Marx's Model of Expanded Reproduction

Marx's Model of Expanded Reproduction
Author(s): Alfred Evenitsky

Source: Science & Society , Spring, 1963, Vol. 27, No. 2 (Spring, 1963), pp. 159-175
Published by: Guilford Press
Stable URL: https://www.jstor.org/stable/40400936
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MARX'S MODEL
OF EXPANDED REPRODUCTION*
ALFRED EVENITSKY
MARX had discovered nothing else, his

formulae of expanded reproduction would be
antee his fame, for these formulae provide
which may be constructed a complex and soph
economy, socialist as well as capitalist.1 Marx
ered the forerunner of contemporary econom
it was he who first demonstrated diagrammat
lationship between the accumulation process
In a letter dated 6 July 1863 Marx sent En
representation of his theory of reproduction
nay is obvious, indeed he refers to the diagra
mique,2 and devoted a large section of the fir
* The author wishes to express his gratitude to Dr. M

draft of this article and offered both valuable suggestio
1 It may appear strange that the same model can be used

a socialist economy, but the reason is plain enough: "Ch
duction and in the class structure of society is accom
social and economic nature of the corresponding portio
but the necessity remains for definitive quantitative re
vision of the social product into tools of production (m
labor, and objects of consumption, characterizing the s
position of production, naturally holds true for both
cialist modes of production." (V. Nemchinov, "Relations
duction," Problems of Economics, Vol. I, No. 10 [1959]
2 Letter No. 67 of Marx-Engels Selected Correspondence
diagram by Marx much superior to this representing t
two departments of production has been reproduce
Marx-Engels-Lenin Institute edition of the second vol
159

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160 SCIENCE AND SOCIETY
of Surplus Value to Quesnay,3 as w

Dühring.4
It is precisely because Marx's expanded reproduction formu-
lae provide a prolegomenon to the theory of economic growth that
a critic of Marx was forced to admit that "the Marxists have . . .
come closest to developing a substantial theory of economic

growth
tion that "Marx's schema is the only compr

model of the industrial process of produc
Keynes."6
It is difficult to explain Marx's theory of r
a single article, and even more difficult to m
The importance of the subject, neverthele
fort be made. The present paper has a tw
sent as simply as possible the essentials of
duction. Second, to examine the propositio
never formulated by Marx, is implicit in
explicit in Lenin) that any given rate of
consumers' goods requires a higher rate of
producers' goods.
Simple Reproduction
Let us begin by assuming a state of aff
under either capitalism or socialism, nam
neither growing nor shrinking- one in wh
are produced in just the amount required
duction used up. Such an assumption does
real world, but it is very useful nonethe
to see the elements of the problem in th
called this condition simple reproduction
3 See the Bonner-Burns edition (London, 1951), pp.

4 (New York, n.d.), pp. 273-83. Some valuable secon
"Marx et Quesnay" in François Quesnay et la Phy
pp. 105-30; Pierre Moride, Le produit net des Phy
Karl Marx (Paris, 1908) and Henri Woog, The Tab
Quesnay (Berne, 1950).
5 Evsey D. Domar, "Economie Growth- An Economet
nomie Review, Supplement, Vol. XLII, No. 2 (1952)
6 "A Structural Model of Production," Social Research

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MARX'S EXPANDED REPRODUCTION 161
The aggregate value of the gross national produ

Marx, consists of the value of the means of prod
its production (constant capital) , the value of the
sumed (variable capital) and the surplus value g
represent this as follows:
W = C + V + S
Commodities are essentially of two kind

duced for direct consumption (say shirts)
or producers' goods intended to assist in
sumers' goods (say looms which produce t
the shirts) . We do not, of course, ignore th
commodities such as fuel oil which are
purchased by a householder to heat his ho
when purchased by a thermoelectric power
tricity, but for analytic purposes- and, in
well- it is a simple matter to distinguish t
That sector of the economy engaged in p
duction Marx called Department I, while th
goods he called Department II.7
Using subscripts we can restate our prev
for the two departments:
Department I Wt = C, + Vt + S,
Department II W* = Ct + Vt + S$
Departments I and II both require means of production, but
only Department I produces it. Therefore, it is obvious, that an
exchange must take place between the two departments such that
in a condition of equilibrium the means of production required
by both departments is equal to the output of Department I.
Ct + C* = Ct + Vt + St
Moreover, the workers and capitalists of Departm

subsist on turret lathes and steel rails. They must obt
goods through exchange with Department II. The equ
dition for such an exchange requires that the consum
7 The heart of Marx's analysis of the reproduction process will be

ters XX and XXI of the second volume of Capital.

