Debunking Marxism 101 (Updated)

In the links below I update my series of posts debunking Marxist economics and ideology, to complement my series on Debunking Austrian economics 101.

As in the series on Austrian economics, not all posts actually debunk Marxism, but sometimes provide outlines or summaries of Marxist theory or interesting points on Marxism or Karl Marx’s life and thought. There are also some posts where constructive things can be said: on endogenous money, the falsity of Say’s law and the monetary theory of production, how some of Marx’s economic thought anticipated Keynes, but even here the discussions in Marx’s Capital are simply obsolete and have long been superseded by modern Post Keynesian theory, and are mainly of historical interest.

In what follows, sometimes Marxist economic theory will be debunked by means of Post Keynesian economics (which is what this blog advocates), though frequently I have my own original criticisms or follow the arguments of other critics of Marxism.

It is important to remember that Post Keynesian economics – although it has severe criticisms of laissez faire capitalism and neoclassical or Austrian economics – is still strongly distinct from Marxist economics. Post Keynesian economics is not Marxism, and leading Post Keynesians and economists whose work has been foundational for Post Keynesian economics have rejected the labour theory of value, the basis of Marxist economics.

John Maynard Keynes, for example, said that Marx’s theories were founded “on a silly mistake of old Mr Ricardo’s” (Skidelsky 1992: 517) – namely, the labour theory of value. For Michał Kalecki and Joan Robinson the labour theory of value was “metaphysical” (Brus 1977: 59; Robinson 1964: 39), and for Piero Sraffa it was “a purely mystical conception” (Kurz and Salvadori 2010: 199). If the labour theory of value is unsound, then the whole Marxist edifice constructed on it cannot but fall and collapse. Moreover, the classical Marxist idea of historical determinism is also incompatible with the Post Keynesian idea of the fundamental uncertainty of the future.

For Marx’s theory of the “law of value” in volume 1 of Capital, see here:

“Marx’s ‘Law of Value’ in Volume 1 of Capital,” February 4, 2016.

For an overview of why the labour theory of value is wrong, see this post:

“Why Marx’s Labour Theory of Value is Wrong in a Nutshell,” June 28, 2015.

For a detailed discussion of how Marx and Engels continued to think of the theory of value in volume 1 of Capital as an empirical theory of pre-modern commodity exchange before modern capitalism (where prices of production are anchors for the price system), see here:

“Engels’ View of the Theory of Value in Volume 1 of Capital in the 1890s,” August 12, 2015.

The posts below are divided into the following groups:

(i) Bibliographical Posts.
(ii) Marx and Engels’ Works Online
(iii) Karl Marx’s Life 1818–1883
(iv) Documentaries about and discussions of Karl Marx and Marxism.
(v) Against the labour theory of value.
(vi) On the alleged tendency of the rate of profit to fall.
(vii) On Marx’s “Critique of the Gotha Program.”
(viii) Discussions of David Harvey’s lectures on Reading Marx’s Capital Volume 1.
(ix) Steve Keen on Marxism.
(x) On Marx’s views on phrenology and race.
(xi) On Marx’s views on slavery.
(xii) Marxism, authoritarianism and imperialism.
(xiii) Against Marx’s Communist Manifesto.
(xiv) Against Sraffian and Marxist long-run equilibrium.
(xv) Chomsky and Marxism.
(xvi) Against Temporal Single System Marxism (TSSI)
(xvii) Marx’s Monetary Theory
(xviii) Marx versus Keynes
(xix) Critical Summaries of Volume 1 of Capital
(xx) Marx’s Theory of Wage Determination in Capitalism
(xxi) Useful Insights in Capital
(xxii) Marx’s Views on Capitalism and Imperialism and Colonialism
(xxiii) Historical Development of Marxism
(xxiv) Responses to Marxists
(xxv) Failed Predictions of Marx and Engels
(xxvi) Marxism and Poststructuralism
(xxvii) Marx and Immigration
(xxviii) Engels’ Pause and Marx’s Hasty Generalisations about Capitalism
(xxix) Marx and Increasing Intensity of Labour in Capitalism
(xxx) Marx and Technological Unemployment.

I also recommend my series of posts that are critical chapter by chapter summaries of volume 1 of Capital in section xix below (or listed in a separate post here).

The posts are as follows:

Debunking Marxism 101
(i) Bibliographical Posts:

(1) “Study Guides to and Overviews of Marx’s Capital,” June 10, 2015.

(2) “Bibliography on Marx’s Monetary Theory,” June 16, 2015.

(3)“Early Reviews and Critiques of Marx: A List,” March 16, 2016.

(ii) Marx and Engels’ Works Online:

(1) “Some Early Editions of Marx’s Capital Online,” May 10, 2015.

(2) “Engels’ Later Works Online,” May 13, 2015.

(iii) Karl Marx’s Life 1818–1883:

(1) “Karl Marx’s Life 1818–1841,” April 20, 2015.

(2) “Karl Marx’s Life 1842–1844,” April 21, 2015.

(3) “Karl Marx’s Life 1845–1849,” April 24, 2015.

(4) “Karl Marx’s Life 1850–1860,” April 25, 2015.

(5) “Karl Marx’s Life 1861–1870,” April 28, 2015.

(6) “Karl Marx’s Life 1871–1883,” May 1, 2015.

(7) “Karl Marx’s Night Out on London Town,” September 5, 2015.

(8) “Karl Marx the Conspiracy Theorist,” December 11, 2015.

(iv) Documentaries about and discussions of Karl Marx and Marxism:

(1) “A BBC Discussion of Karl Marx,” April 4, 2015.

(2) “Karl Marx in London,” April 26, 2015.

(3) “BBC Radio 4 Discussion on the 1848 Revolutions,” April 22, 2015.

(4) “Jonathan Sperber on Karl Marx,” April 23, 2015.

(5) “Bryan Magee interviews Peter Singer on Hegel and Marx,” April 8, 2015.

(v) Against the labour theory of value

(1) “Mysticism and the Labour Theory of Value,” May 7, 2014.

(2) “Did Kalecki Accept the Labour Theory of Value?,” April 18, 2014.

(3) “Adam Smith on the Labour Theory of Value,” April 20, 2014.

(4) “Progress in Marxism on the Labour Theory of Value?,” March 18, 2015.

(5) “Marx’s ‘Socially Necessary Labour Time’: A Quick Overview and Critique,” March 26, 2015.

(6) “Marx on the Labour Theory of Value in Volume 1 of Capital,” March 27, 2015.

(7) “Marx’s Labour Theory of Value and Rothbard’s Homesteading Property-Rights Theory: Peas in a Pod,” March 28, 2015.

(8) “The Foundation of Marx’s Labour Theory of Value in Ricardo,” March 29, 2015.

(9) “More Mystical Labour Theory of Value Nonsense,” March 29, 2015.

(10) “The Two Epistemological Ways to Interpret the Labour Theory of Value,” March 30, 2015.

(11) “Piero Sraffa’s Damning Verdict on the Labour Theory of Value,” March 30, 2015.

(12) “Kliman’s Explanation of Marx’s Labour Theory of Value,” March 31, 2015.

(13) “Philip Pilkington on the Labour Theory of Value,” April 1, 2015.

(14) “The Labour Theory of Value and Animal Labour,” April 1, 2015.

(15) “Achille Loria and Alexander Gray on Marx’s Labour Theory of Value,” April 2, 2015.

(16) “Matias Vernengo on Marx’s Labour Theory of Value,” April 3, 2015.

(17) “My ‘Sun Theory of Value’: Why it’s better than the Marxist Labour Theory of Value,” April 5, 2015.

(18) “Achille Loria on the Contradiction in Marx’s Labour Theory of Value,” April 7, 2015.

(19) “Marx’s Wage-Labour and Capital,” April 9, 2015.

(20) “Dühring’s Review of Capital and Marx’s Letter to Engels of 8 January, 1868 on the Labour Theory of Value,” May 12, 2015.

(21) “Marx’s Abstract Socially-Necessary Labour Time in A Contribution to the Critique of Political Economy and Capital,”

(22) “Marx on Labour Value and Cost Price in the Grundrisse,” May 7, 2015.

(23) “Engels’ Letter to Werner Sombart on the Labour Theory of Value in 1895,” May 14, 2015.

(24) “What the Labour Theory of Value does not Explain,” May 15, 2015.

(25) “What Conditions are Necessary for Commodity Prices to Equal Marx’s Labour Value?,” May 17, 2015.

(26) “A Devastating Contradiction in Marx’s Argument for the Labour Theory of Value,” May 19, 2015.

