list moderator michael writes: >Rakesh keeps reiterating that deficits represent a serious threat. I don't >agree, even though I believe that Keynesian policy runs in the problems in >the long run.
I think govts have in fact already found that running deficits the size that would be needed to achieve full employment would only yield retrenchment in private investment; govts thus find that limiting deficits and containing the run up in debt are important to maintaining private investment--that is, fiscal prudence gives confidence that taxes and interest rates will remain under control over the projected future and the state will thus not bite into profits the prospects for which are not strong. The state thus finds itself unable to do much even as the private economy has been unable to generate full employment and plunges itself into downturns. This has already made many people expendable; that is in part why we continue to be haunted by bourgeois dysgenic fears about the black so called underclass and so called illegal aliens. The limits of the mixed economy have in fact already been reached, including now in Japan. >My own preferred version of the contradiction suggests that a different form >of fictitious capital presents a serious barrier. I tried to explain my case >in my book on Marx's crisis theory. The deficit spending tends to reduce the >competitive pressures, allowing business to maintain excessive fictitious >capital, ultimately leading to speculative excesses (such as the buildup of >the telecom industry) and frauds. I do emphatically agree on the importance of the theory of fictitious capital as you are developing it here. In particular, I agree that the way out of recessions ultimately depends upon the slaughter of capital values, not higher prices and strong consumption in the first instance. Rakesh
