Rethinking the Theory of Money,Credit, and Macroeconomics: A Review Essay

ABSTRACT

This essay presents an overview and assessment of John Smithin's 2018 book Rethinking the Theory of Money, Credit, and Macroeconomics. Smithin continues the projects of Keynes and Minsky with the aim of providing a general account what how the macroeconomy actually works. The essay evaluates Smithin's alternative monetary model of the economy in the light of several key Post-Keynesian themes.     

Modeling model selection in model pluralism

ABSTRACT

In his recent book, Rodrik [(2015). Economics rules. Why economics works, when it fails, and how to tell the difference. Oxford University Press] proposes an account of model pluralism according to which multiple models of the same target are acceptable as long as one model is more useful for one purpose and another is more useful for another purpose. How, then, is the right model for the purpose selected? Rodrik roughly outlines a selection procedure, which we formalize to enhance understanding of his account of model pluralism and to advance the critical discussion.     

An overview of probability,expectations, uncertainty and rationality in Keynes's conceptual framework 1

Keynes's writings on the cognate topics of probability, expectations, uncertainty and rationality exhibit considerable complexity. This paper seeks to provide a clarifying overview of his position on these topics, both in his main philosophical workThe treatise on probability, and his main economic workThe general theory. It is argued that the most useful approach for understanding the deeper structure of Keynes's thought in each work is by means of a two-dimensional, two-domain analysis.Such an analysis helps demonstrate some of the ways in which the conceptual framework of The treatise on probability provides an essential part of the philosophical foundations of The general theory, while at the same time recognizing some of the key differences between the two works. It also illuminates Keynes's non-neoclassical theorization of rationality, and his path-breaking attempt to develop a theory of rationality under irreducible uncertainty.     

Economic theorist and ‘entrepreneur of popularisation’: Schumpeter as Finance Minister and journalist

Abstract

Modern theory of popularisation suggests that the production and the popularisation of scientific knowledge are interlinked and interactive processes. This perspective offers new insights into Joseph A. Schumpeter's main work in public finance, The Crisis of the Tax State, and into his later endeavours as Finance Minister and journalist to popularise two central economic ideas of this work, the once-and-for-all capital levy and the reform of the tax system. We demonstrate that Schumpeter's Crisis contains popularising features and was written with a popularising intention. Furthermore, we show that in his journalistic works popularisation went hand in hand with the development of innovative economic ideas.     

Will the MEGA2 edition be a watershed in interpreting Marx?

Abstract

The MEGA² edition is a watershed in interpreting important aspects of Marx’s oeuvre, but not all of them. It provides hints as to why Marx failed to complete his magnum opus, Capital, and informs about his doubts regarding the “law of motion” of capitalism centred on the “law of the falling tendency of the rate of profit” he was keen to establish.     

Veblen,Veblenian Social Practices,and Prosperity Theology

Abstract:

At the turn of the twentieth century (1910), Veblen published an essay which explored the relationship between Christianity and capitalism by focusing on the interaction between the two institutions as they evolved. Veblen’s analysis begins by detailing the evolution of Christianity prior to the age of industrialized capitalism, after which he explores the evolutionary interplay between the two. Just over ten years prior to the publication of this essay (1899), Veblen published the Theory of the Leisure Class while over ten years after the publication of the essay (1923), Veblen dissected the sales efforts of Christianity in a note titled “Salesmanship and the Churches.” Nearly 100 years later, these three works together explain a modern and distinctly American religious movement—Prosperity Theology. This research argues that Prosperity Theology as practiced in the United States over the past nearly half century embodies and integrates all three of these works by Veblen and proposes the conceptual term “Veblenian Social Practice.”     

