the economic theory has most
most people aren't economists believe
economists are experts on money.
and what
they don't realize is again one of these
little historical accidents.
mainstream
economics began fundamentally with volas[Walras?] model back in the 1870s where he was
trying to model.
individual mark market
trade reaching equilibrium without any
external control.
and his vision of that
was the Paris boss[Brussel?] where there were
individual commodities which were traded
with an auctioneer who would make sure
the mand equals supply before trades
took place in that individual market.
and
so his scale to say could you have a
room where all markets did that at once
and no trade occurred in any market
until all markets were an equilibrium
could we get to that point.
and
Mathematica of course they can't.
but
that doesn't stop economists for using
that as their foundation.
but as to some
of his simplifying assumptions he
assumed no money no banks and no debt
now they've got ossified into economic
theory and at the same time they wanted
to say nominal factors in monetary
inflation prices absolute prices only
affect the price ratios the price level
they don't affect actual economy so they
wanted to have the monetary system
having no impact upon the real.
and that
became what they call money neutrality
so all the stuff becomes embedded in
mainstream education.
and if you survive
in education or an inculcation and
mainstream economics you think that
money makes no difference.
well in the
real world what banks do is create money
and if they create money they don't
create it so it sits in a bank vault and
you can paint respect to the to the bank
they create them.
so you can spend it so
that creation of money by banks creates
spending power it has a definite impact
upon the economy.
and that completely
changes the nature of macroeconomics
once you recognize that .
Schumpeter to
recognize did back in the 1920s.
Irving Fisher realized it in the 1930s.
Pigou realized that in the late 1920s.
so
it was something that was sitting there
but the mainstream wants to give their
models nice and neat and tidy and money
makes it all very messy from their point
of view they continue assuming it
doesn't matter.
I'm saying if you do if you're modeling
an economy that doesn't have money
you're not modeling capitalism.
so we
need a framework or lets us do that
Minsky is specifically designed to do
that so what my original work in
economics was on Marx's theory of value
deriving it from his dialectical
philosophy.
and part of that dialectical
philosophy always has a foreground than
a background so if you that gives me a
foundational lets me integrate the two
so if you the vision I have of that is
that everything mrs. Hegel and Marx is
together is the argument that any unity
is embedded in a society.
society will
focus upon one aspect of that unity
making at the foreground but the unity
can't exist without the rest of its
elements which are pushed into the
background.
and therefore you sort of
stretched the unity and there's a
tension between the foreground and the
background.
and that gives you a basis to
say they'll be transformation over time
but it also means I could talk about
moral philosophy at one extreme and
self-interest at the other.
now when you
see that there's a unity there you've
got to have a tension between the two
and you can't get rid of one and just
focus on the other.
but there's this
tendency in humanity to do that and we
look at our religious theories that ends
up with the same extreme one extreme or
the other
the only religions that don't do that a
things like Buddhism which talk about
yin and yang and you know you've got to
think the balance right between one
extreme in another we always as a
species seem to fall for an extreme.
so
we need a philosophy that makes us lets
us avoid that and Smith didn't even
though he provided both moral philosophy
in one hand and self-interest on the
other he didn't provide a philosophy
they degraded the two so economics ran
off on one extreme.
2021/05/22 キーン Macro N Cheese: What Marx Got Wrong with Steve Keen
What Marx Got Wrong with Steve Keen
Macro N Cheese #121
Steve Keen believes Marx contradicted himself. Maybe socialist revolution isn't inevitable after all? You don't need to have studied the labor theory of value to listen to this episode, but you may want to after you've heard it.
So, and he could be incredibly tedious in pulling apart in forensic detail government reports at the time reporting into the state of the working class in England and a whole range of other issues. And there were parts of Capital which are just tedious to read through because it will be 40 or 50 pages of Marx dissecting a report from 1858 about the state of the working class in the United Kingdom as published in the parliamentary report.
So and there will be parts where it's dreary beyond belief and other points about splashing insights. I mean wonderful, wonderful scatological prose. So if you're able to read, then you can understand Marx, but you have to be able to read a gigantic intellect who can focus upon trivia at various times. But at the same time, there are flashes of great insight. And Marx also read all the classical economists himself.
He read everybody from Catillon forward. He read Petie. So he was a historian of economic thought, first and foremost. And that means you can actually read him without reading the others beforehand. But of course, it helps to read them too. So I am doing my master's degree treaded full time while being a full-time member of staff, I might add. So I got a teaching job at a university full time, not tenured, unfortunately, that's part of the story, but I was being paid full time to do my master's degree.
