Tuesday, July 18, 2017

Nick Johnson — Production and realization of surplus value – Marxists, Keynesians and others

Many Marxists follow the man himself by emphasising that capitalism is a profit-driven system. By contrast, Keynesians, particularly the more radical post-Keynesians, see the system as demand-driven and therefore responsive to a policy of demand-expansion during a slowdown or recession.…

In sum then, I find the above quote from Marx on the contradiction between the production and realization of surplus value and profit very helpful. It offers tremendous insight into the dynamics of capitalism, which has given rise to periods of growth and crisis throughout its history. 
If Marx is right, different kinds of crisis may require different solutions: if the production of surplus value and profitability is insufficient, then some kind of restructuring is required; if its realization is weak due to inadequate demand, then policies which boost investment or consumption may be appropriate.
The Political Economy of Development

4 comments:

Dan Lynch said...

Nick said policies which expand demand will have little effect on growth and, as seen in the 1970s, can give rise to a combination of inflation, slowing growth and rising unemployment, known as stagflation.

Except 70's inflation was caused by oil, and 70's unemployment was caused by austerity and monetary policy. It would be nice if economists understood inflation.

Matt Franko said...

It would be nice if economics would finally ditch inflation... nobody else changes their units.,,. "Well.... that is in 2005 amperes...". Whaaaaaaatttttt???

Tom Hickey said...

It would be nice if economics would finally ditch inflation... nobody else changes their units.,,. "Well.... that is in 2005 amperes...". Whaaaaaaatttttt???

Right. They act like these are actual measurements.

Moreover, using inflation rate, which is an economic indicator as a policy target violates Goodhart's Law.

Neil Wilson said...

It would be nice if Marxists stopped thinking in static terms and terms of Gold coins.

Accumulation of capital, aka keeping score, is what fiat currency is there for.

Let them count their numbers on a spreadsheet. The rest of us are interested in distribution of actual resources, not pretend ones.