Crusoe,Friday and the Raced Market Frame of Orthodox Economics Textbooks

ABSTRACT

‘Crusoe’ and ‘Friday’ signifiers necessarily evoke a world of racialised hierarchies. Economics textbooks are perhaps the sole remaining medium to simply wish away their resulting relations of power. These are the teaching aids that inspire students analytically to think of markets as pristine economic institutions and persuade them politically that they should want to will such institutions into being. Yet they all-too-often rely on the pedagogical device of the so-called Robinson Crusoe Economy, where the main characters from Defoe’s most famous novel are required to instinctively recognise their equality within voluntary contracting agreements so that each can act as the neoclassical homo economicus. In other words, economists’ Crusoe and Friday figures must behave antithetically to what has historically been implied by the ‘Crusoe’ and ‘Friday’ signifiers. But how can this be so, given how commonplace it was when Defoe’s characters were first introduced into economic theory in the 1850s to justify white settler colonialism on the grounds that ‘savage’ societies lacked the capacity to be self-governing? The raced market frame that emerged in practice from this assumption continues to be reproduced uncritically today by Crusoe’s and Friday’s presence in the textbook explanation of the most basic model of market exchange.     

Robinson Crusoe: The quintessential economic man?

The tale of Robinson Crusoe strikes a responsive chord in the imagination of many economists. This paper argues that the story of Robinson Crusoe, and the joy economists take in his example, are indicative of the way the discipline deals with issues of race and gender. Crusoe is used to represent homo economics par excellence, yet his self-sufficiency conceals the labor of others. A close reading of the novel reveals the issues of power, sexuality and race that are hidden underneath the storyline of Crusoe's relationship with Friday. The economists' portrait of equal exchange ignores the elements of domination and exploitation between Crusoe and Friday. The absence of female agency in Defoe's and the economists' story masks a narrative structure that, in fact, relies in fundamental ways on gendered representations. This process of exclusion mirrors the lack of recognition in our culture of the economic contribution of women. If Crusoe is taken to be the quintessential economic man, the economists' story imposes boundaries separating those who belong in economic discourse from those who do not. It also makes it easier for our discipline to avoid the ethical burden of addressing the disturbing issues of race and gender in our narratives.     

From profit margins to income distribution: Joan Robinson's odyssey from marginal productivity theory

The point of departure for this paper is a 1941 Note on profit margins co-authored by Joan Robinson and Nicholas Kaldor that remained unpublished until 2000. Robinson's reviews of Henry Clay's The Problem of Industrial Relationships, Bresciani Turroni's The Economics of Inflation, and Roy Harrod's Towards a Dynamic Economics, along with her 1965 Cambridge Inaugural Lecture, may be interpreted as analogous documents that develop her critique of neoclassical wage theory and identify the money wage as the economy's ‘key’ price. These publications were critical steps toward the wage mark-up hypothesis and Post-Keynesian support of incomes policy to contain inflation. Robinson's Harrod review anticipated her later ideas about economic growth. With Kalecki's notion of ‘the degree of monopoly’ and her own concept of neo-mercantilism (from the Inaugural Lecture), these themes are nascent in the Robinson–Kaldor Note on profit margins.     

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.     

Sraffa: the theoretical world of the ‘old classical economists’ *

Sraffa's mature work is seen here as a re-discovery and resumption of the ‘submerged and forgotten’ approach of the ‘old classical economists from Adam Smith to Ricardo’. Wages determined by broad economic and social forces entail there product prices determined independently of demand and supply functions. Some main questions raised for the modern economists by this radical reorientation of economic theory are then considered in order to conclude that it is aginst that background that Sraffa's mature work should be set with its three main contributions, of a rediscovery of the approach, of a complete and transparent solution of the problems of price determination it raises, and of its application to the critique of neoclassical theory. Among several developments originating from Sraffa's seminal work, two are singled out for mention: (i) the possibility of deficiencies of aggregate demand in the long period no less than in the short one; this follows naturally from the abandonment of the neoclassical theory of distribution, of which the role of the interset rate in equilibrating savings and investment is a corollary; (ii) the question of the distribution of the surplus between wages and profits in a modern economy where wages are no longer confined to subsistence.     

