Revisiting the Böhm-Bawerk–Edgeworth Controversy: Early Neoclassical Economists and Labour Exchange

This article revisits the controversy between Böhm-Bawerk and Edgeworth. The crux of this debate revolving around value and cost lay in their views on labour exchange. Böhm-Bawerk and Edgeworth did not disagree on the basic principles underlying the causality between labour exchange and value-cost. Böhm-Bawerk stressed a decisive influence of social power relationships on labour time and Edgeworth apparently agreed. Böhm-Bawerk’s and Edgeworth’s observations on actual industrial relations and their theoretical arguments informing the controversy had variances. Such observation–theory discrepancies also appeared in their other work and were shared by other early neoclassical economists. Their efforts, with this contradiction, contributed to the moulding of a principle that de-individuates labour exchange. At the root of this process lay the fact that, despite their subjectivist approach, they failed to comprehend the distinctiveness of capitalistic labour exchange arising from worker subjectivity towards labour performance and employer countermeasures. The Böhm-Bawerk–Edgeworth controversy typically illustrates this crucial moment for the establishment of the neoclassical paradigm.     

Calls for change. The scientific status of economic theory and the future of democracy: A review of three recent contributions

Abstract

After the last financial crisis, economic theory and economists have largely lost their credibility. Not having been able to foresee and explain the recession, they have clearly shown that a deep methodological reform of the discipline is necessary. With its restrictive assumptions and the self-referentiality of formal models, mainstream economics has indeed become highly unrealistic and therefore unable to face the deep and evident problems of capitalistic society. The books reviewed in this paper try to criticize economic theory from three closely related points of view: the technical drift that has endangered democracy and annulled the role of citizens in public choices, the sometimes obscure role of economists and the way through which articles of low scientific relevance are published, and finally the decisive role of the Nobel Prize in economics to legitimize the market turn begun in the 1970s. Considering such a discouraging picture, it is necessary to ask whether there is still hope for reforming economics and if, possibly returning to the classics of economic thought, it is still possible to carry out a struggle based on ideas and not on dogmatic prejudices.     

Cornelius Castoriadis on the Scope and Content of Neoclassical and Marxian Economics

The paper presents the thought of the political philosopher Cornelius Castoriadis on economic methodology and the neoclassical and Marxian traditions. Castoriadis suggested that the scope of economic theory includes the identification of “local” regularities and not the search for invariant “laws.” He criticized the use of equilibrium and the utilitarian framework in the neoclassical tradition and proposed to approach human agency based on the Aristotelian concept of the “social individual.” In addition, he criticized the deterministic nature of the Marxian “laws.” According to Castoriadis, the use of concepts such as the “production function” and “capital” presents a number of caveats.     

Galbraith’s Obviated Market: Some Empirical Evidence

Unlike the methodological sciences, such as mathematics and decision theory, which use the hypothetical-deductive method and may be fully expressed in complex mathematical models because their only truth criterion is logical consistency; the substantive sciences that have as their truth criterion the correspondence to reality, adopt an empirical-deductive method, and are supposed to generalize from often unreliable regularities and tendencies. Given this assumption, it is very difficult for economists to predict economic behavior, particularly major financial crises.     

On the Anthropological Study of Economies: A Comment

This paper deals with the moral justification behind policy positions. Squeezed between the inevitability of having a welfare ideology and the mantra of value-neutrality (depoliticization), neoclassical policy economists tend to disguise their normative positions on policy matters as common sense. This attitude is particularly pronounced in what I will call "the rhetoric of worthiness," whereby the neoclassical approach justifies its advocacy that certain people should not be helped. This normative position is disguised by a vocabulary (e.g., moral hazard) claimed to be politically neutral. The present paper criticizes this neoclassical mode of policy evaluation in favor of a more socially conscious and innovative policy approach.     

Guy Routh's Heterodox Critique of Economic Methodology

Guy Routh was an outstandingly incisive and severe critic of mainstream economic theory's abstraction, class bias, and empirical irrelevance. Routh's The Origin of Economic Ideas (1975 1989), with such chapter titles as “The Preposterous Origins” and “From Propaganda to Dogma”, was described by Robert Heilbroner as “irreverent, original, controversial, and delightful” while J. K. Galbraith expressed his “utmost enjoyment” and “utmost approval” of the book. Routh's trenchant critique of mainstream theorizing and his vision of an empirically-grounded alternative have been largely forgotten since his death in 1993, but deserve the attention of heterodox and especially of institutionalist and social economists.     

价值创造还是价值攫取:美国企业股东治理模式的困境与启示

美国现行企业治理模式失灵是其经济难以真正复苏的主要原因之一。外部大股东介入公司运营非但没有带来理想中的效率提升,反而干扰了管理层的正常决策,加重了对劳动者的盘剥。金融资本家大肆攫取公司资源,严重损害了企业的创新能力。股东治理模式误解了股东与经理人的经济关系,高估了股东投资对于企业经营的重要性,错把股东视为唯一的风险投资者与关键的创新推动者。此外在分析时所采用的同质化抽象处理也不利于普通股东。股东至上的观念本质上属于资本主义生产方式的必然产物,倾向于大股东的利润分配方案根植于以交换为核心的新古典经济学,不能据此来指导企业经营。我国下阶段的公司改革需要以适合我国国情的、专注于提升企业生产创新能力的新型公司治理理论为指导。     

How Do Longer Parental Leaves Affect Women’s Workplace Tasks? Evidence from Germany

This study examines how the radical extension of the period of parental leave, from eighteen to thirty-six months, that occurred in Germany in 1992 affected the nature of tasks women performed in their workplaces. The results of the analysis – which used a difference-in-differences method – suggests that this reform had a significant impact on the type of tasks carried out at work by women in the former West Germany. The study finds that after the reform was introduced, the women affected by it performed roles involving significantly less creative and more codifiable tasks than they had done previously. This analysis adds a new dimension to the discussion of the impact of maternity leave legislation on labor market outcomes.     

