Launch of “Marx and Hayek” by Eric Aarons

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Eric Aarons’ book Hayek ver­sus Marx: And Today’s Chal­lenges will be launched at Glee­books on Fri­day April 24th at 6pm. I will make an open­ing speech about the book and its remark­able author. There will be pre-launch drinks from 6 till 6.40.

Atten­dance is free, but places are lim­ited. Please con­tact Glee­books on (02) 9660 2333, or click on the link to Request a place on Glee­books’ auto­mated book­ing form.  Glee­books is at 49 Glebe Point Rd, Glebe; the launch will take place in the upstairs room, which can accom­mo­date about 100.

This is Eric’s 4th book. In a theme devel­oped in the pre­vi­ous two, he explores the com­pet­ing, and flawed, philoso­phies of Karl Marx and Friedrich Hayek, espe­cially in the light of the eco­log­i­cal chal­lenges of today. Quot­ing from the pro­mo­tional mate­r­ial for the book:

 The aim of the book is to stim­u­late the realign­ment of polit­i­cal, the­o­ret­i­cal and philo­soph­i­cal think­ing that is now begin­ning in response to global warm­ing. The author pro­vides an exam­i­na­tion of the the­o­ries of the most promi­nent social philoso­phers of the 19th and 20th cen­turies — Karl Marx and Friedrich Hayek. He does so in the belief that the work of these two thinkers, in their com­mon­al­i­ties and dif­fer­ences, suc­cesses and fail­ures, con­tain impor­tant indi­ca­tors of the con­tent of a social phi­los­o­phy suited to today’s con­di­tions. 

The book pro­ceeds in the con­text of the fail­ure of the attempts by fol­low­ers of Marx, hav­ing achieved polit­i­cal power, to realise the objec­tives they took to issue from his the­o­ries, on the one hand, and of the ear­lier suc­cesses, but now emerg­ing fail­ures of the neo-lib­eral phi­los­o­phy of Hayek to cope with the with the envi­ron­men­tal out­comes of those very suc­cesses, on the other. In doing so, the book will inci­den­tally cri­tique post­mod­ernism, because of its claim to be ‘The­ory’ as such, which for a gen­er­a­tion impeded gen­uine the­o­ret­i­cal and philo­soph­i­cal work. 

It should be a stim­u­lat­ing night. I look for­ward to see­ing some blog mem­bers there–especially those who have an inter­est in Marx­ian or Aus­trian phi­los­o­phy and eco­nom­ics.

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  • maveri

    Lud­wig von Mises

    Sorry if this is off topic but I couldn’t see that there is any way of start­ing your own topic here?

    Any­how — as to the above ( Lud­wig von Mises ), any­how heard of his work and what do they think of it?

    Appar­ently the fol­low­ers of his eco­nomic the­ory also pre­dicted this cri­sis as well.

    I’ve wiki’d him and vis­ited their web­site ( ) but I’d like to know what peo­ple here fol­low­ing Steve Keen think of him.


  • Ernie


    Lud­wig von Mises memo­r­ial web site is one of the Aus­trian school of eco­nomic thought sites, Austrian’s get men­tioned a bit here in many threads.

    Like pretty much most schools of eco­nomic thought, the Austrian’s have some good bits, and they have some bad bits. The best way to treat them is cherry pick the good bits, ignore the rest.

    - Ernie.


    On the cash hand­outs; sorry mahaish- I couldnt dis­agree with you more. Hand­ing out money from the pub­lic purse has bug­ger all to do with stim­u­lous. It is all about shoring up polls dur­ing a time of eco­nomic hard­ship. This Govt, like all oth­ers, keeps a weather eye on the cal­en­dar, another on the polls. This is no dif­fer­ent and bla­tantly so.

    Frit­ter­ing away our hard won suplus on ludi­crous the­o­ries like these hand­outs is scan­dalous and stu­pid. And to be hon­est, it speaks to just how une­d­u­cated Aus­tralians in gen­eral are thet they would con­sider this absur­dity a good idea , like Man­nah from heaven.

