Money, cycles and capital formation: von Mises the 'Austrian' vs. Robertson the 'Dynamist'

A ‘disequilibrium’ between saving and investmentdecisions determines a maladjustment in production, the disruptionof capital, and a downturn in economic activity, according tothe ‘Austrian’ approach. By contrast, the ‘Dynamists’argue that it may lead to economic growth, as disequilibriummay well be instrumental to capital accumulation. What explainsthese different predictions in otherwise similar models? Thekey is in the interplay between the analytical features andthe ideological options underlying each of these approaches:alternative lines of thought, entirely compatible with theiranalytical models, were abandoned by some of these authors whenthey conflicted with their pre-analytical views. This paperillustrates the argument by exploring the models of two ‘fathers’,von Mises and Robertson.     

A behavioural analysis of the subsistence standard of living

Subsistence is analysed as an endogenous variable, contraryto its conventional exogenous treatment. It is postulated thatthe subsistence-livers perceive their own standard of subsistence,direct their earnings behaviour towards attaining, maintainingor exceeding this standard and, thus, reveal the standard throughthis behaviour. The labour supply function of the working poor,which displays a forward-falling segment at low wages and anupward-rising segment at higher wages, is hypothesised to offermeasures of subsistence and survival standards. The conceptsare rationalised using Sen's concept of ‘freedom of choice’and Arrow's concept of ‘freedom as flexibility’.It is argued that at below-subsistence living, individuals lackfreedom of flexibility in choosing their preferences and thussuffer the loss of freedom of choice—while subsistenceoffers a reasonable minimum of this freedom, the freedom iscompletely lost at the lowest survival standard.     

Wage formation in historical perspective: the French experience

Translator's note: In this article Robert Bayer introduces thenotion ‘regulation’ as a key concept in analysesof the labour market. The term refers to the balance of social,institutional and economic forces which characte rise at a particulartime the economic system as a whole or particular parts of it.I considered translating ‘regulation’ as ‘order’,‘regime’, ‘system’ or ‘formation’;but these terms are either too static or already bear inappropriateconnotations. It was therefore decided to retain the Frenchexpression in the English text.     

The economic case for international labour standards

This paper explores the economic case for international labourstandards. Granting workers rights of free association and collectivebargaining confers both static and dynamic economic efficiencies.Static efficiencies refer to one-time gains from improvementsin economic practice. Dynamic efficiencies refer to gains fromimprovements to the growth path resulting from a shift awayfrom a ‘low road’ development path to a ‘highroad’ path. These efficiencies raise wages, employmentand output in developing countries, and they can also benefitworkers in developed countries. Labour standards are an institutionalmechanism for raising the quality of growth in both developingand developed countries. In this sense, they are a ‘win–win’institution.     

The Asian crisis and the shaping of 'proper' economies

The latter half of the 1990s saw a new international agendadevelop: the ‘strengthening of the international financialsystem’ through the globalisation of standards and codesof ‘best practice’. The author calls for criticalreflection on this normalisation of ‘free market’capitalism and its global enforcement through a comprehensivesystem of economic standardisation and surveillance. To thisend, Michel Foucault's analysis of liberalism is shown to behighly relevant.     

Keynesian theorising during hard times: stock-flow consistent models as an unexplored 'frontier' of Keynesian macroeconomics

This paper argues that the stock-flow consistent approach tomacroeconomic modelling (SFCA) is a natural outcome of the pathtaken by Keynesian macroeconomic thought in the 1960s and 1970s,a theoretical ‘frontier’ that remained largely unexploredwith the end of Keynesian academic hegemony. It does so in twosteps. First, it phrases the representative views of Davidson,Godley, Minsky and Tobin as different ‘closures’of the same (SFC) accounting framework, calling attention totheir similarities and logical implications. Second, it discussesunresolved issues within this approach and how it differs from‘modern’ theorising.     

