Marx, Kalecki, and socialist strategy

Monthly Review

Volumn 64, Issue 11, 2013, Pages 1-14

  Foster, John Bellamy ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 84878742378     PISSN: 00270520     EISSN: None     Source Type: Journal    
DOI: 10.14452/MR-064-11-2013-04_1     Document Type: Article

References (77)

1. Paul A. Samuelson, the leading representative of mainstream Keynesianism (or the so-called neodassical-Keynesian synthesis) was to concede that Keynes's "prescription in its most simple form self-destructed, as the obligation to run a (unemployment humanitarian state caused modem economies to succumb to the new disease of stagflation-high inflation along with joblessness and excess capacity." Samuelson, "The House that Keynes Built', New York Times, May 29, 1983.
2. David M. Gordon, Thomas E. Weisskopf, and Samuel Bowles, 'Power, Accumulation, and Crisis', in Robert Cherry, et al., The Imperiled Economy (New York: Union for Radical Political Economics, 1987), 43;
3. Alain Lipietz, "Behind the Crisis", Review ol Radical Political Economics 18, no. 1 and 2(1986):13.
4. See Howard J. Sherman, 'Inflation, Unemployment, and the Contemporary Business Cycle', in John Bellamy foster and Henryk Szlajfer, eds., Pie Faltering Economy (New York: Monthly Review Press, 1984), 93.
5. Raford Boddy and James Crotty, 'Class Conflict, Keynesian Policies, and the Business Cycle", Monthly Review 26, no. 5(October 1974):1-17.
6. See also Raford Boddy and James Crotty, "Class Conflict and Macro-Policy: The Political Business Cycle", Review of Radical Political Economics 7, no. 1(1975):1-18.
7. Boddy and Crotty, "Class Conflict, Keynesian Policies', 4, 8.
8. Unlike Boddy and Crotty some theorists on the left later on made the mistake of thinking that Kalecki had himself presented a profit-squeeze theory. On this erroneous interpretation see, for example, Andrew Glyn, Capitalism Unleashed (Oxford: Oxford University Press, 2006), 31.
9. For a criticism of such misuse of Kalecki see Robert Brenner, "The Economics of Global Turbulence", New Left Review 229(1998):14-17.
10. Michal Kalecki, 'Political Aspects of Full Employment", in Kalecki, The Last Phase in the Transformation of Capitalism (New York: Monthly Review Press, 1972), 76-83
11. Selected Essays on Economic Planning (Cambridge: Cambridge University Press, 1986), 24.
12. Steindl insisted in line with Kalecki that "a general rise or fall in money wages would not necessarily and regularly affect the share of profits, because it is the capitalists who decide the 'mark-up' which is added on to wage costs in order to arrive at the price." Josef Steindl, Maturity and Stagnation in American Capitalism (New York: Monthly Review Press, 1976), 236-37.
13. Boddy and Crotty, "Class Conflict", 4.
14. B. Boddy and Crotty were presenting the profit squeeze as an explanation of economic crisis. Others, however, went further and saw it as the source of long-term stagnation. See, for example, Gordon, Weisskopf, and Bowles, "Power, Accumulation and Crisis";
15. and in the British context, Andrew Glyn and Bob Sutcliffe, Capitalism in Crisis (New York: Pantheon, 1972).
16. Pulteney quoted in Philip Morowski, The Birth of the Business Cycle (New York: Garland Publishing, 1985), 15.
17. "labor Costs a Challenge to Fed, Companies", Wall Street Journal Marketwatch blog, March 8, 2012, http://artides. marketwatch.com.
18. Thomas E. Weisskopf, Samuel Bowles, and David M. Gordon, "Two Views of Capitalist Stagnation", Science and Society 49(Fall 1985):259-86.
19. Alejandro Reuss, "That '70s Crisis", Dollars & Sense, no. 285(November-December 2009):23-24. Such thinkers argue that today's economy is characterized by a declining wage share, with the present crisis therefore having the opposite cause from that of the 1970s.
20. For a general summary of the argument on monopoly and stagnation see John Bellamy Foster and Robert W. McChesney, The Endless Crisis (New York: Monthly Review Press, 2012), 29-38.
21. Harry Magdoff and Paul M. Sweezy, The Deepening Crisis of U. S. Capitalism (New York: Monthly Review Press, 1981), 181-82.
