ABSTRACT
This chapter argues that the decline in profits is the fundamental cause of the emergence in the seventies of high levels of inflation followed by mass unemployment. In clay vintage model, a given rate and form of accumulation will, in a situation of full employment, entail and generate a certain rate of growth of real wages, determined by the rate of technical progress and the rate of growth of the labour force. The rate and form of accumulation determines the demand for ‘additional’ labour provided ‘exogenously’. The ‘crisis of Keynesianism’ is fundamentally a result of the inadequacy of simply stimulating realization conditions when production conditions are poor. The dominant alternative to the policies within the labour movement is that associated with the left-wing of social democracy and certain ‘EuroCommunist’ parties. Its’ essentials are reflation together with various forms of ‘supply side intervention’ to promote modernization and investment to ensure employment and growth.
