Research in the History of Economic Thought and Methodology: Volume 24 Part 1

Kalecki's theory of the business cycle is rightly renowned for various reasons: in particular, besides itself providing an original contribution, it set the framework for Kalecki's ideas on effective demand, for his anticipation of a number of Keynesian elements, and for the development of Kalecki's related themes such as income determination and distribution. Although the secondary literature (both technical and descriptive) on this subject is immense, a specific aspect seems to deserve further reflection.

I was invited by Sandra Peart and David Levy to take part in the Summer Institute held from 26 to 30 July 2004 at George Mason University. After some discussion I agreed to give two lectures, on my project on the use of the concept of the invisible hand and on the theory of economic policy of Lionel Robbins and Friedrich Hayek, and to participate in a public “conversation” with James M. Buchanan before the same group. Subsequently, I accepted Buchanan's invitation to have a videotaped private interview by him.

Focusing on the relatively unstudied status of women in classical political economy, this important collection of essays will inform, delight, and even surprise the reader. The essays provide testimony both to the intellectual richness of the period, as well as the extraordinary social and political events of the time. The most striking unifying theme of the work is how social and political contexts served to generate the economic ideas of and about women.

Seven authors contributed to this well-edited volume that explores the publications, lectures, public comments, and correspondence of several well- and lesser-known classical thinkers regarding women's role in society, politics, and the economy. The dual goals of the work as stated by the editors are to “show that the classical economists did concern themselves with gender analysis” and to illustrate that the classical school developed a “sophisticated response to the question, why is it that in all human societies women have suffered a lower status than that enjoyed by men?” (p. 2). This response includes three elements: the inalienable rights of all human beings, the unchanging biological differences between men and women, and the varying historical contexts in which men and women find themselves. The intersection of these three factors affects how and why women's status changes across space and over time. The goals of the volume are met to a great extent, and anyone interested in gender scholarship and/or economic thought will find the collection interesting and long overdue.

Chapter 1 is entitled “Normative Scripture – Christian and American.” Here Pelikan considers the normative status of the two documents. Though their texts were “originally composed under very specific circumstances,” illumined by later scholarship, they have been “adopted by a community as its normative Great Code…occupying a position that in some profound sense stands beyond its own history” (pp. 4–5).That normative status is based on the assumption that it can be applied to any and all of the radically changed situations of later times, many of which the writers who originally framed it could not themselves conceivable have foreseen…. Therefore its words and phrases have for centuries called forth meticulous and sophisticated – and sometimes painfully convoluted – interpretation, as well as continual reinterpretation.…a massive corpus of authoritative, if often controversial, commentary. (p. 5)

This volume, sponsored by the European Society for the History of Economic Thought, was shaped at the University of Bologna where earlier drafts of the 16 essays it contains were presented at a Conference on institutions, markets and the division of labor. Like any collection of essays, especially if they come after a conference, the quality of the contributions varies, but it must be said that the average exceeds the usual standard. Moreover, although the title “Knowledge, Social Institutions and the Division of Labour” is broad enough to accommodate a diversity of subjects, there is a degree of congruity among the different contributions. The book is divided in three parts, “Rationality, Communication and Connecting Principles” (comprising four essays), “Social Interaction and Moral Sentiments” (comprising five essays) and “Division of Labour, Patterns of Interdependence and Social Institutions” (comprising seven essays).

This book is important for demonstrating a significant lacuna in our current view of the history of economic thought. It reflects many years of research, and of struggle with established views, on the part of the editor and principal author, S. M. Ghazanfar, who is to be congratulated for having thus carried his program to fruition. He has been ably aided by A. A. Islahi and Hamid Hosseini in this venture. I am reminded of the introduction to Maria Rosa Menocal's (1987) book on The Arabic role in medieval literary history where she poses the question of “courtly love” and thus, indirectly, of chivalry, for Medieval Europe. What is the origin of the troubadour, the bearer of songs of courtly love? A simple solution presents itself in the Arab word “tarab,” or song, from which troubadour seems to follow naturally. Nonetheless, the suggestion was dismissed out of hand because troubadour “could not” have arisen from a society which oppresses women! We should be more concerned with the facts than with our preconceptions about societies.

