Re: what makes a theory 'social democratic'?

From: paul cockshott (clyder@GN.APC.ORG)
Date: Mon Dec 15 2003 - 05:32:12 EST

 Rakesh wrote
  What for example did
Keynes mean by the abolition of interest through the elimination of the
functionless investor? An elimination of the price paid to commercial
banks for creating media of payment/high power money or the elimination of
property income as such? The disappearance of *interest* need not mean the
euthanasia of the rentier of course since the functionless investor would
merely old other assets (e.g. stocks) instead of holding debts (bonds). And
what would it mean for the banks to get no reward for creating media of
payment if this is what Keynes meant by the elimination of the functionless
I understood him to be referring not to a zero rate of interest but
to a very low rate of interest, since it comes just after he
has discussed the effect of very low rates on interest on
encouraging capital intensive projects like reclaiming land
from the sea Dutch style.

I raised this in the context of your previous remarks about the
falling rate of profit.

By itself the falling rate of profit is no more serious than
under consumption and equally susceptible to reformist
interventions - Keynes proposals to hold down interest rates
below the rate of profit being an example.

The issue of reform or revolution is in the end political.
What would be the political reaction to such a policy by the
different classes in society?

Would there be attempts by the propertied interest to forcibly
overthrow a government implementing such a policy?

Would resistance to this lead to a revolutionary crisis?

The distinction between reform or revolution is a matter
of political strategy and political opportunity it is
not pertinent to scientific analysis of the economy.

Since the commercial banks are indispensible in a capitalist
system, Keynes would have to propose a complete socialisation of the banks
since if their services were to be offered gratis their costs would have to
be covered out of general taxes. but this is not what Keynes meant by a
somewhat comprehensive socialisation of investment, yet that would be the
only way to abolish interest as a cost on firms.
And if Keynes meant to abolish the rentier class, he should have advocated
100% tax on all income from property, or nationalisation and socialisation
of all income yielding property. But this he did not do either.
So it seems that no meaning can be derived from his famous call for
euthanasia of the rentier or a somewhat comprehensive socialisation or (one
could argue) the marginal efficiency of capital.
Keynes seems to have been a confused and confusing man, perhaps a first
rate intellect who became so mentally unsettled and unstable by his
catastrophic times that he descended into the true underworld of demagogues
and cranks.

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