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Marx Inside the Circuit: Discipline device, wage bargaining and unemployment in a sequential monetary economy

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  • Riccardo Bellofiore
  • Guglielmo Forges Davanzati
  • Riccardo Realfonzo

Abstract

The aim of this paper is to show that Marxian labour theory of value can be consistently interpreted in terms of the monetary circuit model, where firms need initial finance to start production and where the money supply is endogenous. In contrast to the recently revived Marxian monetary models, in particular the New Interpretation, it is argued here that although the money wage is bargained for on the labour market, the real wage is determined by firms' choices, since firms autonomously determine the structure of production and hence real consumption for the working class as a whole. This does not mean that firms are able to set the real wage without economic and social constraints. Starting from our circuitist reading of the labour theory of value and distribution, a model is developed in order to determine the level of employment and income distribution, on the assumptions that (i) the industrial reserve army affects wage bargaining and labour effort and that (ii) workers react to the failure of their expectations on the real wage by reducing their work intensity. In this context, it is shown that firms may increase their share of profits over time only be means of innovations.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Review of Political Economy.

Volume (Year): 12 (2000)
Issue (Month): 4 ()
Pages: 403-417

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Handle: RePEc:taf:revpoe:v:12:y:2000:i:4:p:403-417

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Cited by:
  1. Cavalieri, Duccio, 2004. "On Some Equilibrium and Disequilibrium Theories of Endogenous Money: A Structuralist View," MPRA Paper 43738, University Library of Munich, Germany.
  2. cavalieri, duccio, 2003. "On the closure of the monetary circuit," MPRA Paper 43836, University Library of Munich, Germany.
  3. Keen, Steve, 2013. "A monetary Minsky model of the Great Moderation and the Great Recession," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 221-235.
  4. Guglielmo Forges Davanzati & Andrea Pacella, 2014. "Unemployment benefits, the ‘added worker effect’ and income distribution in a monetary economy," Working Papers PKWP1402, Post Keynesian Economics Study Group (PKSG).

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