The Theory of Accumulation: A Marxian Approach to the Dynamics of Capitalist Economy (Kobe University Monograph Series in Social Science Research)

This book treats the mechanisms of growth and cycles in capitalist economies in a unified manner, incorporating a highly original macro-dynamic theory based on Marxian micro-foundations and historical perspectives. That theory was developed about 50 years ago by Nobuo Okishio (1927-2003) and included the ideas of Keynes and Harrod. In mainstream economics, it used to be standard to analyse long-term economic growth and business cycles in different frameworks. That approach has been changing recently, but it still tends to be common to discuss them separately. At the outbreak of the global financial crisis of 2007-2008 and the prolonged stagnation that followed, there was strong criticism among policymakers and businesspeople that mainstream macroeconomics failed to provide convincing explanations and effective policy recommendations. This book offers an alternative perspective that responds to those criticisms. All these macroeconomic difficulties call for new wisdom beyond the limited neoclassical framework. The sharp, wise thoughts of Okishio will add new tools for young researchers worldwide to meet the challenges of the current resource misallocation, the Great Recession and the Lost Decades problems. Okishio proposes a historical perspective for the capitalist system, first. He argues that production relations are conditioned by productive force. The former should evolve as the latter improves, and the latter should evolve in order for human society to survive. While reproduction is indispensable for the economy to continue in any production relations, it takes a specific form in capitalist economy. He next shows that the existence of profit requires the exploitation of the labourer. This is called the Fundamental Marxian Theorem. He also shows a trade-off relationship between the real wage rate and the profit rate. In his theory, the real wage rate is determined to clear commodity markets in the short run as in the Keynesian theory, while Marx believed that the real wage rate is given at subsistence level or is influenced by the labour market. Okishio attributes the origin of the business cycle to labourers' under-consumption and private capitalists' dispersive decision of accumulation. The former is caused by exploitation, and the latter is based on the capitalist class's private ownership of the means of production. Both are derived from the nature of the capitalist economy. He argues lastly that, in the long term, the development of productive force through the business cycle will transform the production relation into a new economic system.-- Provided by publisher Preface to English Edition 6 Preface to the Second Edition 8 Preface to the First Edition 10 Contents 12 About the Author 15 List of Figures 16 List of Tables 18 1 Introduction 19 1.1 The Structure of This Book 20 1.2 Various Issues Today 21 1.3 The Relationship Between Capital and This Book 24 2 Fundamental Structure of Capitalist Economy 26 2.1 The Characteristics of a Capitalist Economy 26 2.1.1 Productive Force and Production Relations 27 2.1.2 Productive Forces and Production Relations in the Capitalist Economy 35 2.2 The Conditions for Profit Existence 41 2.2.1 Various Vulgar Views 41 2.2.2 Casual Observations and the Question 44 2.2.3 The Conditions for Profit Existence 46 2.2.4 A Mechanism to Guarantee Profits 58 2.3 Theories of Determination of the Real Wage Rate 61 2.3.1 The Reproduction Cost Theory 61 2.3.2 The Marginal Productivity Theory 63 2.3.3 The Labor-Market Theory 64 2.3.4 The Commodity-Market Theory 66 2.4 Mechanism of Determination of the Real Wage Rate 73 2.4.1 Reproduction of Wage-Labor Power and Real Wages 74 2.4.2 Temporary Determination of the Real Wage Rate 78 2.4.3 Factors that Determine the Real Wage Rate 86 2.4.4 Movement of the Real Wage Rate 89 Mathematical Appendix 91 Uniform Profit Rate and Real Wage Rate 91 Temporary Equilibrium of the Real Wage Rate 95 3 Extended Reproduction in the Capitalist Economy 105 3.1 Reproduction 105 3.1.1 Reproduction in General 105 3.1.2 Reproduction in the Capitalist Economy 113 3.2 Various Theories on the Capital Accumulation 116 3.2.1 David Ricardo’s Point of View 117 3.2.2 Malthus’s View 125 3.2.3 Sismondi, the Narodniks, and Luxemburg’s View 130 3.3 Extended Reproduction in the Capitalist Economy 136 3.3.1 Reproductive Replacement in the Capitalist Economy: Simple Reproduction 137 3.3.2 Extended Reproduction in the Capitalist Economy 146 3.4 The “Equilibrium” Accumulation Trajectory 159 3.4.1 Steady Extended Reproduction Trajectory 160 3.4.2 The Equilibrium Accumulation Trajectory: A Constant Technology Case 163 3.4.3 The Implication of the Equilibrium Accumulation Trajectory 168 3.4.4 An Equilibrium Trajectory of Capital Accumulation with Technological Progress 176 Mathematical Appendix 182 Equilibrium Accumulation Trajectory and Sector Ratio 182 4 Accumulation and Crisis in Capitalist System 191 4.1 Cumulative Process of Disequilibrium 191 4.1.1 The Vulgar View 191 4.1.2 Importance of Accumulation Demand 195 4.1.3 Capitalists’ Decision on Accumulation Demand 200 4.1.4 Cumulative Process of Disequilibrium 204 4.2 Theories on Economic Crisis 213 4.2.1 Underconsumption Theory 214 4.2.2 Theory of Declining Profit Rate Due to Real Wage Rate Increase 222 4.3 Economic Crisis 228 4.3.1 Inevitability of Economic Crisis 229 4.3.2 Triggers of Economic Crisis 235 4.3.3 Implications of Economic Crisis 240 4.4 Reversal 246 4.4.1 Inevitability of Reversal 246 4.4.2 Triggers of Reversal 249 4.4.3 Business Cycle 255 Mathematical Appendix 258 Cumulativeness in Disequilibrium 258 5 Tendency Law in Capitalistic Accumulation 262 5.1 Arguments on Tendency Law 262 5.1.1 Counterarguments Against Tendency Law 262 5.1.2 Equilibrium Growth Theory 266 5.1.3 Breakdown Theory 268 5.2 Marx’s Tendency Law 271 5.2.1 Law of the Tendency of the Rate of Profit to Fall 271 5.2.2 The Law of the Progressive Production of the Relative Surplus Population 275 5.2.3 Implication of the Laws 282 5.3 Capitalist Production Relations and Fetters to the Productive Force 283 5.3.1 Difficulty of Realization and a Fall in the Profit Rate in Relation to an Increase in the Productive Force 285 5.3.2 Increase in the Minimum Required Funds and the Mobilization of Public Funds 287 5.3.3 Global Control Over Nature and Environmental Pollution 290 5.3.4 Information-Processing Ability and Its Monopoly 292 5.4 Transformation of the Capitalist System 294 5.4.1 Rebellion of the Labor Class 295 5.4.2 Realistic Direction of Human Continuance 297 6 A Vision Toward New Society 300 Correction to: The Theory of Accumulation 304 Correction to: N. Okishio, The Theory of Accumulation, Kobe University Monograph Series in Social Science Research, https://doi.org/10.1007/978-981-16-7905-6 304 References 305 Index 308