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workers and capitalists of Departme

the workers and capitalists of Depar
the total output of the consumers' go
Vt + S, + V2 + S2 = C2 + V2 + S2
By algebraic simplification the last two equations

C2 = Vt + St.
This is the equilibrium formula for a condition of sim

production and states that the output of means of produ
Department I (above its own replacement needs) must
value the output of consumers' goods of Department II (ab
consumption which takes place within the department) .
way of interpreting the formula is to say that the means of p
tion used up in Department II must equal in value the com
consumed by the workers and capitalists of Department I
sum of the incomes disbursed in Department I) .
A diagram will serve to make this relationship clearer:
Department I Ct + Vt + St
Department II C2 + V2 + S2
Of the output of Department I (producing means of produc

tion) that portion represented by Ct is utilized within the depa
ment to replace used up means of production. The balance rep
sented by Vi and St (which is enclosed in a box to indicate tha
enters into interdepartmental exchange) is transferred to Dep
ment II in exchange for consumers' goods.
Of the output of Department II (which produces consume
goods) , a portion equal in value to C2 is transmitted to Dep
ment I and exchanged for means of production sufficient to rep
that used up in Department II. The balance of the production
Department II, represented by V2 and S2j is consumed within
department.
The elements of Marx's reproduction scheme represent dial
tical dualities whose aspect alters with the nature of the prob

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the model is called upon to solve. The element Vt> f

represents a portion of the production, in value term
sumers' goods department. But it also represents wag
workers in that department destined to be spent fo
goods. It thus represents simultaneously output and
duction and consumption, supply and demand.
There is a second duality in Marx's reproductio
which should not be overlooked. The commodities whose elements
are the building blocks of the reproduction scheme represent not
only values but also use-values. As Bukharin has noted, Marx's anal-
ysis of the conditions of enlarged reproduction "brings in both the
value (economic) and the natural (technical) aspect of reproduc-
tion. The process of exchange between the two departments pre-
supposes not only a 'logic' of value but also one of technique which
is derived from the law of technical interconnection of the different
departments of production/'8 For reproduction to continue unin-
terruptedly not only must the elements of the output be present
in the proper value-proportions but means of production and con-
sumers' goods as natural products must be produced in the right
proportions.
Expanded Reproduction
Although Marx's scheme of simple reproduction is enormously
useful for expository purposes it has little relevance to the actual
world since growth rather than stagnation is the normal condition
of an economy. It is necessary, therefore, to recast the equations in
the light of this fact.
The sine qua non of expanded reproduction is that a portion
of the surplus value (which under simple reproduction had been
completely consumed) be accumulated, that is, be employed for
expanding the stock of means of production and for purchasing
more labor power. We, therefore, will distinguish the components
of the surplus value as follows:
S = So + Sc + Sv
where So represents that portion of the sur
8 N. I. Bukharin, "Marx's Teaching and Its Historical

and Modern Thought (New York, 1935), p. 58.

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by the capitalist, Sc that portion in

means of production, and Sv that p
of additional labor power. The out
be represented as follows:
Wt = Ct + Vt + Sot + Set + SVi
W, = C, + V, + So, + Sc, + Sv,.
In a condition of harmoniously developing exp

tion the output of means of production will be
stant capital consumed in both departments plu
surplus value in both departments which is accu
of production.
Wt = Ct + C, + Set + Sc,
Similarly, the output of consumers' goods must

of the wages paid out in both departments plus tha
surplus value of both departments used to expand
labor power plus the surplus value consumed by t
both departments.
W9 = Vt + V» + Svt + Sv, + Sot + So,
Now, since
Wt = Ct + C, + Set + Sc,
but also
Wt = Ct + Vt + Sot + Svt + Set

it follows that
Ct + C, + Set + Sc, = Ct + Vt + Sot + Svt + Set
which by algebraic reduction becomes

