So about a year or so ago, I wrote a response post to a post on the reddit 'AskEconomics.' You can find that here. I was scrolling yesterday just randomly on the Home Page and came across a post titled 'Why do Economists Still Point to the LTV when Discussing Marxian Economics, when Modern Marxian Economics has Moved Beyond the LTV?', the subject title intrigued me, so I went deeper and discovered that it was a bunch of people responding to my post! I take quite a lot of issue with a number of the seeming responses. I think the server has a certain commonality in terms of making very strong statements about things that I would be very skeptical making, for example; much more recently a responded to a comment claiming that 'Heterodox Economics Doesn't Engage with Orthodox Economics,' (if you're curious, you can find that here).
Raptorman556
To start with, Raptorman makes a quick rather jokey comment about that I'm emphasising what Marx really meant. This is meant jokingly and not really as a point. But I thought it would be good to quickly delve further into. In recent years, the economic ideas of John Maynard Keynes have experienced a bit of a resurgence; especially in light of the Global Financial Crisis, I'll also quickly mention that the economist Hyman Minsky, and particularly his theory of the Business Cycle, have experienced a similar resurgence (though not as much as Keynes). Following 3 decades where it seemed that the status quo was neoliberalism, that hasn't really been the case for the last decade and a half, even within the IMF. I'd like to quickly just quote from the book 'The Keynes Solution' by Paul Davidson
In 1972, I and several others had a printed debate with Milton Friedman that was published in the Journal of Political Economy...In that debate I pointed out to Friedman that in Chapter 19, Page 257, of the General Theory, Keynes specifically stated that his analysis did not rely on any rigidity of money wages or prices. Friedman's response, on pages 148-149...was that 'the four chapters Davidson refers to contains many correct, interesting and valuable ideas although also some wrong ones...But all four chapters are strictly peripheral to the main contribution of the General Theory.' Instead, on page 44...Friedman insisted, without providing any citations, that '[t]he rigid price assumption of Keynes...is entirely a deus ex machina with no underpinning in economic theory.' By accusing Keynes of making an assumption that Keynes never made, Friedman enabled himself and his followers to dismiss Keynes as developing a theory without any underpinnings. - p.164
Discussions on what authors, particularly extremely influential authors like Marx and Keynes, are important; because in what way can we reject these people's ideas if we are unsure what they are in the first place? Misunderstandings within Marxian thought are common, especially, due to the fact that Marx died before the publication of either Volumes 2 or 3 of Capital, and Engels' editing work was pretty shoddy. On this point, let me turn to a truly fantastic piece from Christopher Arthur titled 'The Myth of Simple Commodity Production' which came out in 2005! Over a century after Volume 3 was published.
For Mandel was following a very long tradition. Paul Sweezy in his much-used classic textbook The Theory of Capitalist Development stated "Marx begins by analysing 'simple commodity production'"...Earlier, in the thirties, Oskar Lange, in explaining Marx's theory of value, said Marx starts with such a notion: 'Marx calls it "einfache Warenproduktion." A later authority, R.L. Meek, in his 1967 essay on 'Karl Marx's Economic Method' alleged Marx had a model "he called 'simple commodity production'"
But the simple truth is that Marx never called anything 'einfache Warenproduktion,' the term cannot be found in his writings
If people who dedicate their lives to Marx have for many years misinterpreted Marx on basic tenants like "what does Marx begin by analysing" then it seems much more likely that this can happen for Marx's critics who haven't engaged with his work as much.
This is not to say that what someone really means matters if they're wrong, but what's relevant is sometimes you have an interpretation of something that would lead to that thing being incorrect, but what matters is that interpretation is wrong, and thus what ultimately matters is whether the validity of the thing changes as a result of a correct interpretation. People on that sub obviously know and care about this because they frequently respond to misunderstandings and misinterpretations of the state of modern economics that if they were true, would be quite silly. But imagine if the critic responds with "oh please tell me what modern economics really means", obviously that would be ridiculous!
Anyways...onto the post!
