The Brooklyn Rail

December brought the publication of The Return of Inflation: Money and Capital in the Twenty-First Century (London: Reaktion, 2023), by Paul Mattick, who is—full disclosure—the Field Notes editor. Members of the Berlin collective Friends of the Classless Society thought that a conversation about issues raised by the book would be helpful because of the obfuscation and difficulty normally associated with discussion of money. As a number of people participated in this conversation, it should be remembered that “Rail” refers to a plural subject.

Friends of the Classless Society (Rail): There are two main explanations for inflation going around: on the one hand, there was the loose money policy of the central banks and excessive state spending, which the “deficit hawks” emphasize. Others focus on accidental things like the pandemic and the war in Ukraine. You don't consider either of these explanations to be central. Why?

Paul Mattick: These two answers to the question are very old. They go back to the beginning of the nineteenth century, when there were arguments about inflation in England. One side explained it by the quantity theory of money, the idea that if there is too much money relative to goods, prices have to go up. Then there was the other side, which believed that transient issues of trade relations or warfare caused prices to rise for particular reasons.

It’s fascinating that this discussion has been going on for about one hundred and fifty years and has made no conceptual progress. What's wrong with both of these ideas is that they share the notion that the capitalist system normally falls into an equilibrium set by the relationship between the supply of goods and the demand for goods. It supposes that there are certain capacities for production and certain desires for consumption and the two have to adjust to each other, leading to a stable economic situation. From this point of view, the whole idea of an economy is that it utilizes resources in order to meet human needs, to produce goods for consumption. Then, if it is out of equilibrium, indicated either by increases or decreases in prices, there must be some force from outside the economy which is causing this to happen. The first explanation, the quantity theory, blames monetary or fiscal policy of governments for disrupting the natural equilibrium of the system by putting too much or too little money into circulation. The second one points to “shocks,” as contemporary terminology has it, which disrupt the natural tendency towards equilibrium.

The idea that inflation is caused by too large a money supply dates from the sixteenth century, but was first formulated in a careful way in the middle of the eighteenth century by David Hume and others. It was already debunked at that time by Sir James Steuart and in the nineteenth century by the first people who began actually to study statistics of trade and prices. Since the eighteenth century, when this began to be the dominant theory, every attempt to verify it empirically has failed. All of the studies show that there is no particular relationship between the quantity of money in the social system and the price level, in other words, that you can emit large quantities of money without raising prices and prices can go up even as the level of circulating currency goes down.

This theory is based on the idea that money is not basic to the economic system, in which the owners of commodities mutually exchange them, but is simply a technology that makes it easier for people to barter goods with each other. In fact, capitalism is not just a system in which people who own goods exchange with each other. It's a system in which some people have to work for other people. Because access to goods requires ownership of money, they have to sell their labor power to earn the money with which they buy back their own product. Money is a mechanism that organizes the exploitation of labor, not the exchange of commodities among equals.

Because money is central to the economy, it provides the only representation of the allocation of human productive power among different types of production, because the system is a competitive one in which each producer, each enterprise or firm, tries to get as much of the social product and therefore of the social surplus product as possible. Money misrepresents the allocation of labor as, for example, certain goods which are not produced, like the oil which sits in the ground in Saudi Arabia or Texas, still have a monetary value, which is the form in which the owners of those goods manage to extract part of the social surplus for themselves. So money is the form in which the economic actors, which means mainly capitalists, struggle against each other and against the producers to appropriate surplus labor. Money is intrinsic to the working of the capitalist economy, not something external to it that distorts its functioning.

The basic problem with both the quantity theory of money and the supply shock explanation of inflation is that they ignore the dynamics of the capitalist economy as a whole. What is missing from the classical or neoclassical account of the economy is that it treats supply and demand as a relation between producers and consumers. The regulation of that relationship by the need of capitalists to achieve a certain level of profitability is ignored. But in fact the market is essentially regulated by the need of producers to make a level of profit large enough to accumulate, to continue expanding their businesses. What determines supply is the possibility of making a profit from the sale of goods of a particular type. What determines demand is, with respect to consumer goods, the level of the wage and the living standard that people are used to. For producers goods, it's determined by what inputs are needed to make those goods which can be sold for profit. So demand ultimately depends on the ability of firms to make an adequate level of profit.

