Since then, states and central banks have done all they can to prevent growth from rising, for fear it will cause higher interest rates and another crash in asset prices. Ironically, they are getting the higher interest rates, anyway. The main levers in that economic activity are the capital accumulation of the multinational corporations, and the spending by governments. As far as the latter is concerned, we have seen that, to restrict economic growth, they cut their spending and raised taxes, some of which went, directly, to fund their bailouts of financial institutions, whose paper wealth crashed along with the prices of the assets on their books.
As far as the former is concerned, it is where the control of that socialised capital by shareholders, rather than by its collective owners – the workers – plays its part. Those shareholders, the ruling-class, clearly have more concern to protect their paper wealth than they do in economic growth, the consequence of which is, then, to cause interest rates to rise, and asset prices to crash. In addition, since 2000, it has become clear that, even what growth there has been, has caused the demand for labour to rise faster than supply, causing relative wages to rise and relative profits to fall. It is marginal compared to what occurred in the 60's and 70's, but it still acts to cause the demand for money-capital to rise relative to supply, and so, again, for interest rates to rise, and asset prices to fall.
It is part of the problem any government seeking to engage in even mildly expansionary policies will face. The ruling-class, which controls all of the loanable money-capital, even those huge sums in pension funds etc. it does not own, simply exerts its power via the global capital markets. A government would, therefore, see its borrowing costs rise. Its currency would fall on foreign exchange markets and so on. As all that happened, and its stock market and property market fell, the bourgeois media would present all this as a condition of crisis, even if, in reality, the government was able to divert this money into an expansion of real economic activity!
The proponents of the Magic Money Tree (MMT), of course, argue that, instead of borrowing to finance this spending, the government could just “print” more money, as for example was proposed by John Law and the Perreire Brothers, with such disastrous, but predictable results, as again repeated in Weimar. As I have described, elsewhere, this mistakes money for currency/money tokens. As Marx described it, its like confusing the picture of a cow for the cow itself. Simply producing more pictures of cows does not mean you create more cows. Its true, as I have noted earlier, and discussed elsewhere, if the government were to print more money tokens, it would not lead to a depreciation of those tokens – inflation – if the increase in the value of output was, at least, proportionate to it.
But, that assumes that the government has the ability to direct the economy, and to direct the currency it has just printed into real capital accumulation, so as to increase output. The government in China might have something approaching that level of control; the soviet government, in the 1920's, thought it had that control, but no western governments have it. Indeed, in the 1920's, as Trotsky pointed out, the soviet government printed large amounts of money tokens, and despite there being rapid economic growth, it was not as rapid as the depreciation of the currency, leading to inflation and instability. In China, the printing of money tokens, as in the west, has led to the same asset price bubbles, and the same problems that large property empires, now, face collapse, requiring the creation of even more money tokens to keep them afloat.
Moreover, as I have noted, elsewhere, in the 1950's – 70's, where Keynesian intervention acted counter-cyclically, an increase in liquidity did lead to increased output, but, that increased output did not manifest until around 18-24 months later. At that time, still with the memory of the mass unemployment of the 1930's fairly recent, and with Keynesian demand management the dominant theory of the ruling-class, governments faced little resistance to such an approach. At that time, after all, the ruling-class still saw its wealth and power flowing from its ability to obtain interest/dividends and recognised that the best conditions to do so flowed from continued economic growth and so increasing profits.
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