Government Debts and Inflation: Stumbling-Blocks in the Way of Keynesian Full Employment Policy

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Government Debts and Inflation: Stumbling-Blocks in the Way of Keynesian Full Employment Policy

Author:: Steindl, Josef

Scope:: Typoskript, 10 Blätter, handschriftliche Anmerkung auf Seite 1, nummeriert

Year of publication:: 1976

Source material date:: [vermutlich um 1976]

Description:: It has been maintained, or pretended, thet Keynesian policies have failed because of obstacles which made them unworkable. Among these are most prominent foreign balance deficits, accumulating government debt and inflation. I do not really believe that these have been sufficient to cause the great change in economic trends and in people's outlook since 1974 (or earlier), but they are serious problems, and, apart from foreign balance problems which all Keynesians have been fully aware of, and which depends entirely on international cooperation, they have not always been taken seriously enough. (Auszug, S. 1)

Note:: Unveröffentlichtes Typoskript.

Topic:: Economic history,economic theory,current developments

JEL Classification:: E12 [General Aggregative Models: Keynes, Keynesian, Post-Keynesian] H68 [Forecasts of Budgets, Deficits, and Debt]

Shelfmark:: S/M.59.5

Access:: Free access

2 In fact, this difficulty (which also occurs - albeit immediately and not only in future - when you follow Kalecki's alternative policy of financing public spending by taxes on corporation profits, increasing thereby effective demand and employment) throws up a fundamental dilemma of Keynesian economic policy: For social (or egalitarian) reasons we want to tax business, for reasons of incentive to invest we want to relieve it from burden of taxation, sometimes even to subsidise it. Kalecki's modified income tax seemed to show a navigable way between Scylla and Carybdis; There is one level of income tax for capitalists who don't invest, and another, lower level for those who do invest their income. The difference between the two levels would seem to be relevant for the incentive to invest, while the absolute level (the higher one) would be relevant for the burden you want to put on the capitalists. In other words, if the incentive deemed necessary for investment demands a certain rebate on the higher level of tax you may within limits, raise the higher level to such an extent as to give you a desired yield on the total taxation of capitalist income. In other words you compensate for the loss in the rebate by taxing the "rentier" (the non-investor) the more heavily. The limits are of course that you can hardly tax more than 100% of income. Therefore, the level of the income before tax will be important; that, in fact, largely depends on the state of demand.

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