Paper credit and the multi-personae Mr. Henry Thornton

The bicentenary celebration of the publication of Henry Thornton's An Enquiry into the Nature and Effects of the Paper Credit of Great Britain (1802) presents an appropriate time for a reconsideration of this great work on monetary economics. This paper highlights Thornton's criticisms of Adam Smith along with the importance that Thornton attached to the lender of last resort role of the Bank of England. It suggests that there are three Mr. Thorntons who appear in Paper Credit. The first is the concerned anti-inflationist of the first section. The second is the worried anti-inflationist of the second section of the book. Besides these, there may be a third Mr. Thornton. This persona was that of the practical banker who understood the new emerging financial architecture that had resulted in paper credit supplanting metallic money. Thornton understood this new transformation of the monetary system. It is conjectured that the existence of the usury laws, inter alia, may have prevented Thornton from fully investigating the possibility of the UK moving to a specie-less system.     

The Economic Writings of William Thomas Thornton: A review article

The Economic Writings of William Thomas Thornton makes available numerous out-of-print books and articles by an important economist whose work has, until recently, been neglected by historians of economic thought. The collection, which is by no means complete, helps cement Thornton's reputation and restores his rightful place in the history of economics. This article discusses the collection's main strengths and weaknesses, and draws particular attention to the contemporary relevance of Thornton's work in the light of recent controversies surrounding his place in the annals of economic science, and to certain aspects of his successful East India Company career.     

Producer co-operatives in nineteenth-century British economic thought

Drawing on the popular radicalism of the day and his own development of the theory of the stationary state, John Stuart Mill had argued on normative and positive grounds that capitalist firms were transitional institutions and should/would evolve into producer co-operatives. In Britain, Mill's work set off a dialogue among mainstream economists. Contributors included Thornton, Fawcett, and Cairnes from Mill's “school,” as well as Jevons and Marshall who while sympathetic endorsed the less radical reform of profit sharing. Ironically, much of the socialist left, including Beatrice Potter (Webb), praised Mill's concerns, but rejected producer co-operatives in favour of nationalisation. By the early twentieth century, Mill's message resonated only with the guild socialists who kept the radical argument for producer co-operatives alive. The subtext of the paper is that modern liberals have too conveniently lost connection with this important history and its radical/liberal message of capitalism as a transitional mode.     

Interest rate gaps and monetary policy in the work of Henry Thornton: Beyond a retrospective Wicksellian reading *

Abstract

This paper revisits the theory of interest rates propounded by Henry Thornton (1760 – 1815). Particular attention is paid to Thornton's examination of the inflationary effects of the gap between the Bank of England's discount rate and the current rate of profit. The paper shows that Thornton is also concerned, unlike Wicksell, about the consequences of a gap between the Bank of England's discount rate and the effective bank lending rate on the market for loanable funds, which results mainly from the usury laws. Thornton's analyses offer then a framework for regulating the value of money through adjustments to the bank rate.     

Some unpublished correspondence of William Thomas Thornton, 1866-1872

This collection of letters conveniently assembles all of the unpublished correspondence of W. T. Thornton to J. S. Mill and J. E. Cairnes. Although this cache of letters is by no means large, it is nonetheless significant. First, Thornton's letters to Mill and Cairnes provide material for a reassessment of his relationship with both men. Second, it is apparent from these letters that Thornton's intellectual preoccupations ranged widely. Hence, they constitute the best supplement presently available to Thornton's published writings on political economy and philosophy. Third, the letters are an important ‘literary’ source in recovering aspects of Thornton's illustrious company career at East India House (1836–1880). In this context, they form an invaluable companion to his published writings on India. They may even afford some clues about the role he played in the formation of policy in India in the period after the 1857 mutiny. In short, they cast important light on the social, moral and intellectual milieu in which he lived and worked.     

