Abstract
This article is the first part of “A General Theory of Value and Money” and sets out the foundations of an axiomatic theory of value and money. Its purpose is to equip the public to explain the four facts that define the modern capitalist economy: the long-term post-war decline of the economies of the global North, the financial instability which produced the 2008 crash, the prolonged post-war growth in inequality between the global North and the global South, and the exceptional 30-year growth of China. The axiomatic method is poorly understood among economists. It allows us to interrogate empirical evidence in a systematic way, and is therefore the necessary precondition for an inductivist, scientific enquiry into economic events, that is, an enquiry whose starting point is the explanation of facts. The second part of “A General Theory of Value and Money,” to follow, deals with the empirical conclusions, especially the analysis of accumulation, the rate of profit, and financial crashes.
Highlights
This article sets out the foundations of an axiomatic theory of value and money
WRPE Produced and distributed by Pluto Journals www.plutojournals.com/wrpe/. It seeks to establish the minimal principles needed to study such phenomena free of the doctrinaire presuppositions which dominate economics, and which lead to conclusions so profoundly at odds with the facts (Freeman 2020) that political economy needs to be refounded if it is to act as a genuine science at the service of human emancipation
Why start with an axiomatic framework? Why not, for example, start where the classics began, with the role of labour, or with Keynes’s analysis of money and the circular flow of income? Or with von Böhm-Bawerk’s celebrated distinction between subjective and objective value concepts, or with Walras’s seminal equilibrium formalization of marginal value theory? The answer lies in the religious character of economic thought (Freeman 2018b), which converts the history of the subject into a series of concerted attempts to eliminate socially uncomfortable conclusions from economic theory
Summary
This article sets out the foundations of an axiomatic theory of value and money. Its purpose is to equip the public to explain four facts that define the modern world economy: the long-term decline of the economies of the global North, the financial instability which produced the 2008 crash, the prolonged post-war growth in inequality between the global North and the global South, and the exceptional thirtyyear growth of China.. The axiomatic approach, commonly recognized as the foundation of rational mathematical enquiry (Hazewinkel 2001), is a method for proceeding from the most abstract to the most concrete forms of reasoning about reality It can ground an inductivist scientific approach, whose purpose is to explain observed facts, by structuring our assumptions so that the most general and least restrictive hypotheses govern the most specific, letting us test them in an organized way. He claims, we can reason as if the leaves desired the sun, even though no evidence of this desire can be found This pseudo-scientific method is beyond rescue as a means of analysing social phenomena: it insulates from scrutiny the assumptions that produce wrong predictions (for example, that financial markets behave as if they were markets in goods), whilst preserving intact their apologetic power.
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