Jonathan Nitzan
Encyclopedia
Jonathan Nitzan is a Professor of Political Economy at York University
, Toronto, Canada. He is the co-author (with Shimshon Bichler
) of Capital As Power: A Study of Order and Creorder, published 2009. Their writings focus of the nature of capital
in capitalism and provide an alternative view to that of Marxist and neo-classical economics. In their theory capital is the quantification of power
. Central to their theory is the concept of differential accumulation
where firms strive to profit more by beating the average profit level.
Nitzan and Bichler share an intellectual legacy with institutional political economists
such as Thorstein Veblen
. 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 value
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.
Capitalization
, 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 maximization
). Nitzan and Bichler label this process differential 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.
York University
York University is a public research university in Toronto, Ontario, Canada. It is Canada's third-largest university, Ontario's second-largest graduate school, and Canada's leading interdisciplinary university....
, Toronto, Canada. He is the co-author (with Shimshon Bichler
Shimshon Bichler
Shimshon Bichler is an educator who 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...
) of Capital As Power: A Study of Order and Creorder, published 2009. Their writings focus of the nature of capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
in capitalism and provide an alternative view to that of Marxist and neo-classical economics. In their theory capital is the quantification of power
Power (sociology)
Power is a measurement of an entity's ability to control its environment, 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 endemic to...
. Central to their theory is the concept of differential accumulation
Differential accumulation
Differential 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 with institutional political economists
Institutional economics
Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behaviour. Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the one side and the "ceremonial" sphere of society on the...
such as Thorstein Veblen
Thorstein Veblen
Thorstein Bunde Veblen, born Torsten Bunde Veblen was an American economist and sociologist, and a leader of the so-called 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 value
Utility
In economics, utility is a measure of customer satisfaction, referring to the total satisfaction received by a consumer from consuming a good or service....
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.
Capitalization
Market capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded 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 maximization
Profit maximization
In economics, profit maximization 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 accumulation
Differential accumulation
Differential 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
- Capital as Power: A study of order and creorder. Nitzan, Jonathan and Shimshon Bichler. 2009. Routledge. (Complete book available as free pdf.)
- The Global Political Economy of Israel. Nitzan, Jonathan and Shimshon Bichler. 2002. Pluto Press.
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 SchoolHarvard Law SchoolHarvard 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. The school is routinely ranked by the U.S...
, March 18, 2008] - The Other School of Economics: an introduction to 'Capital as Power', Jonathan Nitzan and Shimshon Bichler. 2009. Routledge.