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I refer t0 “The Aggregate Demand Problem in Capitalism Solved” – July 15, 2022, Tim Di Muzio
Tim Di Muzio notes the difference between US Wages and Salaries and Real GDP and notes the gap as very large: “the average percent difference is as high as 71%”. This gap is assumed, I guess, to explain the lack of aggregate demand for goods and services. But where is the accounting of profit? Profit matters for consumption too. Do not profits go, at least partly, to re-investment (plant and equipment, materials, energy, consumables) and to capitalists, shareholders etc. who also consume? Would it not be better to mention this? Granted, there are issues like the “lower marginal propensity to consume” (for capitalists compared to workers) but there is also the issue of the “departments” as Marx called them.
“He (Marx) therefore introduced a distinction between two departments: Department I comprises the production of means of production, that is, of “commodities having a form in which they must, or at least may, pass into productive consumption”, and department II consists of industries for the production of articles of consumption, that is, “commodities having a form in which they pass into the individual consumption of the capitalist and the working class” – Christian Gehrke.
Tim Di Muzio seems to leave aside consideration of capitalist personal consumption (perhaps considerable once we get to $500 million superyachts) and of the Department 1 consumption, to use Marx’s terminology.
Granted, if we limit the analysis to Department 2, the individual consumption of the capitalist and the working class, then the mark-up seems to explain that the situation. But don’t we need to look at it dynamically too? The over-production presumably gets soaked up by growth, demographic and economic (when things are working well and everything is stoked by continual debt creation).
I find myself wondering if this above is a good example of capitalism’s reliance on endless growth. Without endless growth (and in cyclical downturns) do the overproduction and aggregate demand problems really come to the fore?
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