Concluding Remarks
I. Concluding Remarks
It is to Marx’s great credit that he should have spelled out the superposition of cycles on an upward trend (MECW 37: 499; above, pp. 139, 143, 144, 158). Unfortunately, the rather casual attempts that he made to integrate trend and cycle are riddled with difficulties.
We recall from Chapter 4 that the analysis of the falling profit-rate trend runs in terms of rising organic composition and underconsumption, Marx focusing – in Malthusian fashion – on falling consumption by workers accompanied by falling (or low) consumption by capitalists engaged in an exaggerated drive to accumulate, with “self-expansion” of capital their only goal. Now the “ultimate reason” for crises is said to be underconsumption. But this can only be understood as a very loose proposition; for when we examined the texts devoted to the cycle we found the primary motive for investment attributed to capitalists to be the promise of high returns, the underconsumptionist element falling away entirely. For Marx insists on high spending prior to the upper turning point not only by workers but also by capitalists whose “[consumption] expenditures increase together with their growing income” (above, p. 149). If investment rises with the promise of high
31 Explanation of persistent fluctuations in terms of an echo of an original boom is ascribed also to Robertson 1915: 36–45, Kaldor 1954: 56–61.
161 returns, so too does consumption, the posited “ultimate reason” disappearing
I. Concluding Remarks
from sight. All that remains of the effort to link trend and cycle is an argument encountered (above, pp. 140–1) – it resembles that of J. S. Mill – representing the falling profit-rate trend as responsible for bursts of largely speculative investment.
The “echo effect” discussed in Section H is of the highest technical interest with its insight into regular variations in innovatory investment as providing the key to the trade cycle. But this approach applies rather better to a stationary economy, for where net investment is involved the entire case is weakened (above, p. 158). Taking a broader view of Marx’s life-cycle analysis it is clear that there lacks not only a rationale for the implied regularity of technical progress (and resultant bursts of replacement investment responsible for excess of renewals over amortization funds) to which the 10-year cycle is formally attributed, but also any causal linkage between the crisis and the average life cycle. In fact, Marx nowhere relates his discussion to his other accounts of the cycle. Were we to seek to do so on his behalf
a sequence might be suggested whereby the postulated regular bursts of innovatory replacement investment generates crises by way of their depressing effect upon the profit rate – having in mind not only rising technical organic composition but rising materials’ prices and rising wage rates under pressure of the investment program – and the encouragement to engage in speculative ventures with its consequence in crisis. But this supposes that Marx did intend a causal sequence running from investment to crisis. Unfortunately, the two assertions in the passages cited above from Capital 2 (pp. 159–60) – “Such premature renewals of factory equipment on
a rather large social scale are mainly enforced by catastrophes or crises” and “a crisis always forms the starting-point of large new investments” – entail a reverse sequence whereby it is the crisis that generates or encourages bursts of innovatory investment. For this sharp contrast I can suggest no resolution.
Finally, the requirement of inter- and intra-departmental balances discussed in Section G should be noted as introducing a potentially promising line for business- cycle research, though Marx himself made only a tentative exploration. This is how Leontief saw the matter (1966 [1938]: 76).
Parts
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» The Transformation of Values into Prices: Formal Analysis
» The Transformation and the Allocation Mechanism
» Competition Constrained: Land Scarcity and Firm Size
» On “Market Value” and Competition
» The Inverse Wage-Profit Relation and Profit-Rate Equalization
» Materials, the Luxury-Goods Sector, and the General Profit Rate
» The Rate of Surplus Value as Endogenous Variable
» More on Final Demand and Distribution
» Concluding Comment: The Baumol-Samuelson Exchange
» Setting the Stage: Stationary Reproduction as Circular-Flow Process
» Determinants of the Rate of Accumulation
» The “Simple Reproduction” Scheme
» The “Extended Reproduction” Scheme
» ARRANGEMENT CHANGED FOR PURPOSES OF ACCUMULATION:
» The Subsistence Wage and the Value of Labor Power
» The Falling Wage Trend and Population Growth
» The Industrial Reserve Army and Cyclical
» Inter-Sectoral Labor Movements
» Concluding Remarks: Objections to Malthus
» The Conditions for a Falling Rate of Profit
» Increasing Rate of Surplus Value and Cheapening of Constant Capital
» The Limited Impact of a Rising Rate of Surplus Value
» Implications of Differential Rates of Productivity Increase
» Technical Progress and the Falling Profit Rate: An Overview
» Concluding Comments: On the Significance of the Falling Profit Rate
» Trend and Cycle: Causal Mechanisms
» The Raw Material Constraint and Upper Turning Point
» The Labor Constraint and Upper Turning Point
» Inter- and Intra-Departmental Imbalance
» Wage-Rate and Profit-Rate Trends
» The Private-Property System: Ricardo as bˆete noire
» On Aggregate Demand and “Overproduction”
» In Partial Defense of Proudhon
» Objections to Friedrich List
» Allocation, Cost Price, and the Labor Theory
» On “Labor Power” and the Source of Surplus Value
» The Inverse Wage-Profit Relation
» More on the Real-Wage Trend: Increasing Organic Composition,
» Profit-Rate Determination: “Competition of Capitals”
» Labor and Free Trade: On Marx’s Ricardian bonˆa fides
» Surplus Value and the Transition to Growth
» Elements of a Growth Model: Productivity Increase, Population
» A Marxian “Reply” to B¨ohm-Bawerk
» Surplus Value: Matters of Timing and Indebtedness
» On Ricardo and Surplus Value: An Excursus
» Capital Turnover: A Circular-Flow Process
» Obstacles to Value Realization
» On the Law of Markets and Overproduction Literature
» On Working-Class Consumption
» Profit-Rate Equalization and the Transformation
» The Transformation Aborted: Absolute Rent and the Priority
» The Falling Rate of Profit and Its Significance
» Materials, the Luxury Sector, and the General Profit Rate
» Commercial Capital and the Surplus-Value Doctrine
» Conditions for “Continuous” Accumulation
» Aggregate Demand Constraints
» Sources of Cyclical Instability
» The Recovery Process: Corrective Mechanisims
» On the “Overproduction” Literature
» The “Wages Fund” Doctrine Rejected: Synchronized
» Labor Demand and Technical Change
» Labor Supply: Population Growth and the “Reserve Army”
» The Mechanics of Population Growth and the Falling Wage Trend
» The Economic Role of Inequality
» The Allocative Role of the Free Market vs. Central Control
» Preliminaries: Industrial Organization
» The Supervisory and Allocative Functions
» Science and the Sources of New Technology
» On “Profit of Enterprise” in Capital 3
» On Joint-Stock Organization and Limited Liability
» Marx’s “Revisionism”: The 1860s and 1870s
» Marx and the Classical Canon: The Theory of Value
» Marx and the Classical Canon: The Trend Path of the Factor Returns
» Epilogue: On Engels and the “Closure” of Marx’s System
» Objections to Smithian National-Income Accounting
» On Differential Rent 1851–53
» Contemporary Commentary on Limited Liability
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