Theory, Evidence, and Policy
... a rise in the price of labour resulting from accumulation of capital implies the following alternative: Either ... Or, on the other hand, accumulation slackens in consequence of the rise in the price of labour, because the stimulus of gain is blunted. The rate of accumulation lessens; but with its lessening, the primary cause of that lessening vanishes, i.e., the disproportion between capital and exploitable labour-power. The mechanism of the process of capitalist production removes the very obstacles that it temporarily creates. The price of labour falls again to a level corresponding with the needs of the self-expansion of capital, whether the level be below, the same as, or above the one which was normal before the rise of wages took place. (Marx 1954, p.580) 1.1 Introduction In the recent past, unregulated ﬁnancial markets appeared to be the big threat for the proper working of advanced capitalism. Starting from a subprime mortgage crisis, to which US policy makers at ﬁrst paid not much attention to, due to the belief that markets do regulate themselves, the banking system came close to a systemic banking crisis, with stock markets collapsing, and with now a threatening ﬁscal crisis and government insolvency in particular in the ‘PIGS’ of Southern Europe (Portugal, Italy, Greece, Spain) and maybe further countries. There is fear that the Eurozone may collapse and there are proposals to throw countries like Greece out of the Eurozone, since they have systematically violated the conditions of the EU growth and stability pact. So far...
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