C, + Sc, = Vt + Sot + Svt.
Similarly, since
W, = Vt + V, + Svt + Sv, + Sot + So,
but also
W, = C, + V, + So, + Sc, + Sv,

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it follows that
Vt + V2 + Svt + Sv2 + Sot + So, =

C2 + V2 + So2 + Sc2 + Sv2
which also reduces to the same formula:
Vt + Sot + SVi = C2 + Sc2.
This formula states the equilibrium condition for exp

duction. ! . ■ ■ |
Let us retrace our ste
scheme is perfectly cl
remember, is as follows
Wt = Cj + Sci + Vt + Sot + Svt
,
W2 = C2 + Sc2 + V2 + So2 + Sv2
The Ct and Set represent that value portion of t

producers' goods department which remains withi
the former as replacement for means of produc
latter for enlarging the stock of means of prod
partment. The balance, Vt + Sot + Sv1} is transf
ment II in exchange for consumers' goods. In De
So2 + Sv2j are consumed within the department w
exchanged with Department I for means of prod
that used up in Department II and for enlarging t
of production in Department II.
Nothing could be further from the truth tha
that Marx's scheme was designed to demonstrate
capable of developing smoothly and without the
proportionalities.9 Marx was merely postulati
which permitted him to trace out the transfer o
9 Precisely such an error was made by K. A. Naqvi who asse

prove, on the basis of Marxian schemes of reproduction, th
tem would break down have been unsuccessful for the si
schematic presentation of accumulation was aimed at prov
site." ("Schematic Presentation of Accumulation in Marx,"
view, Vol. V, No. 1 [1960], p. 22, n. 10).

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his hypothetical economy. Inasmuch

talist economy "a balance is an acc
to demonstrate the virtual impossib
rather than the opposite. Bukhar
reality the whole process, since it is
smoothly and the schemes themse
an expression of tendencies with a de
. . . The process of enlarged capita
a process of the enlarged reproduction of all its contradictions
The Marxian scheme of expanded reproduc

main reasons why the condition of equilibri
tained:
1. The anarchic character of capitalist economy produces dis-

proportionalities between Departments I and II and in individual
branches of the economy.
2. Real wage rates rise more slowly than productivity, while
the bulk of the surplus is invested. Consequently, the stock of means
of production grows faster than the demand for consumers" goods.
3. Technological advance takes a labor-saving rather than a cap-
ital-saving form.12
Marx's model of expanded reproduction is a brilliantly con-
ceived tool which provides an analytic framework within which a
variety of complex macro-economic problems can be dealt with, but
it is formulated at a very high level of abstraction. Let us briefly
note some of the more important simplifying assumptions underly-
ing his model:13
10 Capital, Vol. II, p. 578.

11 Op. cit., pp. 58, 63.
12 Joan Robinson, "The Model of an Expanding Economy," Economic Journal, Vol.
LXII (March, 1952), pp. 50-51. Mrs. Robinson puts the last point somewhat dif-
ferently. She contends that Marx believed that technical progress tends to raise
the capital-output ratio.
13 See D. Oparin, "Quantitative Relationships in the Models of Expanded Reproduc-
tion," Problems of Economics, Vol. II, No. 10 (1960), pp. 15-16; K. A. Naqvi,
"Schematic Presentation of Accumulation in Marx," Indian Economic Review, Vol.
V, No. 1 (1960), pp. 13-14; Shigeto Tsuru, "Marx's Tableau Economique and
'Underconsumption* Theory," Indian Economic Review, Vol. I, No. 3 (1953), p.
1, n. 1; Joan Robinson, "The Model of an Expanding Economy," Economic Jour-
nal, Vol. LXII (March, 1952), p. 45.

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(1) A closed economy of free competition.

(2) No precapitalist remnants.
(3) Industry is the only branch of economy.
(4) Absence of non-productive activities.
(5) Society consists of only two classes: capitalist
(6) Only capitalists save and invest a portion of
(7) Prices do not deviate from value and remain
(8) Harmonious development of the economy w
or breakdown.
(9) A uniform turnover of capital of once per year.

(10) No transfer of capital takes place between the two depart-
ments.
(11) An unchanging organic composition of capital.