    Note the tone change in the Govt this last cou­ple of weeks, espe­cially Swan. They are now clearly wrong­footed, see­ing now the GFC will be with us MUCH longer than first thought, throw­ing their finance cal­cu­la­tions down the toi­let. This puts seri­ous strain on fund­ing Australia’s exter­nal oblig­a­tions. The answer as always will be to raise taxes to pay for the prior stu­pid­ity and vote buy­ing.

    The Govt would have been able to pre­serve more jobs by giv­ing away money in the form of tax cuts to small and medium businesses,increasing pen­sion­ers ben­e­fits, invest­ing in APPROPRIATE infra­struc­ture as well as with­hold­ing cash for use later on those feel­ing it hard­est- when the real sh**storm starts.

    We are being fat­tened up for the slaugh­ter and smil­ing all the way.

  • Not an opti­mist

    There was an intrigu­ing post by a guy named Geoff Cro­ker on “Busi­ness Spec­ta­tor on Fri­day, which I have repro­duced below.

    I say “intrigu­ing” because it states that Sep­tem­ber 2009 has long been being a key date for our debt bur­den to come home to roost. Can any­one shed any fur­ther light on where this comes from? 

    Time to pay the piper
    TOPIC : Inter­est rates

    Low­er­ing our cash rate will have no imme­di­ate or mid-term effect on the econ­omy. (Rates real­ity check, April 24.)

    We have reached the point where a lower cash rate will not be passed on to con­sumers or busi­nesses. It will make bor­row­ing more dif­fi­cult, higher inter­est attracts money. The only thing it can do is lower the Aus­tralian dol­lar.

    Its crunch time on Australia’s $700 bil­lion of net for­eign debt. This was always going to bite us in Sep­tem­ber 2009 as pre­dicted since 1980. Yes peo­ple have known just when our debt would hurt us for that long. The Howard/Costello plan was to dig our way out of debt. t almost worked but was a dan­ger­ous strat­egy. Now we are going to pay the piper. SME’s that import prod­uct are about to be smashed. Take a close look at New Zealand. If there’s no dra­matic upturn in min­eral prices that’s us by Sep­tem­ber 2010.

    So expect a dra­mat­i­cally weaker Aus­tralian dol­lar, say $0.61–2, and for local prop­erty to take a hit.

    Geoff Cro­ker 24 Apr 2009 10:58 AM

  • Moz

    Hi Mahaish.

    I fully agree, what is ratio­nal about hous­ing in Aus­tralia. What is ratio­nal or log­i­cal about the phrase ‘house prices only ever go up’(I still don’t see how 10% com­pound­ing can go for­ever). It is very ratio­nal though for a real estate agent or bank to ped­dle this as they have a lot to gain from ris­ing prices and increased demand (real or not). 

    After all a real estate agent is not likely to care too much as long as there is demand to keep flip­ping homes as it is all com­mis­sion based. Banks too have great incen­tives to keep cre­at­ing loans as it is not just about inter­est but fees (com­mis­sion) to strike the loan. So to us it is very irra­tional, but to oth­ers it makes per­fect sense and in fact their entire lively hood depend on it.

    Unfor­tu­nately a lot of peo­ple are going to get burned by the belief that a house is an invest­ment rather than a dwelling to be used and enjoyed.

    I’m glad I don’t own and prob­a­bly will not until the com­mit­ments required to do so are far more bal­anced with life.

  • Lyon­wiss


    The Aus­trian school has a much more accu­rate descrip­tion of human action in the econ­omy. The von Mises view is that peo­ple makes mis­takes, not because they are irra­tional but the world and human beings are com­plex, where accu­rate eco­nomic cal­cu­la­tions are impos­si­ble. In boom times, peo­ple think they last for­ever and make mis­cal­cu­la­tions and
    mal­in­ves­ments which are exposed as such in eco­nomic down­turns. Mar­kets are the final arbiters of indi­vid­u­als’ good and bad deci­sions and they pay for their mis­takes, which is essen­tial for eco­nomic devel­op­ment.

