Marxian economics MIA?

by John Quiggin on January 6, 2010

The financial crisis has, justifiably, enhanced the reputation of Karl Marx as an economic thinker. Marx was the first economist to treat crises and panics as an inherent feature of capitalism rather than as an inexplicable, but fortunately temporary, departures from a natural equilibrium.

Unfortunately, most of his analytical effort, and even more, that of the school of thought that followed him, was devoted to pointless exercises in value theory[1]. Marx’s discussion of crisis rested mainly on the idea of the falling rate of profit which seemed at the time to be both a theoretical inevitability and an observable trend. But with technological progress, there’s no necessity for the rate of profit to fall consistently, and it hasn’t. There are other ideas in Marx that might be developed to yield a better theory of crisis, but nothing resembling a systematic theory.

And, in the current crisis, Marxian economics seems to be pretty much Missing in Action. I haven’t seen much and what I have seen hasn’t added much, in analytical terms, to the standard left-Keynesian analysis. Perhaps the problem is that just about everyone expects capitalism, in one form or another, to survive this crisis, contrary to the orthodox Marxist view where crises become ever more severe and eventually precipitate the revolutionary overthrow of the entire system. But it’s equally possible that I haven’t been looking in the right places.

Readers of my blog have pointed me here, which has some good stuff, but, as I said, isn’t much different from the standard left-Keynesian analysis[2]. Can anyone recommend a distinctively Marxian analysis of the current crisis?

fn1. If I get time, I’ll write a longer post on this point. In short, the idea underlying debates about value theory was that since the sale proceeds of production are divided between the owners of inputs to production (labour, capital, and land in the C19 division) there must exist some natural way of determining the share of the value of output for which each group is responsible. This is essentially an idea about average values, since averages added across a group are equal to the total for that group. But, as the neoclassical revolution of the 1870s showed, prices are determined by marginal costs and marginal rates of substitution and these don’t equal averages. Subsequent attempts to rescue a substantive role for value theory as opposed to price theory by Marxians, Austrians and Sraffians, not to mention the neoclassical marginal productivity ethics of JB Clark and others, have gone nowhere.

fn2. Except for this piece, which reads more like Cochrane or Fama with some added Marxist verbiage



Nick 01.06.10 at 8:40 am

There’s this by Paul Cockshott and Dave Zachariah.


JoB 01.06.10 at 9:22 am

Not being a Marxist and certainly not a ‘Marxist economist’ I always read him to be saying that the tendency to crisis was the tendency fo capital to be hoarded together in the hands of a few – I believe this is the crucial part of his non-worked out dynamics, not the value theory.

If a dynamic system is dependent on a few decision criteria it is inherently instable. Equilibrium reached in such a system is dependent on coincidence – or a conscious balancing act on the part of a few ‘wise’ men to keep all checks balanced (essentially the same as coincidence).

One would have to look why there are have been so few capitalist crises, isolate that factor, and give it more dominance. My candidate would be to prohibit single point of failures and hoarding of the decision power associated with capital (which is more stringent than merely stringent rule against the hoarding of capital as such).


Alex 01.06.10 at 9:23 am

The following article discusses the crisis in a Marxian way:

Vakulabharanam, Vamsi (2009), The Recent Crisis in Global Capitalism: Towards a Marxian Understanding, Economic and Political Weekly, VOL 44 No. 13 March 28 – April 03, 2009.

“But with technological progress, there’s no necessity for the rate of profit to fall consistently, and it hasn’t.”

It could be the case if the individual/firm in question invests a lot of money on R&D; in this case, it would be an addition to constant capital. However, like you pointed out, after the diffusion of technology, there is no ‘tendency’ for the profits to fall. Again, it would depend on how the rate of profits are calculated.


Hidari 01.06.10 at 10:07 am

OK this is going to be one of these dumb questions that is probably too stupid for a ‘real’ economist to even think about, but it cuts to the chase about the problems I have with economics as opposed to ‘other’ sciences.

OK: we have (my understanding is) three theories of value: the labour theory of value (now most associated with Marxism), the marginalist theory (the mainstream), and the Austrian theory. And, one of them is, presumably, ‘right’ and the others are ‘wrong.’ Now, what makes my head spin is simply this: when we have other theories, even in soft sciences like sociology and psychology, people at least pay lip service to the idea that the truth or otherwise of a theory lies in its predictive value (no pun intended). So it seems to me that, sure one can, and perhaps should, mathematise these theories as much as possible, but only with an end in mind, which is to predict prices (or anything). And the theory that best predicts some real world entity with the greatest precision ‘wins’, and we go with that one.

What does my head in is that in economics, no one seems to even try to do this. In other words, it may well be true that the labour theory of value doesn’t predict actual real world prices (or anything). But marginalist theories don’t either.* It’s highly tempting, I must admit, therefore, just to go for the Austrian, subjectivist approach which ditches the whole idea of ‘real’ ‘objective’ value, although I’m sure that brings in its own problems.

OK, so am I just being stupid here (entirely possible)? Basically what I am asking follows on from the previous post about the problems of economics. Please, tell me that the marginalist revolution didn’t get accepted just because the maths looked good? Please tell me it had some empirical (i.e. predictive) support? Please?

*Or do they? If not, what does marginalism predict? I mean, in a real world context, not in some abstract mathematical model?

(Note: as an idea of what I mean, see here: Now this paper might be true or false or bollocks, but at least I can get my head around what it’s trying to do. Where is the equivalent for marginalist theory? I’m not being smart arse here, such papers may well exist, but is the empirical evidence such papers put forward generally agreed to hold up?).


salacious 01.06.10 at 11:12 am

Hidari, my understanding is that there is empirical support for the marginalist prediction that prices will settle at a point where marginal revenue equals marginal cost, at least in vanilla “widget-producing” industries. Someone with more experience in the field is going to have to fill in on how robust that support is.


John Quiggin 01.06.10 at 11:25 am

My quick answer is
(1) Marginalist theory (broadly defined to include models of imperfect competition) predicts prices reasonably well in a lot of contexts, and, when it fails, the best alternatives usually involve close analysis of institutions, not rival theoretical frameworks. Austrian economics, broadly speaking, follows marginalism in price theory, then tries to extract a value theory. Marxist economics doesn’t really say much about price theory as opposed to value theory. At least I haven’t seen any Marxists claiming that their theory gives better predictions of prices than does marginalist theory.

(2) As the post says, once you accept marginalist price theory, most of the questions that led people to worry about value theory, as opposed to price theory, turn out to be more or less meaningless. Austrians disagree with this and try to argue that marginalism proves that value is entirely subjective, but this is silly and ends up relying on argument by definition.

(3) I haven’t had time to go over the article, but it seems to be based on the standard point that since labor is the main input to production, unit labor costs give pretty good estimates of prices. That’s entirely consistent with marginal theory.

(4) For an example where marginalist theory clearly outperforms the alternatives, look at the pricing of airline seats. Marginal cost is quite low as long as there is a plane flying with empty seats, but very high if the airline needs to put on an extra flight. Marginal utility is steeply declining – some people have to get from A to B on a given day, others could easily wait, not fly at all or perhaps even fly somewhere else. The observed pattern of prices can be explained in these terms, but not at all in terms of a labour theory of value, and not usefully in purely subjective terms.


Hidari 01.06.10 at 11:49 am

‘For an example where marginalist theory clearly outperforms the alternatives, look at the pricing of airline seats. Marginal cost is quite low as long as there is a plane flying with empty seats, but very high if the airline needs to put on an extra flight. Marginal utility is steeply declining – some people have to get from A to B on a given day, others could easily wait, not fly at all or perhaps even fly somewhere else. ‘

Ok: at least a prediction I can get my head around. OK: next question. Could someone point me in the direction of a paper where, even in the absolute broadest sense of the word (or any word in the following clause, actually), marginal theory predicted the aggregate* price** of airplane seats, in a real world situation?

*remembering, using ‘aggregate’ in more or less any way you want.

** I’ll bend over backwards to be fair and even give you leave to use the word ‘price’ in any way you want, so you don’t have to give me quantitative data for this, relative, qualitative data will do.


Hidari 01.06.10 at 12:03 pm

Looking back at my last post, I should have made clearer that my point was not specifically the prediction of prices by marginalists, but the prediction of marginalists as opposed to the predictions of Marxists (taking into account the Transformation Problem). This brings the issue back much more clearly to the point of the post: where have all the Marxists gone? In other words, is it in fact true that ‘The observed pattern of prices can be explained in these terms, but not at all in terms of a labour theory of value’?

