According to author Arman Calbay, since Adam Smith published The Wealth of Nations in 1776 and John Maynard Keynes his General Theory of Employment, Interest and Money in 1936, economics has made no progress. “Until now, there is no theory that would serve as the basis for the new economics,” he writes. But Calbay’s book, CAPITAL DE FACTO, which is sub-titled “Inquiring into the General Theory of Capitalism,” will, according to him, fill this lacuna and elevate economics to a new plane. It will do so, he asserts, through three key postulates: (1) All factors of production are equal; (2) value is determined by human ownership of the factor of production; (3) Human labor can only belong to the person themselves. But Calbay says his theory also has practical impact—in two pages, he lays out a pension concept that he expects “will be one the brightest and most debated ideas arising from our theory.”
There are, however, a few problems with his book. First, his argument meanders throughout, jumping from Marx’s labor theory of value to Einstein’s theory of relativity to the free market. Second, he is either unaware or pretends to be unaware that several of the issues he claims to be solving have already been addressed, sometimes centuries ago. For example, he writes that “the labor theory of value leads to erroneous foundations, and we are ready to reveal this.” But Marx’s labor theory was refuted even in his own lifetime and the accepted alternative—the subjective theory of value—was independently constructed by Austrian Carl Menger, Englishman William Stanley Jevons, and French economist Leon Walras. In fact, several of Calbay’s ideas have been explored by the Austrian School, yet he seems to have never heard of them—he lists only Marxists, Keynesians, and neoclassical economists. Even more fundamentally, Calbay contradicts himself throughout his book. For example, he argues that “the free market is not a distinctive feature of capitalist society, since the market existed under both slave and feudal systems.” It is true the market existed in such societies, but it certainly cannot be defined as “free” because coercion was a basic feature of the social order. In a similar vein, he argues that the “labor force cannot be sold in our capitalist society” because nobody is a slave. But this elides the elementary distinction between a person selling their work or skills or knowledge and selling themselves. Nonetheless, if Calbay has indeed constructed a theory that upends over two centuries of economics, the Nobel Prize committee that awards the Sveriges Riksbank Prize in Economic Sciences every year will no doubt hear about it.
Arman Calbay’s argument meanders throughout his book, CAPITAL DE FACTO, jumping from Marx’s labor theory of value to Einstein’s theory of relativity to the free market. The book is also rife with logical contradictions, such as a free market that is not free and the assertion that selling labor is the same as selling a person.
~Kevin Baldeosingh for IndieReader