    Aus­tians are par­tic­u­larly anti-gov­ern­ment, because gov­ern­ments (politi­cians and bureau­crats) are sub­ject to the same com­plex world and there­fore make mis­takes. But the impor­tant dif­fer­ence is gov­ern­ments do not pay for their mis­takes or learn from them. Even worse, by their mis­in­for­ma­tion, lies and decep­tion, they make eco­nomic cal­cu­la­tions for firms and indi­vid­u­als even more dif­fi­cult than they need to be. Wildly fluc­tu­at­ing mon­e­tary poli­cies might mist­ime and exac­er­bate the eco­nomic cycle and could paral­yse invest­ment deci­sion mak­ing of firms and indi­vid­u­als.

    Aus­tri­ans are nat­u­rally alert to eco­nomic mis­takes, par­tic­u­larly by gov­ern­ments. Hence it is not sur­prs­ing that many of the early warn­ings of GFC came from Aus­tri­ans and they are now also crit­i­cal of gov­ern­ment inter­ven­tions, which are vir­tu­ally unac­count­able in a time of cri­sis. Clearly the Aus­tri­ans are closer to the truth about the world than the view of neo­clas­si­cal equi­li­birum with per­fect fore­sight. They also have some inci­sive cri­tiques of other schools of eco­nom­ics, par­tic­u­larly their pre­tense to be sci­ence (Hayek called it sci­en­tism).

    Unfor­tu­nately, the Aus­trian solu­tion of lib­er­tar­ian free-mar­kets has not really worked either, even though they blame gov­ern­ments for mar­ket dys­func­tion. For the Aus­tri­ans to have greater influ­ence, they need to offer con­crete, viable alter­na­tives to cur­rent gov­ern­ment actions, the free-mar­ket mantra just doesn’t sell now. I fol­low the Aus­tri­ans to pre­pare for the worst, not nec­es­sar­ily because I think the worst will hap­pen.

  • joshua

    Read some more BS by Christo­pher Joye

    He spend a lot of time churn­ing out one BS arti­cle after another about how rock solid Aus­tralian res­i­den­tial realestate is then why the need for gov­ern­ment guar­an­tee on mort­gages?

    Oh and why couldn’t we go fur­ther and back­track a bit and have the gov­ern­ment guar­an­tee our super and shares?

  • maveri

    Lyon­wiss — a big thank-you for the descrip­tive reply — much appre­ci­ated.

    Your answer has given me quite a good overview.

    Thanks once again…


  • lyon­wiss

    I’m not sure whether you read your own stuff but there are so many log­i­cal errors in this:

    In boom times, peo­ple think they last for­ever and make mis­cal­cu­la­tions and
    mal­in­ves­ments which are exposed as such in eco­nomic down­turns. Mar­kets are the final arbiters of indi­vid­u­als’ good and bad deci­sions and they pay for their mis­takes, which is essen­tial for eco­nomic devel­op­ment.

    Aus­tians are par­tic­u­larly anti-gov­ern­ment, because gov­ern­ments (politi­cians and bureau­crats) are sub­ject to the same com­plex world and there­fore make mis­takes. But the impor­tant dif­fer­ence is gov­ern­ments do not pay for their mis­takes or learn from them. Even worse, by their mis­in­for­ma­tion, lies and decep­tion, they make eco­nomic cal­cu­la­tions for firms and indi­vid­u­als even more dif­fi­cult than they need to be. Wildly fluc­tu­at­ing mon­e­tary poli­cies might mist­ime and exac­er­bate the eco­nomic cycle and could paral­yse invest­ment deci­sion mak­ing of firms and indi­vid­u­als.”

    1. Think­ing good times will last for­ever in spite of clear his­tor­i­cal evi­dence to the con­trary is ratio­nal?
    2. Why are mar­kets “the final arbiters?”. Can mar­kets never be wrong?
    3. Of course gov­erne­ments pay for their mis­takes. That is what elec­tions are about.
    4. Mis­in­for­ma­tion lies etc is not the pre­serve of gov­ern­ments. In gen­eral, in fact, if want objec­tive infor­ma­tion I feel safer going to a gov­ern­ment or quasi-gov­ern­ment agency.
    etc. etc.

    I don’t know where to start really. I can­not say though whether this is a fair
    rep­re­sen­ta­tion of the Aus­trian school, because I don’t really have a clear idea of what their model is.

