Generalization of the macro monetary model

An overarching aim of this book is to develop a formal model which captures the role of both aggregate demand and money in the reproduction schema. 

Using the new interpretation, this model is summarized here in its most general form, with prices deviating from values. This provides a summary of how the model contributes both as a vehicle for exploring some key issues in political economy and as a synthesis between various fragments. 

Although it is traditional in Marxian frameworks for capitalists to initiate the circulation of money with an advance of constant and variable capital, our previous discussion, in Chapter 4, showed that there are a number of ways in which the circulation of money can be modelled. In the single swap approach all of income is advanced in the Franco-Italian circuit approach only the wage bill is advanced in Nell s mutual exchange approach only wages in the capital goods sector are advanced. Our contribution has been to suggest, under the Kalecki principle (first introduced in Chapter 3), that capitalists advance an amount of money sufficient to realize their profits. This model is predicated on the definition of investment as accumulation of constant and variable capital. 

Recall from equation (4.23) that a multiplier relationship 

How does this model of the circuit of money relate to the transformation problem It can be shown how this model can be generalized to a Sraffian interpretation. Since c = pAX/pX and w = wlX/pX it follows from (8.6) that 

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