Re: zero average profit

From: Allin Cottrell (
Date: Mon Jun 09 2003 - 21:27:52 EDT

On Fri, 6 Jun 2003, Rakesh Bhandari wrote:

> Allin writes in response to me:
> >On Thu, 5 Jun 2003, Rakesh Bhandari wrote:
> >
> >>  Kalecki was able to reach the false conclusion that the govt through
> >>  debt financed expenditures is in fact capable of moving the economy
> >>  to full employment as long as the state keeps real wage growth under
> >>  control.
> >
> >On what basis do you say that conclusion is false?  It seems to me
> >obviously true.
> It is certainly not obviously true that if the govt pulls on the
> levers of fiscal and monetary policy full employment can and will
> obtain. Such hydraulic Keynesianism already went up in stagflationary
> ashes in the 70s...

That's too facile.  The price shocks of the 70s made governments
unwilling to apply expansionary fiscal policy even when unemployment
rose, for fear of worsening inflation.  The price shocks also tended
to reduce aggregate demand in real terms.  The claim that expansionary
fiscal policy will move the economy towards full employment is, of
course, ceteris paribus.  (And the expansionary or contractionary
stance of fiscal policy is measured by the full-employment deficit,
not the actual deficit.)

> >but Kalecki
> >was quite far-sighted on the effects of accumulation on class
> >struggle, particularly in his essay "Political aspects of Full
> >employment".  He predicted (in the late '40s, mind you) that Keynesian
> >policies would run into trouble because sustained low unemployment
> >would tip the balance of forces towards the working class,
> Balance would only be tipped if the govt and unions did not take
> steps to limit real wage gains as would result from a tight labor
> market.

I think you underestimate the effect of high employment.  In the
absence of thorough-going repression of the workers movement (cf Nazi
Germany) high employment necessarily tips the balance in favor of the
working class.  The question then is what form this advantage takes --
gains in wages, or a trade-off of wage gains versus achievement of
political objectives.  If high employment is sustained, the govt and
unions can't "limit real wage gains" for long without offering
something real in exchange.

> I think people are led to Kalecki's theory because it implies that
> solutions are possible through rational class compromise.

I suppose that is one reading, though I doubt whether it is one
Kalecki would recognize.  The point of his "Political aspects of full
employment", as I read it, is that full employment, while it is
"technically" achievable via the lever of fiscal policy, will not in
fact be sustainable so long as the class contradictions of capitalism
are operative.


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