|I WOULD CAUTION against selling social democratic management as a Pareto improvement. Confining ourselves to Pareto improvements puts policy based on class interests antagonistic to the capitalist class off the table.
Economists have killed the left not only with free market ideology but also with an attempt to confine politics to Pareto improvements.
In a globalized economy in which a stimulus could look out, and
in which global capital markets could punish a country running large deficits;
and in which rising wages could led to a capital strike or capital flight.
The state has a good reasons for right wing demand management.
Moreover, I don't think it's the inflation from full employment that the state fears.
Many stronger capitalists favor a zero inflation or even deflationary environment.
Weaker capitals are weakened and sold at a song to stronger ones
And it encourages the adoption of technologies that cut costs faster than prices are falling.
Lastly of course the capitalist class does not want to be taxed to pay back debt incurred from deficit
financing today, especially on behalf of a lot poor colored people.
I don't think there is a clear argument that social democratic management is more clearly in the interests of the capitalist class than
right wing management.