ABSTRACT
Rising mass incomes are the central safeguard of capitalism. Only in the event of rising mass incomes do other factors come into play and contribute to the stability and growth of capitalism. Certainly, Keynesian economists have suggested that autonomous investment may transform labour markets and trigger the normal functioning of the capitalist economy. However, they do not necessarily exert this effect. They will trigger growth and cycles. Durable contribution to growth implies a degree of autonomous investment leading to high levels of employment and rising mass incomes.
Capital accumulation does not exceed technical progress. There is thus no tendency of the profit rate to fall because of a rising organic composition of capital. Marxists incessantly criticise the “contradictions of capitalism”. But the real contradiction of capitalism is to be found in underconsumption. The Marxist proposal of “enlarged reproduction” for meeting this danger is unconvincing.
Economic crises may become so profound that they obviate the neoclassical mechanism of the “destruction” of unwisely spent capital following the overexpansion of spending on capital. If underconsumption is endemic, then this “purifying” crisis will not shift the economy onto a path of growth.
All of these mechanisms may play a supportive role in returning the economy to a path of capitalist growth. The necessary condition is that labour remains empowered. Capitalist growth is thus underpinned by rising mass incomes and not by capital accumulation. The capital output ratio does not increase. Capitalism is capital saving.
