Capitalism and Post-Keynesian Economics: Some Critical Observations

Abstract

No positive economic doctrine has been able until now to escape from the trap of being valid only under very specific conditions, so special as not to be replicated even minimally in actual historical experience. Consider the two fundamental approaches of the 19th century: the Marxian and the Neoclassical one. They both attempt to tell a story about the long-term behaviour of the system. The former tries to identify objective laws of motion, the latter some kind of immanent behaviour to be taken as a normative reference for a real system. They both fail encountering similar analytical problems. In particular, the long-term validity of both approaches depends heavily on the homogeneous nature of the economy they depict.¹ Marx’s long-term theory of capitalist accumulation is not free from the scourge of homogeneity either (see Appendix). Indeed I believe that there are in Marx two distinct and non-compatible macroeconomic theories. The first, of a Ricardian nature, is to be found in Volume One of Capital and culminates in the well known chapter (25) on the Reserve Army of Labour. Its essential elements are reproduced in Wage Price and Profit, a fact that has some importance. Wage Price and Profit is Marx’s speech at the founding meeting of the First International. It can, therefore, be viewed as expressing his core thoughts when economic statements had to be stripped down to their essential points. The second approach is contained in Volume Two of Capital, largely put together by Engels, which gave rise to the most far reaching set of economic debates within the Second International.