If I may act like a typical American here and jump to the relevant results from the theoretical distinction between prod and unprod labor (for a fine intro see the appendix to Geoffrey Kay, The Economic Theory of The Working Class, already cited here by Rob S): the whole social democratic or left Keynesian program to ensure effective demand via govt spending is nothing but a panacea to accumulation crises. This was the conclusion that Mattick, Sydney Coontz, Mario Cogoy, and David Yaffe all had reached before Keynesianism went up in stagflationary ashes in the mid 70s. As I understand it (and Fabian's precise formulations would be most be most appreciated), they all applied that distinction between productive, commodity producing and unproductive, govt contracted labor to analyze the difference between effective demand from private capitalist investment and public spending.
To quote from an unpublished intro to Marxism by Mattick, circa mid 1960s:
"The faster rise of the national income relative to the national debt is usually demonstrated by comapring the respective quantitative data of both. This follows from the lack of distinction--notable in bourgeois economic theory--between private and public, profitable and non profitable production. Actually the growing national debt cannot be related to total income, as determined by both pubic and private production, but only to that part of the total which has not been injected into the economy by way of deficit spending. That part which has been injected falls out of the economy as a profit producing system. It yields income, but by being unprofitable, it yields no taxable income and can for that reason being considered as a compensatory factor vis a vis the national debt. The debt has to be paid out of taxes, that is out of the decreasing profitable part of production. Unless the national debt is actually recovered through additional income in the private sector of th eeconomy, that is, additional income apart from that injected inot the economy by govt deficit spending, the 'income' derived from the latter remains, as far as as capital is concerned, a govt expense. "IN bourgeois economic theory, the GNP, or the aggregate demand, is equal to the sum of consumption, investment, and government spending. Govt deficit spending, however is not part of the market demand, but a deliberate policy of producting beyond the actual market demand as determined by consumption, investmetns, and govt spending, in order to employed unused productive resources. This creates an 'effective demand' WHICH IS NOT SUCH IN A CAPITALISTIC SENSE. However, individual businessmen are not concerned with the nature of the effective demand which they supply. to them it makes no difference whether its stems from govt or from private spending. Likewise, the financiers do not care whether loans are made to private enterpreneurs or to govt, so long as the loans seems secure and yield a desired rate of interest. To the invidivual it makes no difference whether he is employed by the govt or private enterprise, whether he produces commodities for the market or for govt contracted production. In practice, no distinction is made between the public and the private sectyor of the economy, and in both all transactions are money trasactions, which veil the underlying social implications of these transactions. In the individual's view, govt induced production may be just as , or even more, lucrative than production for the market, and --unless repudiated--the accumulation of the national debt appears to him as the accumulation of private claims on the govt and as an equivalent to the accumulation of money and capital... "While this seems to be so, the steady rise of taxation and of the national debt implies a rise of taxable, that is, profitable production, which demands an increased taxation. The material equivalent of the debt, such as the construction of public improvements or the pursuit of war, cannot be recovered as income. The income derived from taxes must come from NEW production in the profit producing sector of the economy. But finding its source in this new production means that a greater share of the altter's profit must take on the form of taxes to cover current tax needs as well as the costs of the national debt. This could imply a reduction of profitability and therewith a further discouragement of private investments. And this, in turn would force the govt to extend its deficit spending. The only way of avoiding a situation wherein the decline of private investments leads to govt spending and the latter to a further decline of private investments, is that of increasing the profitability of capital through the increasing productivity of labor."
rnb