Thoreau's economic philosophy

Abstract

This paper provides an encompassing portrayal of Thoreau's economic thought. It is analyzed against the background of the history of economic thought and the economic thinking of his time. Thoreau's economic thought is an extensive examination of the ideas of classical political economy, and particularly of Jean-Baptiste Say, and it is a fundamental critique thereof. Thoreau recognizes that some aspects and foundations of the modern conception of the economy lead to an alienation of the human being from itself as well as to an alienation from nature. I demonstrate that this critique is a result of Thoreau's specific approach to the economy, which, based on his particular understanding of the human being and his philosophy of nature, seeks the meaning of the economy for human life and for nature. In this philosophical approach, which I characterize as an economic philosophy, Thoreau's deeper defiance of classical political economy and his original place within the history of economic thought are grounded. It leads Thoreau to an alternative conception of an economy of moderation, which is identified and described in detail. I conclude with considerations on the potential meaning of Thoreau's thought for current economic research.     

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.     

Inscribing the American Body Politic: Martin Sheen and Two American Decades

Film and television have been influential in the remaking of the American self since the traumas of Vietnam. We undertake readings of class, gender, ethnicity and race focusing on the roles of Martin Sheen and his two ‘crews’ in Apocalypse Now Redux and in the television series The West Wing. We argue that despite the appearance of a more progressive America as represented by the Bartlet White House it remains within a long tradition that represents the US in discourses of innocence and pureness of will and is largely blind to the kind of violence perpetrated by Willard and his crew in Apocalypse Now Redux. We suggest that the capacity of the US repeatedly to ‘forget’ its use of certain kinds of violence marks the limits of self-sacrifice of the American self and provides the discursive possibility for the eternal return of innocence.     

Karl Haushofer and geopolitics — the history of a German mythos

This essay attempts to reassess the writings of Karl Haushofer, a German professor of geopolitics during the period of the Third Reich. However, this examination is not to be another historical reflection. Instead it approaches the question what different kinds of historical reflections on Karl Haushofer as a person and his geopolitics were made in Germany and how they influenced the further geopolitical research. The different interpretations of Haushofer are examined in the form of a discourse analytic study. It shows that the different judgments concerning his work are open to diverse political interpretations.     

Interdependence and independence in Cantillon's Essai

Abstract

Cantillon's contribution to economic thought is widely understood to lie in his systematic examination of economic interconnectedness. The model developed here brings profits fully into price determination, casts additional light on Cantillon's treatment of distribution, and provides the first extended analysis of the policy recommendations found in part one of his Essai. These anti-urban policies are examined in relation to French urbanization and William Petty's analysis of Irish economic development.

Entrepreneurial risk-bearing is central to the Essai and this model, yet for Cantillon landlord tastes determine the economy's equilibrium position. This view is mirrored in his treatment of class mobility: only by becoming landed proprietors can entrepreneurs escape dependence and become independent or autonomous determiners of society. Indeed, social mobility actually accounts for the ‘independence’ of the landed proprietors as a group. Rent's special role stems not so much from the nature of land or agriculture – as Physiocracy would emphasize – as from the nature of the social forces determining its ownership.     

‘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.     

Of clouds and clocks and Keynes: conceptions of reality and the growth of knowledge function of money ∗

In this paper, John Maynard Keynes' General theoryand the concept of money are given an evolutionary interpretation. This interpretation is based on Karl Popper's delightful essay ‘Of clouds and clocks: an approach to the problem of rationality and the freedom of man’. The essay presents two things: Popper's conception of indeterminism and his general theory of abstractions. Popper's general theory concerns the role of abstractions and rule-governed, hierarchical systems of abstractions in structuring an indeterministic and uncertain world. He applies his general theory to science.Popper maintains that science is an abstract, rule-governed, linguistic process that facilitates criticism as a way of learning about our world. Popper calls this the growth of knowledge function of science. Popper's general theory can be applied to Keynes' General theory. Following Popper, I argue for a conception of the economy as a rule-governed, monetary language of commerce that facilitates critically minded inquiry in the domain of ordinary economic transactions. A monetary system facilitates the growth of commonsense knowledge in the economy. I call this the growth of knowledge function of money. An awareness of indeterminism and a growth of knowledge like function of money seem to pervade Keynes' General theory.     