(27) “Wicksteed on the Contradiction in Chapter 1 of Volume 1 of Capital on the Labour Theory of Value,” May 21, 2015.

(28) “Karl Popper on the Labour Theory of Value,” May 30, 2015.

(29) “Fiat Money Destroys the Labour Theory of Value,” June 6, 2015.

(30) “Why Marx’s Labour Theory of Value is Wrong in a Nutshell,” June 28, 2015.

(31) “Eugen von Böhm-Bawerk’s Critique of Marx: A Quick Summary,” August 6, 2015.

(32) “Two Important Instances in Volume 1 of Marx’s Capital where Labour Values determine individual Commodity Prices,” August 7, 2015.

(33) “Two Instances where Marx’s Theory of Value in Volume 3 Intrudes into Volume 1 of Capital,” August 8, 2015.

(34) “Joan Robinson on Marx’s Labour Theory of Value: A Few Points,” August 11, 2015.

(35) “Engels’ View of the Theory of Value in Volume 1 of Capital in the 1890s,” August 12, 2015.

(36) “Marx’s Letter to Engels of 2 August, 1862 on Prices of Production,” January 19, 2016.

(37) “Engels’ Understanding of the ‘Law of Value’ in the Anti-Dühring” January 29, 2016.

(38) “Robert Wilbrandt’s Interpretation of Marx’s Law of Value in Volume 1 of Capital,” January 30, 2016.

(39) “The Historical Development of Marxist Interpretations of the Law of Value,” January 31, 2016.

(40) “Rudolf Hilferding on the Law of Value in Volume 1 of Capital,” February 1, 2016.

(41) “‘Socially Necessary Labour Time is the only Source of Value’: What Does this even Mean?,” February 2, 2016.

(42) “Marx’s ‘Law of Value’ in Volume 1 of Capital,” February 4, 2016.

(43) “Alexander Gray on the Two Contradictions in Marx’s Theory of Surplus Value in Volume 1 of Capital,” February 8, 2016.

(44) “Louis Boudin on the Contradiction between Volumes 1 and 3 of Marx’s Capital,” February 10, 2016.

(45) “A Marxist agrees with me on the Labour Theory of Value and Fiat Money!,” February 12, 2016.

(46) “Debunking Marx’s Concept of Exploitation based on Surplus Labour Value,” February 13, 2016.

(47) “Would Capitalism necessarily be destroyed if Human Labour fell towards Zero?,” February 12, 2016.

(48) “The Long-Run Tendency of Capitalism is to Decrease the Rate of Exploitation,” February 14, 2016.

(49) “Eduard Bernstein on Engels’ Historical Defence of the Law of Value in Volume 1 of Capital,” April 12, 2016.

(50) “Marx and Engels’ Attempt to Salvage the Law of Value in Volume 1 of Capital,” November 29, 2015.

(51) “The Important Points about Marx’s Labour Theory of Value,” December 1, 2015.

(52) “The Absurdity of the Transformation Problem,” December 6, 2015.

(53) “More on Engels’ Supplement to Volume 3 of Capital,” December 8, 2015.

(54) “‘Imaginary’ Prices and Marx’s Labour Theory of Value,” December 11, 2015.

(55) “Engels’ Famous Challenge in the Preface to Volume 2 of Capital on the Transformation Problem,” December 22, 2015.

(56) “Empirical Studies showing that Prices are Correlated with Labour Costs do not Prove the Classical Marxist Labour Theory of Value,” December 23, 2015.

(57)“Böhm-Bawerk on Marx’s Problem of Aggregating Heterogeneous Human Labour,” March 7, 2016.

(vi) On the alleged tendency of the rate of profit to fall:

(1) “Michael Heinrich on the Tendency of the Profit Rate to Fall and Engels’ Dubious Editing of Marx,” April 4, 2015.

(2) “Marx’s Tendency of the Rate of Profit to Fall: Analytically and Empirically Unproven,” February 22, 2016.

(3) “The US Profit Rate was Abnormally High in WWII and Immediately Afterwards,” March 4, 2016.

(vii) On Marx’s “Critique of the Gotha Program”:

(1) “Marx’s ‘Critique of the Gotha Program’: Four Points,” April 29, 2015

(viii) Discussions of David Harvey’s lectures on Reading Marx’s Capital Volume 1:

(1) “David Harvey on Reading Marx’s Capital Volume 1, Class 01,” April 8, 2015.

(2) “David Harvey on Reading Marx’s Capital, Volume 1, Class 02 (Updated),” June 30, 2015.

(3) “David Harvey on Reading Marx’s Capital Volume 1, Class 03,” July 3, 2015.

(4) “David Harvey on Reading Marx’s Capital, Volume 1, Class 04,” July 19, 2015.

(5) “David Harvey on Reading Marx’s Capital, Volume 1, Class 05,” September 25, 2015.

(ix) Steve Keen on Marxism:

(1) “Steve Keen’s ‘A Marx for Post Keynesians,’” April 6, 2015.

(x) On Marx’s views on phrenology and race:

(1) “Marx’s Phrenology and Racial Views,” April 26, 2015.

(xi) On Marx’s views on slavery:

(1) “Marx on Slavery in his 1846 Letter to Annenkov,” April 27, 2015.

(2) “Marx on Slaves as Fixed Capital,” July 16, 2015.

(3) “Marx on Slave-based Plantation Systems,” July 18, 2015.

(xii) Marxism and authoritarianism:

(1) “Engels on Authoritarianism and Revolution,” April 30, 2015.

(2) “Communist Imperialism,” February 14, 2016.

(3) “‘Marx was not responsible for the Horrors of Communism’ is Nonsense,” November 5, 2015.

(xiii) Against Marx’s Communist Manifesto:

(1) “What Economic System did Marx and Engels Advocate?,” July 24, 2012.

(xiv) Against Sraffian and Marxist long-run equilibrium:

(1) “Sraffians versus Kaleckians versus Fundamentalist Post Keynesians,” June 17, 2014.

(2) “Matias Vernengo on Marx’s Labour Theory of Value,” April 3, 2015.

(3) “Sraffian Long-Run Equilibrium Prices of Production and Post Keynesianism,” April 11, 2015.

(xv) Chomsky on Marxism:

(1) “Chomsky on Marxism,” July 12, 2015.

(xvi) Against Temporal Single System Marxism (TSSI):

(1) “Mongiovi on Temporal Single System Marxism,” May 16, 2015.

(2) “Nitzan and Bichler on the Temporal Single System Interpretation (TSSI),” June 3, 2015.

(xvii) Marx’s Monetary Theory:

(1) “Marx on the Necessity of Money being a Commodity,” June 8, 2015.

(2) “Marx rejected Fiat Money,” February 16, 2016.

(3) “Marx on the Origin of Money in the Critique of Political Economy (1859),” April 5, 2016.

(xviii) Marx versus Keynes:

(1) “Keynes versus Engels on ‘Socialism,’” May 5, 2015.

(xix) Critical Summaries of Volume 1 of Capital:

(1) “Prolegomena to the Study of Marx’s Capital (Updated),” June 2, 2015.

(2) “Marx’s Capital, Volume 1, Chapter 1: A Critical Summary, Part 1 (Updated),” June 21, 2015.

(3) “Marx’s Capital, Volume 1, Chapter 1: A Critical Summary, Part 2,” June 26, 2015.

(4) “Marx’s Capital, Volume 1, Chapter 2: A Critical Summary,” June 4, 2015.

(5) “Marx’s Capital, Volume 1, Chapter 3: A Critical Summary,” June 12, 2015.

(6) “Marx’s Capital, Volume 1, Chapter 4: A Critical Summary,” July 4, 2015.

(7) “Marx’s Capital, Volume 1, Chapter 5: A Critical Summary,” July 6, 2015.

(8) “Marx’s Capital, Volume 1, Chapter 6: A Critical Summary,” July 13, 2015.

(9) “Marx’s Capital, Volume 1, Chapter 7: A Critical Summary,” July 31, 2015.

(10) “Marx’s Capital, Volume 1, Chapter 8: A Critical Summary,” August 2, 2015.

(11) “Marx’s Capital, Volume 1, Chapter 9: A Critical Summary,” December 19, 2015.

(12) “Marx’s Capital, Volume 1, Chapter 10: A Critical Summary,” February 3, 2016.

(13) “Marx’s Capital, Volume 1, Chapter 11: A Critical Summary,” February 7, 2016.

(14) “Marx’s Capital, Volume 1, Chapter 12: A Critical Summary,” February 11, 2016.

