Marx,Sraffa, and Surplus: Observations Prompted by Garegnani (2018)

ABSTRACT

In a posthumously published article, Pierangelo Garegnani (2018. ‘On the Labour Theory of Value in Marx and in the Marxist Tradition.’) depicts Marx’s project in Capital as that of ‘developing systematically the theory of Ricardo and [the] implications of social conflict’ implied by Ricardo’s ‘surplus approach to value and distribution’. This paper argues to the contrary that Marx’s theory of surplus value and exploitation differs from (neo-)Ricardian surplus theory in fundamental ways, and modifies Garegnani’s simple Sraffian model to illustrate the distinctive implications of Marx’s theory.     

Enrico Barone's ‘Ministry of Production’: Content and Context

Abstract

Enrico Barone's famous article on economic planning, ‘Il Ministro della Produzione nello Stato Collettivista’ (‘The Ministry of Production in the Collectivist State’), which showed the theoretical possibility of an economically efficient collectivist planned economy, was published in Giornale degli Economisti in 1908. Barone's article has been widely cited, particularly in the comparative economic systems literature, but it has not been very widely read or analysed in recent years, and there is not much literature that places Barone's ‘Ministry’ model in the context of his other works or in its historical, social, or ideological context. The aims of this article are: (a) to analyse and clarify Barone's model in depth; (b) to place it in the context of Barone's other writings and the literature on the subject; and (c) to examine the apparent contradiction between Barone's hostility to socialism and his attempt to formulate the pure theory of the collectivist economy.     

Kaldor's 1970 Regional Growth Model Revisited

Kaldor's 1970 paper ‘The Case for Regional Policies’ was republished in the 60th anniversary volume of the Scottish Journal of Political Economy. This article reflects on the model after more than 40 years, and argues that although it has been criticized for its deterministic nature, it has lost none of its relevance. It predates the ideas of so‐called ‘new’ growth theory, and the new economic geography of Krugman, and provides at least a partial explanation of why growth rates and levels of per capita income between regions and between countries can continue to persist and even widen in contrast to the predictions of orthodox equilibrium theory.     

The Stagnation Tendencies of Neoliberalism: A Review Essay

In his 2012 book, From Financial Crisis to Stagnation, Thomas Palley argued that the financial crisis of 2008 would be likely to result in a period of long-term stagnation. Both the crisis and the predicted stagnation, Palley argued, were the outcomes of policies pursued since the 1980s; the persistence of those policies explains the stagnation. Underpinning the policies and their consequences are the flaws of the neoliberal macro model and the particular role played by finance in that model. The rejection of Keynesianism meant the abandonment of the commitment to full employment. The neoliberal paradigm rests upon a foundation of ‘bad ideas’ that are located in political philosophy as much as in economic theory. Palley’s argument has a bearing on recent discussions among mainstream macroeconomists, whose interest in secular stagnation has been revived by the ‘ongoing crisis’. These discussions have left mostly unanswered the question of the causes of stagnation. The present essay argues that Palley’s concept of ‘structural Keynesianism’ can benefit from a closer association with the analysis of structural transformation and its effects on policy regimes and stagnation tendencies.     

The visual history of the Tableau Économique

This article looks at the history of the Tableau Économique from a visual point of view. It shows that Quesnay invented the Tableau to formalize visually his economic theory, and that he used different versions of the Tableau (‘Zigzag’, ‘Précis’ and ‘Formule’) for reasons of visual rhetorics. Accordingly, the visual history of the Tableau clarifies several problems identified by previous ‘ecommentors’. The paper concludes that the history of the Tableau as an image cannot be equated with that of Quesnay's abstract economic model without missing the Tableau Économique's raison d'être.     

Stabilizing consumer choice: the role of ‘true dynamic stability’ and related concepts in the history of consumer choice theory

Abstract

It is often argued that the inability of Arrow–Debreu general equilibrium theory to produce an adequate proof of the stability of the Walrasian price adjustment mechanism was one of the program's most significant failures. This paper will not question this standard interpretation of the history of general equilibrium theory, but makes the case that characterizing the ‘stability’ question in terms of market stability– in particular the stability of the equilibrium price vector in the Walrasian general equilibrium model – actually helped to stabilize the standard model of consumer choice in general equilibrium theory and elsewhere within microeconomics. The problem of the stability of ‘consumer's equilibrium’ was much discussed early in the twentieth century, and it has recently re-emerged in a different guise as the ‘endowment effects’ and ‘reference dependencies’ of contemporary behavioral economics, and yet it disappeared from mainstream discussion during the period 1950 to 1980. This paper argues that shifting the discussion from the intra-agent stability of the individual consumer to the inter-agent stability of the competitive market contributed – despite its ultimately negative impact on general equilibrium theory – to the long period of stable normal science consumer choice theory enjoyed during the middle of the twentieth century.     

