Archive for January, 2012

The Trouble with Marxism (Part Three) or, How Fred Moseley M.E.L.T.ed Karl Marx

January 30, 2012 Leave a comment

Saint Denis, Bishop of Paris

Pardon the extensive quotes of Marx here, but I need to establish a theoretical basis for my argument that will follow:

In Capital, Volume One, Chapter 3, Marx argues:

The price or money-form of commodities is, like their form of value generally, a form quite distinct from their palpable bodily form; it is, therefore, a purely ideal or mental form. Although invisible, the value of iron, linen and corn has actual existence in these very articles: it is ideally made perceptible by their equality with gold, a relation that, so to say, exists only in their own heads. Their owner must, therefore, lend them his tongue, or hang a ticket on them, before their prices can be communicated to the outside world. [2] Since the expression of the value of commodities in gold is a merely ideal act, we may use for this purpose imaginary or ideal money. Every trader knows, that he is far from having turned his goods into money, when he has expressed their value in a price or in imaginary money, and that it does not require the least bit of real gold, to estimate in that metal millions of pounds’ worth of goods. When, therefore, money serves as a measure of value; it is employed only as imaginary or ideal money. This circumstance has given rise to the wildest theories. [3] But, although the money that performs the functions of a measure of value is only ideal money, price depends entirely upon the actual substance that is money. The value, or in other words, the quantity of human labour contained in a ton of iron, is expressed in imagination by such a quantity of the money-commodity as contains the same amount of labour as the iron. According, therefore, as the measure of value is gold, silver, or copper, the value of the ton of iron will be expressed by very different prices, or will be represented by very different quantities of those metals respectively.

Perhaps, I am misinterpreting what Marx is saying here, but it seems to me he is stating what serves as money has significance to consideration of the price-form itself. If an ounce of gold has 15 times the labor contained in it as is contained in an ounce of silver, the price of a commodity denominated in units tied to an ounce of gold will be 1/15th that of a price tied to an ounce of silver. On the other hand, a given price using the gold standard, will have 15 times the value of that same price using the silver standard.

In both cases, the price of the commodity may be one dollar, but one dollar using the gold standard contains 15 times the value of one dollar using the silver standard. In both cases, one dollar may be the “money name” of an ounce of gold or an ounce of silver, but the value differs significantly depending on which metal serves as the standard of price. The term “one dollar” will represent more or less labor time depending on the commodity serving as the price standard. This relation, of course, is entirely independent of the commodity to which the price $1.00 is attached, although it has significance for it as well.

If it takes 15 hours of labor to produce one ounce of gold, 1 hour to produce one ounce of silver and ten minutes to produce one ounce of copper; the same price $1.00 will express far different labor times when an ounce of gold, silver or copper is the standard for one dollar. The same “money name”, $1.00, will alternately represent 15 hours, 1 hour, or ten minutes of labor. We cannot know what $1.00 signifies in terms of labor time, unless we know the standard to which this price refers.

So, the Marxist theoretician Fred Moseley is almost entirely wrong when he states non-commodity money can express the value of a commodity. He is right insofar as the price of the commodity expresses the value of the commodity but he is wrong to assume this expression is equal generally to the socially necessary labor time contained in the commodity itself. Non-commodity money does indeed always express the value contained in the commodity, but it always express this quantity as zero hours of labor time. No matter the quantity of non-commodity money we are dealing with — the price of a pair of shoes, a house, an aircraft carrier, or the US trade deficit with the People’s Republic of China — the quantity of non-commodity money to which we refer expresses the value of any of these as zero hours of labor.

This does not mean the commodities have no socially necessary labor time, nor that their values have ceased to exist; it simply means, this value was detached from the price of the commodity, when token money was detached from its commodity.

Value, socially necessary labor time, is dark matter in our economy — we cannot see it, but can only infer its existence. We infer its existence from the countless acts of exchange of unlike use values in the market. Since these use values are themselves not commensurable, we infer there is some hidden thing allowing us to compare them as trade-able goods. Money relations make this hidden other thing, socially necessary labor time, visible to us, but in a way this hidden other thing appears as a quality of money.

Moseley has absorbed this much of Marx’s theory, but then he stumbles, and, facing the puzzle of non-commodity money — he seems to forget the function of money in expressing socially necessary labor time, depends entirely on the thing serving as money. The circulation of commodity money is a reflex of the circulation of commodities themselves and dependent on this latter. In Marx theory, when the circulation of commodities increase, all things being equal, the amount of commodity money pulled into circulation must increase, when the circulation of commodities decreases, the quantity of money in circulation decreases.

