The Crisis of Capitalism: Keynes Versus Marx

Marx believed that the Ricardian class struggle for shares of the national product would be settled decisively in favour of labour: capitalism would be abolished, and with it the profits of capitalists and rents of landlords. But Marx missed the growth of a social balance between the 'countervailing powers' of business, labour, and government, which put the revolution off the agenda. Since the business class lost its ability to enforce the real wage reductions necessary to its continued profitability, mass unemployment became endemic in the developed world. This was the setting in which Keynes' analysis in terms of 'under-employment equilibrium' could gain traction. It promised to break the social stasis by invoking the economic power of the state, argues the author.