Re: [OPE] Mistaking Mathematical Beauty for Economic Truth

From: Alejandro Agafonow <>
Date: Sat Sep 12 2009 - 04:01:05 EDT

Labour theory is its main weakness and it isn’t a coincidence that being a mathematical economist Ian, your work confines itself to it. Rather, the strength of Marx’s theory lies in what Samuel Bowles calls Marx-Coase-Simon theory of the employment relationship. He defines it briefly as follows:   **Its key feature is that the firm is represented as a group of suppliers of inputs to a common production process whose activities are coordinated by means of an authority structure rather than by market exchanges governed by complete contracts… The central analytical problem is to understand how the structure of firms addresses the conflicts and incentive problems arising from the fact that because labor, credit, and other contracts are incomplete, those with decision-making authority in the firm have power over other peoples’ labor. An important question, then, is why is it generally the case that in capitalist economies control rights are not assigned to those who work in the firms but rather to those who supply capital to the firm, or their representatives.** (338-39). Bowles, Samuel (2004). Microeconomics. Behavior, Institutions and Evolution.. Princeton University Press.   Note that what Bowles calls market exchanges is the idealized and non-real picture offered by the perfect competition model. Similarly, the Marxian theory of value offers another version of this model with prices spinning around labor in a tendency toward a natural price. Finally, if LTV has any possibility, it is not as a theory of capitalist exchanges, but as an alternative method of book-keeping and pricing.   A. Agafonow ________________________________ De: Ian Wright <> Para: Alejandro Agafonow <> CC: Outline on Political Economy mailing list <> Enviado: sábado, 12 de septiembre, 2009 2:37:33 Asunto: Re: [OPE] Mistaking Mathematical Beauty for Economic Truth > If Marxist economics has any strength, it is its institutional approach > which couldn’t have developed if mathematic had played the same role as in > neoclassical economics. The most important strength of Marxist economics is its theory of value. It is the only modern school of economic thought that maintains that money represents labor time. For the vast majority of academic economists this is a discredited theory. But I am confident that when a future history of economics is written the period in which this theory was doubted will be considered nothing less than a dark age of economic science.

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Received on Sat Sep 12 04:03:29 2009

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