Lecture 10- Tuesday, October 9 , 2012
Chapter 24: Concluding Notes on the Social Philosophy towards which the General
Theory Might Lead
Reluctance to use direct taxation more arises from fear it would reduce saving and
slow the growth of capital. “...only in conditions of full employment is a low
propensity to consume conducive to the growth of capital.”
Direct taxation is said to be bad for growth but there is a limit on savings
imposed by taxation only on full employment
Advantage- avoid taxes that prevent getting you on full employment
Good reason for inequality
Death duties reduce other taxes, raise MPC and increase inducement to invest. May
be other reasons for inequality, but not to encourage saving.
Why inequality? “Dangerous human proclivities” can be turned toward money-
making: “It is better that a man should tyrannize over his bank balance than over his
fellow-citizens...” But much lower stakes would work as well.
Demand for capital is “strictly limited.” Should be possible to get the MEC to a very
low level. Quite compatible with some measure of individualism but does mean “the
euthanasia of the rentier.”
Capital, unlike land, is not really scarce. If it were scarce at full employment, state
could increase saving so that it is not scarce.
Rentier capitalism a transitional phase. No need for a revolution to replace it.
Financiers and entrepreneurs fond of their craft so tax them without fear they will
give up. (Might they not practice it elsewhere?)
Leave it to experience to decide how much to encourage investment.
In other ways the theory is “moderately conservative in its implications.” Wide
fields of activity are unaffected.
State: guiding influence on MPC; management of r may not be enough to get
adequate I so need “a somewha