Because of this misunderstanding, the orthodox theory has no idea of how the system develops over time. For example, everybody recognizes today that there is insufficient investment throughout the world. When the Bank of International Settlements analyzes what's going on in the economy, they say that the root problem is that there's no investment. But why is that? Nobody really knows. They say it's an unfortunate fact and that the government should have pro-investment policies. Pro-investment policies usually mean something like regulating wages, keeping them low enough, and subsidizing businesses or lowering taxes because they believe that businessmen won't invest because taxes are too high.

Economists are aware that there is a business cycle, but there is no generally accepted explanation for it. There is Schumpeter's theory that there are particular kinds of people who are very inventive and who disrupt the normal functioning of the system and create crisis situations. There is Keynes's idea that there is a limit to consumption and also a limit to investment because of declining returns, producing unemployment. But for the most part, each downturn receives its own explanation. So you have the great financial crisis of 2008, which was due to overinvestment in real estate, then you had a crisis due to COVID; in 1973 you had a crisis due to too much government spending or whatever.

Thus the burst of inflation in 2021 is explained by supply shocks. Of course, it's true that there is a war in Ukraine. And it's true that, for example, there was a shortage of semiconductors in the United States in 2021. The story is more complex than it looks at first. For example, there was no actual grain shortage, but there was a big increase in the price of wheat. Why? Because there was an enormous burst of speculative buying of wheat futures when people saw that the war in Ukraine was probably going to put pressure on supply because Ukraine and Russia are the two greatest producers of wheat. So speculators bought wheat futures just as the war was beginning. As it turned out, there never was a shortage of wheat, but some people had already bought it, so they were in a position to raise the price. This effect is now over; these days Polish farmers are trying to prevent Ukrainian farmers from selling their wheat because prices are too low. Similarly, it was possible for the people who were in the gas and oil business to increase prices temporarily, because there were attempts to prevent or limit the purchase of Russian oil, and because the Americans (it seems) blew up the Russian gas pipeline to Europe.

In order to account for the so-called Great Inflation of the 1970s, economists trying to explain the failure of Keynesian policies invented various theoretical entities, the natural rate of unemployment and the natural rate of interest. I call them invented entities because there is no evidence that they exist. And in fact, it's not even possible to decide what they are. So this is a purely theoretical construction, which depends on the rather insane conceptual structure of neoclassical economics. But what's interesting is that this whole conceptual apparatus doesn't explain what was going on in the 1950s, where you had very high inflation rates immediately after the Second World War, which then fell very quickly in the United States to one percent or one and half percent, although they were higher elsewhere in the world, while unemployment went down at the same time. Those two things are supposed to move in opposite directions. However, it's not so mysterious if we remember that the 1950s, coming at the end of the Great Depression and the Second World War, was a period of general prosperity which didn't begin to weaken until the later 1960s and the very deep recession of 1973–1975. This recession was really what marked the end of thirty years of post-war prosperity.

The Volcker shock that undid the inflation of the 1970s coincided with the next global recession, in the early 1980s. There's probably something to the idea that the rate of inflation fell because interest rates were raised, but it's hard to say even how much there is to it because there was a recession in the whole world in 1982, 1983, not just in the United States. What is left out of economists’ explanations is the way in which price movements and the functioning of the different sectors of the market are affected by the general evolution of capitalism, which entered a new period of susceptibility to recessions in the 1970s. The fiscal and monetary contribution to the money supply coincided with an attempt to deal with a weakening of the whole system that made possible struggles among different economic actors to utilize the willingness of the authorities to increase the money supply, to compete with each other through price increases.

Rail: I’d like to ask you what you make of the idea of a wage-price spiral.

Mattick: As was pointed out long ago by Keynes, you can lower wages and transfer income from the working class to entrepreneurs by raising the prices of consumer goods. If prices go up by five percent it takes a while to catch on, as opposed to when you say, we're lowering your wage by five percent. If you lower wages beyond the level that people are willing to put up with, then they will demand higher wages. For example, in the United States, the minimum wage is 7 dollars and 25 cents, but you can't live on that. You can't pay rent and buy food. Now employers have to pay 12 dollars or maybe in some places 15 dollars. So the wage has to go up as the prices in general go up. But it always goes up more slowly because you can raise the price of eggs on Monday and you can raise it again on Tuesday. But to raise wages you probably have to go on strike, or not show up for work. So there is a spiral. Eventually wages have to go up or people will starve to death, but the wages go up more slowly than other prices. Yet capitalists always blame the increase in prices on wages. They say if it weren't for the workers demanding more money, we wouldn't have to raise our prices.

Rail: Doesn’t competition force companies to try to offer their products at a low price to maximize market share?

