Unproductive Activity and Endogenous Technological Change in a Marxian Model of Economic Reproduction and Growth

Abstract

This paper integrates unproductive activity into a Marxist growth model based on Marx’s reproduction schemes. Labor extraction and technological change are related to the production and distribution of surplus and thus are endogenous. Unproductive labor is shown to have potentially contradictory effects. It can squeeze profits and reduce growth or increase work intensity and develop productivity enhancing technological change, which increase profitability and growth. Empirical evidence indicates that both effects occurred in the postwar United States. Marx’s reproduction schemes are also shown to rely on a classical growth dynamic in which the profit and savings rates determine the rate of growth.