In case you were wondering: Yes, the chief economic adviser to Tsipras is insane.

by Jehu

The title of this post is, by any measure extremely rude and provocative, but bear with me. If you can get through the first section of this post, which is extremely wonky, I will show why one of the most important advisers to SYRIZA is likely living in his own special world, and not subject to arguments founded in the real world. According to Einstein (or Mark Twain, or an old Chinese proverb or Benjamin Franklin — who knows for sure) insanity is doing the same thing over and over again but expecting different results. If this is true John Milios is insane, as I will prove.

In the view of John Milios, the Marxist economic adviser to SYRIZA, Marx had a monetary theory of value and a monetary theory of capital, both of which he developed in opposition to Ricardo. miliosThis view argues that value arises, not from labor, but from circulation of commodities.

It follows from Milios’s argument that surplus value arises not from surplus labor, but from circulation as well. In both processes, money is the necessary form of the appearance of value and surplus value: Neither value nor surplus value could exist without money.

According to Milios then, Marx thus breaks with Ricardo and classical political-economy, who thought value arose from the expenditure of human labor. Milios explains Marx’s focus, in the great bulk of the volumes of Capital, on the process of production as Marx’s ambivalence toward  Ricardian theory and his (Marx’s) incomplete break with classical theory. Although Marx pioneered a radical break with classical political economy, says Milios, when fumbling with the problem of the transformation of values into prices, “Marx retreats to the empiricism of the Ricardian theory”.

In addressing this problem, Marx fails to grasp the non-commensurability between value and price”:

“In this way, albeit tacitly, he [Marx] adopts (he retreats to) the Classic viewpoint that values are entities that are qualitatively  identical and therefore quantitative comparable (i.e. commensurable) with prices.”

For Milos, therefore, Marx present us with two incompatible “discourses” in Capital: First, a recognition that money is  “the only empirically tangible measure of value”; second, that “value and price are situated on the same level of abstraction, are qualitatively identical and therefore quantitatively  comparable.”

To remove some of the wonkish window-dressing of these two statements, Marx runs into the very same question that Ricardo encountered in his own work: Are the prices of commodities determined by their labor values? Or, are they determined by law of the average rate of profit? Buried deeply in Milios argument, in other words, is the very same criticism that the Austrian economist, Bohm-Bawerk, directed at Marx in his critique of volume 3.

The argument can be more plainly stated this way: Can the prices of simple commodity production be reconciled with the prices of capitalistic commodity production?

Of course, Marx’s answer to this was, “No. They cannot be reconciled.”

The contradiction Ricardo sought to overcome between simple commodity prices and capitalist commodity prices was a real contradiction that is inherent in the capitalistic mode of production. It was not the result of a defect in Ricardo’s or Smith’s approach, but arose out of the laws of capitalist production itself. This contradiction expresses the fact that capitalism is a form of commodity production that does not aim at the production of value,  but the production of surplus value.

The whole of economics after Marx (both bourgeois and Marxist) has sought to refute Marx on this and to figure out a way to reconcile the two; but they have yet to come up with a way to make the value of a simple commodity, v equal the price of a capitalistically produced commodity, v+s. Moreover, even now it has not occurred to Marxists that v will never equal v+s no matter how much math they apply to the problem or how sophisticated the math they apply. The defect here is not Marx’s math, but the fact that for any non-zero value for s, v will never equal v+s.

Milios solution to this problem is that of the bourgeois simpletons: if v will never equal v+s, pretend v doesn’t exist. We live in a mode of production that involves the capitalistic production of commodities, not simple commodity production. This capitalistic commodity production effectively operates according to rules where prices are determined by v+s, not v.

It would seem, therefore, that we could entirely ignore v and focus only on the problem of v+s; but here is the problem with Milios solution: if we ignore v, then there is no longer any v+s — only s. Which is to say, if we ignore v, the value of the simple commodity, we also ignore the variable capital that is essential to the capitalist mode of production. We ignore, in other words, the subsistence of the working class itself and side with the capitalist parasites against our own class.

You don’t get to choose between the determinants of price in the capitalist mode of production; you can’t simply argue that because you can’t get the sums to equalize, you simply ignore one or the other. This was the solution that neoclassical theory adopted and Marxists like Milios seem to have followed neoclassical theory on this. Others, like Andrew Kliman, Anwar Shaikh, Alan Freeman et al., have chosen to try one device after another to reconcile v with v+s when s is non-zero.

