JSPE-Routledge Prize

The 2024 JSPE-Routledge Book Prize winner

The 2024 prize winner is Professor Duncan K. Foley (an emeritus professor of the New School University) based on his following books

・Understanding Capital: Marx’s Economic Theory. Cambridge MA: Harvard University Press, 1986.

・Money, Accumulation, and Crisis. New York: Harwood Academic Publishers, 1986.

Reasons for Awarding the Prize to Professor Foley

Duncan K. Foley was born in Columbus, Ohio on June 15, 1942. He studied mathematical economics at Yale University under Herbert Scarf and received his Ph.D. with a thesis investigating the public bond from the viewpoint of general equilibrium theory. After teaching at MIT, Stanford University, and Barnard College of Columbia University, he was appointed in 1999 to the Leo Model Chair of Economics at the New School University, where he is currently Professor emeritus. He was an External Professor at Santa Fe Institute until 2010.

　Prof. Foley is an established scholar recognized by mainstream academia for his work in the early 1970s that laid the micro-foundations for macroeconomics through general equilibrium analysis. Some of his works from that period have been translated into Japanese (Coa. Miguel Sidrauski, Monetary and Fiscal Policy in a Growing Economy, 1971; Its Japanese translation appeared in 1974). Since the mid-1970s, he has also introduced the idea of statistical equilibrium and supported the research on complex systems and agent-based modeling and has made achievements in these areas as well. However, the book with a large readership beyond academia is Understanding Capital: Marx's Economic Theory (1986), cited by many of the nominators for this prize.

It was published in 1986, but its genesis lay in the rediscovery of Marx by a younger generation of economists at the height of the anti-Vietnam war struggle around 1970. As Prof. Foley attests in several of his recollections, for someone originally in mainstream economics, understanding Marx's thought and theory required long research and the advice of many friends. The word "understanding" in the book's title may indicate the author's own effort of "understanding.

　On the one hand, this work was widely accepted as a "general introduction" to Marx's economic theory. However, it caused a series of debates among researchers of Marx's economic theory that continue to this day by presenting a "new interpretation” of labor value theory and a "new solution" to the so-called “transformation problem” of Marxian economics. Foley's theory of the value of labor assumes a macro correspondence between the total amount of productive labor in a country and the total value added of that country's economy. Thus, the "value of money" is the latter in monetary terms divided by the former in labor hours. In terms of hourly wages, it is equal to the labor share. Based on this understanding, the two propositions that were considered incompatible in the "conversion of value into production prices," namely, "total labor value = total product price" and "total surplus value = total profit," are compatible, which is why they were called the "new solution.

On the one hand, there is a view that this "solution" is highly valuable for adapting the propositions of Marxian economics to the current social accounting statistics, but on the other hand, there is criticism that it is merely a synonym for the macro proposition that total labor input = total value added (expressed in money term). On the positive side, there is an ongoing debate over the merits of dynamically developing a "single system" free from a dual system of (labor) value and price to incorporate adjustment and time. On the other hand, those on the side of the correctness of the "value of invested labor" theory, which is based on the input-output relationship in production, have criticized the theory because it conflicts with the results of mathematical Marxian economics to date.

　When evaluating Foley's theory of Marxian economics, it is impossible to ignore the theory of value inspired by I. Rubin's monetary theory (which views abstract human labor as the substance of value in terms of abstraction through money circulation) and the cyclical and turnover theory of capital recognition with a stock-flow perspective since the time when he was a member of the mainstream. It is not possible. This is not necessarily well presented in Understanding Capital, which is only a "general introduction," but we can get an idea of its composition in Money, Accumulation and Crisis, which he published in the same year. Therefore, it is appropriate to add this book to the list of recommendations.

This book shows the possibility of developing an analysis of the circulation and turnover of capital based on the Keynesian-Marxian perspective of viewing the demand for money from the inside of the capital cycle. Rather than hastily concentrating the circulation and turnover of capital in the structure of capital reproduction, the book presents a dynamic analysis that includes the behavior of capital (firms) (employment, production adjustment, markups), financial crises, and their adjustment processes. If we develop a process analysis that incorporates the unique interests and actions of each economic actor in the process of capital circulation and turnover, as this book suggests, a political economy that includes inflation and depression, as well as fiscal and monetary policy, would be possible. Although Prof. Foley has published several more papers in this area, it is regrettable that there is no full-fledged work that develops and summarizes them, but this should be taken as an indication of the challenges for future generations, as well as the "new interpretation," which has developed into a "single system.

After these two books, Prof. Foley coauthored with Thomas R. Michl, Growth and Distribution (1999) and published Adam's Fallacy: A Guide to Economic Theology (2006). Both are translated into Japanese as Seicho to Bunpai (2002) and Adam Smith no Gobyu (2011). The former is a well-balanced textbook that includes the views of mainstream as well as non-mainstream economists in the areas of growth and distribution theory, while the latter is an excellent book that outlines the history of economic thought while sharply cutting into the tendency of economics since Adam Smith to be harmonious and to affirm the status quo. Although the educational value of both books is unquestionable, they were not considered for our evaluation due to their nature.

Since moving to the New School in 1999, Foley has taken up contemporary issues such as the growing inequality associated with the financialization of the economy and global warming. In the former, he maintains the critical viewpoint that expanding bloated financial income and unproductive labor is based on exploiting the "global pool of surplus value.” In the latter, he criticizes the fact that political misunderstandings are preventing the realization of an agreement to eliminate the externality of CO2 emissions, even though it is feasible to do so in favor of both the present and future generations. This is an alarming view from an economist who has remained critical of capitalism while maintaining a rationalistic faith in the future of humanity.

In light of Prof. Foley's lifelong research activities outlined above, we have selected his two important books of 1986, Understanding Capital and Money, Accumulation and Crisis, for their contribution to critical political economy and for their controversial and stimulating nature. We conclude that the 2024 JSPE Routledge International Book Prize should be awarded to Prof. Duncan K. Foley for his two books Understanding Capital and Money, Accumulation and Crisis.