Capitalism, Economic Dynamics

By MichaŁ Kalecki; Jerzy Osiatyński et al. | Go to book overview

The Problem of Effective Demand with Tugan-Baranovsky and Rosa Luxemburg [1] (1967)

I

In the discussions about the market for the national product in terms of the Marxian schemes of reproduction, the positions taken by Tugan-Baranovsky and Rosa Luxemburg are at opposite poles. Tugan-Baranovsky denies altogether that the problem of markets may constitute an obstacle to the development of capitalism, which thus depends entirely on the increase in productive capacity. Rosa Luxemburg, on the contrary, considers expanded reproduction in a closed capitalist system impossible, attributing all its development to the possibility of selling its wares in the markets external to it, i.e. in the non-capitalist sector of the world economy.

It is most interesting that both authors commit important errors in their arguments and that nevertheless their theories give a correct picture of some essentials of capitalist economy. Tugan-Baranovsky rightly stresses the 'antagonistic character' of the capitalist regime, as a result of which the production of consumer goods is not its final aim and the demand for them is not the motive force of its development. Similarly, although Rosa Luxemburg's theory that the development of capitalism depends solely on the 'external markets' is not correct, these markets are still an important part in the dynamics of capitalism.

The two theories find something like a point of intersection in present-day--especially US--capitalism, where a decisive role is played by a market created by the government for armament production.


II

The theory of Tugan-Baranovsky is in fact very simple: the author maintains that with 'appropriate proportions' of use made of national product the problem of effective demand does not arise. This argument, illustrated numerically by means of Marxian schemes of reproduction, is in fact tantamount to the statement that, at any level of consumption of workers and capitalists, the national product may be

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