Re: Marx and Keynes on Unemployment

[Steve.Keen@xxxxxxxxxxx (PMDF V4.3-13 #6323) id <01HPV50M8AZK8X205V@xxxxxxxxxxxxxxxxxxxxxx>; Fri, 28 Apr 1995 07:44:47 +1000]

Ajit Sinha recently posted the following on Marx's theory of unemployment:

|... My guess is that Jim holds the ... view ...that it is Marx's
|doctrine that to conteract the workers pressures to raise wages, the

|capitalists introduce labor-saving technical change... this doctrine is not

|found in Marx's writing, at least in *Capital*...
|the idea that labor-saving technical change is introduced because
|of an upward pressure of wages carries with it the neo-classical germ of
|switching to relatively capital intensive technology in response to higher
|wages-- and this kind of reasoning was quite foreign to Marx. This aside, For
|Marx a labor-saving technical change is a long-run or secular tendency in
|capitalism. Moreover, in his framework, the real wages as well as the value of
|labor-power also have a secular falling trend. ...There is no such thing as

|"bargaining power" unemployment explanation in Marx.

I hate to partly contradict someone who later agrees with me in the same
post -:), but the following excerpt is from Capital Vol. 1,
Chapter 25, at the end of section 1 (pp. 580-581 in the Progress Press
edition):

"accumulation slackens in consequence of the rise in the price of
labor, because the stimulus of gain is blunted. The rate of
accumulation lessens; but with its lessening, the primary cause
of that lessening vanishes, i.e. the disproportion between
capital and exploitable labor power. The mechanism of the process
of capitalist production removes the very obstacles that it
temporarily creates. The price of labor falls again to a level
corresponding with the needs of the self-expansion of capital,
whether the level be below, the same as, or above the one which
was normal before the rise in wages took place... To put it
mathematically, the rate of accumulation is the independent, not
the dependent variable; the rate of wages the dependent, not the
independent variable." (Ibid., pp. 580-581.)

This is not a "labor-saving technology" argument, so much as a
"slackening of the rate of accumulation in response to rising wages"
one; but it can surely be surmised that Marx would have accepted
the proposition that, if rising wages were reducing the ability
of capitalists to accumulate, they would have been open also
to technologies which directly reduced the need to employ labor.

There is also no hint that wages had a downward secular trend here.

The piece itself can be regarded as a superb verbal precis of
Goodwin's "predator-prey" model of capitalism, a century before
it was written--and this justifies Goodwin's own belief that
his model was "Marxian".

Of course, Marx is rather "biblical": if you look long enough,
you can (almost) find support for any argument. But the above,
I submit, is part of a trend to Marx's thinking which makes
him far more a Post Keynesian than a Marxian. (This is the
gist of a paper I've put on the CSF archives, but as I'm
currently massively revising that in response to comments
from Marc Levoie, I'd ask anyone interested to NOT read the
version there.)

For the record on the debate with PD as to whether you can
have unemployment in a non-monetary system, one of the outcomes
of Goodwin's model is that the average level of unemployment
*exceeded* the equilibrium level of unemployment (what our neo
friends might call the NAIRU); for a masterful exposition of
this, see Blatt, _Dynamic Economic Systems_, pp. 215-16. The
model was of course non-monetary.

Cheers,
Steve Keen
PS to Ajit--look forward to meeting you in Newcastle next month,
mate.