Mattick: Something like this was largely true for the beginning of capitalism and through the nineteenth century, and this produced a generally deflationary trend. Over time, prices fell, reflecting the increase in the productivity of labor due to the mechanization and organization of the labor process that was achieved by capitalist industrialization. But this has changed radically since the 1930s.

There is still price competition. For example, there might be ten different companies that make parts for automobiles and they compete with each other to provide the parts more cheaply. Today, because of economies of scale, Chinese solar panels are cheaper than solar panels made anywhere else in the world. Another example would be Amazon, which lowered its prices to such an extreme degree that it made no profit at all for five years in order to establish a quasi-monopoly position in the shipping of goods. But mostly companies don't do this and can't do this. Some companies which have tried to copy the Amazon strategy like Uber and WeWork, have made no money whatsoever; WeWork went bankrupt this year. In the United States sixteen percent of corporations make zero profit. They simply exist because people are constantly giving them more loans, hoping that maybe someday they will make some money. So-called zombie corporations are also very big in China now. The Chinese zombies are kept alive by the constant infusion of money from the state banking system.

But firms which are in a position to raise prices raise them. For example, there are three or four companies that control the world's food supply. There are a very small number of car companies and a very small number of oil companies. Because everybody needs oil, the oil companies can just get together and decide what the price is going to be. But something like that happens in all of the areas which are extremely concentrated, areas that are central to production, like steel, ship-building, or the transportation of goods. Companies have learned to compete by raising prices or by simply not allowing them to fall. Sometimes this is organized with the help of the state, as in agriculture. The state subsidizes agricultural producers, so you have a kind of tax on the whole system which goes to agricultural producers in order to keep them producing food at all, because otherwise the price of food would be so low that they know nobody would bother to produce it. Then, of course, society would come to an end.

If you raise the price of oil, then the price of transportation has to go up. Any company that uses trucks or boats to move their goods, they then have to raise their prices, too. So there has been, since the 1940s, a general tendency for the price level to rise all over the world, the opposite of what happened in the course of the nineteenth century when there was a general tendency of prices to fall. This is a real change in the operation of the system.

As prices rise, the value of money—what a unit of currency can buy—falls. So more money must be provided, in the form of government-created money or bank-created credit, to make possible the circulation of goods at higher prices. This supports the illusion of the quantity theory, that the quantity of money causes the price level to rise. But in fact it is the other way around.

Rail: What you seem to be saying about price formation seems to me a very far-reaching claim. Market competition by cost-cutting and lowering prices is a core mechanism of capitalism and you’re saying that it’s not operating anymore. I have a problem with this thesis. I mean, even if you only have three or four companies left, let's say in aviation, like with Airbus and Boeing, they still compete for contracts and they have to cut costs. From a class perspective, even if there are only two companies left, both of them still have this pressure to squeeze their workforce and make them work harder and for the lowest possible wages in order to outcompete the other participant in this specific sector. I think we can see this in the electronics sector. Computers and so on became much cheaper because companies were competing for market shares. You seem to be claiming that this mechanism of competition and cost-cutting and price formation is not valid anymore.

Aren't you basically saying that firms can decide themselves what prices they want and then that's how market prices are created? The way you claim that companies set prices, again, leaves me hesitant because I believe that they can't just raise prices arbitrarily because they're in a state of competition. Even if there's an oligopolistic situation, that's still a situation of competition and it still means that cost-cutting and lowering prices is a very good competitive strategy.

Mattick: Electronics provide an interesting example. During the eighties, the prices of cellphones fell dramatically. But since the first iPhone in 2007 the price of smartphones has risen steadily, with the two best-selling ones being the most expensive.

I'm not saying that companies can set whatever price they want. The oil companies, for instance, decided for a while that they're not going to drill any more wells and closed down refineries to keep the oil price high. But because the economy is slowing down, they still can't charge 150 dollars for a barrel of oil—the buyers can’t pay that because they can’t just pass on the price to their customers. They could produce twice as much oil and lower the price to 30 dollars a barrel. But they don't, they produce less oil. So they get as much as they can possibly get. In 2019, they were able to get 60 dollars a barrel. In 2020, it had to go down to 48 dollars a barrel and in 2022 they got it back up to 120 dollars a barrel. Now it’s below 80 dollars. They're constantly trying to make it as high as possible, given all the other things that companies and people have to spend money on.

