One of the implications of this the tendency for an accelerated hollowing-out and destruction of state institutions. If you use the state to transfer a lot of net income from the working class to the employing class, with Keynesian instruments, plus run up enormous financial debts at the same time, plus you reduce taxation, then, in the end, no strong motive may remain for any social class to sort out the financial problems of the state (except the public servants and certain dependents on the state, who retain a definite interest in balancing the books of public finance) and then a logic develops where you just privatise even more, because you cannot get out of your fiscal crisis in any other way, i.e. the whole thing snowballs (this is called the "selling off the family silver" strategy).
The economic logic of that is that, if you privatise, then 1) you earn quick state revenue from the sale. 2) you reduce state spending and state costs at the same time. 3) private enterprise gets an additional investment opportunity. 4) you reduce the effective responsibility of the state to citizens, therefore also future costs for which you are no longer responsible. 5) the total tax take may increase, in proportion to public spending, despite higher unemployment, without disadvantaging employers in any way. 6) high-educated public servants are often more capable of getting themselves out of unemployment, even if it means a job for less pay at a lower level. 5) these factors have a flow-on effect on the state apparatus which remains, because they force a sharper focus on the core business of the state, and impose more financial discipline (a ""privatisation dynamic" sets in among interdependent state institutions). Thus, privatisation from this point of view can solve a lot of budgetary problems very quick, but at the expense of being less able to do anything about societal problems, because you have less means available to intervene in them. But the timing and time factor is very important here, what is the speed at which the process develops ? I recall how, in the 1970s, economists talked about "economic development strategies" but in the course of the 1980s, they went out of fashion. Why ? Because the market mechanism is supposed to sort out all of those sorts of issues, and therefore you didn't really need any macro strategy, other than that which ensures social stability, a stable currency and so on. In that case, the state no longer requires a positive, pro-reactive strategy for balanced economic development, because prices are supposed to sort that one out. This type of thing provides tremendous opportunities for heterodox economists, who can justifiably claim that the government is only engaging in a negative haemorraging downwards rather than providing a positive societal alternative. Plus, the fiscal crisis of the state generates a new crop of smart radicals. Just because Marx didn't write about public finance doesn't mean that socialists couldn't do it now. It is true, the economists which come from the more shitty leftwing traditions don't have any sophisticated political economy of bureaucracy, but nevertheless there's a lot of literature on the theory of it. J.
