 Well, good afternoon, Professor Scheik. Anwar Scheik, it's a pleasure for me to meet you here. And we're going to have a discussion about your work, your theoretical work, your political work. And first of all, I think it's worthwhile to start with your intellectual biography. Could you tell us a little bit about yourself, like how you developed into the intellectual that you are today? Yes. Well, first let me thank you for the invitation here. This conference has been really excellent. And as I mentioned in my first, in my session, one of the things that motivated me to become an economist was a confrontation between the levels of development that I perceived as my family moved across the world and the discrepancy between what I perceived and what seemed to me could be done. My early training was as an engineer. So I tended to have the attitude that if there's a problem, you can fix it. But that led me to study economics. And then I discovered to my shock that economics didn't really portray the world adequately. And therefore, the fix becomes a problem because you're starting from a foundation which is already misrepresenting the world. That led me to graduate school. And in graduate school, I encountered political movements. There was a strong anti-war movement in the United States at that time in pro-civil rights, pro-feminist rights, women's rights. So it was a very progressive time. And it led me to question what I was being taught as a student and to read more widely, more generally, about how the world actually worked rather than how it was misrepresented within economic theory. Yeah. So you're an economist. You come from a department that is particularly non-pluralist in many ways that many of the heterodox approaches to political economy actually exist outside of the economics department. And until at least the crisis, you had the situation that the methods of the abstract, mathematicized, equilibrium theory-based methods actually infiltrated or influenced many social sciences, political science in particular, game theory, et cetera. But the crisis kind of changed things in a way that you had revolts against neoclassical economics in so far as it didn't explain the crisis. But for you, it was political movements actually that got you interested in different models, not the inefficiency to explain. That's an interesting question, because actually when I was the first studying economics, you have to remember that the economics profession was broader and more open than it is now, because it was a time when Keynesian economics was still taken as a serious economic school. And that in itself was interesting, because Keynesian economics had come into power because of the failure of the orthodox economists to understand what the Great Depression was about. And that led to a big opening. But by the early 70s, that opening was closing down. And by the 80s, it had shut down completely. I, however, had already been exposed to that opening. And I was fortunate actually to read the work of the man who would later become my colleague, Robert Halberner, in a book called The Worldly Philosophers. And there I discovered that economics had always had a grand set of different visions of which neoclassical economics was the smallest, so to speak, in my opinion intellectually the smallest and least interesting. And yet that was all that I was being taught. And so that spurred my interest in all these different ideas. And because I was also lucky that I ended up teaching at the new school, which was a very progressive institution founded in the early 20th century by progressives who had left Columbia University and created their own school and then later by progressive scholars coming from Europe with the rise of the Nazis. And that meant that I was fortunate to be in an internationalist, progressive environment as an economist rather than someone outside of economics. Yeah, wow. I mean, as Germans, most people know that Habib Makuza was, of course, was at the new school himself. But so you were exposed, or you grew up in a situation where the economics departments were strongly influenced by Keynesianism. And Keynesianism was also the profession. And it was also until the crisis of Fordism, the dominant economic policy, anti-cyclical. But you also, you didn't stick with Keynesianism, but you also developed and you have developed over the recent years a fundamental critique also of the heterodox approaches within political economy. Can you tell us a little bit about why you, what the critique is? Well, what I observed coming from travels across different parts of the world is that people behave differently and in complicated ways. I mean, no one can study history without understanding the role of culture and institutions and emotions and angers and sacrifice and violence, all of these things. And so when I was introduced to the foundations of economic analysis in the traditional sense with optimizing and maximizing, it seemed to me a completely absurd way to start and kind of indeed an insulting way to start to represent human behavior that way. It wasn't certainly not true in, as a European human behavior, it wasn't true of any. But I also observed that many of my heterodox colleagues accepted that as representing something that was in the past and was not true any longer. And that seemed to me a trap. Because if you take a foundational view of something being true in the past and you see the present as being imperfect, which is how many heterodox economists go, imperfect competition, concentration, monopoly power, then you're trapped in the framework of perfection. So that led