From simplistic to complex systems in economics

The applicability of complex systems theory in economics isevaluated and compared with standard approaches to economictheorising based upon constrained optimisation. A complex systemis defined in the economic context and differentiated from complexsystems in physio-chemical and biological settings. It is explainedwhy it is necessary to approach economic analysis from a network,rather than a production and utility function perspective, whenwe are dealing with complex systems. It is argued that muchof heterodox thought, particularly in neo-Schumpeterian andneo-Austrian evolutionary economics, can be placed within acomplex systems perspective upon the economy. The challengeis to replace prevailing ‘simplistic’ theories,based in constrained optimisation, with ‘simple’theories, derived from network representations in which valueis created through the establishment of new connections betweenelements.     

Preferences, reductionism and the microfoundations of Analytical Marxism

Analytical Marxism has recommended that Marxian theory shouldconform to ‘normal’ scientific methods and thatthis should involve the development of microfoundations. Thelatter has involved the adoption of rational choice theory andits corresponding assumptions regarding agents' behaviour. Thispaper seeks to question this position and highlight a numberof problems which Analytical Marxism faces, particularly inthe domain of economic theory. The different views of scienceespoused by Analytical Marxists display a tension between ‘positivist’and ‘realist’ perspectives, and the arguments forindividualist and anti-reductionist approaches to social andeconomic theory are also argued to be problematic. The approachof Analytical Marxism, it is suggested, can involve the uncriticaladoption of many of the assumptions of standard economic theoryand, as such, it is subject to a number of substantive criticisms,some of which have been elaborated from within mainstream economictheory.     

A simple model of three economies with two currencies: the eurozone and the USA

This paper presents a Keynesian model which describes threecountries trading merchandise and financial assets with oneanother. It is initially assumed that all three countries haveindependent fiscal policies but that two of the countries sharea currency, hence the model can be used to make a preliminaryanalysis of the conduct of economic policy in ‘the eurozone’vis-à-vis the rest of the world—‘the USA’.The main conclusion will be that, if all three countries doindeed operate independent fiscal policies, the system willwork under a floating currency regime, but only so long as theEuropean central bank is prepared to modify the structure ofits assets by accumulating an ever rising proportion of billsissued by any ‘weak’ euro country.     

The fiscal sociology of Gino Borgatta: Pareto, extra-economic redistribution and economic growth

The purpose of this study is to establish the extent to whichBorgatta's early fiscal sociology is consistent with, and differentfrom, Vilfredo Pareto's critical views on fiscal theory. Particularemphasis is given to the treatment of the relationship between‘extra-economic’ redistribution, achieved throughfiscal measures, and economic growth. Since evidence of Pareto'sinfluence is much weaker in Borgatta's more mature studies,the ‘definitive’ Paretian fiscal sociology thatemerged in his early ‘Lo Studio Scientifico dei FenomeniFinanziari’ is investigated for possible indications ofwhy Borgatta did not subsequently develop fiscal studies furtheralong Paretian lines.     

Post-Keynesianism, socialisation of investment and Swedish wage-earner funds

This paper analyses the performance of one of the most controversialof recent economic policy ‘experiments’, namelySwedish Wage-earner Funds (WEFs). It examines the ability ofthe WEFs to meet macroeconomic, financial and democratic objectives.The analysis indicates a favourable financial performance, butlittle significant democratisation. Macroeconomic influencewas constrained by the limited size of the scheme and, thoughassociated with positive changes in economic variables, theexperiment was ultimately overwhelmed by the collapse of anasset price ‘bubble’. Nevertheless, the performanceof the WEFs has legitimised the concept of collective investmentfunds as an economic policy instrument.     