(12) The gestation period of capital goods is constant so th
a given annual rate of investment produces a given ann
rate of growth in the stock of capital goods.
As a consequence of this high level of abstraction all one
derive from the model per se are the conditions for equilibr
and the logic of rapid growth through emphasis on Departm
As soon as attempts are made to fill the reproduction scheme
concrete data the most divergent results are obtainable depe
on the underlying premises that are inserted into the model.
explains why the theories of capitalist development of Tugan
nowsky,14 Rosa Luxemburg,15 Fritz Sternberg,16 Otto Bauer,17 H
ryk Grossmann,18 and Rudolf Hilferding19 vary so widely th
they all start with the same analytical framework, Tugan-Bar
sky, Hilferding and Bauer developing a perspective of harm
capitalist development, Luxemburg and Sternberg of cap
breakdown through a surfeit of surplus value and Grossman
capitalist breakdown through a shortage of surplus value. Be
Marx's model of expanded reproduction sets forth the equilib
condition for the economy, it has served as the point of depa
14 Theoretische Grundlagen des Marxismus (Leipzig, 1905).

15 The Accumulation of Capital (London, 1951).
16 Der Imperialismus (Berlin, 1926).
17 "Die Akkumulation des Kapitals," Neue Zeit, Vol. XXXI, Part I (1912-13
18 Das Akkumulations- und Zusammenbruchsgesetz des kapitalistischen System
zig, 1929).
19 Das Finanzkapital (Wien, 1923).

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for almost every significant elaboration

of crises.
Economic Growth and the Priority
There is a tendency to confuse th

growth with the conditions for rapid
growth merely requires that a portion
to add to the stock of the means of p
ditional labor power. In a hypothet
growing labor force it would be poss
be associated with a utilization of t
capitalists' own consumption) for ex
clusively and, consequently, with a d
of capital. In a less far-fetched instanc
grams of expanded reproduction wher
though the capitalist divides his inves
variable capital in the same proportio
past, i.e., the organic composition of
The rapidity of economic growth is
by which the output of Department
quirements for the means of produc
that is to say, by the magnitude A in
Wt = C, + C* + A
(from which it follows that Wt > Ct + C2 and

If we drop Marx's simplifying assumption that th
position of capital remains unaltered,20 and postula
dency for it to rise, which is a fundamental premis
tem, we see at once that a given rate of growth in the
department producing consumers' goods requires, c
a higher rate of growth in the output of the depar
means of production.
AW, > AW*
20 It is absolutely essential that it be understood that Marx's simplify

abstracts from a rising organic composition of capital not from techn
ress. We shall soon see that the two are not necessarily the same.

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To see this more clearly let us recall the formulas

puts of the two departments.
Wi = Ct + C2 + Set + Sc2
W2 = Vt + V2 + So1 + So2 + Svt + Sv2
Department I must produce replacements for the means

tion used up in both departments (Cj + C2) as well a
ment to provide for the expansion of the stock (Sct +
partment II has to provide for the consumption requir
society (Vi + V2 + Sot + So2) as well as for the expan
outlays for the purchase of labor power (St/i + Sv2) . Si
ganic composition of capital is increasing, the weight
capital in the increments of capital invested must be gr
the average obtaining for the economy as a whole
A Sd + A Sc2 A Sct + A Svt 4- A Sc2 + A Sv2
Sci + Sc2 > Set + SVi + Sc2 + Sv2
which signifies that a given rate of increase in the production of
Department II requires a greater rate of increase in the production
of Department I.
We see then that once the process of rapid economic growth
has been set in motion its continuation requires two conditions:
First, that increments of investment in means of production for in-
stallation in the producers' goods department be larger proportio-
nately than the increments of investment in means of production
to be installed in the consumers' goods department.
A Sd A Sc2
Sd Sc2
Second, that the increments of investme

in both departments be larger proportion
of expenditure on labor power.
A Set + A Sc, A Svt + A Sv2
Sci + Sc2 > Svt + Sv2
If Department II is favored, the output of consumers' goods ini-
tially will be higher than if Department I were favored. But since