All of this extremely wonky crap is very interesting to me, but probably not to you. Fortunately, none of it has anything to do with why I think Milios is clinically insane.


To understand why I think he is insane, let’s see how Milios applies his “insights” into Marx’s alleged errors.

Basically, John Milios, as economic adviser to SYRIZA, is a neoclassical theorist masquerading as a Marxist. The worst part of this is that he doesn’t even realize he is a neoclassical economist and really thinks he is a Marxist, which is why he spent so much time trying to reconcile labor theory with neoclassical theory on the premise he was correcting Marx’s errors. His effort actually was devoted to expunging from labor theory any hint that value is the product of labor and price merely the expression of value.

The value form school of Marxism has not gotten to the point where they can openly declare that value and surplus value are produced by capital,  because they are cowards who are afraid to come out of the shadows, (with the exception of Chris Arthur), but they will get there in due time.

Now, all of this, of course, is just me being unforgivably sectarian and hostile to people who shit on Marx’s grave and call it fertilizer. If you aren’t on a mission like I am to uncover these fucking frauds, it may be entertaining but not particularly helpful.

What you are likely really interested in is what sort of advice Milios will give to Tsipras, right?

Since this clown jester of Marxism has the ear of King Tsipras, what words of economic wisdom will he utter?

First, following on my previous remarks, Milios believes Marx’s solution to the transformation problem is wrong. Instead of trying to reconcile v with v+s (as he believes Marx was trying to do) Milios thinks we can exclusively concentrate on v+s. However, as I stated before, ignoring v means you ignore the v in v+s, which means you ignore the subsistence of the working class. Thus Milios is exclusively concerned with the production of surplus value and capital,  the latter which, he believes, is both the source of value and surplus value.

Second, in taking the view of the bourgeois simpleton, Milios believes money is the necessary form of appearance of both value and surplus value. Based on what he calls the monetary theory of value and the monetary theory of capital, in his paper, “Strategies for a Good Society in the Era of Financialization”, Milios concludes “financial markets have an active role to play in the organization of social power relations.”

Which is to say, essentially, it looks like Milios holds to some sort of theory similar to Hilferding that finance can be employed to control production:

“In this regard, financialization is apprehended as a complex technology of power, the main aspect of which is not income redistribution  and economic instability but the organization of capitalist power relations. It should be comprehended as a technology of power  formed by different institutions, procedures, analyses and reflections, calculations, tactics and embedding patterns that allow for  the exercise of this specific, albeit very complex, function that organizes the efficiency of capitalist power relations  through the workings of financial markets.”

Milios believe finance should be seen as a technology that enables the state to direct economic activity according to a predetermined plan. The aim of this plan is not just to redistribute income or offset crises, but to organize the productive activities of the whole society.

What I find fascinating in this is not that Milios thinks this can be done, but that he doesn’t appear to realize it is already being done! Seriously, what does he think the central banks are doing at this very moment?

The question any astute observer has to be asking at this point is doesn’t Milios’s proposal for state direction of production through the banking system violate a long-standing view among communists — dating back to the Paris Commune — that the working class cannot simply lay hold to the existing machinery of state and wield it for its own interests? Milios is basically arguing SYRIZA and other Left parties can expropriate or otherwise seize the central bank and manage the economy through it.

There is nothing to say this cannot be done in theory, but in practice the crisis erupted despite central bank control. So, Milios’s argument then comes down to saying, “The Left are better at employing the central banks than the capitalists are.”

And that, folks, is insane!

No one in their right mind thinks a bunch of fucking Marxist academics are better managers of a central bank than the fascists. And, in any case, no Left party has sufficient personnel with the skill sets and experience necessary to run a central bank. The result is that any attempt to run a central bank would rely on the people who are there presently and the central bank would essentially be taking over SYRIZA not the reverse.

I mean, the capitalists suck, but they are not stupid — they built the fucking system and know it inside and out. It is only reasonable to assume that if the central banks could fix capitalism, it would be fixed and humming like a top. Even if we could unambiguously trace the original idea of using the banks to run production back to Hilferding, we have to acknowledge that the capitalists took the idea and ran with it — and they have over a 100 year head start on us.  That is 100 years of experience managing almost 200 national economies.

What Left party today walks into power with that resume?

Which begs the question: Does the working class really want to be some dumb academic’s learning experience?