I’m particularly interested in empirical support for marginalism because almost everybody’s critique of modern neo-classicism in the post ‘Tweedledumb and Tweedledangerous’, was that it doesn’t have any empirical support, and neoclassicism would seem to derive most clearly from marginalism (in the broadest sense of the word ‘derive’).
CF also Anwar Shaikh.


John Quiggin 01.06.10 at 12:13 pm

I’m not sure if these are the uses of ‘aggregate’ and ‘price’ you want, but you said I could pick my own, so here goes.

As pointed out in the post, it’s an accounting identity that total revenue from sales must be equal to the sum of wages, profits and payments for other inputs. Since revenue = average price* quantity, we get the ‘prediction’ that average price must equal wages, profits and payments for other inputs divided by quantity produced). That tautological prediction is common ground for marginal and classical theories.

But maybe you are thinking of something different like computable general equilibrium modelling. CGE models predict prices for the whole economy and, I think, do an OK job under conditions of full employment.


Hidari 01.06.10 at 12:37 pm

Yes it’s something more like CGE I was thinking of. I think at this point I should back out and pass the buck onto someone more knowledgeable (wouldn’t be hard). However, I will point out before leaving that even a cursory glance at the GCE literature shows their relationship to general equilibrium theory is tendentious, and so it’s not clear what, if anything, one can infer from their predictions about marginalism. This paper traces them back to Quesnay!

I might also add that Leif Johansen, who invented the modern methodology of CGE, was a member of the communist party, (and so presumably believed in, not marginalism, but….the LTV), so again even if the predictions of CGE were 100% accurate (and they’re not) it’s not clear what one could reasonably infer from that.


The Raven 01.06.10 at 12:48 pm

“…do an OK job under conditions of full employment.”

Isn’t this what Keynes complained about when he wrote, “Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again?”

I think, also, that both critics and followers may be focusing too much on Marx’s failings–if indeed they have it right, and are not misinterpreting his work into error–, and too little on the problems he was working on. The revolution Marx I understand to have hoped for has not arrived, but the ethical and social problems which made it something to hope for are still very much with us, and it might be more profitable to return to first principles and take another look. We might begin by saying that: (1) some leveling of vast disparities of wealth is both ethical and necessary; (2) in the end co-operation is more important than competition in human societies; (3) history is necessary both as a ground for economic theory and as a way for economics to understand itself.

Then again, maybe not. This dilettante bird can only croak.


Dan Cole 01.06.10 at 1:20 pm

I’ve responded to this post on my blog, “Law, Economics, and Cycling” at


JoB 01.06.10 at 1:28 pm

And that’s the internal logic of capitalist crises – ‘when’ things are on the up again we need to be prepared to reap the benefits, meaning we need to become more capitalist. Never ever is there an ‘if’ before ‘things are on the up again’.


DivGuy 01.06.10 at 1:36 pm

My reading of Capital is that Marx didn’t endorse the labor theory of value, but took it from Ricardo in order to show that even under Ricardo’s system, oppression is built into the economy and revolution thus necessary and inevitable. I’ve taken Marx’s articulation of value theory not as a new theory, but as part of an internal critique of the dominant economic theory of the day.

Marxian critique, in this reading, could be applied equally well to Austrian marginal theories or others. What you’d be looking for in terms of Marxian economics, then, wouldn’t be economics which espoused the same theory of value one finds in Capital, but economics which engaged in a similar sort of critique of existing systems.


kalecki 01.06.10 at 1:43 pm


This probably won’t satisfy your desire for an orthodox Marxian analysis since it draws on Keynesian and Marxian traditions, and its not a complete explanation of the global crisis by any means.

Also, David Kotz at UMass Amherst presented a very good paper at the URPE at ASSA session, but I don’t have a link for that.


Steph 01.06.10 at 1:44 pm

Here’s a Marxian analysis of the current crisis, by Rick Wolff at UMass:


peter 01.06.10 at 1:50 pm

Hidari @2:

It is a mistake to assume that theories and models in economics are intended, primarily, to predict economic phenomena, or that economists would choose between alternative theories or models based on their relative predictive abilities. Ariel Rubinstein, in the appendix to his book “Modeling Bounded Rationality”, lists four purposes for economic modeling, only one of which is prediction. One of the purposes he lists is (for the modeler) to better understand the relationships between economic variables, a purpose that can be – and, as we have seen these last two decades in finance theory, is often – undertaken without reference to any external data or experiments.


Louis Proyect 01.06.10 at 1:57 pm

And, in the current crisis, Marxian economics seems to be pretty much Missing in Action.

And how would you liberal idiots know where to look?


Walt 01.06.10 at 2:02 pm

Well thank you for that informative comment. I learned so much.


Henry 01.06.10 at 2:02 pm

Louis, Louis, you seem to keep forgetting that you stormed off in a hissy fit a few years ago and swore _never_ to return. I dunno whether this is your fourth or your fifth comeback tour, but Status Quo has nothing in it. If you want us to ban you – rather like those habitual alcoholics who ask bartenders to refuse to serve them in the future so as not to put them in the path of temptation, we would be only delighted to do it. Out of brotherly solidarity, natch.


JoB 01.06.10 at 2:08 pm

14- Ouf, I’m not alone. Also, I never thought of Marx as primarily an economist at all.


Glen Tomkins 01.06.10 at 2:10 pm

Capital has mutated

If you were going to model the current economy, and especially as it relates to the current crisis, you would probably replace “profit” as the engine driving the thing, with “RoI”. Excess wealth doesn’t seem content anymore to capitalize things, because the RoI it can get for that isn’t nearly as nice as what it can get from the latest financial instrument that exists at some nth order derivative from the actual production of goods or services. Should we still call this excess wealth that people “invest”, “capital”, now that the profits to be had from actually capitalizing things have so dwindled in comparison to the RoI to be had from just gambling on things, that the folks we used to think of as “capitalists” now wouldn’t be caught dead settling for the miserable returns available from actual capitalism?

Well, whatever you’re going to call it, what it’s been up to lately, creating these economic weapons of mass destruction, seems pretty inherently unstable. Worse, there seems to be a certain political inevitability to these financial instruments that “capital” has got up to lately, to not just pyramidize themselves individually, but to merge together into ever more consolidated grand pyramids. These things are, politically, “too big to fail”, and that dynamic has led to the final consolidation into the one final pyramid of the US govt. Instead of deflating the bubbles, we have decided to reinflate them all under the full faith and credit of the Treasury. It’s as if, having discovered a cancer, a set of cells in the body that had started growing uncontrollably, to the point that the health of the whole body was now threatened by the tumor outstripping the body’s normal mechanisms for supplying nutrients and clearing waste products, the response to that was, not excising the tumor, but instead trying to keep it fed and satisfied in its uncontrollable growth. The end for the body in this case would be quite predictable and inevitable. It’s hard to see what we’re doing now with the economic crisis not ending the same way.


Hidari 01.06.10 at 2:37 pm

‘It is a mistake to assume that theories and models in economics are intended, primarily, to predict economic phenomena….’

In other words, it’s not a bug, it’s a feature.


JoB 01.06.10 at 3:04 pm

It’s art.


Glen Tomkins 01.06.10 at 3:52 pm

“And, one of them is, presumably, ‘right’ and the others are ‘wrong.’”

Not really. The classic case is Euclid’s Fifth Postulate. You can build a self-consistent geometry by following Euclid’s take on how many straight lines you can draw through a given point that will never intersect a given line (one), or you can accept Riemann’s version (none), or Lobachevski’s (many), and also get internal consistency. All three, very different, geometries that result from taking one of these three postulates, model some aspects of the observable world, but not all, and not even all geometrical aspects of the world we live in. It’s a given that no geometry, even a “meta-geometry” that you could construct by incorporating all three of these geometries, plus all geometries you could get by taking all conceivable variants on other Axioms and Postulates, seeks to model all of reality, but instead intends to model just one, literally superficial, aspect of that reality.

The perceived difference between “hard” and “soft” sciences, and the continuum of speculative thought that runs clear through them, and then all the way to the other end of the spectrum to judgements we think of as purely subjective, is entirely a matter of complacency. No reasonable person would be at all satisfied with the idea that either “He loves me.”, or “He loves me not”, that these models are either mutually exclusive, or at all exhaustive of reality. If it matters to you enough that you bother to frame the question, then clearly both are true, and neither excludes the zillions of other equally true models of reality, that are actually more important to how things will turn out, whereby he is simultaneously a wonderful and amazing person in countless ways, and a pathetic little snit in countless other ways. We take life too seriously, and have too much experience of it, to imagine that any one answer either exists in isolation, or comes close to exhausting the realities involved. Turn from the world we actually live in, to the world of physics, and nobody has the direct experience, or the existential investment, to bother to imagine that there isn’t some one, true model that will explain it all on the level of supposedly fundamental particles (or strings, or whatever weird model the physicists have got to in pursuit of this chimera) that constitute some supposed ground truth of reality. The difference between physics and advice columns is entirely a matter of complacency.

