Keynes And Marx

1.0 Introduction

John Maynard Keynes had some amusing jibes against Marx, but does not provide any substantial argument against the theory in Marx's Capital. In fact, one can draw parallelisms between elements of Keynes' and Marx's theories. This post provides a brief start on justifications for these assertions.

2.0 Jibes

Keynes' most explicit and most well-known statement about Marx is probably this:

"How can I accept a doctrine which sets up as its bible, above and beyond criticism, an obsolete economic textbook which I know to be not only scientifically erroneous but without interest or application for the modern world? How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeois and the intelligentsia vho, with whatever faults, are the quality in life and surely carry the seeds of all human advancement? Even if we need a religion, how can we find it in the turbid rubbish of the Red bookshops? It is hard for an educated, decent, intelligent son of Western Europe to find his ideals here, unless he has first suffered some strange and horrid process of conversion which has changed all his values." - Keynes, 1931

This is from his essay, 'A short view of Russia'. One might also want to look at the essays, 'Am I a Liberal?' and 'Liberalism and Labour'. These three were all republished in Essays in Pursuasion. The latter two are more about party politics in Britain in the 1920s.

3.0 The General Theory, Including Drafts

Keynes distinguished, in drafts of the General Theory, between three types of economies. He designated the first type as a barter of co-operative economy. The second type is a neutral entrepreneur economy or a neutral economy, for short. This type is summarized by Marx's symbols C-M-C and acts like the first type. Agents exchange commodities for commodities, with money acting as an intermediary, but having no independent effect on the course of events. A monetary theory of production, though, deals with a money-wage economy, also known as an entrepreneur economy. This type is characterized with Marx's symbols M-C-M'. Money matters in all runs. I rely on secondary literature which I do not reference below.

Another parallelism between Keynes and Marx is in the choice of units:

"In dealing with the theory of employment I propose, therefore, to make use of only two fundamental units of quantity, namely, quantities of money-value and quantities of employment. The first of these is strictly homogeneous, and the second can be made so. For, in so far as different grades and kinds of labour and salaried assistance enjoy a more or less fixed relative remuneration, the quantity of employment can be sufficiently defined for our purpose by taking an hour's employment of ordinary labour as our unit and weighting an hour's employment of special labour in proportion to its remuneration; i.e. an hour of special labour remunerated at double ordinary rates will count as two units. We shall call the unit in which the quantity of employment is measured the labour-unit; and the money-wage of a labour-unit we shall call the wage-unit." -- Keynes. 1936.

The above seems close to Marx's theory of value.

4.0 After The General Theory

I pick two examples of others drawing on parallels between Keynes and Marx. Perhaps the above section heading is unfair to Kalecki. When he visited Cambridge, the Keynesians found that he was in on all their jokes. Kalecki divides the economy into a sector producing consumer goods and a sector producing investment goods. He was aware of Rosa Luxemburg, and Luxemburg built on Marx's schemes of simple and expanded reproduction.

Joan Robinson (1953) makes the point about units of measurement that I note above. She had a lot more to say about Marx.

5.0 Conclusion

Many have had lots more to say about the relationship of the ideas of Keynes and Marx. One question is whether Marx was wrong to claim that the development of capitalism will lead to its own demise, perhaps in the depth of a great depression. Does not Keynes provide the political tools to keep capitalism going indefinitely? Some Marxists rejected Keynesianismn on these grounds.

Another question is about long-run theory. Keynes' General Theory is not confined to the short run. No need exists for the labor market to eventually clear. Sraffa provides a theory of prices consistent with a non-clearing labor market, and he takes output as given. Should there not be a theory that integrates the approaches of Keynes and Sraffa? But this has been on the agenda for decades.

Lots more can be said.

References

• Michal Kalecki, 1943. Political aspects of full employment, Political Quarterly.
• John Maynard Keynes, 1931. Essays in Persuasion.
• John Maynard Keynes, 1936. The General Theory of Employment, Interest and Money. Harcourt, Brace and Company.
• Joan Robinson, 1953. An open letter from a Keynesian to a Marxist.