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 investor? --------------------------- 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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