(15) “Marx’s Capital, Volume 1, Chapter 13: A Critical Summary,” February 12, 2016.

(16) “Marx’s Capital, Volume 1, Chapter 14: A Critical Summary,” March 9, 2016.

(17) “Marx’s Capital, Volume 1, Chapter 15: A Critical Summary, Part 1,” March 17, 2016.

(18) “Marx’s Capital, Volume 1, Chapter 15: A Critical Summary, Part 2,” March 18, 2016.

(19) “Marx’s Capital, Volume 1, Chapter 16: A Critical Summary,” March 20, 2016.

(20) “Marx’s Capital, Volume 1, Chapter 17: A Critical Summary,” March 21, 2016.

(21) “Marx’s Capital, Volume 1, Chapter 18: A Critical Summary,” March 23, 2016.

(22) “Marx’s Capital, Volume 1, Chapter 19: A Critical Summary,” March 24, 2016.

(23) “Marx’s Capital, Volume 1, Chapter 20: A Critical Summary,” March 26, 2016.

(24) “Marx’s Capital, Volume 1, Chapter 21: A Critical Summary,” March 28, 2016.

(25) “Marx’s Capital, Volume 1, Chapter 22: A Critical Summary,” April 4, 2016.

(26) “Marx’s Capital, Volume 1, Chapter 23: A Critical Summary,” April 10, 2016.

(27) “Marx’s Capital, Volume 1, Chapter 24: A Critical Summary,” April 14, 2016.

(28) “Marx’s Capital, Volume 1, Chapter 25: A Critical Summary,” April 16, 2016.

(29) “Marx’s Capital, Volume 1, Chapter 26: A Critical Summary,” April 17, 2016.

(30) “Marx’s Capital, Volume 1, Chapter 27: A Critical Summary,” April 18, 2016.

(31) “Marx’s Capital, Volume 1, Chapter 28: A Critical Summary,” April 19, 2016.

(32) “Marx’s Capital, Volume 1, Chapter 29: A Critical Summary,” April 20, 2016.

(33) “Marx’s Capital, Volume 1, Chapter 30: A Critical Summary,” April 20, 2016.

(34) “Marx’s Capital, Volume 1, Chapter 31: A Critical Summary,” April 20, 2016.

(35) “Marx’s Capital, Volume 1, Chapter 32: A Critical Summary,” April 21, 2016.

(36) “Marx’s Capital, Volume 1, Chapter 33: A Critical Summary,” April 22, 2016.

(xx) Marx’s Theory of Wage Determination in Capitalism

(1) “The Debate on Marx’s View of Wages in Capitalism,” January 12, 2016.

(2) “A Simple Challenge to Marxists on the Theory of Wage Determination in Volume 1 of Capital,” March 7, 2016.

(3) “Marx on Wage Determination and the Classical Economists,” March 27, 2016.

(4) “Marx and the ‘Iron Law of Wages,’” December 29, 2015.

(5) “Marx on Wages in Value, Price and Profit (1865),” December 30, 2015.

(6) “Engels on Subsistence Wages,” December 21, 2015.

(7) “Marx’s Views on the Effectiveness of Trade Unions,” March 15, 2016.

(xxi) Useful Insights in Capital

(1) “What are the Useful Insights in Marx’s Capital?,” January 27, 2016.

(xxii) Marx’s Views on Capitalism and Imperialism and Colonialism

(1) “Capitalists and Imperialism,” January 3, 2016.

(2) “Paul Bairoch on the Industrial Revolution, Imperialism and Capitalism,” February 19, 2016.

(3) “Paul Bairoch on the Industrial Revolution, the Third World and Imperialism in World History,” February 20, 2016.

(4) “Who said this about British Rule in India?,” December 28, 2015.

(xxiii) Historical Development of Marxism

(1) “The Critical Responses to Volume 3 of Marx’s Capital and the Early Development of Marxism,” February 9, 2016.

(2) “Some Early Critical Reviews of Volume 3 of Marx’s Capital,” December 18, 2015.

(3) “The Historical Development of Marxist Interpretations of the Law of Value,” January 31, 2016.

(xxiv) Responses to Marxists

(1) “Response to Jehu on ‘Four Questions for LK on Money,’” April 8, 2016.

(xxv) Failed Predictions of Marx and Engels

(1) “Marx and Predictions of Capitalist Crisis,” September 17, 2015.

(2) “Engels’ Failed Prediction of Revolution in the UK,” December 20, 2015.

(3) “The Failed End of Capitalism Prediction by Marx,” December 4, 2015.

(xxvi) Marxism and Poststructuralism

(1) “The Poststructuralists as Frustrated Marxists-Communists,” October 20, 2015.

(xxvii) Marx and Immigration

(1) “Marx on Mass Immigration and Capitalism,” November 13, 2015.

(2) “The Hypocrisy of Marxists and Left Libertarians on Mass Immigration,” March 13, 2016.

(xxviii) Engels’ Pause and Marx’s Hasty Generalisations about Capitalism

(1) “Engels’ Pause: A Cause of Marx and Engels’ Hasty and False Generalisations about Capitalism,” February 6, 2016..

(xxix) Marx and Increasing Intensity of Labour in Capitalism

(1) “Marx on the Increasing Intensity of Labour in Industrial Capitalism: I Refute Him Thus,” March 18, 2016.

(xxx) Marx and Technological Unemployment

(1) “Marx on Technological Unemployment in the Grundrisse,” April 9, 2016.

BIBLIOGRAPHY
Brus, Włodzimierz. 1977. “Kalecki’s Economics of Socialism,” Oxford Bulletin of Economics and Statistics 39.1 (February): 57–67.

Kurz, Heinz D. and Neri Salvadori. 2010. “Sraffa and the Labour Theory of Value: A Few Observations,” in John Vint et al. (eds.), Economic Theory and Economic Thought: Essays in Honour of Ian Steedman. Routledge, London and New York. 189–215.

Robinson, Joan. 1964. Economic Philosophy. Penguin, Harmondsworth.

Skidelsky, R. J. A. 1992. John Maynard Keynes: The Economist as Saviour, 1920–1937 (vol. 2), Macmillan, London.

Marx’s “Law of Value” in Volume 1 of Capital

Labour value in volume 1 of Capital is defined in the following passages:

“A use-value, or useful article, therefore, has value only because human labour in the abstract has been embodied or materialised in it. How, then, is the magnitude of this value to be measured? Plainly, by the quantity of the value-creating substance, the labour, contained in the article.” (Marx 1906: 45).

“Since the magnitude of the value of a commodity represents only the quantity of labour embodied in it, it follows that all commodities, when taken in certain proportions, must be equal in value.” (Marx 1906: 53).

“We see then that that which determines the magnitude of the value of any article is the amount of labour socially necessary, or the labour-time socially necessary for its production. Each individual commodity, in this connexion, is to be considered as an average sample of its class. Commodities, therefore, in which equal quantities of labour are embodied, or which can be produced in the same time, have the same value.” (Marx 1906: 46).

“Commodities as values are nothing but crystallized labour. The unit of measurement of labour itself is the simple average-labour.”
Chapter 1 of the first German edition of Capital (1867)
https://www.marxists.org/archive/marx/works/1867-c1/commodity.htm

“A use-value, or useful article, therefore, has value only because human labour in the abstract has been embodied or materialised in it. How, then, is the magnitude of this value to be measured? Plainly, by the quantity of the value-creating substance, the labour, contained in the article.” (Marx 1906: 45).

“Human labour-power in motion, or human labour, creates value, but is not itself value. It becomes value only in its congealed state, when embodied in the form of some object.” (Marx 1906: 59).

“Value is independent of the particular use-value by which it is borne, but it must be embodied in a use-value of some kind. Secondly, the time occupied in the labor of production must not exceed the time really necessary under the given social conditions of the case.” (Marx 1906: 209).

“The labour, however, that forms the substance of value, is homogeneous human labour, expenditure of one uniform labour-power.” (Marx 1906: 45–46).

“Value is here, as occasionally in the preceding pages, used in the sense of value determined as to quantity, or of magnitude of value.” (Marx 1906: 62, n. 1).

“The recent scientific discovery, that the products of labour, so far as they are values, are but material expressions of the human labour spent in their production, marks, indeed, an epoch in the history of the development of the human race …” (Marx 1906: 85).

That is to say:

(1) the substance of value is abstract socially necessary labour time, which must be defined as a homogeneous unit capable of aggregating and measuring all heterogeneous types of human labour-power (Marx 1906: 45–46);

(2) so therefore value is abstract, socially necessary labour time embodied, crystallised, or materialised in commodities, and

(3) the magnitude of value or quantitative measure of value is the amount of abstract socially necessary labour time, counted in homogeneous units (Marx 1906: 45–46).

