Keynes Attempts To Generalize Marginalist Theory

In previous chapters, we saw that Keynes denied that the unpaid labor of the working class produced surplus value. So, how does surplus value — profit, interest, and rent — arise, according to Keynes, if the working class does not produce it?

Ricardo and Marx vs. Keynes

Ricardo, unlike Adam Smith, attempted to use the law of labor value consistently. He sensed that this law applied not only to simple commodity production but also to capitalism proper. Ricardo was only partially successful in this, but he was on the right track. He realized that price is a relationship between the commodities whose price is being measured and the money commodity — gold — in which the commodity’s price is reckoned.

Liberation Day

On April 2, President Trump announced his “Liberation Day” tariffs. As this blog concentrates on economic questions, this was the biggest event of the last month. But before I get to the tariff, I’ll look at other developments.

Kilmar Abrego Garcia lived and worked legally in Maryland since 2019. The Trump administration accused him of belonging to a gang, arrested and put him on a plane heading for a notoriously brutal El Salvadoran prison. He had not been convicted of any crime. They then claimed they’d committed an administrative mistake.

On April 10, the Supreme Court unanimously ordered the return of Kilmar Abrego Garcia. As of this writing (April 28), he remains imprisoned, and Trump has refused to follow the court’s order. [I wonder whether the high court regrets last year’s decision that even after leaving office, a president cannot be criminally prosecuted for any action taken while in office in pursuit of their duties? I don’t know the answer, but it seems the court is like a man sawing off the branch he is sitting on. -SW]

Keynes on the ‘Classical’ Marginalist Economists

In the second chapter of his “General Theory of Employment, Interest, and Money,” Keynes summarizes the theories of the “classical economists.” Keynes uses the same terminology that Marx uses and indeed borrowed the terminology from Marx. However, Keynes referred to the “classics” of marginalism, or rather, he lumped together the marginalists with the classical economists in Marx’s sense of the term.

The Origins of Keynes’s Views

Keynesian economics represented a major retreat from economic liberalism by bourgeois political economy under the blows of the Depression of the 1930s. But what was the doctrine that Keynesian economics reacted against?

Keynes and the Attempts to Mitigate Capitalist Crises of Overproduction

The Ideas of John Maynard Keynes

The ideas of the English economist John Maynard Keynes achieved their greatest influence during the 1960s and early 1970s. Keynes was widely credited by his followers among the economists and others in those days for saving capitalism.

Gaza Genocide Resumes as U.S. Wages War on Yemen

On March 17, the Gaza genocide resumed, first the blockade and then the bombing. It appears we are back where we were under Genocide Joe Biden. Up until then, Trump was better for the Palestinian people in one sense. After his election, negotiations paused the genocide. The pause began on January 19, the day before he became president.

Now the only difference is that, in theory, the Biden administration supported the so-called two-state solution that had been Washington’s official policy since 1993, with the Oslo Accords. The West Bank and the Gaza Strip would form a separate Palestinian state, while the rest of historic Palestine would belong to the Zionist entity, the Jewish State of Israel. Biden insisted that Gaza’s Hamas administration be replaced by the rule of the notorious collaborationist Palestinian Authority, under Mahmoud Abbas, who has acted as a Zionist agent. The Biden administration, like its predecessors, opposed anything like (bourgeois) democratic rule in Gaza.

Though he supported this approach in his first administration, Trump has now junked it. He’s made it clear that all Palestinians will have to leave Gaza, promising they will enjoy a wonderful life somewhere outside Palestine. In addition, the U.S. would own Gaza, transforming it into some kind of hotel casino resort, owned by U.S. capitalists that would include the Trump Organization itself.

Ricardo’s Theories of International Trade Challenged by the Crises of 1825 and 1837

In 1825, shortly after Ricardo’s death, the first global crisis of overproduction swept over Britain. A second global crisis erupted in 1837 with far more devastating results. It was followed by years of industrial depression and mass unemployment. Stormy class struggles broke out, from which came the Chartist movement, the first mass working-class political party. It was during the depression that followed the 1837 crisis that Marx and Engels were themselves radicalized.

The Ricardian Theory of International Trade

Our examination of the laws governing international trade begins with David Ricardo’s theory of comparative advantage. This theory has dominated bourgeois political economy as regards the theory of international trade for the last two centuries. It has survived the transition from his theory of value based on the quantity of labor socially necessary to produce a commodity of a given use value and quality to the modern marginalist theory of value. It has also survived the transition from the gold standard to the universal use of so-called fiat money.

Value, Price and Crisis

Marx noted that in the boom phase of the industrial cycle — the introduction of technical advances — state-of-the-art machinery will reduce the price of production while the general price remains stable or even rises. So prices tend to rise.