The idea of Economics is changing  very fast... We need to generate a deep transformation in Economics as soon as possible... This transformation is based on the generation of new principles, assumptions, concepts and models that can help to explain new and dynamic economic problems in our real world.  

Dear Lall,

you question is rather complicated, and it is also not easy task to criticize famous people. But let us start from this:

Thomas Malthus: "A QUESTION seems naturally to arise here whether the exchangeable value of the annual produce of the land and labour be the proper definition of the wealth of a country, or whether the gross produce of the land, according to the French economists, may not be a more accurate definition...the only point in which I should differ from Dr Adam smith is where he seems to consider every increase of the revenue of stock of a society as an increase of the funds for the maintenance of labor, and consequently as tending always to ameliorate the condition of the poor."

[Malthus, "An Essay on the Principle of Population" (ed) Anthony Flew (Pelican Classics, 1970, p. 192)]

Malthus was correct that land and labour are production factors. Later land was replaced by capital in macroeconomic growth models, and land was abandoned. (I am not the first to talk about this; read the book of Brian Czech "Supply shock"). In that theory nature was completely eliminated, and this allowed for the models of unbounded growth. With the declining role of agriculture in GDP and higher fraction of hi tech products with lower material input people remember land less and less... But recently we recognized that growing capacity of land is hardly enough to maintain our present consumption.

To summarize: Malthus is still right about the role of land in economic production (despite neoclassical trend to kick land away). Of course, this definition should be amended by other factors, like capital. But then a big question: what capital? I do not think that financial because it is highly speculative and has little link with real values.

If it's about to understanding "modern" (that was in 1929) or better "contemporary" economics none of the quotes you mentioned, Lall, meet the beef but maybe this:

"But the Fed did the right thing last week: nothing."

source: http://www.nytimes.com/2015/09/21/opinion/paul-krugman-the-rage-of-the-bankers.html

Of course you know from who it is. 

What most people - excuse my arrogance - and especially scholars don't get is the paradox that financials unfortunately are real and even more real than "real values".

Just look at the world's market capitalization (Image attached).

Let's make the best out of it and share this wealth instead of reclaiming the old real values. They were blowing in the wind.

the conceptual model from many economists  teach  us  the tools for understanding the society, although, we have to think about the changes which has appear during the last decades. The question is how to connect these concepts with the new information time, where things happen to fast in order to satisfy individuals, organisations and government. 

Alexander, looking at your graph, I see how small is Russia (the country holding the largest share of global natural resources) and China (the country producing the largest share of real manufacturing output). How long do you think this wrong financial image of real economic values will dominate? Can this asymmetry be the potential reason for future emergence of some new type of Marxism, that would reveal hidden truth and call for social change?

Dear Lall,

 I do think that self-reflection is a must for all scientists, and economics is not an exception in that respect. So I very much welcome your effort to make sense of the tradition of the discipline. However, I am very sceptical about the possibility to give a strong definition for such a science, as there are so many different schools, methodologies and self-perceptuons. 

Best,

Ferenc

@Yuri: Yes. Maybe we won't call it "Marxism" anymore but "common goods economy". But politics in Russia and China do hard to resist the oligarchs and to keep the spirit of solidarity alive. Nevertheless both countries still have more public wealth than the rest of the world.

Euclid defined geometry as all those theorems that can be deduced from these five axioms:

1.      Two points fully define a segment.

2.      A segment fully defines a line.

3.      The center and the radius fully define a circle.

4.      All right angles are equal to each other.

5.      A line and a point not on it fully define the parallel

         through that point.

Leonhard Euler defined ballistics as all those theorems that can be deduced from these three axioms:

1.      Constant atmospheric density from the ground to the apogee.

2.      Drag is proportional everywhere to the square of the speed.

3.      Gravity is everywhere pointed downwards; e.g. the Earth is flat.

I define economics as all those theorems that can be deduced from these three axioms:

1) One's value scale is totally (linearly) ordered:

     i) Transitive; p ≤ q and q ≤ r imply p ≤ r

     ii) Reflexive; p ≤ p

     iii) Anti-Symmetric; p ≤ q and q ≤ p imply p = q

     iv) Total; p ≤ q or q ≤ p

2) Marginal (diminishing) utility, u(s), is such that:

     i) It is independent of first-unit demand.

     ii) It is negative monotonic; that is, u'(s) < 0.

     iii) The integral of u(s) from zero to infinity is finite.

