Progressive Taxation
I think my post wasn't very clear, sorry. I meant that we had progressive taxation 45-79
1970s progressive taxation and falling rate of profit means capitalists sulk and stop investing
From 45 onwards we had rising productivity & wages. This means demand for goods and services. I think another factor is that we had many more people being employed by nationalised industries and the introduction of the NHS. This meant workers had enough money to create demand for all privately produced goods/services.
The falling rate of profit is seen over any cycle, within any industry/business and over time. Because of competition, businesses invest in technologies to become more efficient. Efficiency leads to the falling rate of profit because less labour is needed combined with competition to bring down prices. Because you have this, capitalist sulk and stop investing or they invest elsewhere. I can't find a chart that specifically shows this in the U.K but I recall reading that sometime around 1965 (ish) profits slumped.
www.businessinsider.com/profits-at-high-wages-at-low-2013-4 graph one shows falling rate of profit in the U.S but a similar picture was seen in the uk.
"The body of evidence from a range of sources on measuring the US ROP since 1946 shows that there has been a secular fall in profitability since 1946 but that it has been interspersed with a cycle of up and down phases. There is mostly agreement that the first up phase was from 1946 to 1965, the next down phase was from 1965 to 1982 and then there was an up phase from 1982 to 1997
followed by a down phase afterwards. So there is a cycle of profitability, as well as a secular decline"
Falling profit has a wave or cyclical pattern with troughs and peaks thenextrecession.files.wordpress.com/2011/11/the-profit-cycle-and-economic-recession.pdf
We have seen rising profits over the last 30 years. However one thing that occurs to me is that this time (79 onwards) most of that profit is because of falling wages rather than technological advances, the demand has only come from the availability of borrowing because workers can't pay with their wages. So the profits come from debt. The other interesting thing is that the profits are not then invested into core business where value is created but into areas that create fictitious
capital.
When Maggie came to power she inherited stagflation, inflation, unemployment, which would still have risen because the capitalists were sulking and not investing. Without their investment the costs to the government of keeping industries which were failing nationalised and picking up the welfare tab would have been horrendous.
She created the conditions in which investment would be profitable, problem is we now need to be moving in the opposite direction and Scameron et al haven't caught on yet and business owners are unlikely to wake up until they are fighting each other for your last dime.
However with so much private sector debt & state debt sitting alongside huge levels of surplus capital which is essentially now fictitious capital, Keynes cure might not work???????? certainly investors are moving towards health/education/welfare to make money for them. The net result could be higher national debt and still no show from the private sector. What do others think?