A marxist perspective on the economy requires that there be some basic forces in the economy (albeit in constant flux) and that these create fundamental forces that become very, very hard for a government policy to overcome in the long run. In contrast, I think a left-keynesian perspective on the economy paints a picture of reliance on irrational herd reactions creating "unnecessary" problems that can be overcome by judicious government intervention. Of course the picture is never "day and night" - marxists acknowledge an enormous amount of "noise" and irrationality in the system and keynsians acknowledge some historical forces. The crux becomes which one is driving the system at this or that conjuncture.
Anwar is consistent and methodical. In "Measuring the Wealth of Nations" he mathematically strips away the "superficial" from prices to get down to the marxist fundamental of labor value in the American economy. He then regroups the national accounts so that they fall in the categories that Marx describes as the main actors. Empirically Shaikh then finds that the American economy behaves largely along the lines that Marx describes. Pretty important stuff.
I guess that in the presentation that Doug describes, Shaikh uses the same methods to show that prices of American imports (even after the exchange rate) also stay linked to the underlying productive forces in the foreign. This also seems pretty important - i.e. it is a first piece of evidence in a chain that would show that the global economy also basically moves along lines described by Marxists. But I am not so sure it is important to that the NYSE or some other market moves in explicable ways - as we know, not much actual investment actually comes from the money in the market anyway (since only the initial placement serves this role).
My biggest problem is that I don't yet have a feel for math operations that Anwar has used to get his results. In today's world, we all have to look for data that has been "tortured enough to confess the results". Does anyone have a feel for Anwar's math enough to comment on the plausibility of his very powerful conclusions?
I have the feeling that his dense work is one of those publications that will only show its full consequences over a long time. Definitely understudied.
Paul
Doug Henwood wrote:
>I don't know if he's published this material. I saw him give a talk
>based on the research at the New School a couple of years ago. He and
>his grad students had done the work on lots of countries/currencies,
>and he had lots of very impressive charts to prove his point, with
>the market exchange rates bouncing around the relative productivity
>line.
>
>Shaikh applies similar reasoning to his analysis of the stock market.
>In that case, the "fundamental" is what he calls the marginal profit
>on new investment, which he says explains the stock market. (If
>investment grows by $50 billion, and profits by $5 billion, the
>marginal profit on new investment is 10%.) I have two problems with
>this. One is that while the exchange rate - if you take it to be the
>macro price of a country's goods on world markets - is determined by
>competitive forces in markets for traded goods. There's a mechanism
>to explain the correlation. With the stock market, there's no such
>mechanism; no one except Anwar has ever observed a marginal rate of
>profit on new investment. I think what he's capturing is the business
>cycle effect. That short-term determination of stock prices is what
>he set out to refute: he doesn't want to believe there's anything
>irrational about capitalist processes, and the short-term,
>sentiment-driven picture of financial markets that Keynesians from
>Maynard himself down to Robert Shiller
><http://www.econ.yale.edu/~shiller/> have drawn disturbs him
>immensely. But I think he's provided inadvertent confirmation of this
>analysis: the stock market is driven by the present, recent past, and
>likely immediate future - and is most definitly not a dispassionate
>discounter of long-term performance.
>
>Doug
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