Tugan's 'Bubble': Underconsumption and Crises in a Marxian Model.

Tugan-Baranowsky denied the possibility of underconsumption crises, arguing that capitalists would invest indefinitely in machines simply to produce more machines. Marxists have criticized this argument but have failed to show how such crises occur. Tugan's path is here characterized as a variety of 'bubble' whose duration is related to the level of confidence. Opportunities for the birth of bubbles arise from capitalist parsimony and reductions in wage costs. In this way quasi-periodic crises may be generated. Tugan's bubble is distinct from the neoclassical bubble but like the latter it contributes to the removal of inefficiency. (c) 1995 Academic Press, Ltd. Copyright 1995 by Oxford University Press.