Value and the foundation of Economic Dynamics

This article constructs time-varying labour value measures free of such restrictions and shows that they call for a radical re-evaluation of this century's debate on value. We exhibit a counter-example to the Okishio theorem in which labour-saving innovation leads to a continuously-falling profit rate, and a dynamic approach to the classical problem of transforming values into prices in which the sum of values is equal to the sum of prices while the sum of profits remains equal to the sum of surplus values. Elsewhere we have exhibited a computer simulation model using these values. A dynamic value measure is thus practical, necessary, and the basis for a general reconstruction of economics

Geld (Money)

This is the English language version of the entry on ‘Money’ (‘Geld’) in the ‘Historisch Kritisch Wörterbuch des Marxismus’, a comprehensive dictionary of Marxist terminology being produced as an accompaniment to the Marx-Engels-Gesamt-Arbeite (Marx-Engels collected works), a comprehensive critical edition of the works of Marx and Engels The German-language version is available separately on this site ‘Geld’, entry in Historisch Kritisch Wörterbuch des Marxismus, Band 5: Gegenöffentlichkeit–Hegemonialapparat. Hamburg: Argument-Verlag, ISBN 3-88619-435-3abstract labour, accumulation, bank, banknotes, alienation, commodity fetishism, fictitious capital, finance capital, financial crises, research and presentation, use-value, equilibrium theories, gold, silver, inflation, capital, classical capitalist economy, convertibility, crisis, market, Marx, MEGA, money, neoclassical, production, price of production, productive and unproductive labour, utopian socialism, sraffianism, exchange, exchange value, transformation problem, objectification, value, value-form, law of value, circulation, TSSI, temporalism

The GLA’s interim metro area dataset

This paper reproduces, in citable form and, for scholarly purposes, the report of the same name produced by the author for the Greater London Authority. GLA Economics prepared its interim dataset on the output and population of 35 European cities, for use within the GLA group when London is benchmarked against these cities. The need for this dataset arose because there is no agreed standard, either worldwide or in Europe, for measuring a city, or even for defining where it begins or ends. Existing estimates differ widely. In a previous working paper, we compared estimates of city productivity growth available from three sources, and found that the differences between these sources were greater than between the cities themselves. These differences affected such basic questions as, for example, whether German cities were growing faster, or slower, than British cities. Economic conclusions about cities in Europe, in short, depend on who provides the data. Although a number of international agencies are working on this problem, with whom GLA Economics works closely,at the time of publication no agreed standard exists. The GLA therefore prepared this dataset for its own purposes, as a standard against which to judge others and as the basis for its own decisions.Keywords: City; global city; Functional Urban Region; Larger Urban Zone; Territorial Indicators; Metropolitan Region; pluralism

Value and the foundation of Economic Dynamics

This article constructs time-varying labour value measures free of such restrictions and shows that they call for a radical re-evaluation of this century's debate on value. We exhibit a counter-example to the Okishio theorem in which labour-saving innovation leads to a continuously-falling profit rate, and a dynamic approach to the classical problem of transforming values into prices in which the sum of values is equal to the sum of prices while the sum of profits remains equal to the sum of surplus values. Elsewhere we have exhibited a computer simulation model using these values. A dynamic value measure is thus practical, necessary, and the basis for a general reconstruction of economics.Profit Rate; Okishio Theorem; Marxist economics; Value Theory; TSSI

Datapedia: a Yellow Brick Roadmap

This note lays out a roadmap to Datapedia: the goal is to share numbers with the same power and ease that the Wiki has delivered for documents. This would transform the quality and usability of economic data. The goal is a system which, by analogy with Wikipedia can establish a world resource for reliable data. The paper discusses a process by which data providers and users can evolve a new set os systems for exchanging, describing and interacting with data to bring this about. The proposal centres on the metadata – additional descriptive data – that is associated with numeric data, and suggests how, in two cases – World GDP and Creative Industry Employment – data could be mapped in such a way that viable Datawiki platforms can be built. The proposal also allows existing communities of users to start reshaping the way they exchange and handle data, to permit, and also to improve existing standards for collaborative use of data. The first step would be Datawiki: an opensource system for recording revisions, changes and sources of data, allowing users to compare different revisions and versions of data with each other. It would be a set of protocols, and simple web tools, to help data researchers pool, compare, scrutinise, and revise datasets from multiple sources. The first step towards Datawiki is Wikidata: rethinking the way that data itself is transmitted between people that collaborate on it a platform-independent standard for exchanging specifically numeric data. I show that the ubiquitous standard for exchanging data – the spreadsheet – is not up to the task of serving as a platform for Datawiki, and assess how alternatives can be developed.Creative Industries; Economic statistics; Datapedia; Wikipedia; Wikidata, wikipedia, creative industries, macroeconomics