So when it came to reading Marx, I knew that there was a flaw from having read Capital and having my unusual interpretation of Chapter Six of Capital. Well, then I've got to find where Marx got this insight about the role of use-value and exchange-value, and the only way to find it was read through chronologically everything he had written. And I found it on page 267 to 268, I think it was, of the Grundrisse in a footnote.
I've never even heard of that book. In terms of Capital, you've got the Communist Manifesto, you've got the Eighteenth Brumaire, you've got a number of things. I'd never heard of that. Where does that fit chronologically in his writings?
[00:13:33.720] – Keen
Well, it starts in 1857, and the Grundrisse, I can't pronounce it properly and they'll probably translate it badly as well. But I think it's German for rough draft. So in 1857, Marx was of the opinion the revolution was about to occur and so he decided to go back and reread all the classical economists so he could write the definitive theoretical text for the revolution, which ultimately became Capital Volume One published in 1867.
And my vision of him and I really see him as a human being, that is, not the god that a lot of Marxists talk about and then getting off with his carbuncles to go and sit in his seat. I think was the British Museum or the British Library, I'm not sure which one I should have visited when I was in the UK and I never did one of my great failings.
But he was just sitting there and reading, reading, reading all the originals. And the reason the Grundrisse was so important is that if you go back to when Marx first read the classical economists, Smith and Ricardo in 1844, he came from the position of a philosopher and a poet, and he was incredibly critical of both Smith and Ricardo because he saw them as being dehumanizing.
So a large part of what you read in the economic and philosophical manuscripts of 1844 is him being disgusted by the way that neoclassical economists reduce most of men in general to an autonomaton in the production process. And he called it strictly dehumanizing. But by the end of the manuscript, he started to be convinced in the logical work, particularly of Ricardo, and what he saw was Ricardo had an explanation where profit comes from, which Marx thought was inadequate.
And because he simply assumed that profit would come out of the production process, then both Ricardo and Smith used labor the amount of time it took to produce something as a measure of its value. So Smith argued that if a deer cost twice as much as a sheep, then it was to take twice as much time to capture the deer as to process the sheep.
So it was a strict labor theory of value, but I couldn't find where profit came from. And Marx said, well, what's going on is when a capitalist buys a whole range of inputs for production, when he buys labor, what he pays is the means of subsistence. He pays a worker enough income for that worker to be able to stay alive. And that might take four hours, let's say, to reproduce the means of subsistence for a worker. But the employment contract means you've got to work for eight or 12 hours, was 12 hours a day back in Marx's time and six days a week.
So the time above the time needed to produce the means of subsistence was a surplus that accrued to the capitalist. And that was what Marx used the explanation where surplus came from, where profit came from, and therefore that was also the foundation of his argument that there was going to be a tendency for the right of profit to fall because Marx saw a tendency for capitalists to use more machinery over time, which didn't produce a surplus relative to labor, which did.
Therefore there was a tendency for the rate of profit to fall. He had seven countervailing factors behind that, but fundamentally that was the fulcrum on which he argued for the inevitability of socialism because with capitalism driving the rate of profit down by increasing technological overweight of machinery to labor over time, that means a diminishing amount of profit.
The seven countervailing factors would ultimately lose out. Capitalists would start to batten down on the workers to increase the level of exploitation that would lead to a revolution, and then you have socialism. So that was his perspective in 1857. But then he went back to read all the originals and pardon me for going on too long here.
Because Marx was a leader of the international, it had rivalry from the anarchists, Proudhon and Kropotkin I think were attacking him as well over the whole international. Putting the 1850s in context, I see the state of industry and living conditions in England as similar to India 20 or 30 years ago, in the worst of what you'd find in a suitable boy, the pollution, the extremities of the capitalist, pressures on the workers and so on.
And remember, Marx and Jenny moved out of Chelsea at one stage because there was a cholera outbreak. So you've got to put yourself in that context and see the strength of the working-class reaction to the situation they found themselves in at the time. Anyway, so in the middle of all this, Marx was one of the leading intellectuals, the leading intellectual, the only rivals coming from the anarchists and a colleague, I think it was Otto Brayer dropped in to visit Marx in 1857 with a copy of Marx's own copy annotated copy, I think of Hegel's Philosophy of Right and Marx having read Ricardo and Smith back in 1844, developed an explanation for profit which they themselves didn't have after that.