There is a lot to unpack here (including the usual "this is what Marx really meant"), but let me get straight to the crux of the argument. Have Marxists moved on from LTV? I'm not convinced that sentiment is universally shared from what I've seen (even their post admits some prominent Marxists like Richard Wolff don't agree). But let's say they have moved on—great, I'm happy to hear it. But ultimately, it isn't the job of mainstream economists to go chasing down every new idea Marxists come up with. That isn't how science works. It's their responsibility to clearly articulate their theories and prove they have empirical support using the best and most up-to-date econometric methods. The best way to do that is by publishing in the top peer-reviewed economic journals, and over time, given those ideas really do have merit, they will gain support and be incorporated into mainstream economics. If they can do that, then I would happy to entertain whatever their modern theories are regardless of whatever label ("Marxian") they wish to put on it. If they can't, then it appears they've achieved change without progress.
So I partially agree and partially disagree. The agreement is that I don't expect economists to be extremely educated on every single idea that is not prominent now that has existed in the history of economic thought, this is silly. Some movements, like Georgism, have seemingly gained some reignited traction despite being rejection at the time. However, ignoring the fact that the Marxist John E. Roemer literally did this, and the Marxist Samuel Bowles has also done it (more than once) (quick note: although these are old, I think that this is irrelevant because it outlines that this has happened before and they were largely ignored). As pointed out in the replies, there are obvious limitations here that are indicated by the insights of Thomas Kuhn's ideas, that overcoming paradigms like this, even if you were correct; it's not as simple as "well just provide your evidence and if it's right then you'll change everyone's minds." There are a vast array of journals that highlight the ideas associated with 'heterodox economics' (for anyone interested see here).
Modern economics doesn't operate in "schools of thought" anymore and hasn't for some time. I think the vast majority of the QCs here would be surprised to learn they're Austrians and Market Monetarists when they mainly just consider themselves "economists" (or "economic students").
I don't believe I ever claimed that economists think like this, frankly I think a lot of the non-engagement that comes with these ideas is that most economists don't even know that they exist in the first place. I'll get onto later that there are top economists who associate with these ideas though. Also, whilst I was being hyperbolic, probably the two most active members of that subreddit who comment and reply on ideas associated with heterodox economics are BainCapitalist and RobThorpe (I hate to believe in confirmation bias, but Rob Thorpe wrote a lengthy response that I will address later). Bain's a Market Monetarist and Rob is an Austrian, it strikes me as particularly odd that in a subreddit where a lot of the crux of the argument of these ideas is "these ideas aren't popular within economics, they're not taken seriously, etc." we then turn to our friendly Austrian to outline why Post-Keynesian Economics isn't popular and therefore wrong. But I'll get onto this...
CornerSolution
Agree completely. I think in particular you've hit the nail on the head on the key distinction between modern mainstream economics and the heterodox schools. Modern mainstream economics is largely indifferent to questions of political philosophy. In contrast, the heterodox schools seem to largely be based around a certain political philosophy (which varies from school to school). For example, Marxian economics is very much premised on the Marxian political philosophy that maintains that workers are being exploited (with obvious moral implications) by the owners of capital, and much of Marxian economics is devoted to making this notion precise (e.g., what exactly do we mean by exploitation, and how do we quantify it), and in trying to draw implications from it (e.g., showing why the capitalist system must eventually collapse). Fundamentally, you can't separate the political philosophy from the practice of economics here. The same is true of say, the Austrian school of economics, which is underpinned by a form of libertarian political philosophy. The upshot here is that, in these heterodox schools, the practice of economics really has the flavor of being an attempt to rationalize the political philosophy that underpins the school: the philosophy comes first, with the economic practice then built around it. You can actually see an example of this directly in this passage from the post linked by OP:
It's quite odd to me that they can claim that the 'mainstream economics' their subreddit is completely neutral on questions of political philosophy despite the fact that there is a rather large overlap between their subreddit and the neoliberal subreddit, which is a political philosophy. Heterodox economists, like mainstream economists; reach their conclusions through economics, not through political philosophy. If this wasn't the case we wouldn't see vast differentiations between economists in heterodox schools with regards to preferred policy because, well it would all be homogeneous.
