Joseph Schumpeter and Thorstein Veblen on technological determinism,individualism and institutions

This article investigates Joseph Schumpeter's affinities with Thorstein Veblen with respect to technological change and determinism, the future of capitalism, individualism and institutions. From a methodological point of view, a common point in their analysis is their anti-teleological view regarding economics as a discipline. Also, in the Schumpeterian system, technology is the cornerstone of economic evolution and appears as the making of new combinations. In the Veblenian theoretical framework, the bearer of change is to be found, inter alia, in technology, just like in Schumpeter's works, although not without differences. They also share the opinion that technology revolutionises capitalism and has serious implications for its future as a system. Furthermore, regarding individualism, in his work Schumpeter stresses the importance of the social milieu on individual action, a fact which bears strong resemblance to the Veblenian notion of evolution as ‘depersonalized evolution’. In this sense, Schumpeter is very close to Veblen, although Schumpeter's approach could be classified in what is called institutionalist individualism, whereas Veblen could be classified as holist. Undoubtedly, the role of institutions is of great importance in both Schumpeter and Veblen. Ιnstitutions in the Schumpeterian schema play a central role closely related to the future of capitalism. Institutional and non-institutional factors enter into complex forms of interaction just like in Veblen's approach. There, institutions are part of the social milieu and their underlying framework, much wider than mere economic and social. Of course, the theoretical analyses of Schumpeter and Veblen are not devoid of differences springing mainly from their methodological approach such as the role of the individual in the capitalist process which is probably the most significant difference regarding the importance attributed to it in Schumpeter's early works. Also, the way technical change appears constitutes another difference. However, his views are quite close to Veblen's. After all, Schumpeter began to write in a social, political, theoretical and ideological environment at a time when evolutionary ideas dominated social thought.     

Marx on Ricardo: an explanation of some important misunderstandings

Ricardo's theory of value and distribution is reconstructed by proceeding along the lines of Marx's critique of Ricardo. It is thus an anti-critique of Marx's reading of Ricardo. The chapter ‘On Value’ in Ricardo's Principles is shown to be a consistent and rigorous treatment of the determinants of prices of production. According to Ricardo labor-values merely serve to approximate more elaborate standards of value. Marx's criticism is shown to rest crucially on his own misinterpretation of Ricardo's definitions and presupposes his own – faulty – theory of surplus value. Therefore Ricardo's theory can – contrary to Marx's theory of surplus value – still be regarded as a fruitful complement to Sraffa's model.     

Schumpeter on the integration of theory and history

This paper assesses Joseph Schumpeter's agenda for the integration of theory and history. On the basis of a critical realist conception of the nature of historical theory it is argued that Schumpeter's aims are at odds with his analytical strategy: his implicit ontology cannot be reconciled with his conception of theory. An illustration is provided as to how this mismatch is reproduced in Schumpeter's substantive attempts to integrate theory and history, and brief reflections are offered as to why this mismatch arose and endured.     

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.     

Marx,postmodernity, and transformation of the individual

Postmodernity raises for Marxism the question of what happens to the alienated subject's consciousness and purposeful action in the aftermath of its alienation. Arguing that some of Marx's own ideas can shed light on this question, I make a conceptual distinction between form of consciousness and mode of consciousness to capture what I take to be the kernel of his thinking on the transformation of the “average” individual and her/his consciousness in his Early Writings, and especially in the Grundrisse.     

Marx's critique of “eternal” political economy: how Mill is alien to Marx's attacks

Marx deplored political economy's claims to establish “eternal” – or “natural” – laws. This paper seeks to defend John Stuart Mill from his critique. It argues that, contrary to what Marx alleged, these two economists have a great deal more in common on this topic than is frequently realised. Both on the theoretical level and on the political one, Mill's views about the relativity of capitalism seem very close to Marx's. This paper also suggests that Marx may have ignored Mill's insistence on the relativity of economic theories because it may have challenged his own “scientific socialism”.     

