I have been reading some of the academic literature on the relative merits of a Basic Income Guarantee (BIG) and Job Guarantee (JG). In the academic literature, a BIG – for example, as proposed by Van Parijs – refers to a policy in which every citizen receives a basic income irrespective of labor force participation or employment status. A JG, as readers here will realize, refers to a guaranteed job at minimum wage for anyone who wants one. In opposition to the BIG, one argument advanced by Modern Monetary Theorists (e.g., here) concerns the value of the currency, which they define as the amount of labor time required to obtain it. In making their argument, however, they reason “at the margin”, somewhat reminiscent of neoclassical analysis. I think this is incorrect for a reason I will discuss.
Read it at heteconomist.com
Currency Value is Not Formed “at the Margin”
by Peter Cooper
2 comments:
Peter has been writing a lot of great stuff on this subject. I think he is probably misinterpreting Wray and Tcherneva, however.
I also don't think that the Marxian analysis of the price level in terms of the labor hours exchanged per unit of currency has received a lot of empirical support from subsequent research, including from those otherwise sympathetic to Marx's critique of capitalist processes of production, profits and employment.
Dan, you mentioned at my blog that you weren’t previously aware of the MMT definition of value of the currency. How can you be so sure I’ve misinterpreted? ;-)
As I’ve also mentioned in a recent reply to you, your comment about a lack of empirical support for Marx’s theory of (commodity) value is not relevant, but in any case misses the point of Marx’s theory, which does not predict price equal to value, except in aggregate, but rather price deviating systematically from value according to organic composition of capital. This is not the time or place to defend Marx’s theory of value, since it is not relevant to the current discussion, but I disagree with you on that as well. ;-)
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