Roots of Capitalist Stability and Instability

Prabhat Patnaik is an eminent and prolific economist who has worked creatively for 40 years at the intersection of Marxian and Keynesian theoretical traditions. In addition to his writings on Marxism and Keynesianism per se, he has made important contributions to our understanding of macroeconomics, development economics, and debates around economic justice, capitalism, s ocialism and imperialism. The Value of Money is his most recent book-length contribution, focusing mainly on technical questions in monetary theory. But Patnaik’s mind is too fertile and his i nterests too wide-ranging for even a technical book on monetary theory to be only about monetary theory. In fact, this book is an original, surprising and highly stimulating synthesis of ideas. He begins with a critique of monetarist monetary theory, which draws on Marx and Keynes in interesting ways. But he also advances a critique of Marx and Keynes themselves, centred on an analysis of colonialism and imperialism in the operations of advanced capitalist economies. In this ladder theme, Patnaik builds from the original contributions of Rosa Luxemburg, where Luxemburg had explained how precapitalist economies provide new markets to purchase the excess supply of products produced within the advanced capitalist economies. The Value of Money concludes by arguing that the United States (US) needs to control the world’s supplies of oil in order for the dollar to maintain its preeminence in global financial markets. By this point, Patnaik has connected a bstract discussions on the theory of money with the US invasion of Iraq. In addition to its impressive scope and many insights, there are also many ways in which the main lines of analysis in The Value of Money are incomplete and frustrating. For example, his discussion of the theory of money and his critique of monetarists proceeds with almost no references to the operations of financial markets. He also gives almost no attention to the role of the State and economic policy, even though evalu ating state policy interventions is crucial to understanding the problems of maintaining adequate levels of overall demand in contemporary capitalism. Correspondingly, his emphasis on the centrality of precapitalist societies as being essential to the stability of capitalism provides no clear explanation as to what is distinct about precapitalist societies for this purpose. More generally, the book draws upon few references to intellectual or historical developments over the past 50 years, many of which are central to the questions he is pursuing.