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Department I will grow slowly, the out

represent a large share of a slowly gro
is favored, the output of consumers' go
But the rapidly expanding output of
the conditions for a rapid growth of t
which the output of consumers' goods w
of a rapidly growing total. In the long
pie will be larger than a large slice of a
is the logic of emphasizing Department
economic growth and, in the long run,
sumers' goods.21
This point was clearly understood by
thesis that rapid economic growth unde
ganic composition of capital required t
production for the production of other
grow faster than the output of means
duction of consumers' goods which, in t
the output of consumers' goods.22
It is now necessary to examine in greate
for any desired rate of growth in the
higher rate of growth is required in th
This theorem which derives from the
progress requires a rising organic comp
speaking, a rising capital-output ratio)
21 See the interesting paper by P. C. Mahalanobis,

ess of Growth of National Income," Sankhya,
the author attempts to work out the dynamics in
ments to the national income.
22 Concerning the So-Called Question of Markets (Moscow, 1954). This remarkable
work was first written in 1893 but the manuscript which had been lost was not
rediscovered until 1937. What a lot of nonsense Rosa Luxemburg might have been
saved from writing had she been familiar with this work!
23 The capital-output ratio as generally employed is a marginal concept measuring
the relation of an increment of fixed capital to the increment of product flow.
We shall employ this term here to mean the aggregate capital-output ratio, i.e.,
the relation of the stock of fixed capital to the total flow of product. Labor-saving
innovations (which achieve a reduction in the quantity of living labor embodied
in a unit of commodity) raise the capital-output ratio. Capital-saving innovations
(which achieve a reduction in the quantity of congealed labor transferred to a
unit of commodity) effect a reduction in the capital-output ratio. Our assumption
that the organic composition of capital and the capital-output ratio move together

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faith among many Soviet economists and has been elevate

status of a "law of socialist economy." Yet it is by no mean
that a rising capital-output ratio is a necessary concomitant
nological progress. There are several important factors whi
to lower this ratio:
(1) The capital-output ratio may be lowered directly by util-

izing the means of production more intensively and more rationally.
It does not require great theoretical sophistication to perceive that
the output of shoes can be raised without increasing the stock ot
shoe-making machinery if shoe factories go on a double shift. We
may assume that a socialist society with many incentives for the
most rational and economical employment of the means of produc-
tion (which, of course, includes circulating as well as fixed capital)
will not lack for a never-ending flow of ideas and innovations to
that end. i i i S
(2) The capital-outp
labor-saving innovati
low organic composi
of factors of product
position of capital in
The shift might hav
overbalance the capit
would achieve the pa
in a particular bran
saving consequence f
lower average organ
fetched possibility, e
investment policy wou
in which the capital-
ness of capital investm
(3) The capital-outp
tion of technologica
derives from the fact tha

tivity it induces at any g
24 See Alexander Gerschenkron in American Economic Review, Vol. XLIX, No. 4
(1959), p. 735.
25 The Soviet planners use the term "coefficient of absolute effectiveness of capital"
to refer to the reciprocal of the capital-output ratio.

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than labor-saving. There can be no

type production equipment (standar
purpose units) and most types of au
mously capital-saving. A rate of inves
just sufficient, in value terms, for rep
rate of growth of Department I) is co
put of Department II if the new equi
saving relative to the old.
There are yet other factors whose eff
on the universality of the theorem reg
ment I. Advancing technology deman
ers. This tends, through increased ex
raise F26 (unlike the three foregoing
minish C) . Further, as increasing em
the efficiency and durability of cons
capital goods will have a growing econ
of turning out a number of washing m
is obviously producing ten times as m
producing the same number of washi
after two years.
Marx was not unaware of the capita
devoted an entire chapter in Capital
ment of Constant Capital."27 Again,
acting causes to the falling tendency
the factor of the cheapening of the
But he did not believe that, on balanc
predominate over labor-saving. His em
vations was not accidental. In his day
form. But early in the twentieth centu
the capital-output ratio dropped unin
Inasmuch as the underutilization o
26 This interesting point has been made by Gu

Bedingtheiten des Marx'schen Akkumulationsg
ably is not of great importance.
27 Capital, Vol. Ill, Chap. V.
28 Ibid., pp. 276-77.
29 The decline commenced in 1909 when measu
measured in 1929 prices. See Daniel Creamer,
ufacturing Industry, 1880-1948, (New York, 195

