Steve Keen’s “A Marx for Post Keynesians”

Steve Keen’s paper “A Marx for Post Keynesians” can be found here:

Steve Keen, “A Marx for Post Keynesians,”
http://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Amfpk.pdf

I have to admit I’ve only skimmed this before and some time ago, but I will look at its main points in what follows.

Keen argues that there are actually “two sets of axioms developed by Marx, but lost to Marxian political economy by its slavish adherence to the Labor Theory of Value” (Keen, “A Marx for Post Keynesians,” p. 1). One of these sets of axioms might be methodologically useful in Post Keynesian economics.

What Keen argues is this:

“Marx employed two distinct sets of axioms in his thinking. One set, which I will call Marx’s Labor Axioms, has been treated as Marxism’sole intellectual foundation since Hilferding’s 1904 rejoinder to Böhm-Bawerk. The other set, which I will call Marx's Commodity Axioms, was regarded by Marx as logically prior and superior to his Labor Axioms, though he believed--erroneously--that the two sets were consistent.” (Keen, “A Marx for Post Keynesians,” p. 4).

According to Keen, the Labour Axioms in Marx are as follows:

“1) Value is ‘socially necessary abstract labor-time’;
2) Under capitalism, when markets are in equilibrium, commodities exchange in proportion to the amount of value they contain;
3) Under capitalism, the ability to perform work, labor-power, has itself become a commodity;
4) In production, labor transfers its value directly to the product, while the commodities used up in production transfer their value indirectly;
5) Labor is unique because of the difference between the commodity sold by workers, labor-power, and the commodity consumed in production, labor itself.”
(Keen, “A Marx for Post Keynesians,” pp. 4–5).

Ultimately, this set of axioms is not valid, argues Keen, and there are other problems with Marx’s analysis, such as, for example, that his treatment of money in volume 1 of Capital is close to an orthodox quantity theory of money (Keen, “A Marx for Post Keynesians,” p. 12).

By contrast, Keen sees Marx’s “Commodity Axioms” as follows:

“1) The commodity is the essential unity in capitalism;
2) Commodities have two aspects: use-value and exchange-value;
3) Under capitalism, use-value and exchange-value are incommensurable, so that the use-value of a commodity plays no role in determining its exchange-value;
4) Use-value is an objective property of commodities, assessed however from the point of view of the consumer;
5) The exchange-value of a commodity is the exchange-value of the commodities used up in its production;
6) Under capitalism, the ability to perform work, labor-power, has itself become a commodity;
7) Capitalism has two main circuits, the Circuit of Commodity Capital (C--M--C), where the objective is the consumption of use-values, and of the Circuit of Money Capital (M--C--M+), where the objective is the production of surplus value.” (Keen, “A Marx for Post Keynesians,” pp. 5–6).

These axioms, amongst other things, lead to a “distinctly monetary view of capitalism which emanates from them” (Keen, “A Marx for Post Keynesians,” p. 9), which is compatible with Post Keynesian economics.

Keen analyses these commodity axioms and comes to the conclusion that

“The Commodity Axioms thus lead to the conclusion that surplus can be generated by all inputs to production, thus supporting the Neo-Ricardian and Post Keynesian approaches to production, and contradicting conventional Labor Theory of Value Marxism’s insistence that labor is the only such source. Marx’s attempt to avoid this conclusion in Capital was a logical failure, which nonetheless succeeded in convincing a century of Marxists (and their critics), chiefly by obscuring his Commodity Axioms, to leave only the Labor Axioms as his apparent legacy to economics (the historiography of this is covered in Keen 1993a and 1993b). Twentieth century Marxism thus developed--and foundered--on the basis of Marx’s Labor Axioms.” (Keen, “A Marx for Post Keynesians,” p. 9).

For example, by means of his labour axioms, Marx sees wages as determined by real phenomena: Marx’s view that the wage is on average the value of labour power which reduces to the subsistence wage is at variance with the Post Keynesian view that wages are fundamentally a monetary phenomenon determined by institutional factors (Keen, “A Marx for Post Keynesians,” p. 10). But Marx’s commodity axioms lead to the Post Keynesian view, unlike the labour axioms. Moreover, ultimately labour cannot be treated just as a commodity like any other (Keen, “A Marx for Post Keynesians,” p. 10).

Another useful insight that Marx had in his “Commodity Axioms” was that in capitalism the capitalists want more money as the ultimate aim of production, so that there is a “Circuit of Capital” in which money is used to buy factor input commodities and then these are used to create an output commodity which is then sold to obtain more money (which can be expressed as M – C – M). This insight was “about the only aspect of Marx’s thought for which Keynes expressed admiration” (Keen, “A Marx for Post Keynesians,” p. 7, n. 10).

I am not so sure about the value of these “Commodity Axioms.” Axiom (5) seems untrue to me, and would be better stated:

(5) in cost-based, mark-up price markets, the exchange-value of a commodity is based on total costs, but not identical to it.

Keen himself seems to admit that axiom 6 is unsatisfactory and proposes this axiom:

“1) Labor-power is both a commodity and a non-commodity, giving rise to a dialectic of labor, which determines the wage.” Keen, “A Marx for Post Keynesians,” p. 7, n. 11).

So, all in all, the case for basing Post Keynesian economics on the original “Commodity Axioms” seems problematic.

BIBLIOGRAPHY
Steve Keen, “A Marx for Post Keynesians,”
http://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Amfpk.pdf