Foucault on the Marginal Revolution in Economics: Language and the Cartesian Legacy

Scholars have long debated the ‘revolutionary’ character of the ‘Marginal Revolution’ in economics, focusing on theoretical foundations, methodological devices, social context and political aspects. This article offers a new perspective by investigating ontological and epistemological conditions of that intellectual movement. This requires, in turn, a characterization of those conditions, for which purpose we will draw on Foucault's configurations of thought into ‘epistemes’ in The Order of Things. Although not mentioning those conditions, there have been few references in economics to Foucault's approach. They have mainly claimed that he neglected its importance because he did not see it as a ‘revolution’ in The Order of Things. It is argued here that he actually considered it a ‘revolution’ in The Archaeology of Knowledge. A revision of Foucault's account provides some ideas regarding deep philosophical conditions of the emergence of neoclassical theory and defies some usual interpretations of the circumstances that led to the mathematization of economics. The main conclusion is that its revolutionary character did not stem from a change of ontological beliefs, but—just as many historians of economics have defended—it was a methodological revolution. This study suggests a reinterpretation of that event, claiming that it resulted from a new conception of language and a crisis of Descartes's project of a mathematical unifying science. Going beyond that debate, these reflections proffer ideas that deserve an appraisal in economics.     

Value,sign, and social structure: the ‘game’ metaphor and modern social science

This exploratory paper, part of continued work on the history of game theory, seeks to illustrate certain links between von Neumann's theory of games and contemporaneous ideas in other fields. In particular, we claim that the emergence of the analytical metaphor of the ‘game’ in economics can be viewed as part of a general reconceptualization of theory in a range of disciplines. That methodological reconstitution may be described as the emergence of a Structuralist view, an approach to theorizing which treated its object – be that a text, a kinship arrangement, or an economy – as a self-contained system, with its own internal logic, subject to its own ‘laws’. In particular, individual texts, or observed social and economic arrangements, are now viewed as variations on an underlying logical theme, on a structural invariant. The latter is to be uncovered, in the case of linguistics, through the analysis of phonemes; in kinship analysis, through the rules governing the exchange of women because of the incest taboo; in von Neumann and Morgensterns game theory, through the possibilities for equilibrium coalition formation, based on the stable set. There thus emerged a tendency, across the intellectual spectrum, towards seeing things in combinatorialterms. Theoretical coherence was to be found in examining how objects ‘held together’ rather than analysing where they ‘came from’: nineteenth-century concerns with history, evolution and individual psychology give way to a distinctly modern emphasis on synchronic, formal structure, on analogical reasoning. Atomism gave way to holism, and formal elegance superceded immediate empirical content. Recourse to the metaphor of the ‘game’ was constitutive of this shift, which we examine by referring to Saussures General Course in Linguistics, to Formalism in mathematics and literary analysis, to Lévi-Strauss's analysis of kinship and myth, and to von Neumann and Morgenstern's Theory of Games and Economic Behaviour.     

Personhood and Human Richness: Good and Well-Being in the Capability Approach and Beyond

This paper aims at developing the Capability Approach's (CA) underlying philosophical anthropology and ethics by focusing on the work of its major exponents, Amartya Sen and Martha Nussbaum. I first discuss CA's critique of happiness as subjective well-being and defend the idea of ‘flourishing’ which ultimately refers to the Aristotelian concept of eudaimonia. I then focus on the notions of ‘good’ and ‘well-being’ and address the problem of the compatibility between a substantive notion of the Good (expressed through universal moral values) and individual preferences. I thus tackle the issue of adaptive preferences (which is investigated both from a methodological and an ethical perspective) and suggest that the process of adaptation should be thought in the dynamic frame of the constitution of the self. Therefore, in the second half of the paper I investigate the CA's idea of personhood and focus on some important assumptions behind its underlying anthropological model – above all the notion of ‘human richness’. As a result, I first point out the dynamic dimension of personhood, according to which individuals are ‘becoming themselves’ in search of self-realisation and construction of their identities. Second, I highlight its relational dimension, according to which every one is the expression of the anthropological richness and at the same time represents the highest possibility of richness for every other one.     

