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Political Economy, value theory and economic policy: Implications for Neo-Fisherian monetary policy
Last modified: 2018-06-20
Abstract
Abstract: The concept of value lies at the heart of approaches to political economy and economic policy. This paper traces, from a history of thought perspective, three key approaches to value (the surplus approach, neoclassical marginalism and Austrian marginalism) and discusses their use for different stances regarding the inherent stability of a capitalist market economy. The approaches are not completely distinct. For instance, all three allude to some form of utility. Yet, only one recognizes the importance of (quantitative and qualitative) connectivity between the spheres of production and exchange for the determination of price and for understanding how markets function within a capitalist economy. The strength of the connectivity rests, moreover, on the presence of a labor theory of value. Without that connection, it is argued, a capitalist market economy is more likely to be envisioned as self-stabilizing with limited scope for analysis of endogenously-generated instability or fragility, except in response to an external or policy shock. Consequently, the role of government and policy is different from that in a context in which the dynamics of the production (labor) process create a turbulent process of tendential regulation. The implications of these insights are drawn for Neo-Fisherian monetary policy (and its relationship to Hyman Minsky’s Financial Instability Hypothesis).
Keywords
Political Economy, value, heterodox, Neo-Fisherian, monetary policy, Minsky
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