3) First-unit demand conforms to proportionate effect:

     i) Value changes each day by a proportion (called 1+εj, with

          j denoting the day) of the previous day's value.

     ii) In the long run, the εj's may be considered random as they

          are not directly related to each other nor are they uniquely

          a function of value.

     iii) The εj's are taken from an unspecified distribution with a

          finite mean and a non-zero, finite variance.

This is how sciences are defined, not by talking about politics and showing us maps with shaded-in countries.

Chapter Simplified Exposition of Axiomatic Economics

Dear Victor! How will you define "value" without a political framing? Money? Social Capital? The Commons? Public Goods? Currencies? Commodities?

What is to be called and measured as a "value" that changes every day ? Isn't that Heraklit's πάντα ῥεῖ ?

Alexander-

The dictionary defines value as the regard that something is held to deserve; the importance, worth, or usefulness of something.

As long as an individual's value scale is transitive, reflexive, anti-symmetric and total, then he conforms to my theory.  I don't care what his values are.  I certainly don't care what his politics are.

I don't know who Heraklit is and the Greek phrase translates as "everything flows."  I don't know what that means.  I know who Euclid is and have studied his work extensively.  Does that help?

Dear Victor, we understand that you are mathematician. I also have math education, but not only that but also physics and economics. Indeed what you write is completely in line with what microeconomic textbooks tell us about formal properties of utility. Formally this is a non-contradictory theory and is used for about a century.

But now we come to the discussion not on utility, but on value, and this is beyond that math that you write. If you know also physics or other natural science, you will understand what is going beyond math. In social sciences and economics we produce some output using inputs. Economists think that the are only labor and capital, but some argue that land as a natural productive factor should be also there - see my post.

Contrary to utility, value is quantitative. What is the value of 1 banana found (not produced, there is no labor and capital input for it!)  in a tropical forest? What is its price? Just think about it. To whom the land rent should belong (if it is not privatized)?  Why water is free input even when it is scarce? Math alone cannot answer those questions.

Math accepts both the spaces of Euclide and Minkovsky. Natural and social sciences have to answer which of them  is real.

Thank you, Yuri. It would by the way be quite inspiring to see a mathematical approach on value in economy. Maybe I haven't understood Victors attempt yet? Is it about value itself or only about the relation between pre-defined values in form of figures?

I thank all my fellow researchers for responding to the definitions.

Except for Victor asserting the Axiomatic approach, I do not see much disagreement on the classic definitions. I see some needs to address current reality, and for more scientific tools. The controversial area of value and price that plagued economic thought has surfaced as well, but still remains unsettled. I am surprise that no one addressed the underlying dialectical vs. nomological views of some of the definitions as incompatible or did I just misread this point?

Dear Lall, I thought that other people would address other definitions, but they did not. What can I tell? Most of them are about different approaches to wealth and political economy. Those phrases are not exact and probably still correct. Samuelson told that only 35 years ago - this is not a history yet. Only Malthus was talking about exact inputs (and I elaborated on that).

Let us consider Jean Baptiste Says: "the aim of political economy is to show the way in which wealth is produced, distributed and consumed". Now we have macroeconomics with production function and factors - it is about production of wealth. Distribution of wealth is an important issue, but little is written about it in economic textbooks apart from tax laws. Labor economics studies how salary is defined: it can be marginal value of labor for Cobb-Douglas production function. But who decides about the powers? The employer offers wage and then worker takes it or not. There are also bargaining models of wages. Marx has introduced exploitation, but nobody of modern economists works in this direction.

Wealth can be partly consumed and partly saved (consider house or physical capital of plant as examples). What is missing is that there is no law of wealth preservation. (In physics we have law of conservation of energy). Now wealth can be accumulated by production and saving. It can also be destroyed for example by tsunami. But more important is that wealth is highly volatile because of current financial system. Even false beliefs can manipulate values of stocks, and we can suddenly become poorer or richer (in nominal terms).

Dear Yuri! It's true. There's no law of wealth preservation. Maybe it helps to regard wealth as part of the commons and than to prserve the commons. China, Russia, Norway and a few other countries have preserved their common wealth by not selling it to the "financial markets".

That's a step to protect assets. So if a country or a  region wants to preserve its wealth - don't go public in London and New York.

Dear Lall:

Thank you very much for bringing up such an important issue for debate and discussion in the world academia.

I teach introductory micro and macroeconomics here at the Department of Agriculture, University of Technology, Papua New Guinea. Each year, I need to deal with the issue in my micro-class. I would like to share my experience with you and others interested. However, before doing this, I would like to make some observations on the literature you have reproduced.

Pl. see the answer attached.

Khandakar