Weblog Volker Radke

Robert Brenner, Monthly Review:
<<Thirdly, Keynesian policies, which became almost universal in the 1970s, actually contributed to the perpetuation of overcapacity and overproduction, helping to prevent a decisive recovery of profitability and, in turn, of capital accumulation. Increased demand, deficit spending, and easy credit allowed many high-cost, low-profit firms that would otherwise have gone bankrupt to continue in business and maintain positions that might have been occupied by lower cost, higher-profit producers. But, given their low surpluses, such weakened firms could hardly undertake much capital investment or expansion. Instead, in response to an increase in aggregate demand resulting from Keynesian policies, they were able to bring about a smaller increase in supply than in the past, so that the ever-increasing public deficits of the 1970s brought about not so much increases in output as accelerated rises in prices. Keynesianism was thus unquestionably necessary to keep the world economy turning over. But, it increased inflation and, precisely by preventing the harsh medicine of depression that had historically cleared the way for new upturns, it reduced over the long run the potential dynamism of the system.>>