Corner claims that workers being exploited has "obvious moral implications," let's see what Marx says about this idea in his Notes on Adolph Wagner:
The obscure man falsely attributes to me the view that “the surplus-value produced by the workers alone remains, in an unwarranted manner, in the hands of the capitalist entrepreneurs” (Note 3, p. 114). In fact I say the exact opposite: that the production of commodities must necessarily become “capitalist” production of commodities at a certain point, and that according to the law of value governing it, the “surplus-value” rightfully belongs to the capitalist and not the worker.
And here is Michael Heinrich in his book "How to Read Marx's Capital"
The fact that Marx speaks of “exploitation” is sometimes taken as evidence that Capital contains a moralistic critique of capitalism. However, this term does not appear in chapters 4 through 7, where Marx deals with the basics of the relation between labor-power and surplus-value. Only in later passages does Marx speak of Exploitation / Ausbeutung, and he does so there in a relatively casual way and without moral emphasis. Marx’s later references to exploitation in Capital also suggest that this term is not employed in a moralistic way. For example, he will speak of the exploitation of the means of production’s “use-value” (442); the exploitation of the laws of electricity and magnetism for telegraphy (508f.); the exploitation of “natural wealth” (754), and so on. In all these cases, to exploit means to benefit from existing forces, potentials, or resources for specific ends. The same holds for exploiting labor-power: the capitalist, as the buyer of laborpower, harnesses its potential for his benefit. This does not amount to a moral critique, but it does demonstrate that, for capital, labor-power is just another resource among others, all of which it subordinates to the endless valorizing of value, which is capital’s only goal.
Corner then says...
This is precisely what I mean. The notion of the exploitation of labor is dogmatic to Marxian economics, and it cannot be discarded without discarding the whole thing. So when one fundamental Marxist theory of exploitation (the LTV) is refuted, rather than revisiting the uncomfortable question of whether exploitation is actually the right lens to be viewing the world through, the school must immediately pivot to an alternative theory of exploitation.
Firstly, the LTV is a theory of value, not a theory of exploitation. But as I demonstrated above, Marx's notion of 'exploitation' is not a moral one. So in what sense is it political philosophy? No political argument is being made when we just identify what is going on, that is a descriptive claim. The question becomes, if the Labour Theory of Value is incorrect, must it necessarily follow that a theory of exploitation is impossible? The answer is no. Roemer for instance has demonstrated exploitation using game theory models, and as I outlined in my previous post; Morishima and Okishio demonstrated mathematically that there are positive profits iff there is a positive rate of exploitation. We can discuss these things and their legitimacy, but to say "Marxian Economics is incorrect because the Labour Theory of Value is wrong," is akin to saying "Marginalism is incorrect because Say's Law is wrong."
On the heterodox economics vs mainstream economics distinction I would probably say that most people that would accurately be called 'heterodox' probably would not uphold that label. Although the people on that subreddit might try to tell you otherwise, in Economics today there is a wide range of methods, models and ideas; it is largely wrong to say "the new neoclassical synthesis is what everyone believes." To give some examples, THE top minimum wage researcher (who is actually mentioned in that thread) Arindrajit Dube associates with heterodox economists, Branko Milanovic one of the top researchers on inequality does too, some really good empirical researchers like Philipp Heimberger and Steven Fazzari, the Nobel Prize winner William Vickrey, there's more. And some of the top economists (that these guys probably idolise) are far less resistant to these ideas than they would claim (because heterodox economics = bad economics, remember?) like Larry Summers, Olivier Blanchard etc. someone should probably speak to Paul Romer too because he was extremely critical of modern macroeconomics when he claimed "In the last three decades, the methods and conclusions of macroeconomics have deteriorated to the point that much of the work in this area no longer qualifies as scientific research."
