A high level of debt in demand, profits are squeezed, but if workers' incomes are kept down to boost profits, those profits cannot be realised because of lack of sales.
One possible solution to this conflict is to increase debt. In this way demand can be generated without wages eating into profits, at least in the short-term. But this can only be a temporary respite from the fundamental problems facing capitalism.
Financial capital, which carries out the lending, eventually requires its own profit on that lending. At that point either wages have to rise to allow households to pay back their debt, squeezing profits once again, or households have to meet their debt obligations without an increase in income, in which case demand falls back.
It is no accident, then, that those imperialist economies which have relied most heavily on low wages in the last few decades, the USA and Britain, are also those with the highest levels of household debt.
This borrowing can appear to resolve the underlying conflicts in the economy, as in the UK in the late 1980s and late 1990s and in the USA at the present time.
But this resolution cannot last, and in fact the reliance on debt makes the eventual adjustments sharper and more destabilising. The British recession of the early 1990s is the clearest recent example of this
ncreasingly there seem to be impor-