> On the narrow question of discourse around "saving capitalism," it should be
> pointed out that capitalism is a word with a lot of positive valence in many
> quarters nowadays - sort of like "democracy." So even if capitalists had no
> social power, it shouldn't be surprising that politicians would talk openly
> this way.
Yeah - this is precisely why socialism always works with a political handicap. It's not that the ideological attachment to 'capitalism' is irrational - most people have an entirely rational interest in the smooth operation of the system if the alternative is breakdown. So the left is constrained by the need to work within the bounds of reform that will not be dysfunctional, or to go the whole hog and somehow build support for a leap into something completely different. There isn't a middle ground, and the political system quickly de-legitimates reform that becomes dysfunctional.
> It's dysfunctional for profits, but is it systemically dysfunctional? If the
> "system" in question is pure market-capitalist-type social relations, large
> (but not catastrophic) persistent output gaps seem to be system-reinforcing,
> at least so far.
Well, I guess you're right that the system can survive with a fair amount of unemployment. I'd say it is certainly politically destabilising though. It seems that unemployment that can be pinned to policy may generate more of a counterreaction (eg the European austerity) than unemployment that seems to come naturally out of a crisis, with no-one in particular to blame. In any case, I think business in general would prefer to be operating with a zero output gap (by definition, the highest non-inflationary rate of employment).
Mike Beggs