R.G. Hawtrey on the national and international lender of last resort

Abstract

This paper traces R.G. Hawtrey's main contributions to the theory of the lender of last resort (LLR), both national and international (ILLR). This theory is a continuation of one of the traditions of the classical period, started by Henry Thornton, which differs in important points from that of Walter Bagehot. In their treatment of the classical concepts the authors partly depart from the interpretation of Thomas M. Humphrey, who considers that Thornton and Bagehot have basically the same approach about LLR. Hawtrey renewed Thonton's views and extended the concepts to new problems, including the ILLR. Hawtrey built a model of LLR in a dynamic macroeconomic model that includes the Cambridge market for cash balance and introduces the bases of a theory of ILLR, describing the sequence of twin crisis, exchange and banking crisis, thus explaining the difficulties for an ILLR to act on the currency market without taking the risks involved, in a situation completely different to the one faced on the money market by the national LLR.     

Sraffa and the Marshallian tradition*

Abstract

The paper retraces some of the stages in Sraffa's thinking about the work of Marshall, by drawing on unpublished material in the Sraffa archive from 1923 to 1930. It argues that Sraffa transformed his dissent – which was based on ideological grounds – into a ‘quest for the fatal error’ to demolish the logical construction of Marshallian theory. Some of his attacks were successful (for example, the critique of the relation between costs and output); other attempts failed (the critique of the ‘normal rate of profit’ and the critique of the concept of marginal productivity) since Sraffa could not find enough textual evidence to support his position.     

Japanese Consumption,External Disequilibrium and their Statistical Measurement

Georgescu-Roegen's work is usually divided into two categories, his earlier work on consumer and production theory and his later concern with entropy and bioeconomics beginning with his 1966 introductory essay to his collected theoretical papers published in the volume Analytical Economics. Most economists usually praise his earlier work on pure theory and ignore his later work which is highly critical of neoclassical economics. Those economists sympathetic to his later work usually take the position that he “saw the light” and gave up neoclassical theory some time in the 1960s to turn his attention to the issues of resource scarcity and social institutions. It is argued here that there is an unbroken path running from Georgescu's work in pure theory in the 1930s, 1940s, and 1950s, through his writings on peasant economies in the 1960s, leading to his preoccupation with entropy and bioeconomics in the last 25 years of his life. That common thread is his preoccupation with “valuation.” The choices our species makes about resource use and the distribution of economic output depends upon our valuation framework. Georgescu-Roegen's work begins in the 1930s with a critical examination of the difficulties with the hedonistic valuation framework of neoclassical economics, moves in the 1960s to the conflict between social and hedonistic valuation, and culminates in the 1970s and 1980s with his examination of the conflict between individual, social, and environmental values. This paper traces the evolution of Georgescu-Roegen's thought about valuation and the environmental and social policy recommendations which arise out of his bioeconomic framework.     

Hayek,Mach, and the re-ordering of mind

This paper argues that Friedrich A. v. Hayek's theory of mind and the relation between mental and physical events, most systematically presented in his 1952 book, The Sensory Order, is indebted to Ernst Mach's theory, and, in particular, to his Analysis of Sensations, above and beyond what Hayek himself along with multiple admirers of his work ever cared to admit. By highlighting a number of important similarities between Mach's and Hayek's theories of the psychical/phenomenal and physical world/order, the paper aims to show that key aspects of Hayek's theory of mind can be traced to Mach's theoretical foundations. The paper further argues that some of the criticisms Hayek levels against Mach concern nonessential points, arise from the uncritical acceptance of common misinterpretations of Mach's theory, or are plainly wrong.     