There are, of course, a number of qualifiers to this which do not concern me right now — I am trying to get the general drift.

Generally speaking, just as the value of the commodity is expressed in a definite quantity of gold, so the total value of commodities in circulation, determined the total quantity of gold in circulation. This rule, however, DOES NOT apply to non-commodity money — and Moseley should know this. He should know it, because in chapter three of Capital Marx states:

The State puts in circulation bits of paper on which their various denominations, say £1, £5, &c., are printed. In so far as they actually take the place of gold to the same amount, their movement is subject to the laws that regulate the currency of money itself. A law peculiar to the circulation of paper money can spring up only from the proportion in which that paper money represents gold. Such a law exists; stated simply, it is as follows: the issue of paper money must not exceed in amount the gold (or silver as the case may be) which would actually circulate if not replaced by symbols. Now the quantity of gold which the circulation can absorb, constantly-fluctuates about a given level. Still, the mass of the circulating medium in a given country never sinks below a certain minimum easily ascertained by actual experience. The fact that this minimum mass continually undergoes changes in its constituent parts, or that the pieces of gold of which it consists are being constantly replaced by fresh ones, causes of course no change either in its amount or in the continuity of its circulation. It can therefore be replaced by paper symbols. If, on the other hand, all the conduits of circulation were to-day filled with paper money to the full extent of their capacity for absorbing money, they might to-morrow be overflowing in consequence of a fluctuation in the circulation of commodities. There would no longer be any standard. If the paper money exceed its proper limit, which is the amount in gold coins of the like denomination that can actually be current, it would, apart from the danger of falling into general disrepute, represent only that quantity of gold, which, in accordance with the laws of the circulation of commodities, is required, and is alone capable of being represented by paper. If the quantity of paper money issued be double what it ought to be, then, as a matter of fact, £1 would be the money-name not of 1/4 of an ounce, but of 1/8 of an ounce of gold. The effect would be the same as if an alteration had taken place in the function of gold as a standard of prices. Those values that were previously expressed by the price of £1 would now be expressed by the price of £2.

Note here, Marx does not state the quantity of tokens of money in circulation is determined by the sum of values in circulation; rather, he says a given quantity of tokens will represent a greater or lesser quantity of value depending on fluctuations in the circulation of commodities. Token money, therefore, does not behave at all like commodity money, because it has no value of its own and cannot reflect in itself the value of the commodities for which it is exchanged.

But, surprisingly, Moseley takes this very section of Capital and attempts to erect a theory for how non-commodity money can serve as its own measure of value, and standard of price. And, he does it by turning Marx completely on his head, by proposing something he and other Marxist academics call, The Monetary Expression of Labor Time (MELT). This argument says Marx held to the idea that money had to be a commodity, but this is not a necessary feature of his theory of money. They are, I admit, trying to “salvage” Marx’s theory in an age where non-commodity money is the rule, and to defend Marx against charges his theory is irrelevant or anachronistic.

“Marx,” his opponents state, “said money had to be a commodity, but look — the dollar is just worthless paper. It is money because we all agree it is money, and because the state guarantees it as universally acceptable in transactions.” (See, for instance, my posts on FOFOA.) Rather than making a materialist study of the dollar and other so-called non-commodity monies, MELT tries to twist Marx’s theory to fit these worthless symbols of money. Their starting point in this salvage operation begins where Marx discusses the money closest to debased dollars, inconvertible paper money.

But, in so doing, they neglect Marx’s warning, issued in the words of Marie Anne de Vichy-Chamrond, marquise du Deffand. Madame du Deffand, upon hearing of the miracle of St Denis, who, having had his head chopped off, picked up his severed head and walked six miles, preaching the Gospel, observed:

“The distance is nothing it is only the first step that is difficult.”

Marx’s warning in this regard is apt: the use of non-commodity money is not the least difficult to explain, rather we have to explain how it came to exist in the first place.


The Trouble with Marxism (Part Two)

January 28, 2012 Leave a comment

The portion of the labor day that is socially necessary as a percentage of GDP

So, I got feedback from three people who, in one way or another, say they don’t understand my last post on my conversation with Andrew Kliman. One person posting on Reddit, complained it was too dense; another wondered if I was advocating a return to the gold standard; a third person, who I asked to read it and give me feedback, began to have difficulty with it about halfway through it. Specifically that person had difficulty understanding my discussion of the “transformation problem”.

