Abstract
In 2017, anticipating the 200th anniversary of Karl Marx’s birthday, Ludo Cuyvers published with Routledge The economic ideas of Marx’s Capital: Steps towards post-Keynesian economics. The book examines a number of building blocks supporting Marx’s economic theory, as can be found in Capital. The golden thread of the book is the use that the author makes of the linear production model or the Marx-Leontief model, thus linking his analysis to Sraffa’s work. As G.C. Harcourt mentions in the Foreword of the book, this is particularly appropriate since the opening of Sraffa’s archive in Cambridge clearly shows how large Sraffa’s indebtedness to Marx was. It is clear that Cuyvers views his contribution as being along the same lines. First of all, the approach links Marx’s reproduction schemes to the equation system that allows the determination of both labour values and prices of production, as well as a Sraffa-like Standard System. The justification for using a system of equations resides, so the author states, in Marx’s concept of ‘normal reproduction’, when all spheres of production are expanding in the same proportion, technical progress is neutral and the rate of profits constant. Cuyvers elaborates on the labour theory of value and points out that both Marx’s prices of production and labour values are prices to which, under conditions of normal reproduction, the production and exchange system would evolve as the result of the migration of capital and labour respectively, from one sphere of production to another.
In a further chapter, Marx’s concept of unproductive labour is examined. Cuyvers argues that what is crucial is whether economic activity is yielding a surplus product that can be used in the next ‘production period’, in which case it is productive. This also allows him to link his analysis to how the so-called Cambridge School models the relationship between the rate of profits and the rate of growth of the economy, particularly since the release of Joan Robinson’s The Accumulation of Capital, which in turn builds on the work of Michał Kalecki, and Marx’s ‘realisation’ of the surplus value.
The author than extends his analysis to Marx’s ‘laws of motion’, that is, the dynamics of the capitalist economic system. However, using the linear production model, a thorough analysis of how technical progress, as fuelled by the capitalists’ expectations of super-profits, impacts the rate of profits of the economy is mathematically impossible, which forces Cuyvers to work out mathematical examples and simulations. He shows that rising labour productivity allows an increase in the capital intensity of production, as was Marx’s contention, however this is without inducing a fall in the average rate of profits. It all depends on the extent to which this capital intensity grows and the amount by which wages will increase with the rising productivity of labour.
Next comes Marx’s theory of the falling rate of profit. Cuyvers reviews Okishio’s theorem, after which he investigates US historical data, to conclude that neither Marx’s ‘composition of capital’, nor the rate of profits, has evolved according to Marx’s predictions. Marx’s law of the falling rate of profits is considered debatable on both theoretical and empirical grounds. As such, Cuyvers investigates other reasons for economic stagnation present in Capital, such as underconsumption and underinvestment at the macroeconomic level, with both reflected in the changing ratio of profits to wages, or Marx’s ‘rate of surplus value’. Following Marx, the author indicates that the intensity of the class struggle and the balance of power between labour and capital determine how the intensity of exploitation, measured as the rate of surplus value, evolve over time, but the statistical evidence for the United States and the United Kingdom shows no long-run trend.
Turning to Marx’s theory of the business cycle, the author indicates the role-played by the capitalists’ hunger for profits, which creates a situation of over-accumulation of capital and a cyclical decline in the general rate of profits, and argues that it was far ahead of its time. Also the monetary theory in Capital was innovative, but unfortunately far from fully developed. It is built on the idea that the supply of money and credit adjust to demand for it, and that the rate of interest is a purely monetary phenomenon, which is also a crucial dividing line between Keynesian and post-Keynesian economics, and that of the neo-classicals.
Although Cuyvers’ intention was purely to investigate Capital, he also dwells on Marx’s underdeveloped underconsumption and underinvestment theory. He lists factors that are regarded as counteracting the tendency for capitalist stagnation, from external markets and military spending (from Rosa Luxemburg and Kalecki to Joan Robinson, Paul Baran and Paul Sweezy), to technological change and innovation, and discusses some of the relevant theoretical and empirical literature on ‘long cycles’ in economic activity (Kondratieff, Goodwin, Mandel, and so on).
In a last chapter, Cuyvers summarizes and also lists issues to be researched further that are critical for the development of the linear model of production, such as how exactly skilled labour should be treated, how to model the different and variable degrees of substitutability of skilled and unskilled labour by capital, or how to introduce technological change and other long-run economic dynamics.
Like Marxist economic theory, post-Keynesian theory differs from neo-classical economics in that it starts from the premise that capitalism as a society is divided into antagonistic social classes. The subtitle of the book refers to Cuyvers’ regularly linking his findings to the insights of the early post-Keynesian neo-Marxist economists, particularly Kalecki and Robinson, such as the role of accumulation, its interrelationship with technical progress and its importance for profits realization, as well as to the works of Baran and Sweezy. The author claims that these contributions to both Marxist and post-Keynesian economics are too often forgotten. His point is strengthened by Marx’s unfinished monetary theory, which reveals important similarities with post-Keynesian views. Marxist economic theory will, however, benefit highly from the introduction of post-Keynesian views on expectations and uncertainty in models of how a capitalist economy works.