Jonathan Nitzan is a Professor of Political Economy at
York UniversityYork University is a university located in Toronto, Ontario. It is Canada's third-largest university and has produced several of the country's top leaders across the humanities and in sciences such as chemistry, meteorology and space science....
, Toronto, Canada. He is the co-author (with
Shimshon BichlerShimshon Bichler teaches political economy at colleges and universities in Israel. Along with Jonathan Nitzan, Bichler has created an engaging power theory of capitalism and theory of differential accumulation in their analysis of the political economy of wars, Israel, and globalization.-Major...
) of
The Global Political Economy of Israel. Their most recent book, published 2009, is
Capital As Power: A Study of Order and Creorder. Nitzan and Bichler have also penned a number of articles in academic journals. Their writings focus of the nature of
capitalIn economics, capital or capital goods or real capital are factors of production used to create goods or services that are not themselves significantly consumed in the production process. Capital goods may be acquired with money or financial capital...
in capitalism and provide an alternative view (to that of Marxist and neo-classical economics).
Jonathan Nitzan is a Professor of Political Economy at
York UniversityYork University is a university located in Toronto, Ontario. It is Canada's third-largest university and has produced several of the country's top leaders across the humanities and in sciences such as chemistry, meteorology and space science....
, Toronto, Canada. He is the co-author (with
Shimshon BichlerShimshon Bichler teaches political economy at colleges and universities in Israel. Along with Jonathan Nitzan, Bichler has created an engaging power theory of capitalism and theory of differential accumulation in their analysis of the political economy of wars, Israel, and globalization.-Major...
) of
The Global Political Economy of Israel. Their most recent book, published 2009, is
Capital As Power: A Study of Order and Creorder. Nitzan and Bichler have also penned a number of articles in academic journals. Their writings focus of the nature of
capitalIn economics, capital or capital goods or real capital are factors of production used to create goods or services that are not themselves significantly consumed in the production process. Capital goods may be acquired with money or financial capital...
in capitalism and provide an alternative view (to that of Marxist and neo-classical economics). In their theory capital is the quantification of
powerPower is a measure of an entity's ability to control the environment around itself, including the behavior of other entities. The term authority is often used for power, perceived as legitimate by the social structure. Power can be seen as evil or unjust, but the exercise of power is accepted as...
. Central to their theory is the concept of
differential accumulationDifferential Accumulation is an approach for analysing capitalist development and crisis, tying together mergers and acquisitions, stagflation and globalization as integral facets of accumulation...
where firms strive to profit more by beating the average profit level.
Nitzan and Bichler share an intellectual legacy of
institutional political economistsInstitutional economics, known by some as institutionalist political economy, focuses on understanding the role of human-made institutions in shaping economic behaviour. The institutional economists were typically critical of US American social, financial and business institutions...
such as
Thorstein VeblenThorstein Bunde Veblen, born Tosten Bunde Veblen was a Norwegian-American sociologist and economist and a primary mentor, along with John R. Commons, of the institutional economics movement...
. In particular, they share Veblen's explanation that business exists with the end of pecuniary (monetary) gain and not the accumulation of goods of consumption or of physical machines.
Nitzan and Bichler argue that it was never possible to separate economics from politics. This separation is required to allow for neo-classical economics to base their theory on
utility valueIn economics, utility is a measure of the relative satisfaction from, or desirability of, consumption of various goods and services. Given this measure, one may speak meaningfully of increasing or decreasing utility, and thereby explain economic behavior in terms of attempts to increase one's utility...
and for Marxists to base the labour theory of value on quantified abstract labour. Instead of a utility theory of value (like neo-classical economics) or a labour theory of value (as found in Marxist economics), Nitzan and Bichler propose a power theory of value. The structure of prices has little to do with the so-called "material" sphere of production and consumption. The quantification of power in prices is not the consequence of external laws – whether natural or historical – but entirely internal to society.
In capitalism, power is the governing principle as rooted in the centrality of private ownership. Private ownership is wholly and only an act of institutionalized exclusion, and institutionalized exclusion is a matter of organized power. And since the power behind private ownership is denominated in prices, Nitzan and Bichler argue, there is a need for a power theory of value.
CapitalizationMarket capitalization/capitalisation is a measurement of the size of a business enterprise equal to the share price times the number of shares outstanding of a public company...
, in their theory, is a measure of power, as illuminated through the present discounted value of future earnings (while also taking into account hype and risk). This formula is basic to finance which is the overarching logic of capitalism. The logic is also inherently differential as every capitalist strives to accumulate greater earnings than their competitors (but not
profit maximizationIn economics, profit maximisation is the process by which a firm determines the price and output level that returns the greatest profit. There are several approaches to this problem...
). Nitzan and Bichler label this process
differential accumulationDifferential Accumulation is an approach for analysing capitalist development and crisis, tying together mergers and acquisitions, stagflation and globalization as integral facets of accumulation...
. In order to have a power theory of value there needs to be differential accumulation where some owners' rate of growth of capitalization is faster than the average pace of capitalization.
Major Works
External links
- The Bichler and Nitzan Archives
- Video: http://bnarchives.yorku.ca/250/Jonathan Nitzan speaks on the political economy of the Iraq invasion, Harvard Law School
Harvard Law School is one of the professional graduate schools of Harvard University. Located in Cambridge, Massachusetts, it is the oldest continually-operating law school in the United States and is home to the largest academic law library in the world. HLS typically ranks among the top law...
, March 18, 2008]
- The Other School of Economics: an introduction to 'Capital as Power', Jonathan Nitzan and Shimshon Bichler. 2009. Routledge.