Rejoinder to Rosser,O'Donnell,and Carrión Álvarez and Ehnts on their criticisms of my ergodic/nonergodic formulation of Keynes's concept of an actuarial certain future vs. an uncertain future

This article provides my responses to recent criticisms of my argument associating Keynes’s concept of uncertainty with Keynes’s explicit statement that in our world of experience applying the “probability calculus” to historic data does not produce actuarial certain knowledge of future economic outcomes. Furthermore I have tried to explain, using Keynes’ own written statements how Keynes’s General Theory differs from old classical theory, new classical theory, Samuelson’s Keynesian Theory, and New Keynesian Theory.     

Introduction to an Unpublished Note by Nicholas Kaldor & Joan Robinson

Some have argued for the priority of needs in moral and development theory, on the grounds that people have conflicting and incommensurable values and conceptions of the good. In this paper, I concentrate on one version of this view, that due to John Rawls. Rawls' view is that a person's advantage should be evaluated in terms of certain primary goods which are citizens' needs. I outline a variation on James Griffin's account of well-being, which involves certain values that make any human life better—prudential values. I argue that such values are commensurable, and that the account is consistent with pluralism. The discussion supports and helps us to understand various criticisms of Rawls. It also suggests that one argument for the priority of needs in development theory is invalid.     

Governmental Control of Externalities,or the Prey Eats the Predator

This paper argues that Gunnar Myrdal's theory of the state fruitfully elucidates which set of factors contributed to the transformation of the Welfare State into what James K. Galbraith has described as the modern Predator State. Myrdal employs the circular cumulative causation hypothesis (Berger forthcoming; 2008; Berger and Eisner 2007) to explain the evolution of the state as the result of multiple interrelated factors. Myrdal's evolutionary-institutional analysis of the state is found to be compatible with Galbraith's (2008) recent Veblenian approach in that it highlights the role of corruption (pecuniary considerations) in the relationship between big business (the "organized sector") and government.     

A historiographical exhumation of J.A. Hobson's Over-Saving Thesis: General theory versus historiography

Abstract

The discussion of J.A. Hobson's understanding of over-saving has been largely confined within John Maynard Keynes' famous critique in the General Theory. I argue that gauging Hobson's contribution by ‘general theory’, that is, by an ahistorical, non-evolutionary yardstick, is to miss the larger part of Hobson's achievement. Hobson's conception of over-saving was contained within an evolving historiography of capital accumulation and took on various meanings depending on whether Hobson was discussing a competitive or monopolistic environment. I show that Keynes' ‘corrected’ version of over-saving was implicitly contained within Hobson's analysis of an evolving monopolistic industrial structure.     

Religious rules as a means of strengthening family ties: Theory and evidence from the Amish

Religious institutions impose many rules on their members. I argue that a central function of these rules in many religious communities is to promote altruistic and cooperative behavior within families. My argument contrasts with the dominant view in the literature that the primary economic function of religious rules is to promote altruism and cooperation between unrelated religious community members. I develop my argument using a novel dataset on the Amish. My theory can explain selection patterns into the Amish church, Amish cultural persistence, persistent inequality between the Amish and non-Amish people, and high Amish fertility rates.     

Marshall on equilibrium and time: a reconstruction

This paper's aim is to offer a reconstruction of the Marshallian conception of equilibrium and time. Its main features are as follows. First, I argue that the hallmark of this conception is to posit an interrelationship between two equilibrium concepts — market-day and normal equilibrium. I claim that they are part and parcel and cannot be analysed separately. Second, my reconstruction gives a central role to the market period. Third, I argue that the so-called short and long-period equilibrium concepts refer to the same unique concept of normal equilibrium. Fourth, I argue that Marshall’s value theory admits the effective existence of disequilibrium states. A Marshallian disequilibrium refers to cases where market-day and normal values fail to coincide, this state of affairs going along, however, with market clearing. I also propose an alternative interpretation of Marshall's corn model wherein perfect information is considered the linchpin of achieving equilibrium. Finally, I argue that my reconstruction avoids a series of interpretative pitfalls.     

The Italian theories of progressive taxation∗

In this paper I evaluate the logical consistency of Patinkin's claim that involuntary unemployment can result from slow speed of adjustment. I argue that Patinkin's argument is flawed because of an unjustified breach of continuity in the trade technology assumption between the microeconomic and the macroeconomic parts of Money, Interest, and Prices. Finally, I claim that the issue of flexibility versus rigidity should be linked to the trade technology assumption. As soon as a centralized trade technology is assumed, flexibility automatically comes in.     

