OVERCOMING POLITICAL ISOLATION:

THE RELEVANCE OF KEYNESIAN FUNDAMENTALS FOR MORAL ECONOMY APPROACHES IN AN INCREASINGLY MULTIPOLAR INTERNATIONAL SYSTEM

Abstract

The actual drive to globalization will not result in a worldwide extension of "textbook type" capitalism but in the generalization of rent dominated systems which will disempower labour and limit also the civilizational impact capitalism has had on today's developed economies.1 Post-Keynesians are certainly not surprised, as they have argued that the equilibria required for wage increases and profit based on investment spending are not automatically produced by market oriented decisions. From the Keynesian observation of the possibility of unemployment equilibria, post-Keynesians formulated recommendations on the use of fiscal and financial policies for improving levels of economic activity, ultimately employment levels. This debate led to the initiation of the problem of long-term insufficient effective demand in case of absence of empowerment of labour. Ultimately, unemployment was diagnosed as the result of social power relations not providing the necessary counterweight of labour against the cost-reducing strategies of business. For preserving capitalism, labour has to be capable of negotiating the conditions of its employment derived from its scarcity. The interrelationship between democracy and capitalism is characterized by the dynamic equilibria between capital and labour. The analysis of that interaction of major competing political camps in capitalist democratic societies is closely connected to the analysis of the “Third Estate”, the transition to capitalism and the bourgeois revolutions.