When Galbraith Frightened Conservatives: Power in Economics,Economists’ Power,and Scientificity

In this article, I first expound John Kenneth Galbraith’s general theory of power. Galbraith always took into account phenomena of power in economics, and shed light on the power of economists in particular. I then show how the reaction of conservatives to the broadcasting of the Age of Uncertainty highlights the relevance of Galbraith’s theory. Letters exchanged by conservative Lords in an effort to fight against Galbraith’s ideas paradoxically illustrate his theory. This leads to questions about the status of economists, popularizers, and experts. Finally, I argue that convictions have a crucial role in scientific production, and that Robert Solow’s distinction between the “serious scholars” and the proselyte economist is irrelevant because of its incapacity to understand how economists produce knowledge.     

Economic Institutions and the Satisfaction of Human Needs

This article examines John Kenneth Galbraith’s contributions to the field of economic development. Galbraith’s works on economic development were numerous, but they remain largely ignored by his critics and fans alike. He approached the economic development problem with a keen understanding of both the economic and political forces shaping the development debate. Galbraith’s contributions to development economics were always focused on how to get the job done. Doing so required different strategies in an exceedingly diverse community of nations. His work remains relevant. The literature is only now beginning to recognize that this holistic approach to development is a necessary alternative to single-causation theories of world poverty. Galbraith’s approach to development problems is consistent with (and perhaps inspired by) original institutional economics (OIE) in the tradition of Thorstein Veblen and Clarence Ayres.     

Economic Consequences of Armaments Production: Institutional Perspectives of J.K. Galbraith and T.B. Veblen

J.K. Galbraith’s short book, How to Control the Military, boldly championed political and institutional reforms to curb “the military power.” Galbraith stood out among economists for his advocacy of arms reduction negotiations with the Soviet Union. He rejected the hypothesis that the Soviet Union nurtured an aggressive expansionary military policy. At the same time, he maintained that the tenor of national policy and the shaping of national priorities emanated from the Pentagon. Galbraith’s assertion that the military was the dominant force within the “military-industrial complex” was never empirically demonstrated. Nor did he adequately address the crucial role that military outlays played in advancing major technological innovations which underwrote the accumulation process. Veblen offered a more comprehensive analysis of the role of military expenditures, correctly showing that forms of “waste” are highly functional to the institutional and ideological structure of the U.S. economy. Military Keynesianism constituted the evolution of his conceptualization.     

Public Policy Adrift: Veblen’s Blind Drift and Neoliberalism

This paper considers the factors that currently shape and direct public policy formation in the United States. The paper begins by articulating the general position of institutionalists with regard to the purpose of public policy analysis and formulation. Next, a discussion of Thorstein Veblen’s view is presented focusing on his rejection of meliorative tendencies in the economy and the meaning of his concept of blind drift as applied to the likely direction of ongoing social processes. Then, we explore a contemporary analysis of the belief in the role of meliorative trends in contemporary social and economic policy analysis and discussions by James K. Galbraith. Then, we examine Philip Mirowski’s recent analysis of the shaping of the direction of public policy debate by what he refers to as the neoliberal thought collective as a mitigating factor to the blind drift suggested by Thorstein Veblen.     

Cultural catallactics

In response to Israel Kirzner’s claim that “culture lies outside the scope of economic theory itself,” Storr advances a compelling vision of market processes in which price changes, profit/loss signals, and constitutional rules do their work only when refracted through culturally specific webs of meaning. Yet Storr provides few details about the analytic structure or consequences of his alternative approach and ultimately no answer to the Kirznerian question of how, or how fully, a culture-infused market process would eliminate incoherence of plans. Storr’s focus on the competing spirits that animate particular markets is congenial to Ludwig Lachmann’s emphasis on diverse interpretative frames through which individuals decode market signals. If pursued, the nascent Weber-Schütz-Lachmann trajectory of Storr’s cultural catallactics would showcase the distinctive strengths of the Austrian hermeneutic tradition as a radical alternative to the culturally disembedded Walrasian/Kirznerian market.     