The Discretionary Economy

Some critics allege that many if not most economists are subject to "Panglossian tendencies" — that is, they are too quick to make excuses for apparently dysfunctional aspects of the status quo. This paper examines theoretical welfare economics as a possible exemplar of "Panglossian tendencies." A major focus is on the absence from both the pedagogic and the professional literatures of two key concepts bearing upon the evaluation of Pareto efficiency and social welfare maximization as competing criteria of economic policy analysis: the "isowelfare function" and the "supra-welfare region." These concepts are explicated herein using the familiar Edgeworth-Bowley box diagram illustrating the twoindividual, two-good pure exchange model. A higher level of awareness and appreciation among economists of these concepts might serve the beneficial purpose of downgrading the perceived significance of Pareto efficiency as an operational criterion of economic performance.     

On science and reform: the parable of the new economics, 1960s–1970s

The article considers Paul Samuelson, Robert Solow, James Tobin, Walter Heller, and Arthur Okun qua political economists. The focus is on their combination of a faith in economic science and a passionate public spirit. The article aims to substantiate two related arguments. The first is that these “new economists” were public intellectuals, regularly addressing public opinion, and engaging with the major economic and social issues of the times; the second is that their value judgements gained the upper hand over scientific discourse when they were confronted with the 1970s inflation.     

从劳动激励与监督机制看劳资关系

劳动激励与监督机制显示,在资本雇佣劳动体制下,由于资本追求利润最大化的决策模式,市场机制总是使得资本在对劳动的关系上趋于强势.改变这种格局的必然逻辑是资本的权力应当得到抑制,资本追求利润最大化的决策模式应当得到修正.     

At the origin of post-war mainstream of economics: On pareto’s influence on economic theory

Allais (1968) maintained that Pareto’s influence on the development of economics was felt only after considerable delay and was confined to Italy and France. This paper provides a reconstruction of the intellectual dissemination of Pareto’s thought through Europe and the United States in the period 1900–1940, showing that it was influential in the period from c.1900 to the mid-1920s and that in the 1930s it was highly important in the foundation of mainstream post-war economic theory, although in a more elusive way than before.(JEL:B13, B16, B21, B23, B31)     

Index Volume XII – 1978

This paper presents and evaluates Don Lescohier's contribution to labor economics, and specifically to labor market policy. Lescohier, a prominent member of the Wisconsin Institutional School, put the labor market in the center of his investigations and tried to examine many of the factors that determine its efficient functioning, differentiating his study from the labor studies that focused on the individual — mainly union — worker. His analysis was essentially influenced by the progressive political climate of his time, the heterodox thought of some \"non-Marshallian\" British economists like Beveridge, and the newly emergent field of personnel management. Lescohier ardently proposed the creation of a federal-state centralized system of employment offices, which would undertake the difficult task of organizing the American labor market after the end of World War I. His work constituted both an interesting and significant case study, and thus deserves a higher position in the history of labor economics.     

Theory of negative consumption externalities with applications to the economics of happiness

This paper investigates the problem of obtaining Pareto efficient allocations in the presence of negative consumption externalities. In contrast to the conventional wisdom, we show that even if consumers’ preferences are monotonically increasing in their own consumption, one may have to dispose of resources to achieve Pareto efficiency when negative consumption externalities exist. We provide characterization results on destruction both for pure exchange economies and for production economies. As an application, our results provide an explanation to Easterlin’s paradox: average happiness levels do not increase as countries grow wealthier. We thank an anonymous referee, Xiaoyong Cao, Li Gan, and Tapan Mitra for helpful comments and suggestions that improved the exposition of the paper. The first author thanks the National Natural Science Foundation of China and Private Enterprise Research Center at Texas A&M University for financial support.     

Social Control of Corporate Power: Comment

Economic activity takes place within an institutional framework. The economy, like society, represents a complex of institutions, ranging from the smallest, such as the family, to the largest and most comprehensive, the state (Chavance 2009). Institutional economics offers a broad perspective that brings forward the concept of gender, since gender is a fundamental organizing principle of institutions (Jacobsen 2003). A focus on social provisioning, typical for both feminist as well as institutional economists, leads to a broader understanding of economic activity. This broader approach includes activities like caring and care labor that cannot be entirely understood in terms of individual choices. In this paper, I explore the relationships between care and the economy from the perspective of neoclassical, institutional, and feminist economic theory. Economic theories are a basis for public policies that have a major impact on people’s lives. I argue that changing the dominating economic perspective into feminist-institutional one would improve the situation of care providers, who would, in turn, contribute to the development of society and the economy.