Effective Demand in the Short Run and in the Long Run

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Effective Demand in the Short Run and in the Long Run

Author:: Steindl, Josef

Scope:: Typoskript, 10 Blätter, mit zahlreichen handschriftlichen Anmerkungen und Ergänzungen vom Verfasser

Year of publication:: 1990

Source material date:: [vermutlich 1990]

Language:: English

Description:: Capitalism today is not exactly what it used to be. The classics used to see it as a production machine which produced a surplus from which the owners paid the interest to the banks which financed it. Today the greater part of the interest does not come from that source but from governments, development countries, and from consumers and home owners directly. [...] There is evidently a striking analogy between this problem and the problems of a permanent budget deficit considered further above. In both cases there is a continuing accumulation of debt which is not "covered" by assets in the productive sector. And in both cases there is an extraction of interest payments which are not paid out of the surplus and which tend automatically to lead to further accumulation of debt. In fact, the budget problem is only one part or one aspect or example of the more general problem which is presumably deeper in so far as it refers to an institutional development in our society. (excerpt, p. 8 and 9.)

Subject:: Kapazitätsauslastung Investition Effektive Nachfrage Deficit spending Öffentliche Schulden Zinsniveau Kreditmarkt Private Verschuldung

Note:: Typoskript mit geringfügigen Änderungen post mortem (2012) publiziert, ohne Berücksichtigung der handschriftlichen Anmerkungen der vorliegenden Fassung.

Related work:: Steindl, Josef: Effective Demand in the Short and in the Long Run. In: PSL Quarterly Review, vol. 65, Issue 261, 2012, S. 189-197

Topic:: Growth,cycle and stagnation

JEL Classification:: E11 [General Aggregative Models: Marxian, Sraffian, Kaleckian] E12 [General Aggregative Models: Keynes, Keynesian, Post-Keynesian]

Shelfmark:: S/M.51.4

Access:: Free access

7 usefulness will be exhausted and the situation will have to be reconsidered. II. In the course of the postwar decades in all industrial countries the financial sector has gained in importance in relation to the industrial sector ( Bhaduri-Steindl 1986 ). The dynamics, the accumulation of wealth, power and prestige of finance has far outstripped the general pace of advance. Industry in the sense of material production could not keep pace with finance, because its share in the national product declined, but more important perhaps, because the industrial firms have more and more turned to financial activities, they have invested more and more of their gains in financial assets or real estate rather than in equipment and factories.This shrinking of the main traditional market of the banks made it necessary for them to find new fields for their WtsU, activity and new customers for their credits. The new fields were first of all abroad. Banking was internationalised to a hitherto unknown extent. Taking the industrial world as a whole "abroad" meant of course the third world. The fortuitous event of the oil crisis made it easy to expand in this field. With the Mexican crisis of 1982 this era found an end. It was followed by the high time of the merger movement, the leveraged buy outs and the stock exchange boom. The buy outs meant that a tremendous lot of share capital was replaced by credits and bonds. The paradoxical situation was that an industry which did not know what to do with its money, which to quite a large extent ceased to be a customer for the banks because it had a surfeit of funds for real investment got now very highly indebted exclusively in connection with its financial transactions. A related field was the finance of real estate.Land

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