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dominant feature of monopoly capitalism and inasm

ture serves to increase the capital-output ratio, this
capital-saving trend in innovations ot such a pronou
has asserted itself in recent times that it is able to overbalance the
growth of idle capacity.
lhe discussion of the problem of the priority of Department I
among Soviet economists has not been conducive to a clarification
of the issue. An article by D. Shepilov30 summarized and attempted
to retute the arguments ot several young Soviet economists who
opposed the Soviet policy of stressing investment in Department 1.
The arguments employed by the objects of Shepilov's scorn are as
varied as they are irrelevant: that emphasis on Department I is a
law of capitalism, not of socialism; that disproportionalities will de-
velop if the production of means of production continues to be em-
phasized; that the favoring of Department I is proper for the early
period of the construction of socialism but not for industrially de-
veloped socialism. Shepilov * 'refuted* ' their arguments with equal-
ly irrelevant quotations from Marx, Lenin, and Stalin.
Another Soviet economist, A. Pashkov,31 dogmatically affirmed
the priority of Department I without qualification and, thus, con-
verted a theorem which derives from a particular premise into an
unvarying guideline extrapolated into the limitless future. Neither
Shepilov nor Pashkov appear to realize that if the law of the prior-
ity of Department I were unqualifiedly valid; if, in short, the or-
ganic composition of capital increased ceaselessly, this would mean
a steadily growing rate of investment for which the terminal point
would be the asymptotic approach of investment to the entire na-
tional product.32
30 It has been translated in National Affairs for March, 1955. One should also refer
to the collection of articles by K. Ostrovityanov and others, "Stalin, Heavy In-
dustry and the Party Line," in The Current Digest of the Soviet Press, Vol. VII,
No. 9 (1955).
31 "An Approach to the Law of the Preferential Development of the Means of Pro-
duction," Problems of Economics, Vol. I, No. 8 (1958) and Das ökonomische Gesetz
der vorrangigen Wachstums der Produktion von Produktions-mitteln (Berlin, 1960).
32 Bassett Jones in an eccentric book full of the most unexpected insights gave voice
to the problem of the domination of Department I. "This means that the plant
absorbed goods at a faster rate than the consumer. Obviously, if this keeps up,
it would not be long before the production plant absorbed back into itself most
of the goods it produced. . . . Then in effect both supply and demand would be

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There have been, on the other hand, economists like M. Bor,33

Ya. Kronrod,34 and A. Notkin35 who have recognized the impor-
tant role that a declining capital-output ratio plays in permitting
a maximum of output with a minimum of capital stock but their
presentation of this datum is in a different context: not whether
a rising capital-output ratio makes it possible for Department II to
grow as fast as, or even faster than Department I, but whether the
factors tending to reduce the rate of economic growth under social-
ism may not be counterbalanced by a declining capital-output ratio.36
It is not our intention to cast doubt on the validity of the com-
mon-sense observation that, all other things being equal, the higher
the rate of investment in Department I the more rapid the rate of
growth of the economy as a whole.37 We only wish to emphasize the
located at the same end of the processi" (Debt and Production [New York, 1933],
p. 36). The late dean of Soviet economists, S. G. Strumilin, seemed aware of this
problem. He noted that in the thirty-year period from 1928 to 1958 the output
of producers' goods as a proportion of the Soviet Union's total gross industrial
output increased from 39.5 per cent to 71.6 per cent. But the increases were at
a rapidly decreasing rate decade by decade. Strumilin, therefore, seemed to sug-
gest that the ratio of producers' goods will either continue to grow asymptotically
or that it will cease to grow altogether. ("Concerning the Problem of Optimum
Proportions," Problems of Economics [Vol. V, No. 3, 1962], p. 4).
33 "Concerning Some Factors Determining the Rates and Proportions of Social Re-
production," Problems of Economics, Vol. II, No. 7 (1959).
34 "Special Features of Socialist Reproduction at Its Present Stage," Problems of
Economics, Vol. II, No. 8 (1959), "Rates and Proportions of Expanded Reproduc-
tion in the Period of the Comprehensive Building of Communism," Problems of
Economics, Vol. IV, No. 10 (1962) and Die sozialistische Reproduktion (Berlin,
1957).
35 "On the Rates of Expanded Reproduction in the Period of the Unfolding Con-
struction of Communism," Problems of Economics, Vol. II, No. 5 (1959).
36 See, for example, A. Notkin, ibid, p. 9: "With the given size of the fund of pro-
duction accumulation a lower capital-output ratio makes it possible to attain
higher rates of expanded reproduction." Bor presents data demonstrating that the
capital-output ratio for Soviet industry declined by 7.3 per cent from 1950 to 1955,
op, cit., p. 25.
37 Unfortunately caeteris paribus does not always obtain. Marx in a passage of in-
credible prescience warned: "On the basis of capitalist production, it must be as-
certained on what scale those operations which withdraw labor and means of
production from it for a long time without furnishing in return any useful prod-
uct can be carried on without injuring those lines of production which do not
only withdraw continually, or at several intervals, labor-power and means of pro-
duction from it, but also supply it with means of subsistence and of production."
(Capital, Vol. II, p. 412.)

