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This paper integrates unproductive activity into a Marxist growth model based on Marx's reproduction schemes. Labor extraction and technological change are related to the production and distribution of surplus and thus are endogenous. Unproductive labor is shown to have potentially contradictory effects. It can squeeze profits and reduce growth or increase work intensity and develop productivity enhancing technological change, which increase profitability and growth. Empirical evidence indicates that both effects occurred in the postwar United States. Marx's reproduction schemes are also shown to rely on a classical growth dynamic in which the profit and savings rates determine the rate of growth.

This paper examines the effect of class conflict on industrial location both theoretically and empirically. It demonstrates that there is a sound theoretical basis and empirical support for the conclusion that U.S. industries have chosen to abandon agglomeration and scale economies in order to secure a distribution of income that favors capital at the expense of labor. The decline of the U.S. manufacturing belt is examined with reference to union density, bargaining power, and the effects that large-scale production plants have on these factors. The meat packing industry in the postwar United States serves as a case study to establish the specific ways that class conflict has shaped the scale profile and geographic distribution of production plants. The paper builds upon the class conflict approach to urban and regional economics pioneered by Matthew Edel and David Gordon and aims to demonstrate its explanatory power. JEL classification: R30, J51, B51.