By PRABHAT PATNAIK
The reason you have involuntary unemployment in any economy is because wealth can be held also in the form of money. Imagine a world in which wealth could be held exclusively in the form of capital goods. Then of course there would never be involuntary unemployment. Whatever output is produced at full employment will be partly consumed, corresponding to which there will be demand for that output, and whatever is not consumed . . . would also take the form exclusively of capital goods, and as a result there would never be a problem of aggregate demand. Likewise, even if all wealth were held in the form not of capital goods but of claims on capital goods, even then, as neoclassical economics would argue, there would never be a problem of aggregate demand, and what is called Say’s Law — supply creates its own demand — would always hold. The reason why you have a problem of involuntary unemployment therefore is because a part of the wealth is thought to be held by people in the form of money rather than in the form of either capital goods or claims on capital goods. Both Marx and Keynes said this.
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