82.183.15.174 on Thu, 18 Feb 2021 16:11:49 UTC
limiting conditions for its validity (when the priority

ment I is taken to mean the necessity for a more rapid
crease of Department I to achieve a given rate of incre
partment II) and to express doubt, which arises on both
and logical grounds that this condition must, by extrapolat
the perspective for the foreseeable future. The "law of t
of Department I" is not, properly speaking, a law. It is
sion of an historical tendency whose manifestation requi
ber of prior conditions for which there is no firm warr
New York City

82.183.15.174 on Thu, 18 Feb 2021 16:11:49 UTC

Marx&#39;s Model of Expanded Reproduction

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Marx's Model of Expanded Reproduction

Author(s): Alfred Evenitsky

Stable URL: https://www.jstor.org/stable/40400936

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MARX had discovered nothing else, his

* The author wishes to express his gratitude to Dr. M

1 It may appear strange that the same model can be used

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of Surplus Value to Quesnay,3 as w

come closest to developing a substantial theory of economic

tion that "Marx's schema is the only compr

3 See the Bonner-Burns edition (London, 1951), pp.

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The aggregate value of the gross national produ

Commodities are essentially of two kind

Moreover, the workers and capitalists of Departm

7 The heart of Marx's analysis of the reproduction process will be

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workers and capitalists of Departme

By algebraic simplification the last two equations

This is the equilibrium formula for a condition of sim

Of the output of Department I (producing means of produc

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the model is called upon to solve. The element Vt> f

where So represents that portion of the sur

8 N. I. Bukharin, "Marx's Teaching and Its Historical

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by the capitalist, Sc that portion in

In a condition of harmoniously developing exp

Similarly, the output of consumers' goods must

Wt = Ct + Vt + Sot + Svt + Set

Ct + C, + Set + Sc, = Ct + Vt + Sot + Svt + Set

which by algebraic reduction becomes

W, = C, + V, + So, + Sc, + Sv,

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Vt + V2 + Svt + Sv2 + Sot + So, =

which also reduces to the same formula:

Vt + Sot + SVi = C2 + Sc2.

This formula states the equilibrium condition for exp

Wt = Cj + Sci + Vt + Sot + Svt

The Ct and Set represent that value portion of t

9 Precisely such an error was made by K. A. Naqvi who asse

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his hypothetical economy. Inasmuch

The Marxian scheme of expanded reproduc

1. The anarchic character of capitalist economy produces dis-

10 Capital, Vol. II, p. 578.

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(1) A closed economy of free competition.

(9) A uniform turnover of capital of once per year.

(11) An unchanging organic composition of capital.

14 Theoretische Grundlagen des Marxismus (Leipzig, 1905).

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for almost every significant elaboration

Economic Growth and the Priority

There is a tendency to confuse th

(from which it follows that Wt > Ct + C2 and

20 It is absolutely essential that it be understood that Marx's simplify

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To see this more clearly let us recall the formulas

Department I must produce replacements for the means

Second, that the increments of investme

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Department I will grow slowly, the out

Marx's Model of Expanded Reproduction

Marx's Model of Expanded Reproduction