Hi D. T.,
Thanks for this - there's a lot I agree with in the perspective you put forward. But I think that all three of the major 'three rejections' you mention would get fairly wide support in the melange of post-Keynesianism, Marxism and institutionalism that makes up heterodox economics today. I understand the urge to go back to first principles and at some point anyone who wants to go beyond eclecticism has to do that for themselves or align with someone who has. My only concerns are that there's no point in building more unnecessary walls in an already balkanised, marginal field, and also no need to reinvent wheels and call them something different. Following from that, it's maybe more interesting to turn this into a discussion of the substantive issues - where there is quite a bit of common ground.
> 1. rejection of dual-quantity theories of value
> The first says that observable financial quantities cannot be explained by
> some other unobservable quantities, abstract labour-time in the case of the
> LToV.
Yes - my view is that the structure of prices emerges from the interaction of a number of different factors and that's it's wrong to reduce them to a single factor. The quantification of all these qualitatively different factors happens through exchange for money, and there's no other single 'twin' determinant factor prior to exchange. And that's not to commit the cardinal sin (in Marxian circles) of 'exchange-determined' value - because the other factors involve strategic production for exchange, depending on technology, prior accumulation, class relations in production processes, prior distribution of income, consumption preferences and modes of competition...
Ever since Sraffa at least Marxists have been dealing with rejections of dual theories of value - but you can take this view of value without necessarily taking a Sraffian line on the determination of relative prices. I think Marx himself puts forward a complex, almost Marshallian theory of relative price in Vol 3 of Capital, focusing heavily on the processes of competition.
> 2. rejection of the duality between 'real' and 'nominal' spheres
>The second says that we have no basis to proclaim some separation
> between a real sphere of production and a nominal sphere of financial
> representation. In part, this is because we have no way of quantify a
> supposedly 'real sphere.' This creates problems for explanations of the
> recent crisis on the basis of a so-called 'bubble.' Prices were supposedly
> inflated; against what? What ought prices to have been? How can we tell?
I think this is a point that is absolutely central to Marx's vision - that capital is nothing but money put into circulation in the strategic pursuit of more money. It's also fundamental to Keynes: as he puts it in the General Theory: "The division of Economics between the Theory of Value and Distribution on the one hand and the Theory of Money in the other is, I think, a false division... One of the objects of the foregoing chapters has been to escape from this double life and to bring the theory of prices as a whole back to close contact with the theory of value." [p. 293]
In both visions, the system generating the structure of prices is utterly blind to any imposed framework distinguishing between a price level and relative prices - price is nothing but the relative price of each commodity to money. However, the fact that money is only wanted for exchange and as a liquid store of value does give the concept of 'real value' and a 'price level' some meaning. It will always face some form of the index number problem because it's not really 'there', generated by the system itself, it's always an epistemological construct. But it has meaning and real effects back upon the system because people don't generally pursue money for its own sake.
Marx had no need to deal with these issues specifically in the way we do, with reference to price inflation, because the gold content or backing of money always ultimately anchored the relative price of each commodity to money in the long run. There was no index number problem because there was no concept of a price level for the classical economists, and value in terms of non-convertible money tended to be expressed in terms of fluctuations in the value of that money relative to gold. Keynes famously rejected the concept of a quantifiable 'real output' - "To say that net output to-day is greater, but the price level lower, than ten years ago, is a proposition of similar character to the statement that Queen Victoria was a better queen but not a happier woman than Queen Elizabeth - a proposition not without meaning and not without interest, but unsuitable as material for the differential calculus." [GT, p. 40] He preferred to measure output by the 'labour units' used to produce it, and with fewer qualms than Marx about the problems of reducing qualitative labour into units. But later in the General Theory he is driven to talk about real output as we know it (e.g. Ch 21), and with the differential calculus too - because it really does have some meaning, however problematic.
I fully agree with the idea that capital is always financial and that a firm distinction cannot be drawn between 'real' and 'financial' accumulation. But again this is central to both Marx and Keynes's treatments of the relations between interest and profit - Marx explores it in terms of fictitious capital etc. Keynes - especially in Chatpter 17 of the GT - treats money, financial and productive assets on the same level, as assets substitutable between one another as agents manage their portfolios in search of the highest expected yield (including liquidity as a form of yield). Post-Keynesians have built on this, especially Minsky, whose oeuvre is practically an extended riff off Chapter 17.
I agree that talk about bubbles is problematic if it's taken to mean there is a fundamental value (these days often supposed to be the historical average of some ratio or another) asset prices ought to revert to. But I don't think it's meaningless - it's a bubble if the price level of some class of assets is unsustainable, if there are forces which will act to reverse those price increases.
> 3. rejection of the duality between 'economy' and 'politics'
>The
> last says that accumulation - which they argue is judged solely in financial
> terms and must be judged *differentially* - cannot be explained by any one
> set of institutions that can be described as the 'economy,' but instead
> depend on a vast, diverse array of social relations that transcend any
> analytical division between 'economy' and 'politics.' That is why they
> cannot be dismissed as merely more thinkers talking about "cost-plus
> pricing, with a differential profit margin depending on
> market power." The power of capitalists is far more diverse and complex than
> that.
As a broad proposition, this is completely uncontroversial - it would be hard to find a heterodox economist who did not agree that the economy was social through and through and economics is a social science. But to say value depends on 'power' is not to say very much at all - as Foucault says, power is essentially qualitative, not quantitative, and inherent in a system rather than individuals. I don't know what bringing power into value determination does, unless it's broken down into more specific relationships. Maybe you could explain what is meant by the emphasis on 'differential accumulation' - my foggy memory of B + N suggests it has something to do with dividing firms into to categories along the lines of the old 'monopoly' and 'competitive' branches of capital.
Mike Beggs