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.)

The “Transformation” of Capitalism
Evaluating the work of Keynes, economists came to “distinguish the problems he opened up from the particular solutions he suggested. These solutions might all be altered, or discarded and replaced,” it was said, “and his work would still be revolutionary in the opening up of problems and the admission of the possibility of some solution different from the one that had previously been accepted and had foreclosed fresh inquiry.” In this, Keynes “succeeded where previous heretics had failed, partly because he came at a time that was ripe to receive his ideas.” Although Keynes’ “theory of stagnation gave modern expression to some indigenous elements stressed in Marx’s ‘break-down&rsquo... (From : Marxists.org.)

Technology and the Mixed Economy
Apart from its irrational aspects, the mixed economy can exist a long as an increasing productivity yields a sufficient social product. Production must be large enough to maintain the necessary profit ability for the stagnating or relatively declining private capital, to secure existing living standards, and to allow for a growing quantity of nonprofit production. Since the national debt can be refunded, it is actually only the interest on it which need be covered by either taxes or new borrowings. And since the rate of private investment decreases, more funds become available for government borrowings. In the long run, however, and with the continuous, faster growth of the “public” as against the “private” sector of... (From : Marxists.org.)

Accumulation and the Falling Rate of Profit
Marx was not particularly interested in demonstrating the viability of anarchic capitalism. His concern with the law of value relates to his “ultimate aim to lay bare the economic laws of motion of modern society.” The best points in Capital, Marx wrote to Engels, “are 1) the twofold character of labor, according to whether it is expressed in use-value or exchange-value (all understanding of the facts depends upon this); and, 2) the treatment of surplus-value independently of its particular forms of profit, interest, groundrent, etc.” The twofold character of labor-power is, of course, the equivalent of the social relations of capital production as a production of surplus-value. And the independent treatment of surpl... (From : Marxists.org.)

The “Business Cycle”
Marx’s value model of capital development is a methodological device to “grasp its inner interconnections,” which cannot be observed in immediate reality. To have a theory of capital development at all, the “force of abstraction” has to transcend the semblance of competition. The abstract value-scheme reveals that, apart from competition as the driving force of capital formation, profit production already finds a limiting element in the capital-labor relationship. In order to forestall a decline of profitability, accumulation must never rest. More and more surplus-value must be extracted; for this purpose, production must be steadily revolutionized, and markets must be continually extended. The two-fold charact... (From : Marxists.org.)

This book was written during a time hailed by the President of the United States as “the greatest upsurge of economic well-being in history.” Others, in other nations, spoke of an “economic miracle,” or else claimed that “we never had it so good.” Professional economists were overjoyed that their “dismal science” had finally turned out to be the hope of the world. They impressed governments and businessmen alike with their theoretical erudition and its practical applicability. With the unfortunate exception of an inarticulate minority, from the “High” down to the “Low” there was general agreement that business was excellent and that it would stay that way. There was som... (From : Marxists.org.)