ABSTRACT

In Volume II of Capital Karl Marx displays his well-known schemes of reproduction with the purpose of examining the proportions in which capital needs to be allocated between means of production and means of consumption in order to sustain a consistent path of economic growth — in Marx's terminology, expanded reproduction. In Volume II of Capital Marx also addresses the issue of effective demand and realization in a growing capitalist economy. Following Duncan Foley (1982, 1983, 1986a,b), the unifying concept underlying Marx's schemes of reproduction and his treatment of aggregate demand and the issue of realization is given by the circuit of capital, a stock-flow consistent representation of the capitalist system as an ever-expanding circular flow of commodities and money.