But a Frankenstein or orthodox Marxist should have predicted that the yields on Treasury Bills would remain depressed in a true slump and that debt-financed government spending would hardly nudge them upwards. Harvey did not understand this because he was not orthodox or Frankenstein enough, to use Begg’s ad hominem, red-baiting language.
Marxists (and former Marxists) have produced work more analytically sharp and/or empirically rich than anything produced by neo-classical economics—Anwar Shaikh, Duncan Foley, Alain Lipietz, Fred Moseley, and Meghnad Desai. But let’s just take the center of Beggs’ critique. By supply and demand analysis, neoclassical economics mean silly things as * stable* equilibrium prices and refuse to see the primacy of supply or changed real-cost conditions as the ultimate determinant of equilibrium price (to the extent that it exists) and quantity demanded and supplied. Beggs misinterprets the supposed knock-down quote. About it Hollander writes: “Were Marx alluding here to demand-equality at any price, including short-run market price, the assertion would be nonsensical; but he is in fact specifically concerned with equality at “market value”, or long run cost price, and insisting upon cost conditions as determining final equilibrium. Here is the real knock down quote, and Beggs does not even try to see how it stands in relation to neoclassical S and D analysis: Should the market-value [costs] change, this would also entail a change in the conditions on which the total mass of commodities could be sold. Should the market-value fall, this would entail a rise in the average social demand (this always taken to mean the effective demand), which could, within certain limits, absorb larger masses of commodities. Should the market-value rise, this would entail a drop in the social demand, and a smaller mass of commodities would be absorbed. Hence, if supply and demand regulate the market-price, or rather the deviations of the market-price from the market-value, then, in turn, the market-value regulates the ratio of supply to demand, or the centre round which fluctuations of supply and demand cause market-prices to oscillate. http://www.marxists.org/archive/marx/works/1894-c3/ch10.htm Beggs gets a bit closer to Marx’s position when he writes: “Alfred Marshall himself argued in an appendix to his *Principles of Economics *that his marginalist analysis did not undermine Ricardo’s theory of long-run value, because in the long run producers shift between sectors chasing abnormally high and fleeing abnormally low returns to their investments, so that supply conditions determine price. Demand matters in the long run only to the extent that the quantity produced and sold affects the cost of production, due to economies of scale, inputs whose supply can be increased only at increasing cost, etc. That demand or “social need” could influence socially-necessary labor time and therefore value, Marx was fully aware.” But in neither sentence can Beggs get himself to say that for Marx the law of value meant the primacy of supply or changed cost conditions.
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