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New Socialism

New Socialism

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Published by Mark Tutone
New Socialism is very relevant to our time.
New Socialism is very relevant to our time.

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Published by: Mark Tutone on Oct 20, 2008
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11/24/2012

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One question which arises from the above is whether interest should be paid
on the savings of the personal sector. Let us first examine the consequences
of a zero ‘nominal’ interest rate on such savings, so that people are able to
withdraw from the system over time exactly the cumulated sum of the labour
tokens which they have previously contributed. Note that as the productivity
of labour grows over time, and the labour content of specific goods falls, labour
tokens will in effect become ‘worth more’: there is a form of implicit interest on
labour-token savings. It is reasonable that people should be able to collect this
‘interest’ on their long-term saving, since their non-consumption makes possible
an accelerated accumulation of means of production which in turn helps to
bring about increased labour productivity, but there is no call for any additional
payment.2

In the classical, full-employment model of capitalism the function of interest
on savings is to induce a sufficient supply of saving in order to finance invest-
ment, but in the system we envisage investment is socialised and the basic source
of ‘funding’ for accumulation is taxation. To the extent that the retirement and

2

It is more debatable whether even this implicit interest should be available on short-term
savings in consumer deposits. The setting aside of tokens in such deposits will not, under
the scheme suggested above, make more than a marginal contribution to accumulation. To
remove the implicit interest, labour tokens in savings deposits would have to be devalued at
a rate equal to the growth rate of labour productivity. But insofar as the acquisition of these
deposits makes funds available for consumer credit, for which consumers are willing to pay
interest, there may be a case for the non-devaluation of labour tokens in saving deposits.

Tax policy

99

deposit/credit accounts run a current surplus, personal saving may make some
contribution to the ‘financing’ of accumulation, but this is secondary. There
is no need to encourage individual saving, since the basic social rate of ‘sav-
ing’ (that is, non-consumption) is decided democratically when the plan for
accumulation and taxation is drawn up.

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