Marx and Input-Output Analysis and General Equilibrium Theory

Abstract

This article shows the following: (1) Marx has given a description of the relationship between industries, which is equivalent to Walras's theoretical version of input-output and to Leontief's empirical (monetary) input-output analysis. (2) Marx's version of general equilibrium theory is characterized by the attributes required for the formulation of the theoretical (abstract) model: the conditions for the existence of the general equilibrium state and simplified assumptions. His theory is characterized by different rates of profit; unemployment of primary factors with positive prices; unsold commodities and so on. Also, Marx's money theory, as well as Smith's and Walras's, is relevant to modern society. Moreover, Marx, as well as Walras, stated repeatedly that in reality equilibrium is never achieved; but he asserted that the study of equilibrium achievement is necessary for managing real economics, by revealing the nature of distortions of equilibrium states and treating them.