Four endogenous market failures which (TSS) value explains better: Inequality, Unemployment, Crisis and Liquidity Preference

Freeman, Alan (1999): Four endogenous market failures which (TSS) value explains better: Inequality, Unemployment, Crisis and Liquidity Preference.

Abstract

This was presented to the First International Seminar on Nuevas Direcciones en el Pensamiento Económico Crítico (New Directions in Critical Economic Thought), organised by the Departiment of Applied Economics, Faculty of Politics, Universidad Complutense de Madrid, Madrid, 10-12 May 1999

It argues, with reference to empirical data from the US economy, that the theoretical category of value is required to explain four widely-recognised general features of a market economy:

• Permanent mass unemployment, that is, a permanent excess supply of labour, so that the labour market is never in equilibrium. • The gap between rich and poor countries, which has systematically grown for the last hundred and fifty years, and whose growth has accelerated sharply since 1981, at the very moment when the re-construction of a unified world market started;

• The regular repetition of crisis – a sharp and well-defined interruption in accumulation, accompanied by a sharp rise in unemployment and a sudden fall of asset prices –every 7-12 years;

• The fact that in crisis, capital retreats from the sphere of production into the sphere of circulation and in particular, into the speculative holding of liquid assets.

• Item Type: MPRA Paper
• Institution: The University of Greenwich
• Language: English
• Keywords: Value; TSSI; temporalism; rate of profit; Marx; MELT; Okishio
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B1 - History of Economic Thought through 1925 > B12 - Classical (includes Adam Smith); B - History of Economic Thought, Methodology, and Heterodox Approaches > B1 - History of Economic Thought through 1925 > B14 - Socialist ; Marxist; B - History of Economic Thought, Methodology, and Heterodox Approaches > B5 - Current Heterodox Approaches > B51 - Socialist ; Marxian ; Sraffian; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles

References

Freeman, A. (1997) ‘What Happens in Crashes? A non-equilibrium, value-theoretic approach to liquidity preference’. Presented to the 1998 EAEPE conference, Lisbon 1998. [http://mpra.ub.uni-muenchen.de/2303/1/MPRA_paper_2303.pdf]

Freeman and Carchedi (1996). Marx Without Equilibrium. Aldershot and London: Edward Elgar.

Maldonado-Filho, E. (1997) ‘The Circuit of Industrial Capital, Price Changes and the Profit Rate’, presented to the 1997 conference of the Eastern Economic Association (http://www.iwgvt.org)

Okishio, Nobuo (1961), ‘Technical Changes and the Rate of Profit’, Kobe University Economic Review 7. pp 86-99.