Theories of Value, Output,
Theories of value and theories of the general level of output (as opposed to theories of the output of particular commodities) are often treated separately, too little regard being paid to the congruence of the particular theories advanced. The objective of this chapter is to examine alternative theories of the determination of the general level of output in the light of the theories of value with which they are associated. The ultimate purpose of the exercise is to suggest a critique of attempts to reinterpret Keynesian analysis within the framework of orthodox neoclassical general equilibrium theory (microeconomics) and to contribute to the constructive task of relating Keynes’s principle of effective demand to the framework of an older tradition of economic analysis dating back to the classical economists and Marx.
The first section of this chapter is devoted to a discussion of the longperiod method in theories of value and theories of output. The second and third sections deal with theories of output set within the framework of classical and Marxian analyses—first the classical version of Say’s Law, then Marx’s rejection of Say’s Law and his discussion of the possibility of crises. The fourth section presents the neoclassical version of Say’s Law, exemplified by Irving Fisher’s theory of investment. The fifth section turns to Keynes’s theory of output as presented in the General Theory and subsequent articles, and the sixth section presents the interpretation of the General Theory generally known as the Neoclassical Synthesis. The seventh section is devoted to a critique of general-equilibrium analyses of rationing and unemployment. Finally, in the eighth and ninth