Joan Robinson and the three cambridge revolutions

Joan Robinson's association with three Cambridge ‘revolutions’—imperfect competition, effective demand and capital theory—is examined in the context of her personal and intellectual partnership with Richard Kahn, John Maynard Keynes and Piero Sraffa. Initially, imperfect competition appeared to have successfully extended marginal analysis to all market forms. It also allowed Richard Kahn and Joan Robinson to persuade Keynes to present the main argument of The General Theory in terms of aggregate demand and aggregate supply. By the early 1950s, however, Joan Robinson had rejected the Marshallian methodology and had become a strenuous censor of neoclassical theory. In this paper the origin of her critique is traced to her reading of Sraffa's Introduction to Ricardo's Principles.     

The New Economics of Labor Migration: Beware of Neoclassicals Bearing Gifts

Abstract

Until the emergence of the New Economics of Labor Migration (NELM) in the 1980s, migration scholars were largely divided into two main theoretical camps, viz. the neoclassical and historical-structural approaches to migration. Against this background, the NELM presented itself as a theoretical ‘third way’ between the two latter approaches, and purported to reconcile agency and structure in a way previously unachieved by either of them. While those pretensions gained a fair amount of acceptance and popularity, this paper argues that they are fundamentally misleading, and that the NELM is little more than a slightly more sophisticated avatar of the neoclassical approach to migration, whose fundamental weaknesses it has not, and cannot, shed. This paper further argues that, in so doing, the NELM effectively constitutes migration theory's own instance of economics imperialism, i.e. the attempt to advance the fundamental tenets of neoclassical economics (methodological individualism and the assumption of optimizing rationality) within the context of the study and interpretation of various social phenomena. In order to put forth these arguments, this paper provides a summary presentation of the standard neoclassical theory of migration, the historical-structural heterodoxy and the NELM; highlights why it is that the NELM should be regarded as a ‘reworked’ version of the neoclassical theoretical framework and discusses its inception in the context of the ‘information-theoretic revolution’ in economics; and argues for a new and improved ‘historical-structural synthesis’ as a more satisfactory alternative to both the NELM and the standard neoclassical theory.     

What remains of the growth controversy ∗

Nobel laureate R.M. Solow (1992) reflected that, ‘The Kaldor–Kalecki–Robinson–pasinetti line made life harder for itself by being part of a wholesale attack on mainstream economics. Anyway, it was not ever able to muster a body of serious applied work’. This article considers the accuracy of an assessment like Solow's of the sucess of the growth theorys that economists have proposed as alternatives to neoclassical growth theory. The article, which takes an historical perspective, focuses on Kaldor's growth theory.     

Good in a crisis: the ontological institutionalism of social constructivism

This paper seeks to recover and establish the distinct (and distinctly) institutionalist social ontology that underpins social constructivism as an approach to political economic analysis. It views social constructivism as a profoundly normative mode of political inquiry which seeks to discern, interrogate and elucidate the contingency of social, political and economic change – restoring politics (broadly understood) to processes and practices typically seen to be inevitable, necessary and non-negotiable. More controversially, perhaps, it also sees social constructivism, after both Berger and Luckmann and Searle, as ontologically institutionalist. Social constructivism, it is argued, has its origins in the attempt to establish the ontological distinctiveness of institutions as ‘social’ (as distinct from natural or ‘brute’) facts. This leads it to a distinct understanding of the relationship between actors and the environment (both natural and social) in which they find themselves and to its characteristic emphasis on the ideational mediation of that relationship. That in turn leads it to a particular type of analytic purchase on political economic realities, reflected in its distinctive emphasis on interpretive ambiguity, the social construction of political and economic imperatives and on disequilibrium. The argument is illustrated and developed further through an elucidation of the implications of such a social constructivism for the analysis of the period of crisis through which we now acknowledge ourselves to be living.     

Colonising Space: The New Economic Geography in Theory and Practice

The New Economic Geography (NEG) incorporates social space into neoclassical models, and claims to provide an explanation of uneven development within the parameters of economic orthodoxy. It is among the most influential recent innovations in mainstream economics – Paul Krugman was awarded the 2008 Nobel Prize in Economics for his contributions to the NEG, and it provided the theoretical inspiration for the World Bank's 2009 World Development Report. Drawing on the work of David Harvey and Henri Lefebvre, this article interprets the NEG as a colonising project in both its theoretical claims and its practical applications. Theoretically, the NEG colonises the disciplinary terrain of economic geography while replacing its substantive content with the abstractions of neoclassical economics. In practical terms, the NEG has been instrumental in the World Bank's ‘new spatial approach to development’, which aims to fully colonise peripheral regions of the global economy through constructing the spatial infrastructures necessary for globalised production and exchange. The social contradictions implicit in this project are revealed in the case of the Plan Puebla Panamá, a regional development programme for southern Mexico and Central America, based on the NEG, and identified by the World Bank as a prototype for its spatial approach to development. The article thus provides a critique of the NEG as a theoretical approach and as a policy tool, demonstrating the increasing significance of the production of space within the neoliberal project, and cautioning against the transformation of socio-spatial reality in the image of technocratic abstractions.     