Rob Thorpe
Now onto Mr. Thorpe, our friendly neighbourhood Mises Institute enjoyer!
There are a few things to say here. Firstly, our replies here are slanted towards Reddit - for obvious reasons. When someone comes here asking about Marx it is not likely that they have come across academic Marxists. More likely, they have come across the Marxist content on Reddit. Or other Marxist content in popular form - such as the videos from Richard Wolff. Our replies here reflect that. I think that the discussions in the comments of KeynesianSpaceman's reply demonstrate why this is reasonable.
I don't know if there are more Marxists who reject the LTV than there are ones that believe in it. Even if we accept that most Marxists now are of the Analytical sort, what is the situation on Economics topics specifically? Analytical Marxists have written relatively little about Economics. On the other hand, the Marxists who believe in the LTV have written quite a lot. Now, I don't have statistics on it. But, I doubt that KeynesianSpaceman does either.
As a sidenote, I don't agree with KeynesianSpaceman's description of history here. There were many Analytical Marxists long before Steedman's book "Marx after Sraffa".
The difficulty with the first statement, that actually we're aiming at people on reddit and thus can talk about your average Marxist, not your average Marxian economist, is that I was responding to a post where people spoke about Marxian economists! People made a bunch of claims about those economists, I responded, and then I am instead told that because we're on Reddit, I shouldn't dispute incorrect statements. They may have watched videos about Richard Wolff, but that would extend also to people who just attend Econ101 classes, when someone criticises Econ101; is it not suitable to point out that Economics does not end with Econ101 and extends much further (Thorpe most likely doesn't super believe in this as much as I would, due to the influence of say, Hazlitt and Sowell that Austrians tend to adore).
The next point is silly, when I refer to Analytical Marxists on this topic, I refer to those who have spoken on matters of Economics. But to be clear, G.A. Cohen for instance wrote on both and rejected the LTV. Roemer and Gintis and Bowles and Elster etc. rejected the LTV, the Neue-Marx-Lekture people reject the LTV. It's only really Wolff and maybe Cockshott who accept it anymore. Also, to be clear, Analytical Marxists like Roemer, Gintis etc. have written much more on Economics than the Marxists who still write on the LTV do.
When you look at the predictive record of a person you have to be careful. The question is not whether one or two predictions are correct. You have to look at all of the predictions they made and find out how many from those are correct.
Suppose that a person makes a lot of predictions, that makes the chance that one of them actually happens more likely.
Putting that aside though, we are not talking about these sort of personal predictions here. As far as I can tell, the incorrect predictions that u/syntheticcontrols is talking about here are economic ones. They're predictions from theory, not personal ones. That is, the predictions that Marx's theories give for prices and profits.
Suppose I have a friend called Jack, and Jack makes 500 predictions and all 500 turn out to be correct. My friend Steve then says, well what if Jack made 100,000 predictions? This would be a valid criticism but only if you can say and demonstrate all of Jack's incorrect predictions. An example might be Peter Schiff, Ron Paul, Robert Murphy etc. who did all predict the Great Recession, but right after that they all predicted hyperinflation following QE. On the first they were correct, on the second they weren't. But if we're working with falsificationism, it's not enough to say, 'maybe this theory might have been wrong at some point,' it seems like if the theory predicts things correctly, it may be a decent theory until such a point where it predicts things incorrectly. For instance, Godley's SFC models have proven fairly influential among many following the Great Recession, to the point that a lot of models now are SFC!
Where do we find that bit in Bohm-Bawerk's writing then?
In his book on Marx 'Karl Marx and the Close of His System.'
What does this have to do with anything? None of this actually says anything about criticisms of Marx. Wieser and Walrus thought that Marginalism was radically socialist - so what? This is factlet for people with too much time of their hands, it doesn't tell us anything about the actual question being discussed.
Does Wieser being "heterodox" matter? No, whether a critique is heterodox or not doesn't matter. All that matters is whether or not it is a correct critique.
It's not directly relevant, it was just a sidenote.
