RE: 'Debunking Economics' - Ch. 10

[Clifford Poirot <cpoirot@xxxxxxxxxxx>]

My comments below:

	-----Original Message-----
	From:	Steve Keen [SMTP:stevekeen10@xxxxxxxxxxx]
	Sent:	Tuesday, May 23, 2000 2:29 PM
	To:	hliu@xxxxxxxxxxxxxx; pkt@xxxxxxxxxxxxxxxx
	Subject:	Re: Debunking Economics

	Hi Henry,

	I won't ignore it--it was a good read!

	On the language point, I agree that it both gives us the means to
think, and
	constrains what we think. This is one reason why I believe that
heterodox
	economics needs a theory of value if it is ever to become other than

	heterodox and supplant neoclassicism.
	[Clifford Poirot]
	Value is a tricky word, and the underlying mistake (IMO) of most
economists, Neo-classical, Marxist and Neo-Ricardian, is to confuse
different meanings of the term.

	We can have a theory of valuation that relates how people make
decisions to the monetary values they ultimately assign to goods and
services. Both NC theory and Marxist theory require an implicit or explicit
general equilibrium to fully and consistently relate value to prices. I do
not for a minute deny that Marxists can mathematicallly solve systems of
equations. I deny that this is a meaningful exercise.

	If there is no determinate equilibrium towards which economic
systems tend, then there can never be a consistent theory of value in the
above sense. The best we can do is to retreat to instrumental valuation- a
concept which has many of its own problems.

	What we should do is discuss where values-what we believe to be
good, true, beautiful, ugly, false, right and wrong come from. In other
words, when we discuss values, we should discuss ethics and the normative
implications for policy that we can derive from the field of ethics.

	What most theories of value do is confuse ethics with metaphysical
assumptions underlying determination of general equilibrium prices and then
pretend that ethics are not being discussed.

	The neoclassical theory of value
	provides a language which constrains how new students think about
economics,
	in a way which we know is wrong. But once students have learnt the
language,
	it becomes very difficult for them to accept a different way of
thinking
	about economics.

	We need a language which is as seductive as the neoclassical, but
not as
	wrong. A theory of value goes much of the way to providing that, but
one
	does not yet exist for PK thought.

	[Clifford Poirot]
	I do not see how an economic model which rests on the premise of
real economies evolving in real historical time can ever have a theory of
value as this term has been used in the past. Valuation of goods and
services is a constantly evolving, open ended process.