/leftypol/ - Leftist Politically Incorrect

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

`F_S = S_I + S_C`
Where
F_S = Flow of spending
S_I = Spending on investment
S_C = Spending on consumption

`F_I = I_I + I_W`
I_I = Income from investment
I_W = Income from labour

And since the flows must be equal for the amount of capital to remain fixed in the economy (that is, every debt has its credit)

`F_I = F_S` => `I_I + I_W = S_I + S_C`

Now with some re-arranging we can see that the surplus of investment i
`S = I_I - S_I = S_C - I_W`

That means the surplus of investment comes from total consumption occurring in excess of total wages. I.E., for investors (net investors) to get what they spend, the consumers (net consumers) must spend what they get. For investors to get more than what they spend, the workers must spend more than what they get. That is, in 'normal' economic functioning, the trend is for investors to accumulate capital.
How can this be? How does such a system work and sustain itself? There are two main mechanisms:

*** 1 Credit Expansion
In this case, the amount of capital in the economy is increased via debt, in order to maintain consumption.

Credit expansion involves an expansion of our model from a system of fixed capital to one where it can vary. Now I want to take a moment to discuss how inflation works.
In a re-arranged form of the well-known monetary equation:

`P = MV / Y`
M = Money supply
V = Velocity of money (how often each unit is spent)
P = Price level
Y = Real output (GDP)

It is clear to see that for prices not to rise, any increase in the money supply must be counterbalanced by a reduction in the velocity of money, or an increase in real output. That is why you will often see the fed brazenly try to crash the economy to fix inflation. I also want you to note that if real output is increased proportionally as a result of the increase in the money supply, then prices will not rise.

This means that credit expansion can continue so long as investment remains productive. But suppose that, suddenly, investment becomes unproductive! Perhaps there is no further efficiency gain to be made, or people have over-speculated. Well it's clear that in this case there will be a crash. This gets me onto my next point: boom and bust cycles are a natural product of feedback from this phenomenon. In times where investment is profitable, investors predict the good times will continue, and S_I goes up. However, the moment that consumption dips there will be a reversal in this trend: investors become fearful, and this phenomenon leads to boom and bust cycles. As Kalecki points out, this is exacerbated by the fact that there will be a lot of fixed capital lying around used specifically for investment that cannot be repurposed (machines and such) and this deepens the issue. When investors do not spend, workers cannot make money, meaning they cannot consume.

*** 2 External appropriation
Luxemburg speaks of this mainly Surplus value is realised via exports to non-capitalist markets, fuelling imperialism. I am too lazy to do this one rn and haven't read Luxemburg's works on imperialism in some time. But maybe later if I don't get shidded on for this thread

Finally, on the repression of workers. It's clear that there's an intrinsic animosity under capitalism between workers and investors, so investors will often forgo profits in order to collaborate to spend money to repress workers so they never realise this inherent tension.

Thank you for coming to my TED talk stop pretending I'm stupid just bc I don't cite Stalinist dogma every two sentences thank you.

Here's some sources I used to back up my points while writing dis so I don't sound like a schizo but honestly mostly I just reasoned it out from first principles and remembered where some people spoke about what I already had in my brain long ago.

Ted Harvey lectures on Kalecki
https://www.youtube.com/watch?v=73gWjTXd-ts

Luxemburg's Accumulation of Capital
https://www.marxists.org/archive/luxemburg/1913/accumulation-capital/ch01.htm

Political Aspects of Full Employment
https://delong.typepad.com/kalecki43.pdf

Theory of Economic Dynamics
https://archive.org/details/in.ernet.dli.2015.122597