John Stuart Mill on wage inequalities between men and women

Abstract

Mill proposes an analysis of women’s low wages in a paragraph of Principles of Political Economy. The paper’s purpose is to confront this analysis with his conception of justice, rooted in his utilitarianism. Mill’s attachment to justice arises in a particular context, as the result of various intellectual influences. On the one hand, it underlies his concern for the situation of women on the labour market and his insistence on the role played by custom and laws in wage differences between men and women. On the other hand, the shortcomings of Mill’s analysis appear consistent with his vision of equal justice and freedom for women.     

Hungarian Border Politics as an Anti-Politics of the European Union

ABSTRACT

This essay contextualises Hungarian antipolitics of Europe as an element of radical conservative nation-building and as a reflection of the strategic use of borders. Two concrete examples of border politics will be elaborated that document shifts from EU-conformity to EU-contestation and the increasing political significance of culturalist arguments. These cases, moreover, are exemplary of the dual nature of then nationalist-conservative agenda which involves: 1) the implementation of an ethnopolitical and thus extraterritorial, de-bordered notion of nation and 2) the unilateral securitisation of Hungary’s borders, for example with Serbia, in a self-proclaimed defence of European integrity. The research that informs this essay is based on a review of media sources, academic and policy-focused literature. The essay begins with a discussion of links between Hungarian euroscepticism and the radical conservative nation-building project and continues with an analysis of post-1989 border politics with regards to the areas mentioned above. Considerable attention will be devoted to the Hungarian government’s politics of borders and contestations of European Union within the context of the so-called refugee crisis and wider debates regarding immigration and asylum.     

Pigou on business cycles and unemployment: an anti-gold-standard view

Abstract

This note examines A. C. Pigou's views on the practical issue of high unemployment in the 1920s. In his Industrial Fluctuations, Pigou emphasized that the monetary aspect of business cycles was much more important to fluctuations in unemployment than wage adjustment. In a journal article, however, he stated that major part of the high unemployment should be attributed to the failure of money wage adjustment. I argue that, on balance, Pigou attached greater importance to monetary problems than to the wage rigidity.     

On exogenous money and bank behaviour: the Pandora's box kept shut in Keynes' theory of liquidity preference?

This essay examines Keynes' views on banking behaviour and the relationships between central banks and banks as they evolved from his Tract on Monetary Reform to The General Theory. The objective is to clarify in what sense money may be exogenous in his final work. We identify a distinctly Keynesian position on the money-supply process, featuring money exogeneity due to bank behaviour. Our findings run counter to both neoclassical synthesis view on exogenous money cum passive banks as well as the post Keynesian challenge of endogenous money cum passive banks.     

Marx's analysis of the falling rate of profit in the first version of Volume III of capital

Abstract

This paper provides an analysis of the Hodgskin section of Theories of Surplus Value and the general law section of the first version of Volume III of Capital. It then considers Part III of Volume III, the evolution of Marx's thought and various interpretations of his theory in the light of this analysis. It is suggested that, as late as the 1870s, Marx had hoped to be able to provide a demonstration that the rate of profit must fall. The main conclusions are that (1) Marx's major attempt to show that the rate of profit must fall occurred in the general law section, (2) Part III does not contain a demonstration that the rate of profit must fall and (3) Marx was never able to demonstrate that the rate of profit must fall and he was aware of this.     

Strange brew: The antinomies of distribution in W.S. Jevons' Theory of Political Economy *

Abstract

In the Preface to the second edition of his Theory of Political Economy (1879), W. Stanley Jevons announced an extraordinary turn in his analysis as he abandoned much of the explanatory framework used in the body of the text to explain cost of production and distribution. It is shown here that, when the Theory is read in the context of the objective and structure of Jevons' distribution analysis, the turn can be explained as Jevons' response to the realization that he was only able to reconcile his analysis of cost of production and of distribution in a special case.