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

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  • Freeman, Alan

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.

Suggested Citation

  • Freeman, Alan, 2007. "Explaining national inequality: the relevance of Marx and the irrelevance of equilibrium," MPRA Paper 6836, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:6836
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    File URL: https://mpra.ub.uni-muenchen.de/6836/1/MPRA_paper_6836.pdf
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    References listed on IDEAS

    as
    1. Freeman, Alan, 2004. "The Inequality of Nations," MPRA Paper 5589, University Library of Munich, Germany.
    2. Alan Freeman & Guglielmo Carchedi (ed.), 1996. "Marx and Non-equilibrium Economics," Books, Edward Elgar Publishing, number 737, April.
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    More about this item

    Keywords

    Inequality; Development; Value Theory; Temporalism; World Systems Theory; Dependency Theory; Globalization; TSSI; General Equilibrium;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - 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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