nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2022‒08‒22
nine papers chosen by
Karl Petrick
Western New England University

  1. Karl Marx´s Theory of Capitalism Exposition, Critique, and Appraisal By Escudé, Guillermo J.
  2. Inflation and Distributive Conflict: a theoretical perspective By Guilherme Spinato Morlin
  3. Sen and Sraffa: Description as Theory By Syed Mohib Ali
  4. From Addition to Multiplication: The Labour Theory of Value and the Economic Institutions of Capitalism. Part Two: Neither Micro nor Macro: Understanding the Evolution of Aggregate Variables in a Capitalist System By Alberto Battistini
  5. The Kaldor-Verdoorn Law’s at the Age of Robots and AI. By Andrea Borsato; Andre Lorentz
  6. From Addition to Multiplication: The Labour Theory Of Value and the Economic Institutions of Capitalism. Part One: Profit and Surplus-Value in light of Transaction Costs By Alberto Battistini
  7. Consumption as pedagogy of simulation By Filippo Pietrini
  8. From Addition to Multiplication: The Labour Theory of Value and the Economic Institutions of Capitalism. Part three: Structure, Super-structure and Institutional Change By Alberto Battistini
  9. Homo economicus to model human behavior is ethically doubtful and mathematically inconsistent By M. Lunkenheimer; A. Kracklauer; G. Klinkova; M. Grabinski

  1. By: Escudé, Guillermo J.
    Abstract: This book gives a clear synthesis of Marx’s theory of Capitalism and its relation with economic theory as it evolved over the course of the last 300 years. It places Marx’s though in perspective, comparing it with the main aspects of the economic theories that preceded it, including not only the Classical Adam Smith and David Ricardo but also economists like Cantillon, Turgot, and Ramsay that Marx chose to ignore with respect to the crucial issue of entrepreneurship because it was incompatible with his Theory of Surplus Value. But the book also contrasts Marx’s theory with Walras’, the Neoclassical economist whose influence on contemporary mainstream economic theory was most lasting. The analytical aspects of Marx’s theory are rigorously expressed by means of the technique of Input-Output Analysis, which is explained from the most elementary level in order to make the book self-contained. Each of the multiple topics of Marx’s complex and refined theory is explained in detail, including his theory of money, the heterogeneity in kinds of labor and in productive techniques, the turnover of capital, Simple and Extended Reproduction, his theory of the economic cycle, his theory of ground rent, his theory of productive and unproductive labor, and his view of the main tendencies of capitalist society. The book is structured in accordance with the development process of Marx’s thought. Hence, it begins with the life project he generated in his youth and drove him from the study of history and philosophy to that of Political Economy, on the one hand, and political praxis, on the other. Hence, Parts I, II, and IV of the book respectively address A) the philosophical-methodological foundations of his scientific endeavor (his Historical Materialism); B) his scientific theory of capitalist society as expressed in Capital; and C) his political thought and praxis, which had enormous effects over the course of the 20th century. Part III of the book addresses our critique of Marx’s theory of Capitalism. Beyond our criticisms, however, the book shows that Marx made important contributions to the comprehension of the functioning of Capitalism in the more conventional part of his theory, which we denominate ‘exoteric’ in order to contrast it with his ‘esoteric’ Theory of Surplus Value which was the foundation of his view of the exploitation of wage labor in Capitalism.
    Keywords: Marx's theory of capitalism; Marx's theory of surplus value and its critique; Comparison of Marx's and Walras' economic theories; Historical Materialism; Marx's political project and its critique; appraisal of Marx's influence in the light of the world events of the 20th century.