me to investigate from the start how can we start with a different foundation. Now, in my early years in graduate school, I also studied anthropology, because that seemed to me the right place to begin when you're talking about people's behavior and psychology and political science. But then the question is, how do you put that together in an economic analysis? And that took me some time to show that you can go from the foundations of how people behave all the way up to the macroeconomic patterns and market patterns of how capitalism behaves in a systematic fashion. And I didn't want this to be just a book of axioms. I wanted my work to be grounded in empirical analysis, because in the end, if you're going to do a project of this sort, you have to be able to show that it's capable of understanding what really happens. So I think of it as there's an opposition on one side between perfect competition, perfect economics and imperfect economics. In my view, they're tied together. And I prefer to call what I'm doing real economics, that is economics that's grounded in the actual behavior. I should say that is not a new thing because that is how Adam Smith approaches capitalism. It is how Ricardo approaches it, how Marx approaches it, and it might be then also how Keynes approaches it. And once we understand that there is a big tradition of the best economists of the profession, of the pantheon so to speak, who are already doing this, we don't have to feel that we're doing something outside. We're actually doing something that was the majority until neoclassical economics became dominant. So I mean, if one were to categorize or pigeonhole the various, like in the history of economic thought, could probably say that you have like the classical political economy, which Marx ended up being like saying that he was better at explaining the origin of profit, for instance, as opposed to Smith and Ricardo. And then you had the neoclassical onslaught against Marx and that whenever there were crises, it seems that you get a tendency or a current of thought that, and that's why I found your work particularly interesting, that starts with the market, has it as its original premise, but then adds a lot of exceptions to the rule. Then like if you, for instance, read Max Weber, seems that he has like thousands of explanations why the market isn't working as it is working, but he sticks to it as like the original premise to the way he's thinking. And it seems that whenever there's crises, you have economists going back to history and looking at culture and all those social environments and language, but I was just surprised that you excluded Keynes from that particular category of say institutional political economy from John Stuart Mill, maybe via Max Weber to Keynes, Galbraith, maybe Stieglitz today. That's right. Why would you exclude Keynes? Because I think Keynes was posing a fundamental question which is not institutional, but fundamental to the structure of the market itself, which is the better way to put it is the effect of a big stimulation of the economy on the economy itself. Now the problem goes back earlier. Marx has a discussion about the effect of the discovery of gold mines in California as the gold was discovered and flowed from California across the west, from the west to the east, and then from the east to Europe. This was a problem investigated by Thomas Tuck. What happened to the European economies with this huge influx of purchasing power, what we would call now a massive stimulus? Well, the classical argument from Ricardo and it was the idea that it would just cost prices to rise. But we observed that instead, the main effect was that it cost quantities to rise. It caused employment and growth. So Marx already remarks upon the fact that capitalism by its nature is capable of responding to a stimulus. But that discussion is not there in Marx's own work because most of his work is unfinished. He didn't in fact live to do most of what we consider to be his work, was put together by angles after his death. So that raises the question in the classical tradition, how do you understand the responsiveness of the system to a stimulus? And Keynes is the one who poses that problem as fundamental and Kalatsky also. But really Keynes is the most conscious of the break. But the difficulty for Keynes is that he has nowhere to go with this understanding beyond the macro level because he's trying to, whether consciously or unconsciously, find a connection between his macro policies and the micro theory of the people that he was opposing. And that contradiction meant that Keynes was then able to be pulled back into the framework by their saying, look, he himself says he's one of us. And yes, so we will make him one of us by adding some imperfections. Keynes' economics becomes an imperfection. From my point of view, Keynes' economics is about a fundamental property of the system, which is a, I don't like the word perfection, but it's in effect a real characteristic of the system, that it's responsive to a stimulus. Whether the stimulus is the printing of money or the discovery of gold. But then the issue is what is the limit to that from the classical side? How does that have something that creates factors that overturn it or damp it down or cause consequences that are unintended? So I saw this some time ago, but the issue was how to go from a systematic framework that can explain the behavior of individual markets, microeconomics, all the way to the macro and explain the patterns that you actually observe without using any of the foundations of orthodox economics, no maximizing, no