ABSTRACT
The stability and growth of capitalism depends on rising mass incomes. Profit depends on net investment spending. Resources for investment are provided by the banking system and its capacity for creating money. Effective demand can be temporarily stabilised through neo-mercantile government deficit spending. However, this is not sustainable in the long term. There are four distinct types of investment. Rising mass incomes are required in order to realise three of them (expansion of the production of existing products, introduction of new products and defensive investment). Any attempt to deepen capital accumulation by raising capital per unit of output without rising mass incomes leads to unrealistically exponential growth. Under certain circumstances, even this growth is simply blocked because of lack of effective demand from rising mass incomes.