There is no grand unified theory of economics because we aren’t complacent enough about the subject matter of economics to accept such a thing, even as a goal. Economics is somewhere between physics and advice columns. Formal modeling similar to what one might see deployed in physics can yield insights, so we don’t let economists get away with a product that looks like an advice column, all-purpose advice to “look within” or some such. But the issues involved are too great for people to accept the results of any one model as the only possible truth of the matter.


Hidari 01.06.10 at 3:55 pm

‘My reading of Capital is that Marx didn’t endorse the labor theory of value, but took it from Ricardo in order to show that even under Ricardo’s system, oppression is built into the economy and revolution thus necessary and inevitable. I’ve taken Marx’s articulation of value theory not as a new theory, but as part of an internal critique of the dominant economic theory of the day.’

That’s an extremely interesting viewpoint, and certainly avoids many of the problems with the LTV. It’s obviously not a widely held position (most ‘orthodox’ Marxists I’ve read either assume, or try to prove that the LTV is ‘true’), but does anyone else (i.e. academically) agree with it? Following on from that, are there any critiques of marginalism from a Marxist position that do not go on to assume the truth of the LTV?


Hidari 01.06.10 at 3:57 pm

‘Economics is somewhere between physics and advice columns.’

Yeah but it’s not exactly mid-way between those two is it?


Walt 01.06.10 at 3:57 pm

Is history predictive? To the extent that history is unpredictive, is it useless? If formal models could successfully be descriptive, could provide useful summaries of the past or present, then even that would be a contribution to human knowledge.


Roger Mexico 01.06.10 at 3:59 pm

I’m surprised we made it to 24 comments without anyone mentioning Giovanni Arrighi or David Harvey, the two names I associate most with Marxist economics.

Unfortunately, Arrighi died last year, and he doesn’t seem to have produced a major piece on the crisis. Still, much of his work concerns capitalism and crisis (especially, the Long Twentieth Century), so it’s not as if he hasn’t been writing about this for decades now. This is from one of his last interviews (with David Harvey, actually) from the New Left Review, March – April 2009. My apologies about the length of this, but I assume this is behind a paywall for most readers…

Q: The current crisis of the world financial system looks like the most spectacular vindication of your long-standing theoretical predictions that anyone could imagine. Are there any aspects of the crisis that have surprised you?

A: My prediction was very simple. The recurrent tendency towards financialization was, as Braudel put it, a sign of the autumn of a particular material expansion, centring on a particular state. In The Long Twentieth Century, I called the onset of financialization the signal crisis of a regime of accumulation, and pointed out that over time—usually it was around half a century—the terminal crisis would follow. For previous hegemons, it was possible to identify both the signal crisis and then the terminal crisis. For the United States, I ventured the hypothesis that the 1970s was the signal crisis; the terminal crisis had not yet come—but it would. How would it come? The basic hypothesis is that all these financial expansions were fundamentally unsustainable, because they were drawing into speculation more capital than could actually be managed—in other words, there was a tendency for these financial expansions to develop bubbles of various kinds. I foresaw that this financial expansion would eventually lead to a terminal crisis, because bubbles are as unsustainable today as they have been in the past. But I did not foresee the details of the bubbles: the boom, or the housing bubble.

Also, I was ambiguous about where we were in the early 1990s, when I wrote The Long Twentieth Century. I thought that in some ways the Belle Epoque of the United States was already over, whereas it was actually only beginning. Reagan prepared it by provoking a major recession, which then created the conditions for the subsequent financial expansion; but it was Clinton who actually oversaw the Belle Epoque, which then ended with the financial collapse of the 2000s, especially of the Nasdaq. With the bursting of the housing bubble, what we are observing now is, quite clearly, the terminal crisis of us financial centrality and hegemony.

…And Harvey has also been giving a few lectures on the collapse. For example:

I believe these are previews to the next book.


Hidari 01.06.10 at 4:22 pm

‘Is history predictive?’

No, but historians have been much less keen, ahem, historically speaking, to unblushingly compare their ‘laws’ to those of physics and chemistry.

Secondly, the basic facts of history are empirically verifiable in a way that the basic presuppositions of economics are not. World War 2 quite definitely happened: I can prove it. But whether or not the ‘laws’ of ‘marginal utility’ actually exist in any meaningful sense is precisely what is in question.


Louis Proyect 01.06.10 at 4:33 pm

I was under the impression I was banned since something I wrote about Jared Diamond never appeared. If I intended to reach the august readers of this august forum instead of making a rude comment intended only for the moderator who had banned me, I would have written something more civil like this:

I wonder if the Crooked Timber crew knows where to look for Marxist analysis. It certainly won’t be found in Workers Liberty, an obscure British sect known mostly for its hostility to political Islam. My recommendations are to google “David Harvey”, “John Bellamy Foster”, “Patrick Bond”, “Michael Lebowitz”, to start with if you think that Marxists are “missing in action”. I suspect, however, that you folks are so tied into wonkish liberal journals that you really don’t know where to look.


Miracle Max 01.06.10 at 4:46 pm

Good old Louis. Still winning friends and influencing people. But his suggestions are germane. Here’s a few more:

Robert Brenner:

Also Doug Henwood for shorter pieces in his Left Business Observer, Gary Dymski, and Robert Pollin.


Glen Tomkins 01.06.10 at 5:08 pm

“Yeah but it’s not exactly mid-way between those two is it?”

The nub of the problem is that a reasonable person could wonder whether the objection is that economics is, or should be, closer to physics, or is, or should be, closer to what Carolyn Hax does.

I’m a physician myself, and some of my patients need something closer to physics than I can provide, but most need something closer to Carolyn Hax than they will accept. Despite this state of affairs, perfectly reasonable people, the mainstream of current opinion, in fact, pretty consistently expects medicine to be more like physics than it is, and is disappointed when it’s not.


Bunbury 01.06.10 at 5:30 pm

Cochrane and Fama again?

Is it worth pointing out that neither Cochrane nor Fama is really a macroeconomist, rather they are both financial economists. (There is some overlap but freshwater macro people look for micro foundations for macro, C&F do the reverse).

Their willingness to appear in public as economists tout court and pronounce on important issues that they don’t publish on, media willingness to give them airplay as such and the failure of the profession to laugh at them are certainly problems but don’t speak directly to the normal conduct of economics as a scholarly pursuit.

Greg Mankiw as a public intellectual is prone to irritating Instapundit style “just saying” comments that sometimes insinuate Cochrane/Fama style conclusions and he may ultimately be just as wrong but is probably a better representative of the mainstream. In what I’ve read he is rather more difficult to dismiss. Surely it is more useful to think of the theoretical mainstream as represented by people like Mankiw and Feldstein rather than armchair quarterbacks like Cochrane and Fama or monomaniacs like Taylor and Prescott who are more or less straw men.

(Probably a Tweedle* comment really but that thread is very long and winding. To make this more on topic, isn’t there a case that Hyman Minsky was a Marxian economist? He’s got a lot of airplay, the others presumably wouldn’t have started from there.)


soru 01.06.10 at 5:33 pm

Secondly, the basic facts of history are empirically verifiable in a way that the basic presuppositions of economics are not.

That’s not really comparing like with like: an equivalent provable qualitative statement of economics would be something like ‘the US has a car-making industry’.

You can do quantitative history: what casualty rate could the Red Army sustain without collapsing? What were the coefficients of the various factors influencing that number?

It’s just that most historians tend to stop at the point where they realise ‘we don’t know any of this stuff, and there is no practical way of finding it out’. Which is about the point in the introduction to an Economics 101 textbook where the word ‘assume’ first appears.


Tim 01.06.10 at 5:40 pm

Good post.

As some have pointed out, visit David Harvey’s website for a good current Marxist writing about the global crisis.

I think DivGuy is bang on regarding Marx’s true position on the LTV. He is not primarily (not at all?) concerned with creating a theory that will allow him to predict prices, in my opinion. Marx’s LTV is to be distinguished from that of the classical political economists in that Marx identifies value not as a kind of abstract substance inhering in things, but ultimately as a definite kind of social relation that prevails in capitalism. Good on this is, incidentally, Harvey (see Limits to Capital, end of Ch1). Also the Soviet economist II Rubin:

I might even go further and say to describe Marx as an “economist” at all is to deny the true significance of his work .. The subtitle of Capital is of course illuminating: A critique of political economy. Marx was above all else, throughout his entire life, concerned with the critique of man’s alienation and the attainment of a truly human mode of existence. See Cyril Smith on this:


vimothy 01.06.10 at 6:00 pm

I’m not very interested in Marxism, but are you familiar with chartalism / Post Keynesianism (Mosler, Mitchell, Wray, etc)?