utility, no perfect knowledge, no rational expectations, no equilibrium in the traditional sense of being a state of existence. And so you have to have a starting point that can encompass the real processes. And you need different tools, different math, different methodology. But in the end, you have to address the same patterns. This is interesting because, as you know, within the Marxist political economy tradition, there seemed to be those who say that Marx was actually writing a categorical critique of classical political economy that he was criticizing the concepts themselves but did not try to supersede those. Whereas others are saying, no, he was actually in the classical political economy tradition. He tried to be the better classical political economist. And he seemed to side with that tradition that one has to develop, like one actually has to solve the transition problem and things like that. Yes, but I think the problem is that what unifies Marx with the classical economists is the idea that they're analyzing the real world, capitalism itself. And a critique of the foundations of somebody else's approach will not give you that analysis. Marx spent a huge amount of time studying the behavior of prices, relative prices, productivity, technology, land rent, wages, labor conditions. He spent time understanding these so he could show how he could explain what was happening as being intrinsic to the system. So if you're a philosopher, you can talk about the critique of the classical tradition and you can talk about Marx's foundational break with it. But if you're an economist and someone says to you, so how does that explain whether there should be austerity or stimulus in Europe, in Greece, what can you say? You can't throw out the tropes of exploitation and alienation. That's not going to help. You have to be able to answer the same questions. And I think not only it's very clear that Marx tried to do that, that his work focuses on those patterns, but it's also clear that he didn't finish writing what he projected to do. And so that was a task. And by the way, when he leaves to Engels, he says, well, look, Fred, you're going to have to finish up this work, which I didn't do. And I'm sure that my followers will be able to understand this foundation and take it on to the proper development of political economy, but they didn't do that. They didn't. Well, I mean, in April 58, he had that project of writing six books, which would have included a book about the international market and the state and so on. Wage it is. Yes. But to come back, I want to ask you a little bit about those things as well. But to come back, some people would have said that, say, the main interest or research interest of Marx was to analyze not why that particular price, but why that particular social form of organizing an economy. But you would say you need both, or they're both in Marx. Anyway, I deny it's absolutely that Marx was only interested in one side. One of the things that happens with Marx, this is an analogy I use. I may not have the exact numbers here, but when Newton was working on the law of gravity, he came to a stunning realization that you could unify these in the idea that two masses are attracted towards each other and that the size of the masses determined the gravitational force between them. And so he could explain why we could take a ping-pong ball, a table tennis ball, and a golf ball, and in the absence of air, they would drop to the ground at the same rate. That's a beautiful, beautiful thing to understand. However, he had a problem. Outside the Earth is the golf ball, the moon is a table tennis ball, and it's hanging there and is not coming down. And Newton was faced with the difficulty that if his argument was correct, he could explain why apples fall from the tree to the ground, but he couldn't explain why the moon didn't fall to the Earth. Now, it took him the development of calculus and I recall it 12, 13 years, some number like that, before he realized that if the two objects are moving relative to each other, they can be in an orbit. Now, suppose that Newton had died before he did that. Suppose he had died only with the apples falling to the ground, then his followers would have split into two parts. Those parts would say, well, he was interested only in the fundamentals, the basic laws, and that he really didn't care about the moon and apples, it was just his point of entry, or the other side would say, well, we need a different principle for that. So maybe we start with Newton, maybe we don't, but we need some way to explain why a big object doesn't fall. And Newton was conscious of the danger, so to speak, of a half-finished theory. Unfortunately, we have from Marx a half-finished exposition, not a half-finished analysis in my opinion. He did a lot of that work, but a half-finished exposition. And it split the movement precisely in that expected way. Some went to the idea that Marx was only interested in a foundational critique, but not interested in the vulgar things like prices and interest rates and exchange rates, but we know that's not true because Marx spent a lot of time commenting and writing about that. And others would say, well, the ideas that Marx put forward are no longer true because he was talking about competition, and we don't have competition. Now we have monopoly, and so they move on to the idea that we have to explain the moon in a different way. I've always argued that both of those are mistakes, that there was a path after Tony Blair known can never say a third way, but there is another path that can't unify the starting point, the