In the first of the eleven essays making up this book, Bevir and Trentmann state the perspective unifying them. Against the rise of a “neo-liberal discourse” idealizing the market as a beneficial coordinating mechanism, Bevir and Trentmann point to the embeddedness of markets.¹ In particular, they assert their cultural embeddedness, arguing that “how precisely any particular state or market operates will depend on how it is governed by a host of beliefs, discourses, practices, and institutions” (p. 10). The first goal of the volume is to provide historical case studies illustrating the richness of past conceptualizations of the relationship between society, markets, and the state (p. 2). The second goal is to reconsider the role played by “agency” in the history of capitalism.² The editors argue against Karl Polanyi that liberals have not always been in favour of markets irrespective of social and environmental concerns, and that peasants and rural elites have not always defended traditional forms of social coordination. The general point is conveyed by the following passage: “The question was, for all these groups, not simply one of support or resistance to markets but about how markets should be embedded within social and political contexts. Social groups and intellectual traditions that were ambivalent about markets also helped to shape the contours and dynamics of capitalist societies” (p. 4). In other words, liberal market economies “arose as embedded within the context of particular types of civil society, which were themselves a contingent product of European history” (pp. 7–8).

“Bob” Malthus, the Revd T. Robert Malthus (1766–1834), had only one son, Henry (“Hal”) who like his father became a clergyman and married, but died childless in 1882. Malthus's older brother “Syd,” Sydenham II (1754–1821), inherited the family property in Albury, Surrey on the death of their father Daniel in 1800, and transmitted it to three more generations of descendents: Sydenham III (1806–1868), Sydenham IV (1831–1916), and the last Robert (1881–1972) who married but died childless.

Paul Heyer is to be commended for producing a very informative book on Harold Innis’ history of communications. It pulls together the communications elements in Innis’ wide-ranging works, and presents the result in an account that an otherwise uninformed reader can digest. The book is unique. Donald Creighton's biography of Innis is about the man, primarily, and only secondarily about his contribution to economic history (Creighton, 1957). Indeed, it is more about Creighton's own interpretation of Canadian history than about much that Innis had to say. My own intellectual biography of Innis (Neill, 1972) is a labored presentation that fails in at least one respect in which Heyer has not failed so badly. Heyer's Harold Innis is a neat, readable presentation of something Innis had to say. Of course, Heyer has been limited by his commission. In a contribution to a series of books on “Key Thinkers in Critical Media Studies,” Innis’ broad interest in many aspects of economic activity and his obsessive concern with the state of economics itself had to be relegated, more or less, to comments in passing. Still, it is Heyer who notes that Innis’ book of essays, Political economy in the modern state (Innis, 1946) “is pivotal” in his thought, though not given much attention by his interpreters, among whom I must include myself.

Was Shakespeare an economic thinker? To Karl Marx, who freely quoted the playwright in confirmation of various assertions in Capital, at least Shakespeare's characters were. Prior to claiming that money is a “radical leveler…[that] does away with all distinctions” (Marx 1967, I, p. 132), for instance, Marx famously cites Timon's diatribe on gold from Timon of Athens (1607):Gold, yellow, glittering, precious gold!Thus much of this, will make black white; foul, fair;Wrong, right; base, noble; old, young; coward, valiant.… What this, you gods? Why, thisWill lug your priests and servants from your sides;Pluck stout men's pillows from below their heads;This yellow slaveWill knit and break religions; bless the accurs’d;Make the hoar leprosy ador’d; place thieves,And give them title, knee and approbation,With senators on the bench; this is it,That makes the wappen’d widow wed again:…Come damned earth,[Thou] common whore of mankind.

From the opening salvo of Benjamin Ward's (1972) What's wrong with economics to Henry Woo's (1986) What's wrong with formalization in economics to Mark Blaug's (1999) “The formalist revolution or what happened to orthodox economics after World War II?” the specter of mathematician David Hilbert has haunted economists's discussions of formalization and axiomatization.