CLASSIFICATION PROBLEMS AND THE DIVIDING LINE BETWEEN GOVERNMENT AND THE MARKET: AN EXAMINATION OF NHS FOUNDATION TRUST CLASSIFICATION IN THE UK

ABSTRACT: In this paper we argue that national accounting categories provide an inadequate basis for evaluating differences between public and private sector services. This is because accounting categories rely on economic concepts such as market price but do not take account of substantive public policy goals such as universality. The argument has important consequences for the structures and systems of delivery especially where nonprofit providers and social enterprise models are substituted for public bodies formerly integrated into the government's delivery system. Using an example taken from the UK's National Health Service, we show that the mechanisms for ensuring universality through redistribution are not sufficiently taken into account for classification purposes.     

Advertising in demand systems: testing a Galbraithian hypothesis

In this paper we argue that the influence of advertising upon the inter-product distribution of demand is a system-wide phenomenon which is investigated better through a demand equation system rather than through single equation methods. Attention is focused upon a dynamic version of Deaton Muellbauer's AIDS model modified to include advertising terms. Within this framework using data on consumer's non-durable expenditure in the UK we carry out a preliminary test of Galbraith' hypothesis that advertising may affect the composition of aggregate consumer demand.     

Eriksson on Critical Realism: a rejoinder

Abstract

In this response to Andrew Mearman I argue that his critique suffers from a series of misrepresentations of my paper. For example, Mearman generalizes my arguments about Keynes to be about Critical Realism (CR), and he challenges my criticism of Tony Lawson's arguments by claiming that I have misrepresented CR. In fact the text of my 1998 paper does not support Mearman's claims. Furthermore, since (i) the principal aim of my paper was to question the interpretation of Keynes as a realist, and (ii) Mearman does not present any arguments suggesting how CR in its current form would refute my conclusions, his criticism must be judged doubly misdirected.     

Joan Robinson and the three cambridge revolutions

Joan Robinson's association with three Cambridge ‘revolutions’—imperfect competition, effective demand and capital theory—is examined in the context of her personal and intellectual partnership with Richard Kahn, John Maynard Keynes and Piero Sraffa. Initially, imperfect competition appeared to have successfully extended marginal analysis to all market forms. It also allowed Richard Kahn and Joan Robinson to persuade Keynes to present the main argument of The General Theory in terms of aggregate demand and aggregate supply. By the early 1950s, however, Joan Robinson had rejected the Marshallian methodology and had become a strenuous censor of neoclassical theory. In this paper the origin of her critique is traced to her reading of Sraffa's Introduction to Ricardo's Principles.     

The Anglo-Irish context for William Edward Hearn's economic beliefs and the ultimate failure of his Plutology

Abstract

William Edward Hearn is generally regarded as Australia's first economist of international note and his Plutology ([1863]1864) is invariably deemed to be Australia's first economics text. In this paper I argue that it is more appropriate to describe Hearn as an Anglo-Irish economist and, to this end, provide the Anglo-Irish context for the economic doctrines that he expressed in Plutology and elsewhere. I also argue that the failure of Plutology in the market place was, in part, due to a campaign waged against Hearn in London by John Elliot Cairnes, who was an undergraduate contemporary of Hearn's at Trinity College, Dublin.     

Export Variety,Revenue, and Productivity in China

In this paper I argue through empirical testing that it is the underlying export variety that helps to explain the strong correlation between China's provincial export revenue and productivity. The empirical model maps export varieties into provincial GDP functions with multiple sectors by price index theory. By employing panel data that covers all 31 executive districts of mainland China from 1998 to 2005, I find that export varieties, via export revenue, significantly affect productivity: it accounts for 44.1% of interprovincial TFP differences and 36.6% of within‐province TFP growth; a 10% increase in export variety leads to a 1.4% productivity growth in China.     

Wealth and sensibility. The historical outcome of better living conditions for all according to Adam Smith

In this paper, I argue that Smith's commercial society is characterised more by restraint of self-command than by restraint of emotions through self-command, as usually stated. According to Smith, the appropriate degree of self-command varies with historical circumstances: better living conditions for all favour relaxation of self-command and lead people to express their sentiments more freely. I thus highlight a crucial link in Smith's thought between variations in general economic conditions and variations in moral judgement on the expression of emotions, or, in other words, between The Theory of Moral Sentiments and the Wealth of Nations.     

