This article sets out the foundations of an axiomatic theory of value and money. It is a definitive statement of the Temporal approach to value, in which a rigorous framework is presented for the transition to continuous time, freeing the theory of value from the prison of discrete (period) analysis in which it has been trapped since the time of the Physiocrats.
In order to achieve this, it demonstrates that the theory of value as developed by Marx is one particulat case of a general theory of value, ownership, production, and distribution, with the special feature that the value of any basket of goods is independent of distribution, allowing us to make the consistent and rigorous the implicit distinction recognised by all economic theories, between production and distribution.
It adopts the method of inductive pluralism in order to equip the public to explain the four facts that define the modern capitalist economy: the long-term post-war decline of the economies of the global North, the financial instability which produced the 2008 crash, the prolonged post-war growth in inequality between the global North and the global South, and the exceptional thirty-year growth of China.
To this end it employs the axiomatic method, which is poorly understood among economists and indeed, maligned. The purpose of an axiomatic approach is to investigate, in a systematic and pluralist way, all possible explanations of the facts, forensically identifying sources of error by pinning down the fallacies, and logical errors, which lead to predictions that do not accord with reaslity. This allows us to interrogate empirical evidence in a systematic way, and is therefore the necessary precondition for an inductivist, scientific enquiry into economic events, that is, an enquiry whose starting point is the explanation of facts.
The second part, to follow, deals with the empirical conclusions especially the analysis of accumulation, the rate of profit, and financial crashes.
Cite as: Freeman, A. 2020. A General Theory of Value and Money (Part 1: Foundations of an Axiomatic Theory). In World Review of Political Economy, 2020 (TBA)