22. Paul M. Sweezy, "More (or Less) on Globalization", Monthly Review 49, no. 4(September 1997):3.
23. Harry Magdoff and Paul M. Sweezy, The Irreversible Crisis (New York: Monthly Review Press, 1988), 76.
24. On the long-term slowdown in the rate of economic growth from the 1970s to the present see Foster and McChesney, Endless Crisis, 3-4.
25. Magdoff and Sweezy, Deepening Crisis, 179.
26. Fred Magdoff and John Bellamy Foster, 'Class War and Labor's Declining Share", Monthly Review 64, no. 9(March 2013):1-11.
27. Today's business-cyde research, as Sherman points out, has shown that the rise in the wage share of income at the peak of the typical business cycle is due not to the increase in employee income that occurs at this stage, which is at best "tiny", but rather to the fact that 'wages are steady, while profit is falling.' Howard J. Sherman, The Roller Coaster Economy (Armonk, NY: M. E. Sharpe, 2010), 52-53.
28. Karl Marx, On the First International (New York: McGraw-Hill, 1973), 5-12.
29. Karl Marx, Value, Price and Profit (New York: International Publishers, 1935), 12-16;
30. Kari Marx and Frederick Engels, Collected Works (New York: International Publishers, 1975), vol. 20, 338. Value, Price and Profit was a talk delivered to a working class audience and was never revised by Marx for publication. It was first published as a pamphlet in 1898, edited by his daughter Eleanor. In the talk Marx did not use the formal language of departments as in volume two of Capital, but simply referred to the wage-goods and luxury-goods sectors as different "branches of industry." (In his reproduction schemes in volume II Marx treated Department II as subdivided between a workingclass wage-goods sector and capitalist luxury-goods sector. Later Marxian theorists have commonly treated this as two separate departments: Department II and Department III, respectively.) Nor did Marx refer specifically in his talk to the investment-goods sector (Department I)-despite the fact that since this represented the accumulation of capital it was the driving force. Still, in distinguishing in Value, Price and Profit between the wage-goods and luxury-goods sectors there was no doubt that Marx was implicitly arguing in terms of a three-department reproduction scheme and the exchanges that would take place between the wage-goods and non-wage-goods departments. Therefore references to all three departments have been induded in the explanation of the argument, without which it would be incomplete. Indeed, as we shall see below, Marx's argument on the effects of a general wage increase on the distribution between the three departments was later replicated by Kalecki.
31. Marx, Value, Price and Profit, 6, 56.
32. Karl Marx, Wage-Labour and Capital (New York: International Publishers, 1933), 45.
33. Karl Marx, Capital, vol. 1 (London: Penguin, 1976), 771.
34. Kart Marx, Capital, vol. 3 (London: Penguin, 1981), 347;
35. Marx, Value, Price, and Profit, 54-55.
36. Kari Marx, Capital, vol. 1, 762, 769-70
37. Capital, vol. 2 (London: Penguin, 1978), 486-87.
38. Karl Marx, Capital, vol. 2, 486-87. In referring to an increase in the wage share of income that occurred at the peak of every cycle as a "harbinger" of crisis (a kind of leading indicator) Marx was pointedly not attributing the cyclical downturn itself to this fact Marx's pioneering approach to the business cycle (and to periodic crises as a cyclical phenomenon) was complex, emphasizing numerous factors and never worked up into a developed theory. He considered nearly all of the elements that are incorporated into contemporary business-cyde analysis, placing a strong emphasis, however, on an understanding of the cycle as determined by fluctuations in investment, particularly related to the renewal of fixed capital-a view which was to have a strong influence on economics in general. Marx's broad approach had much in common with Kalecki's dynamic analysis based on the mutual interaction of investment and profits, incorporating both demand-side and supply-side factors.
39. Hence, recent attempts to reduce Marx's theory of the cycle to a wage squeeze on profits explanation have no real basis in his thought On Marx's approach to the cycle see Marx, Capital, vol. 2, 264;
