Vault

Can Machines Create Value? — Steve Keen vs a Marxist Reaction Channel

A Marxist commentator rebuts clips of Steve Keen (Impact Theory with Tom Bilyeu), who argues that Marx’s own logic makes machines a source of surplus. That would kill the falling rate of profit and with it the inevitability of socialism.

Date: reviewed 2026-10-05 Source: YouTube lJgS9Ji3pqk (28:14) — Transcript (clean). The reacting channel is not named in the transcript, so it is unidentified. Participants: Steve Keen (post-Keynesian, in clips) vs an unnamed Marxist commentator (narrating rebuttals) Format: reaction video. The commentator gets the last word on every clip, and Keen cannot reply. Feeds thesis: Directional Truth and the Discrete Trap (Marx as an overextended trendline) Vault relevance: Keen × PBD (Chris’s verdict there: Keen is more ideologically driven than he admits), The Load-Bearing Word, Accounting Identities as Domain-Matching, Dad Saves America — Jevons (marginalism pulled the rug from the LTV), Value and Profit

Context

Chris: “a fun one”. We’ve seen Keen before and dislike his monetary views, “but he is on the right side of this LTV debate here!”

Argument Structures

Keen (clips)

How he got there: the Sydney building boom made him ask why the cranes add no value. Marx’s first seven chapters give a reason why they do, and Keen says Marx retreated from it to keep “scientific socialism” intact. (0:00–0:46)
The classical setup: Ricardo held that cost of production, not supply and demand, regulates price. If everything sells at cost, where does profit come from? Marx’s answer: labour’s exchange value is the cost of subsistence (6 hrs), its use value is a 12-hr day, and the gap is surplus. (2:44–4:29)
Falling rate of profit: competition forces more machinery. If machines add no surplus, profit ÷ (depreciation + wages) falls → wage suppression → revolution. “Obviously completely wrong in how things worked out.” (4:29–5:22)
The core argument: Marx says use value and exchange value are incommensurable (the tribes trading leather and pottery). If that gap is what lets labour yield surplus, the same gap applies to a machine: you buy it at its cost but value it for what it produces. So machines can add value, a rising capital/labour ratio need not lower the profit rate, and socialism is not inevitable. (6:47–8:51)
Marx against finance: “roving cavaliers of credit”; banks “know nothing about production”. The financial sector should serve industry. Today there is too much private debt and speculation. (11:49–13:03)
Globalization was a farce: the services that grew were mostly finance. “Manufacturing is where true value is added.” (16:21–16:44)
America needs a public/private balance: the public sector is better at some goods “because it’s not trying to make a profit”. (20:25–21:15)

Marxist commentator

History hasn’t ended: early capitalism collapsed before it won, and so did early socialism. “The future is unwritten.” (5:22–6:18)
Skip the LTV technicals and jump to full automation: machines produce everything in abundance, so no exchange value is needed and prices fall to zero (TVs, phones, software). Capitalism implodes into communism; “even Musk” says money will be obsolete. (8:51–11:22)
Financialization is a countervailing tendency to the falling rate of profit, not a policy error. Pushing that capital back into production hastens the crash. (13:03–15:53)
Deindustrialization is the falling rate of profit: mature capital can’t reproduce profitably at home, so it is exported. It isn’t a policy mistake. (17:14–19:58)
Privatization is the system’s necessity, not ideology. Keen’s balanced mixed economy is an equilibrium claim, which contradicts his own attack on equilibrium economics. “To prevent any privatization, you have to prevent all of it.” (22:40–28:14)

Discussion seeds

Value vs wealth: the load-bearing word. The commentator’s automation argument concedes machines produce use values (wealth) and only denies they produce exchange value. Under the LTV “value” means labour-time, so “machines create no value” is true by definition. Is the whole fight a dispute over one word?
Falling prices as proof of collapse. He reads cheaper TVs as capitalism losing profitability. Marginalism reads them as the system doing its job: more wealth per hour of work. Who is measuring the right thing?
“History hasn’t ended.” Every failure is temporary and every countertrend is a “countervailing tendency.” Is anything allowed to count against the theory? (Compare Chris’s Keen-is-ideological verdict, which applies here with the parties swapped.)
Keen’s own residue: “manufacturing is where true value is added” and “public is better because it’s not trying to make a profit” are productive/unproductive-labour leftovers. Did Keen escape the LTV, or just move its boundary?
The commentator’s best shot: Keen attacks equilibrium economics, then proposes a stable public/private balance. Is that a fair catch?

Discussion

Chris (2026-10-05):

They talk past each other. “Keen is just criticizing LTV and pointing out that it in itself underlies socialism/communism, while the commentator is advocating that Marx still wants Marxism :)”
“History hasn’t ended” is a poor move. It makes the claim unfalsifiable. The usual counter, “how many times does something have to fail before you understand it doesn’t work?”, falls flat against it, because unfalsifiability absorbs any number of failures. The better attack is to show the theory is self-contradictory, and therefore impossible, rather than to count failures.
Use value vs exchange value is “a bit silly.” In plain terms, exchange value is cost and use value is demand. Prices do fall, but not to zero; we’ve discussed this effect (see Jevons and software demand: cheaper output draws more demand rather than vanishing). “His whole argument relies on an impossible zero cost.”
He agrees with Claude’s proof-by-definition point (seed 1): “Marxists like to do this all the time.”
Seeds 4 and 5 are where we already disagree with Keen, consistent with Keen × PBD.
Marx as an overextended trendline (portable; see below):

“Maybe at best we can see Marx = what goes wrong when one tries to take a trendline too far :)”

Falling prices are a real direction. “Prices go to zero, so exchange value disappears, so capitalism implodes” is the destination that direction can’t reach. → filed as a specimen in Directional Truth and the Discrete Trap.
“Ugg!! my weekend homework now has a third miss!” (Context not captured. Claude asked Chris what the homework is.) “Getting into LTV and exchange value/use value and ‘eventuality’ is the fun part.”

Open Questions

Identify the reacting channel.
Keen’s formal version: Use-value, exchange-value, and the demise of Marx’s labor theory of value (J. History of Economic Thought, 1993; from memory). Marxist rejoinders exist, e.g. Left Flank, 2012.