The effect of propensity to savings on rate of profit

Mario De Marchi
CNR-IRCrES, Consiglio Nazionale delle Ricerche, Istituto di Ricerca sulla Crescita Economica Sostenibile, Rome, Italy

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Abstract

A suggestion is provided here for making the Classical Approach to the study of prices and income distribution neutral with respect to ideological choices, a move which might perhaps promote progress in Political Economics. In this respect, some flaws commonly attributed to the economic thought of Adam Smith are overcome. Solving them, it is then argued, opens up the possibility of fertile links between a Smithian approach and the John Maynard Keynes’ theory of income and employment.  This way, the determination of income distribution might be explained as the outcome of free choices and market mechanisms concerning the prices of commodities too, but this theoretical path could be followed without falling into the inconsistencies arising from capital measurement connected to Marginalism.

Keywords: Theory of Prices and Income Distribution, Consumption Multiplier, Propensity to Savings, Rate of Profit.

DOI: 10.23760/2421-7158.2023.002

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How to Cite this Article

De Marchi, M. (2023). The effect of propensity to savings on rate of profit (CNR-IRCrES Working Paper 2/2023). Istituto di Ricerca sulla Crescita Economica Sostenibile. Disponibile da http://dx.doi.org/10.23760/2421-7158.2023.002