Alternative title: Why you shouldn't need to read theory to know what's up under global capitalism. Start doing populism you idiots.
Many here have taken issue with me in the past when I have said that 'in order for investors to get what they spend, the workers must spend what they get', or with my claims that this can explain:
- Capital Accumulation
- Boom & Bust Cycles
- Political repression of workers
I hope to expand upon what I mean by these statements and convince you of their truth, and thus show you that my argument is sound and based on trivial intuition, thus no need for any fancy theory.
First of all, on the simplest case. Whilst I do not generally approve of 'simplifying assumptions', here I think they are valid since I am making a monetary argument: I hope to show the logical necessity of the simple case, and show that the more complicated cases of our real world are simply emergent properties of this base case and do not invalidate it.
We will start with an economy that has fixed capital and four economic 'functions' an actor can take: To 'invest' the money one has available (by spending on productive assets), to 'spend' the money they have available on assets which are non-productive (though perhaps which are vital to subsistence), to work (which brings in income) and to receive income from investment. In the case of the investment function, it is obvious that the productive asset yields surplus, and that this surplus returns to the one investing. From our assumptions we see, this surplus must come from other actors in the economy.
Anyone who is familiar with Kalecki will immediately see where I'm going with this, and I hope it is obvious to you that no one will 'invest' unless they reasonably believe they can get surplus value from their investment, which means that everyone else in the economy must be, in aggregate, spending money into the hands of the one investing. This is in fact, Kalecki's basic two-sector model. Since the total capital flow in the economy must be made up of investment and consumption, then we say
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