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Explaining national inequality: the relevance of Marx and the irrelevance of equilibrium

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Freeman, Alan

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Abstract

This paper was originally presented at the ‘Marxism and Political Economy’ conference called by the International Socialist Journal on Saturday 29th September 2007. A revised version was presented to the Historical Materialism conference on 13th November 2007. It enquires why, although national economic equality is one of the most persistent features of the history of capitalism, economics as yet lacks a coherent economic explanation of it. It also enquires why Marxism has failed to develop such an explanation, and concludes that in both cases the inadequacies of existing theory arise from the constraints of the general equilibrium paradigm. In the second case, however, this paradigm is wrongly attributed to Marx. The paper argues that Marx’s own, original theory of value, contains the basis for an economic mechanism of divergence in the formation of market value as the average of many producers of differing productivities. The persistence of productivity differentials – excluded by the general equilibrium paradigm – is maintained by a positive feedback mechanism. It yields a surplus (above average) profit to the high productivity producers, who become geographically concentrated within a definite and very stable block of nation-states at an early point in the history of capitalism. From then on, this extra profit could be invested in maintaining a permanent productivity lead. This is an entirely temporal effect and cannot be predicted or reproduced if it is pre-supposed that productivity differentials are ignorable.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6836.

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Date of creation: Sep 2007
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Handle: RePEc:pra:mprapa:6836

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Related research
Keywords: Inequality; Development; Value Theory; Temporalism; World Systems Theory; Dependency Theory; Globalization; TSSI; General Equilibrium;

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Find related papers by JEL classification:
O1 - Economic Development, Technological Change, and Growth - - Economic Development
O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
B4 - Schools of Economic Thought and Methodology - - Economic Methodology
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches

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  1. Freeman, Alan, 2004. "The Inequality of Nations," MPRA Paper 5589, University Library of Munich, Germany. [Downloadable!]
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This page was last updated on 2009-11-9.


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