by Marx and Keynes on the contradictions of capitalism Each capitalist, Marx noted, has an ambiguous relation to the workers. On the one hand, she wants the workers she employs to have low wages, since that makes for high profits. On the other hand, she wants all other workers to have high wages, since that makes for high demand for her products. Although it is possible for any one capitalist to have both desires satisfied, it is logically impossible for this to be the case for all capitalists simultaneously. This is a ‘contradiction of capitalism’ that Keynes spelled out as follows. In a situation of falling profit, each capitalist responds by laying off workers, thus saving on the wage bill. Yet since the demand of workers directly or indirectly is what
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Marx and Keynes on the contradictions of capitalism
Each capitalist, Marx noted, has an ambiguous relation to the workers. On the one hand, she wants the workers she employs to have low wages, since that makes for high profits. On the other hand, she wants all other workers to have high wages, since that makes for high demand for her products. Although it is possible for any one capitalist to have both desires satisfied, it is logically impossible for this to be the case for all capitalists simultaneously. This is a ‘contradiction of capitalism’ that Keynes spelled out as follows. In a situation of falling profit, each capitalist responds by laying off workers, thus saving on the wage bill. Yet since the demand of workers directly or indirectly is what sustains the firm, the effect of all capitalists’ simultaneously laying off workers will be a further reduction in profit, causing more lay-offs or bankruptcies.