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Hosted on Acast. See acast.com/privacy for more information.
Hosted on Acast. See acast.com/privacy for more information.
Hosted on Acast. See acast.com/privacy for more information.
Hosted on Acast. See acast.com/privacy for more information.
Hosted on Acast. See acast.com/privacy for more information.
Ever wondered why Britain’s roads are riddled with potholes, why the trains keep breaking down and why there aren’t enough hospital beds? Simple. Britain is not making enough capital investments. Taking the public and private sector together, it amounts to about 6 percent of GDP, well below the 22% in the US - which has its own infrastructure problems. China can spend as much as 40% of GDP on capex projects.
Steve says there are two reasons why Berit5ian’s infrastructure is failing. First, not enough engineers. There needs to be more teaching of STEM subjects in schools. But more importantly the adherence to the notion that governments need to balance budgets means capex investment is often pushed aside by more pressing short-term spending. Phil asks whether the sensible way forward is to allocate an amount of money for capex investment that sits outside the budget that the government tries to balance each year.
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Steve Keen says he builds his economic model based on the motivation of three types of actors. First, the worker, who wants to maximise his or her wage. Then there’s the capitalist who wants to maximise profits. And the financiers who wants to lend out as much money as possible with the best possible returns.
How does Steve’s model change if most businesses became cooperatives. Workers would also become shareholders, also wanting to see strong profits. They might also have other considerations, such as working conditions, which will impinge on the returns won by the capitalists. Financiers might lose out as the cooperatives seek to reinvest their funds in new lines of business.
This week Phil and Steve examine how co=operatives change the model of the capitalist system and ask why we don’t see more of them.
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What causes an economy to fall from a peak? Many economists will argue it’s exogenous shocks but, as Phil and Steve discuss, there’s not too many of those around. Maybe COVID was one, but even that came about because our economic system has drawn us closer to wildlife habitats.
Or is it a lack of resources? We run out of capacity to produce more, whether it’s factories, people or natural resources, like fossil fuels. Does the shortage relative to demand force prices up and its inflation that ultimately kills growth.
No, says Steve. Karl Marx had it right when he postulated that the rising pressure on wages will cut the profit that capitalists thought they would be earning, which would mean they cut investment. Talk about cutting off your nose to spite your face.
So, if that’s how economies peak, what is it that pulls hem out of a trough? And is there anything we can do to minimise the impact of business cycles, or are they simply the natural order of things?
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