POLITICAL ECONOMY

Economic cataclysms in the modern world are largely the result of a deep crisis in economic science, which is unable to build a correct state strategy for economic development. The fundamental problem of economic science is a misunderstanding of objective economic laws: the Law of value and the Law of accumulation, first of all. As a result, the degradation of the economy by clumsy macroeconomic policies. Meanwhile, the economy is a surprisingly self-regulating system, both in terms of market equilibrium and optimal development. The main thing is not to interfere with her in this, following the principle of "laisser-faire". Therefore, there is a need to revise the conceptual foundations of classical political economy - the Law of value in the context of the labor theory of value and the Law of accumulation in the context of the theory of surplus value.

Political economy is an economic science based on the labor-intensive essence of value: value has a labor origin. The author proceeds from this in his desire to reconstruct political economy by adding monetarism to it.

The author's monograph sets itself the task of:

1. Explain the essence of a market economy from the standpoint of political economy, correctly formulating the law of labor value and the law of capital accumulation in a free-market economy.

2. Synthesize monetarism and political economy (incorporate the quantity theory of money into the labor theory of value) to create on this basis a qualitatively new monetary system.

As a result, POLITICAL ECONOMY will turn from a theoretical abstraction into an applied economic science suitable for practical implementation.

The historical process of economic development is presented as a process of its integration. In the Middle Ages, small subsistence farming took place: everything that was produced in small farms was immediately consumed. Then began the exchange of goods between individual producers. Later, commodity-money trade developed: first at the regional level, and then reached the interregional level. Today there is a global market. – A global economic monolith is being formed.

The basis of the integration process is the intellectualization of labor. The intellectualization of production requires the unification of the efforts of manufacturers, their involvement in a single production process. Both through the market and directly, entering into cooperation. We can say that the intellectualization of production has spurred economic integration and led to the development of the market. – – To the global trade of now growing companies up to transnational ones.

INTELLECTUALIZATION → INTEGRATION → MARKET

The intellectualization of labor is what gave us today's hyper-integrated market economy. Question: what is the condition for the normal functioning of a market economy?.. – First of all:

a) consumer demand for the final product, as an incentive for the commodity production;

b) equivalent exchange of goods across the economy, as a guarantee of a fair exchange of labor results.

The growing demand for marketable products stimulates production on the basis of scientific and technological progress, and the equivalent exchange of goods ensures proper remuneration for labor. These conditions are fulfilled – there is economic development. The conditions are not met... – the breakdown of the economy is coming.

How is a market economy regulated?

The market economy is, first of all, a self-regulating system. With the exception of certain (monetary and budgetary, primarily) macroeconomic functions of the state.

The functioning of a free-market economy is based on two basic laws:

1. LAW OF ACCUMULATION – motivates the production of a surplus product (in the form of surplus value) for the purpose of expanded reproduction for the sake of economic survival of the business;

2. LAW OF VALUE – regulates the reinvestment of surplus value in expanded reproduction to the state of equivalence of commodity exchange = optimal pricing.

Thus... The law of accumulation creates material prerequisites for expanded reproduction through the accumulation of surplus value for reinvestment purposes. The law of value corrects the reinvestment of surplus value into production, taking into account the equivalent exchange of the results of labor.

That is: one law stimulates economic development in the course of the competitive struggle for the economic survival of commodity producers; another law corrects economic development by redirecting investment flows = labor resources in the interests of consumer demand and market equilibrium.

Such is the market essence of the material life support of modern society, which represents the sphere of scientific interests of political economy. But, it is precisely here that there are significant shortcomings of political economics, which do not allow building on its basis the correct macroeconomic strategy of the state in view of the impossibility:

a) have an adequate understanding of the market economy, having correctly formulated the law of labor value and the law of capital accumulation;

b) have a practical application by creating a monetary system on a labor-costs basis as an instrument of monetary policy.

As a result: economic ignorance multiplied by the mediocrity of macroeconomic management = overregulation of the economy.

Therefore, there is a need to radically revise the conceptual foundations of classical political economy, depriving it of theoretical gaps.

The foundation of classical political economy is the theory of labor value. The essence of the theory is well known: the labor-containing essence of value as the basis of market pricing. That is exactly what it is: not ephemeral subjective utility, but objective labor costs are at the heart of pricing. This is the merit of political economy. However, the labor-intensive content of this theory suffers from a false definition of the category VALUE: in the sense of "value as abstract labor embodied in a commodity". Hence the erroneous conclusion about the alleged "fluctuation of market prices around value". In reality, VALUE is the market valuation of abstract labor embodied in commodities, and therefore there is a fluctuation of value (in price) around the embodied labor costs. A seemingly simple terminological flaw fundamentally breaks the logic of the labor theory of value. But that's not all...

The already weak version of the labor theory of value was finally destroyed by K. Marx, planting on VALUE the so-called. "Price of production" (production costs + average profit). According to this, commodities are sold not at value, but at "production prices", around which "market prices" fluctuate. In fact, it is on the basis of the price of production costs (cost-price) plus the average profit that the value is formed. That is:

VALUE (in price) = price of production costs + average profit.

It is on this definition of the category "value" that the author's version of the labor theory of value and, accordingly, political economy is built.

POLITICAL ECONOMY – In the process of being translated into English.