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.)

Keynesianism in Reverse
Keynesian interventions in the economy were at first rather ineffective. Keynes explained this by saying that “the medicine he recommended was too niggardly applied.” The unemployment problem remained unsolved until the approaching Second World War forced the various governments to do for the purpose of waging war what they had been unwilling or unable to do during the preceding depression. With the beginning of war production, how ever, Keynes was finally convinced that his theory would find confirmation, for now it would be seen “what level of consumption is needed to bring a free, modern community ... within the sight of the optimum employment of its resources.” War-policies, however, were quite independent of the... (From : Marxists.org.)

The Law of Value as “Equilibrium Mechanism”
Marxist criticism of bourgeois society had to encompass more than proof of the exploitation of labor by capital. The idea of surplus-value was inherent in the labor theory of value, and socialists prior to Marx had utilized it in their arguments. In order to show once more that profit or surplus-value is gained in production and not in exchange, Marx found it advisable to disregard the effects of market competition on value relations. This is possible only in theory, because the production process cannot actually be divorced from the exchange process. Yet, according to Marx, the laws of capitalist production “cannot be observed in their pure state, until the effects of supply and demand are suspended, or balanced.” This was not ... (From : Marxists.org.)

Value and Price
In order to stay in business, every capitalist entrepreneur must strive for the largest possible amount of surplus-labor; for only by achieving this maximum can he maximize the profits he can realize through market prices. This profit maximum is only partly determined by his own exertions in maintaining or raising the rate of exploitation; it is co-determined by similar exertions on the part of all other capitalists. To increase the profitability of any particular capital, the profitability of total social capital must be in creased, for otherwise there would be no way of realizing the increased appropriation of surplus-labor as profits in the market. Since surplus-labor in the form of commodities falls outside the capital-labor relationshi... (From : Marxists.org.)

Economic Development
Keynes’ theory dealt with “mature” capitalism and its apparent incapacity for further “automatic” development. This preoccupation with “mature” capitalism reflected a rather general disregard for the development of the world’s industrially backward regions. In Keynes’ view, to recall, it is the diminishing scarcity of capital, a consequence of the diminishing propensity to consume, which explains insufficient demand and unemployment in the developed capitalist nations. In countries where capital is scarce and the propensity to consume consequently high, this problem does not exist, for a “poor country will be prone to consume by far a greater part of its output, so that a very mode... (From : Marxists.org.)

The Imperialist Imperative
Marx’s model of capital accumulation represents a closed homogenous system in which the rising organic composition of capital results in a fall of the rate of profit and therewith in the decline of capital expansion whenever the conditions of production do not allow for a sufficient rise in the rate of exploitation. But capitalism is not a closed system: it is able to slacken the rising organic composition of capital through its outward extension and to better its rentability through importation of profits from abroad. It is the value-expansion of the existing centralized capital, however, which determines the size as well as the character of the world market, and which limits the capitalization of underdeveloped nations to serve the ... (From : Marxists.org.)