Once you understand the operation of a fiat money system, full employment and greater social welfare becomes within the reach of policy. Best of all, the basis of this approach is totally stock-flow consistent and water-tight from an accounting and operational perspective.

Marx isn’t necessary to achieve full employment, though one would imagine that he would look favourably on the outcome.


bob mcmanus 01.06.10 at 6:09 pm

Hell, if Proyect is commenting I probably shouldn’t, but ignorance and incompetence have never stopped me before.

2, Hidari:” Please, tell me that the marginalist revolution didn’t get accepted just because the maths looked good?”

Exactly this. Jevons was an engineer.

Marxian economics of course will not, can not, and should not look like bourgeois economics, and will barely be able to communicate with marginalist economists. That’s cool, mainstream economists are not who Marxists should be talking with.

The Sub-Proletarianization of the American People Overview …Richard Estes

(I can’t link to the exact post; scroll down a little.)


will u. 01.06.10 at 6:23 pm

“Marx’s LTV is to be distinguished from that of the classical political economists in that Marx identifies value not as a kind of abstract substance inhering in things, but ultimately as a definite kind of social relation that prevails in capitalism.”

Yes, I think that one may very well believe that the measure of value for the material reproduction of society is, in the abstract, a unit of socially necessary labor time — and also that determination of prices by this measure is an entirely intractable problem. That is to say: for society to maintain itself, ultimately it must adopt some method of directing finite human time and attention to various tasks in “the human metabolism with Nature.” In capitalism, this coordination is accomplished in the circulation of commodities between otherwise isolated economic units. No such unit has a synoptic view of the social organism: hence the tendency toward crisis, because social organization is beyond human control, and has acquired a logic of its own. Information about the (spatio-temporally uneven? always disequilibrated?) allocation of human labor is borne in some (necessarily distorted and limited?) fashion by the prices of commodities. But having conceptualized how capitalism operates in the abstract does not give us the ability to predict these prices.

I’ve been meaning to read Moishe Postone (and more Lukacs.) Here’s the Old Moor himself, though:

“Every child knows a nation which ceased to work, I will not say for a year, but even for a few weeks, would perish. Every child knows, too, that the masses of products corresponding to the different needs required different and quantitatively determined masses of the total labor of society. That this necessity of the distribution of social labor in definite proportions cannot possibly be done away with by a particular form of social production but can only change the mode of its appearance , is self-evident. No natural laws can be done away with. What can change in historically different circumstances is only the form in which these laws assert themselves. And the form in which this proportional distribution of labor asserts itself, in the state of society where the interconnection of social labor is manifested in the private exchange of the individual products of labor, is precisely the exchange value of these products.


The vulgar economist has not the faintest idea that the actual everyday exchange relations can not be directly identical with the magnitudes of value. The essence of bourgeois society consists precisely in this, that a priori there is no conscious social regulation of production. The rational and naturally necessary asserts itself only as a blindly working average.”


vimothy 01.06.10 at 6:28 pm

Ah, just seen your link to Galbraith. Obviously, you are familiar!



bob mcmanus 01.06.10 at 6:30 pm

Mark Thoma has picked this post up, and the commenters, especially “Paine”, who may be some kind of actual Marxist, are doing a pretty good job.

“if one is an economist and loyal to any existing

marx is useless…

a specifically marxist formal model
is in fact a contradiction in terms

dialectics operates on and thru models
a dialectician does not build models she explodes them

we know all models explode
the mission is to explode them precisely enough to sublate them” …Paine


bill j 01.06.10 at 6:35 pm

Here’s a Marxist analysis of the crisis, written last winter 2008.


christian h. 01.06.10 at 6:42 pm

Just to say I do not agree that the “tendency of the rate of profit to fall” has in any way been disproved. It is simply not true that Marxism does not, or cannot, account for innovation. You might try the late Chris Harman’s new book “Zombie Capitalism” for some data on profit rates (there’s obviously heated debate on how to measure it, and there’s in fact a lot of writing about it out there – though not as much in academia, not surprisingly in light of what was discussed in dsquared’s earlier post).


Jim Harrison 01.06.10 at 6:50 pm

Economics is never going to be the physics of money, not because it hasn’t gotten technical enough, but because money doesn’t have a physics. An economy is more like a language than a system of things, and the best the economists can do is to come up with something like a formal grammar: a set of rules that defines how an economy should behave, not how it does behave, which is the concern of a different subject.

What remains from Marxism, as I believe even Samuelson admitted when he wasn’t calling Marx a minor Ricardian, is its insistence on the pertinence of class struggle. What’s missing from the debates about the equations is the recognition that the most relevant question is “for whom?”


Tim 01.06.10 at 7:06 pm

Hear Hear for Jim Harrison’s first paragraph. Indeed I think Marx would have broadly agreed (in spite of those silly paragraphs when he talks about ‘internal laws of motion’…). He may have got carried away with himself with talk of ‘science’ but I don’t think he ever meant that a ‘science’ of political economy was on a par with natural science.

Second one I am not so sure about, because I think that more remains from Marx. Specifically, his theory of alienation – correctly understood. (Correctly understood I do think it warrants the title ‘theory’…)


R.Mutt 01.06.10 at 8:10 pm


JoB 01.06.10 at 8:10 pm

Roger@29- thanks for that, I always tend to trust people that disclaim they know it all -and in line with more than one comment here now: none of the Q&A refers to LTV, but does refer to ‘accumulation’ (I forgot that word). The problem is hoarding of decisions into a few. It is the same problem that brings down communist regimes in crisis.


John Quiggin 01.06.10 at 8:14 pm

As a general point, links to specific pieces are more useful than suggestions of names. So far, the suggestions have pointed me to some interesting stuff, but, as I said in the original post, nothing that is radically different from the kind of Keynesian/Minskyan analysis I’ve been putting forward myself. John Bellamy Foster, for example, cites both Keynes and Minsky extensively and the piece linked by Bill J at #42 is very similar.


Vance Maverick 01.06.10 at 8:32 pm

Jim Harrison’s analogy is wrong about linguistics. Linguists (as opposed to composition teachers) are far more concerned with how we do speak than how we “should” speak, and the grammars they have devised to describe the real language of men are far more formal than anything dreamt of in your English class. (Formality obviously a property of the grammar rather than of the language it describes.)

That said, he may be on target about economics. To rescue the analogy, I’d have to base it on some discipline I know nothing about — maybe it should aspire to the condition of the sociology of money.


David 01.06.10 at 8:38 pm

I’ll follow Hidari’s initial lead and expose my great ignorance of such matters by asking where, in all this talk about value, is the distinction between exchange value (which labor theory of would seem to complement) and use value (fraught with externalities, always best shuffled to the side)?

Glad to see Harvey, sometime cab driver and geographer brought into the discussion.


lemuel pitkin 01.06.10 at 8:58 pm

Some good Marxist analyses of the economic crisis from the past year or so:

Chris Rude, The World Economic Crisis and the Federal Reserve’s Response to It: August 2007-December 2008

Jim Crotty, Structural Causes of the Global Financial Crisis: A Critical Assessment of the ‘New Financial Architecture’

David Kotz, The Financial and Economic Crisis of 2008: A Systemic Crisis of Neoliberal Capitalism

Erdogan Bakir and Al Campbell, The Bush Business Cycle Profit Rate: Support in a Theoretical Debate and Implications for the Future (unfortunately there does not seem to be free version available for non-subscribers)

Engelbert Stockhammer, The finance-dominated accumulation regime, income distribution and the present crisis

Costas Lapavitsas, The Roots of the Global Financial Crisis and Financialised Capitalism: Crisis and Financial Expropriation (also no public version, unfortunately)

Gerard Duménil and Dominique Lévy, The Crisis of Neoliberalism and U.S. Hegemony

And two more that I personally find less compelling but should be included in any survey of Marxist takes on the crisis:

Robert Brenner, What Is Good for Goldman Sachs Is Good for America: The Origins of the Current Crisis”

John Bellamy Foster and Harry Magdoff, Financial Implosion and Stagnation: Back To The Real Economy

I’m delighted to see you taking an interest in Marxist economics. I’ll be very interested in your thoughts in response to any of these.


rootless-e 01.06.10 at 9:08 pm

Another smart observation from Marx is that the interests of finance and production capitalists often conflict. To me, one of the limitations of neo-classicalists is that they do not distinguish between the activities of manufacturing bonds, raising corn, and building cars – reducing all to a single magnitude.


dsquared 01.06.10 at 9:18 pm

John, with respect to #48, is it really fair to rule out people who self-identify as Marxists and who make at least an attempt to fit the crisis into Marxian categories, just because they cite Keynes and Minsky? You’d hope that a living research program would continue to recognise important insights made outside its own native paradigm.


rootless-e 01.06.10 at 9:18 pm

Doug Henwood – Marxist? Last time I read him, he was explaining that the Canadian banking system was better than the US one apparently because it is more stably controlled by a small elite.


lemuel pitkin 01.06.10 at 9:29 pm

Here is a list of a dozen good Marxian analyses of the crisis from the past year or so. (Also in a comment which will come out of moderation eventually.)

