A Note on the Surplus Approach as ‘Neo-Marxian’ Political Economy

ABSTRACT

After a short survey of the reasons why the label ‘Neo-Ricardianism’ customarily fixed to the surplus approach to political economy should be discarded for good, the note focuses on Marx's analysis of the influence of income distribution on the incentive to invest and technical change. It is held that it is principally this analysis that should be taken as the foundation for any further development of the surplus approach, with a view to putting together the essential elements of an alternative theory of employment and activity levels within which also the role of the State and its economic policy may be critically dealt with.

KEYWORDS:

• Ricardianism
• Marxian political economy
• distribution theory
• accumulation
• technical change
• role of the State

JEL CODES:

• B120
• B14
• D3
• E2
• O30
• H10

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1 As to international free trade, obviously a crucial topic for a thorough discussion of the current state of advanced capitalism, let us here recall that also Marx was in favour of it and that he thought that free trade would have had a positive impact on the normal profitability of capital. But his analysis of the demand limits to output (more on this below in the text) impeded him to regard free trade as capable of ensuring the participating nations higher levels of overall real income. Basically, Marx's position on the matter reflected but a political speculation: he saw international free trade as a pusher to the extreme the antagonism between the proletariat and the bourgeoisie, thereby hastening the social revolution. Cf. on this Pivetti (2019).

2 The journal discontinued its publication in 1990 (with a double issue on gravitation and classical price theory), basically owing to the difficulty ‘to increase the circle of contributors … without causing a decline in the quality of the work published’ (Vol. 6, ns. 1–2, p. 3).

3 Catalogue number D 3/12/4 10 in the collection of Piero Sraffa's papers housed at the Wren Library of Trinity College, Cambridge. See also D 3/12/4 7 and D 3/12/4 2.

4 Especially against the risk of slipping into some hotchpotch of ‘Marxo-marginalist’ reasoning. For a significant example of this, applied to a topical issue (the economics of US military spending), see the discussion between myself (1992) and Smith and Dunne (1994) of The Cambridge Journal of Economics, pp. 373–384 and 515–527.

5 For a discussion on the ultimate determinants of the parties’ relative strengths and the actual channels through which they act, see Pivetti (2013).

6 It is fair here to remark that at the very end of his life also Ricardo acknowledged that the transformations that save labour by increasing its productivity can feed the formation of a surplus population. In discussing ‘the influence of machinery on the interests of the different classes of society’ in a new chapter added to the third edition of the Principles, he admitted that the introduction of new machinery could result in a smaller demand for labour – ‘that the substitution of machinery for human labour, is often very injurious to the interests of the class of labourers […] as some of their number will be thrown out of employment and population will become reduntant compared with the funds which are to employ it’ (1821 [1951], pp. 386, 388 and 390).

7 ‘[The capitalist] is always enjoying wealth with a guilty conscience, with frugality and thrift at the back of his mind. In spite of all his prodigality he remains, like the miser, essentially avaricious’ (Marx 1861–1863 [1963], p. 282). It should be added, however, that the capitalists’ ‘frugality and thrift’ largely simply reflect the sheer difficulty of spending on consumption disproportionately high personal incomes.

8 In Wicksell's words, ‘the capitalist saver is thus, fundamentally, the friend of labour, though the technical inventor is not infrequently its enemy’ (1901 [1934], p. 146).

9 On this, see Stigler (1947, p. 327).

10 Cf. on this Garegnani (1979, pp. 78–79). Garegnani's article was first published in Italian in 1964–65.

11 In the last chapter of The General Theory Keynes acutely observes that ‘it is not necessary … that the game should be played for such high stakes [a high prospective level of profit] as at present. Much lower stakes will serve the purpose equally well, as soon as the players are accustomed to them’ (1936, p. 374).

12 On the trajectory of the European Left over the last 40 years, see Barba and Pivetti (2021) (2nd ed.).