By Claudio Sardoni
In the midst of the present international fiscal quandary, many declare there's a necessity to come back to the Marxian and Keynesian traditions with a purpose to higher comprehend the dynamics of marketplace economies. This booklet is a crucial step in that path. It provides a severe exam of the rules of macroeconomics as built within the traditions of Marx, Keynes and Kalecki, that are contrasted with the present mainstream. specific realization is given to the matter of industry varieties and their relevance for macroeconomics.
Professional economists and postgraduate scholars in economics, specifically these excited about macroeconomics and the background of monetary proposal within the twentieth century, will locate this insightful source beneficial. This ebook can be required analyzing for a wide share of the economics occupation who're disappointed with the mainstream.
Contents: Foreword Preface 1. creation 2. The Marxian thought of a financial financial system and the Critique of Say's legislations three. basic Overproduction Crises four. Keynes s Critique of Say s legislations five. Keynesian Underemployment Equilibria 6. A Critique of Keynes s Microfoundations 7. Kaleckian Macroeconomics: an summary eight. the matter of industry varieties in glossy Macroeconomics nine. Concluding feedback A. A Formalization of Marx s Schemes of replica B. results of salary alterations in Keynes s version C. fee decision and source of revenue Distribution in Kalecki
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Extra info for Unemployment, Recession and Effective Demand: The Contributions of Marx, Keynes and Kalecki
Below, we attempt to provide Marx’s point of view with more rigorous analytical foundations. 2 This can be justified if we make the following two assumptions: 1. 2. The prevailing market form is free competition. Firms in the short period produce at constant unit variable costs and, hence, at decreasing average total costs. More precisely, unit variable costs are constant up to capacity; after that they start increasing steeply. In other words, the unit variable cost curve has the shape of a reversed L.
The increase in demand by average firms does not produce a rise of prices because it can be met by average firms themselves, which can increase supply because, through investment, their productive capacity grows. Therefore, prices would not change in such a way as to generate price expectations that induce marginal firms to start production and investment again. Thus, it would seem that the economy can stabilize in a situation in which there is unused capacity and unemployment. This, however, is only an apparent solution.
But, in expanded reproduction, not all the surplus can be consumed; it must be at least partly used to expand the scale of production. 13 The monetary value of aggregate profits is the same as in the case of simple reproduction but profits now depend on two sets of decisions by capitalists: their investment and consumption decisions. In general, therefore, aggregate profits depend on capitalists’ expenditure decisions which, in turn, imply a decision to reduce the level of money hoards. There is, however, another difference between simple and expanded reproduction.