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Showing posts from August, 2010

Marx and Keynes: The Problems of Unemployment and Crisis.

Marx's analysis of capital was an attempt to uncover the fundamental laws of motion that govern the capitalist mode of production. Marx differed from many of his contemporaries in that he conceived of capitalism as necessarily dynamic and incapable of homeostasis . This resulted from a complex array of factors, the ultimate source of which is the need to produce surplus-value. Marx claimed this amounted to the “absolute law’ of capitalist production. However, the expansionary impetus of capital is not a smooth linear process of growth and the accumulation of capital is subject to recurrent interruptions and crises. Marx argued that this tendency toward crisis arises from the competition between capitalists and the success of prior accumulation. In apparent contradiction to Marx, Keynes formulated a theory of effective demand that explained economic fluctuations and downturns in terms of insufficient aggregate demand. For Keynes, the causal factor that leads to below capacity econ…