    JEL: B00 B31 B40 B51
    Date: 2021
  2. By: Guilherme Spinato Morlin
    Abstract: Conflicting claims models have stressed the race between prices and money wages, in the struggle among capitalists and workers, as the main inflationary pressure. We discuss how conflicting-claims inflation models describe conflict inflation and the related outcome for income distribution. The paper therefore contrasts alternative theoretical perspectives underlying conflicting claims models. We also discuss how these approaches provide a criticism to the New-Keynesian Phillips curve. We also explore the relations between demand-pull and cost-push inflation and endogenous money theory. A deeper understanding of distributive conflict requires an analytical exposition of the relation between prices and distribution. In general, conflicting claims models rely on Kaleckian explanation of distribution, based on the notion of mark-up pricing according to the degree of monopoly. Conflict inflation allows wage bargaining to affect income distribution and, thus, the real mark-up level. However, this theory contains unsolved theoretical shortcomings, lacking an ultimate explanation for profits and overlooking input-output relations. An alternative theory of distribution can be found in modern appraisals of the Classical surplus approach. We examine how this approach has been extended to the study of inflation, providing a consistent relation between inflation and distributive conflict
    JEL: B51 D33 D46 E31
    Date: 2022–04
  3. By: Syed Mohib Ali
    Abstract: The article engages with Amartya Sen’s interpretation of Piero Sraffa’s Production of Commodities by Means of Commodities (PCMC). Sen has the distinction of highlighting the philosophical and methodological aspects of Sraffa’s work. In this regard, Sen has highlighted the role of counterfactuals in economic theory and the role of value theory in political economy as a matter of ‘social communication’. On these two issues, there is considerable discussion in recent Sraffian scholarship that is concerned with the significance of Sraffa’s critique of marginalist theory and the rehabilitation of classical economics. The article scrutinizes Sen’s interpretation of PCMC and highlights several noteworthy contributions and insights. While being sympathetic to the substantive points of criticism entailed by PCMC, Sen misunderstands Sraffa’s ‘critique of economic theory’ and the reasoning involved in such a critique. A critical reading reveals that Sen’s interpretation of Sraffa is more reflective of his own work on the ‘choice basis of description’ than an appreciation of Sraffa’s theoretical project. Despite the misunderstandings, the article highlights the similarities in vision between Sen’s interpretation of Sraffa and Sraffa’s revival of classical economics. By undertaking such a critical reading, the article raises important issues about method and the scope of economic enquiries
    Date: 2022–06
  4. By: Alberto Battistini
    Abstract: This three-parts study propounds an institutional and evolutionary - or qualitative and inter-subjective- re-interpretation of Marx’s version of the labour theory of value. More specifically, this second part begins the general and dynamic extension of the static and partial analysis presented in the first part. Consequently, the analysis of the division of labour among firms is added to that of the division of labour within the firm. The key notion in this regard is that of interdependence between the “sphere of production” and the “sphere of circulation”, that is, the interdependence between the phase of value creation – or appropriation- that takes place within the firm and the phase of its realization – or appropriationthat takes place in the market of goods. Indeed, it follows from the analysis of this interdependence that the aggregate variables should not be understood as being determined by the sum of separate and independent individual variables, nor, even less, as a series of ‘wholes’ endowed with a logic different from the individual ones, without this leading at least to a departure from the same additive framework of the methodologically individualistic approach discussed in the previous part. On the contrary, aggregate variables turn out to be micro-founded by the production relationships that prevail within the firm, and in their turn they macro-found the individual ones making it possible to retrieve and re-interpret the mechanisms of cumulative causation on which, respectively, Marx and Smith based their theories of crisis and growth.In other words, since even the aggregate production function turns out to be non-additively separable, the problem of determining the value of the joint product of the firm arises in basically the same way for the aggregate product. Accordingly, it, too, can be solved with the notion of exchange value introduced in Part One. Consequently, this situation further weakens the neo-classical theory of value and distribution, making it even more appropriate and urgent to retrieve and re-interpret the classical perspective and in particular the Marxian one where, again because of the interdependence between the “sphere of production” and the “sphere of circulation”, such theories are interdependent. From this interdependence there ensues the inseparability of efficiency and distributional considerations, the importance of property rights as a rule rather than an exception, and the role of conflict as a positive principle
    Keywords: crisis; growth; competition; scarcity; business cycle; abstraction.
