Marxian economics MIA?

There’s this by Paul Cockshott and Dave Zachariah.

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, 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.

‘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.

“…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.

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’.

John,

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.

http://faculty.buffalostate.edu/joth/pk2009/Site/program_files/Michl.pdf

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.

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.

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

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

‘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.

“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.

‘Economics is somewhere between physics and advice columns.’

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

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 dot.com 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: http://davidharvey.org/2008/12/a-financial-katrina-remarks-on-the-crisis/

I believe these are previews to the next book.

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.

“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.

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.

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.

“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:

http://www.marxists.org/archive/marx/works/1868/letters/68_07_11-abs.htm

“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.”

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
paradigm

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

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).

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’…)

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.

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.

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.

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.

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.

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.

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.

use-value, exchange-value

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.

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: http://homepage.newschool.edu/~AShaikh/

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: http://www.dailymotion.com/video/x9hqta_anwar-shaikh-on-marx-and-the-global_news
Metroeconomica, Vol. 60, No. 3

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.

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.

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.

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?

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 ;-(

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.

“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.

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.)

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.

86, well, thanks!

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.

“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.

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=”http://www.amazon.co.uk/Reclaiming-Marxs-Capital-Inconsistency-Dunayevskaya/dp/073911851X/ref=sr_1_8?ie=UTF8&s=books&qid=1262988114&sr=1-8″ 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.

kalecki

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.

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

The free fall is over, but the crisis continues by Joel Grier
http://www.isreview.org/issues/66/feat-crisis.shtml

U.S. labor in the crisis Resistance or retreat? by Lee Sustar
http://www.isreview.org/issues/66/feat-USLabor.shtml

Reviving socialism from below:
Capitalism’s biggest crisis since the 1930s raises the question of what can replace it.
by Phil Gaspar
http://www.isreview.org/issues/65/gasper-socialism.shtml

Economic crisis and the responsibility of socialists by Rick Kuhn
http://www.isreview.org/issues/68/feat-grossman.shtml

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