The State and financial Markets. A post- Hilferding view on the socialisation of investment and finance

Abstract

From a post-Hilferding view, the analysis aims to prove three propositions of what constitutes the core of the general theory of monetary circuit. Firstly, “Financial markets” cannot normally ration the State in its ability to spend. Secondly, the “public debt” constraint thereby does not exist under normal circumstances. To the contrary, the accumulation of public debt is the fundamental stability condition of the whole financial system as long as it is the outcome of a long run planned policy of productive deficits (what must be deemed good deficits). Finally, to fight the postulated “financialization” generated by the tendency of the private corporations sector to evolve towards a parasite feudal system, only planned long run productive deficits may generate full employment and, in the most optimistic case, neutralize this tendency.