Full text: Stagnation.

The characteristic feature of Sweezy's ( 1942 ) work 
is a mixture of Marxian and Keynesian elements. A long run 
tendency to underconsumption is deduced from the following 
assumptions: The share of ; v.wage.s and of capitalists 
consumption in the total output decreases in the long run 
while the share of investment increases. The ratio of 
the capital stock to the output remains constant. It 
follows that there must be a long run tendency for 
consumption to decline while the capacity of production 
rises. The question why capitalism has not been ruined 
a long time ago by this tendency to underconsumption 
is answered as follows: There have been counteracting 
tendencies but they have become weaker in the course of 
time so that the underlying depressive tendency has become 
visible in the 1930s. The offsetting tendencies are: 
Building up of new industries# population increase, 
unproductive consumption ( personal and commercial services ) 
and government spending. 
Monopoly is given due attention in connection with its 
effect on profits and its tendency to retard innovation. 
Under competition the innovations are made by new entrants 
who need not care about the ruin they inflict on the older 
capital of the others whereas under oligopolistic conditions 
the innovator will render his own existing equipment obsolescent. 
Sweezy makes it clear that he does not favor the concept of 
breakdown. All that can be shown are tendencies which 
impair the working of the system especially the accumulation 
process. He strongly believes, however, that the 
counteracting tendencies will ultimately not prevail.

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