Tugan’s “Bubble”: Underconsumption and Crises in a Marxian Model
Author(s)
Mainwaring, Lynn
Abstract
Tugan-Baranowsky denied the possibility of underconsumption crises, arguing that capitalists would invest indefinitely in machines simply to produce more machines. Marxists have criticized this argument but have failed to show how such crises occur. Tugan’s path is characterized 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 in contributes to the removal of inefficiency.