INEQUALITY, MAJORITY VOTING AND THE REDISTRIBUTIVE EFFECTS OF PUBLIC EDUCATION FUNDING

Abstract. This paper documents that in poor countries redistribution in cash is negligible. To the extent that public education funding is redistributive, the lion's share of redistribution in poor countries is through public education budgets. I present a simple model of how inequality determines redistribution through public education spending when funding decisions are made through majority voting. Contrary to T. Persson and G. Tabellini, and contrary to conventional wisdom, in the present model higher inequality leads to less redistribution if the curvature in the utility function is sufficiently high. I argue that large curvature of the utility function is empirically relevant.     

Anonymous exploitation: non-individual,non-agential and structural

Abstract

On contemporary standard accounts exploitation is of man by man: One individual exploits another through a particular transaction. This paper offers a departure from the individualist transactional paradigm of exploitation by formulating an account of anonymous exploitation. The departure is threefold. Anonymous exploitation may occur as non-individual exploitation in cases where exploiter, exploited or both are not individuals but group agents, it may occur as non-agential exploitation in cases where exploiter, exploited or both are not agents but non-agential groups and it may occur as structural exploitation in cases where structures are exploitative. I shall argue that anonymous exploitation in its three variants is a real, independent and non-mysterious phenomenon. To miss its significance is to miss the ‘genius’ or even to remain blind to important instances of exploitation. My argument proceeds in seven steps. In section 1, I offer a brief analysis of the concept of exploitation and spell out the desiderata that a successful theory of exploitation would have to satisfy. In section 2, I explain what I mean by anonymous exploitation. Section 3 explores the idea of non-individual exploitation; section 4 presents an account of non-agential exploitation and section 5 proceeds likewise with the idea of structural exploitation. Section 6 puts the individual steps of my argument together and I conclude in section 7.     

Jacob Viner on Adam Smith: Development and reception of a theological reading

Abstract

Jacob Viner was one of the most important interpreters of Adam Smith's work, particularly for his emphasis in a classic 1927 article on Smith's theological framework, his discussion of the relationship between the Theory of Moral Sentiments and the Wealth of Nations and dismantling of a popular view of Smith as a doctrinaire advocate of laissez-faire. What is less well known is that Viner's theological reading of Smith developed over the next 40 years through intense study of eighteenth century natural theology, and some of his views changed. This article traces the development of Viner's interpretation of Smith. It assesses the suggestion of D.D. Raphael that Smith moved away from a theological framework over time and that Viner repudiated his theological reading of Smith. I argue instead that Viner's mature work broadened and strengthened the theological reading. Much of the literature on Smith and Viner wrongly assumes that naturalistic explanation and theological frameworks are mutually exclusive. This may be the dominant twentieth century view, but it was not so in the eighteenth century, as Viner well understood.     

The Institutionalist Roots of Macroprudential Ideas: Veblen and Galbraith on Regulation,Policy Success and Overconfidence

One consequence of the global financial crisis has been to prompt debate over macroprudential regulation – meant to limit private risk-taking that threatens systemic stability. In this paper, we stress the roots of macroprudential ideas in the Institutionalist economics of Veblen and Galbraith in a way that highlights both unrecognised policy possibilities and underappreciated impediments to policy effectiveness, arguing in particular that regulatory success can breed overconfidence. First, we argue that while Veblen's views anticipated macroprudential arguments, they also obscured tensions between the technocratic acumen of policy ‘engineers’ and popular legitimacy. Second, we argue that while Galbraith's views similarly shaped the postwar Keynesian policy mix, they also echoed Veblen in underrating the potential for populist resentment of an intellectual ‘technostructure’. We conclude that while this analysis can be seen as highlighting an overlooked century of macroprudential debate, it also demonstrates the potential for technocratic overconfidence – which can eventually undermine policy legitimacy and effectiveness.     

Backhouse and Boianovsky on “disequilibrium theory”. A review article of transforming modern macroeconomics. Exploring disequilibrium microfoundations, 1956–2003

Abstract

This article is an in-depth analysis of Backhouse and Boianovsky's book, Transforming Modern Macroeconomics: Exploring Disequilibrium Microfoundations, 1956–2003. I start with questioning Backhouse and Boianovsky's too broad understanding of the disequilibrium approach. Thereby they bring together theories that should be kept separate, those by Patinkin, Clower and Leijonhuvud on the one hand, and those by Barro and Grossman, Drèze and Benassy, on the other. I also substantiate my disagreement with their claim that an inner link exists between fixed price equilibrium theories and imperfect competition modelling. Finally, I put forward a few conjectures about the reason why fixed price modelling petered out.