It’s not surprising that there is some overlap between Marxian and post- and left Keynesian approaches. (It would be worrisome if there weren’t!) After all, most of Keynes is anticipated, if not fully developed, in Marx’s writings. So it’s no strike against Marxian economists that they agree with Keynesians on some points.

But Marxian approaches are usually distinguished by an interest in (1) the the fall in profitability of the real sector prior (logically and temporally) to the financial crisis and (2) government responses to the crisis as representing specific class interests. These concerns are largely absent from Keynes, and completely from Minsky.


lemuel pitkin 01.06.10 at 9:44 pm

Doug Henwood self-identifies as a Marxist, absolutely. As he himself says of his book Wall Street, “Marx’s view of credit … pervades the entire book, from the epigraph to the last word.”


piglet 01.06.10 at 9:47 pm

Some strange defenses of whatever it is economists do. If economic postulates are like Euclid’s fifth axiom (#25), how come we have a bunch of economists but not a single mathematician advising the government and shaping public policy? The comparison is both too weak and too strong, too weak because economists do claim that theirs is a science concerned with empirical reality, too strong because no economic system has actually been reduced to a consistent set of axioms.

#6: “For an example where marginalist theory clearly outperforms the alternatives, look at the pricing of airline seats. Marginal cost is quite low as long as there is a plane flying with empty seats, but very high if the airline needs to put on an extra flight.”
Sorry but this is a weak example based on a common sense observation. I admit the concept of marginal cost is a useful one and constitutes an intellectual achievement, even if in hindsight it appears rather banal. But a bundle of useful descriptive concepts doesn’t constitute a science. In particular it should be stressed that the concepts of neoliberal economics are somewhat useful at the micro level but fail miserably at the macro level.


Colin Danby 01.06.10 at 9:50 pm

Rick Wolff has also been writing e.g. and word is a future _Rethinking Marxism_ issue will be largely devoted to this theme. Lou’s suggestions are good, and I second dsquared @51: lotsa people have been working a Kalecki-Minsky-Robinson version of PK which intersects with large swathes of Marxism. One advantage of PK is that it has no reductive value theory at all.


rootless-e 01.06.10 at 9:54 pm

Braudel argued that Capitalism is not coincident with markets and, in fact, is often inimical to markets. That’s definitely not a classically marxist argument but draws on marx’s critique of political economy, and to me makes more sense than the sequence of economic systems posited by marx.


rootless-e 01.06.10 at 9:57 pm

OMG, sparts. I give up.


Tim Wilkinson 01.06.10 at 10:02 pm

use-value, exchange-value


lemuel pitkin 01.06.10 at 10:03 pm

But Rootless, the Sparts are on your side! Like you, they don’t think Doug Henwood is a real Marxist — that’s what the bit I quoted was responding to.


maybelle 01.06.10 at 10:09 pm

Hi y’all. Get that you’re mad at Louis P. for some past annoyance; I’m new to this site so don’t know that history…But his first suggestion of David Harvey was my first suggestion too, so Louis has pointed you in a good direction.


rootless-e 01.06.10 at 10:22 pm

It’s funny that Henwood quotes just the passage I was thinking of above:

“The credit system, which has its focal point in the allegedly national
banks and the big money-lenders and usurers that surround them, is one
enormous centralization and gives this class of parasites a fabulous power
not only to decimate the industrial capitalists periodically but also to
interfere in actual production in the most dangerous manner – and this crew
know nothing of production and have nothing at all to do with it.”
– Marx, Capital, vol. 3, chap. 33

While I’m unwilling to even read discussions with Sparts, I’d say that Henwood’s current analysis e.g. is pretty much run-of-the-mill liberal/”progressive” with no real reference to the kinds of things at least I’d expect to see in marxist approach. I mean, if you are disappointed by Obama, you are not really using class struggle as a basis of your political analysis.


Louis Proyect 01.06.10 at 10:54 pm

One other name worth mentioning, Anwar Shaikh who teaches at the New School. Along with his occasional co-author, my friend Ahmet Tonak, they combine Marxist theory about the falling rate of profit with extensive empirical data to back it up. Shaikh is a disciple of Henryk Grossman, who was the subject of an excellent biography by Rick Kuhn that I recommend highly.

Here’s Anwar’s page at the New School:

He has an article there titled “Economic Policy in a Growth Context: A Classical Synthesis of Keynes and Harrod” that would probably interest many here, although I am skeptical of Keynes myself.

I also recommend his talk on Marx and the Global Economic Crisis that can be seen here:
Metroeconomica, Vol. 60, No. 3


John Quiggin 01.06.10 at 11:04 pm

DD@53 I’m not ruling people out, and I’m not primarily concerned to make a judgement about the state of Marxian economics. I’m more concerned to ask whether, in thinking about the crisis in Minsky/Keynes terms (updated to include behavioral econ and an internal critique of EMH), I’m missing out on something important. Certainly, it’s good to read stuff with more of a class perspective, and I found the Bellamy interview interesting, but there was nothing radically new to me there.

The obvious candidate for a specifically Marxian perspective is the claim (contra my post) that the rate of profit really is declining, that capital destruction is required, and that this explains the crisis. I’ve been pointed to something by Andrew Kliman taking that line, but I find it totally implausible.


John Quiggin 01.06.10 at 11:06 pm

@Piglet “. In particular it should be stressed that the concepts of neoliberal economics are somewhat useful at the micro level but fail miserably at the macro level.”

You might have noticed that I am writing a book in which this is a central theme.


rootless-e 01.06.10 at 11:44 pm

The magdoff argument that financialization is the only possible source of growth in the current economy is interesting.


lemuel pitkin 01.06.10 at 11:47 pm

The obvious candidate for a specifically Marxian perspective is the claim (contra my post) that the rate of profit really is declining, that capital destruction is required, and that this explains the crisis. I’ve been pointed to something by Andrew Kliman taking that line, but I find it totally implausible.

I’m sorry, which part do you find implausible? It’s certainly plausible — in fact, it’s true — that the profitability of nonfinancial corporations (in the US at least) was declining prior to the crisis. Why don’t you think this could have played a role in the crisis?

The secular tendency of the rate of profit to decline that Marx — and other classical economists — expected may not have been borne out. But the tools that Marxists have used to analyze this tendency can be applied just as well on a cyclical timeframe — that’s exactly what several of papers I linked to above, especially the Kotz and Bakir-Campbell, do.

A core insight, I think, is that stable expansion of a capitalist economy requires a particular distribution of income between sectors and classes, but there are no equilibrating forces that reliably maintain that distribution. So for instance you can have a profit-squeeze crisis if the wage share rises too much, or a realization crisis if it falls. In either case, the crisis itself eventually helps right the imbalance — by demoralizing workers and restoring the reserve army of labor in the one case, and by forcing the retirement of excess capacity on the other — but if the crisis is a severe one some new constellation of social and political institutions will be needed as well.

Along the same lines is the idea you can find in (Marxist) Michael Perelman’s work (but also in Schumpeter) that an economy with large fixed capital investments needs the right degree of monopoly. Too little and you have fratricidal competition as prices are driven toward marginal cost; too much and you have stagnation and lose the competitive pressure toward innovation.

(Jim Crotty has also written a lot about this issue of correspective versus fratricidal competition; a recent paper is here.)

Or along the same lines again, Anwar Shaikh’s stuff on international trade, where he argues that neither exchange rates nor relative prices adjust to maintain current account balance, even in the long run, with the result that trade is governed by absolute rather than comparative advantage. There’s a concrete, empirical claim that you won’t find in the mainstream.

