Leaving the Church — Orthodox vs Heterodox Economics (2/2)

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Continued from here.

Having introduced the Keynesian and Post-Keynesian paradigm as a genuine form of heterodox economics, as opposed to that strand of heterodox theorising which is merely a critical commentary, a branch and ultimately a vindication of mainstream economics, Shaikh discusses [from time mark 05:35 to 08:08] the second tradition of genuinely heterodox economics: classical economics in the tradition of Smith, Ricardo, and Marx:

But there is another set of [heterodox] theories [that Sheikh endorses as providing an independent base of theorising about the economy], which are ... older than Keynesian theories, and I want to call them here classical political economy: the theories of Smith, Ricardo, and especially of Marx — which are also different [i.e. they possess a theoretical base independent of orthodox economics], but they are different from Keynesian theory.

Capital and labour are not viewed as equal. Class is a fundamental social relation. Race, gender and ethnicity are bound in the matrix of class relations ... [Emphasis] is on the turbulent patterns of market forces. Markets don't achieve equilibrium, they achieve a rough balance by overshooting and undershooting, and the disorder is the means to the order ... [Emphasis] is ... on competition as the root of the powerful gravitational forces of political economy.

The dominant incentive ... is the profit motif. It dominates all others because it is central to the operation of capital and hence of the business sector. The system is viewed as inherently expansionary; which is located in the premise of capital which is to put money in to get more money out ... And that expansionary character shows up in its geographical expansion as well as in its expansion to new arenas all the time. So it's not just globalisation but all other areas of life that capital expands to.

Mechanisation and industrialisation are intrinsic features of this point of view. And unemployment [especially in Marx] is the necessary outcome, it's not an potion, it's not a possibility, it's necessary. The system has mechanisms to create it. And this is, of course, created on a global scale ... because the markets operate on a global scale. So you cannot speak of national employment as if it's unrelated to unemployment [in other countries] ...

The state, from this point of view, can be a potential regulator, but it's subject to strict limits. And these limits are of two sorts: one is a political limit ... And the other is the profit limit—because the state cannot go very far in impinging upon the profit motif ... I am clearly in this tradition.