Marx, Sraffa, Rawls and the Limits of Mainstream Economics

Paper Session

Friday, Jan. 6, 2017 10:15 AM – 12:15 PM

Swissotel Chicago, Monte Rosa
Hosted By: Union for Radical Political Economics
  • Chair: William McColloch, Keene State College

Economics in the 21st Century

Robert Chernomas
,
University of Manitoba
Ian Hudson
,
University of Manitoba

Abstract

Economics has the awkward distinction of being both the most influential and most reviled of the social sciences. The economic crisis that started in 2008 does not appear to have caused the discipline’s influence to wane, but it has expanded the number of its critics. Broadly speaking, the growing criticism from outside (and occasionally inside) economics centered on how the discipline lacked realism and used technique as an end in itself, instead of engaging with concrete economic realities and accepting a pluralism of approaches adapted to the complexity of economic problems. A fundamental component of the lack of realism is the lack of attention by the mainstream of the discipline to inquire about the economic influence of the most powerful people, institutions and corporations that dominate the decision making of the 21st century. This paper explores whether this criticism should be applied to the work of the new generation of economic superstars, who have established significant influence both inside and outside the discipline. The John Bates Clark (JBC) medal is given to the American economist under forty “judged to have made the most significant contribution to economic thought and knowledge,” and is generally considered the second most prestigious in the profession (after the Nobel Prize, which it sometimes foreshadows). We will examine the work of those that have won the award from 2001 to 2013. The winners of the JBC are significant because they represent the future of economics as defined by the discipline itself.

Time to Bring Sraffa out of the Closet

Robin Hahnel
,
Portland State University

Abstract

This article argues that it is time for Sraffians to take a moral stand and add a “normative” theory which judges most profits to be unjustifiable to Sraffa’s “positive” theory of price and income determination. Specifically it is argued that what we might call the “fundamental Sraffian theorem” implies a better moral critique of capitalism than the “fundamental Marxist theorem,” and four common justification for profits are rebutted.

Employment in a Just Economy

John Komlos
,
University of Munich

Abstract

This paper is based on the ideas of political philosopher John Rawls and suggests that in a just economy full employment would have to go beyond the implications of NAIRU. Rawls argues that the just economy is one which would be created behind a veil of ignorance, that is to say, without knowing where we would end up in the society’s distribution of talent and other attributes. If we were to create it from scratch we would not create the kind of labor markets that exist currently, because we would be too concerned about ending up among the excluded, i.e., those without full time jobs which today in the U.S. is still 10% of the labor force or some 15 million adults. This is substantial but it does not even include at least 7 million additional people who have dropped out of the labor force altogether or the 2.3 million in jail! Hence, the “natural” in the natural rate of unemployment is a misnomer, insofar as unemployment does not occur in nature. The concept is especially misleading, because many economists and media commentators inappropriately but invariably equate it with “full” employment as Martin Feldstein did in the January meeting of the American Economic Association. As a consequence, endemic un- and underemployment is accepted as an inevitable attribute of the labor market. This is insidious inasmuch as the concept assumes that the institutional structure of the labor market is held constant. However, with creative restructuring of that market our aim should be to bring unemployment down to the minimum feasible rate which in the U.S. is most likely around 1.2%,--the rate which prevailed in 1944 and which probably represents the lower bound attainable. Instead of the prevailing system, the right to work needs to be recognized as a natural right, because the right to life depends upon it. Several ways are proposed to create an inclusive labor market that distributes the available work in a more equitable fashion than the current system and envisions a just economy that risk-averse people would be willing to enter at random, i.e., without knowing where they would end up in it.

Time, Constant Capital, Accumulation, Sustainability, and Marx's Economic Theory

Michael Perelman
,
California State University-Chico

Abstract

In the Grundrisse, Marx remarked that all economics ultimately reduces itself to an economy of time. In addition, Marx gave great prominence to the subject of the duration of the working day and, even more, by the historical perspective that ran through his whole body of work. Finally, the time required for the turnover of capital is a major factor in the rate of profit. One aspect of Marx's analysis of time was his concept of the "mortal leap." Marx's mortal leap bears some similarity to Keynes's animal spirits; however, Marx's analysis was much deeper than Keynes'. Very little analysis following Marx delved more deeply into the moral leap or into the nature of constant capital. For example, Keynes, as Schumpeter made clear, gave virtually no attention to the question of replacement investment, which reflected technical change and its resulting moral depreciation. The point of this paper is to suggest that the questions surrounding the nature of time in a capitalist economy offer fertile ground for considering Marx's contribution in this matter.
Discussant(s)
Ann E. Davis
,
Marist College
Matias Vernengo
,
Bucknell University
Nathaniel Cline
,
University of Redlands
David Mathew Fields
,
University of Utah
JEL Classifications
  • B3 - History of Economic Thought: Individuals
  • B5 - Current Heterodox Approaches