NEW EVIDENCE ON REAL WAGE CYCLICALITY WITHIN EMPLOYER–EMPLOYEE MATCHES

In the most thorough study to date on wage cyclicality among job stayers, Devereux's (2001) analysis of men in the Panel Study of Income Dynamics (PSID) produced two puzzling findings: (1) the real wages of salaried workers are noncyclical, and (2) wage cyclicality among hourly workers differs between two alternative wage measures. We examine these puzzles with additional evidence from other sources. Devereux's finding of noncyclical real wages among salaried job stayers is not replicated in the National Longitudinal Survey of Youth (NLSY) data. The NLSY data, however, do corroborate his finding of a discrepancy for hourly workers between the cyclicality of the two alternative wage measures. Evidence from the PSID Validation Study contradicts Devereux's conjecture that the discrepancy might be due to a procyclical bias from measurement error in average hourly earnings. Evidence from the Bureau of Labor Statistics establishment survey supports his hypothesis that overtime work accounts for part (but not all) of the discrepancy. We conclude that job stayers' real average hourly earnings are substantially procyclical and that an important portion of that procyclicality probably is due to compensation beyond base wages.     

The economic contributions of Paul Sweezy

This paper offers a critical appraisal of the work of Paul M. Sweezy (1910-2004). After a brief biographical summary, the following sections deal with Sweezy's early writings; his book, The Theory of Capitalist Development; his thinking on socialism; his contribution as an historian of events and of ideas; the Monopoly Capital, co-authored with Paul Baran; and Sweezy's work after the death of Baran in 1964. The paper concludes with an assessment of Sweezy's significance, and a comprehensive bibliography of his writings.     

Frank Knight and pragmatism∗

Abstract

One of many controversies surrounding the work of Frank Knight involves the question of whether, or to what degree, his ideas were consistent with those of American pragmatism. Substantive textual evidence can be found to support almost any simple answer to the question. This paper argues that while Knight was quite (often aggressively) opposed to a particular set of pragmatic ideas alive in the scholarly and social debates of his day, this fact says more about Knight's historical context than it does about the broader relationship between his philosophical position and pragmatism. Knight was opposed to the social control pragmatism of his day, but at the same time his general philosophical position has much in common with the features of the pragmatic tradition that are most emphasized in the recent philosophical literature.     

Starvation and Social Class: Amartya Sen on Markets and Famines

In his recent work, Amartya Sen assesses markets positively because they contribute to freedom. His work on famines, however, harbours a critical stance toward markets. In this paper, I compare Sen's ‘two views’ of markets and argue that his positive assessment is untenable. Markets can undermine freedom and, to show this, I examine the effects of market-dependence in times of famine; I extend the purview of Sen's analysis to include the manner in which subsistence producers who were once relatively autonomous from markets for their survival become dependent on markets. In conclusion, I examine the normative aspects of Sen's work on famines.     

History,utility and liberty: John Stuart Mill's critical examination of Auguste Comte

This paper shows that Mill's assessment of Comte's work casts light on his own attitude towards the historicity of social phenomena and on the way he connects the notions of utility and liberty. It underlines the relative stability of Mill's views. While the tone of his remarks about Comte varied through time, their content remained basically unchanged. The paper untangles the complex web of the two thinkers’ intellectual relationship by gathering information scattered across many texts, assesses the effects of the Comtian influence on Mill's epistemology and shows how Mill's liberalism was partly built on his opposition to Comte's ideas.     

Zvi Griliches's contributions to the economics of technology and growth*

Zvi Griliches's contributions to the economics of technology and growth are identified. Included is a discussion of his contributions on: the determinants of differences in speed of adoption of innovations; the use of patents to measure technology; the private and social returns to R&D; and spillover effects from R&D. Griliches's own evaluation of his research contribution is compared to the evaluation of others in the field, using as evidence citation counts of his works collected from the online Web of Science. Griliches's most important contribution is his 1957 Econometrica hybrid corn paper that is a foundation of the economics of technological innovation. Remarkably, the trend in annual citations to the paper has continued to increase for over 40 years. Finally, we summarize Griliches's most recent views on the practice of economics and on the most important unanswered questions in the economics of technology and growth.     