  • By the way I didn’t list it but in case peo­ple don’t know wrt the last sen­tence
    “Wildly fluc­tu­at­ing mon­e­tary poli­cies might mist­ime and exac­er­bate the eco­nomic cycle and could paral­yse invest­ment deci­sion mak­ing of firms and indi­vid­u­als.”

    Well mon­e­tary pol­icy mostly is fairly pre­dictable and it has been very suc­cess­ful in reduc­ing the ampli­tude of nor­mal busi­ness cycles. The prob­lem lies else­where (explod­ing debt — espe­cially con­sumer debt — and explod­ing asset prices). Busi­ness debt is also impor­tant, but in bank­rupcy the assets don’t dis­ap­pear, they just get real­lo­cated.

    I don’t believe the Aus­trian claim that mal­in­vest­ment is dri­ven by mon­e­tary pol­icy — mal­in­vest­ment is a nor­mal fea­ture of cap­i­tal­ism and part of its strength as well as its weak­ness — and mon­e­tary is not some secret and arbitary process but an endoge­nous part of the sys­tem.

  • Per­son­ally,
    I think if we want to lis­ten to an old school of thought, we should be tak­ing Henry George more seri­ously rather than Hayek or von Mises.

  • hyper­pro­duc­tive

    just came across a very inter­est­ing arti­cle on the inter­play between energy and eco­nom­ics

    the idea appears a lit­tle under devel­oped, but I’m sure will appeal to read­ers here

  • I think the two phe­nom­e­non (Peak Oil & WFC) are two dif­fer­ent phe­nom­e­non, but they inter­act with each other. I don’t think it is good to con­fuse them.

    Peak Oil prob­a­bly brought for­ward the cri­sis (by affect­ing US house­hold cash flow), and Peak Oil means it is even more impor­tant to con­trol debt going for­ward (because growth is likely to be slower) but they are not the same thing. 

    Peak Oil is a prob­lem with­out a debt cri­sis and a debt cri­sis is a debt cri­sis with­out peak oil.

  • hyper­pro­duc­tive

    Hi Rea­son, I agree. But I think it is an impor­tant point. Grow­ing the econ­omy requires grow­ing energy sup­ply or improv­ing energy effi­ciency.

    There­fore your abil­ity to growth the econ­omy is inher­ently linked to 

    1 — how much energy you expend to secure the energy you need. The less return on energy, the less energy avail­able for use in other eco­nomic activ­ity.

    2 — the effi­ciency with which you put energy to use for pro­duc­tive means once you have it.

    Devel­oped nations have only really decou­pled energy growth and GDP growth by out­sourc­ing pro­duc­tion to the devel­op­ing world — i.e. as a rule, glob­ally we don’t do well on the effi­ciency front. I’d sug­gest there­fore that glob­ally, our eco­nomic for­tunes are still very closely linked with our abil­ity to secure high rates of energy return on ene­gry invested

  • Is that the same Eric Aarons as at Wikipedia?

    Eric Aarons (born 1919) is a mem­ber of the third of four gen­er­a­tions of the Aarons fam­ily who played lead­ing roles in the Com­mu­nist Party of Aus­tralia (CPA). …
    Aarons played an impor­tant role in the party’s work from the mid-1940s to the wind­ing up of the party in the early 1990s. He rose to be in charge of party edu­ca­tion, to be a lead­ing the­o­rist and author, a pow­er­ful advo­cate for de-Stal­in­i­sa­tion of the CPA and was one of three peo­ple who jointly replaced his older brother, Lau­rie Aarons, as CPA National Sec­re­tary in 1976. 

    Steve, you say that “there’s no way” that Aarons has bought into any par­tic­u­lar ide­ol­ogy 100%. How­ever, it’s dif­fi­cult to imag­ine this author pre­sent­ing an unbi­ased opin­ion.

  • jad

    Hi Steve

    I very much enjoyed read­ing “Debunk­ing Eco­nom­ics” sev­eral years ago. After recently watch­ing David Harvey’s video lec­tures on “Read­ing Cap­i­tal” and read­ing Vol­ume 1, I decided to revisit you crit­i­cisms of the labour the­ory of value, which I didn’t have the back­ground knowl­edge to grasp when I read you book.

