Tugan-Baranowsky and effective demand

Milios, John and Sotiropoulos, Dimitris (2007). Tugan-Baranowsky and effective demand. Science and Society, 71(2) pp. 227–242.

DOI: https://doi.org/10.1521/siso.2007.71.2.227

Abstract

Tugan-Baranowsky criticized underconsuption crisis theories on the hasis of Marx's reproduction schemes in Vol. II of Capital. However, he incorporated in his analysis the "ahsolute immiseration thesis," and claimed that "proportionality" between production sectors would exclude any possibility of crisis, despite the supposedly continuous fall in mass consumption. This approach allows for a Keynesian interpretation of Marx's theory of expanded reproduction of social capital, according to which a constantly increasing investment demand may always compensate for the lacking demand for consumer goods. In contrast to Keynesian approaches, the ultimate "cause" of an economic crisis is found to be not "lack of demand" but "lack of surplus value," in the sense that the totality of capitalist contradictions renders capital unable to exploit labor at the level of exploitation that is required for sustaining profitability rates.

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