But there are devastating problems with the very concept of a homogeneous unit of abstract, socially necessary labour time and serious empirical problems with the theory, as I show here. The very concept, as Marx defines it, cannot be accepted or defended as coherent or meaningful, and is contrary to the empirical evidence.

At any rate, Marx in the text of volume 1 of Capital thinks commodities tend to exchange at pure labour values, as determined by socially necessary labour time (Marx 1906: 176–177; Marx 1909: 208–210). This is called the “law of value” (Marx 1906: 208, 335, 587, 612), “laws of the exchange of commodities” (Marx 1906: 177; Marx 1906: 638), “law of the determination of value by labour-time” (Marx 1906: 350) or “law of the exchange of commodities” (Marx 1906: 257).

However, Marx accepts that prices move around labour values as the latter are the equilibrium price anchors for the system and there are some exceptions.

We can see this from an analysis of the text of volume 1:

(1) In Chapter 1, Marx suggests that diamonds may not always exchange at their true labour values, and perhaps often below their real labour value (Marx 1906: 47). He also cites another economist who suggested that gold may not normally exchange at its true labour value either, but Marx does not explicitly commit himself to this, and indeed it blatantly contradicts his own theory of general price movements later in Chapter 3 (see (5) below).

(2) Marx states in Chapter 1 that it is possible to accurately measure the value of skilled labour by looking at the exchange values of products of skilled labour as against products of unskilled labour (Marx 1906: 51–52), but that makes no sense unless Marx really believes that commodities tend to exchange at pure labour values. That is, this argument does indeed assume that commodities tend to exchange at true labour values.

(3) Marx also says that gold or silver, when initially brought to market, is exchanged with other commodities with an equal socially necessary labour time value as a barter transaction (Marx 1906: 122). That requires exchange at pure labour values.

(3) Marx refers to occasions where sellers sell commodities above their labour values as “swindling” (Marx 1990: 264), because they obtain more value in exchange than what they have given: this assumes that exchange at labour values is the honest state of affairs and the tendency of capitalism.

(4) in chapter 3, Marx admits that, because of supply and demand, market prices can deviate from true labour values:

“Magnitude of value expresses a relation of social production, it expresses the connection that necessarily exists between a certain article and the portion of the total labour-time of society required to produce it. As soon as magnitude of value is converted into price, the above necessary relation takes the shape of a more or less accidental exchange-ratio between a single commodity and another, the money-commodity. But this exchange-ratio may express either the real magnitude of that commodity’s value, or the quantity of gold deviating from that value, for which, according to circumstances, it may be parted with. The possibility, therefore, of quantitative incongruity between price and magnitude of value, or the deviation of the former from the latter, is inherent in the price-form itself. This is no defect, but, on the contrary, admirably adapts the price-form to a mode of production whose inherent laws impose themselves only as the mean of apparently lawless irregularities that compensate one another.” (Marx 1906: 114).

However, there is a mechanism by which prices move back towards labour values (see (5)).

(5) in Chapter 3, Marx goes on to explain general price inflation and deflation in terms of labour value:

“But, although the money that performs the functions of a measure of value is only ideal money, price depends entirely upon the actual substance that is money. The value, or in other words, the quantity of human labour contained in a ton of iron, is expressed in imagination by such a quantity of the money-commodity as contains the same amount of labour as the iron. According, therefore, as the measure of value is gold, silver, or copper, the value of the ton of iron will be expressed by very different prices, or will be represented by very different quantities of those metals respectively.

If, therefore, two different commodities, such as gold and silver, are simultaneously measures of value, all commodities have two prices—one a gold-price, the other a silver-price. These exist quietly side by side, so long as the ratio of the value of silver to that of gold remains unchanged, say, at 15:1. Every change in their ratio disturbs the ratio which exists between the gold-prices and the silver-prices of commodities, and thus proves, by facts, that a double standard of value is inconsistent with the functions of a standard.” (Marx 1906: 108).

“A general rise in the prices of commodities can result only, either from a rise in their values—the value of money remaining constant—or from a fall in the value of money, the values of commodities remaining constant. On the other hand, a general fall in prices can result only, either from a fall in the values of commodities—the value of money remaining constant—or from a rise in the value of money, the values of commodities remaining constant. It therefore by no means follows, that a rise in the value of money necessarily implies a proportional fall in the prices of commodities; or that a fall in the value of money implies a proportional rise in prices. Such change of price holds good only in the case of commodities whose value remains constant. With those, for example whose value rises, simultaneously with, and proportionally to, that of money, there is no alteration in price. And if their value rise either slower or faster than that of money, the fall or rise in their prices will be determined by the difference between the change in their value and that of money; and so on.” (Marx 1906: 111).

So here Marx sees prices as ultimately determined by two factors: (1) the labour value of units of gold and (2) the labour value of commodities as they interact with (1).

(6) For Marx, there is an equilibrium process at work by which prices are driven back towards their true labour values:

“It is true, commodities may be sold at prices deviating from their values, but these deviations are to be considered as infractions of the laws of the exchange of commodities, which, in its normal state is an exchange of equivalents, consequently, no method for increasing value.” (Marx 1906: 176–177).

“It requires a fully developed production of commodities before, from accumulated experience alone, the scientific conviction springs up, that all the different kinds of private labour, which are carried on independently of each other, and yet as spontaneously developed branches of the social division of labour, are continually being reduced to the quantitative proportions in which society requires them. And why? Because, in the midst of all the accidental and ever fluctuating exchange-relations between the products, the labour-time socially necessary for their production forcibly asserts itself like an over-riding law of nature. The law of gravity thus asserts itself when a house falls about our ears. The determination of the magnitude of value by labour-time is therefore a secret, hidden under the apparent fluctuations in the relative values of commodities.” (Marx 1906: 86–87).

These two passages in volume 1 are elucidated by a passage in Chapter 10 of volume 3 of Capital, where Marx specifies this equilibrium process:

“The assumption that the commodities of the various spheres of production are sold at their value implies, of course, only that their value is the center of gravity around which prices fluctuate, and around which their rise and fall tends to an equilibrium.” (Marx 1909: 208–210).

This is the law of value on volume 1 of Capital, despite two blatantly contradictory footnotes: footnote 24 in Chapter 5 and footnote 9 in Chapter 9.

These footnotes appear to admit that prices of production are the anchors for the price system in 19th century capitalism, and that such prices of production do not correspond to true labour values.

So it seems clear these footnotes hint at the different and contradictory theory Marx had already sketched in the draft of volume 3 of Capital and in a number of private letters as follows:

(1) a letter to Engels of August 2, 1862 (on this letter see here);
(2) an exchange with Engels between June 26 and June 27, 1867;
(3) a letter to Engels of 8 January, 1868 (on this letter, see here);
(4) an exchange with Engels from April 22 and April 30, 1868, and
(5) in a letter to Ludwig Kugelmann on 11 July 1868.

However, if Marx really held his prices of production theory in private, this theory utterly demolished and smashed up the law of value that Marx had been defending in the actual text of volume 1 of Capital, and showed that book to be a tendentious work of communist propaganda.

It also seems that Engels, despite the letters he had from Marx, also dishonestly defended the “law of value” in volume 1: for example, in Herr Eugen Dühring’s Revolution in Science, first published in 1878 when Marx was still alive, Engels defended the idea that commodities tend to exchange at their labour values in modern capitalism (see here).

Moreover, it took Engels years and years to finally publish volume 3 of Capital. In fact, he left it to 1894, even though people were pressing him for the volume and the solution to the transformation problem (Howard and King 1989: 24). And Engels utterly refused to relate Marx’s solution to the transformation problem to any private correspondents (even Marxists) or to have it printed separately before the publication of volume 3 (Howard and King 1989: 24–25), whose publication was delayed for years and years. That is telling.

In light of all this, we can understand why Engels – if he was fully aware of the use of a different theory of price determination in volume 3 – dragged his feet and must have been very apprehensive indeed about the publication of volume 3. That is to say, the reason was that in volume 3 of Capital Marx had used a different theory of price determination by prices of production which totally contradicted the theory of price determination in volume 1.

No doubt wishing to finish Marx’s great work even though it would come with a cost and pressed by Marxists to do so, Engels finally published volume 3.

As I have noted before, once Engels published volume 3, the inevitable happened: hostile critics of Marxism and even some sympathetic supporters of Marx pointed to this devastating contradiction between volumes 1 and 3.