Understanding Social Market Economy,Francesco Forte and His Interpretation

The social thought which emerges from Francesco Forte’s economic writings proves to be mainly inspired by methodological individualism, though interpreted through a peculiar “personalistic” key. We will analyze the peculiar traits of his thought and the specific contribution that Forte gave to the understanding of a specific economic theory based on the doctrine of “Ordoliberalism” or the “Freiburg School.” In our work, we will show how Forte proposes an interpretation of that doctrine, according to two of his main points of reference in economic and philosophical thought: Luigi Einaudi and Antonio Rosmini Serbati. Finally, we will present an important aspect of Forte’s work: his institutional analysis in the light of the particular civil philosophy expressed by Christian social teaching.     

Changing knowledge in the early economic thought of Michael Polanyi

How did Polanyi, a middleman between Keynes and Hayek, see economics education as a way to save the challenged liberal economic system of the 1930s? The first part of the article explores how experts and non-experts were engaged in making and disseminating economic knowledge, what role perception had in these engagements, and how such practices contributed to a kind of mental division of labor in the early economic thought of Michael Polanyi. The second part reconstructs Polanyi’s endeavors to show how the visual presentation of social matters could foster these engagement practices and the construction of economic knowledge. The third part points out that top-down and bottom-up approaches were both present in Polanyi’s economic thought and explains why the latter is evolutionary in a sense that it is based on changing knowledge in cognitive, behavioral, social and technical domains. The fourth part discusses how public understanding of economic ideas connected interactional expertise and boundary work in Polanyi’s account, and how he was engaged in developing both as part of his social agenda. The article concludes by showing how Polanyi positioned his growth theory and social agenda to save liberal economic thought and our civilization.     

Creative Destruction or Regressive Stagnation? Comments on articles by Paul Davidson and James Galbraith

In considering the relevance of Keynesian economics in the late twentieth century, there are two questions to be asked: first, to what extent do ‘Keynes's insights’ help in analysing the world today; and secondly, to what extent does the ‘globalisation’ of the world economy, affect the implementation and efficacy of Keynesian economic policies. The articles by Galbraith and Davidson tackle these two questions: James Galbraith considers the relevance of Keynesian concepts in analysing the global economy of today, and Paul Davidson discusses Keynesian policies given the changes in the world economy.     

Honoring a pioneer: Gordon Tullock (1922–2014)

Gordon Tullock made seminal contributions to three disciplines, economics, political science, and biology. He was also a founder of bioeconomics. Although economic theory has moved beyond the rational self-interest assumption that underlies his work, Tullock’s contributions were important theoretical stepping stones.     

Law in Modern Society

In this article, we study the relationship between monetary policy and the socio-institutional framework. Specifically, we examine the economic policy response to the debt crisis of the Eurozone, applying institutional economics from two perspectives: the theory of social power and the endogenous money supply. The research question is whether monetary policy can be characterized as a countervailing power exercised by European institutions with respect to the member countries. Fiscal and monetary policies have been interpreted through these sources and types of power, as proposed by Galbraith, by distinguishing between those types of power that have had a permanent versus a conjunctural character. We conclude that European Quantitative Easing can be characterized as having been a countervailing power. All of this has strengthened European institutional power despite having been manifested in the context of an economic and financial crisis.     

Cognition,competition, and catallaxy in memory of Friedrich August von Hayek

The paper focuses on central elements of the scientific work of Friedrich A. v. Hayek since the 1930s. In a first part, his epistemological position and its implications for his understanding of the tasks of the social sciences are presented as he set them out particularly in theSensory Order (1952). Then, it is shown how his findings in economic theory as well as in the analysis of economic and societal systems are formed by these foundations. His emphasis on the subjectivity and the constitutional limitations of human knowledge is identified as a precondition for the outstanding analytical insights which he gained with regard to the functioning of a market order and the role of institutions in societal development. Furthermore, it is argued that Hayek's enduring campaign for freedom and against the socialist tendencies in welfare states was not simply a matter of personal conviction. It was also the result of his analysis in constitutional political economy which revealed to him that freedom as a normative basis of economic and societal institutions is the key to the explanation of European cultural evolution.     

