UIUC Econ 452: week 4
UIUC Econ 452: week 4 Econ 452
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This 3 page Class Notes was uploaded by Laura Kunigonis on Monday February 15, 2016. The Class Notes belongs to Econ 452 at University of Illinois at Urbana-Champaign taught by Werner Baer in Spring 2016. Since its upload, it has received 28 views. For similar materials see Economies of Latin America in Economcs at University of Illinois at Urbana-Champaign.
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Date Created: 02/15/16
Econ 452, week 4 Marxian Analysis General view A) Substructure (economic organization) and superstruncture (everything else i.e. social and cultural) B) Stages of history C)Capitalism (industrialization) is a necessary, but not permanent stage V = C + v + s (v+s) value produced by new labor some payed to workers, some kept as profit C = constant capital (machinery) v = variable capital (labor) s = surplus value (what remains with the capitalist, profits) Ratios: C/C + v = organic composition of capital s/C + v = rate of profit s/v = rate of exploitation Three theories of the Crises of Capitalism 1) Crisis of the falling rate of profit (can be fought by increasing the rate of exploitation i.e. exploit the labor force) Reserve army of the unemployed is increasing System breaks down, revolution 2) Disproportionality crisis 3) Under consumption crisis Large capacity to produce but the capacity to consume shrinks Neo Marxism - Hilferding/Hobson/Lenin - Theory of Imperialism Spread of colonialism, Africa, India, Indonesia Joseph Schumpeter Austrian, born into almost the upper class Studies law, advised Egyptian princess Wrote: The theory of economic development 1- Stationary state (all factors of production are employed and used to produce consumption goods) No economic growth 2- Entrepreneur (has a new idea and succeeds in implementing it) - innovation 3- Banker (credit) received deposits and wrote notes 4- Imitators 5- Impact Competition for factors of production Inflation End of inflation when new goods appear on the market Competitive sell-off leads to stagnation 6- Creative destruction 7- New stationary state until cycle starts again 8- Lessons for development Replication of entrepreneur Value of inflation as mechanism of “forced savings” Contemporary Development Theories Ragnar Nurkse A) vicious cycle (of underdevelopment) B) revolution of rising expectations (as the economy begins to grow, all money must be put to strengthening infrastructure, not improving standard of living) C) balanced growth D) disguised unemployment Arthur Lewis Model: development with unlimited supplies of labor
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