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Under-Consumption and the Accumulation Motive

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  • Thomas I. Palley

    (Department of Economics, New School for Social Research, New York, NY 10003)

Abstract

This paper presents a theory of individual behavior in which the drive to accumulate wealth is a critical motive behind economic action. The suggested theory is fully consistent with the neoclassical approach to choice, subject only to displacing the traditional hedonistic interpretation. When this theory of individual behavior is placed in the context of a self-interest private property economy in which individuals accumulate wealth in the form of financial claims (intermediated accumulation) and firms maximize profits, it generates a logical explanation of the causes of effective demand failures.

Suggested Citation

  • Thomas I. Palley, 1993. "Under-Consumption and the Accumulation Motive," Review of Radical Political Economics, Union for Radical Political Economics, vol. 25(1), pages 71-86, March.
    • Handle: RePEc:sae:reorpe:v:25:y:1993:i:1:p:71-86
    DOI: 10.1177/048661349302500104
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    References listed on IDEAS

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    1. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
    2. Nicholas Kaldor, 1955. "Alternative Theories of Distribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(2), pages 83-100.
    3. Dennis H. Robertson, 1936. "Some Notes on Mr. Keynes' General Theory of Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 51(1), pages 168-191.
    4. Kohn, Meir, 1986. "Monetary Analysis, the Equilibrium Method, and Keynes's "General Theory."," Journal of Political Economy, University of Chicago Press, vol. 94(6), pages 1191-1224, December.
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    Cited by:

    1. Thomas I. Palley, 2008. "The Relative Income Theory of Consumption: A Synthetic Keynes-Duesenberry-Friedman Model," Working Papers wp170, Political Economy Research Institute, University of Massachusetts at Amherst.
    2. Thomas I. Palley, 2013. "Gattopardo economics: the crisis and the mainstream response of change that keeps things the same," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 10(2), pages 193-206.

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