ABSTRACT
This chapter examines the relationship between the monopoly sector and the state sector. It shows that the simultaneous growth of these sectors generates an increasingly severe social crisis and fiscal crisis. The basic cause of the fiscal crisis is the contradiction of capitalist production itself—the fact that production is social whereas the means of production are owned privately. The fiscal crisis is at root a social crisis: Economic and political antagonisms divide not only labor and capital but also working class. Today, inflation and fiscal crisis are anathema to monopoly capital and the state. From a theoretical point of view there are three ways for state to keep costs down and ameliorate the fiscal crisis and inflation. The first is to deflate the economy as a whole by engineering a managed recession. The second is to introduce and enforce wage and price controls. The third is to cooperate with monopoly capital to increase productivity in private and state sectors.