Adjusting the model to adjust the world: constructive mechanisms in postwar general equilibrium theory

Economic methodologists most often study the relations between models and reality while focusing on the issues of the model's epistemic relevance in terms of its relation to the ‘real world’ and representing the real world in a model. We complement the discussion by bringing the model's constructive mechanisms or self-implementing technologies in play. By this, we mean the elements of the economic model that are aimed at ‘implementing’ it by envisaging the ways to change the reality in order to bring it more in line with the model. We are thus concerned mainly not with the ways to change the model to ‘fit’ the reality, but rather with the model's own armature that is supposed to transform the world along theoretical lines. The case we study is Arrow–Debreu–McKenzie general equilibrium model. In particular, we show the following: gradient methods and stability could be regarded as constructive mechanisms of general equilibrium modeling in the context of market socialism debates; the obsession of general equilibrium theorists with these concepts can be partly explained by the fact that they hoped not to be faithful to reality, but rather to adjust it to fit the theoretical model; mechanism design theory initiated by the stability theorist Leonid Hurwicz could be seen as a successor of this position. We conclude by showing the relevance of this analysis for epistemic culture of much of contemporary economics and hence, claim that it is an important complement to the traditional philosophy of economic modeling.     

How should firms carry out technological diversification to improve their performance? An analysis of patenting of Korean firms

This research aims to analyze how a firm's technological diversification strategies influence its financial performances, in terms of ‘technological diversification’ in broad technology sectors and ‘technological concentration’ on its own core technology, especially in the case of Korean large firms. The data used in the analysis were panel data encompassing the years between 1990 and 2006, which linked Korean firms’ patent information registered in the United States Patent and Trademark Office to the financial data of those firms collected from Korea Investors Service, Inc. (Kis-Value). For the estimation of the panel data, a fixed effect model, which considers the individual firms’ own effect on the financial performance, was used. Tobin's q was used as a dependent variable representing firm performance, while ‘broad technology diversity’ and ‘core technology diversity’ were used as the focal explanatory variables. The results show that a firm seeking to have more technological assets should invest in a broad technological diversification strategy in its search for new business opportunities; it should likewise concentrate on the core technology in order to maintain its financial performance.     

Endogenous money and shareholders' funds in the classical theory of banking

By its nature, bank money is endogenous, but its issuing is risky and presupposes the presence of banks' shareholders' funds. Shareholders' funds give banks the means of dealing with the difficulties involved in the process of money creation and which are inherent to the banking activity: convertibility constraint, credit and liquidity risks. Unlike the Richardian paradigm, Smith's ‘real bill theory’ and Thornton's ‘lender of last resort theory’ point out the functions of shareholder's funds. Therefore their monetary-banking approachs seem more complementary than contradictory. In other respects, the theory of endogenous money and credit introduces risks and capital in the analysis of exchange and lead to questioning the classical market theory constructed on the model of bartering     

Immanuel Kant and Endogenous Growth Theory

Despite the modern origins of endogenous growth theory, we argue that the ‘Idea for a Universal History with a Cosmopolitan Aim’ written by Immanuel Kant in 1784 provides an early and coherent example of such a theory. Kant's endogenous growth mechanism is driven by the inherent rivalry that exists between agents which increases effort and strengthens the accumulation of knowledge, which in turn is carried through generations. In an exercise in ‘rational reconstruction’, we present a mathematical model of Kant's mechanism. We use the model to contribute to the contemporary policy debate as to whether ‘keeping up with the Joneses’ leads to excessive effort.     

China's Post-Listian Rise: Beyond Radical Globalisation Theory and the Political Economy of Neoliberal Hegemony

While China's rise has been much discussed, its meaning continues to be contested. This is true in radical international political economy, where, for example, it was the subject of (often polarised) debates between Giovanni Arrighi and David Harvey prior to Arrighi's death in 2009. This reflected a broader debate in IPE between development theory and radical globalisation analysis. The key point of contention is whether China's rise represents a challenge to or further consolidation of neoliberal hegemony on a global scale. This article critically scrutinises some of the key assumptions of the radical globalisation approach, specifically, that China represents another form of the ‘competition state’ whose development aspirations have been radically constrained by global ‘new constitutionalism’ and American monetary power so as to conform to neoliberalism. Deploying a structurationist approach to global governance and an eclectic/regulatory analysis of the Chinese state, I argue that China has challenged neoliberalism by projecting its growing power through constitutionalised global governance. In the face of (declining) American power, global constitutionalism has provided an opportunity structure that may help China consolidate its long-term strategy of consensual development. Far from anchoring ‘neoliberal hegemony’, global economic governance is increasingly central to its unravelling.     