The common thread here is the idea that the reproduction of a capitalists system requires certain balances, but there are no automatic mechanisms to maintain them. You can find a limited form of this insight in Keynes, in that the rate of investment is essentially unanchored, but it’s much more fully developed in the Marxian tradition.


Mauckjw 01.07.10 at 1:06 am

John Bellamy Foster is continuing the legacy of Paul Sweezy and company at Monthly Reveiw. They are certainly distictively socialist but do draw on the other giants of left wing economics.

Foreign Policy asked Leo Panitch basically the same question.


john c. halasz 01.07.10 at 1:52 am

Just about everything I’d have to say has already been covered by various other commenters, (including just now contesting whether the “tendential law of the falling rate of profit” is really so indecipherable or empirically nugatory, if one gives it a proper reading in “value” terms,- and recognizes that as a tendency, it’s formulation precisely invites consideration of other countervailing tendencies). I’ll just add that marginalist price theory is scarcely a signal and empirically triumphant achievement, as, in fact, the exact mechanisms that go into the formation of nominal prices are not entirely evident to this day across-the-board and marginalist accounts frequently are just wrong. If, for example, there is a high proportion of fixed, long-run capital investment involved in a production process/sector, then the own demand production supply curve will feature lower marginal costs and increasing returns virtually throughout, and there is no meaningful unique profit-maximizing equilibrium point per se. The point of distinguishing “value” from nominal prices comes out when differing sets of nominal prices, such as production prices, wages, consumer prices, profits and financial asset prices don’t resolve into each other, as fanatasized by neoclassical synchronic GE theory, which was the aim of concentrating solely on nominal prices in accordance with the supposed universal law of supply-and-demand, (a piece of late 19th century positivism and concomitant psychologism),- and which failure to resolve is precisely what goes on especially at points of crisis. There is no one Marxian crisis theory, but the Vol. 3 account of financialization and the generation of fictitious capital, as others have mentioned, would seem particularly apposite today, (even if it’s just a sketch and presumes a far more limited financial system in the “hard” commodity money/gold standard terms of its time).

IFAICT most technically advanced or sophisticated Marxian economists do operate as a species of post-Keynesian, though that is also the orbit in which the likes of Marx and Kalecki still gain a hearing and exercize an influence. (Shaikh, for example, is closely associated with the Minskyite Levy Institute). From what I’ve seen or read, Marxian economists are unsurprisingly unsurprised by the global financial crises, but, other than some rhetorical gestures, their explanatory efforts are abstracted and removed from the at least implicit philosophy of praxis framework that underwrote Marx’ own (critique of) economics. When it comes to “what is to be done?”, they’re as nonplussed as the rest of us. (Though that the “value” of over-accumulated capital needs to be “destroyed” up to the point where it re-aligns with the available “mass” of labor-value, so that the system as a whole can be reset and resume its cycle-of-cycles, is the standard classical Marxian “answer”: fleshing out exactly how that would occur and with what implications and re-alignments is the problem, let alone the possibilities for institutional transformations it would allow).

If anyone would ask me, I think the main roots of the GFC lie in huge global trade imbalances and a corresponding decline in the labor share of global output, both operating at the behest of rent-seeking arbitrage activities of MNCs. A fundamental distinction needs to be made between boosting the rate-of-profit through technical improvements to productive capital stocks that raise the real distributable surplus-product and boosting profits through lowering the ratio of distribution between profits and wages. I don’t think mainstream neo-classical economics has the conceptual means for marking that distinction. And the former involves that very “contradictory” dynamics that Marx emphasized, while the latter must ultimately be self-stultifying.

For the rest, if the objection to Marx’ deployment of LTV and the proof of the superiority of neo-classical marginalism is to be the “transformation problem”, then please note that such a problem doesn’t really exist in Marx, but is the product of neo-classical misreading, whether motivated or innocent.


Harry Tuttle 01.07.10 at 2:55 am

More useful Marxist analysis of the crisis:

Walden Bello. A primer on the Wall Street meltdown. Inquirer (Philippines). October 1, 2008

Robert Brenner. Overproduction not Financial Collapse is the Heart of the Crisis. The Hankyoreh (Seoul, South Korea). February 4, 2009.

Joseph Choonara. Marxist accounts of the current crisis. International Socialism Journal Issue: 123. June 24 2009

Peter Gowan. Crisis in the Heartland. New Left Review 55, January-February 2009.

David Harvey. The Crisis and the Consolidation of Class Power. March 6, 2009.

David McNally. From Financial Crisis to World Slump: Accumulation, Financialization, and the Global Slowdown. December 15, 2008


JW Mason (lemuel pitkin) 01.07.10 at 3:06 am

For an example where marginalist theory clearly outperforms the alternatives, look at the pricing of airline seats.

Does anyone really think airline tickets are priced at marginal cost? Seems fairly obvious that most of what airline management is about is finding ways — from frequent-flyer programs to hub-and-spoke routes to advertising and branding generally to various forms of price discrimination — to keep price above marginal cost.

From The Structure of American Industry, 10th Edition (a standard industrial organization text): “From 1984 to 1988, the rise of concentration and hub dominance arrested the decline of prices, eliminated many competitors, and reduced the flexibility of routes. During the 1990s, pockets of market power tended to deepen, and monopoly effects on prices and efficiency increased Business fares rose sharply in the 1990s, as price discrimination sharpened. On the whole, events since deregulation have made inelastic demand travelers worse off in terms of higher prices and lower service quality.”

Seems like awfully shaky ground on which to stage a defense of marginalism.


Elizabeth 01.07.10 at 4:25 am

Try David McNally’s piece in the last Historical Materialism (may need university library access to get it for free).


John Quiggin 01.07.10 at 4:39 am


# 69 That sounds more plausible than a secular decline. The policy implication would seem to be that capital and labour have a shared interest in ensuring that the labour share of income remains at the level consistent with stability, and should pursue this through Wassenaar-style agreements. Plausible enough, but not what I was expecting when I asked about Marxian analysis.

#73 The whole theory of monopoly pricing and price discrimination, starting with the notion of elasticity, is thoroughly marginalist (inelastic demand = marginal utility declines rapidly with quantity consumed over the relevant range). What’s happening in the airline case is that airlines are recovering their fixed costs from inelastic demand consumers (business travellers) while pricing near short-run marginal cost (passenger service etc) for high elasticity consumers. If you think the quoted analysis is compelling (I’ve found the same result for Australia here) you’ve internalised a fair bit of marginalist thinking.


John Quiggin 01.07.10 at 4:41 am

JCH @72 “If anyone would ask me, I think the main roots of the GFC lie in huge global trade imbalances and a corresponding decline in the labor share of global output”

No disagreement there!


JW Mason (lemuel pitkin) 01.07.10 at 6:00 am

The policy implication would seem to be that capital and labour have a shared interest in ensuring that the labour share of income remains at the level consistent with stability, and should pursue this through Wassenaar-style agreements.

To a certain extent, yes. But the whole point is that this is not just a “policy” that can be adopted by some omnipotent social planner, but the result of historically specific institutions. The Social Structures of Accumulation (SSA) approach in the USA, and the similar Regulation School of Marxism in France, describe the capital-labor accord as a condition of rapid accumulation/growth in the postwar period in pretty much exactly these terms. But their point — also made by Andrew Glyn (another Marxist I believe you admire) in Capitalism Since 1945 — is that this was the result of the specific political outcome following the war, not — as in the mainstream — some automatic quasi-natural process. (Nor is it true that there is a unique factoral distribution that’s optimal for both workers and capitalists; yes, there’s a range over which that’s the case, but its boundaries aren’t known a priori.)

Plausible enough, but not what I was expecting when I asked about Marxian analysis.

Why not?


JoB 01.07.10 at 8:31 am

John@66 – With respect but I think you should look less closely because there is an elephant in your thread. Many people have directed us away from LTV, away from this primarily economic analysis of Marxist writing you seem to prefer and toward the instability of accumulation and a decisive inbalance towards a few financial decision makers. But you seem to dismiss everything as either helpful but non-Marxist or Marxist but old hat (which is fair enough but then you were better to change the title of your thread to: the zombie ideas of Marxism exposed).

On the economic details I gladly defer to lemuel ;-)

PS: by the way, what the hell is this ‘Marxian’ thing, why not just ‘Marxist’?, what did I miss, is it a neoliberal conspiracy to associate Marxists with Martians – cleverly abusing naïve Trotskyites to distribute the word?

lemuel@76 & before – I’m interested to know what, in your analysis, is the alternative: a central plan or an alternative process of checks and balances that avoids catastrophic failure but allows progressive non-commanded evolution? Maybe it’s clear, but it’s not clear to me. & I want to be in the know!


