Value Theory and Business Cycles

Value Theory and Business Cycles

Value Theory and Business Cycles

Value Theory and Business Cycles

Excerpt

The past two decades have brought forth a vast number of books and articles on business cycles and price movements. Most of these treatises have dealt with description, quantitative measurement, causes and cures. The views presented have been highly divergent, and in many instances distinctly contradictory. A partial explanation of this situation would seem to lie in the fact that many have proceeded directly to an analysis and explanation of price movements and business cycles without recognizing that these phenomena are definite problems in applied economic theory, especially value theory.

It is the purpose of the present study to show the vital relation between business cycle theory and value theory. In fact, the study is intended to contribute quite as definitely to the economics of value as of business cycles.

Book I deals with embodied value theory and price movements. The analysis appears to show that no embodied value theorist can logically explain a business cycle. He either involves himself in a dual theory of value, a logical inconsistency, or explains nothing but a secular trend. The presentation is quite critical, since it deals, as we believe, with the "false trails," based upon an erroneous theory of value, formulated by Ricardo, and utilized in a modified form by the Socialists, Anarchists, Greenbackers, and those afflicted with "Lawism."

Book II deals with business cycles in relation to the marginal utility theory of value, as developed by the Austrian School. The "fore-runner" of this theory was T. R. Malthus, who coined the term "Commanded Value." Malthus serves as a logical starting point for the consideration of business cycles, first, because he stressed the importance of "short run" factors, and second, because his value approach was from the demand . . .

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