elements which were laid out and show that it's capable of explaining much more than was actually used or developed in the classical tradition. And Marx's followers, they try to actually develop or fill the lacunae in Marx's work. For instance, like Hilferding with this book on financial capital or Luxembourg with a book on the accumulation of capital. But in your work, Luxembourg has seen a sort of renewed interest in her work, particularly because of her Landnahme theorem, like the idea that there needs to be an external to capital, only that she was wrong thinking that it had to lay outside of the external borders of nation states, but that it could actually be like the new deal, be inside of existing social formations. But Luxembourg hasn't influenced your work as much. You're drawing a lot on- No, let me say two things. Before I wrote this book, which took me 15 years, I spent 10 years on another book, which was about the movement from Marx to Hilferding and Luxembourg, and I still have that unfinished manuscript. I did, I threw it away. I mean, it's hanging around, but I didn't use it. And I didn't use it because that manuscript focused on the incompleteness or problematics of each of these people in relation to Marx. It became a book about concepts, but not about the issues involved. When I read Hilferding, for instance, and Finance Capital, two things seem to me very important pose there. One is, is it true that there is monopoly? And you have to, when I read that book, I say, how do you know that it's monopoly? And the answer is because firms are big, but big firms, concentration centralization, is not in Marx a source of monopoly. It's a mechanism for competition. However, if you're starting from orthodox economics, perfect competition, then the fact that firms have any scale at all is an indication of imperfection. So what it crept into the Marxist tradition was already the nascent dominant ideology of capitalism, the perfection ideology. And it's absolutely dominant today. The Monthly Review School people have recently published, I mentioned in my book, their notion of what competition is. And they say, well, it's the same as Milton Friedman. Well, that's an astonishing statement from a Marxist group because if they've read anything in Marx, it's all about the fact that competition is the operative principle that regulates capitalism. So when I read Luxembourg was a different question. Luxembourg question was, what about effective demand? What is the place in Marxist scheme? And she focuses on the schemes of reproduction and says, well, where does the demand come from? I read that very carefully and I did a lot of work on it actually at one point. And I realized that the problem was twofold. One is how is the system able to finance growth? And that's a kind of externality, especially if the growth is going to be beyond the internal mechanism system. And the second is how does the system respond to a stimulus of effective demand? And that leads you pretty much to Kalecki and Keynes, which is where Kalecki says he comes from Luxembourg anyway. But then that's disconnected from the other laws. It appears only as a problem at the aggregate level, but surely that cannot be true. Every of these problems appears at the level of the micro. So I try to show that you can stitch these problems together, you can answer them, but not necessarily in the way they were posed either by Hilfiding or Luxembourg. For instance, in the book I show about finance capital. I have a discussion of how finance capital can be treated analytically. Yes, thank you for holding it up. Please buy that book. You will see it's quite heavy, it's not easy to hold up. And here is another problem that comes up. Most Marxist tradition focus on the idea that profit comes from surplus value. What I point out in the book is that Marx makes the argument that it doesn't and people ignore that. And the reason is very simple. Before industrial capitalism, there was 2,000 years of merchant capitalism, not a system in itself, but in some countries and some areas, big trading families, big trading regions, where did the profits come from for those trading regions? They didn't have manufacturers to do it. They went abroad, they took things from here, took them to China or Arabia and they brought back other things. So that was an unequal exchange in the sense of Marx which produces profit. In the beginning of that chapter on profit, I mentioned that I start with Stuart, Sir James Stuart, who says there are two sources of profit. And this is the first section of theories of surplus value of Marx. Part one, chapter one, he discusses, say, Sir James Stuart's idea that there are two sources of profit. And Marx says, Stuart doesn't explain where the second modern profit comes from, which I, Marx, will. That's going to be surplus value. But he's right that there is another profit, which I am going to call profit on transfer or profit on alienation. And that's going to become important later when I get to the distribution. Of course we know he doesn't get to it. But that clue is very important because it's also the source of explaining many problems such as a transformation problem, the appearance or disappearance of profit relative to surplus value, as well as financial capital, as well as trading capital. So I try to show that the same principle operates to explain the particular problems, but the principle has different moments, so to speak. There's a production of profit and there's a creation of profit through transfer. And that solves a lot of problems that appear otherwise to be unrelated to the main argument.