Capitalism: Lecture #29-Postwar Accumulation, Forces Leading to the Current Crisis

[@SusanSt.James-33]

Insightful explanation of the weakness in Keynes's General Theory explanation. What are your views about his Treatise on Money? It is said that in that book, Keynes was working within a Classical Economics paradigm. Thanks for making it clear what Kondratieff's work was about. Sad that his life was put to an unfortunate end.

[@TheCommonS3Nse]

If I’m understanding his theory correctly, MMT would be wrong because they want to increase PP and assume that it will cause an increase in supply to meet the new demand. Shaikh is basically arguing that there are no practical limits on increasing PP, but when the PP is increased without increasing the potential room for growth, you get inflation. So if you have an island that produces bananas, there will be no problem with increasing the currency in circulation as long as some of that money is used for increasing the area for banana trees on the island. More area for trees means more room for growth, which means that the growth utilization rate will not increase as the growth increases with the new demand generated by the increased PP. It will however be an issue when the entire island has been utilized for banana production and there is no more room to expand. Now any growth in the demand for bananas will reduce the potential number of bananas available in the market, as the demand exceeds the available supply. This causes inflation. Therefore, MMT would be somewhat correct as long as the increased money supply does not exceed the country’s potential for growth. Their theory of government being the employer of last resort would fail as it would vastly increase PP, which would increase growth without a corresponding increase in the potential capacity for growth, pushing industries to their physical limits of supply. Growth would increase until bottlenecks appear, at which point inflation will start to creep in. Government expenditures on something like green energy would, on the other hand, increase the potential for growth, as there is a lot of room for growth in this field. ie. government investment in solar capture technology would improve the efficiency of solar panels. Higher efficiency means more room for growth, as more efficient means more cost effective, therefore more profitable. So the same money that would cause inflation if just handed out would not cause inflation if it was instead spent in ways that made industries more profitable. I hope I am understanding his theory correctly. It seems to make sense to me, but I could be way off base.

[@jayjaymcfly7475]

I think you're kinda right. Man, this whole thing is really hard to digest, where have the easy straight lines gone which cross at some optimality-point that we know so well from the neoclassical theory? :)

[@libertaer-ye6km]

At 01:14:34 Shaikh calls negative interest rates "nonsense" and points then to the absence of positive interest rates on reserves. Can somebody explain this?

[@TheCommonS3Nse]

From my understanding, they say it’s a negative interest rate, but that’s just a softer way of saying they will charge you extra if you hold onto the money. Where higher interest rates are an incentive to save your money (since you earn interest on those savings), a negative interest rate is an active disincentive to saving money. You would actually have to pay the bank extra to hold your money in a savings account. It forces people and companies to actively invest their money into the stock market if they want to realize any sort of return.