40. Ernest Mandel, The Formation of the Economic Thought of Karl Marx (New York: Monthly Review Press, 1971), 140-53;
41. Howard J. Sherman, The Business Cycle (Princeton: Princeton University Press, 1991), 70, 135-36.
42. On Kalecki in this respect see Sherman, The Business Cyde, 71-72;
43. Michal Kalecki, Theory of Economic Dynamics (New York: Monthly Review Press, 1965).
44. Marx, Capital, vol. 1, 772-94.
45. For theorists such as Kalecki, Steindl, Baran, and Sweezy, even the limited importance that Marx gave to the notion of a profit squeeze under competitive capitalism was an expression of the fact that in Steindl's words, Marx did 'not manage to detach himself completely" from 'straightforward 'classical economics" (meaning in this case a Say's law perspective). An 'increase in wages could never reduce profits' within the economy as a whole, Steindl pointed out 'as long as investment (and capitalist consumption) remain high.' Steindl, Maturity and Stagnation, 237.
46. Marx, Value, Price and Profit, 59.
47. Michal Kalecki, Selected Essays on the Dynamics of the Capitalist Economy (Cambridge: Cambridge University Press, 1971), 156-59.
48. Joan Robinson, 'Michal Kalecki: A Neglected Prophet' New York Review of Books 23, no., 1(March 4, 1976):28-30.
49. Kalecki, Last Phase, 78.
50. Kalecki, Collected Works (Oxford: Oxford University Press, 1990), vol. 1, 374,;
51. Keynes to Kalecki, December 30, 1944 in Kalecki, Collected Works, vol. 1, 579.
52. Kalecki, Selected Essays on Dynamics, 156. Kalecki also pointedly indicated here that this doctrine was the last refuge of Say's law, stating: 'Even though in the analysis of other phenomena Say's law was not adhered to, at least not strictly, in this case [a money-wage increase] the preservation of purchasing power was not put into doubt"
53. Kalecki, Collected Works, vol. 1, 283-84, 326-41, 563-65;
54. Selected Essays on Economic Planning (Cambridge: Cambridge University Press, 1986), 23-24.
55. See also Gunnar Myrdal, 'A Parallel: The First Blum Government 1936-A Footnote to History", in N. Assordobraj-Kula, et. al., ed., Studies in Economic Theory and Practice: Essap in Honor of Edward Lipiński (Amsterdam: North-Holland Publishing Co., 1981), 53-62.
56. Kalecki, Collected Works, vol. 1, 284-85.
57. Kalecki, Selected Essap on Economic Planning, 19-24.
58. Marx, Capital, vol. 1, 784.
59. Kalecki, Selected Essap on Economic Planning, 24;
60. Josef Steindl, 'Stagnation Theory and Stagnation Policy", in Foster and Szlajfer, eds., The Faltering Economy, 179-97.
61. What the Labour Party could have achieved politically is of course subject to debate. See, for example, Ralph Miliband, Parliamentary Socialism (London: George Allen and Unwin, 1961);
62. Raymond Williams, 'Class Voting in Britain', Monthly Review 11, no. 9(January 1960):327-34.
63. Steindl, "Stagnation as Policy", 189.
64. Josef Steindl, "The Present State of Economics", Monthly Review 36, no. 9(February 1985):35.
65. Magdoff and Foster, "Class War and labor's Declining Share', 8-10.
66. Paul Krugman, 'Robots and Robber Barons", New York Times, December 9, 2012, http://nytimes.com.
67. Paul Krugman, End This Depression Now! (New York: W. W. Norton, 2012), 94-96, 206.
68. Kalecki, Selected Essap on Economic Planning, 20-24.
69. Kalecki, Collected Works, vol. 1, 340.
70. Kalecki, The Last Phase, 85-114.
71. Foster and McChesney, The Endless Crisis, 103-54.
72. Kalecki, Colletied Works, vol. 1, 284.
73. For a rational, Keynesian view on an increase in the minimum wage see Paul Krugman, "Raise that Wage', New York Times, February 17, 2013, http://nytimes. com.
74. For an irrational, pre-Keynesian (Say's Law) view, see James Dorn, 'Obama's Minimum Wage Hike', Forbes, February 20, 2013, http://forbes.com. The truth is that even if Obama's proposal to raise the federal minimum wage to $9 an hour were enacted the real minimum wage (adjusted for inflation) would still be below that of 1968!
75. Gar Alperovitz, What Then Must We Do (White River Junction, VT: Chelsea Green, 2013), 7.
76. Magdoff and Foster, 'Class War', 10.
77. Marx, Value, Price and Profit, 61.