Everything around you that you own and use is the result of effort of a vast army of unseen workers. The great attribution error of history is the erroneous assumption that we need the thieves to make it all possible.
All over the world we find ourselves in the midst of a grand Globalization experiment that has devastating consequences for the vast majority. The promise is, it will get much worse. It is the economic experiment penned by Milton Freidman, Mises, and Hayek as well as the French economist Say. On the question of value, these marginalists have parted company with Adam Smith and Ricardo who knew that it was central to scientific economic study to understand what it is that determines value. They tackled questions about what it is that encourages wealth to grow and what determines its distribution between classes in society. They saw an objective measure of value as a precondition for coming to terms with these problems. Smith suggested it was to be found in labour. Ricardo built his work from these notions and developed the idea of use-value as opposed to exchange-value to be elaborated on later by Karl Marx.
There is no doubt that that the more shallow focus of the marginalists, the invisible hand, which serves as their basis for economic theory, is valid, especially on a micro level. However, when we consider the confounding factors of the larger economy, supply and demand curves and marginal utility curves simply can't explain much. It is superficial and it is 'vulgar economics'. We must go deeper to discover what it is that determines value. We must go to Ricardo, Smith and for more depth, Marx.
Any notion that the invisible hand of supply and demand will produce what is best for society is simply wrong. For example, a given society may need more medicine or health care or housing, whatever the case may be. The market suggests however that producing Play Stations is more profitable. Play Stations will be produced in accordance with the laws of supply and demand. Capitalism is very good at producing trinkets, shiny toys, and killer hamburgers.
At this point capitalism seems to be beyond Keynes and it may be that Keynes policies and recommendations are simply archaic. Keynes undoubtedly provided capitalism with a longer life expectancy than unbridled capitalist anarchy could have expected. It also could be argued that defense spending has done more for the overall health of capitalism in the 20th century than Keynes distribution policies. It certainly cultivates and maintains hegemony.We can see that advanced capitalism is not living up to the promise of stability or equilibrium. Capitalism is showing itself to be an anarchistic loose hose, flipping and whipping depending on the mood of speculators. Rather than stability, the economy is subject to the whims of a grand global casino game.
The theory of supply and demand helps explain the price of something in a given time or place but it does not explain why things have the exchange value they have. The theory that does have far more explaining power is Smith's labour theory of value. According to this theory, the exchange value of commodities is determined by the amount of labour measured in working hours necessary to make them (given current levels of technology). Socks sell for less than cars because it takes fewer hours to make socks than it does cars. In the same period of time, a person may make many socks but only one car. Smith and other economists tested this theory by comparing prices of commodities with the necessary labour time needed to produce them. They found that while it does not explain the exact price of things, it does explain why they exchange for their approximate prices. This theory takes the mystery out of the concept of value by relating it, exchange value, to human labour. Consider the fact that the basis of capitalist economies is surplus value, that is, the hours of labour beyond what the worker is paid for and the value that is appropriated by the capitalist; that this is the basis of the wealth of capitalists. And when we consider what can be done with labour power in terms of developing priorities, goods and services, we may then consider possibilities beyond the poor and short sighted rationality of the marginalists, popularly known today as neo-liberals. We might abandon the superstitious nonsense that the theft of the value that is produced by labour as an indispensable ingredient to economic success. In other words, we can afford to abandon the notion that exploitation, greed, and theft are necessary evils for societies to function well. At that point, we may go beyond the tyranny of the twit class.
The neo-classical experiment is on and we are in the midst of it. Patterns are beginning to emerge and they are looking grim. From these patterns and hardships an awareness of the true nature of capitalism is growing.
A specter is haunting the planet…