> Of course the rich could theoretically invest in expanding > production, but > then they would need a motivation to do so. What would > motivate them to > invest in cumulative production growth, in an economy running > at 75 percent > of installed productive capacity and relatively stagnant > ordinary consumer > demand ?
monetary policy won't motivate expansion when capacity utilization is low, but tax cuts and/or spending increases can do that, by creating a market that tallows greater use of installed capacity. >... it is very difficult to trace the flow of funds from the US > government and enterprises producing military equipment to other enterprises > so that you might be able to estimate some kind of multiplier. All you > really have is the total value of defence contracts by contractor. It looks > to me like military production is not sufficiently large-scale to > increase economic growth significantly overall, except for some sectors. in a period of lots of unemployment, some workers are getting more income than they were before because they have jobs as soldiers (or are replacing those who have jobs as soldiers in the private sector). At this point, I don't think military Keynesianism is a big thing. It's hardly enough to cancel out all the cut-backs by the states. But Iraq War II may become a full-scale quagmire... > As a Phd student, I really got the impression that really neoclassical > economic models boil down to a zero-sum trade-off between saving and > consumption, where saving is tacitly treated as automatically implying > investment. This is suggested by Keynes's formulas as well. > Thus, what is > not consumed, is saved, and what is saved, is invested. Keynes reverses the classical line of causation: increased investment leads to increased income, which raises saving. > In Marxian theory, of course, a sharp distinction is made between saving, > investment, and type of investment. in Marx himself, the distinction between saving and investment is not emphasized. The issue is more one of overproduction and the non-realization of surplus-value. Jim