    JEL: A10 B00 C70 P10 D02
    Date: 2022–07
  5. By: Andrea Borsato; Andre Lorentz
    Abstract: This paper contributes to the literature around the Kaldor-Verdoorn’s law and analyses the impact of robotisation on the channel through which the law shapes labour-productivity growth. We start with a simple evolutionary interpretation of the law that combines Kaldorian and Post-Keynesian arguments with the neo-Schumpeterian theory of innovation and technological change. Then we apply a GMM estimator to a panel of 17 industries in 25 OECD capitalist economies for the period 1990-2018. After elaborating on the general evidence of the Kaldor-Verdoorn’s law in the sample, we investigate the effect of increasing robotisation. The estimates suggest that for industries with a higher-than-average robot density, the increasing adoption of robots weakens, at least, the meso-economic channel that relates productivity growth to mechanisation. Yet, the higher degree of robotisation strengthens the mechanism that links labour productivity growth at the industrial level to the macro-level dynamic increasing returns to scale that emerge from a general expansion of economic activities through the many interactions between sectors. Such results are in agreement with the empirical literature that suggests different impacts from robotisation on the basis of the level of economic activity considered.
    Keywords: Labour productivity, Kaldor-Verdoorn’s law, Robotisation, GMM.
    JEL: J23 O33 O47
    Date: 2022
  6. By: Alberto Battistini
    Abstract: this three-parts study presents an institutional and evolutionary -or a qualitative and intersubjective-re-interpretation of Marx’s version of the labour theory of value. More specifically, in this Part One Marx’s own contribution to that theory - that is, the theory of surplusvalue, or the difference between use-value and exchange-value of labour power as a determinant of profit in perfectly competitive conditions and of the contradictory nature of the capital accumulation process- is re-dis-covered. Accordingly, the amount that would have been the cost of obtaining the same commodity in the noncapitalist Commodity ? Money ? Commodity circuit -that is, in the market of independent or smalland medium-size producers, takes the place of the direct and indirect quantity of working hours contained in a given commodity, thus representing its exchange value. By applying - as Marx did- the same pricing rule which holds for the other commodities to labour power, therefore, the quantity of labour socially necessary to produce subsistence goods is in its turn substituted with the amount that is possible to earn from independent participation in the production process, without specific means of production in the usual meaning of the term. Since the step in terms of surplus-labour is then skipped for theoretical as well as practical reasons, the use-value of labour-power corresponds to the exchange-value of the commodities. Consequently, as in Marx, also in this case a kind of profit that derives from the difference between the use-value and the exchange-value of labour-power, but measured in terms of transaction costs, comes to light. Moreover, because it derives from the aforementioned difference, this kind of profit is not eliminated by competition. As a consequence, it should be named as ‘Marxian’ or ‘industrial’ profit in order to distinguish it from monopoly profit, which instead derives from price setting. On the basis of this result, in the next two Parts of the study the hypothesis that the principle of the maximization of this kind of profit might work as a general positive principle for the economic domain, including as special cases Pareto-efficiency and conflict, will be verified
    Keywords: transaction costs; wealth effects; use-value; exchange-value; team production; methodological individualism
    JEL: A10 B00 C70 P10 D02
    Date: 2022–07
  7. By: Filippo Pietrini
    Abstract: This paper highlights the still actual aspects of post-structuralist consumption analysis and in particular that of Baudrillard and Bourdieu. I analyze the today world of consumption through this theoretical lens. I do not deny that the consumer has an active role in the sense creation, that the meanings of consumption acts are variable or that in addition to the enunciator, an enunciateer and a socio-cultural context come into play. But I would rather argue that there are still valid reasons to recover a partially deterministic vision between the social position (and not the classes) and, this is the novelty of the paper, the mode of signification (and not the goods/services or their constellations, as in the historical Bourdieu’s map). I identify various empirical facts of this connection between social structure and consumption. I argue that consumption has been and is a pedagogy of simulation (as manipulation and production of social meanings) , and it is precisely in this sense that it spread to other fields, from the political positions on social issues to the presentation of the self in every day life. Finally, I highlight the social consequences of consumption as a language and the symbolic dimension this entails nowadays
    Keywords: Sociology of consumption, post-structuralism, simulation, ideology, symbolic value.
