ABSTRACT
This chapter clarifies the impact of state spending on capitalist economy. It reviews briefly the ideas of economics about the nature of productive labour. It is from a critical examination of the theoretical work Karl Marx's conception was developed. Marxists argues state spending has had a stabilising effect on post-war capitalist economy. The theory that arms expenditure represents one crucial way in which capitalism can overcome its contradictions depends, in the final analysis, on the view that the surplus capital which the system generates absorbed by means of state spending. The thesis is essentially a variant on Keynesianism in that it holds that the tempo of capitalist development is ultimately dependent on the rate of capital investment. Spending on armaments regarded by some writers as constituting the major source of the post-war capitalist boom. Harman provides a resume of the essential points of the theory, which often goes under the label of the 'permanent arms economy'.
