ABSTRACT
This chapter analyses the long-term effects on incomes of Ricardo phenomenon. The 'Ricardo phenomenon' is a recipe for automated poverty for a growing proportion of the population – a process in Britain which have seen developing in the past decade. The role of the state in providing incomes for consumption cuts across the 'natural' development of capitalism, and interferes with the economic and social consequences of its development. Keynes was implicitly recognising a new role for the state in economic affairs, because he was showing that during the stage of advanced industrialisation the state's intervention was necessary to allow incomes to continue to rise steadily. The experience of the Heath government showed us that Keynesian fiscal and monetary policies do not alter these attitudes. Monetarist pressures for a return to reliance on market prices grew on both sides of the Atlantic. The monetarists were blaming the consequences of the 'Ricardo phenomenon' for causing it.
