9
required to maintain full employment he no doubt tacitly assumed
that interest rates would be kept low. If the euthanasia of the
rentier would be achieved i.e. the interest rate kept at the rate
of inflation then the servicing of the public debt would not
constitute a problem at all (except perhaps in so far as different
groups might be affected in different ways by inflation).A
positive real rate of interest may of course be tolerable if there
is a sufficient growth of the national product. If the interest
rate is substantial in relation to the growth rate, then the
situation is likely to lead to a continuing increase in the public
debt.
Kalecki had proposed a tax on all wealth in order to service the
debt.Since all capitalists would pay but only the rentiers would
receive the yield of the tax this involves a shift of income from
entrepreneurs to rentiers,which is not a very happy implication. A
steadily growing public debt in this case implies a growth of the
rentier income and of the number of people interested in it.In
view of the large propensity to save of this class this growth
will tend to be self reinforcing.Politically this means that a
growing rentier class allied to an expanding financial sector will
see to it that high interest is maintained and no experiments in
expansion are entertained. Economically it means that there result
automatically continuing additions to the budget deficit which do
not benefit effective demand.
Paradoxically enough (or so it seems) the large budget deficits of
the last decades have not been the result of Keynesian-Kaleckian
policies at all. Quite the opposite. When the end of the Keynesian
era was officially declared in 1974/75 budgets everywhere turned
very largely into deficit and they sky rocketed after Reagan took
over. The explanation is not difficult: After 1974 the personal