So it’s not like the capitalists can just freely set a price. But you can also compete by raising prices and not just by lowering them. You get the money, someone else doesn’t. The great advantage is that you can raise prices without investing in more production. You don't have to hire workers. If you doubled the supply of oil, you would make less money. So they raise the price by 10 dollars a barrel instead of drilling a new well. And that kind of pricing is the basis of this fifty or sixty years of inflation.

Everyone agrees, of course, that wages should be as low as possible. The way this works out in different periods can be quite different. For example, earlier in this century, after 2008, it was simply not possible to raise food prices very high, but it was possible to raise the prices for medical care, for university tuition, or for real estate. So where it was possible, firms raised their prices. During the COVID lockdowns, there was a general collapse of the world economy and to deal with it an enormous amount of money was pumped into the system, mostly given to businesses, but also handed out to individuals. And when it was decided that the economy had to start working again, people actually had a certain amount of cash which they hadn't been able to spend for a while. So then you had a short moment in which people began to buy stuff again, and that provided a situation in which the producers of those goods could raise their prices. But if you look at the previous ten years when there was supposedly no inflation, you have an incredible increase in the price of stocks and bonds, gold, art, and real estate. It's just that people who were buying cars and television sets and diapers didn't have a lot of extra money, but the people buying stocks and bonds, gold, and art did, so that's where the prices went up. It’s too simple to say that there was no inflation until 2021, and then suddenly it mysteriously appeared. There was actually an enormous inflation, just not for everyday goods, but in the cost of university, drugs, housing, stocks, bonds, and gold. It partly depends on who at any given moment has access to money and who at the same time is in a position to raise prices.

Rail: One problem I had when I read your book was the relationship between long-term trends and this current inflation, because obviously you're right that there's been a certain amount of inflation throughout the postwar period. But then again, there are periods like the 1970s with extreme inflation in most developed capitalist countries, followed by the 1980s, 1990s, and 2000s with very low inflation. So: what is the relation between long-term trends and this most recent hike in inflation? What’s wrong with referring to specific contingent factors that explain the inflation?

I get the impression that you underestimate the gravity of the disruption of supply chains and of all the other effects of the pandemic and of the war in Ukraine, though I think the pandemic is much more important. It seems like the only way that the supply chain crunches and all that enters into the picture in your account is in the sense that because of the pandemic, people for a certain amount of time had more money to spend, so companies could raise prices. In that way, you link the current inflation to a long-term trend, like the decline of profitability. My own very personal experience is different. For example, when I tried to buy a bicycle last summer, I felt like a citizen of the old GDR waiting for a car or an apartment because it took them three months to get me a bike. It was due to supply chains breaking down.

Mattick: Of course, it's true that there were real supply chain disruptions. When you have a general collapse in business, as during the pandemic, then suddenly you no longer have as many ships going back and forth and you don't have as many parts. However, before you knew it, there were too many ships and the price of shipping fell by fifty percent over the last year after it went up very fast. They have had to cancel orders for new ships because they don’t need them anymore. In the United States you now have oversupply in stores. They have sales everywhere because they have so much stuff that they can’t sell to anybody. The Russians were prevented from selling their gas to the Germans. All you have to do is blow up the pipeline, but then they have to buy gas from somewhere else. Now American gas producers are selling gas to the Germans and then the Russian gas is going to go somewhere else. It will go to India or it will go to Turkey. All this gets rearranged. These very concrete situations don't explain general tendencies and trends. The general tendency to an inflationary economy, which we have had now throughout the second half of the twentieth century, and which is quite the opposite of what existed in capitalism for the first half of its existence, suggests that there is some fundamental change in capitalism since the Great Depression.

The enormous destruction of capital value in the Depression and even the physical destruction of capital goods in the Second World War itself made possible a new upswing, although one that was not capable of achieving high enough levels of employment for the ruling class to feel confident and sure that there would not be social movements of the kind that they had experienced in the 1930s all over the world. So even during the prosperity period of the 1950s and early 1960s, there was a tendency for the government to supplement the efforts of the private capitalist economy through government spending and the borrowing of money and its distribution either to selected firms or (more in Europe than in the United States) in the form of welfare payments, transfer payments to the population to alleviate the tendencies towards immiseration which still existed even in the period of prosperity. When the prosperity came to an end in the 1970s, the decision was made all over the world not to allow the earlier pattern of depression as the kind of healing moment that overcomes the tendency towards insufficient profitability to occur but instead to supplement the weakening private economy with a constantly increasing amount of government borrowing and spending.

