Debating the stimulus and the rights of the needy

Debt finance is a legitimate means of building the kind of infrastructure which can support increased productivity, capacity, and sustainable improvements in material living standards.

But where debt accumulates unsustainably, or where “bubbles” promote an “on paper” economy without an anchor in real production, the system ceases to be viable.

Considered only on a private level (the sum of household and business debt - including corporate bonds), the ratio of Australian debt to GDP - according to Steve Keen - has been building for many years - to peak, at the time of publication,  at 177 per cent.

“Corrections” are inevitably painful - and the current meltdown demands a far more robust and direct role for government in minimising impact of cyclical economic crises in future.

Private pension funds such as superannuation, meanwhile, carry too much risk for ordinary retirees: risk could be better spread and managed through a public system.

Responses to the global crisis

There are other problems which go to the heart of the capitalist world economy. One such failing inherent in the capitalist system is what Marxists call “over-accumulation”.

As Bello explains it, capitalism develops “tremendous productive capacity that outruns the population’s capacity to consume owing to income inequalities that limit popular purchasing power”.

Again: this manifests as a “recessionary correction”, which neo-liberal purists suppose is a necessary, and in fact desirable, process.

Even in the face of recession, though, there are many - such as the wealthy and those with secure employment - who will not bear the brunt of the crisis.

Further, such is our productive capacity, even accepting that unemployment will rise, we have the means to act in social solidarity with each other.

Because those on lower incomes generally spend a greater proportion of their income on domestic consumption, tax and welfare reform in their favour can provide the economy with greater buoyancy, while also providing for human need.

There is no need for Australians to face the kind of destitution widespread in the Great Depression of the 20th century. It is a matter of whether or not government has the political will to do what is right.