Economics Essay Exam
Business Cycles: Marx, Keynes & Schumpeter
Marx:
Marx point of view on the business cycles, was rooted towards bourgeoisie – their wages to the working class, the accumulation of assets and the constant search for profit maximization. According to Marx, there was a delicate balance between the production of consumer goods and capital goods - an imbalance of either could lead to decreased profits and a subsequent recession (HL p. 239).
This was connected, he believed, since if the workers salary was low, a hoarding of assets would begin, which, according to HL, would create a period of extended growth. This growth would lead to a higher level of consumption for the consumers and therefore a bigger need for workers in producing …show more content…
292) – but his ideas about its development was firstly far more positive/romantic, secondly, on a much longer timescale, and thirdly on a much bigger scale, as he also believed, that fx the Russian revolution effected the business cycle .
He argued that the business cycles had mainly three distinct forms:
”one of quite short duration, a second with a rhythm of seven to eleven years, and a third with a vast fifty-year pulse”(Heilbroner p. 299), which was interconnected with certain booms of technology, such as the steam-engine, and if he had lived to see it, he would surely also have counted the miniaturization of technology as one, as well as the personal computer and the internet. The two biggest of these cycles, was a destruction of the current equilibrium, which he believed, benefited man greatly, as prices was brought down and a as new and equilibrium could grow forth, from the old structures cadaver.
A combination of all three (cycles), he believed, had happened during the great depression (Heilbroner p. 299) – which in turn, would bring 3 decades of …show more content…
A new machine, which made a production process more efficient, would automatically spread by ”immitators” in the same business and create an economic boom, both for the producer of the capital goods, as well for the producers of consumer goods and in turn the working class - this could after a while create a recession, when both profits and investments tend to stagnate and decline. Schumpeter describes the entrepreneurs and forerunners as warriors in armor, pushing the boundaries of society as a whole, while the investors and receivers of rent as lounge-sitting suits (Heilbroner p. 301).
But in the end, he thought, that while capitalism increased economic wealth, it also promoted routines, the wrong kinds of people and mentality; the capitalists/bourgeois instead of the entrepreneurs, who challenged the equilibrium, and changed the structures for the better – this, is what he believed, brought down the economy/system; a system that did not treasure sociological success as much as personal gain (Heilbroner p.
Business Cycles: Marx, Keynes & Schumpeter
Marx:
Marx point of view on the business cycles, was rooted towards bourgeoisie – their wages to the working class, the accumulation of assets and the constant search for profit maximization. According to Marx, there was a delicate balance between the production of consumer goods and capital goods - an imbalance of either could lead to decreased profits and a subsequent recession (HL p. 239).
This was connected, he believed, since if the workers salary was low, a hoarding of assets would begin, which, according to HL, would create a period of extended growth. This growth would lead to a higher level of consumption for the consumers and therefore a bigger need for workers in producing …show more content…
292) – but his ideas about its development was firstly far more positive/romantic, secondly, on a much longer timescale, and thirdly on a much bigger scale, as he also believed, that fx the Russian revolution effected the business cycle .
He argued that the business cycles had mainly three distinct forms:
”one of quite short duration, a second with a rhythm of seven to eleven years, and a third with a vast fifty-year pulse”(Heilbroner p. 299), which was interconnected with certain booms of technology, such as the steam-engine, and if he had lived to see it, he would surely also have counted the miniaturization of technology as one, as well as the personal computer and the internet. The two biggest of these cycles, was a destruction of the current equilibrium, which he believed, benefited man greatly, as prices was brought down and a as new and equilibrium could grow forth, from the old structures cadaver.
A combination of all three (cycles), he believed, had happened during the great depression (Heilbroner p. 299) – which in turn, would bring 3 decades of …show more content…
A new machine, which made a production process more efficient, would automatically spread by ”immitators” in the same business and create an economic boom, both for the producer of the capital goods, as well for the producers of consumer goods and in turn the working class - this could after a while create a recession, when both profits and investments tend to stagnate and decline. Schumpeter describes the entrepreneurs and forerunners as warriors in armor, pushing the boundaries of society as a whole, while the investors and receivers of rent as lounge-sitting suits (Heilbroner p. 301).
But in the end, he thought, that while capitalism increased economic wealth, it also promoted routines, the wrong kinds of people and mentality; the capitalists/bourgeois instead of the entrepreneurs, who challenged the equilibrium, and changed the structures for the better – this, is what he believed, brought down the economy/system; a system that did not treasure sociological success as much as personal gain (Heilbroner p.