Engels scrambled to re-write history and defend Marx: finally, in his “Supplement and Addendum” to Volume 3 of Capital published in 1895 Engels defended volume 1 by saying that the law of value there only applied to the pre-modern world of commodity exchange before prices of production came to dominate modern capitalism. Engels also
defended this apologetic rewriting of history in a private letter to Werner Sombart of March 11, 1895 (see here).

But that will not do: this was a dishonest Marxist intellectual fraud by Engels; the two volumes of Capital were and are contradictory, as numerous critics of Marxism have noted from Joan Robinson (Robinson 1950: 359) and Gerald F. Shove (Shove 1944: 48–49), to Werner Sombart (1894) and Achille Loria (1895; English trans. Loria 1920; see also here), and to Eugen von Böhm-Bawerk (1949 [1896]).

BIBLIOGRAPHY
Böhm-Bawerk, Eugen von. 1949 [1896]. “Karl Marx and the Close of His System,” in Paul. M. Sweezy (ed.), Karl Marx and the Close of His System and Böhm-Bawerk’s Criticism of Marx. August M. Kelley, New York. 3–120.

Engels, F. 1991 [1895]. “Supplement and Addendum” to Volume 3 of Capital,” in Karl Marx, Capital. A Critique of Political Economy. Volume Three (trans. David Fernbach). Penguin Books, London.

Howard, Michael Charles and John E. King. 1989. A History of Marxian Economics. Volume I, 1883–1929. Princeton University Press, Princeton, NJ.

Loria, Achille. 1895. “L’opera postuma di Carlo Marx,” Nuova Antologia di Scienze 55.3 (February): 460–496.

Loria, Achille. 1920. Karl Marx. (trans. Eden and Cedar Paul), George Allen and Unwin Ltd., London.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1909. Capital. A Critique of Political Economy (vol. 3; trans. Ernst Untermann from 1st German edn.). Charles H. Kerr & Co., Chicago.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

Robinson, Joan. 1950. Review of Karl Marx and the Close of his System by Eugen von Böhm-Bawerk (ed. Paul Sweezy), The Economic Journal 60.238: 358–363.

Shove, G. F. 1944. “Mrs. Robinson on Marxian Economics,” The Economic Journal 54.213: 47–61.

Sombart, Werner. 1894. “Zur Kritik des ökonomischen Systems von Karl Marx” [Toward a Critique of the Economic System of Karl Marx], Archiv für soziale Gesetzgebung und Statistik 7: 555–594.

“Socially Necessary Labour Time is the only Source of Value”: What Does this even Mean?

The following proposition is asserted as true by Marxists (e.g., Foley 1986: 16):

Proposition 1: Socially necessary labour time is the only source of value.

Marx asserted this numerous times, though not necessarily in these words, and here are some examples:

“A use-value, or useful article, therefore, has value only because human labour in the abstract has been embodied or materialised in it. How, then, is the magnitude of this value to be measured? Plainly, by the quantity of the value-creating substance, the labour, contained in the article.” (Marx 1906: 45).

“Since the magnitude of the value of a commodity represents only the quantity of labour embodied in it, it follows that all commodities, when taken in certain proportions, must be equal in value.” (Marx 1906: 53).

“We see then that that which determines the magnitude of the value of any article is the amount of labour socially necessary, or the labour-time socially necessary for its production. Each individual commodity, in this connexion, is to be considered as an average sample of its class. Commodities, therefore, in which equal quantities of labour are embodied, or which can be produced in the same time, have the same value.” (Marx 1906: 46).

Sometimes Marx refers to the value of a commodity solely as the congealed or embodied socially necessary labour in it (Marx 1906: 59). Unfortunately for Marx even this assertion is contradicted by his own statements elsewhere in volume 1 of Capital, where he argues that a commodity cannot even have a proper labour value unless being an object of utility:

“Lastly, nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value.” (Marx 1906: 48).

But let us put aside this devastating contradiction (on which, see here), to focus on another issue.

What did Marx mean by the word “value,” and what meaning does the word “value” have in Proposition 1?

It might be understood in the following way:

Proposition 2: Socially necessary labour time is the only source of exchange value.

However, this is blatantly false. We know that prices and exchange ratios are not determined by Marx’s concept of socially necessary labour time.

In modern capitalism, we find (1) flexprice markets and (2) cost-based mark-up pricing. Flexprices tend to be strongly influenced by supply and demand, and can be seen in auction or auction-like markets. Demand is, then, a necessary source of the existence of an exchange value. Secondly, mark-up prices are based on average unit costs of a firm plus a profit mark-up and based on an estimated or target rate of output or sales volume. But once again demand is also a necessary source of the existence of an exchange value or price of this type.

Even Marx admitted that products with no labour value can fetch exchange value too, like uncultivated land or non-reproducible commodities (Marx 1906: 115; Marx 1906: 115; Marx 1991: 772), so that this in itself refutes Proposition 2.

So clearly Proposition 2 is false.

However, Proposition 1 might be interpreted or re-interpreted as follows:

Proposition 3: Socially necessary labour time is the only source of produced output commodities.

Proposition 4: Socially necessary labour time is the only source of money profits.

Again, these are false.

To produce an output commodity, we need more than labour. If a business wants to make bread, it needs wheat flour. It does not matter how much labour the business has, flour from wheat is a physically necessary condition to make bread, and is therefore a necessary condition for bread.

Machines are also very frequently indispensable capital goods in modern production, and without machines many output commodities would not be possible, no matter how much labour is available (e.g., an airline needs aeroplanes and a shipping service needs ships).

Marx himself in effect concedes this when he say that labour is not the only source of use values:

“The use-values, coat, linen, &c, i. e., the bodies of commodities, are combinations of two elements—matter and labour. If we take away the useful labour expended upon them, a material substratum is always left, which is furnished by Nature without the help of man. The latter can work only as Nature does, that is by changing the form of matter. Nay more, in this work of changing the form he is constantly helped by natural forces. We see, then, that labour is not the only source of material wealth, of use-values produced by labour. As William Petty puts it, labour is its father and the earth its mother.” (Marx 1906: 50).

That is, natural resources are a necessary source for the production of use values.

To turn to Proposition 4, it too is false. In order to get money profits, a business needs agents who will buy its output commodities with money and so there needs to be demand for the commodities and money to buy them at a price allowing the business to make a profit. Even worse, businesses can obtain money profits from the sale of products, which, as even Marx admits, have no labour value, such as uncultivated land or non-reproducible commodities. It cannot be that socially necessary labour time is the only source of profit.

So what, then, does Proposition 1 mean?

In reality, it ultimately reduces to this proposition:

Proposition 1a: Socially necessary labour time is the only source of embodied socially necessary labour time.

This is because Marx understands his concept of “value” merely as socially necessary labour time, embodied in commodities. While one might interpret this as an empirical proposition, it seems to be tautological or verge on tautology (and since, under Marx’s own theory, embodied socially necessary labour requires a physical commodity with a use value, it would seem that, even if defended as an empirical proposition, it is dubious, as argued here).

However, Proposition 1a can be further reduced to this statement as follows:

Proposition 1b: The concept of socially necessary labour time is contained in the concept of the embodied socially necessary labour time.

However, Proposition 1b is an empirically-empty tautology, an explicitly analytic a priori proposition which is tautologous, and Proposition 1a.

What use is that?

So we are left with the original proposition which can be reduced to this form:

Proposition 1b: The concept of socially necessary labour time is contained in the concept of the embodied socially necessary labour time.

As we have seen, this is an empirically-empty tautology.

It is of no use unless the Marxist can demonstrate that socially necessary labour time is an empirical concept in the sense Marx requires: that it can be properly defined as a homogeneous unit, and that all heterogeneous types of human labour can aggregated or compared using the unit.

This is clear from Marx’s statement as follows:

“The labour … that forms the substance of value, is homogeneous human labour, expenditure of one uniform labour-power. The total labour-power of society, which is embodied in the sum total of the values of all commodities produced by that society, counts here as one homogeneous mass of human labour-power, composed though it be of innumerable individual units. Each of these units is the same as any other, so far as it has the character of the average labour-power of society, and takes effect as such; that is, so far as it requires for producing a commodity, no more time than is needed on an average, no more than is socially necessary. The labour-time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time.” (Marx 1906: 45–46).

Marx states here that a unit of social necessary labour time is homogeneous and can be used to aggregate the labour values of all commodities.

But let us return to Proposition 1b (and by implication Proposition 1a). In reality, this proposition is as worthless as the following proposition:

Proposition 5: The concept of the Wicksellian natural rate of interest is contained in the concept of the equilibrium Wicksellian natural rate of interest.