The contribution of Gerald Shove to the development of Cambridge Economics

Frank Gerald Shove was a close friend of Keynes and the other protagonists of the economic debates in Cambridge during the 1920s and 1930s. Shove's influence on those debates is not well documented because he published little and had all his notes destroyed after his death. This paper looks at Shove's most significant contributions to the debates of the 1930s. Attention is concentrated on the debates over increasing returns and imperfect competition. Shove emphasized the complexity of economic phenomena and the need to develop tools to deal with it. He found his analytical and methodological inspiration in Marshall's work. This position led him to clash with younger economists, in particular Joan Robinson, whose work on imperfect competition and whose efforts to achieve rigorous and ‘precise’ results failed, in his view, to capture the working of actual markets. The final section of the paper discusses the similarity of Shove's methodological outlook to that of Keynes. Both were well aware of the need to go beyond Marshall, but they wanted to retain the richness, complexity and realism of Marshall's approach.     

Jules Dupuit,Société d'économie politique de Paris and the issue of population in France (1850 – 66) ∗

Abstract

The tradition that views Dupuit only as a brilliant engineer-economist who trained at the École nationale des Ponts et Chaussées remained strong in the fifty years that followed World War II. Within this tradition, research on Dupuit mostly was focused on his publications on surplus theory, road tolls and discriminating monopoly. His participation in the debates about other issues taking place within the various learned societies to which he belonged (Société d'économie politique de Paris, Société d'économie sociale, Société de statistique de Paris) long remained unexplored. But recent research has begun filling the gap. This paper follows on these latter research efforts. It aims at uncovering a largely unknown facet of Dupuit, endeavouring to fully elicit his role in the various controversies that took place in France between 1850 and 1866 on the issues of population and the Malthusian principle of population.     

Hayek,Friedman, and Buchanan: On Public Life,Chile, and the Relationship between Liberty and Democracy

This article places recent evidence of Hayek's public defense of the Pinochet regime in the context of the work of the other great twentieth-century classical liberal economists, Milton Friedman and James M. Buchanan. Hayek's view that liberty was only instrumentally valuable is contrasted with Buchanan's account of liberty situated in the notion of the inviolable individual. It is argued that Hayek's theory left him with no basis on which to demarcate the legitimate actions of the state, so that conceivably any government action could be justified on consequentialist grounds. Furthermore, Friedman's account of freedom and discretionary power undermines Hayek's proposal that a transitional dictatorship could pave the way for a genuinely free society. It is contended that Hayek's defense of Pinochet follows from pathologies of his theories of liberty and democracy.     

Ethical Dimensions of the Economy: Making Use of Hegel and the Concepts of Public and Merit Goods

This paper argues that Mises's methodological position has been misunderstood by both friends and foes alike. On the one hand, Mises's critics wrongly characterize his position as rejecting empirical work. On the other hand, his defenders wrongly interpret his stance as rejecting empirical analyses on the grounds that they contradict apriorism and push economics towards historicism. We show that Mises's methodological position occupies a unique place that is at once both wholly aprioristic and radically empirical.     

The Institution,the Economy and the Market: Karl Polanyi's Institutional Thought for Economists

This paper aims to clarify the logical structure of Karl Polanyi's concept of institution, especially with regard to his most important contribution to political economy—the conception of self-regulating markets as institutions. Although Polanyi did not provide a well-developed concept of institution, this article argues that such a concept exists in his work. Moreover, there is in Polanyi's work a sophisticated institutionalist account of the self-regulating market that has been largely overlooked as Polanyi does not present it explicitly. Analyzing the economy as an institutionalized process, as Polanyi does, reveals that the market is neither a natural nor a spontaneous phenomenon—a conclusion that runs counter to conventional economic thinking. Polanyi's approach enables us to view capitalism (the ‘market society’ in Polanyi's language) through a highly specific cultural fact: the fiction of the self-regulating market. This institutional perspective needs to be reassessed beyond new-institutionalist theoretical constructions.