Nóra Tünde Szentkuti; ID: 58270; Number of characters:7198
The explanation of the business cycle in terms of Marx, Keynes and Schumpeter naturally contains similarities as well as differences. Marx put the focus onto production, while Keynes and Schrumpeter emphasised the role of exchange. All of the thinkers received an impact and influence from the period of their existence, which had marked on their approaches (like the effects of the Great Depression in the case of Keynes). The aim of the essay is to show the correlations and dissimilitudes of the concepts, by focusing onto Marx, Keynes and Schumpeter's definition of the circulation flow in the capitalist system, their interpretation of depression and their attitude to the notion of capitalism.…show more content… This circulation can be described as C-M-C. However, in a capitalist system the circulation has changed to M-C-M' (money-commodity-greater amount of money, which has surplus value), where the intention of the capitalists is to gain profit (capital), at the end of the process of exchange. Marx points out that the surplus value cannot find in the sphere of circulation and for this reason he placed his focal point on the sphere of production. In that case, the capitalist production's fundamental mode of capital is the industrial capital, where surplus value is created and furthermore expropriated in capitalism. The circulation of capital takes place in an order, where firstly the capitalist buy commodities (ingredients) as a replacement of his money, then he put the commodities under a production process, which adds more value to them. Finally the capitalist sells the output of the production, thus gains surplus value (HL,…show more content… The firms will gain less profit, thus they will produce less goods and need less workers (HL, pp 408-414). The unemployment people will save their money and for that reason it will not flow back to the business. In the case of people's savings beat the number of investments, government should take a step and artificially increase the demand and encourage purchases, to save capitalism and create equilibrium. Unlike Marx, Keynes did not suggest any other economic system to replace capitalism, but he wanted to save it. On the other hand, they agreed that the economic growth led to an increase in the amount of savings, which capitalism cannot solve itself and the lack of investment opportunities is the main cause of