He became like another version of Ricardo. Samuelsen used to call him a Ricardian Socialist, highly sophisticated but he almost dropped the philosophical logic that he'd built up when he was studying under Hegel's successors back in Germany when he did his Ph.D. in law. And in 1857, he's re-exposed to Hegel's dialectics. And when I'm reading the Grundrisse, the section after which he's reread Hegel as well is definitively different to what went beforehand. And in the same sense, you know, Hunter S. Thompson, of course. Hunter S. Thompson.
[00:19:00.530] – Grumbine
Yes, absolutely.
[00:19:02.720] – Keen
Well, you know, you could tell which drug he smoked. Was it mescaline? Was it cocaine? Was it marijuana? You know, you could pretty much tell depending how much consumption you've taken, that's what he's on at the moment. Well, it was a distinct shift. Suddenly he started to speak in Hegelian terms, talking in terms of dialectical pairs.
And one thing which the classical school was very, very different about compared to the Neo-classicals is that the classicals – Marx, particularly Smith and Ricardo – saw no role for use-value, as they called it, not utility, but use-value in political economy. So they would say that the commodity has to be useful, has to have a use-value so that it can be purchased. But the use-value plays no role in setting its price.
Now, this was in contrast to Jean-Baptiste Say who was a proto-neoclassical who said that the utility is what people pay for and the neoclassicals have built on Say and say that the price is determined by the coincidence of the marginal utility of a product with the marginal cost of producing it. And now so Ricardo and Smith were emphatic that use-value plays no role in setting price and therefore use-value had no role in their economics.
And that's effectively what Marx also developed and said use-value plays no role in the political economy. But in reading Hegel, he started to talk in dialectical pairs and the classical school talked about the use-value of the commodity and the exchange value of a commodity, dismissed the use-value and said the exchange value comes from the time involved in producing something.
So that's where the labor theory of value and measuring capital in terms of labor time as well to make capital that became the way of thinking. But here's Marx talking in terms of dialectics. And then I want to quote the entire footnote. I still remember the moment that I found this footnote where I was, I was actually in my ex-wife's parents' house in the northern New South Wales town of Mullumbimby, just off from a town called Byron Bay that you might know.
Crocodile Dundee lives in the area. So here is Marx. I'm reading this on the drafting table of my ex-father-in-law's. He was actually an engineer. The drafting table he had in the garage where they stored all the farm equipment. But here's the quote: "Is not value to be conceived of the unity of use-value and exchange value. In and for itself is value as such the general form in opposition to use-value in exchange value as particular forms of it?"
I'm going to read this out. "Does this have significance in economics?" Now we're going to move away for a moment here and just comment. The Grundrisse was Marx's rough notes. It's the stuff he was writing down as he read through all the various literature that he was rereading to get prepared to write Capital. So it's just like, these were never meant for publication. When he wrote, "Does this have significance to the comment to the question in and of itself?"
And then you said, "Use-value presupposed even in simple barter, exchange or barter." I'll jump over these very verbose, as you know, being more verbose even than me at the moment. But he finally says, "If only exchange value as such plays a role in economics, then how could elements later enter which relate to use value, such as right away in the case of capital as raw material, etc.?
How is that the physical composition of the soil suddenly drops out of the sky in Ricardo?" So he's suddenly saying. "We've neglected the role of use-value here. We have to take use-value into account," and then he says again, this is a footnote which goes on for one and a half pages.
[00:22:33.679] – Grumbine
Wow!
[00:22:35.320] – Keen
"The price appears as merely a formal aspect. This is not in the slightest contradicted by the fact that exchange value is the predominant aspect," blah, blah, blah, blah, blah. Then he says, "In any case, this is to be examined with exactitude in the examination of value." He obviously wasn't writing for publication and "not as Ricardo does to be entirely obstructed from nor like the dull Say he puffs himself up with the memories of his vision of the word utility.
Above all, it will and must become clear in the development of individual sections to what extent use-value not only is presuppose matter outside economics and its forms, but to what extent it enters into it." And so he's now saying I've got to use use-value and exchange-value as dialectical pairs to derive the labor theory of value. Ok?
[00:23:21.310] – Grumbine
So I've heard you bring up Say many times. Is this the same Say that would be of Say's Law?
[00:23:27.400] – Keen
Oh, yeah, absolutely. Yeah. And the one of the crazy things about Ricardo is that Ricardo had a classical theory of value in which utility played absolutely no role. And he was a correspondent with Say. They were good friends corresponding from different countries. And Say's Law was based on a utility maximization view of capitalism. Now Ricardo adopted Say's Law with a totally in contradiction to his own theory of value.