This is three more examples of my “tin-ear”, which expressed itself in my disagreement with Andrew. I have not been able to explain “my point” in a way that is not abstract, or explain the relevancy of the various statements I make to real events within society. Part of this is because I am a “Marxist” in the same way I could be considered a “Darwinist” — I am not an expert on either. The theory makes sense to me, and I accept it as a reasonable explanation for how the world works.

But, if someone argued a eugenics distortion of Darwin, I could not argue against that person by quoting Darwin. And, if someone argued a Keynesian distortion of Marx, I probably could not argue back using quotes from Marx. Until recently I was more a leninist than a “Marxist”; having read a lot of Lenin, but little more of Marx himself than the Communist Manifesto. And, neither of them had I read for more than two decades.

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The Trouble with Marxism (Part One)

January 27, 2012 2 comments

Well, I have just about had enough of my conversation with The Andrew Kliman, so I thought I would try to assess what it accomplished instead.

My ‘tin-ear’ with Andrew began after a conversation with @skepoet on twitter about the odd divergence between gold and dollar measures of economic activity since the Great Depression of the 1930s. The dollar measure of US GDP has risen almost uninterrupted since the end of the contraction phase of the Great Depression; while the gold measure of GDP rose from 1934 to 1971, then fell until 1980, rose again from 1980 to 2001, and has been falling since.

Interesting enough, the gold measure of GDP exhibits a classic pattern of boom and bust typical of the economy prior to the Great Depression, but the dollar measure of GDP shows an almost disturbingly smooth continuous upward sweep, until the most recent difficulties of 2008. What I find most interesting about the two measures of economic activity is that, until 1933, both gold and the dollar measures of GDP exhibited the same behavior. However, this identical pattern broke down in 1934.

What accounts for this sudden divergence?

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The Sorry State of Anti-Statism, and Other Random Thoughts

January 24, 2012 2 comments

So, last night I put myself through the agony of watching the entire NBC sponsored Republican debate. I don’t normally do this, but since I am such a fan of Brian Williams and his fetish for the British royals and heart-warming feel good stories about people making a difference, I figured, “What the fuck?”

What follows are a few of my (almost) unedited random thoughts:

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Categories: politics

Anarchism, libertarianism, Marxism and Unpaid Labor

January 22, 2012 Leave a comment

Here is something I culled from Marx’s paradox of capitalist price — i.e., the so-called transformation problem — that all present variants of critical communist theory rejects (and, by all variants, I mean the usual suspects: libertarianism, Marxism and anarchism). All conflict in society is directly or indirectly a struggle over the length of the social working day. We could call this Marx’s basic theorem of social development. Marx stated his theorem this way:

The history of all hitherto existing society is the history of class struggle.

But, this class struggle has always more or less directly or indirectly revolved around the uncompensated labor of one portion of society.

All three variants of communist consciousness have advanced their petty demands, while remaining mute on this pivotal issue. However, there is not a single demand advanced by any of them that does not touch on the length of the social working day. The libertarian complaint on taxes, the anarchist complaint on force, and the Marxist complaint on profit all come down to this. Moreover, each variant’s hostility toward the other is wholly rooted in the struggle over working time. It seems logical to assume since all three are only divided by which function of the state they oppose they must all share an ignorance regarding the premise of this state.

That common ignorance can be stated as follows: Each cannot imagine that the premise of the state is the uncompensated labor time of society. Each, therefore, imagines it possible to abolish the present state of things without abolishing its premise — uncompensated labor. Each imagines it possible to ignore abolition of uncompensated labor time, or reduce it to a mere byproduct of the state’s own abolition. Engels made the clearest argument against this ignorance in his argument against Bakunin:

Bakunin has a peculiar theory of his own, a medley of Proudhonism and communism. The chief point concerning the former is that he does not regard capital, i.e. the class antagonism between capitalists and wage workers which has arisen through social development, but the state as the main evil to be abolished. While the great mass of the Social-Democratic workers hold our view that state power is nothing more than the organization which the ruling classes-landowners and capitalists-have provided for themselves in order to protect their social privileges, Bakunin maintains that it is the state which has created capital, that the capitalist has his capital only by the grace of the state. As, therefore, the state is the chief evil, it is above all the state which must be done away with and then capitalism will go to blazes of itself. We, on the contrary, say: Do away with capital, the concentration of all means of production in the hands of the few, and the state will fall of itself [fällt von selbst]. The difference is an essential one: Without a previous social revolution the abolition [Abschaffung] of the state is nonsense; the abolition of capital is precisely the social revolution and involves a change in the whole mode of production. Now then, inasmuch as to Bakunin the state is the main evil, nothing must be done which can keep the state-that is, any state, whether it be a republic, a monarchy or anything else-alive. Hence complete abstention from all politics. To commit a political act, especially to take part in an election, would be a betrayal of principal.

