by
David Harvey
[...] capitalists, as we earlier saw, have a choice as to what they reinvest in: they can reinvest in the expansion of production or they can use their wealth to buy up assets, such as stocks and shares, property, art objects or shares in some speculative enterprise such as a private equity company, a hedge fund or some other financial instrument from which they can realise capital gains. In this case their reinvestments play no role in bolstering effective demand.
Something to think about: if the argument against raising marginal tax rates for high incomes is that these people will thus be less incentivised to "work more" and thus earn more, doesn't the same reasoning apply to falling profit rates? so they're less incentivised to reinvest productively if the rate of profit goes down, or even if it just doesn't go up enough? esp since they don't "need" to reinvest