I don't think Marx did understand subjective value. On the other hand, I think he would have agreed that there is accumulation of capital. But he would have argued that there will still be a crisis because that's separate from profit.
Without entrepreneurship all businesses work in approximately the same way. To Marxists business managing is seen as finding the secrets of other businesses so they can be copied and finding ways to keep pay low. So, all businesses invest in capital if they need to, and it doesn't differentiate them. A Marxist would say that a business that fails to invest will be driven out of business and the remaining businesses will make up the market. What differentiates businesses, if anything, is the rate of exploitation of labour, which is determined by the difference between labour and labour power. If there is no net difference then profit tends towards zero, and we have the "crisis of capitalism". So, that crisis can occur while capital is being accumulated as society is becoming richer.
The C-M-C and M-C-M' formulations were simple but effective devices that demonstrated the importance of the non-neutrality of money - J.M. Keynes acknowledges that Karl Marx was on the right track, but criticises him for not expanding on it in an earlier draft of The General Theory.
(Of course, J.M. Keynes's acknowledgement of Karl Marx being on the right track in no way means that he was endorsing Marxism or the Soviet Union - quite far from it. There's a reason Karl Marx is named with Silvio Gesell and Major Douglas as part of the "underworld" in economics...despite J.M. Keynes recognising that they had a kernel of truth to their arguments, it wasn't exactly a compliment on J.M. Keynes's part.)
I don't think Marx did understand subjective value. On the other hand, I think he would have agreed that there is accumulation of capital. But he would have argued that there will still be a crisis because that's separate from profit.
ReplyDeleteWithout entrepreneurship all businesses work in approximately the same way. To Marxists business managing is seen as finding the secrets of other businesses so they can be copied and finding ways to keep pay low. So, all businesses invest in capital if they need to, and it doesn't differentiate them. A Marxist would say that a business that fails to invest will be driven out of business and the remaining businesses will make up the market. What differentiates businesses, if anything, is the rate of exploitation of labour, which is determined by the difference between labour and labour power. If there is no net difference then profit tends towards zero, and we have the "crisis of capitalism". So, that crisis can occur while capital is being accumulated as society is becoming richer.
I don't believe any of that, of course.
The C-M-C and M-C-M' formulations were simple but effective devices that demonstrated the importance of the non-neutrality of money - J.M. Keynes acknowledges that Karl Marx was on the right track, but criticises him for not expanding on it in an earlier draft of The General Theory.
ReplyDelete(Of course, J.M. Keynes's acknowledgement of Karl Marx being on the right track in no way means that he was endorsing Marxism or the Soviet Union - quite far from it. There's a reason Karl Marx is named with Silvio Gesell and Major Douglas as part of the "underworld" in economics...despite J.M. Keynes recognising that they had a kernel of truth to their arguments, it wasn't exactly a compliment on J.M. Keynes's part.)