Marxian and Post Keynesian Theory. Similarities and
Differences. Part I.
FMM summer school Keynesian economics and European
Economic Policies
Engelbert Stockhammer
Institut für Geld- und Fiskalpolitik
Wirtschaftuniversität Wien

• Talk about what is interesting/valuable about Marxian economics
• I‘ll not talk about value theory and little about macro.
• [tacit assumption] econ is a social science
• Historic and political economy approach
• Class, exploitation
• Characteristics of capitalism
• Capitalism: Contradictions of labor power as a commodity
• Unemployment as a systemic feature
• Production process as labor process
• Distribution as a social phenomenon
• Recent changes in the accumulation regime: welfare state,
European integration
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• Systematic appropriation of surplus labor by one social group
(class) by another („antagonistic interdependency“). 3 conditions (Wright 1997)
• Inverse interdependent welfare principle
• “the welfare of the exploiter is at the expense of the exploited”
• Exclusion principle
• “exclusion of the exploited from access to . . . certain important productive resources”
• Appropriation principle
• “appropriation of the fruits of labor of the exploited by those who control the relevant productive resources”

• Historically different forms (different modes of production)
• Slavery: the labourer is a commodity; use of force
• Feudalism: labourer tied to the field, delivers surplus product; crucial role of force and ideology (religion)
• Capitalism: labour power is a commodity; relative autonomy of state
• (Utopian) communism: labourers collectively control surplus
• Simultaneity of class positions/class structures
• All kinds of intermediate class positions
• Each individual can occupy different class positions
• Different class processes will coexist and interact (slavery in antebellum USA, household labour in capitalism …)
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• Modes of production have to reproduce themselves
• Reproduction fragile because of antagonistic interests
• Different means to stabilize class relations: different relations between economic and political sphere
• Institutions to mediate and stabilize social conflicts
• State and force play important role in reproduction of social system
• Note: that‘s very different from neoclassical/liberal contract theory
• Capitalism: unique in that economic sphere is relatively independent

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• PK use class: income groups (Weberian concept of class)
• No political theory of class, no theory of the state
• Historizing economic concepts: market (for labor), state, capitalism
• PK and socialism
• Most PKs are pro-capitalists (well, Kalecki, Robinson?)
• In fact, no concepts to analyze non-capitalist forms of production

• PK: fundamental uncertainty
• PKs derive role of money, animal spirits ...
• PK uncertainty in fact uncertainty of the investor in a long-term investment project
• Do workers also face uncertainty?
• No, they typically don‘t do long-term investment
• Yes: job insecurity
• Institutions mediate and distribute uncertainty: social security systems, firing restrictions
• Capitalist may have interest in increasing the uncertainty for workers
• How is unceratinty distributed in non-capitalist production relations
(S 07, S&R 08)
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• Exploited class: wage labourers
• No access to means of production
• Labour power becomes a commodity
• Worker has to sell her labour power for a certain amount of time
• (1) does find a job
• Has to be obey orders of capitalist (or his managers) (Coase 1937)
• Receives a wage in return
• Has to take care of herself otherwise
• (2) does not find a job
• Receives no wage
• Still has to take care of herself
• Note. Capitalism is not a primarily defined as a market economy, but as an economy where labor power is a commodity
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Power in the production process?
(over 10+ persons) yes no
Ownership of means of production?
yes Classical capitalist „old middle class“:
Small businesses no „Manager“ Skilled worker
Unskilled supervisor
Unskilled worker
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yes
Ownership of means of production?
no
Power in the production process?
(over 10+ persons) yes
Classical capitalist
[1.8%] no
„old middle class“:
[12.8%]
„Manager“
[9.2%]
Unskilled supervisors
[2.8%]
Skilled worker
[24.4%]
Unskilled worker
[47.8%]
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• Production process as a labour process
• Why should the worker obey orders she dislikes?
• Unemployment: an imporant means to ensure work discipline
• Unemployment is part of the capitalist system (Kalecki 1943)
• Problem of work discipline („labour extraction“)
• Pecuniary rewards (efficiency wage theory; Bowles 1985)
• Work organization: Taylorism (Braverman)
• Surveillance: recent scandals in Germany
• Factory regimes (Burawoy)
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• Wage: the „value of labour power“
• Labour power is unlike other commodities: it‘s alive
• Outcome of class struggle („bargaining“)
• Production as a labour process with machinery
• A machine =/= its monetary value (Sraffians, capital controversies)
• marginal product of capital or labour not a meaningful concept
• Theory of distribution as a theory of social relations and power.
• Tension in Marxian and PK theories of income distribution:
• Class struggle and power (Marx)
• Degree of monopoly power (Kalecki)
• Demand (Kaldor)
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• Competition among capitalists
• Technological innovation to gain temporary monoply rents
(Schumpeter)
• Competition from abroad (Brenner 1999)
• Seek state support (from trade policy to military interventions to secure raw products)
• May not be able to sell output (effective demand problems)
• Need credit to finance investment
• May be faced with rate of return requirements by shareholders
(Crotty 2005)
• …
• Fragile, disequilibrium dynamics
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• 3 types of crises (e.g. Weisskopf 1979). Crisis = fall in the profit rate:
• R/K = (Y/Z)* (R/Y)* (Z/K)
• R…profits, Y… output, Z…potential output, K…capital stock
• Realization crisis (Y/Z): surplus produced but not ‚realized‘ due to lack of effective demand
• Profit squeeze crisis (R/Y): wage demands cut into profits
• Rising organic composition of capital (Z/K): labour-saving technological change reduces technical capital productivity
• Does this theory predict much?
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• PK: lack of supply-side analysis
• Labor extraction (1): conflict at the work place.
• Labor extraction (2): unemployment as a disciplinary advice for wages
• challenge: macroeconomic modelling with effective demand and class conflict
• Bhaduri Marglin (1990): wage-led vs profit-led demand regime
(investment function)
• Bowles and Boyer (1990): efficiency wages and demand
• Conflict inflation models (Sawyer, Arestis, Hein ..)
• NAIRU (Sto 2008)
• Political economy of economic policy (Kalecki 1943): political contradictions of full employment (Balogh 1982)
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• State relatively autonomous in capitalism (Gramsci, Althusser): arena to form and implement class compromises
• Fordist accumulation regime (Aglietta, Lipietz)
• Unique historic background: Socialist workers movement (19th century), Russian revolution, Great Depression
• Welfare state: decommodification of labour power (unempl benefits, social security, pension systems)
• Regulated labour relations, productivity-oriented wage policies
• Keynesian stabilization policy
• Crisis of the 70s: economic crisis and political crisis. Socialdemocratic welfare state looses political support
• From late 70s: rise of Neoliberalism (Glyn 2005). Retreat of labor, globalization, deregulation of finance …
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• European integration: in whose interest? (class analysis)
• EU as a vehicle for neoliberal policies?
• Financial deregulation
• Maastricht Treaty: limits on Keynesian policies
• Free trade, services directive
• … but not social standards
• „embedded neoliberalism“ (van Appeldorn)
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• Historic perspective. Capitalism is one way of organizing production and social relations
• Socities are structured by class relations (as well as by lots of other social relations)
• Political economy approach: Force and power are structural parts of societies, in particular of exploitative modes of production.
• Production process as a labour process: labour is different from capital.
• Income distribution is a socially, not technically determined phenomenon
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