Free Cash, Capital Accumulation and Inequality by Craig Allan Medlen

Author:Craig Allan Medlen [Неизв.]
Language: eng
Format: epub, pdf
Publisher: Taylor & Francis (CAM)
Published: 2018-08-16T20:00:00+00:00

Stagnation and stimulants

Under the optics of the oligopoly-stagnation thesis, an explanation of any protracted slowdown—like the slowdown since the late 1960s—inevitably deals with the weakening of various stimulants and the exhaustion of various counter-acting forces. Below I focus on three factors: (1) the reduction of taxes on the rich; (2) the extension of the two-earner household, and (3) the rise of household debt.

High taxes on the rich countered stagnation because they aimed at high-saving individuals and corporations whose spending propensities on investment were problematic at best and low at worst. The decline of high taxes on the rich eventually led to higher and higher government deficits, a corresponding rise in free cash and the speculative endeavors associated with free cash.

The extension of the two-earner household raised household incomes and, together with a rise of household debt, allowed markets to expand. Such debt stimulation, however, expanded the level of risk and consequently bumped up against inherent limits.

Before discussing the rising deficits of government and households, I first construct a model of free cash generation that expands upon Kalecki’s original formulation. Free cash is generated not just by government deficits but by the deficits of households as well. This free cash model allows us to understand how debt stimulants countering stagnation have been intimately intertwined with the growth of speculative free cash.

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