A Marxian alternative

Although it has been shown that Nell s (2004) model of the circulation of money bears some resemblance to Marx s system, two key issues remain to be resolved. First, in adopting the Kalecki schema of intersectoral flows (Table 4.1), Nell narrowly associates accumulation with the production of means of production (capital goods). There is no mention of the accumulation of consumption goods, which are placed at the centre of Marx s reproduction schema. Second, the role of Marx s category of surplus value is obscured in the Kalecki table. As demonstrated in Chapter 3, for the 

Following the approach worked out in Chapter 3, Table 4.1 shows that in the Kalecki-type formulation profits in each sector are defined in gross terms, consisting of expenditure on the replacement of existing constant capital and its expansion (C, + e/C.) whereas in Table 4.2 profits (/() are defined in net terms (dC, + dV,). The latter definition of profits is consistent with Marx s interpretation, with the total increment of capital identical to the volume of surplus value, after accounting for the replacement of current inputs of constant and variable capital. 

As discussed earlier, in relation to the single swap approach, it may also be posited that capitalists advance the amount M —M required to purchase the total increment of capital. In addition to funding the production of this capital increment, the monetary advance allows the realization of the volume of surplus value required for its production. Capitalists earn a net volume of profits (surplus value) that is driven by increments dC = dC, + dC2 and dV =dV, + dV2 of constant and variable capital respectively. Ignoring for simplicity the role of capitalist consumption, the total volume of surplus value P = dV + dC is driven by capitalist requirements for new constant and variable capital. 

In contrast to the single swap approach, however, it can also be argued that the money required for additional capital can be advanced without advancing the whole of the economy s gross income. In Marx s terminology it may 

Key to modelling the circulation of money in this Marxian reproduction schema is a consideration of how it intertwines with the circulation of commodities between sectors. A precondition for the circuit of money is the commodity circuit. To explore in more detail how commodities circulate in Marx s system, the role of inventories has to be considered. Taking his lead 

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Wolff, R.D., Callari, A. and Roberts, B. (1984) A Marxian alternative to the traditional transformation problem Review of Radical Political Economics, 16 115-35. 

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