> I dont think you entirely have this right. Labour theory of value is useful in very narrow ways. It doesn't tell you anything about the money supply.
I said that modern economics is dominated by people who "all base their vocabulary and fundamentals on the labor theory of value and an economic model based on the Victorian industrial economy" not Victorian economists themselves, though that's very interesting too. What I meant by Victorian economy was one dominated by largely interchangable labour working in large manufacturing facilities (now we would say "factory"). There's a pretty clear line from Smith, describing a largely preindustrial economy (his famous example was a "workshop", but he wrote more extensively, a fact most who quote him don't know), to Ricardo (technically pre victorian but the first to use modern thinking), to Marx (very insightful to really come to grips with that industrial economy for the first time; a shame his analysis and recommendations were mostly rubbish.
That model of the economic drivers of an industrial economy (palimsest factories -- and workers, mass movements and very long product cycles) powered through WWII (convert an IBM card sorter factory into making machine guns? No problem!) and even into the 60s, but has long been woefully inadequate for an economy in which most jobs are non-fungible skilled jobs (even, or especially, factory jobs) and the collapse of mass movements. And even an economics built on a model of today's economy will soon be inadequate, as you say, for a robotic future where the marginal cost of production tends towards nil. But that's still a long way off.
Speaking of Victorian economists themselves, it's absurd that we speak of mercantalism vs free trade in the same terms as were used 150 years ago. When I am unlucky enough to read a lazy johnny-one-note like Navarro talking about the economy I always imagine him with huge muttonchops like a character from Lytton Strachey. Of course those guys didn't really understand the macroeconomy and were stuck on the gold standard, for all the bubbles and crashes it caused. To that extent I agree what you said about their model of money, at least, being subsumed by more complex and sophisticated instruments more suited to a growing economy. Too bad the model of productive economic activity is still stuck in the past.
> Australia, which gutted out its manufacturing, is riding a boom
Yes, sadly Australia's long boom was really China's, as successive governments of both the coalition and labor chose to turn the country into an extractive resource province of China. The cost, the "Dutch disease", is well known but was blithely ignored. In many ways, both good and bad, I don't recognise the place any more. But compared to most places, in which I include the US, it's still the lucky country.
> You might hate Varoufakis, I don't know, but "adults in the room" is entertaining to read. He did a lot of work on inflationary trends in MMORPG before helping Greece pour fuel on the fire. I wish more was written about that. Massive raids on the intergalactic scene do two things: they bond the tribe, and they're potlach, destroying surplus capital to renew the energy in the game.
Hate is a strong word I almost never use, and as far as Varoufakis is concerned I don't pay much attention to him. TBH I wonder how much he really did on MMORPG economics as as far as I can tell he was almost never at the office, which I believe was part of the reason for his departure. Certainly I don't think he covered himself in glory in his time as a practicing economist in a Greek government.