I'm new to post-keynesianism (know Keynesianism and MMT), and stared reading Introduction to Post-Keynesian Economics. I do not understand why the heterodox and orthodox is divided by looking what is the economic left and economic right.

Hello,

So I used to think I had a pretty solid background in econ, and then I started reading a lot of Steve Keen and i learned a lot about the assumptions put in place in modern econ (I'm a few chapters into Debunking Economics, and (just finished the demand curve chapter), it seems pretty solid from what I can tell, especially his arguments about utility maximization and the different shapes of the demand curve). I still got plenty left to read but, out of curiosity, i looked up Steve Keen and trump.

I found this article: https://www.forbes.com/sites/stevekeen/2016/11/11/trumps-truthful-heresy-on-globalization-and-free-trade/

Ricardo argued that free trade could nonetheless benefit both countries, if England devoted all of its workers to producing cloth, while Portugal turned all its workers into wine makers, because the total amount of wine and cloth produced by the two countries would be higher. They could trade the two commodities, and everyone would be better off than if trade didn’t occur. So specialization allows “gains from trade”. Drop the tariff barriers, and everyone will win—even the inhabitants of the weaker economy.

The argument might sound convincing, until you ask a simple question: “So how do you turn a wine press into a spinning jenny?”. Answer? You don’t.

Ricardo’s model assumed that you could produce wine or cloth with only labour, but of course you can’t. You need machines as well, and machinery is specific to each industry. The essential machinery for making wine can’t be used to make anything else, if its use becomes unprofitable. It is either scrapped, sold at a large loss, or shipped overseas. Ditto a spinning jenny, or a steel mill: if making steel becomes unprofitable, the capital involved in its production is effectively destroyed.

I did a bit more reading and he also argues that most modern industrialized countries got that way via protectionism (it is true that the UK and America both had very high tariffs, and that necessitated investment in industry at home. It's also true that S. Korea and Japan did the whole infant industry thing, and China very much engaged in protectionism to get rich.

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Now, I have a number of ideological reasons that i'm not super comfortable with this line of reasoning. But let's focus on economics.

My initial thought was this: just sell your capital goods to the other guy. Sell your english wine press to Portugal, and buy their spinning jennys. Maybe that's a simplistic argument, but that was my first go to. Idk if that's true though, cause i mean we can certainly find rusting factories in the Rust belt (though idk if they still have their machinery or if it was sold off to the foreign industry or scrapped for parts and used in more productive industries).

My second was to ask: what even is the point of industrialization if it means more expensive and shittier goods? Perhaps he is right about equilibrium with S&D, but sellers still have to compete on quality, if I make a better good than you I can get more customers no?

Plus, a lot of recent evidence has shown freer trader tends to have benefits, though its downsides are localized. Like, Botswana is the poster child of this. They used foreign trade deals and the like to sell mineral wealth and they got rich off it (and are still one of the richest and most stable countries in Africa).

I could be wrong, but those were my initial thoughts. I like a lot of Steve Keen but this one kinda threw me for a loop. Am I missing something here?

I have been reading a number of more post-keyensian works recently, like that of Steve Keen, and one thing I find is that a lot of it has elements of more classical marxism, however some of those elements are modified/changed. That's basically what neo-marxists do right? Revise and expand upon old marxist thought?

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So what's the difference? Like, what sets the two apart?

Hi,

I am relatively new to marxist theory (sorry), but I have long been fascinated by economics in general.

So anyways, I recently listened to this podcast: https://www.youtube.com/watch?v=Vwavxl-w_Z4

which interviews Australian Post-Keynesian Economics Professor Steve Keen.

I am currently trying to understand his critique of the Marxist Labor Theory of Value.

He starts to talk about it around 29:40 for those interested, and expands until about 35:00-ish.

Anyways,

This is my understanding, is this correct:

The use value of labor power is the value it can create, i.e. the value and use value of labor power are the same. This means, that the surplus value of labor is measured by taking the Exchange value and subtracting the value (use value) from it. So Surplus = Exchange - use.

The exchange value of labor is its wages, and its use-value is the value of the products it can create.

A similar logic applies to machines. Their use value is what they can produce. And the exchange value is the price of production.

Therefore they too can create a surplus value.

I asked this of a Marxist and the response I got was this:

Machinery can't add any value because this constant capital will regulate the socially necessary labor time on a given market. Which means once every capitalist has the same technology / machine, the only thing that will regulate the profit / value creation is the abstract labor itself

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But I don't feel that really touches on the argument Keen is making right? Because Marx was using the whole use-value exchange-value paradigm to prove the labor theory of value right?

I checked the wikipedia and found this part, which I really didn't understand:

Keen further observes that while Marx insisted that the contribution of machines to production is solely their use-value and not their exchange-value, he routinely treated the use-value and exchange-value of a machine as identical, despite the fact that this would contradict his claim that the two were unrelated.[54] Marxists respond by arguing that use-value and exchange-value are incommensurable magnitudes; to claim that a machine can add "more use-value" than it is worth in value-terms is a category error. According to Marx, a machine by definition cannot be a source of human labor.[55][56] Keen responds by arguing that the labor theory of value only works if the use-value and exchange-value of a machine are identical, as Marx argued that machines cannot create surplus value since as their use-value depreciates along with their exchange-value; they simply transfer it to the new product but create no new value in the process.[57] Keen's machinery argument can also be applied to slavery based modes of production, which also profit from extracting more use value from the laborers than they return to laborers.

https://en.wikipedia.org/wiki/Labor_theory_of_value

Is my understanding of Keen's criticism correct?

So ultimately he argues that a machine can create a surplus. But,

Machinery can't add any value because this constant capital will regulate the socially necessary labor time on a given market. Which means once every capitalist has the same technology / machine, the only thing that will regulate the profit / value creation is the abstract labor itself

means that it's wrong to say machines are a source of value?

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I am confused and would love some help clarifying

Hello! I’ve heard of a recent construct used to model macro phenomena called stock-flow consistent modeling that Godley & Lavoie describe in their 2007 book, Monetary Economics. What additional resources (which may include books, articles, or lectures) describe the SFC approach and its significance? Thank you!