Limited Capitalism, Institutionalism, and Marxism

Abstract

This chapter examines a part of the relationship between institutionalism and Marxism. Particular attention is given to Ayres (1946), Galbraith (1967), and Baran and Sweezy (1966). The procedure of the chapter is to review Ayres’ analysis of the underconsumption tendency of capitalism and demonstrate its remarkable similarity to the analysis of Baran and Sweezy. Then it is argued that Galbraith’s analysis identifies the capitalist solution to this problem and that this analysis is important to contemporary Marxism. Finally, it is argued that Galbraith’s analysis is itself incomplete without something like the Marxist theory of alienation.

The assumption that economics must now abandon … is that of consumer sovereignty — and, in light of the role of the modern state in the economy, what may also be called citizen sovereignty.

J.K. Galbraith, 1969.

The imagery of choice … means that this choosing … controls the economic system. And if choice by the public is the source of power, the organizations that comprise the economic system cannot have power.

J.K. Galbraith, 1973.

Reprinted from the Journal of Economic Issues (1977) by special permission of the copyright holder, the Association for Evolutionary Economics.