Money and Finance
ABSTRACT
This paper argues that heterodox economists should put more emphasis on value theory in their analysis. While value is generally associated with price and thus indirectly with the “value of money”, this paper adopts the approach recommended by Robert Heilbroner: “The general problematic of value... is the effort to tie the surface phenomena of economic life to some inner structure or order.” Money’s value is not what it can purchase, nor is it simply derived from the labor embodied in the commodity used as money. As Heilbroner put it, “Value ‘theory’ is ... indispensable for understanding how the capitalist system, largely guided by price stimuli, tends toward some kind of determinant outcome.” This paper will synthesize contributions of Duncan Foley and David Graeber on the labor theory of value, Hyman Minsky’s approach to the relation between prices and production and allocation of the surplus, and the Modern Money Theory approach to the role of the state in the monetary system to demonstrate how value theory sheds light on the capitalist system, which is fundamentally a “monetary system of production.”
Key Words: Value, Price, Modern Money Theory, Labor Theory of Value, Instrumental Theory of Value
Cross Reference: Papers,Working Paper,Money and Finance
WP 18 Reviving Value Theory
L. Randall Wray, Levy Economics Institute | March 2024ABSTRACT
This paper argues that heterodox economists should put more emphasis on value theory in their analysis. While value is generally associated with price and thus indirectly with the “value of money”, this paper adopts the approach recommended by Robert Heilbroner: “The general problematic of value... is the effort to tie the surface phenomena of economic life to some inner structure or order.” Money’s value is not what it can purchase, nor is it simply derived from the labor embodied in the commodity used as money. As Heilbroner put it, “Value ‘theory’ is ... indispensable for understanding how the capitalist system, largely guided by price stimuli, tends toward some kind of determinant outcome.” This paper will synthesize contributions of Duncan Foley and David Graeber on the labor theory of value, Hyman Minsky’s approach to the relation between prices and production and allocation of the surplus, and the Modern Money Theory approach to the role of the state in the monetary system to demonstrate how value theory sheds light on the capitalist system, which is fundamentally a “monetary system of production.”
Key Words: Value, Price, Modern Money Theory, Labor Theory of Value, Instrumental Theory of Value
Cross Reference: Papers,Working Paper,Money and Finance