5
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.