The General Theory and Victoria Chick at 80: A Celebration Conference 11 July 2016 “Keynes and Marx: some points of contact” Andy Denis City University London Paper available at: http://bit.ly/KeynesMarx

Are approaches of Keynes and Marx utterly opposed? Paul Mattick (1969) Marx and Keynes. The limits of the mixed economy Geoff Pilling (1986) The Crisis of Keynesian Economics. A Marxist view Nick Potts (2013) “Keynesian Economics: In Search of Unnatural Stability” The paper argues that this is incorrect. It identifies some points of contact between Keynes and Marx. http://bit.ly/KeynesMarx

Points of contact between Keynes and Marx Historical vision – capitalism points beyond itself Labour theory of value – labour is the foundation of value roundaboutness and prices of production Tendency of the rate of profit to fall – declining MEC The overproduction of capital – production and realisation of values limited by consumption. http://bit.ly/KeynesMarx

An example: roundaboutness and prices of production – the account in GT Ch 16-II, IV “I sympathise with the pre-classical doctrine that everything is produced by labour, aided by … the results of past labour, embodied in assets”. (213) “there must be a due proportion between the amount of labour employed in making machines and the amount which will be employed in using them.” (214) This is the organic composition of capital. High organic composition – roundaboutness – must inevitably → lower yield as only present (not past) labour produces anything. http://bit.ly/KeynesMarx

So articles produced by more roundabout processes must be kept scarce and “therefore expensive relatively to the quantity of labour involved” – they “must be kept sufficiently scarce to command a higher price” (215). This is exactly Marx’s argument: capital is reallocated from high organic composition industries, raising prices, such that the price of those commodities = the labour values of inputs plus a fraction which = the general rate of profit. Keynes’s “higher price” = Marx’s “price of production”. http://bit.ly/KeynesMarx

In both Keynes and Marx, additional accumulation – whether in the individual industry or industry as a whole → reduction in profitability of that industry or the economy: “If capital becomes less scarce, the excess yield will diminish, without it having become less productive” (213). “I should guess that a properly run community … ought to be able to bring down the marginal efficiency of capital in equilibrium approximately to zero within a single generation; so that we should attain the conditions of a quasi-stationary community … [I suppose] it to be comparatively easy to make capital goods so abundant that the marginal efficiency of capital is zero. (220-1) http://bit.ly/KeynesMarx