On the Microfoundations of Marxist Macroeconomics

Abstract

In private enterprises, their microeconomic efficiency and macroeconomic efficiency are inherently contradictory, while in public enterprises these are inherently unified. In market economies based on private ownership, the laws of market competition, capital accumulation and income distribution result inevitably in a polarization of income distribution and wealth possession, an outcome that is independent of human will. A reliance solely on adjustment by the market and by micro-enterprises is limited in its effects and is insufficient to maintain a reasonable balance between various economic structures and proportions, so it is necessary for the social economy to carry out planned adjustment and to impose macro-control over the whole. Nevertheless, measures such as exercising macro and micro controls through the government’s progressive tax system, minimum wage standards, and social relief are unable to overcome the trend to polarization caused by the capitalist market economy based on private ownership, and nor are these measures able to solve the problems of insufficient effective demand, relative overproduction and longterm macroeconomic depression. Marxist political economy can provide a more practical theoretical basis, a more comprehensive guiding role, and more effective policy suggestions for the development of the socialist market economy.