The problem with this is that even though it feeds people and gives them jobs, it does not actually improve the profitability of the system. What we have seen from the breakdown in the 1970s to the present is a slowing rate of growth and a slowing rate of investment. And that means that there is more and more pressure on each individual capitalist firm to maintain its cash flow by extracting money from everybody else. That's to say, if you wanted to compete by lowering prices, you would have to lower your costs. To lower your costs, you now have to invest on a gigantic scale. That can be done in particular areas. For example, you mentioned electronics and in particular the development of digital devices. It's true that if you look at the very rapid development of the computer industry, the productivity of labor in electronics and computer production developed very, very quickly, although it may have reached some kind of limit now. For example, I think the Lordstown factory, which was the most advanced automobile factory in the world when General Motors created it around 1970, cost 3 billion dollars. Now, to make one small computer chip fabrication plant costs 35 billion dollars. The amount of capital investment necessary in order to increase the productivity of labor is now so gigantic that they simply can't do it on a large scale, especially because the existing rate of return on investment has become rather low.

Economists complain about this from morning to night. In fact, they were just complaining about it again in Jackson Hole at the meeting of the world's central bankers. The rates of investment are very, very low in the whole world. There was a burst in productivity in the 1980s because of the development of electronics and you also had a certain amount of robotification in older forms of production like automobiles. And you had, of course, a cheapening of production by moving the production facilities to lower-wage areas. But there isn't that much labor involved in these products, like computer chips or iPhones. It's mostly done by machines now

You would not only need to invest enormous amounts to increase productivity above what it is now, but you would end up destroying the value of the existing production systems. Thus, for example, to make a green economy you would have to get rid of all those production facilities which are based on the use of fossil fuels, which is almost everything that exists because the non-fossil fuel energy sector is extremely small. That means you would just be throwing away 60 or 70% of the capital investment of the world's corporations.

You are right to suggest that the decline of price-cutting competition contradicts the traditional logic of capitalism. I would put it this way: capitalism’s formerly normal functioning is coming to a standstill. It could take a long time and will certainly be very unpleasant, but we are living through the beginning of the end of this social system. It had high points in the nineteenth century and in the mid-twentieth, but it is not progressing anymore. So, now you have a struggle among the different corporations to get control of as much as possible of the money which is created in the form of credit by the banking system and to push off the costs of this credit-based expansion on other firms.

Rail: So the Ukraine war and conjunctural changes in the markets and so on all contribute to the tendency to inflation. Does this mean inflation will go away again? To the extent that you're willing to make a prediction, what's your take? Do you believe that inflation is receding now? Do you believe that things will stabilize, or are we entering a period of general double-digit inflation in the developed countries?

Mattick: It has already moderated, for several reasons. I’ll start with the concrete. During the COVID period, the government handed out small amounts of money to people. So then when people had to go back to work and when production started up again, people spent that money. That made it possible for companies that were selling goods that people wanted to buy to raise the prices, but now that money is gone. So people are beginning to reach the limit of how much they can pay for a dozen eggs or how much they can pay for a car or how much they can pay for a television. So certain things which are a little more luxurious, like new cars or recreational vehicles, aren’t being bought in large numbers anymore. People have to buy second-hand cars. In the United States, people didn't have to pay their college debts for two years and now they do have to pay the debts again. So, now they have less money to buy food or medicine or to rent an apartment. But that leads us to a more general issue.

We're entering into a continuation of the downturn of 2020, which everybody describes as a COVID recession. It's true that the decision was made to stop the production and circulation of commodities, but the economy was already slowing down radically before that. If they hadn't done it on purpose, it would have happened anyway. And we are now returning to this slowdown, which you could say was interrupted by the enormous throwing of money by governments into the system. The problem is that the profitability of capital is still very low and the system is not expanding. For example, China, which started this process very late, was able ten years ago to manufacture a pseudo-prosperity by creating a real estate bubble, just like they did in Japan in 1980 and in the United States in 2007. It looked like everybody was getting rich and the economy was taking off and everything was great. But actually they were just providing credit so people could sell houses to each other.

And eventually the whole thing fell apart. It's not just something that's happening in China. The Chinese construction industry is collapsing, so Germany can't sell heavy machinery to China and Chinese businesspeople can't buy as many Mercedes as they used to buy. So you also have a contraction of the German economy happening at the same time. That has effects in the United States as well. There really is a global system which the economists forget when they're trying to analyze what's going on. There are problems in China, in the Eurozone, in the United States, or in Argentina, but, actually, it's one big system and it is not doing very well. Whoever can still make money by raising prices will do it, but others won’t be able to. They will not make a lot of money and the decline of the general economy will continue.

