Marxian Reproduction Schema: Money and Aggregate Demand in a Capitalist Economy, by Andrew B. Trigg. Ahingdon, UK and New York, USA. Routledge. 2006. Hardback: ISBN-10 0-415-33669-4, 60.00 [pounds sterling]. 130 pages.
This is an ambitious little book. Trigg attempts to advance our understanding of the macroeconomics of cycles and growth by synthesizing the Marxian approach to macroeconomics with elements of post Keynesian economics. Marx's work emphasized the conditions necessary for reproduction and balanced growth, and discussed crises (his term for the downward turning points in the business cycle) quite extensively, but did not systematically work out the roles of aggregate demand and money. Keynes and the post Keynesian approach emphasize money, credit and aggregate demand, but neglect reproduction conditions and the inter-sectoral flows of expenditures and products necessary for balance and stability. Trigg persuasively argues that Marx's reproduction schema in Volume 2 of Capital and the less systematic discussions of money, credit and crises in Volume 3 should be understood as very important contributions to the development of macroeconomics, worthy of our study even now.
Chapter 2, "The Multiplier," begins with a review of Marx's two department (producing capital goods and consumption goods) reproduction schema, which he used to illustrate the necessary conditions for reproduction of the capital stock and labor power. The production of capital goods must equal depreciation; the production of consumption goods must equal the necessary consumption for workers' reproduction of their labor power as well as any consumption by capitalists; this must occur in both real-physical and money-income-expenditure dimensions. For growth to occur, capitalists must save some of their profits and purchase net capital; the production of capital goods must equal this demand. If demand for capital goods increases, a "multiplier" effect on wages, employment and total production will occur, as in a Keynesian model. Trigg also shows how Marx's model can be understood as a precursor of Leontief's input-output model.
Chapter 3, "The Kalecki Principle," explains some of the connections between Kalecki's work and both Marx and Keynes; Trigg shows how a Kalecki version of the investment spending multiplier can be integrated into Marx's reproduction schema. This chapter also demonstrates the importance of Kalecki's insight that investment by capitalists...