Tuesday, June 28, 2011

The Emergence of Capitalist Economics III

Yanis Varoufakis, Joseph Halevi, Nicholas J. Theocarakis, 2011, Modern Political Economics: making sense of the post-2008 world, London: Routledge.

If chapters 3, 4, and 5 are taken together they are disappointing to me (a longtime critic of modern economics' obsession with equilibrium and mathematical models of non-existent economies to derive policies for the economies that exist. They cover a numbers of economists from the 19th century, including the Physiocrats, Ricardo (in some detail), Marx (in some detail) and, surprisingly, an economic model (in great detail) derived from the recent science-fiction screen-play of the film, The Matrix.

Readers must get used to the adjective ‘commodified’, introduced without explanation, as if it is in daily discourse around the world’s campuses (most of whom are not familiar with Karl Marx). If the authors, VHT, aim at persuading a wide audience of modern economists, they should invest some space in the text for accommodating the lack of a working knowledge of Marxist thinking, let alone any empathetic feeling for his politics.

Letting the mathematics, of which modern economists are competent to follow, do VHT’s work is not enough, given the abrupt introduction of deep concepts like ‘value’, disengaged from its classical meaning and treated almost as a ‘life force’, and similarly with ‘capital’ an entity also with a life of its own (hence, VHT’s empathy for The Matrix – where the world has been taken over by a mysterious force based on technology that subordinates all humans and subjects them to being passive source of bodily heat to work the ‘economy’).

VHT propose a Ricardian ‘corn model’ to explain how economies reproduce, grow and produce a surplus, followed by a detailed account of the Matrix economy, leaving this reader unclear of the significance of either to the headline concern with the crash of 2008, which I assume comes later(I’m only at chapter 4, ‘The trouble with humans’). Apparently, we must ‘grasp the dialectical nature of our species’, namely that ‘at the same time, (a) we possess the properties and display the behavioural codes of a particularly stupid virus; and (b) we have the capacity to act as intelligent designers of a rational life on Earth’ (p73). It’s usually a sign of an over-exited imagination that always see problems as knife-edge choices.

Chapter 5 is a tutorial on the Marxist theories of labour, labour power, wages, surplus value, and capital. VHT write as if Marx was profoundly right, until he got to the transformation problem, as his labour theory of value was otherwise correct. That’s not going to convince many modern economists easily.

But on to Chapter 6: Empires of Indifference …


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