Within the last century, quite a number of lost ancient religious texts have been found. Sadly, few of these, even when of an eschatological nature, have turned their attention in any detail to the work of economists. Especially lacking has been a consideration of the history of economic thought. Happily, this oversight can now be put partly right. I believe this could be the first finding of its kind ever published in the economics blogosphere. The discovery was certainly fortuitous, hidden as it was behind a dusty edition of Milton Friedman’s A Monetary History of the United States, which had somehow found its way into the lost books section of the local library. If it had not been for my insistence that the library clerk mount a step ladder to remove it from the area, the lost Book of Noah’s Wife might have fallen into the hands of the monetarists.
Differences in interpreting Marx, as we have seen, tend to come down to three key questions. The first concerns how the value of labor power is understood. This will affect the treatment of variable capital. Is its value determined by the labor embodied in wage goods or the prices of those goods? The second question concerns the value of the means of production. This pertains to constant capital. Is the value of constant capital determined by the labor embodied in inputs or the amounts paid for them? The third question concerns whether value and price determination should be considered simultaneous or temporal. It was pointed out in the previous post that Marx’s aggregate equalities stand or fall with our answers to the first two questions. His equalities hold provided constant and variable capital are assumed to depend upon the prices of inputs and wage goods rather than the labor embodied in them. This approach is taken by all single-system interpretations, whether temporal or simultaneist. For the purposes of this post, adopting any of these interpretations would have been fine. However, the choice between temporality and simultaneity will sometimes be relevant later in the series. By way of background, the present post specifically introduces the temporal single-system interpretation (TSSI).
So far, the intention has been to give a sense of the relevance and accessibility of Marx’s macroeconomic ideas. Rather than jump straight into his theory, with what might appear to be strangely named variables and foreign concepts, it seemed desirable to spell out simple connections between Marx’s categories and those of non-Marxist economics. Doing so meant glossing over some of the finer points of Marx’s definitions and categories. The first task of this post is to address a few of these. Attention then turns to distinguishing value from price and introducing Marx’s three aggregate equalities. The implications of Marx’s equalities are powerful, but their validity depends on how his theory is interpreted. The final section of the post will highlight the major points of contention. This will provide context for two upcoming posts, which consider the temporal-single system interpretation (TSSI) and a possible rationale for its adoption in this series.
The first post in this series distinguished between three types of macro measures: ‘monetary’, ‘real use-value’ and ‘real labor-time’ magnitudes. Under simplifying assumptions, the post spelled out basic connections between these different kinds of variables. The same assumptions are retained in this post to highlight a connection between the aggregate markup (Kalecki), the rate of surplus value (Marx), value of the currency (MMT) and the monetary expression of labor time (MELT).
I am interested in exploring what seems to be a basic compatibility between MMT (Modern Monetary Theory) and Marx. Compatibility of two theories, of course, does not require agreement, and there is no suggestion that either MMT proponents or Marxists will find a synthesis between the two approaches fruitful. Compatibility simply means that the two approaches are mutually consistent and that, if desired, the insights of both could be integrated into a unified understanding of the capitalist economy. At the same time, there is no claim that the idea of a connection is new. I have linked in the past to work by MMTers Randall Wray and Mathew Forstater concerned with various aspects of Marx’s theory, and Bill Mitchell has often noted in posts at billy blog an influence on his work of Marx. Suffice to say that, personally, I think a synthesis could prove worthwhile. Some MMTers may agree, some not, and likewise for Marxists.
Tom O’Brien conducted an excellent interview with Mathew Forstater in November 2012 on the topic of Marx and Modern Monetary Theory (MMT). The first half of the interview focuses on Marx, particularly in relation to primitive accumulation and fiat currency as one mechanism used to drive the process. There is a clear connection with MMT on this point. There is also a connection, as Forstater explains, in conceptualizing value of the currency in terms of socially necessary labor time. (Further discussion on this latter connection can be found in a couple of previous posts, here and here.)
GUEST POST by jrbarch: There are three major fields of thought or areas, before our consciousness, present in the mind:
1. Science – including education
2. Philosophy – great conditioning ideas
3. Psychology – what is man essentially, and how does he function?
The first two deal with the proper use of the mind and intellectual faculty – the power of discrimination – so that correct knowledge arises from correct perception, correct deduction, and correct witness (accurate evidence). Governments around the world commit a grave crime against humanity by LYING in order to sustain their particular ideology. So does the advertising and entertainment industries. No parent would LIE to their children if they wanted their kids to grow up with a clear mind and right habitual use of the mental faculties; and to be in touch, inside of themselves, with a sense of integrity, dignity and self-respect, extending to others. People forget that it is our behaviour towards one another, based on the inclusivity and universality of the sense of self, that determines what happens in the world; the ideologies are not necessarily compelling. It depends upon whether or not we are willing to be slaves, to whatever mind says. Or to put it in other words, whether or not our relations with ourselves and others come from a deeper place, free of all ideologies, because they are centred in the greater reality of being.
Most of the time, this blog concerns itself with economics and, more particularly, a theory of money. There is a reason for this, and also a story behind it. Believe it or not (and, of course, you shouldn’t believe it even for a second), in its original concept this blog was to be a self-help website focusing on Personal Health & Fitness. Quite simply, this seemed to be the kind of topic that would drive traffic and rake in the advertising dollars. It was only after this initial plan fell through that a little thinking outside the box became necessary and attention turned to writing about money instead of actually making any. Rather than trace in embarrassing detail how the failure came about, the matter can be explained by way of example. A representative writing sample from the period is reproduced below, but not before a brief recounting of its grueling path to non-publication.
Regular readers will be acutely aware that I have made many bold predictions (no link found) concerning the precise timing of the end of the world and will continue to do so repeatedly into the future. Specific dates have been set, and then re-set, for the rapture, appearance of Antichrist, great tribulation, Armageddon and second coming. Despite these efforts, which have been made without expectation of heavenly reward, only modest dollar returns, I now find myself under attack. Sadly, there are those who question my motives for all the date setting. Some even allege there are readers who have been swindled out of life savings. Although this kind of attack comes with the territory for a prophet, and indeed I welcome the persecution, it nonetheless seems necessary to address readers’ concerns and shortcomings. For now, time constraints preclude anything more detailed than a summary statement. A forthcoming book will provide the full scoop. April 1st 2016 is its forecast date of publication and $49.95 its likely recommended retail price. Both predictions remain subject to subsequent revision, which you all should be used to by now.
The videos posted below are to talks given last July at a Politics in the Pub session in Katoomba, New South Wales, Australia by Victor Quirk and Bill Mitchell of the Centre of Full Employment and Equity (CofFEE), University of Newcastle. Both speakers emphasize the capacity of a currency-issuing government to ensure that full employment is maintained at all times. All that is missing right now is the political will.