New Ideas in the Tradition of Galbraith
New Directions in Modern Economics series
Edited by Blandine Laperche, James K. Galbraith and Dimitri Uzunidis
Chapter 16: What Has Happened to the Public Sector? Marketization and Financial Logic
Blandine Laperche and Dimitri Uzunidis 1. INTRODUCTION For more than 30 years now, capitalist economies, especially those with a high level of scientific, technical, industrial and service development, have been groping their way. The model of growth which emerged after the Second World War and created many financially sound markets was characteristic in that it included in the same tendency, the strategy of private profit making, the spreading of material welfare and the role of the state. Big private and public corporations (often in a monopolistic position) as well as large numbers of employees profited by this impetus given by state supervision. As a matter of fact, the resulting mass consumption of more or less undifferentiated goods was accompanied with a strong demand for services of similar standard: health, education, transport and communication, water and electricity. Such a model, inscribed in the Keynesian tradition, is only viable in a period of shortage or economic reconstruction: the economic growth (i.e. the expansion of solvent demand: opening and expansion of markets) is so strong then that the profit made by organizations is considered by their managers as sufficient to cover present and anticipated production costs. In this context, investment takes the economy towards a virtuous cycle characterized by enlarged production basis, the creation of jobs, income, savings and an increase in consumption. At the same time, the state drains part of the capital and earned income in order (a) to maintain market organization and dynamics through public expenditure and other direct and...
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