On Sraffa's Standard commodity

The necessity of expressing the relative price of a commodityin terms of another commodity makes it impossible to distinguishthat part of any change that can be ascribed to the characteristicsof the commodity itself from the part of that change that isto be ascribed to the characteristics of the commodity of reference,i.e., the numéraire. Ricardo (1817) was the first topoint out this problem and the need to find an ‘invariablemeasure of value’, but he was not able to solve the problem.In 1960, Sraffa suggested using a bundle of commodities, thathe called ‘Standard commodity’, to accomplish thisfunction, claiming that it was a standard of value invariantwith respect to changes in the distribution of income. But inSraffa's book there is no explicit proof of this claim. Thisgave rise to many misunderstandings about the Standard commodityand its role as invariable measure of value. This paper proposesa proper definition of an ‘invariable measure of value’,and then proves that the Sraffa ‘Standard commodity’does fulfil the requirements of this definition.     

Hollander, de Vivo and the 'further evidence' for the corn model interpretation of Ricardo: a conspiracy of silence?

This paper reconsiders the debate between de Vivo and Hollanderover the ‘further evidence’ in favour of Sraffa's‘corn model’ interpretation of Ricardo in the lightof Torrens's Letter to Lord Liverpool (1816). It is argued thatthe Letter provides unique evidence of the influence on Torrensof Ricardo's Essay on Profits (1815); and that, contrary tode Vivo, the evidence is not that of a ‘corn model’influence. It is further argued that the manner in which theLetter has been dealt with is unsatisfactory. The shortcomingsin Hollander's position are traced to peculiarities in his long-standinginterpretation of the early Ricardo.     

The Coasean analysis of lighthouse financing: myths and realities

In ‘The Lighthouse in Economics’ (Coase, R. H. Journalof Law and Economics, vol. 17, no. 2, 357–76, 1974), Coasereached the conclusion that in England there existed a relativelyefficient privately financed lighthouse system, which wouldrefute economists' traditional statements concerning the productionof public goods. The purpose of this paper is to challenge hisconclusion. We first show that, from a methodological and theoreticalperspective, ‘The Lighthouse’ is consistent with‘The Problem of Social Cost’ (Coase, R. H. Journalof Law and Economics, vol. 3, 1–44, 1960). Then, applyingCoase's own method (historical case studies), we attempt tore-examine the respective roles and efficiencies of privateinitiative and government.     

On Sraffa's Standard commodity: is its price invariant with respect to changes in income distribution?

In his 1960 book, Sraffa suggested using a composite commodity,which he called the ‘Standard commodity’, to solveRicardo's search for an invariable measure of value, i.e., astandard capable of isolating the price movements of any othercommodity induced by changes in income distribution. The absencein Sraffa's book of an explicit proof of the invariance propertyof this standard gave rise to many misunderstandings about itsmeaning and its role as an invariable measure of value. In orderto clear up these questions, Bellino (On Sraffa's Standard commodity,Cambridge Journal of Economics, vol. 28, 121–32, 2004)has proposed a ‘proper’ definition of an ‘invariablemeasure of value’, showing that Sraffa's Standard commoditydoes fulfil the requirements of this definition. He claims thatthe fulfilment of this property (but not the constancy of its‘nominal’ price) qualifies the Standard commodityas an invariable measure of value. In this paper, a proof ofthe invariance of the price of the Standard commodity with respectto changes in income distribution is given, and the equivalenceof this property with Bellino's definition of invariance isshown.     

New Labour, energy policy and 'competitive markets'

By the end of New Labour's first term four central objectivesof energy policy had become established: ‘cheap’energy, the relief of fuel poverty, a major reduction of carbondioxide emissions, and energy security through maintaining awide diversity of primary fuel supplies, all to be achievedthrough ‘competition’. After surveying New Labourenergy policy documents, the paper argues that New Labour failedto appreciate (i) the extent to which, under such a laissezfaire policy regime, these objectives were mutually inconsistent;(ii) that the apparent successes of energy market liberalisationduring the preceding Conservative Governments had little todo with ‘competition’; and (iii) that the transactioncosts of injecting increasing ‘competition’ intoboth British and European energy systems are likely to exacerbatethe growing threat to energy security. The paper concludes witha brief examination of the implications of transaction costeconomics for the organisational structure of the UK energysupply industry.     