    Hav­ing now read your paper on the Demise of Marx’s labour the­ory of value, I am a bit con­fused re your argu­ment. You come to the con­clu­sion that com­modi­ties other than labour power could be a source of sur­plus value. 

    How­ever, in chap­ter 1 of Vol­ume 1 Marx defines value as socially nec­es­sary labor time, this being the one attribute that all com­modi­ties have in com­mon and which there­fore makes them com­men­su­rable. Chap­ter 6 to 8, as I read them, pre­sup­pose the def­i­n­i­tion of value given in chap­ter 1. So it seems to me that, by def­i­n­i­tion, a machine could not pro­duce any more value than was embod­ied in its pro­duc­tion and that the only com­mod­ity that could do this is labour power (due to the fact that the socially nec­es­sary labour time embod­ied in its pro­duc­tion is less than the time for which it is used by the cap­i­tal­ist).

    Of course, a lot of crit­i­cisms can and have been made of the valid­ity of Marx and Ricardo’s def­i­n­i­tion of value, but this seem to me to be a wholly sep­a­rate issue from whether means of pro­duc­tion can be a source of sur­plus value, which, by def­i­n­i­tion, they can‘t be. Any thought on this?

    Inci­den­tally, I think that Marx recog­nised that as automa­tion increased, the applic­a­bil­ity and rel­e­vance of the labour the­ory of value would dimin­ish. Eg this sec­tion of the Grun­drisse: Con­tra­dic­tion between the foun­da­tion of bour­geois pro­duc­tion (value as mea­sure) and its devel­op­ment. Machines etc. ttp://

  • Hi Jad,

    Thanks, and wel­come aboard here.

    Marx does indeed define value that way in chap­ter 1; but well before then he believed he had derived the mean­ing of value from a dialec­ti­cal analy­sis of cap­i­tal that also appeared first in the Grun­drisse, and ear­lier than the sec­tion you cite. How­ever that deriva­tion con­tra­dicted the propo­si­tion that labour was the only source of value–and I believe that when Marx first devel­oped it, he realised this, or rather scared him­self with the real­i­sa­tion that it might con­tra­dict that propo­si­tion.

    The actual point at which Marx devel­oped the analy­sis that let him pro­ceed not merely from a def­i­n­i­tion, but a deriva­tion, is on pp. 266–267 of the Grun­drisse (in chap­ter 5) in a long foot­note marked not by a num­ber but an aster­isk (look it up and read it carefully–it’s a remark­able pas­sage but too long to repro­duce here, in the sen­tence “In the rela­tion of cap­i­tal and labour, exchange value and use value are brought into rela­tion; the one side (cap­i­tal) ini­tially stands oppo­site the other side as exchange value, [*] and the other labour” []), stands oppo­site cap­i­tal, as use value”).

    Have a good read of that and you will see one of the sev­eral times in Marx’s intel­lec­tual life when he had a blind­ingly bril­liant real­i­sa­tion. How­ever he rapidly sought a means to resus­ci­tate his prior belief, which was a return to that def­i­n­i­tional approach to what value was–but that def­i­n­i­tion remained in con­flict with his deriva­tion.

    His first, gen­uine appli­ca­tion of the dialec­tic did reach a con­tra­dic­tory propo­si­tion that “the oppo­site of cap­i­tal can­not itself be a par­tic­u­lar com­mod­ity, for as such it would form no oppo­si­tion to cap­i­tal, since the sub­stance of cap­i­tal is itself use value; it is not this com­mod­ity or that com­mod­ity, but all com­modi­ties”. He then rapidly retreats from the abyss this implies for the labour the­ory of value–that labour, as a sin­gle com­mod­ity, can­not be the oppo­site of capital–and instead asserts that “The com­mu­nal sub­stance of all com­modi­ties, i.e. their sub­stance not as mate­r­ial stuff, as phys­i­cal char­ac­ter, but their com­mu­nal sub­stance as com­modi­ties and hence exchange val­ues, is this, that they are objec­ti­fied labour.” This is a con­tra­dic­tion of the propo­si­tion that one com­mod­ity can­not be the oppo­site.