An economics for development and peace: With a particular focus on the thought of Ernst F. Schumacher

Ernst F. Schumacher'sSmall is Beautiful seems thoroughly persuasive even at the turn of the century, as reckless material development is increasingly recognized as a threat to peace. This article describes how his thought was influenced by Mahatma Gandhi. Gandhi's and Schumacher's ways of thinking are considered as alternative development theorees, different from any of those stemming from laissez-faire economics or Marxism. The formulation and proliferation of Schumacher's ideas about intermediate technologies are traced in both Indian and global contexts, to evaluate their sufficiency as bases for development. Moreover, their implications for contemporary economics are discussed, with the assistance of Amartya K. Sen's concepts of “capability,” “sympathy” and “commitment,” which are in clear contrast to the conventional concept of “economic man.” Finally, it is concluded that Schumacher's alternative development theories and practices, as well as Sen's economics, may play important roles in development and peace studies in the 21^st century. I am grateful to William Volgor, Michael McPherson, David Schrom and Mark Kurowski for their helpful suggestions on drafts of this article.     

On the opportunism-independent theory of the firm

Previous developments in the opportunism-independent theoryof the firm are either restricted to special cases or are derivedfrom the capabilities or resource-based perspective. However,a more general opportunism-independent approach can be developed,based on the work of Demsetz and Coase, which is neverthelesscontractual in nature. This depends on ‘direction’,that is, deriving economic value by permitting one set of actorsto direct the activities of another, and of non-human factorsof production. Direction helps to explain not only firm boundariesand organisation, but also the existence of firms, without appealingto opportunism or moral hazard. The paper also considers theextent to which it is meaningful to speak of ‘contractual’theories in the absence of opportunism, and whether this analysiscan be extended beyond the employment contract to encompassownership of assets by the firm.     

Stephen Hymer: Life and the Political Economy of Multinational Corporate Capital

This paper provides a short account of Stephen Hymer's lifeand (its link to) his contribution to the theory of the multinationalenterprise (MNE), but mainly the political economy of multinationalcorporate capital. It suggests that as concerns the theory ofthe MNE, Hymer's contribution has in effect predated most currentextant theory. His contribution to the political economy ofmultinational capital, the focus here, is less known, yet ofextraordinary insight and foresight. Hymer predates most importantdebates on what today is called ‘globalisation’and came up with analysis of the highest quality and predictionswhich in the main have stood the test of time. The chief limitationin Hymer's work stems from a tendency to emphasise the monopolyattributes of large MNEs, and the inefficiency and inequityof ‘multinational corporate capital’. In part becauseof this tendency, some of his later work involved predictionsthat did not necessarily and/or fully follow from his analyticalframework, were shaped by ‘ideology’ and were ofvarying agrees of accuracy. Despite limitations, Hymer's overallcontribution and impact fully deserves the almost ‘cult’status he has acquired in the history of economic thought andinternational business scholarship.     

Thinking about developmental states in Africa

During much of the 1980s and 90s, a literature emerged suggestingthat ‘developmental states’ were impossible in Africa.The arguments given ranged from cultural ones about the pervasivenature of clientalism to structural ones on the dependence ofAfrican economies or the atypical levels of rent seeking inAfrican economies. This paper argues that Africa has had statesthat were ‘developmental’ in both their aspirationsand economic performance. It further argues that these experiencesneed to be examined critically for useful lessons, an exercisethat has been hindered by an excessive levelling of the Africanpolitical and economic landscapes.     

ACCUMULATION, CAPACITY UTILISATION AND DISTRIBUTION

This paper examines three approaches to the process of accumulationwhich are based on the ‘Keynesian premise’: the‘neo-Keynesian’, the ‘Kaleckian’ andthe ‘Sraffian’. Making some criticisms of the firsttwo from the viewpoint of the third and from a certain formal/conceptualperspective, we propose a synthetic model which is free fromthese criticisms and in which the adjustment of savings to investmentin the long period is achieved through all the three routesemphasised separately by these approaches: changes in the long-perioddegree of utilisation; changes in the ‘normal’ distributionof income; and variations in the size of productive capacity.The key to the synthesis is the hypothesis that, in the longperiod, the ‘normal’ degree of utilisation is endogenouslydetermined to coincide with the average level through mutualinfluence effected by investment in the short period. Our syntheticmodel, like the first two approaches, is in the line of steady-stateanalysis, but in a way compatible with the ‘Keynesianpremise’.