A neoclassical might very well assert this proposition and defend it as a logical truth, that is, as an analytic a priori proposition. But what use is that? The neoclassical must prove that the Wicksellian natural rate of interest is not only a coherent and properly definable concept, but also a real and empirically proven phenomenon in capitalism that has causal power.

But both the Wicksellian natural rate of interest and Marx’s strict concept of labour value as socially necessary labour time are empirically irrelevant, and, even worse for Marx, socially necessary labour time cannot even be properly defined and measured, unless one can show exactly how to reduce all heterogeneous types of human labour to a common homogeneous unit.

Appendix: Marx in A Contribution to the Critique of Political Economy (1859) on Labour Value
In A Contribution to the Critique of Political Economy (1859), Marx made a statement even more extreme than in volume 1 of Capital:

“Since the exchange value of commodities is, in fact, nothing but a mutual relation of the labors of individuals – labors which are similar and universal – nothing but a material expression of a specific social form of labor, it is a tautology to say that labor is the only source of exchange value and consequently of wealth, in so far as the latter consists of exchange values.” (Marx 1904 [1859]: 31–32).

This is an extraordinary statement which, as far as I can see, is far beyond anything even in volume 1 of Capital, which at least acknowledged that exchange values are also affected by supply and demand.

Further Reading
“The Two Epistemological Ways to Interpret the Labour Theory of Value,” March 30, 2015.

BIBLIOGRAPHY
Foley, Duncan K. 1986. Understanding Capital: Marx’s Economic Theory. Harvard University Press, Cambridge, Mass. and London.

Marx, Karl. 1904 [1859]. A Contribution to the Critique of Political Economy. Charles H. Kerr & Company, Chicago.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1991. Capital. A Critique of Political Economy. Volume Three (trans. David Fembach). Penguin Books, London.

The Poststructuralists as Frustrated Marxists-Communists

What is wrong with the Left today? In my view, a big problem is the ideology called Postmodernism.

Chomsky in the video below gives us some fascinating insights into the origins of French Poststructuralism – and also into its modern offshoot Postmodernism.

Remember he is talking about the origin of French Poststructuralism in the early 1970s.



Chomsky understood the origins of Poststructuralism very well: many of the big French Poststructuralists – like Roland Barthes (1915–1980) and Michel Foucault (1920–1984) – had been Marxists, and some of them Stalinists and Maoists.

They become disillusioned with this cult-like ideology by the late 1960s and early 1970s, which had also been associated with Structuralism (the fashionable academic theory that replaced Existentialism in post-WWII France). The result? These frustrated Marxists turned to Poststructuralism, and to what they believed was a new “radical” critique of “bourgeois” society and civilisation. Unfortunately, this involved all sorts of unbelievably stupid nonsense such as truth relativism, the idea that texts don’t really have authors, and that texts can mean anything you like (no matter how insane your interpretation).

A crucial foundational text for the emerging Poststructuralist movement was Roland Barthes’ essay “The Death of the Author” (Barthes 1967 = Barthes 1977). In this, Barthes essentially argued that critics should divorce their study of a text from its author, and that a text is not a product of its author with a definite and fixed meaning intended by the author (see Barthes 1977: 146).

The radical political agenda for this nonsense was expressed quite openly, explicitly and without any shame by Barthes in this article, as follows:

“Once the Author is removed, the claim to decipher a text becomes quite futile. To give a text an Author is to impose a limit on that text, to furnish it with a final signified, to close the writing. Such a conception suits criticism very well, the latter then allotting itself the important task of discovering the Author (or its hypostases: society, history, psyche, liberty) beneath the work: when the Author has been found, the text is ‘explained’ – victory to the critic. …. literature (it would be better from now on to say writing), by refusing to assign a ‘secret’, an ultimate meaning, to the text (and to the world as text), liberates what may be called an anti-theological activity, an activity that is truly revolutionary since to refuse to fix meaning is, in the end, to refuse God and his hypostases – reason, science, law” (Barthes 1977: 146).

In other words, let us ignore authors and pretend texts can mean anything. In the process, we can emancipate ourselves from “reason, science, [and] law.”

As an aside, some people seem to think that Michel Foucault was some great exception to the absurdity of the Poststructuralist movement, but this is entirely wrong and anyone who bothers to read Foucault’s essay “What is an Author?” (Foucault 1984 [1969]) can see clearly he was fully on board with the stupidity.

Any person who wants to be “liberated” from reason and science is simply unhinged. The Poststructuralist ideology and its Postmodernist offspring was nothing but the most outrageous betrayal of the Left, which, if anything, ought to be strongly defending reason and modern science.

Let us just probe one point in what follows. For example, what would being “liberated” from modern science even involve? Would you be “liberated” from modern science-based medicine? Liberated from scientific principles that ensure that our engineers built buildings, houses and other structures that don’t just collapse on people’s heads and kill people?

Liberated from vaccination programs or scientific principles of public health and sanitation that protect first-world countries from diseases that still plague the developing world? Liberated from the germ theory of disease? Liberated from the principles of internal combustion and science that make motor vehicles work?

The few people in our world today who seriously want to be “liberated” from modern science are mostly religious fundamentalists of the most extreme kind – people who don’t accept Darwinian evolution or even modern medicine. Is that who the progressive left wants to stand with these days?

It is not surprising that the Postmodernist left took up this bizarre hostility to science to the point where it had become an embarrassment to anyone who cares to look at the issue seriously.

If the left wants to reform and strengthen itself, a good place to start is simply for left-wing people to subject Postmodernism to the withering criticism and contempt it deserves, without any concern for offending fellow leftists. Postmodernism does very little except rot your brain – it is the enemy of reason, science, logic, progressive economics and rational discourse.

Further Reading
“Postmodernism: Its Family Tree and Origins,” February 8, 2015.

“Quantum Weirdness and Nonsense,” October 4, 2015.

“Foucault’s “What is an Author?”: A Critique ,” March 7, 2015.

“Lectures on Russian Formalism and Semiotics and Structuralism,” February 19, 2015.

“Postmodernism and Third World Progressive Movements,” February 9, 2015.

“Yanis Varoufakis on Postmodernism and Economic Methodology,” February 16, 2015.

“The Left needs to abandon Postmodernism,” February 5, 2015.

“Chomsky on Žižek and Lacan,” February 6, 2015.

“Nonsense and Postmodernist Writing,” February 7, 2015.

BIBLIOGRAPHY
Barthes, Roland. 1967. “Death of the Author,” Aspen 5/6.

Barthes, Roland. 1977. “Death of the Author,” Image Music Text (trans. Stephen Heath). Fontana, London. 142–148.

Foucault, Michel. 1984 [1969]. “What is an Author?,” in Paul Rabinow (ed.), The Foucault Reader. Pantheon, New York. 101–120.

Walter Block’s An Austrian Critique of Mainstream Economics: A Critique on Epistemology

This is a talk by Walter Block on Austrian economics and its disagreements with neoclassical economics, given at the Mises Institute in Auburn, Alabama, the US, on 21 July, 2015.



I want to focus on epistemological issues here.

Let us review the epistemological problems here one by one:

(1) the Austrians badly misunderstand the philosophy and epistemology of the logical positivists.

For Austrians like Block the expression “logical positivism” is simply an ignorant term of abuse for all empiricists whom they regard as their opponents. However, there are (to my knowledge) virtually no logical positivists today, and strict logical positivist philosophy is not what is used by empiricist modern opponents of Austrian praxeology. In fact, logical positivism had had its day and had been largely abandoned by the 1950s. Modern moderate empiricism is not logical positivism.

The central element of logical positivist philosophy was the verifiability criterion for meaningfulness: the view that if a statement could (1) not be categorised as a true analytic a priori statement and (2) was not a synthetic a posteriori statement that could be verified, then it was a meaningless metaphysical proposition. This idea of course has very serious problems and proved the Achilles’ heal of logical positivism, and one of the many reasons for its rejection in mainstream analytic philosophy. Even the leading British logical positivist A. J. Ayer admitted that the core of logical positivism was wrong and it was badly flawed as a complete, coherent philosophy.

But moderate empiricists in mainstream analytic philosophy today are not logical positivists and do not accept the verifiability criterion, facts which Austrians seem ignorant of. These embarrassing philosophical errors are also committed by the Austrian Hans-Hermann Hoppe.

(2) If (1) isn’t bad enough, Block conflates logical positivism with Popper’s falsificationist principle. Popper thought that all the empirical propositions of science must pass the test of not being falsified: as long as a current scientific theory has not been falsified, then a rational person should accept it, but it must still be subject to testing in the future so that continued acceptance of a theory must depend on it continuing to pass the falsifiability test.

