Four endogenous market failures which (TSS) value explains better: Inequality, Unemployment, Crisis and Liquidity Preference

This was presented to the First International Seminar on Nuevas Direcciones en el Pensamiento Económico Crítico (New Directions in Critical Economic Thought), organised by the Departiment of Applied Economics, Faculty of Politics, Universidad Complutense de Madrid, Madrid, 10-12 May 1999 It argues, with reference to empirical data from the US economy, that the theoretical category of value is required to explain four widely-recognised general features of a market economy: • Permanent mass unemployment, that is, a permanent excess supply of labour, so that the labour market is never in equilibrium. • The gap between rich and poor countries, which has systematically grown for the last hundred and fifty years, and whose growth has accelerated sharply since 1981, at the very moment when the re-construction of a unified world market started; • The regular repetition of crisis – a sharp and well-defined interruption in accumulation, accompanied by a sharp rise in unemployment and a sudden fall of asset prices –every 7-12 years; • The fact that in crisis, capital retreats from the sphere of production into the sphere of circulation and in particular, into the speculative holding of liquid assets.