J. K. Galbraith: Liberal Politics and the Economics of the Modern Business Firm

This appreciation of J. K. Galbraith (JKG) is one of an occasional series of Reputations that New Political Economy carries reviewing the work and life of significant political economists. It is appropriate to include JKG is this series, not only because of his obvious academic stature but also in recognition of the fact that ten years ago he opened the Political Economy Research Centre at the University of Sheffield, UK, from which NPE is managed. To some extent the discussion presented here is based on published work, but in addition an important source involves an interview with JKG conducted on 27 March 2003 in Cambridge, Massachusetts, by Michael Dietrich and Andrew Gamble. Much of the material covered in the interview is developed in more detail in a forthcoming book by JKG to be published in the near future. All quotations and information sources that are not obviously referenced in the text are based on this interview. The discussion is organised as follows. Following a brief introduction, the main section considers Galbraith as a political economist. The focus here is to trace the structure and evolution of JKG's intellectual project. This leads on to a consideration of Galbraith as a political animal and commentator on world affairs. One objective here is to trace the linkages between the intellectual and political projects. Finally, a conclusion is presented under the rubric of Galbraith the man.     

Institutionalism and the “Common Man” Through the Lens of Philip Klein: Business Cycles,the Public Sector,and Keynes’s Economics

This article reviews and assesses Philip Klein’s work on business cycles and macroeconomics, the public sector, and the economics of John Maynard Keynes. The article makes several findings. First, Klein built on the pioneering efforts of Wesley Mitchell to advance the development of cycle indicators and to outline an eclectic theory of cycles that remains useful for synthesizing a broad literature. Second, Klein’s essays on macroeconomics contain enduring discussions of the malleability of the “natural” rate of unemployment and the value of a behavioral approach to expectations. Third, he refocused the institutionalist attention on the public sector by introducing “higher efficiency” and other concepts to help explain how government policy plays a role in economic life. Fourth, Klein emphasized the role of fiscal policy in moderating business cycles. Fifth, his work points in the direction of today’s post-Keynesian institutionalism, both by stressing that Keynes was “profoundly institutionalist” in his approach and by arguing that conjoining Keynes and institutionalism would provide a stronger foundation for macroeconomic theory and policy.     

‘Anecdotal myths’: Tinbergen's influence on Harrod's growth theory

Abstract

In the history of economic theory, Harrod's transition from the explanation of business cycles in An Essay on the Trade Cycle (1936) to his well‐known growth theory in ‘An essay in dynamic theory’ (1939) has always been surrounded by some degree of speculation. One of the topics in that area of speculation concerns the (degree of) influence exerted by Tinbergen on the development of Harrod's growth theory during the 1936–9 period.

This paper argues that Tinbergen's influence on Harrod's work mainly took place on formal, mathematical, grounds, leaving methodological matters untouched. This matter is of some importance in understanding the success of what was initially considered by others as a ‘dynamic’ extension of the Keynesian research programme and later evolved, through the work of Tinbergen and Solow, into a neoclassical growth theory.     

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.     

Francesco Forte’s Contributions to <Emphasis Type="Italic">Essentials of Fiscal Sociology</Emphasis>

Francesco Forte has made major contributions to many areas of economics with the result that his theoretical work and applications have opened new areas of inquiry. This paper connects Forte’s work with the work of Jürgen Backhaus on fiscal sociology. Positioned at the crossroads of economics and sociology, the answers to these questions helped fill the void which gave rise to the field of fiscal sociology. Fiscal sociology is primarily a study of taxation and fiscal policies which illuminates core issues in the sociology of contemporary capitalism. It includes the causes of poverty and inequality in rich countries and adds to our understanding the basis for the inequality between rich and poor countries. Our paper reviews several of Forte’s papers on Pareto’s fiscal sociology and the failure of European planning for less-developed regions. The paper highlights Forte’s contributions to economic theory focusing on Pareto’s sociological theory and the influence of the European Union on regional development.     

Max Weber's critical response to theoretical economics

Abstract

Max Weber's work currently forms the centre of a strategy to rebuild heterodox thought around economic sociology. The instrumentalisation of Weber is based on a lack of understanding of his response to economic theory. This article seeks to fill this gap. It will show that Weber extended Menger's work by correcting its naturalism and that his critical response rests on a Kantian approach, as explained below. It appears that a pure non-Walrasian theory is therefore possible and that the heterodox reclaiming of Weber is based on a misinterpretation of his work.