The sceptic as an economist's philosopher? Humean utility as a positive principle

Whereas in philosophy David Hume was long regarded as a negative thinker to be criticized rather than read, many thinkers interested in social and economic theory from Adam Smith onwards found key concepts, distinctions and problems as developed by Hume useful and inspiring. This applies not only to his seminal contributions to technical problems in economics. It is argued that the way in which Hume employed ‘utility as a positive principle’ (most notably in his ‘experimental’ moral theory) is of pivotal importance in this context. It allows for:

a. distinguishing between internal motifs and external circumstances and constraints; and for

b. making explicit the abstract logic of social interaction structures, mechanisms and processes.

Both are necessary conditions for employing the logic of social situations and mechanisms in the explanation of social institutions and economic processes. It moreover prepares the ground for the use of simplified or cartoon-like models of individual agency in economic and social theory, but also for its critique. On this basis, Hume's influence on various strands of social and economic thought, but also the specific differences with regard to more ‘rationalistic’ approaches (such as Hobbesianism or important versions of neoclassical economics) can be assessed more clearly.     

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.     

‘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.     

Rational vs historical reconstruction – a counter-note on Signorino's note on Blaug

Heckscher's 1919 article originated the Heckscher-Ohlin theory of international trade. In 1987 Carl Uhr pointed out that Heckscher in 1928 made another major contribution to economics in a German-language article on ‘intermittently free goods’, presenting ‘a theory of imperfect competition nine years ahead of that by Joan Robinson and Edward Chamberlin, and a discussion of collective goods not priced by the market’. This paper summarizes the salient ideas of Heckscher's article. It evaluates its merits, originality and significance for the history of economic thought, and how it fits into the ‘revolutionary’ developments of the theory of imperfect competition in the 1930s.     

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.     

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.     

Durkheim's sociology,Simiand's positive political economy and the German historical school

During the nineteenth century, French political economy eluded the historical method. In the light of such context, the way Emile Durkheim and François Simiand interpreted the contribution of the German historical school is worth considering. Following Durkheim's sociological approach, Simiand occupies center stage when it comes to examining how much this historical method has to offer to ‘positive political economy’ considered as an alternative to ‘orthodox political economy’ and to the new conception of economic history which was finding its way through the Annales' school.     

Keynes and probability: An assessment

Abstract

Most interpreters agree that Keynes had a wide-ranging, complex, ‘vision of the world’, which underlies his theoretical contributions. Whenever this is forgotten, as happens in the so-called neoclassical synthesis, not only the original Keynesian spirit goes lost but also, and especially, we lose substantive bricks for our theoretical constructions. The paper considers an important instance of this general rule; namely Keynes's views on the logic of probability, meant as the field concerning human behaviour in an uncertain world (hence connected to, but distinct from, the pure theory of probability, meant as a field of mathematics). The paper begins by recalling the main aspects of the classical and frequentist approaches to probability and the main criticisms they received, pertaining among other things to the limits of their applicability. We then consider Keynes's own views, stressing three aspects: the definition of probability as pertaining to the field of logic, the notion of uncertainty and of the ‘weight of the argument’, the ‘theory of groups’. We then discuss the subjective approach of de Finetti, Ramsey and Savage, and contrast it with Keynes's own views. Finally, we consider the implications of our analysis for the interpretation of Keynes's General Theory, and of his attitude towards econometrics.     

Krishna Bharadwaj's “Return to Classical Theory”: an attempt towards an archaeological reconstruction

Abstract

In the wake of Sraffa's ‘return to classical theory’, Krishna Bharadwaj undertook a critical reassessment of Marshall's claim to continuity with classical theory in general and Ricardo's ‘intensive margin’ in particular. Her analysis is based on an analytical separation between two distinct ways of economic reasoning: the ‘surplus based’ and the ‘demand and supply based’ theories. Calling it an ‘archaeological reconstruction’ of the history of economic theories, I will examine how such an interpretation of theoretical shifts clarifies both the presuppositions behind analysing at the ‘margin’, and hence its radical departure from the conceptual content of the classical theory.