JoB 01.07.10 at 8:35 am

On the Hidari subthread – maybe economy is according to some just mass psychology; it makes good stories that comfort. Why they comfort we don’t particularly know. How long the comfort will last we’re not quite sure of. What stories are the best is an off-limits question because if they have an immediate effect on the symptoms they do everything that’s expected from them.

And there’s always the risk of being raped by the therapists of course ;-(


Hidari 01.07.10 at 10:10 am

‘Does anyone really think airline tickets are priced at marginal cost?’

I’m still waiting for someone to point me in the direction of a paper where a marginalist predicted a priori (not post hoc, which seems to be a more favoured approach) the price of airline tickets, even in aggregate, even in the vaguest possible terms, based on empirical data.


Robert 01.07.10 at 10:27 am

My name points to some empirical tests of the LTV.

Arguably, the structure of Leontief Input-Output (I/O) and Social Accounting Matrices (SAMs) is classical, not neoclassical. So lots of empirical work, including with so-called Computational General Equilibrium (CGE) models is classical. (Hidari, thanks to the link to that Mitra-Kahn paper.)

I’m not sure that a comparable neoclassical theory of prices exists. The Arrow-Debreu model of intertemporal general equilibrium would count, but it has next to no empirical implications. Instead, we have sundry observations at the level of volume 3 of Marx’s Capital. One might also look at the “full-cost” controversy of the 1940s and 1950s, where the marginalists argued the empirical data should be ignored.


Peter Nunns 01.07.10 at 12:59 pm

I do think that you are premature to write off David Harvey’s perspective as insufficiently different from the Keynesian/Minskyan one. While his speeches and interviews on the current crisis don’t seem particularly ground-breaking theoretically, they are rooted in a broader interpretation and application of Marxist dialectics.

To get a sense of that, it would be useful to take a look at the lectures on Marx’s Capital on his website ( or to check out his book Limits to Capital. The upshot of those analyses is a theory of capitalist crises that is rooted in the “real economy” – in particular, land speculation. (Which he discusses in the context of locational monopolies and the “fictitious” nature of land values – which, for a Marxist, instantly refers one back to the question of what value is.) Harvey draws upon this approach in most of his remarks on the crisis – e.g. He sees the financial crisis as a mortgage debt crisis.

That conclusion is probably familiar from other quarters. What a reading of Limits to Capital or the lectures will reveal is that Harvey’s arriving there using a radically different method than the Keynesians et al. He starts, essentially, from Marx’s dialectic of use-value, exchange-value and value, and builds from there. As to whether the Keynesians or the Marxists are right – well, a broken clock is right twice a day, but it’s not clear which clock is broken…

Another thing worth noting is that Harvey has thought quite a bit about different modes of accumulation within capitalism. (His most famous book, The Condition of Postmodernity, starts out with a look at shifting modes of production and accumulation post-1970s.) From my experience, mainstream economists don’t tend to talk much about different forms of capitalist organization – with their eyes focused more closely on the internal logic of the profit-making firm, they tend to see more continuities. Yet it is clear that a business, or a national economy, organized along the lines of, say, 1910 would not have the right qualities to operate effectively today.

Another offshoot, therefore, of his work on Capital is a little model of the things that can change, and the connections they have with each other. See for a brief run-down.

As the title of that article indicates, he sees the question of transition between different forms of capitalism in light of a proposed transition away from capitalism. That, rather than any particular economic conclusions, is what is unique about the Marxists: the ability – and willingness – to think of capitalism as a system of production that came into being and that will – one way or another – come to an end or mutate beyond recognition.


rootless-e 01.07.10 at 1:49 pm

“JCH @72 “If anyone would ask me, I think the main roots of the GFC lie in huge global trade imbalances and a corresponding decline in the labor share of global output””

Really? Over what period of time? Because living standards for billions have gone up very dramatically in the last 25 years.


vimothy 01.07.10 at 5:28 pm

@ rootless-e:

Proportionate share, not absolute amount.

Although, I am puzzled by the causal link (i.e., how did declining share for labour lead to financial crisis?)


M 01.07.10 at 7:26 pm

Although, I am puzzled by the causal link (i.e., how did declining share for labour lead to financial crisis?)

The standard demand-side mechanisms, presumably. The fact that first world laborers are so highly leveraged (and the fact that they’re, you know, in the first world) means that I doubt there’s much to be gained from looking at “labor” globally. There are first world labor aristocrats, a great but declining number of people still working under traditional modes of production, and an even greater and ever-growing number working in a world that would be very familiar to Marx (and the other classicals.)


john c. halasz 01.07.10 at 11:39 pm

JoB @72:

Since you ask on your blog for corrections on English, not being a native speaker, “Marxian” is standard English. It was Marx, after all, who first famously claimed not to be a Marxist! It would pertain to considerations of the thought/work/writings of Marx in a sober, open way. “Marxist” would pertain more to commitment to movements or parties claiming to base themselves on Marx, which tends to get one lost in sectarian weeds, as to who is a “true” Marxist, based on a uniquely “correct” interpretation of Marx, the “correct” line to be pursued in response to the times, and the “correct” recounting of the legends of history. But Marxism in the sense of the historical projection of a universal movement of emancipation by and for the class-conscious proletariat has been bypassed by subsequent history. Marx might have built a powerful locomotive, but it’s been long since chugging along without any tracks. At any rate, most of the contemporary economists we would be concerned with on this thread would be reasonably identifiable as Marxian, but only vaguely and rather rhetorically Marxist.

@83, 84, 85:

The decline in the wage share of global output is not just a First World phenomenon. In China, for example, wages have certainly risen during this cycle, but manufacturing employment has actually declined, (as China climbs the value-added chain, through technological imports and rising productivity), and the wage-share of total Chinese output has gone down. The decline of the wage share in output does effect the level of effective demand, “underconsumption”, but it also means an increasing accumulation of excess capital through higher rates of profit and thus excess capacity on the supply side. (There has been, in actual fact, no global “savings glut”; insofar as savings=investment is a short-run accounting identity, global output stats show an actual decline in savings and investments). The higher rates-of-profit/upward redistribution of income and wealth leads on to financialization, relying on speculative inflation of financial “asset” values and debt-financed consumption demand. All of which IMO is rooted in the MNC dominated global “free trade” regime, which extracts increasing shares of rents from international arbitrage set-ups, of which the north/south for-ex tilt is a prime enabling factor. I’m not big into China bashing, as China has simply played it hand deftly in an MNC dominated world, not of its creation, in which most of the key driving decisions and policies are made elsewhere. The Chinese trade surpluses, while clearly problematic, are actually an East Asian trade surplus, as, at the beginning of this cycle, only 15-20% of “Chinese” exports were Chinese value-added, and though that has certainly risen since, their import of high value-added components remains a dominant trend. The significance of the RMB/$ peg is mostly that China is in the first mover position with respect to the East Asia economy as a whole, insofar as currency adjustments are a key part of resolving global trade/CA imbalances. But China’s policy can’t be simply put down to “mercantilism”, though, to be sure, they’re following prior East Asian development-take-off examples. Just as important for China are a) the import/acquisition of production technology and know-how, even if it means selling their export goods at less than full “value”, and b) the maintenance of domestic/sovereign economic policy control, fiscal, monetary and regulatory, over against IMF neo-liberal dictates. But 2/3 of Chinese exports directly or indirectly occur at the behest of foreign MNCs, who are actually reaping the lion’s share of the surplus. The upshot is that the RMB peg just imitates the ppp/$ gap in for-ex rates that broadly exist between developed and “developing” economies anyway.

I don’t know where Quiggin would stand on this, but my view is that a new Bretton Woods-style global for-ex and trade regime is needed to resolve the problem of huge global imbalances, (which would mean an end to U.S.$ hegemony, which is why such a resolution would be fiercely resisted by TPTB). The Marxian interpretation is that the 1970’s stagflation was rooted in/symptomatic of a crisis in the rate-of-profit of global capitalism, following on the final break-down of Bretton Woods, and that the rise of neo-liberal globalization/financialization amounts to the “solution” . At least, til now.


Ted 01.08.10 at 12:53 am

David Harvey and the French Regulationists are the models for what JQ is attempting. But whereas DH and people like Aglietta, Lepietz, and Anwar Shaik link theoretical moments with empirical parameters, JQ’s discourse of “neoliberalism” and this “GFC” are both theoretically undetermined, and even less empirically identified, let alone linked. OTOH, the Marxists see “neoliberalism” as but one moment of state-capital restructuring following the crisis that started in the mid 1960s.

