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).