But that Popperian epistemological principle of falsificationism is not logical positivism, which was instead concerned with the verifiability of empirical propositions as a test of their meaningfulness.

Worse still, Block seems (if I am not mistaken) to imply that modern empiricists and the older logical positivists never accepted the necessary truth of analytic or pure mathematical statements, yet again the same mistake made by Hans-Hermann Hoppe. For the real logical positivist perspective on epistemology, see here.

(3) Block fails to mention or make explicit that the epistemological basis of Mises’ praxeology is Kantian synthetic a priori knowledge: the idea that there are statements both empirical (synthetic or non-analytic) and necessarily true of the real world. Kantian synthetic a priori knowledge, however, cannot be accepted as real nor defended anymore, and all alleged synthetic a priori statements can be re-interpreted as either analytic statements or (2) empirical statements (= synthetic a posteriori). As Block notes, even mainstream neoclassicals reject Mises’ praxeology because even they cannot accept such a flawed and unconvincing epistemological basis to economic science.

Yet, as Block notes, the Austrian school itself is divided over the very epistemological foundations of economics: there are Austrians who follow Hayek in rejecting praxeology and apriorism and who embrace a moderate empiricist method. Thus the Austrian school cannot even agree itself on whether praxeology is right or wrong.

(4) in Block’s argument about the exchange of a pen for a tie, he has not proved anything with necessary truth, for the simple reason that the person taking the tie might actually be mentally ill and have no opinion about the pen or the value of the tie at all, or alternatively he might be lying and hate the pen and like his tie more but be merely pretending to like it. The assumption that the person must by necessity value the pen more than the tie is sloppy logic and plainly untrue.

(5) Block’s assertion that there is a necessary tendency for profits to fall to zero in Mises’ evenly rotating economy would be necessarily true, but only as an analytic a priori statement asserted of a purely imaginary world or abstract model. The point is: it would not be an empirical statement, and so its necessary truth is a property of its analyticity. The only way one could maintain the necessary truth of something empirical (or synthetic) is to defend Kantian synthetic a priori knowledge. But, as we have seen above, the Austrian epistemology of Mises based on Kantian synthetic a priori knowledge cannot be seriously sustained or defended and this is why Austrian attempts to assert necessary truths of the real world fail time and again.

(6) Block also appears to be arguing that there is a necessary tendency for profit rates to be equalised in capitalism. This is untrue, and requires assuming certain assumptions about the real world that are not true, such as an unrealistic degree of competition across markets, no significant market power, no or minimal barriers to new entry, no strong patent rights giving certain companies a great advantage unavailable to competitors, no aggressive use of capacity utilisation as a barrier to entry, and no significant, persistent differences in profit mark-ups in different sectors and industries.

To what extent there is a tendency for profits to be equalised in real world capitalism is nothing but an empirical question.

(7) So too regarding the idea that minimal wage laws always cause unemployment when this is asserted as a necessary truth, it remains nothing but an analytic a priori statement asserted of a purely imaginary world or abstract model. The question whether any particular minimal wage law tends to cause unemployment in the real world is an empirical question.

Further Reading
“Why Should we reject the Existence of Synthetic a priori Knowledge?,” May 23, 2014.

“Hoppe’s Caricature of Empiricism,” September 10, 2013.

“Hoppe on Euclidean Geometry,” September 11, 2013.

“Hoppe on Euclidean Geometry, Part 2,” September 14, 2013.

“Hayek on Mises’ Apriorism,” May 23, 2011.

“Mises versus Ayer on Analytic Propositions and a priori Reasoning,” March 16, 2014.

“Kirzner on Hayek on Prices,” May 22, 2013.

“Does the Market Tend to Drive Profits to Zero?,” January 11, 2014.

“Sraffian Long-Run Equilibrium Prices of Production and Post Keynesianism,” April 11, 2015.

“Epistemology in Modern Analytic Philosophy: A Review,” September 17, 2013.

Debunking Marxism 101 (Updated)

In the links below I update my series of posts debunking Marxist economics and ideology, to complement my series on Debunking Austrian economics 101.

As in the series on Austrian economics, not all posts actually debunk Marxism, but sometimes provide outlines or summaries of Marxist theory or interesting points on Marxism or Karl Marx’s life and thought. There are also some points where constructive things can be said: on endogenous money, the falsity of Say’s law and the monetary theory of production, how some of Marx’s economic thought anticipated Keynes, but even here the discussions in Marx’s Capital are simply obsolete and have long been superseded by modern Post Keynesian theory, and are mainly of historical interest.

In what follows, sometimes Marxist economic theory will be debunked by means of Post Keynesian economics (which is what this blog advocates), though frequently I have my own original criticisms or follow the arguments of other critics of Marxism.

It is important to remember that Post Keynesian economics – although it has severe criticisms of laissez faire capitalism and neoclassical or Austrian economics – is still strongly distinct from Marxist economics. Post Keynesian economics is not Marxism, and leading Post Keynesians and economists whose work has been foundational for Post Keynesian economics have rejected the labour theory of value, the basis of Marxist economics.

John Maynard Keynes, for example, said that Marx’s theories were founded “on a silly mistake of old Mr Ricardo’s” (Skidelsky 1992: 517) – namely, the labour theory of value. For Michał Kalecki and Joan Robinson the labour theory of value was “metaphysical” (Brus 1977: 59; Robinson 1964: 39), and for Piero Sraffa it was “a purely mystical conception” (Kurz and Salvadori 2010: 199). If the labour theory of value is unsound, then the whole Marxist edifice constructed on it cannot but fall and collapse. Moreover, the classical Marxist idea of historical determinism is also incompatible with the Post Keynesian idea of the fundamental uncertainty of the future.

For an overview of why the labour theory of value is wrong, see this post:

“Why Marx’s Labour Theory of Value is Wrong in a Nutshell,” June 28, 2015.

For a detailed discussion of how Marx and Engels continued to think of the theory of value in volume 1 of Capital as an empirical theory of pre-modern commodity exchange before modern capitalism (where prices of production are anchors for the price system), see here:

“Engels’ View of the Theory of Value in Volume 1 of Capital in the 1890s,” August 12, 2015.

The posts below are divided into the following groups:

(i) Bibliographical Posts.
(ii) Marx and Engels’ Works Online
(iii) Karl Marx’s Life 1818–1883
(iv) Documentaries about and discussions of Karl Marx and Marxism.
(v) Against the labour theory of value.
(vi) On the alleged tendency of the rate of profit to fall.
(vii) On Marx’s “Critique of the Gotha Program.”
(viii) Discussions of David Harvey’s lectures on Reading Marx’s Capital Volume 1.
(ix) Steve Keen on Marxism.
(x) On Marx’s views on phrenology and race.
(xi) On Marx’s views on slavery.
(xii) Marxism and authoritarianism.
(xiii) Against Marx’s Communist Manifesto.
(xiv) Against Sraffian and Marxist long-run equilibrium.
(xv) Chomsky and Marxism.
(xvi) Against Temporal Single System Marxism (TSSI)
(xvii) Marx’s Monetary Theory
(xviii) Marx versus Keynes
(xix) Critical Summaries of Volume 1 of Capital.

I also recommend my series of posts that are critical chapter by chapter summaries of volume 1 of Capital in section xix below.

The posts are as follows:

Debunking Marxism 101
(i) Bibliographical Posts:

(1) “Study Guides to and Overviews of Marx’s Capital,” June 10, 2015.

(2) “Bibliography on Marx’s Monetary Theory,” June 16, 2015.

(ii) Marx and Engels’ Works Online:

(1) “Some Early Editions of Marx’s Capital Online,” May 10, 2015.

(2) “Engels’ Later Works Online,” May 13, 2015.

(iii) Karl Marx’s Life 1818–1883:

(1) “Karl Marx’s Life 1818–1841,” April 20, 2015.

(2) “Karl Marx’s Life 1842–1844,” April 21, 2015.

(3) “Karl Marx’s Life 1845–1849,” April 24, 2015.

(4) “Karl Marx’s Life 1850–1860,” April 25, 2015.

(5) “Karl Marx’s Life 1861–1870,” April 28, 2015.

(6) “Karl Marx’s Life 1871–1883,” May 1, 2015.

(iv) Documentaries about and discussions of Karl Marx and Marxism:

(1) “A BBC Discussion of Karl Marx,” April 4, 2015.

(2) “Karl Marx in London,” April 26, 2015.