[00:23:52.710] – Grumbine
[amused] Seems like a lot of them are adopting things that go against their own philosophy. [slight laugh]
[00:23:56.930] – Keen
This is what happened with Marx because what he was doing was creating use-value and exchange-value as a Hegelian dialectical pair. And here, by the way, if I mentioned the word dialectics, what phrase comes to mind for you?
[00:24:09.500] – Grumbine
Opposites.
[00:24:12.180] – Keen
Yeah, but there's actually there's a way of expressing it: thesis, antithesis, synthesis. You know that one?
I was reading through Marx. I knew that was what people called the dialectic. I was reading Marx and I said right from what he wrote in 1844 , and I'm getting up to 1857 here, and not once did I see him use those expressions. And I always thought thesis, antithesis, synthesis was first of all bloody hard to pronounce properly. And secondly, just didn't seem… it had no real logical content to me as a way of being able to discern his thesis, antithesis, synthesis.
You could do anything with that. And one of Marx's great reads is called "The Poverty of Philosophy" because it was a reply to the anarchist Proudhon, and Proudhon and Marx had met in Paris, I think in 1844, or right after 1844. Marx was trying to teach Proudhon political economy. And as a result of that, Proudhon wrote a book called "The Philosophy of Poverty." And what Proudhon used in that was the thesis, antithesis, synthesis crap, which actually is not at all Hegel.
That comes actually from another German philosopher called Fichte. I'm sure I pronounce the word wrong. So that's the stuff that Proudhon used in what Marx refers to as the Misere, Poverty of Philosophy. And it is not at all the way Marx thought. What I realized was that Marx and by extension Hegel, where he got the idea, didn't talk about thesis, antithesis.
He talked about foreground and background. And the idea was that anything like a human being, a commodity, a social structure is in itself what Marx called a unity. But that unity doesn't sit in isolation from anything else. That unity will be embedded in society. And society will focus upon one aspect of that unity, which is the foreground, and therefore it puts the remainder of the unity into the background.
Now, if you're focusing on something and you make it the foreground of whatever unity you're looking at, the background still exists. And there's a tension imposed on that unity by the fact that society is emphasizing the foreground and putting the other stuff into the background. So there's a tension between the two. So you have foreground, background, and tension, and that to me made far more sense.
That, to me, was a way of putting a whole lot of elements of social change into an understandable framework. So I loved the idea of foreground and background, and that's what Marx is using here. So he's saying that the use-value is the predominant aspect. What he's saying is a commodity is to have both exchange value and use value.
Now, if you put that commodity in an ancient society, like, for example, ancient China, I'm going somewhere with this and it's all focused on you got the emperor at the top and everybody else down below. Then what matters to the emperor is the use value, what it provides, and who cares about the exchange value. So I took a bunch of journalists for a tour of China in 1991, I think it was.
And we were walking through the Forbidden Palace and in the palace, there was an object that still had all the artwork still inside it when I went through, which was about I'd say it was about the length of your arm. Just imagine your arm basically and bend over your hand as much as you can, bend the hand and the fingers. And that's what the object was.
It was made of solid gold, about one and a half foot long sort of handle at one end. And then on the face could be measured with your fist. The fingers studded with rubies, emeralds, diamonds, you name it. The diamonds would have been up to an inch wide. Ok, looking at one hell of an object. And one of the journalists said, "What do you think it is, Steve?" "Oh, it's obvious. It's a backscratcher."
キーン教授はUCLの著名な研究員であり、「DebunkingEconomics」「別の金融危機を回避できるか」の著者です。そして彼の最新の「新しい経済学：宣言」。彼は2008年の世界金融危機を予測する数少ないエコノミストの1人であり、Real World EconomicsReviewからリビア賞を受賞しました。彼の主な研究対象は、マクロ経済学への複雑なシステムアプローチと気候変動の経済学の開発です。
キーン教授はUCLの特別研究員であり、"Debunking Economics"、"Can We Avoid Another Financial Crisis?"、そして最新の "The New Economics: A Manifesto "などの著書があります。2008年の世界金融危機を予測した数少ない経済学者の一人であり、その功績によりReal World Economics ReviewからRevere Awardを受賞している。主な研究テーマは、マクロ経済学への複雑系アプローチの開発と、気候変動の経済学。
Macro N Cheeseは、Andy Kennedyがプロデュースし、Virginia Cottsが説明を書き、MindyDonhamがプロモーションアートワークを作成します。Macro N Cheeseは、Real ProgressivesPatreonアカウントによって公的に資金提供されています。Macro N Cheeseへの寄付をご希望の場合は、patreon.com / realprogressivesにアクセスしてください。
