Comparison of Marx's macro and with Keynes's macro.
Michael Roberts Blog — blogging from a marxist economistMarx’s reproduction schema
Michael Roberts
Comparison of Marx's macro and with Keynes's macro.
Michael Roberts Blog — blogging from a marxist economist
6 comments:
Roberts' Keynes is as usual a straw man here.
". . . for Marx, under capitalism, that investment growth depends on profitability, while in a post-capitalist economy, investment depends on state planning decisions. Keynes makes no such distinction and thus ignores the real cause of crises in capitalism."
Keynes of course made such a distinction, that was the heart of his analysis and recommendations. G is not I. And of course he knew private investment depends on profitability.
The tendency of Roberts & many such "Marxists" - as well as "Keynesians" or "Whoeverists" is to just ascribe what they think right at the moment to their chosen hero and wrong to the chosen opponent. With little regard for historical fact. But it's usually not quite this nonsensically false.
"The Engine which drives Enterprise is not Thrift, but profit." - "Treatise on Money" (1931), John Maynard Keynes
Yup, perfect, better than what I was thinking of.
Moreover, profit is the basis of "shareholder value" as the raison d'être of firms and the objective of management. Wall Street runs on this presumption based on quarterly reports.
Keynes did not agree with this view, although in its contemporary form it is subsequent to Keynes. Keynes did not hold a narrow view of profit expectation as the sole or even chief driver of investment. He held for example, that firms with a reputational stake also took stakeholder value into consideration rather than exclusively short-term profit maximization as firms matured.
"But more interesting than these is the trend of joint stock institutions, when they have reached a certain age and size, to approximate to the status of public corporations rather than that of individualistic private enterprise. One of the most interesting and unnoticed developments of recent decades has been the tendency of big enterprise to socialise itself. A point arrives in the growth of a big institution - particularly a big railway or big public utility enterprise, but also a big bank or a big insurance company - at which the owners of the capital, i.e. its shareholders, are almost entirely dissociated from the management, with the result that the direct personal interest of the latter in the making of great profit becomes quite secondary. When this stage is reached, the general stability and reputation of the institution are the more considered by the management than the maximum of profit for the shareholders. The shareholders must be satisfied by conventionally adequate dividends; but once this is secured, the direct interest of the management often consists in avoiding criticism from the public and from the customers of the concern. This is particularly the case if their great size or semi-monopolistic position renders them conspicuous in the public eye and vulnerable to public attack."
See J. M. Keynes, The end of laissez-faire (1926), IV
But I guess that was back then. Things seem to have changed since. :o
Corporations earn their returns on equity after all costs, including the cost of social activities. The incidence falls on consumers in the form of higher prices for goods and services.
It's forced charity.
As an aside, it's not the corporations' fault. As the quote above shows, it's defensive in nature.
Keynes―Marx―Profit: The abysmal scientific failure of economics
Comment on Michael Roberts/Tom Hickey on ‘Marx’s reproduction schema’*
Michael Roberts summarizes: “… for Marx, under capitalism, … investment growth depends on profitability, …” and “for Marx, savings are profits because workers do not save, so there is a class aspect to his reproduction model.”
Tom Hickey cites Keynes: “The Engine which drives Enterprise is not Thrift, but profit.” (Treatise on Money, 1931)
OK folks, and what does profit depend on? The fact of the matter is that neither Marx nor Keynes had any idea of what profit is. And that is rather bad for any economist who claims to do science.#1, #2
The macroeconomic 3-sector Profit Law reads Q≡(G−T)+(I−S)+Yd.#3 This formula tell one, among many other important things, that monetary profit Q depends on investment I.#4 And there you have it: investment depends on profit, and profit depends on investment. In systems theory, this is called a positive feedback loop. And every half-wit knows by now that positive feedback is what destabilizes a system and eventually destroys it. The big insight about capitalism is that at its heart there is a positive feedback loop. And this explains the economic system's dynamic and crises.
How does MMT fit in? The Profit Law implies Public Deficit (G−T)>0 = Private Profit Q. Thus, the MMT policy of deficit-spending/money-creation is a free lunch for the Oligarchy. While investment i.e. a growing real capital stock is the life elixir of Early Capitalism, growing public debt is the life elixir of Late Capitalism.#5
This, then, is the scandal of 200+ years of economics. Economics is all in one: scientific failure and political fraud because Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism are mutually contradictory, axiomatically false, and materially/formally inconsistent, and ALL got profit wrong.
Because of this, economic policy guidance NEVER has had sound scientific foundations. It has ALWAYS been brain-dead agenda pushing of political clowns. Left-right-center does not matter. Time to bury Marx and Keynes and MMT and all the rest at the Flat-Earth-Cemetery.
Egmont Kakarot-Handtke
* Michael Roberts blog
https://thenextrecession.wordpress.com/2021/07/06/marxs-reproduction-schema/
#1 Cross-references Profit/Distribution
https://axecorg.blogspot.com/2015/03/profit-cross-references.html
#2 Wikipedia, economics, scientific knowledge, or political agenda pushing?
https://axecorg.blogspot.com/2020/06/wikipedia-economics-scientific.html
#3 Profit: The most powerful formula of economics
https://axecorg.blogspot.com/2021/05/profit-most-powerful-formula-of.html
#4 Squaring the Investment Cycle
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1911796
#5 The U.S. economy hangs on the state ventilator for its survival
https://axecorg.blogspot.com/2020/07/the-us-economy-hangs-on-state.html
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