    JEL: A12 Z13
    Date: 2022–06
  8. By: Alberto Battistini
    Abstract: this three-parts study propounds an institutional and evolutionary - or a qualitative and intersubjective-re-interpretation of Marx’s version of the labour theory of value. In this third and final part, the general and dynamic extension of the analyses conducted in the previous parts is concluded. Consequently, the basic issue concerns the Marxian theory of institutional change, i.e. the effect of structural crises on the ideological super-structure and the feedback effect that a possible change of the latter can exert on the former. More specifically, the point is this: to the extent that the conflict present in reality is transferred to a cognitive level, it is possible to identify a notion of inter-subjectivity that consists in the intersection among different points of view, or, to quote the title of a well-known article by Aumann (1973), in what players ‘agree to disagree’. In its turn, provided that the rather restrictive conditions that ensure its formation are fulfilled, this notion of inter-subjectivity corresponds to a super-structural change which - by changing the perception of the legitimacy and efficacy of the existing property rights’ distribution and thereby determining structural changes in decision-making processes- proves able to support the transition from a pair of Paretoefficient equilibria that do not maximize total value to another pair of equilibria, also Pareto-efficient but which maximizes it. In other words, by resolving what in the previous parts has been called the ‘fundamental contradiction of capitalism from the point of view of production’, i.e., the problem of the separation between ownership and control of the labour force, such structural changes re-establish the coincidence between players and decision-makers that enables the transition from the tendency to crisis to the one to growth already introduced in the Part Two and respectively associated with the thinking of Marx and Smith. Moreover, since intersection means that ‘the whole is less than the sum of the parts’, the truth of the statements about this notion of inter-subjectivity does not depend on who makes them and is therefore interpretable in terms of epistemic objectivity. However, since this notion of objectivity does not need unanimity, the philosophy of science which is behind the axiomatic approach - on which in its turn is based standard economic theory, that is, the transformation of normative principle like the Paretoefficiency one into the universal positive principle for the economic domain- turns out to be likewise questionable.
    Keywords: beliefs, expectations, inter-subjectivity; structural interdependence, property rights, self-evidence.
    JEL: A10 B00 C70 P10 D02
    Date: 2022–07
  9. By: M. Lunkenheimer; A. Kracklauer; G. Klinkova; M. Grabinski
    Abstract: In many models in economics or business a dominantly self-interested homo economicus is assumed. Unfortunately (or fortunately), humans are in general not homines economici as e.g. the ultimatum game shows. This leads to the fact that all these models are at least doubtful. Moreover, economists started to set a quantitative value for the feeling of social justice, altruism, or envy and the like to execute utilitarian calculation. Besides being ethically doubtful, it delivers an explanation in hindsight with little predicting power. We use examples from game theory to show its arbitrariness. It is even possible that a stable Nash equilibrium can be calculated while it does not exist at all, due to the wide differences in human values. Finally, we show that assigned numbers for envy or altruism and the like do not build a field (in a mathematical sense). As there is no homomorphism to real numbers or a subset of it, any calculation is generally invalid or arbitrary. There is no (easy) way to fix the problem. One has to go back to ethical concepts like the categorical imperative or use at most semi quantitative approaches like considering knaves and knights. Mathematically one can only speculate whether e.g. surreal numbers can make ethics calculable.
    Date: 2022–07

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