Catechism versus pluralism: the heterodox response to the national undergraduate curriculum proposed by the UK Quality Assurance Authority

Paper presented to the 2007 conference of the International Confederation for Pluralism in Economics (ICAPE), June 1-3, Salt Lake City, Utah. This paper was authored by myself following consultations, and submitted collectively by the Association for Heterodox Economics, as a result of a consultation request issued by the QAA (Quality Assurance Authority) for responses to the ‘benchmark’ statement for the subject of economics. The benchmark statement seeks to define what will in future be considered the prescriptive standard for economics undergraduate teaching in the UK and in UK-certified institutions abroad. The QAA is responsible for the maintenance of academic standards in the UK and although a non-governmental body, plays a strong role in transmitting government requirements to the higher education sector. The benchmark thus represents the first attempt in UK history to regulate what is considered ‘good’ teaching in economics. It is a highly neoclassical and orthodox document and, it is argued in the AHE response, entirely lacking in a pluralist perspective. It represents an important landmark in that it sets out the consensus, among orthodox academics, of what the ‘mainstream’ consists of and how it should be taught. The paper presented at this session represents the consensus, highly critical, response of UK heterodox economists and social scientists to the QAA benchmark statement. It also contains a comparison between the economics benchmark and that proposed by other social sciences, which suggests that economics stands in an isolated position in its attempt to define its field of enquiry by means of a strict prescriptive orthodoxy.Economics Teaching, Pluralism, Heterodox EconomicsEconomics Teaching, Pluralism, Heterodox Economics

What makes the US Profit Rate Fall?

Since world war II there have been two quite distinct phases of world growth. In about 1965, a long slowdown set in which has still not ended. Robert Brenner (2002, 2003) has re-ignited the debate about its causes, claiming that nothing in either present or past economic theory explains it. He argues for a ‘third explanation’, alternative both to the profit-share hypothesis which dominates today, and the rising output-capital ratio account associated with Marx and Kalecki. Empirically, the evidence overwhelmingly shows the output-capital ratio is a dominant cause of postwar movements in the US profit rate; thus what Brenner maintains is theoretically impossible, is empirically true. The paper dissects this contradiction which, if economics proceeded scientifically, would lead to a radical critique of its own paradigm, but has instead led it to suppress and ignore the only coherent alternative. The paper shows Brenner’s rejection of the Marx-Kalecki framework arises because his theoretical paradigm, adapted uncritically from his critics, cannot allow for the effect of falling prices on capital stocks. His own ‘third explanation’ is incompatible with this same framework and can be sustained only by understanding it as the mechanism behind, or ultimate cause of, the movement of the output-capital ratio in price terms.crisis, inequality, Brenner, Value, profit rate, long waves, world systems, TSSI, temporalism

Has the empire struck back? ‘new paradigm’ globalisation or return to classical imperialism?

This article is a prepublication transcript of ‘Has the Empire Struck Back?’ in Albritton, R, Makoto Itoh, Richard Westra and Alan Zuege (eds) Phases of Capitalist Development: Booms, Crises, and Globalization, pp195-215. London: McMillan. ISBN 0 33375 316 X The paper conducts an empirical examination of the current state of the world market with a view to assessing (and establishing the relative strengths and weaknesses of) two contrasting views: the first, that it is the outcome of a process of globalisation, in some sense, and the second, that it is explicable through the classical accounts of imperialism dating from the turn of the last century. It considers also the empirical relevance of Kondratieff’s and Schumpeter’s conception of ‘long waves’ of growth and accumulation. It develops the distinction between endogenous and exogenous causes of decline and accumulation in the market and argues that they are connected to a prolonged secular trend towards income polarisation between blocs of nations characteristic of the operation of the market. It argues that whereas the declining phase of a long wave is endogenous and lawlike, recovery is exogenous and contingent, depending on the outcome of conscious political intervention. The key to the economic outcome of the present phase of capitalism is therefore the political relation between the main players It argues that history has seen two quite distinct patterns of exogenously-constituted recovery from generalised crisis. The industrial revolution, and the post-WWII boom were ‘hegemonically-ordered’ yielding high global profit rates under a single hegemonic power (the UK in 1845, the US in 1945) which fuelled a general expansion even of its rivals, and yielding rising (if unequal) prosperity, relative peace, and political stability. 1890-1914 was different. The profit rate did not recover to previous levels, there was no clear hegemon, growing misery and barbarity over the immiserated parts of the world, and intense great power rivalry leading to the wars and revolutions that bestrode the twentieth century. I argue that the evidence suggests the only possible basis of a new wave of economic expansion is a recovery more comparable with 1890-1914 than 1945-1965. The present period is one dominated by the steady but inexorable loss of US economic hegemony but with no clear alternative hegemon. This leads to an essentially unstable, warlike, and intractable period of competition for domination over sources of surplus profit. I call this a return to ‘classical imperialism’.Inequality; globalisation; poverty; Marx; unequal exchange; imperialism; value; TSSI; temporalism; developmentInequality, globalisation, poverty, Marx, unequal exchange, imperialism, value, TSSI, temporalism, development

