Beyond underconsumption

Second, Rosa Luxemburg s Accumulation of Capital provides an exceptionally detailed examination of Marx s reproduction schema. Aznar (2004 253) argues that Luxemburg believed this book to be a continuation of Capital book 2, which Marx had left unfinished . Key to Luxemburg s interpretation is the role of demand, which she argues is obscured by Marx s specific focus on the question, Where does the money come from Marx is criticized for assuming that capital can accumulate unimpeded, without identifying how new capacity can be profitably realized. 

The purpose of this chapter is to review particular aspects of these two interpretations of the reproduction schema in the light of the macro monetary model developed in previous chapters. How do these interpretations relate to our emphasis in the reproduction schema upon the importance of money, credit and the multiplier And what is the distinctive contribution of the macro monetary model relative to these golden age interpretations By re-interpreting these approaches through the lens of our macro monetary model, the objective is to explore in more depth the role of the reproduction schema in Marxian economic theory. 

The main proponent of the disproportionality approach was Rudolf Hilferding, who built on the ideas of the Russian Marxists, Tugan Baranovsky and Bulgakov. Key to the occurrence of disproportions is the 

The most basic proportions embedded in the reproduction schema are established under simple reproduction. This was touched on in our introduction to the schema in Chapter 2, and in establishing the mutual exchange which takes place between departments of production in the circulation of money (Chapter 4). These proportions can be formally derived, in Table 6.1, by displaying the elements of Marx s numerical example (Table 2.1) alongside the Marxian algebraic symbols.3 

The mutual exchange condition for simple reproduction, established in Table 6.1(a), is that Department 2 exchanges 2,000 units of consumption goods for 2,000 units of means of production produced by Department 1. These 2,000 units of means of production are represented in Table 6.1(b) as used-up constant capital C2. Similarly, the 2,000 units of consumption goods are purchased in Department 1 out of variable capital Vx and surplus value A. Hence the condition for simple reproduction can be expressed as 

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