Screpanti versus Marx on exploitation: a comment

Abstract

Ernesto Screpanti recently claimed to prove that Marx's value theory is logically inconsistent. Jettisoning the value theory, he then reconstructed Marx's theory of exploitation in a manner that supposedly preserves the gist of the original. This note shows that Screpanti's proof of inconsistency is invalid and that his reconstruction contradicts the original theory of exploitation in significant ways, for instance by implying that workers who perform surplus labor can exploit capitalists.     

A Reassessment of Marx's Thought on Labour Exchange

This article reassesses Marx's thought on labour exchange and illuminates its worth. In the Grundrisse and subsequent pre-Capital writings, Marx presented arguments that attached importance to worker subjectivity towards labour performance based on the distinction between labour capacity and labour. This afforded insights into the peculiarities of labour exchange that preclude market determination of wages and other working conditions and necessitate the intervention of class struggle and other socio-political factors in their settlement. The significance of Marx's perspective is further elucidated when compared with the classical tradition and the position of neoclassical economics. Although his emphasis on worker autonomy receded in Capital, his earlier arguments on labour exchange, it is posited, remain highly relevant to understanding industrial relations in today's capitalist economy.     

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.     

J.A. Schumpeter and T.B. Veblen on economic evolution: the dichotomy between statics and dynamics

At present, the discussion on the dichotomy between statics and dynamics is resolved by concentrating on its mathematical meaning. Yet, a simple formalisation masks the underlying methodological discussion. Overcoming this limitation, the paper discusses Schumpeter's and Veblen's viewpoint on dynamic economic systems as systems generating change from within. It contributes to an understanding on their ideas of how economics could become an evolutionary science and on their contributions to elaborate an evolutionary economics. It confronts Schumpeter's with Veblen's perspective on evolutionary economics and provides insight into their evolutionary economic theorising by discussing their ideas on the evolution of capitalism.     

Sapiens nihil affirmat quod non probat

This paper responds to Ernesto Screpanti's critique of Guglielmo Carchedi's approach to Marx's transformation procedure. It argues that there is no logical inconsistency in that procedure once one introduces time, rather than denying it as Marx's critics do. Further, it examines Screpanti's critique and argues that, while Marx's algebra is correct, Screpanti's own ‘refutation’ of Marx is invalid because it balances neither in physical nor in algebraic terms. It finally examines some old critiques which, while presented by Screpanti as novel, are well-known acquaintances which have already been shown to be invalid. Two conclusions are reached. First, Screpanti concedes that the circularity critique does not hold when time is introduced in the analysis and, second, Screpanti's critique is an attempt to vindicate a method of inquiry (simultaneism) which is unsuited to understanding what really matters, a temporal situation, i.e. reality.     

Œuvres économiques complètes

The thesis advanced in this paper is that economists, qua economists, need study and practise the history of economic thought. The ‘cumulative view’ of economics is criticized and opposed to the ‘competitive view’ stemming from Kuhn and Lakatos. Schumpeter's distinction between two stages of economic theorizing–conceptualization and model-building–is recalled. The role of the history of economic thought as a way to investigate the conceptual foundations of different theories is thus pointed out. Some conclusions are then drawn concerning the kind of history of economic thought relevant for the formation of economic theorists.     

Why Marx Neither Has Nor Needs a Commodity Theory of Money

This paper argues, contrary to the standard interpretation, that money in Marx's theory is tied neither to bullion nor to any commodity basis. It is rather the sole social form of value autonomous from use-value. This is demonstrated by reference to Marx's account of the social functions of money, and by showing that to subsume 'money' under 'commodity' commits a category mistake within Marx's system. My argument is conceptual rather than historical. It seeks to locate, not to deny, the role of 'gold' in Marx's monetary theory. It has relevance to contemporary debates about the need for some new 'gold-standard' to sustain the international monetary system.     