    When you apply his dialec­ti­cal logic prop­erly, you get the result that labour and cap­i­tal can both be sources of sur­plus value in pro­duc­tion. If you take a care­ful look even at Cap­i­tal, you will find him attempt­ing to use the use-value/exchange-value dialec­tic to pro­duce the result that labour is the only source of value–and eas­ily using it to show that labour is a source of value, but fudg­ing the vital addi­tional propo­si­tion that cap­i­tal could not be a source of sur­plus.

    I cover all this in detail in my the­sis on Marx, which is down­load­able from the Research page here (, and also in three papers that are on that page.

    So Harvey’s lec­tures, and all the work of all Marx­ists who attempt to pre­serve the labour the­ory of value, are ignorn­ing one of Marx’s great insights, and fail­ing to do for him what he saw him­self as doing for Hegel:

    It is con­ceiv­able that a philoso­pher should be guilty of this or that incon­sis­tency because of this or that com­pro­mise; he may him­self be con­scious of it. But what he is not con­scious of is that in the last analy­sis this appar­ent com­pro­mise is made pos­si­ble by the defi­ciency of his prin­ci­ples or an inad­e­quate grasp of them. So if a philoso­pher really has com­pro­mised it is the job of his fol­low­ers to use the inner core of his thought to illu­mi­nate his own super­fi­cial expres­sion of it.

  • jad


    There’s a bit to unpack in that Grun­drisse quote. Your the­sis looks very inter­est­ing and I would like to get the time to read it one day.

    Not hav­ing read it , nor much of the Grun­drisse, I’m sure I don’t get the full gist of your argu­ment, but on my read­ing of Vol. 1 of Cap­i­tal, I wouldn’t agree that in that vol­ume “Marx has estab­lished the source of sur­plus value, and has done so with­out any ini­tial pre­sump­tion that labor was the only source of value”. Rather, Vol. 1 seems to me to hang together as an inter­con­nected log­i­cal whole.

    For exam­ple, the quote from page 188 of Vol 1 you pro­vide in “Use Value, Exchange value and the demise of Marx’s labor the­ory of value” I think backs up rather than under­mines the view that Marx in that chap­ter was work­ing under the pre­sup­po­si­tion that value is socially nec­es­sary labor time, and there­fore that only liv­ing rather than ‘dead’ labor (means of production)can cre­ate sur­plus value.

    I think David Har­vey, from his per­spec­tive as a geo­g­ra­pher, has a fairly flex­i­ble and undog­matic take on the labor the­ory of value, recog­nis­ing that it has no use as an account­ing tool or empir­i­cally observ­able mag­ni­tude, but con­stru­ing it as the ‘essence’ under­ly­ing the appear­ances of some social phe­nom­ena. I think he has some valu­able insights.

  • I like some of David’s work jad, and the LTV can do as a rough rule of thumb in some of that, but from my economist’s point of view it’s a fun­da­men­tally flawed theory–as flawed as neo­clas­si­cal eco­nom­ics is.

    Read the sec­tion in Cap­i­tal where Marx tries to prove that cap­i­tal adds no addi­tional value–read it very carefully–and see whether Marx was or was not try­ing to prove it from “first prin­ci­ples”, where those first prin­ci­ples are the use-value/exchange-value dialec­tic that I out­line in my papers. If he was sim­ply start­ing from a def­i­n­i­tion in which labour was the only source of value, then all that con­fus­ing (and log­i­cally false) lan­guage would have been unnec­es­sary.

    In any case, it’s not some­thing that can be taken just from def­i­n­i­tions alone. There are log­i­cal con­se­quences to the LTV that are well out­lined in Steedman’s “Marx After Sraffa”, while attempts to get around them result in trav­es­ties like the TSS inter­pre­ta­tion of Marx. In effect, if Marx did truly believe the LTV, and it was cen­tral to his logic, then there’s not much in Marx worth know­ing.

    How­ever from my point of view the LTV was an error that Marx pre­served, but pro­vided the means to tran­scend and build a far richer the­ory.

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