In reading Keynes' General Theory-he called it that to distinguish it from the Classical Theory-it is striking the differences about important economic matters among the various schools. Take the idea of what derives profit. In classical theory-in reality there of course is no classical theory today, only neoclassical-there's the assumption of profit being the wholly legitimate result of perfect competition.
The Keynesian gloss brings the whole idea of monopoly power into the mix where the rate of profit is a function of a firm's "monopoly power" though this is a relative term. Microsoft in the operating systems industry would be said to enjoy a monopoly power of 80 percent... This makes sense at least on an intuitive level. Keynes is right, I think, to bring the idea of monopolies more to the fore as a company doesn't desire competition for it's products but rather the opposite. You can say competition is the unintended byproduct of each company seeking monopoly power for itself.
Ultimately the best way to get a good idea of how economics works is to read these opposing ideas against each other.
In discussing the theory of profits, I can't help but think of Marx as well, with his idea that profit is a function of "surplus value" where the product is divided into two equal parts-the capitalist's profit(surplus value) and what he pays the worker-the necessary means of his subsistence so that the worker can continue to toil for the capitalist.
This idea of surplus value can be taken in many ways. It might seem that this means the the capitalist "robs" the worker of his real due, as he seems to always pay only half of his whole contribution. Yet Marx is not interested in casting aspersions on the character of any particular capitalist-among which there will be good guys, bad guys, and all points in between as is true for all walks of life-but rather structurally-as an individual the capitalist may not be such a bad fellow, but as a class the capitalist is a pig according to Marxism. The idea that the worker creates the value of the product-the labor theory of value- has the ultimate opponent in Ayn Rand.
She in particular makes a case that is a full 180 degrees from the labor theory of value and surplus value. Whereas Marx argues that labor is 100 percent responsible for value she goes as far as arguing the exact opposite: value is created solely by the "entrepreneur"-in other words, the capitalist. This is not surprising if we remember her background as a Russian Emigre who fled after the Russian Revolution. She always had a deep belief in the power of ideas and this may be largely due to the effect of Marxism in the rise of the Soviet Union. She always saw her task as directly confronting Marxism on the level of theory, and indeed her Objectivism is in many ways not merely anti-Marxism but counter-Marxism.
It does seem to me though that there are some interesting implications of her ideas, and that maybe reading the two off against each other could be very fruitful. Her idea is that it is not the worker who creates-as opposed to constructs- the product(the actor) but he who dreams up the idea of the product (in his head) who is the real creative force. It is the old philosophical debate reborn in modern economics-what comes first the chicken or the egg? That is to say, what is primary thought or action?
Marx in his conscious move away from German philosophy to economics argued that action is the highest form of human activity. What distinguishes man from the animals is his work-in some ways this is similar to Chomsky, though for Chomsky the answer is language rather than work as being the primary thing which makes us different than the animals.
Yet Marx speaks of a man who gets the idea of a table in his head, and then he sets about gathering the materials for it, then he builds the table.
The ability to conceptualize work, to think it before doing it is what makes human work different than animal work according to Marx. Yet can't the case be made that even here thought proceeds action just like for Plato himself? To build a table you have it first in your head and only second do you build it in the flesh.
Arguably that gives just as much primacy to idea over action as any Platonic philosophy. This brings us back to Rand. What you can say here is that the capitalist or entrepreneur is the one who first conceptualizes the idea in his head. That is Rand's point. While it's true that the workers may build a building for example, it is not true to say that the building is thanks to their labor first and foremost because without the architect's organizing idea it never would have happened-it's no coincidence that in her magnum opus, Atlas Shrugged, the hero is an architect who has himself gone on strike. In Marx's table example the organizing idea and physical grunt work are performed by the same man.
Yet, on undertakings of any significant scale this is less and less possible. So while you can meet for example a construction worker whose work was vital in building the new WTC when it finally goes up, was his really the creative act? Or is he simply a skilled technician of someone else's idea? Even if he and others like him did the building they would never have done so left to their own devices. What we have here is the distinction between construction and creation-even if the worker constructs the finished product this doesn't make him the creative force.
In this sense you could even argue that the capitalist sees something in the laborer more than himself. In a big project, each worker individually would never know they had the potentiality in them that the capitalist does.
Anyway that occurred to me today as I continue to read Keynes. I wonder if anyone has tried to read Rand and Marx together.