Uncompensated labor, Engels is arguing, is the essential precondition for the state. Marxists have used this quote as the dividing line between it and all other variants of communist consciousness. But, Marxists no more grasp it than either of the other two — hence, not a single Marxist sect raises demands on the working day. Even when they might, on occasion, weakly argue for it, it is nevertheless accompanied by a demand for money wages to remain unchanged. As if the question is not the uncompensated labor, but the worthless paper dollars exchanged for necessary labor.

In fact, paper money is a worthless token having no relation whatsoever to the real compensation the worker receives for her labor power — the only measure of the value of labor power is gold or another commodity money. Currency was debased precisely to make sure there would be no relation between the value of labor power and its price (wages). Keynes says this very thing in his “General Theory”, and I have pointed out the paragraph in which he makes his argument to Marxists time and again without penetrating their dull brains.

Though the struggle over money-wages between individuals and groups is often believed to determine the general level of real wages, it is, in fact, concerned with a different object. Since there is imperfect mobility of labour, and wages do not tend to an exact equality of net advantage in different occupations, any individual or group of individuals, who consent to a reduction of money-wages relatively to others, will suffer a relative reduction in real wages, which is a sufficient justification for them to resist it. On the other hand it would be impracticable to resist every reduction of real wages, due to a change in the purchasing-power of money which affects all workers alike; and in fact reductions of real wages arising in this way are not, as a rule, resisted unless they proceed to an extreme degree. Moreover, a resistance to reductions in money-wages applying to particular industries does not raise the same insuperable bar to an increase in aggregate employment which would result from a similar resistance to every reduction in real wages.

In other words, the struggle about money-wages primarily affects the distribution of the aggregate real wage between different labour-groups, and not its average amount per unit of employment, which depends, as we shall see, on a different set of forces. The effect of combination on the part of a group of workers is to protect their relative real wage. The general level of real wages depends on the other forces of the economic system.

Thus it is fortunate that the workers, though unconsciously, are instinctively more reasonable economists than the classical school, inasmuch as they resist reductions of money-wages, which are seldom or never of an all-round character, even though the existing real equivalent of these wages exceeds the marginal disutility of the existing employment; whereas they do not resist reductions of real wages, which are associated with increases in aggregate employment and leave relative money-wages unchanged, unless the reduction proceeds so far as to threaten a reduction of the real wage below the marginal disutility of the existing volume of employment. Every trade union will put up some resistance to a cut in money-wages, however small. But since no trade union would dream of striking on every occasion of a rise in the cost of living, they do not raise the obstacle to any increase in aggregate employment which is attributed to them by the classical school.

If Marxists can’t grasp the significance of these paragraphs for fascist state political-economy, what hope is there for those who imagine wages can be exchanged for labor power without wages slavery? The struggle against the state is nothing more than a struggle against the theft of uncompensated labor by the state in whatever form. If we cannot grasp this, we will continue to wander around as tiny little isolated sects, or sink further into lonely pessimism: The economic policy of the fascist state is nothing more than a device for compelling increasing quantities of uncompensated labor time from society.

Why is the Bank for International Settlements interested in Karl Marx? (FInal)

January 20, 2012 Leave a comment

Paul A. Samuelson: bald-faced liar and propagandist for the fascist state

(Or, more importantly, why should anarchists, libertarians and Marxists be as well)

So, has any reader of this blog heard that economists have conceded Marx was right after all? Have you at any time during the past 40 years heard an economist admit that Marx was correct in his transformation argument? I am really confused by this, because although Paul A. Samuelson declared Marx’s labor theory of value irrelevant in 1971, it is still being studied by BIS economists today. If I told you Marx’s theory was being studied by economists because Samuelson was a bald-face liar and a practiced dissembler, you would probably just yawn.

