Unemployment, Recession and Effective Demand

Unemployment, Recession and Effective Demand

The Contributions of Marx, Keynes and Kalecki

Claudio Sardoni

In the midst of the current world economic crisis, many claim there is a necessity to return to the Marxian and Keynesian traditions in order to better understand the dynamics of market economies. This book is an important step in that direction. It presents a critical examination of the foundations of macroeconomics as developed in the traditions of Marx, Keynes and Kalecki, which are contrasted with the current mainstream. Particular attention is given to the problem of market forms and their relevance for macroeconomics.

Chapter 9: Concluding Remarks

Claudio Sardoni

Subjects: economics and finance, history of economic thought, post-keynesian economics


This chapter presents some final remarks concerning a number of topics that have a central place in the book. They essentially relate to the problem of realism in economic theorizing. 9.1 THE ‘ECONOMIC MACHINE’: THE SCIENTIFIC DISCOVERIES OF MARX AND KEYNES Classical political economists developed and used the concept of the ‘economic machine’.1 This machine works according to laws which can be understood and studied in a scientific way. They regulate the process by which the machine reproduces itself and grows, and this process fundamentally represents the general (social) interest because all actors within the system (individuals or, rather, social classes) benefit from it. In this framework, each class pursues its own specific interests and, in doing so, it acts in the general interest as well. In other words, there is a fundamental convergence of individual interests and the general interest. In particular, the capitalist class in pursuing its interest enables the machine to reproduce and grow and, as a result, to provide benefits for all. The laws that regulate the working of the machine force individual capitalists to behave in this way. Adam Smith was the classical economist who was most firmly convinced of all this.2 Marx, too, believed that the economy and the social system can be regarded as a gigantic machine, but he also brought a fundamental new insight; namely, that this machine cannot possibly work without using money, which performs several different roles. Once money is introduced, the analytical picture is radically...

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