NEW LIGHTS ON THE ROBBINSIAN THEORY OF WORK SUPPLY

We assess the actual relevance of Robbins' paper ‘On the elasticity of Demand for Income in terms of Effort’ to the theory of work supply. First, we show that the paper is the first application of income and substitution effects to this branch of economic research. Next, we analyse Robbins' economic terminology, especially his definition of work. We find that the concept of work he uses could seem vague as he may be considering both the length and intensity dimensions of this activity. To verify this possibility, we formally reassess Robbins' original proposal by introducing this wider definition of work into the mathematical framework he proposes. The resulting model shows that this reading (i) is compatible with his diagrammatic analysis; (ii) clarifies the meaning of the other vague economic concepts the author uses; and (iii) illuminates his verbal explanations. Additionally, we derive all the relevant results of both the income‐leisure and the more recent effort‐extraction models from this Robbinsian model of work supply. This last outcome allows us to state that Robbins' model comprises current theories of work supply.     

The interdependence between economic analysis and methodology in the work of Joseph A. Schumpeter ∗

Abstract

This paper offers an overview of Schumpeter's entire economic work from a methodological perspective. Only from this ‘birds-eye’ view do all the well-known parts of his work become part of a mosaic which – from a distance – forms a picture of logical succession: It tells the story of an intensive search for an appropriate analytical understanding of the phenomenon of economic change. As a result, this paper argues that, from a methodological perspective, Schumpeter's work appears to be anything but a monolithic unit.     

Marx on division of labour,mechanization and technical progress

The paper reconstructs Marx's analysis of the development of the forces of production in terms of the interaction among division of labour in particular processes of production, social division of labour and technical progress. It also brings out Marx's conception of technical progress and establishes his view of the essential interdependence among the development of the forces of production, the process of capital accumulation and the expansion of markets; it further brings out the role of competition as a fundamental driving force in the interrelated processes of accumulation and of development of the social productivity of labour.     

Methodology,theory and inquiry in Italian economic and social thought: The making of Francesco Coletti

During the first decades of the twentieth century, Italian economist Francesco Coletti (1866–1940) was recognised as an authority on emigration and agricultural economics. We intend to focus here on Coletti's early career to understand how he rapidly managed to secure an enviable reputation. We examine Coletti's interventions on economic semiology and measurement of national wealth. We then move on to a series of theoretical debates (notably on Marx's theory of value) to which Coletti made significant contributions. Finally, we survey Coletti's fieldwork in agriculture and emigration, topics that allowed for connecting theoretical issues, methodological constraints, and empirical data.     

Perspectives on Michael A. Bernstein's A Perilous Progress: Economists and Public Purpose in Twentieth-Century America *

The article compares Joseph Schumpeter's well-known perspectives of long term economic development with those put forward in the 1920's by the German economist Werner Sombart who followed an approach of ‘theoretical historicism’. There was general agreement between Schumpeter and Sombart that capitalism as an economic system was on the decline. Whereas according to Sombart this was attributable to a tendancy towards stagnation; in Schumpeter's view capitalism was doomed due to its success, not for its failure. The strongest parallels are to be found with respect to forces driving the transformation process, at the end of which Schumpeter expected a socialist system whereas Sombart envisioned some kind of mixed economy. The article also discusses the relevance of differences of approaches and of value judgments for the results of both authors' investigations.     

Sraffa on Fixed Capital,Money and the Phases of Capitalism

In this paper I address some elements in Piero Sraffa's thinking that are connected to his conceptualization of the phases of capitalism. Sraffa describes various stages of capitalism using similar categories to the ones employed in the model of the economy provided in Production of Commodities. This is done by distinguishing the role of population, land and (circulating, intermediate and fixed) capital in each stage. Sraffa changed his conceptualization of fixed capital over the years, until he reached its final formulation. The conceptualizations of fixed capital that Sraffa discusses, together with his remarks on money which are made through an analogy with circulating and fixed capital, provide some elements that shed light on Sraffa's view of the dynamics of capitalism.