|Influences||Thorstein Veblen, Karl Marx, Michał Kalecki, Cornelius Castoriadis, Lewis Mumford|
Power theory of value,|
|Information at IDEAS / RePEc|
Jonathan Nitzan is Professor of Political Economy at York University, Toronto, Canada. He is the co-author (with Shimshon Bichler) of Capital As Power: A Study of Order and Creorder, published 2009. Their writings focus of the nature of capital in capitalism and provide an alternative view to that of Marxist and neoclassical economics. In their theory capital is the quantification of power. Central to their theory is the concept of differential accumulation where firms strive to profit more by beating the average profit level.
Nitzan and Bichler share an intellectual legacy with institutional political economists such as Thorstein Veblen. In particular, they share Veblen's explanation that business exists with the end of pecuniary (monetary) gain and not the accumulation of goods of consumption or of physical machines.
Power theory of value
Nitzan and Bichler argue that it was never possible to separate economics from politics. This separation is required to allow for neoclassical economics to base their theory on utility value and for Marxists to base the labour theory of value on quantified abstract labour. Instead of a utility theory of value (like neoclassical economics) or a labour theory of value (as found in Marxist economics), Nitzan and Bichler propose a "power theory of value". The structure of prices has little to do with the so-called "material" sphere of production and consumption. The quantification of power in prices is not the consequence of external laws—whether natural or historical—but entirely internal to society.
In capitalism, power is the governing principle as rooted in the centrality of private ownership. Private ownership is wholly and only an act of institutionalized exclusion, and institutionalized exclusion is a matter of organized power. And since the power behind private ownership is denominated in prices, Nitzan and Bichler argue, there is a need for a power theory of value. There is, however, a causality dilemma to their argument that has drawn criticism: power is based on the ability of firms to set monopoly prices yet the ability to set prices is based on firms possessing a degree of power in the market.
Capitalization, in their theory, is a measure of power, as illuminated through the present discounted value of future earnings (while also taking into account hype and risk). This formula is basic to finance which is the overarching logic of capitalism. The logic is also inherently differential as every capitalist strives to accumulate greater earnings than their competitors (but not profit maximization). Nitzan and Bichler label this process differential accumulation. In order to have a power theory of value there needs to be differential accumulation where some owners' rate of growth of capitalization is faster than the average pace of capitalization.
- Capital as Power: A study of order and creorder. Nitzan, Jonathan and Shimshon Bichler. 2009. Routledge. (Complete book available as free pdf.)
- The Global Political Economy of Israel. Nitzan, Jonathan and Shimshon Bichler. 2002. Pluto Press.
- The Bichler and Nitzan Archives
- Video: Jonathan Nitzan speaks on the political economy of the Iraq invasion, Harvard Law School, March 18, 2008
- The Other School of Economics: an introduction to 'Capital as Power', Jonathan Nitzan and Shimshon Bichler. 2009. Routledge.