(3) “BBC Radio 4 Discussion on the 1848 Revolutions,” April 22, 2015.

(4) “Jonathan Sperber on Karl Marx,” April 23, 2015.

(5) “Bryan Magee interviews Peter Singer on Hegel and Marx,” April 8, 2015.

(v) Against the labour theory of value

(1) “Mysticism and the Labour Theory of Value,” May 7, 2014.

(2) “Did Kalecki Accept the Labour Theory of Value?,” April 18, 2014.

(3) “Adam Smith on the Labour Theory of Value,” April 20, 2014.

(4) “Progress in Marxism on the Labour Theory of Value?,” March 18, 2015.

(5) “Marx’s ‘Socially Necessary Labour Time’: A Quick Overview and Critique,” March 26, 2015.

(6) “Marx on the Labour Theory of Value in Volume 1 of Capital,” March 27, 2015.

(7) “Marx’s Labour Theory of Value and Rothbard’s Homesteading Property-Rights Theory: Peas in a Pod,” March 28, 2015.

(8) “The Foundation of Marx’s Labour Theory of Value in Ricardo,” March 29, 2015.

(9) “More Mystical Labour Theory of Value Nonsense,” March 29, 2015.

(10) “The Two Epistemological Ways to Interpret the Labour Theory of Value,” March 30, 2015.

(11) “Piero Sraffa’s Damning Verdict on the Labour Theory of Value,” March 30, 2015.

(12) “Kliman’s Explanation of Marx’s Labour Theory of Value,” March 31, 2015.

(13) “Philip Pilkington on the Labour Theory of Value,” April 1, 2015.

(14) “The Labour Theory of Value and Animal Labour,” April 1, 2015.

(15) “Achille Loria and Alexander Gray on Marx’s Labour Theory of Value,” April 2, 2015.

(16) “Matias Vernengo on Marx’s Labour Theory of Value,” April 3, 2015.

(17) “My ‘Sun Theory of Value’: Why it’s better than the Marxist Labour Theory of Value,” April 5, 2015.

(18) “Achille Loria on the Contradiction in Marx’s Labour Theory of Value,” April 7, 2015.

(19) “Marx’s Wage-Labour and Capital,” April 9, 2015.

(20) “Dühring’s Review of Capital and Marx’s Letter to Engels of 8 January, 1868 on the Labour Theory of Value,” May 12, 2015.

(21) “Marx’s Abstract Socially-Necessary Labour Time in A Contribution to the Critique of Political Economy and Capital,”

(22) “Marx on Labour Value and Cost Price in the Grundrisse,” May 7, 2015.

(23) “Engels’ Letter to Werner Sombart on the Labour Theory of Value in 1895,” May 14, 2015.

(24) “What the Labour Theory of Value does not Explain,” May 15, 2015.

(25) “What Conditions are Necessary for Commodity Prices to Equal Marx’s Labour Value?,” May 17, 2015.

(26) “A Devastating Contradiction in Marx’s Argument for the Labour Theory of Value,” May 19, 2015.

(27) “Wicksteed on the Contradiction in Chapter 1 of Volume 1 of Capital on the Labour Theory of Value,” May 21, 2015.

(28) “Karl Popper on the Labour Theory of Value,” May 30, 2015.

(29) “Fiat Money Destroys the Labour Theory of Value,” June 6, 2015.

(30) “Why Marx’s Labour Theory of Value is Wrong in a Nutshell,” June 28, 2015.

(31) “Eugen von Böhm-Bawerk’s Critique of Marx: A Quick Summary,” August 6, 2015.

(32) “Two Important Instances in Volume 1 of Marx’s Capital where Labour Values determine individual Commodity Prices,” August 7, 2015.

(33) “Two Instances where Marx’s Theory of Value in Volume 3 Intrudes into Volume 1 of Capital,” August 8, 2015.

(34) “Joan Robinson on Marx’s Labour Theory of Value: A Few Points,” August 11, 2015.

(35) “Engels’ View of the Theory of Value in Volume 1 of Capital in the 1890s,” August 12, 2015.

(vi) On the alleged tendency of the rate of profit to fall:

(1) “Michael Heinrich on the Tendency of the Profit Rate to Fall and Engels’ Dubious Editing of Marx,” April 4, 2015.

(vii) On Marx’s “Critique of the Gotha Program”:

(1) “Marx’s ‘Critique of the Gotha Program’: Four Points,” April 29, 2015

(viii) Discussions of David Harvey’s lectures on Reading Marx’s Capital Volume 1:

(1) “David Harvey on Reading Marx’s Capital Volume 1, Class 01,” April 8, 2015.

(2) “David Harvey on Reading Marx’s Capital, Volume 1, Class 02 (Updated),” June 30, 2015.

(3) “David Harvey on Reading Marx’s Capital Volume 1, Class 03,” July 3, 2015.

(4) “David Harvey on Reading Marx’s Capital, Volume 1, Class 04,” July 19, 2015.

(ix) Steve Keen on Marxism:

(1) “Steve Keen’s ‘A Marx for Post Keynesians,’” April 6, 2015.

(x) On Marx’s views on phrenology and race:

(1) “Marx’s Phrenology and Racial Views,” April 26, 2015.

(xi) On Marx’s views on slavery:

(1) “Marx on Slavery in his 1846 Letter to Annenkov,” April 27, 2015.

(2) “Marx on Slaves as Fixed Capital,” July 16, 2015.

(3) “Marx on Slave-based Plantation Systems,” July 18, 2015.

(xii) Marxism and authoritarianism:

(1) “Engels on Authoritarianism and Revolution,” April 30, 2015.

(xiii) Against Marx’s Communist Manifesto:

(1) “What Economic System did Marx and Engels Advocate?,” July 24, 2012.

(xiv) Against Sraffian and Marxist long-run equilibrium:

(1) “Sraffians versus Kaleckians versus Fundamentalist Post Keynesians,” June 17, 2014.

(2) “Matias Vernengo on Marx’s Labour Theory of Value,” April 3, 2015.

(3) “Sraffian Long-Run Equilibrium Prices of Production and Post Keynesianism,” April 11, 2015.

(xv) Chomsky on Marxism:

(1) “Chomsky on Marxism,” July 12, 2015.

(xvi) Against Temporal Single System Marxism (TSSI):

(1) “Mongiovi on Temporal Single System Marxism,” May 16, 2015.

(2) “Nitzan and Bichler on the Temporal Single System Interpretation (TSSI),” June 3, 2015.

(xvii) Marx’s Monetary Theory:

(1) “Marx on the Necessity of Money being a Commodity,” June 8, 2015.

(xviii) Marx versus Keynes:

(1) “Keynes versus Engels on ‘Socialism,’” May 5, 2015.

(xix) Critical Summaries of Volume 1 of Capital:

(1) “Prolegomena to the Study of Marx’s Capital (Updated),” June 2, 2015.

(2) “Marx’s Capital, Volume 1, Chapter 1: A Critical Summary, Part 1 (Updated),” June 21, 2015.

(3) “Marx’s Capital, Volume 1, Chapter 1: A Critical Summary, Part 2,” June 26, 2015.

(4) “Marx’s Capital, Volume 1, Chapter 2: A Critical Summary,” June 4, 2015.

(5) “Marx’s Capital, Volume 1, Chapter 3: A Critical Summary,” June 12, 2015.

(6) “Marx’s Capital, Volume 1, Chapter 4: A Critical Summary,” July 4, 2015.

(7) “Marx’s Capital, Volume 1, Chapter 5: A Critical Summary,” July 6, 2015.

(8) “Marx’s Capital, Volume 1, Chapter 6: A Critical Summary,” July 13, 2015.

(9) “Marx’s Capital, Volume 1, Chapter 7: A Critical Summary,” July 31, 2015.

(10) “Marx’s Capital, Volume 1, Chapter 8: A Critical Summary,” August 2, 2015.

BIBLIOGRAPHY
Brus, Włodzimierz. 1977. “Kalecki’s Economics of Socialism,” Oxford Bulletin of Economics and Statistics 39.1 (February): 57–67.

Kurz, Heinz D. and Neri Salvadori. 2010. “Sraffa and the Labour Theory of Value: A Few Observations,” in John Vint et al. (eds.), Economic Theory and Economic Thought: Essays in Honour of Ian Steedman. Routledge, London and New York. 189–215.

Robinson, Joan. 1964. Economic Philosophy. Penguin, Harmondsworth.

Skidelsky, R. J. A. 1992. John Maynard Keynes: The Economist as Saviour, 1920–1937 (vol. 2), Macmillan, London.