Of course, he was lying — he’s an economist. Economists are paid to lie and distort reality. They are employed by Washington not to explain economic processes, but to obscure them. To call an economist a bald-face liar, is simply to state he is breathing — nothing more.

But, to understand why Samuelson was lying, and why it was necessary that his lie stand unchallenged for forty years, we have to figure out the problem posed by Marx’s so-called “transformation problem”.

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Anarchism versus Marxism (Or, Dumb and Dumber, Part two)

January 17, 2012 5 comments

Marx (L) and Bakunin

I had a conversation with Tim (@timthesocialist) last night which was really interesting. I have not debated a Marxist about Marx in some time. I am really trying to understand the Marxist argument on the state — at least the Leninist wing of Marxism. As a Marxist by history this should be easy for me, but surprisingly it is not. I am looking for some distinction between anarchism and Marxism on the state — but it is quite difficult to find one.

Both anarchists and Marxists insist Marx’s theory involves something called the “worker’s state”, that replaces the present state. They both insist on this despite the lack of any reference to such an abomination in Marx’s own writings. Marx does indeed insist that had there been a successful revolution during his lifetime, the result would have been a “revolutionary dictatorship”. But, there are many curious features of his argument.

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Why is the Bank for International Settlements interested in Karl Marx? (Part three)

January 14, 2012 Leave a comment

In my previous post, I stated:

In reality, there was nothing in Bohm-Bawerk’s argument to be disproved. Bohm-Bawerk had indeed cited the essential contradiction at the core of capitalism. His problem, however, was to imagine the contradiction to be a defect of Marx’s theory, and not a fatal flaw laying at the heart of the capitalist mode of production itself.”

Bohm-Bawerk had inadvertently confirmed the rather grim future arrived at by Marx’s theory: Capitalism would kill the so-called free market, and in so doing, would destroy itself. It was, as Marx argued, creating its own gravediggers, a mass of directly social laborers who did not need it, and would see it as an impediment to their very survival, owing to obstacles it put in the way of its own operation.

By the 1970s, economists finally were forced to acknowledge there was in fact no inconsistency in Marx’s argument. Marx had, just as Bohm-Bawerk accused him, arrived at a theoretical description for why prices, although resting on the socially necessary labor time required to produce commodities, nevertheless appeared to reflect the prices of production of these commodities and not their labor times. It was not, as Werner Sombart feared, that from Marx’s labor theory of value “emerges a ‘quite ordinary’ theory of cost of production”, but precisely that Marx’s theory predicted from the first that the value of commodities must appear in the form of prices of production.

Moreover, Marx had demonstrated his proof almost in real time, so to speak, in front of his audience in a painstakingly detailed series of volumes — subject to the critical purview of his opponents. He had, as it were, made the elephant in the room — socially necessary labor time — disappear before the disbelieving eyes of his skeptical audience. It was a performance so dramatic and unprecedented, it took decades for the skeptics even to figure out what they had just witnessed with their own eyes.

The acknowledgement of Marx’s triumph took the form of a paper by Paul A. Samuelson, and was couched in the form of the complaint echoing that leveled against Marx by Sombart, as previously quoted by Bohm-Bawerk :

“…if I have in the end to explain the profits by the cost of production, wherefore the whole cumbrous apparatus of the theories of value and surplus value?”

Taking a cue from Sombart, Samuelson, in a paper titled “Understanding the Marxian Notion of Exploitation: A summary of the So-Called Transformation Problem Between Marxian Values and Competitive Prices”, introduced his so-called erasure method arguing,

It is well understood that Karl Marx’s model in Volume I of Capital (in which the “values” of goods are proportional — albeit not equal — to the labor embodied directly and indirectly in the goods) differs systematically from Marx’s model in Volume III of Capital, in which actual competitive “prices” are relatively lowest for those goods of highest direct-labor intensity and highest for those goods of low labor intensity (or, in Marxian terminology, for those with highest “organic composition of capital”). Critics of Marxian economics have tended to regard the Volume III model as a return to conventional economic theory, and a belated, less-than-frank admission that the novel analysis of Volume I — the calculation of “equal rates of surplus value” and of “values” — was all an unnecessary and sterile muddle.’

Samuelson gave a simple straightforward explanation of his “erasure method”:

I should perhaps explain in the beginning why the words “so-called transformation problem” appear in the title. As the present survey shows, better descriptive words than “the transformation problem” would be provided by “the problem of comparing and contrasting the mutually-exclusive alternatives of `values’ and `prices’.” For when you cut through the maze of algebra and come to understand what is going on, you discover that the “transformation algorithm” is precisely of the following form: “Contemplate two alternative and discordant systems. Write down one. Now transform by taking an eraser and rubbing it out. Then fill in the other one. Voila!