The Unconscious Countermovement and the Conscious Polanyian Movement: A New Vocabulary for Contemporary Polanyian Scholarship

ABSTRACT

This article aims to overcome an impasse in current Polanyian scholarship by suggesting a new vocabulary to explain Polanyi’s ‘double movement’ and ‘countermovement’ concepts – the unconscious countermovement and the conscious Polanyian movement. It argues current literature often misinterprets these core concepts, which can lead to a misunderstanding of Polanyi’s general thesis. This paper uses the Carton (2018. On the Nature of the Countermovement: A Response to Stuart et al.’s ‘Climate Change and the Polanyian Countermovement: Carbon Markets or Degrowth?’. New Political Economy)-Stuart et al. (2019. Climate Change and the Polanyian Counter-movement: Carbon Markets or Degrowth? New Political Economy, 24 (1), 89–102) debate on the countermovement to exemplify some of the current misapplications of the countermovement as explicitly ‘anti-capitalist’ (Stuart et al. 2019. Climate Change and the Polanyian Counter-movement: Carbon Markets or Degrowth? New Political Economy, 24 (1), 89–102) movements. This paper argues that in fact all countermovements, as described in The Great Transformation, are necessarily non-ideological. I argue that dialectics and consciousness are fundamental to understanding the double movement and countermovement concepts and that highlighting the conscious/unconscious dynamic within Polanyi’s work helps avoid misreadings of key concepts and provides a clearer and more comprehensive understanding of Polanyi’s general theory.     

Karl Polanyi on economy and society: a critical analysis of core concepts

The Review of Social Economy was founded to highlight the irreducible social aspects of economic activity. Yet, the nature of the ‘social’ and the ‘economic’ are both unresolved, and they are much more problematic than often assumed. This article probes Karl Polanyi’s depiction of the relationship between the ‘social’ and the ‘economic’ and subsequent discourse on ‘embeddedness’. In his Great Transformation (1944) Polanyi associated the ‘economic’ with motives of material gain, while ‘social’ referred to norms of reciprocity and redistribution: his distinction between the ‘social’ and the ‘economic’ then focused primarily on different kinds of motivation. But in a 1957 essay he brought in different kinds of institutions that engender different types of motivation. Polanyi (1944) argued that after 1800 Britain was transformed into a market-oriented ‘economic’ system, based on motives of greed and material gain. He also proposed that an effective market system had to be ‘self-adjusting’ and free of political interference, despite his important additional claim that the state was involved in its creation. Some of Polanyi’s core concepts and arguments are contradictory and problematic, and need to be reconsidered, especially if his enduring insights are to be salvaged.     

Confronting the Geopolitical Aesthetic: Fredric Jameson,The Perfumed Nightmare and the Perilous Place of Third Cinema

This essay explores the conceptual limitations within Fredric Jameson's notion of the geopolitical aesthetic through an analysis of Jameson's now classic reading of The Perfumed Nightmare; this film is central to his concept of the utopic character of film more generally and, moreover, to his argument on the embeddedness of Third World representations within a global, capitalist system. We suggest that, although Jameson acknowledges the underlying constructed and relational character of ontological categories such as film (despite their reification under capitalism), his theory of historical materialism demands that they also be understood as formed with regard to a socio-economic totality. And, because the recognition of a totality requires a master narrative within which all can be understood and framed within a logic of equivalence, Jameson must by default conceive of epistemology as fundamentally divided between a true and a false consciousness. Taking our own cue from recent developments in anti-essentialist thought, we conceive of such cultural forms as the temporarily fixed embodiment of broader-scale discourses that continually construct and deconstruct the world as we know it, including our understandings of the ‘real’ as well as the ‘economic’, the ‘political’ and the ‘cultural’. In our own re-imagining of The Perfumed Nightmare, we provide a partial response to this, noting how these realms are constituted from the temporary ‘fixing’ of a series of people- and place-based identities, such as those constituted under the rubric of ‘gender’. Accordingly, we re-work the term ‘cognitive mapping’ as the attempt to outline the web of significations within which objects are embedded as well as the concomitant lines of fracture and contradiction that allow for such objects to become meaningful in a host of other contexts.     

The treatment of ‘quality’ in the cost of living index

This paper develops the implications of cost of living index theory for measuring the impact of changes in the availability and prices of goods on a household's welfare. It considers both the ‘goods approach’, which treats each variety as a separate entity, and two characteristics approaches: ‘L-characteristics’ and ‘H-characteristics’. L-characteristics are Lancaster's ‘linear and additive’ specification; H-characteristics are Houthakker's ‘heterogeneous’ specification in which the household consumes only a single variety of each product. The paper concludes by discussing the implications of the theory for actual index number construction and relating it to the literature on ‘quality’ and ‘hedonic indexes’.     

Reading Sraffa's Indices – a note *

Piero Sraffa took thirteen years to publish the General Indexto The Works and Correspondence of David Ricardo.The Index is compared to others and is shown to be exceptional in that it leads the way to specific interpretations of Ricardo's life and theory. The choice of entries referring to theory is based on Ricardo's own concepts and carefully avoids neoricardian, Marxian and neoclassical terms. Examples discussed concern ‘comparative advantage’ and ‘value’ The entries referring to Ricardo's life are proof of Sraffa's broad historical interests and focus on certain characteristics of Ricardo.