Toward a Marx-Keynes-Minsky Synthesis

ABSTRACT

This paper summarizes and compares the approaches of Marx and Keynes to the theory of effective demand and places it within the monetary theory of production. While their techniques differed (Marx overtly followed—one could say, completed— the Classical labor theory of value while Keynes worked in–and tried to revolutionize–the Marshallian tradition) their theories were quite similar. In some respects, Keynes allowed money to play a bigger role in his exposition through an emphasis on the importance of liquidity preference in the investment decision. Both rejected the mainstream view that market forces tend to push the economy toward full employment because employment and production are undertaken not to satisfy wants but to produce monetary profits. Finally, Minsky’s extensions of Keynes are examined, including his emphasis on finance and the role it plays in creating instability, and his use of the Kalecki profits equation.  Similarly to Marx, Minsky offers a non-monetary approach to pricing and links that to Kalecki’s theory of profits.  While Minsky set out to reboot the Keynesian revolution, his contributions also have implications for our understanding of Marx. However, the paper concludes that we must also pay attention to Minsky’s stages approach to capitalism and suggests that we have entered a stage in which beginning analysis with commodity production may not shed much light on the direction in which capitalism is headed.