For Marxists, the present controversies are rooted in Marx's own development and exposition of the labor theory of value, especially its presentation in Volumes I (Marx, 1954 [1867]) and III of Capital. As is well known, in Volume I, Marx begins with his analysis of commodities, emphasizing the role of human labor in both its concrete and abstract aspects, and from that he develops (1) the concepts of (exchange) value, of socially necessary labor time, and of its expression in the form of money and the distinction between value and price; (2) the concepts of capital and of surplus value; and (3) the concept of the commodity labor power. With these concepts, his analysis of capitalist production lays bare the nature of capitalist exploitation and links the phenomenon of profit to surplus value (i.e., the unpaid labor time of productive workers). In Parts I and II of Volume III, Marx, explicitly allowing for the interplay of many different capitals, endeavors to show how surplus value is converted into profit, how the rate of surplus value is converted into the rate of profit, how the general rate of profit is formed, and how the values of commodities are transformed into prices of production. He claimed that the transformation preserved the following equalities: total value=total prices; total surplus value=total profits; and, the rate of profit=the rate of surplus value. Marx's presentation of this material in Volume III is, unfortunately, quite rough, since this material is comprised of manuscripts that he had prepared prior to the publication of Volume I in 1867. These manuscripts were not, however, in a final, finished state, and unfortunately Marx never got around to getting them ready for publication.

Montes's interpretations of propriety and of self-command, the master Smithian virtue, led him to place Smith's ethics in the deontology camp with Immanuel Kant, clearly opposed to the utilitarians. This is an issue that is worth pursuing for two reasons. First, the relation between Smith and Kant has not been sufficiently explored in the secondary literature. Samuel Fleischacker (1991, 1996) has investigated the lines of influence from Smith to Kant. There is, for example, a striking mention of the impartial spectator in the form of “an impartial rational spectator” in the Groundwork of the Metaphysics of Morals (Kant [1785] 1997, 4:393, p. 7), yet it is impossible to tell exactly and to what extent Kant's reading of Smith contributed to the development of his own thought. Be that as it may, there is, nonetheless, a logical consistency between Smith's description of the operation of the conscience, as agents learn to construct the perspective of an ideal impartial spectator from which to accurately judge their own thoughts and actions on the one hand and the categorical imperative on the other. Smith's emphasis on impartiality in judging and Kant's emphasis on universality seem to be just different ways of getting at the transcendent nature of true moral character and action. In Smith, then, it is the virtue of self-command through which agents participate in the molding of their own character and stir themselves up for right action (as judged from this ideal perspective). As Montes argues, the spectator judges self-command in terms of the spectator's sense of propriety, not through an analysis of the merit or demerit of an action. It is a deontological argument, not a consequentialist one. When properly understood, self-command entails the development of a morally autonomous agent, similar to Kant's. Thus, Montes concludes:The philosophical meaning of propriety, underpinned by the virtue of self-command, and the role of the conscience introduced by the supposed impartial spectator, situates the sympathetic process within a philosophical tradition that seems closer to Kant than to utilitarianism. (p. 53)

By Mirowski's own description, this book is a collection of essays that dwell in the interstices of scientific disciplines and established fields of inquiry: “this book sets out to explore that no-man's land at the borders of science and economics with attendant emotions pitched somewhere beyond the thrill of spelunking and the delectation of trespass” (p. 4). With his body armor and some extra clips for his rifle, he charges headfirst into this no-man's land with his sights set on what he calls “the twentieth century science-economy problematic” (p. 6). Some scholars often utilize economic principles (especially neoclassical ones) to characterize the structure and processes of science (ever heard of the “marketplace of ideas?”) while pulling out all the stops in claiming economics to be a rigorous scientific enterprise (on par with the pinnacle – physics, of course). In short, Mirowski is troubled that critical analysis of such academic pursuits seems to be verboten.

“The second attempt to model monopolistic competition was far more successful than the first, essentially because the second attempt introduced a formalization that had all the relevant characteristics of monopolistic competition but was still relatively easy to handle” (pp. 1–2). The story of the first revolution is that various precursors, such as Marshall, understood that the middle ground between perfect competition and monopoly was fraught with danger, so they avoided it. In the 1930s, Edward Chamberlin and Joan Robinson independently applied the marginal revenue curve to draw the now-familiar equilibrium position for a profit-maximizing, monopolistically competitive firm. However, the first revolution never really succeeded: “Given the elegance of the monopolistic competition model, it is surprising to see how little influence it had on economic theory” (p. 10). Several of the papers make reference to the failed 1930s monopolistic competition revolution without going into detail. It seems that it is an agreed upon fact.