Marx and Keynes : The Limits of the Mixed Economy

Bibliography
Baran, P. A., The Political Economy of Growth, New York, 1960. Berle, A. A., Economic Power and the Free Society, New York, 1957. Berliner, J. S., Soviet Economic Aid, New York, 1958. Bernstein, E., Evolutionary Socialism, New York, 1961. Beveridge, W. H., Full Employment in a Free Society, New York, 1945. Böhmm-Bawerk, Karl Marx and the Close of his System, New York, 1949. Bucharin, N., Ökonomik der Transformations Periode, Hamburg, 1922. Burns, A. F., The Frontiers of Economic Knowledge, Princeton, 1954. Clark, J. M., Alternative to Serfdom, New York, 1960. Crosser, P. K., State Capitalism in the Economy of the United States, New York, 1960. Denian, J. F., The Common Market, New York, 1960. Deans, V. M., New Patter... (From : Marxists.org.)

Epilogue
Marx did not envision an intermediary stage between private-enterprise capitalism and socialism. His rather clean-cut differentiation between feudalism, capitalism, and socialism made for a certain “orderliness” and “simplicity” in his revolutionary expectations. He recognized, however, that his history of the rise of capitalism pertained solely to Western Europe, and he opposed any attempt to turn it into “a general historical-philosophical theory of development valid for all nations, no matter what their historical conditions might be.” Marx, as well as Engels, allowed for courses of development different from those in Western Europe, and for a shortening of the road to socialism for pre-capitalist nations, in the wake of successful proletarian revolutions in the West. They recognized the state-capitalist tendencies in developed capitalist nations as indications of the coming socialist revolution without fore... (From : Marxists.org.)

Chapter 22 : Value and Socialism
Lenin’s Marxism did not express the practical necessities of the modern international, anti-capitalist class struggle, but was determined by conditions specific to Russia. Russia required not so much the emancipation as the creation of an industrial proletariat, and not so much the end of capital accumulation as its acceleration. The Bolsheviks overthrew Czarism and the Russian bourgeoisie in the name of Marx and by revolutionary means, only to become themselves a dictatorial force over the workers and peasants. And this in order to lead them, eventually, by way of intensified suppression and exploitation, into socialism. Lenin’s Marxian “orthodoxy” existed only in ideological form, as the false consciousness of a non-socialist practice. When dealing with the questions of the socialist organization of the economy, Lenin’s proposals were therefore almost exclusive of a pragmatic type, and no attempt was made to relate them to Marx... (From : Marxists.org.)

Chapter 21 : Marxism and Socialism
Although often proclaimed as an established fact, the conjunction of free enterprise and government planning does not really produce a “mixed” economy. The combination of automatic market relations and conscious determination of production cannot be more than a side-by-side affair. In the course of development, one must come to dominate the other; this means the maintenance of either a competitive or a planned economy. But to avoid the transformation of the mixed economy into state-capitalism, as we have seen, it is not enough to curtail its domestic development, for it is no longer possible to consider the national in isolation from the world economy. The general trend toward state-capitalism must be halted because the continuous expansion of the one system implies the contraction of the other. And in fact the cold war which agitates the world relates not to an evolving struggle between capitalism and socialism, but to a divergence of interests between pa... (From : Marxists.org.)

Chapter 20 : State-Capitalism and The Mixed Economy
While Marx’s theory of accumulation covers the mixed economy, it seems to lose its validity for the completely-controlled capitalist economy, i.e., state-capitalism or state-socialism as represented by the so-called communist societies of the Eastern power bloc, where government decisions and economic planning determine production, distribution and development. These societies are not the product of a slow transformation from a “mixed” to a state-directed economy but are the direct outcome of war and revolution. In practice, they have continued and extended the state-directed war time economy; theoretically, they regard their activity as the realization of Marxian socialism. This is somewhat plausible because they adhere to an “orthodox” interpretation of Marxism which sees in private property relations the main, or only, condition of exploitation. Actually, the conditions which Marx expected to result in the “expropriation of capit... (From : Marxists.org.)

Money and Capital
The Keynesians see the economy as a money economy and tend to forget that it is a money-making economy. In their view money appears as a mere instrument of manipulation for turning insufficient into sufficient social production. An excessive monetary growth by way of credit expansion and deficit-financing may lead to inflation, just as credit contraction and too little money tend to be deflationary. To avoid both excesses, there must be the “right” quantity of money; and it is the government’s function to arrange for this “right quantity.” Fiscal policies are in a way also monetary policies, as they merely allocate the “right quantity” of money in the direction most conducive to economic stability a... (From : Marxists.org.)

Marx and Keynes
It is rather difficult to regard the theories of Keynes as a “revolution” in economic thought. However, the term may be used at will, and the Keynesian theory is called a revolutionary doctrine “in the sense that it produces theoretical results entirely different from the body of economic thought existing at the time of its development.” Yet since that “body of thought,” was neo-classical equilibrium theory, Keynes’ “revolt” may better be regarded as a partial return to classical theory. And this notwithstanding Keynes’ own opposition to classical theory, which in his strange definition, included the whole body of economic thought from Ricardo down to his own contemporaries. Althou... (From : Marxists.org.)

Marx’s Labor Theory of Value
Whereas Keynes’ preoccupation with monetary questions was based on his desire to make the capitalist system work more efficiently, Marx’s relative neglect of these issues stemmed from his goal of formulating a theory of capital development. This labor theory of value evolved out of his criticism of classical value theory. In order to yield regulatory results, the market automatism presupposes a principle on which exchange is based, a principle that explains prices and their changes. If a price is given, it may vary in the interplay of supply and demand, but the question of what determines prices remains. For the classicists, price derived from value and value was determined by the labor incorporated in commodities. This concepti... (From : Marxists.org.)

The Realisation of Surplus-Value
According to Marx, “the contradictions inherent in the movements of capitalist society impress themselves upon the practical bourgeois most strikingly in the changes of the periodic cycle through which modern industry runs, and whose crowning point is the universal crisis.” Throughout the nineteenth century, crisis followed crisis in intervals of roughly ten years. The periodicity of crises, according to Marx, stem simply from capitalism’s ability to overcome the overproduction of capital through changes in conditions of production which increase the mass of surplus-value relative to the existing capital. The definite crisis-cycle of the last century is, however, an empirical fact not directly related to Marxian theory. It... (From : Marxists.org.)

The Mixed Economy
As far as laissez-faire capitalism is concerned, Marx’s prediction of its decline and eventual demise is obviously still supported by the actual course of development. The prevalence of the “mixed economy” is an admission that capitalism would find itself in a depression were it not for the expanding government-determined sector of the economy. What does this government intervention imply as regards the private-enterprise economy? No doubt, state intervention increases production and thus expands the productive apparatus. But if the goal of such intervention is the stabilization of the market economy, government-induced production must be noncompetitive. Were the government to purchase consumption goods and durables in ord... (From : Marxists.org.)