Now Stumbling and Mumbling has taken up the debate:
I recommend the whole posting. Does anyone want to stand up for Keynes?
I’m reminded of James O’Connor’s The Fiscal Crisis of the State, written in 1973.
State spending in a capitalist society, he said, must fulfil two functions: to raise profits, for example by maintaining aggregate demand; and to legitimate the system by ameliorating inequalities. But, he said, these forces for higher spending increased faster than people’s willingness to pay tax. The upshot was a tendency to bigger budget deficits, even in decent economic times.
You could argue that New Labour has been trapped by just these forces.