That crisis was the completion of the Japan and West Germany economic rebuilding at the same time as much of the national monopoly capitalist world reached saturation point. Harvey, Shaik, and others details empirically the decline of average profit rates in the US (and elsewhere) from their height in 1966, while the rate of accumulation kept increasing until 1974, at which point monetary policy could no longer paper mache the over-production/under-consumption contradictions of nationally organized monopoly capitalism. The spatial and price (including labour) rigidities of that system had to go. While the loose monetary policies and Vietnam War provided emergency bandaids for a few years, eventually it let the inflation genie out.

While the Keynesian bandaid could be applied to parts of the pre-1967 world, it became increasingly irrelevant after that.

Again, this “neoliberalism” was not a couple of Supermen – and one woman with a handbag – dropping out of the sky, but one moment of a systematic global restructuring of capitalist relations, without which the accumulation process would have collapsed.


bob mcmanus 01.08.10 at 1:47 am

I watched a lecture by Steve Keen and read a paper by Robert Brenner today, and sorry, Brenner won. You can look at Ted in 87 for an idea of what Brenner wrote. Keen is a follower of Hyman Minsky.

I am afraid if the New Keynesians absorb a little Minsky they will just try to regulate or manage the Instability Hypothesis and bubbles away. It was a part of Minsky’s concept, and elucidated very well by Steve Randy Waldmann at Interfluidity, that regulators will always be completely captured on the upside of the cycles, and that it cannot be otherwise.


JoB 01.08.10 at 8:24 am

86, well, thanks!


Robert 01.08.10 at 11:02 am

I think the comments demonstrate that Quiggin’s original post is, in the technical sense, bullshit.

I date the collapse of the post-war golden age to Nixon’s abolishment of Bretton Woods. I agree we need a new version.

Anyways, I have a question. Has Samir Amin written on the global crisis?


rootless-e 01.08.10 at 2:12 pm

It’s not bullshit as much as a commentary on how well marginalization works. I will say that it’s interesting that Brad Delong and Paul Krugman have blogs, yet the marxist/leftist economists, more immured in outer academia publish only in obscure journals.


engels 01.08.10 at 3:34 pm

Robert, on the Monthly Review website there is an essay by Amin in which he presents arguments from his book ‘La Crise, Sortir de la Crise du Capitalisme ou Sortir du Capitalisme en Crise’.


bob mcmanus 01.08.10 at 3:46 pm

“yet the marxist/leftist economists, more immured in outer academia publish only in obscure journals.”

The blogs are out there; the papers are available. Mark Thoma has “Stumbling and Mumbling” prominent on his blogroll. The left Post-Keynesians are even easier to find.

We just need to announce the New Keynesians are the new center, and confront them from the left with links, papers, analysis.


kalecki 01.08.10 at 6:57 pm

Having spent the better part of a day reading the links provided (especially see 51—papers by Dumenil/Levy, Kotz, and Stockhammer), I’ve come to the conclusion that the central premise that the Marxist left is MIA on the crisis is well off the mark. In fact, it is striking how rich and provocative the conversation among heterodox economists and historians has become, particularly in contrast to the impoverished marginalist discourse.

Not to say there is nothing of value being done by conventional economists. For example, there is a very useful literature on increasing leverage, the rise of repo, etc. But nothing about the systemic crisis of neoliberal finance capitalism, which is by universal agreement the object of analysis of the heterodox crowd. Marginalists just don’t have the analytical vocabulary; at the least, you need some concept of class to get any traction at all.

There is also an interesting Gramscian asymmetry between these two communities: the Marx-Keynes economists understand and often draw upon the work of neoclassicals where appropriate. By contrast, the neoclassical economists operate in disregard of alternative paradigms, as befits a hegemonic group.

For example, John Quiggen’s comment that Marx’s falling rate of profit is invalid because “with technological progress, there is no necessity for the rate of profit to fall” seems to ignore the fact that Marx’s theory was in fact *about* technological progress, which I think anyone familiar with modern scholarship on this question would know. Perhaps I’m being unfair lifting one sentence out of the blog—are you familiar with this literature, John?

I also think the Marx vs. “left Keynesian” dichotomy is less than useful. The original left Keynesian, Michal Kalecki, was heavily influenced by Marx, which is one reason his writings are superior in some regards to those of Keynes.


Benp 01.08.10 at 10:13 pm

I think Andrew Kliman has been mentioned and is worth looking at as one of the main proponents of the TSSI defence of the LTV – href=”″ title=”Reclaiming Marx’s Capital: A Refutation of the Myth of Inconsistency”>. Most of the rest of the Marxian’s have more or less accepted GET. He also refuted Okishio’s theorem; the last proof of Marx’s “pointless exercise”.
Incidentally Kliman is broadly supportive of Chris Harman’s latest (and last) book which presumably draws similar parallels to John Quiggin but from a Marxist perspective.


Ted 01.09.10 at 12:18 am

The bourgeois orthodox economists who snigger at the Marxists, are in fact the problem. Come on, the Krugmans, and other establishment mathematical neoclassicists have gotten nowhere in their interminable rants against the “Right”- not to mention their clumsy attempts at historical analysis and context (cue “neolberalism” handwaving) – coz they are intellectually in cahoots with the Right.


Ted 01.09.10 at 12:36 am


The importance of finance capital in the spatial expansion and restructuring of production has been part of political economic analysis for almost a century now.

This is why Krugman getting a Nobel Prize was such a travesty. Krugmans “New” Economic Geography might have new to orthodox mathematical neoclassical economists, but it was hardly new to, you know, like, er, actual Geographers! And he could not even include finance capital in this “new economic geography”.

That guy and Yale doing stuff on the leverage cycle has some interesting insights, but this whole “neoliberalism” trope is a thirty year old Gramscian first stab at one part of the restructuring of capital-state relations that was necessary to work out the structural crisis from the mid 1960s on. “Neoliberalism” starts to gain some analytical integrity once it is integrated within a more general theorizing of the change from national Fordist monopoly capitalism to post-Fordist global capitalism.

That’s why it is so funny hearing all these bourgeois economists and social scientists co-opting “neoliberalism” as their very own plastic sword in their schoolyard mutual lettuce-slapping tiff with their fellow bourgeois orthodox social scientists; the great Battle of the Op-Ed pages where tensions between capital and labour, industrial and finance capital, state against state, are ignored (or more not seen or understood) in favour of a false, cheesy, but irrelevant, Manichean battle between bizarrely named “Keynesians” and what these “Keyensians” call “Neoliberals”. Tweedledumb and Tweedledumber.


rootless-e 01.09.10 at 1:55 pm

Adam Smith in Beijing is very good.


Jglass 01.09.10 at 8:27 pm

Maybe one of these are what you’re looking for?

The free fall is over, but the crisis continues by Joel Grier

U.S. labor in the crisis Resistance or retreat? by Lee Sustar

Reviving socialism from below:
Capitalism’s biggest crisis since the 1930s raises the question of what can replace it.
by Phil Gaspar

Economic crisis and the responsibility of socialists by Rick Kuhn


Tim Wilkinson 01.10.10 at 7:28 pm

Hidari @80: seconded. All this ‘turns out to have been predictable’ is prima facie pretty suspect. In cases where the whole exercise is carried out ex post, I tend to read ‘is predicted by X theory’ as meaning merely ‘is consistent with X theory’, on the assumption that the prediction may well be of a high level of generality.

If some contrast class is offered of nearby outcomes which are predicted not to occur, that might be a different matter, though even then the fact that the outcomes are known at the time tends to suggest a certain Just-So-ness. Which isn’t to say there is any conscious bias going on – a part of scientific methodology is ruling out the possibility of the unconscious variety – hence objecting on the basis of conflict of interest needn’t carry any further connotation of ethical obloquy.

Perhaps predicting things afterwards is a bit like selecting a statistical test from a number of possible ones, after having carried them all out. A paper which chooses among tests by a method which couldn’t possibly be influenced by the outcomes might be valid, and another paper identical in its intrinsic properties, but in which the test was chosen in the knowledge of its outcome, not so. I suspect that analogous considerations may apply to a prediction (or equivalently for current purposes, a scientific explanation, whether D/N or I/S) carried out when the result (or explanandum) is known.

That this counts against most (all extant, AFAIK) specific evolutionary ‘explanations’ is a feature, not a bug. At least they don’t make any irreducibly evaluative claims, unlike the whole (but never the parts) of nc economics.


Ted 01.10.10 at 10:29 pm

The problem with these “who predicted the crisis” pissing contests was summed up by Supertramp over three decades ago: Crisis? What Crisis?

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