Theory of capitalist development
At centre stage in discussions about Marx’s theory of capitalist development has been the validity of the law of the tendency of the rate of profits to fall, on which a large amount of literature exists.
An important contribution was made by Nobuo Okishio (1961, 1963), who proved that for a constant real wage rate the rate of profits cannot fall with technical progress (now known as the “Okishio theorem”). It ought to be mentioned, however, that Okishio’s results are clearly foreshadowed in Ricardo’s analysis and have been anticipated by Samuelson (1959) and Sraffa (1960). For many economists this demonstrates the invalidity of Marx’s entire theoretical construction, because a central element of his accumulation theory and his crises theory has been shown to be false. However, as was argued above, Marx seems to have had doubts about the correctness of his “law” himself, and it is unclear whether he meant to suppose a constant wage share (or given rate of surplus value) or a constant real wage rate. Moreover, his argument seems to have been meant to refer, following Ricardo, to technical changes induced by changes in income distribution, that is, to “induced innovations”, rather than to technical progress proper.Marx’s schemes of simple and extended reproduction inspired the development of multi-sectoral models of growth and cycles. Michail Tugan-Baranovsky (1905) and Henrik Grossmann (1929) developed cycle and crises theories from those schemes; Rosa Luxemburg (1913 [1951]) used the reproduction schemes for the development of a theory of imperialism; and Russian economists like G.A. Feldman (1928 [1964]) developed multi-sectoral planning models from them (for a comprehensive survey, see Turban 1980). Marx’s schemes also influenced Wassily Leontief’s input-output analysis and the associated literature. (Piero Sraffa’s “first equations”, which he elaborated in 1927-28, however, were developed independently of Marx’s reproduction schemes; see Kurz and Salvadori (2015).)
Marx’s analysis of the interrelationship between capital accumulation and income distribution in an evolving economic system has led to the development of a still growing class of non-linear cyclical growth models, which generate endogenous cycles around a growth path on the basis of the “predator-prey” model developed by Richard M.
Goodwin (1967). Strongly influenced by Marxian ideas about the introduction and diffusion of technical progress and the dynamics of capitalist development is also a branch of the evolutionary economics literature inspired by Joseph A. Schumpeter’s Theorie der wirtschaftlichen Entwicklung (Theory of Economic Development) (1912). The macroeconomic effects of the tendency towards monopolization and capital concentration, emphasized by Marx, have been investigated by Rudolf Hilferding (1910 [1981]), Josef Steindl (1952), and Paul A. Baran and Paul M. Sweezy (1966).Gilbert Faccarello, Christian Gehrke and Heinz D. Kurz
See also:
Ladislaus von Bortkiewicz (I); British classical political economy (II); Vladimir Karpovich Dmitriev (I); Marxism(s) (II); Non-Marxian socialist ideas in France (II); Non-Marxist socialist ideas in Germany and Austria (II); Non-Marxian socialist ideas in Britain and the United States (II); Pierre-Joseph Proudhon (I); David Ricardo (I); Value and price (III); Piero Sraffa (I).