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Academic excellence for business and the professions
The General Theory and Victoria Chick at 80:
A Celebration Conference
11 July 2016
“Keynes and Marx: some points of contact”
Andy Denis
City University London
Paper available at:
http://bit.ly/KeynesMarx
Are approaches of Keynes and Marx utterly
opposed?
• Paul Mattick (1969) Marx and Keynes. The limits of the mixed
economy
• Geoff Pilling (1986) The Crisis of Keynesian Economics. A Marxist
view
• Nick Potts (2013) “Keynesian Economics: In Search of Unnatural
Stability”
The paper argues that this is incorrect.
It identifies some points of contact between Keynes and Marx.
http://bit.ly/KeynesMarx
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Points of contact between Keynes and Marx
• Historical vision – capitalism points beyond itself
• Labour theory of value – labour is the foundation of value
– roundaboutness and prices of production
• Tendency of the rate of profit to fall – declining MEC
• The overproduction of capital – production and
realisation of values limited by consumption.
http://bit.ly/KeynesMarx
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An example: roundaboutness and prices of
production – the account in GT Ch 16-II, IV
“I sympathise with the pre-classical doctrine that everything
is produced by labour, aided by … the results of past
labour, embodied in assets”. (213)
“there must be a due proportion between the amount of
labour employed in making machines and the amount
which will be employed in using them.” (214)
This is the organic composition of capital. High organic
composition – roundaboutness – must inevitably → lower
yield as only present (not past) labour produces anything.
http://bit.ly/KeynesMarx
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So articles produced by more roundabout processes must
be kept scarce and “therefore expensive relatively to the
quantity of labour involved” – they “must be kept sufficiently
scarce to command a higher price” (215).
This is exactly Marx’s argument: capital is reallocated from
high organic composition industries, raising prices, such
that the price of those commodities = the labour values of
inputs plus a fraction which = the general rate of profit.
Keynes’s “higher price” = Marx’s “price of production”.
http://bit.ly/KeynesMarx
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In both Keynes and Marx, additional accumulation –
whether in the individual industry or industry as a whole →
reduction in profitability of that industry or the economy:
“If capital becomes less scarce, the excess yield will
diminish, without it having become less productive” (213).
“I should guess that a properly run community … ought to
be able to bring down the marginal efficiency of capital in
equilibrium approximately to zero within a single
generation; so that we should attain the conditions of a
quasi-stationary community … [I suppose] it to be
comparatively easy to make capital goods so abundant that
the marginal efficiency of capital is zero. (220-1)
http://bit.ly/KeynesMarx
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