Mariana Mazzucato - The Value of Everything - Making and Taking in the Global Economy

29. Ibid., p. 152.

30. C. Hill, The Century of Revolution 1603–1714 (London: Nelson, 1980), pp. 25–6.

31. D. K. Foley, Adam’s Fallacy: A Guide to Economic Theology (Cambridge, MA: Belknap Press, 2006).

32. J. A. Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954), p. 590.

33. ‘In every society the price of every commodity finally resolves itself into some one or other, or all of those three parts; and in every improved society, all the three enter more or less, as component parts, into the price of the far greater part of commodities.’ Smith, The Wealth of Nations , Book I, p. 153.

34. Foley, Adam’s Fallacy , p. 28.

35. T. R. Malthus, An Essay on the Principle of Population (1798; 2nd edn 1803; 3rd edn 1821); critical edn ed. P. James, 2 vols (Cambridge: University Press, 1989).

36. D. Ricardo, On the Principles of Political Economy and Taxation (Cambridge: University Press, 1951), ch. 5.

37. In other words, Ricardo did not believe that there would be enough productivity increase in agriculture to keep the price of food down. History so far has not confirmed Ricardo’s fear; there has been a lot of improvement in agricultural productivity (at least from the point of view of labour productivity), so food has not become a profit-choking part of production costs. See also Foley, Adam’s Fallacy , for a concise and illustrative discussion of Ricardo’s rent and population theory.

38. Ricardo, Principles of Political Economy, p. 71.

39. Another piece of Ricardian theory that has informed economics to the present day is his theory of comparative advantage to explain trade patterns.

40. M. Lavoie, Introduction to Post-Keynesian Economics (Basingstoke: Palgrave Macmillan, 2009), pp. 1–24.

41. J. M. Keynes, The General Theory of Employment, Interest and Money (London: Macmillan, 1936), ch. 24.

42. Ricardo, Principles of Political Economy , p. 150.

43. Ibid., p. 151 fn.

44. Ibid.

45. Ibid., p. 151.

46. This is the principle of primitive accumulation, the historical discussion of which is full of details of chilling violence and cruelty in Marx, Capital: A Critique of Political Economy , vol. 1 (London: Penguin Classics, 2004), Part VIII: Primitive Accumulation.

47. Already mentioned in K. Marx, Economic and Philosophical Manuscripts of 1844 (Amherst, NY: Prometheus Books, 1988).

48. Marx, Capital , vol. 1, ch. 1.

49. Ibid., ch. 8, p. 317.

50. Marx, Capital , vol. 3 (London: Penguin Classics, 1992), chs 38 and 39.

51. In vol. 3 of Das Kapital Marx built a theory of crises of capitalism around the problem of a tendency of the average profit rate to fall as capitalism developed. This is because the composition of capital – variable and constant – tended to shift towards more constant capital relative to variable capital. But that implied that there would be less and less labour power to create the surplus value, so it would shrink relative to the investments necessary on the part of the capitalist, resulting in a falling rate of profit.

52. Ibid., ch. 10.

53. In Marx’s time, ‘transferring money’ could involve transporting gold bullion from one country to another (Marx, Capital , vol. 3, ch. 19).

54. One of several passages to this effect in Marx ( Capital , vol. 3, ch. 17) reads: ‘Just as the labourer’s unpaid labour directly creates surplus-value for productive capital, so the unpaid labour of the commercial wage-worker secures a share of this surplus-value for merchant’s capital.’ The difficulty lies here: ‘Since the merchant’s labour-time and labour do not create value, although they do secure for the merchant a share of already produced surplus-value, how does the matter stand with the variable capital that the merchant lays out in purchasing commercial labour-power?’

55. Marx, Capital , vol. 3, ch. 17.

56. Ibid.: ‘To industrial capital the costs of circulation appear as unproductive expenses, and so they are. To the merchant they appear as a source of his profit, proportional, given the general rate of profit, to their size. The outlay to be made for these circulation costs is, therefore, a productive investment for mercantile capital. And for this reason, the commercial labour which it buys is likewise immediately productive for it.’

57. Marx ( Capital , vol. 3, ch. 23): ‘Money … may be converted into capital on the basis of capitalist production, and may thereby be transformed from a given value to a self-expanding, or increasing, value. It produces profit, i.e. , it enables the capitalist to extract a certain quantity of unpaid labour, surplus-product and surplus-value from the labourers, and to appropriate it. In this way, aside from its use-value as money, it acquires an additional use-value, namely that of serving as capital. Its use-value then consists precisely in the profit it produces when converted into capital.’

58. Marx, Capital , vol. 3, chs 21–36.

59. Marx, Capital , vol. 3, ch. 17: ‘All these [circulation] costs are not incurred in producing the use-value of commodities, but in realizing their value. They are pure costs of circulation. They do not enter into the immediate process of production, but since they are part of the process of circulation they are also part of the total process of reproduction.’

60. See I. I. Rubin, Essays on Marx’s Theory of Value (1928; Detroit: Black and Red Press, 1972), ch. 19 for a detailed discussion of how labour is or is not productive depending on which function of capital it is employed by.

61. H. P. Minsky, ‘The capital development of the economy and the structure of financial institutions’ (1992), Hyman P. Minsky Archive, paper 179.

62. A. Barba and G. de Vivo, ‘An “unproductive labour” view of finance’, Cambridge Journal of Economics 36(6) (2012): http://doi.org/10.1093/cje/ber022; Duncan K. Foley, ‘Rethinking financial capitalism and the “information” economy’, Review of Radical Political Economics , 45(3) (2013), pp. 257–68: http://doi.org/10.1177/0486613413487154

2. VALUE IN THE EYE OF THE BEHOLDER: THE RISE OF THE MARGINALISTS

1. J. B. Clark, The Distribution of Wealth: A Theory of Wages, Interest and Profits (New York: Macmillan, 1899), p. v.

2. A. Roncaglia, The Wealth of Ideas: A History of Economic Thought (Cambridge: University Press, 2005), ch. 4.

3. Léon Walras, Elements of Theoretical Economics , trans. and ed. by D. A. Walker and J. van Daal (1883; Cambridge: University Press, 2014), p. 5.

4. Roncaglia ( Wealth of Ideas , p. 278) quoted Howey to say that Wicksteed and Wieser were the first to use ‘marginal’ in 1884, and that ‘marginalism’ was not introduced until 1914.

5. Jeremy Bentham, A Fragment on Government (London: 1776), Preface, p. ii. Niccolò Machiavelli, in his masterpiece The Prince (1513), expressed similar reasoning.

6. Jean-Baptiste Say, Traité d’économie politique (Paris: 1803); Roncaglia, Wealth of Ideas , p. 165.

7. ‘By utility is meant that property in any object, whereby it tends to produce benefit, advantage, pleasure, good, or happiness (all this, in the present case, comes to the same thing), or (what comes again to the same thing) to prevent the happening of mischief, pain, evil, or unhappiness to the party whose interest is considered.’ Bentham, An Introduction to the Principles of Morals and Legislation (1789), quoted in W. S. Jevons, The Theory of Political Economy , ed. R. D. Collison Black (Harmondsworth: Penguin Classics, 1970), ch. 3.