How does this help the case of people arguing for Marx's view.
Because assuming Marx is making some sort of logical-deductive argument is misunderstanding Marx's argument. Especially given the rise of many believing in Non-Classical Logic and Dialectical Logic in the 20th century, if you want to argue that Marx is wrong, then you'd need to touch on those topics first. It's like if I disputed the Kalam Cosmological Argument because it's not a mathematical proof, or you can't reach it from the praxeological axiom. You need to address arguments on their own terms, or dispute the terms they are arguing them on. Bohm-Bawerk doesn't address the terms, nor the argument. That's what Sowell was saying.
We can consider them a a strict "logical proof". In that case Bohm-Bawerk clearly shows that they are insufficient as such a proof. Or we can consider them as something else - as explaining some ideas and extorting the reader to believe in them. The latter may be the correct interpretation of Marx. But does it make Marx right and Bohm-Bawerk wrong? Of course not.
You're saying it doesn't, as if it has no relevance. But you are explicitly acknowledging here that Bohm-Bawerk is not addressing Marx's argument and is instead making up his own argument he wants Marx to believe and then says "see, Marx is wrong!" This is an acknowledgement from Rob that by considering the proof as strictly logical, that has no implication on the validity of Marx's argument except in terms of Marx's argument not following a strict logic, which is what Marx always said.
Here KeynesianSpaceman admits there is a contradiction between Capital Volume 1 and Capital Volume 3. However, he says that pointing this out is not a critique. He takes the view that this is what Marx meant to do - a view shared by Sowell.
Ask yourself how much sense this makes. It may be true that Marx was deliberately contradictory when writing Capital. That doesn't mean that he can't be criticised for being contradictory. The fact that Marx did this deliberately is something you can use to decorate your conversation at the local pool-hall, but it doesn't negate any criticisms of that contradiction.
The differences between Vol 1 and Vol 3 has caused the creation of at least six different sub-schools of Marxist thought. Each of which deal with the contradiction in a different way.
It is true that Bohm-Bawerk did not adequately address the aggregate equalities. But Bortiekiwicz did (and in modern versions of "Karl Marx and the Close of His System" you can find Bortiekiwicz's paper as an appendix).
I admit no such thing, even way back in the 50s people were saying that (e.g. Joan Robinson in her review of Bohm-Bawerk's book found here) Volume 1 is Marx's theory of value, Volume 3 is Marx's theory of prices. But there is a natural continuation between the 3. "Marx meant to contradict himself" isn't what I'm saying here. Marx's resolution of this was unsuccessful but the Transformation Problem concerned that resolution. As has been pointed out for a long time, the Transformation Problem isn't a problem. For anyone reading this good summaries of this fact can be found in 'The Logic of Marx's Capital' by Deepankar Basu, Chapter 7. And Riccardo Bellofiore's entry on the Transformation Problem in the SAGE handbook of Marxism. Keep in mind, Transformation Problem may be true and Labour Theory of Value false, does not invalidate Marx's work. Hell, see the conclusion section on one of Marx's biggest critics: Ian Steedman! Thus the fixation doesn't really make much sense, especially considering the work on the Fundamental Marxian Theorem, the argument made by Mr. Thorpe is like arguing that modern economics is wrong just because the economy isn't ever in equilibrium. It would have to go far past that, but he does not unfortunately.
Also to be clear, they do not "deal with the contradiction in a different way" they deal with the issue of Marx's solution, but if you correct Marx's solution: there is no contradiction at all. By using the word 'contradiction' you are presupposing your conclusion: that Marx is wrong.
Thorpe is someone I find particularly unconvincing on many topics, I'll make a more extended post on the Transformation Problem in the future, and also a comment on his post here: https://www.reddit.com/r/badeconomics/comments/qo7eo8/theoretical_precision_and_the_cambridge_capital/ (one of the comments gets the critique of this completely right, Thorpe should really read Kurz and Salvadori!).
That is all, until next year I suppose (or perhaps earlier)