I've heard that it's best to stay away from the American Keynesians, the IS-LM is shit.
Now on for my post:
On August 15th 1971, Nixon "closed the gold window" by ending Bretton woods. Unfortunately, it seems this never registered with the Marxian economist.
Before I can continue I will posture a few questions: What is value? What is money? and What are prices?
The basis of Marx's investigation is rooted in the fact that as a species, we must labour to reproduce ourselves and create wealth. Unlike the Austrians postulate contradictory and incoherent axioms, this is subject to empirical validation. And it is - our material needs are the very basis for our continued existence. The labour that is deemed "socially necessary", is imbued in commodities. Not metaphysically, but actually; a real portion of our finite capacity to labour has been used up. This is what Marx calls value.
Now in Marx's simple commodity exchange C-M-C it is assumed this material basis constitutes what the price of the commodity will tend towards. However, by the very nature of commodity exchange it becomes complicated and needlessly complex without establishing a universal equivalent. This "universal equivalent" is money. Serving as a medium of exchange, unit of account and store of value. This of course, is what the "price of commodities" is measured in.
Now, it's readily apparent that gold was not money just like value, is a social relationship. How prices behave will be very different when the money is commodity money than when it is a state backed fiat currency.
This has not registered with Marxian academics. As Jehu points out:
Now the Marxian academics have come up with elaborate explanations for why there does not need to be critical revision of Marx's theories to maintain their relevance, such as the MELT (from the TSSI) school. I've also heard explanations like "multiply the price of a commodity by the inflation in the price of gold to reach it's true value (face palm)", because the "market" is mediating gold as commodity money rather than the state.
Marx states in Capital Vol 1 that the State makes use of four mechanisms to increase its natural wealth: The national debt, the modern taxation system, protectionism and embracement of the colonies. Obviously the first and foremost is the most relevant today.
So how has the national wealth faired under the new fiat currency? National debts have skyrocked in Western nations after all. Well, let's look at pic realated. It's commonly asserted by the left that the 70's was a time of crisis. Recourse to the first pic would not indicate that, but as Jehu states:
Indeed, which one?
However, it's unlikely that academics will admit that the theoretical basis for their work has been unsound. All the data on the falling rate of profit - useless.
Things don't look so good in the future for the left - politically, theoretically or economically.