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Copyright © Cambridge Political Economy Society

research-article

Tugan's ‘bubble’: underconsumption and crises in a Marxian model

Lynn Mainwaring*

*University of Wales Swansea

Abstract

Tugan-Baranowsky denied the possibility of underconsumption crises, arguing that capitalists would invest indefinitely in machines simply to produce more machines. Marxists have criticised this argument but have failed to show how such crises occur. Tugan's path is here characterised as a variety of ‘bubble’ whose duration is related to the level of confidence. Opportunities for the birth of ‘bubbles’ arise from capitalist parsimony and reductions in wage costs. In this way quasi-periodic crises may be generated. Tugan's ‘bubble’ is distinct from the neoclassical bubble, but like the latter it contributes to the removal of inefficiency.

Manuscript received November 20, 1992; final version received August 17, 1993.


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