For all his genius, Samuelson argued, Marx had produced a theory which offered no greater insight into the social process of production than was already present in the form of mainstream economics. It could, for this reason, be entirely ignored.

Ignored also, however, would be the entire point of Marx’s “unnecessary and sterile” detour: namely, to demonstrate in comprehensive and theoretically ironclad fashion why the capitalism mode of production is doomed.

This only deepens the mystery of David Bieri’s interest in a theory routinely dismissed by economists as, at best, a vestigial remnant of classical political-economy. Why would this former bureaucrat of the Bank for International Settlements still be reviewing an obscure technical problem of a long dead theory?

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Why is the Bank for International Settlements interested in Karl Marx? (Part two)

January 13, 2012 5 comments

Bohm-Bawerk's "Marx and the Close of His System"

In the previous blog post, I argued that in each of the three great capitalist catastrophes of the 19th and 20th Centuries — the Long Depression, the Great Depression and the Great Stagflation — economists scurried to bone up on Marx in an effort to understand practical problems of state economic policy confronting them at the time.

Naturally, the connection between these catastrophes and interest in Marx intrigued me, since this guy Bieri is now interested as well. If Bieri were just another Marxian economist I could understand his interest but his connection to the BIS and Bankers Trust, London intrigued me. Bankers Trust, one of the many institutions with which Bieri has been associated, is not exactly your typical local community credit union. It was up to its neck in the dirty dealings that led to financial crisis, and has long been implicated with equally shady dealings in the market in general. Here is what Wikipedia has to say about it:

“In 1995, litigation by two major corporate clients against Bankers Trust shed light on the market for over-the-counter derivatives. Bankers Trust employees were found to have repeatedly provided customers with incorrect valuations of their derivative exposures. The head of the US Commodity Futures Trading Commission (CFTC) during this time was later interviewed by Frontline in October 2009: “The only way the CFTC found out about the Bankers Trust fraud was because Procter & Gamble, and others, filed suit. There was no record keeping requirement imposed on participants in the market. There was no reporting. We had no information.” -Brooksley Born, US CFTC Chair, 1996-’99.

Several Bankers Trust brokers were caught on tape remarking that their client [Gibson Greetings and P&G, respectively] would not be able to understand what they were doing in reference to derivatives contracts sold in 1993. As part of their legal case against Bankers Trust, Procter & Gamble (P&G) “discovered secret telephone recordings between brokers at Bankers Trust, where ‘one employee described the business as ‘a wet dream,’ … another Bankers Trust employee said, ‘…we set ‘em up.”

Perhaps I am just being a tad paranoid, but when a guy with these kinds of connections starts sniffing around dusty old volumes of Capital just before the outbreak of the financial crisis of 2008, I begin to wonder what’s up.

But, I’m getting ahead of myself, am I not? I have not yet even explained what all the fuss is about. This tale begins with a little known simpleton scribbler, whose name is probably unfamiliar to anyone outside of the field of economics: Eugen von Bohm-Bawerk.

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Why is the Bank of International Settlement interested in Karl Marx?

January 9, 2012 3 comments

I’m reading, “The Transformation Problem: A Tale of Two Interpretations”, by David Bieri.

According to his profile,

David studied economics at the London School of Economics and international finance at the University of Durham (UK). In 2006, he started his Ph.D. studies in SPIA.

From 1999 until 2006, David held various senior positions at the Bank for International Settlements, most recently as the Adviser to the General Manager and CEO. From 2002 to 2004, he held the position of Head of Business Development in which capacity he was responsible for new financial products and services and reserve management advisory for central banks. From 2004 to 2005, David worked as an economist in the BIS’ Monetary & Economics Department.

Prior to joining the BIS, David worked as a high-yield analyst at Banker’s Trust in London and in fixed-income syndication at UBS in Zurich.

What caught my attention is the notable resume of this author, which is quite unlike that of the typical Marxian economist. High-yield analyst, central bank bureaucrat, mainstream economist? This is not the sort of person you will find at your local Occupy campsite.

Why, I wondered, is the Bank of International Settlement interested in an obscure technical problem of Marx’s theory? So, I decided to give the paper a read.

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