What happens in crashes? a non-equilibrium, value-theoretic approach to liquidity preference

This paper was the first attempt I made to reassess the relation between Marx and Keynes, an endeavour I pursued relentlessly from this time on, and would at times have given up were it not for the even more relentless support of Victoria Chick, and her equally relentless instence that I carry the project through to its conclusion. I take the opportunity of this post to salute one of economics’ most dedicated seekers after truth, and defenders of those who seek it, in whose theoretical contributions I continue to take refuge and whose conversations I look forward to with the relief known only to castaways. This paper, presented at the 1998 conference of the European Association for Evolutionary¬† Political Economy in Lisbon, shows how variations in the value of money, and in the exchange rate between different moneys of account, lead to transfers of value on the one hand between national or continental monetary blocs and on the other, between the financial and productive sectors of a single national economy. It discusses how these transfers may serve as the mechanism underlying the business cycle and suggests that they may also account for the phenomenon of liquidity preference. It suggests that the concept of liquidity preference constitutes a potential common ground between value-theoretic and post-Keynesian schools of thought. It is set against the background of the 1997 Asian crisis and reflects on the role and reliability of the economics profession.