It's true that if you raise the mortgage rate, it's harder for people to buy houses, but the main reasons it's hard for people to buy houses is that they don't have a lot of money and that venture capitalists have bought up the world's housing stock and it has now become very expensive. And that, too, is because nobody knows what to do with their money other than to speculate on such things as buying houses because they're not even interested in drilling new oil wells.

Overall, you can see that apart from particular opportunities in one sector or another, there is a general decline in the economy. And that means that unlimited price raising also reaches a limit. The limit to the ability to overcome the decline in profitability through inflation has been reached just like it was reached in 1980 when the world went into a global recession. You couldn't just raise prices everywhere the way that you could in 1970 when governments all over the world were pouring money into the economy in order to keep it afloat.

Predictions are always very difficult, especially about the future, as is well known. But there are two elements which are relevant to trying to guess as to what will happen with respect to inflation. One is that we are well into a period of global economic slowdown. This suggests that inflation rates will remain moderate, not disappear, but will be more like in the 1980s than like in the 1970s. By the same token, the system is in deep trouble at the moment, particularly banks, and this will become worse because of the commercial mortgage crisis in the major cities which is going to affect regional, local, and also some larger banks very severely. This raises the possibility that the government will be forced, as they have been doing so far, to increase the amount of credit available to the financial system, which will in the short run provide a basis for some kind of stabilization of the economic situation and allow competitive inflation to continue. It's hard to say because you don't know to what extent they will continue to pour money into the system which allows competitive inflation to go on, or if they are really beginning to feel, as some people are saying, that they can't keep this up indefinitely and that they want to dial it back.

If they do we will enter into a period of more open depression and that will generally have an effect of limiting inflation and maybe even, as it has already in China, opening into a period of deflation. I don't think this will happen, because I think they will actually continue to increase deficit spending and increase the national debts and pour more money into the system because they are really afraid of what would happen if they allowed a full-scale depression to develop. That's not a very solid prediction.

Rail I just wanted to ask if there are different forms of inflation. For example, Turkey or Argentina, don't we have to look at them in a different way than, for example, the inflation we have seen now in Europe or in the US?

Mattick: A very good point. In Argentina, for example, you have triple-digit inflation because you have several different money systems. Money is borrowed in dollars but made in the country in pesos. The value of the Argentine (or Turkish) currency is measured by how many American dollars it's worth. And if you print a lot of Argentine currency, then you have created too much relative to the amount of dollars that goods are worth and we get this old-fashioned kind of inflation. It's like the old inflation of the 1920s or the inflation of the eighteenth and early nineteenth centuries, when a national currency was devalued by simply printing large amounts of it relative to the gold that was the actual money commodity. The inflation of the currency of the most powerful country, which is central to the whole value production system, is different from inflation of less significant national currencies.

Rail: You say central bankers and policymakers react to this inflation in a way that's in accordance with their ideological worldview. So basically, they want to raise interest rates to depress demand and hence bring down prices. Keynesians argue that this only makes sense in an overheated economy, as it did with Volcker back in the early ’80s, so it won't work today. Robert Brenner goes so far as to argue that the Fed and other central banks could choose a different path, that rather than depressing demand would mean expanding supply. He is basically asking for governments to enlarge the state sector and directly provide goods. What do you think about policy advisors from the left who believe the state should rather enhance production than suppress demand by raising interest rates?

Mattick: Brenner is proposing a move in the direction of state capitalism, the preservation of wage labor by the stratification of capital. But there is no serious social or political force that wants the expansion of state control over the economy. In reality, the state is not even able to rebuild highways and bridges. It can't ensure public health. It can’t provide enough munitions for the Ukraine army to fight the Russians. The aeronautics safety administration is falling apart. The state is not able to do anything which is not in the interests of private capital. Climate change, like air safety, is a threat to capital, but it's a threat to capital in general, not to individual capitalists, so they can't do anything about it. They're producing more CO₂ than they ever did in history. A state which is this subordinate to the interests of the largest corporations—which are the oil corporations and the automobile corporations and the largest banks—this state is not going to take over the economy in order to improve the living standard of the population or even to save the Earth from burning up. I would say it is less utopian to call for the abolition of wage labor than to make these kinds of left-Keynesian political demands. There is simply no political force which has the slightest interest in this, just some old Trotskyist professors who have the idea that social democracy is still a viable position. It's not a viable position.