A materialist development of some recent contributions to the labour theory of value

The paper offers a novel interpretation and affirmation of theopening arguments of Capital, answering the fundamental butneglected question of why labour is the substance of value.Marx's arguments require that two philosophical threads, oftenseparated in the literature on value, be woven together. Theargument that value is the intrinsic ‘content’ makingcommodities exchangeable employs the thread of realism. Theargument that abstract labour is the emergent ‘socialsubstance’ of value employs the thread of dialectics.This interpretation develops the materialist and dialecticalphilosophy of E.V. Ilyenkov and deepens the approach to valuetheory initiated by Ben Fine.     

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.     

Labour market deregulation, 'flexibility' and innovation

Labour ‘flexibility’ is often portrayed as importantto competitive success. Using evidence from an original surveyof UK firms, this paper investigates the relationships betweenfirms' use of, on the one hand, various flexible work practices,human resource management techniques, and industrial relationssystems and, on the other hand, the innovative activities ofthose firms. Our results suggest that the sort of ‘lowroad’ labour flexibility practices encouraged by labourmarket deregulation—short-term and temporary contracts,a lack of employer commitment to job security, low levels oftraining, and so on—are negatively correlated with innovation.     

Some Cambridge reactions to The General Theory: David Champernowne and Joan Robinson on full employment

This essay analyses early reactions put forward by Cambridgeeconomists David Champernowne and Joan Robinson to J. M. Keynes'streatment of the labour market in The General Theory. Champernowne'sand Robinson's critical reactions represented attempts to fillthe gap of the determinants of changes in money-wages, whichthey both identified as a weak spot in the argument of the book.They rejected, albeit for different reasons, Keynes's notionof the point of full employment as an upper limit defined bythe equality between the real wage rate and the marginal disutilityof employment. Instead of Keynes's taxonomy of types of unemployment,Champernowne and Robinson introduced, respectively, the conceptsof ‘monetary employment’ and ‘monetary unemployment’,and of ‘critical levels’ of employment.     

Hicks on monetary theory and history: money as endogenous money

Hicks was never tired of saying that monetary theory is in history.What he meant was that monetary theory is intrinsically relatedto real events, and more importantly that monetary issues needto be analysed in a dynamic sequential context in which timeplays an essential part. He went on developing a particularsequential analysis: the study of what happens within a singleperiod (‘single-period theory’) and the study ofthe linkages between a succession of those periods (‘continuationtheory’). It is suggested that this distinction providesa useful lesson for modern endogenous money theorists.     

Breaking the mould: an institutionalist political economy alternative to the neo-liberal theory of the market and the state

The paper criticises the currently dominant neo-liberal discourseon the role of the state and proposes an alternative approachthat will allow us to overcome its shortcomings, especiallyits inadequate analyses of the role of institutions and politics.It argues that the central problem with the neo-liberal frameworklies not in its excessively anti-interventionist policy conclusions,as some of its critics believe, but in the very ways it envisagesthe modus operandi of the market, the state, institutions andtheir interrelationships. The paper then discusses how we mayconstruct the alternative approach of ‘institutionalistpolitical economy’.     

Driven to abstraction? Critical realism and the search for the 'inner connection' of social phenomena

This paper examines critically the method of abstraction offeredby critical realism. Our main argument is that critical realismfails to articulate the synthetic side to abstraction. For thisreason, the critical realist method is unable to capture the‘inner connection’ of social phenomena. We arguethat critical realism is prone to extend a method (partially)applicable to the local and specific level of analysis to thehistorical level. The paper develops a method of abstraction,‘systematic abstraction’, that is appropriate tothis historical level. We argue that systematic abstractionconstitutes a radical addition to critical realism, one whichchallenges the fundamental precepts of the critical realistapproach to abstraction.     

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.     

The ontology of 'the economic': an Aristotelian analysis

Tony Lawson's and Uskali Mäki's respective realist projectsrely on an ontology of the economy. This paper will not focuson these research projects but will instead try to shed lighton them by introducing an ontology of the economy accordingto Aristotle. Oikonomiké, the seminal term used by him,is not a noun but an adjective. For Aristotle, nouns expressentities or beings, both self-sufficient beings and accidentalproperties. Adjectives almost always express accidents. Whatkind of being is ‘the economic’? This analysis willsuggest some conclusions about the constraints of economic scienceand the need for institutions according to the peculiar ontologicalcondition of ‘the economic’ as conceived by Aristotle.