ALB wrote: dogmatic
I’m not sure I agree. It seems to be putting the cart before the horse. Surely it is not the need to pay interest that drives the capitalist economy, but the need to make profits.Banks make loans to capitalist businesses only if they judge that that the business will make a profit of which they can obtain a share as interest (and businesses will only take out a loan if they judge they can make a profit larger than the amount of interest they will have to pay). If banks don’t consider this to be the case then they won’t make a loan even if they have the money. Which is what is happening now. Profit is the problem and not interest as such.The imperative to grow that you mention and which is indeed built-in to capitalism results from capitalist firms competing for profits and having to invest in more and more productive machinery and methods, ie accumulate capital, to remain competitive and stay in the race for profits. What causes unemployment and austerity to increase from time to time is when this competition leads to overproduction (in relation to the market) and a fall in profits. When this happens banks (who had expected to get interest out of future profits, which have now not materialised) and governments (who had expected more tax revenues from the same future profits) find themselves with a “debt problem” but this has been caused not by the need to pay interest but by the fact that profits out of which to pay it have not materialised.But, as you say, whatever causes booms and slumps, the need is to get rid of the profit system and replace it by production for use which is only possible on the basis of the world’s natural and industrial resources becoming the common heritage of all under democratic control.
I agree with you on everything except the bold part which has been proven wrong : Okishio’s theorem is a mathematical theorem formulated by Japanese economist Nobuo Okishio. It has had a major impact on debates about Marx’s theory of value. Intuitively, it can be understood as saying that if one capitalist raises his profits by introducing a new technique that cuts his costs, the collective or general rate of profit in society – for all capitalists – goes up.Okishio [1961] establishes this theorem under the assumption that the real wage – the price of the commodity basket which workers consume – remains constant. Thus, the theorem isolates the effect of ‘pure’ innovation from any consequent changes in the wage.