The Economic Background to the Gulf War

This chapter appeared in ‘The Economic background to the Gulf War’, in Yuval-Davis,N and Bresheeth,H (eds) The Gulf War and the New World Order, pp153-162. London: Zed Press ISBN 1 85649 041 6 ; 1 85649 042 4 The book, a landmark in dissent against the conflagration that has become the war in Iraq, collated works from scholars throughout the world who sought to penetrate the rhetoric of war, and understand its economic and political causes. In this chapter I sought to give meaning to the idea that the war had economic causes, going however beyond simplistic formulations of direct and immediate economic interest. The First Gulf War, as we now know it to have been, was not just about oil. It was, I argued in this chapter, about the disintegration of the entire postwar order. This order, although it was established by military victory and defeat, rested on profound economic relations, most notably hegemony over surplus profit arising from three principal sources: *the technical superprofit arising from the superior productivity of the ‘advanced’ countries as a whole, in the appropriation of which the USA and Germany established dominance during the long decline of UK hegemony *commercial superprofit enjoyed within the ‘spheres of influence’ of the victorious powers, domination over the world market as a whole having been fragmented by the Russian and Chinese revolutions and subsequently (to a lesser degree) the realisation of colonial independence and the formation of the non-aligned bloc – as expressed in the suspension until 1982 of the project of constructing the WTO *the financial superprofit enjoyed in partnership by the victorious powers and expressed (including the relation of forces within the partnership) in the Bretton Woods settlement The chapter argued that the war was provoked, fundamentally, by the decline in the relative productive advantage with which the US emerged from WWII, provoked primarily by the rise of Japan and Germany and expressed in the inexorably growing US deficit. The US, I argued, had been driven to try and reconstruct the world order in such a way as to claw back this loss through an ever-growing monopoly of the second two sources of superprofit – commercial and financial superprofit. The maintenance of these depended on the direct assertion of political and specifically military force – the true driver behind the USA’s ever more violent military stance in world politics. This reorganisation however had provoked an extremely rapid rise in poverty, as the US sought to compensate both for its trade deficit, and for its weaknesses vis-à-vis its rivals (Germany and Japan) by ramping up its direct and indirect receipts from the third world. This drastic impoverishment was creating the crises of governance that drove the US to re-enforce its flagging hegemony by more and more directly interventionist means.development; oil; military expenditure; globalisation

An endogenous profit rate cycle

Endogenous business cycles can be generated using second-order linear equation systems. A generally accepted criticism of linear models is that only one value of the control parameter produces self-sustaining stable cycles. The problem therefore remains of accounting for the most salient observed features of a market economy, namely the persistence of business cycles and the lack of a stable equilibrium. Models developed by Goodwin and his co-workers established that persistent cycles arise only if there are nonlinear terms in the equations of motion. But in most such models, the rate of profit as a determinant of investment behaviour has been either incidental or absent, and attention is focussed either on the interaction between investment and consumption or output, or on the interaction between employment and wage levels. Neither neoclassical nor Marxist thinkers have constructed formal models in which the rate of profit itself exercises the predominant influence on investment behaviour, notwithstanding the importance of the rate of profit assumes in Marxist and classical theory, nor the significant empirical evidence of profit rate variations during the course of the cycle. I devised this equation system to test whether stable cycles could be generated purely on the basis of changes in the rate of profit. The system therefore abstracts from all variations of investment behaviour which might be influenced or determined by changes in the labour market, the price level or by variations in quantities consumed or produced. For this reason S, the share of the money surplus available either for investment or private capitalist consumption, is held constant and only capital stock and investment may vary; investment itself is affected only by the rate of profit. The model generates stable persistent cycles for all values of the input parameters. Hence, it cannot be assumed without further investigation that either Goodwin models (based on interaction between wage and employment) or multiplier-accelerator models (based on interaction between investment and consumption or output) exhaust the range of possible causal explanations of the business cycle.Business Cycle; Profit Rate; Goodwin; Accelerator; Samuelson; Marx; Value Theory