History of Political Economy recent issues

Alfred Russel Wallace and the Political Economists

Collard, D. — Fri, 06 Nov 2009 10:55:09 PST

Alfred Russel Wallace is famous as the co-discoverer with Darwin of the mechanism of natural selection. He was also an enthusiastic economic and social reformer. This article considers the relationship of Wallace's work to that of a number of eminent economists, including Malthus, Mill, Marshall, and Fisher. Wallace's economics, which attempted to analyze practical socialism, protection of the environment, and monetary stability, was interesting and insightful. It was only loosely related to his evolutionary theory.

Keynes and Capitalism

Backhouse, R. E., Bateman, B. W. — Fri, 06 Nov 2009 10:55:09 PST

We analyze Keynes's thoughts on capitalism by focusing on what he wrote on the topic, using the Collected Writings, taken as a whole, together with some unpublished material to tackle three issues: what Keynes meant by capitalism; the fragility of capitalism; and the morality of capitalism. In doing this, we juxtapose materials written at different stages of his career. While the context and the theoretical framework within which Keynes developed his economic thinking changed substantially, our argument is that beneath these many changes in his circumstances and analytical frame lay a remarkably consistent attitude toward capitalism, an attitude in which morality was central. This view of capitalism is linked with the personal values that animated his life, especially the values that he shared with the other members of Bloomsbury.

AT&T's Antigovernment Lesson-Drawing in the Political Economy of Networks, 1905-20

Kielbowicz, R. B. — Fri, 06 Nov 2009 10:55:09 PST

Many Progressive Era reformers, lawmakers, and economists believed that free market competition failed to maximize the public benefits of telecommunication networks. When proposals to place the nation's telecommunication system under the post office gained currency, AT&T responded with its Brief of Arguments against Public Ownership (1913–17). Resembling a loose-leaf service for lawyers, the Brief furnished opinion leaders with more than three hundred items of evidence, some drawn from economists, about the failings of government-run enterprises. To impart lessons about the consequences of nationalizing telecommunication, AT&T assembled evidence from three domains, most notably foreign nations' experience with government ventures. Analyzing the Brief reveals how AT&T structured and popularized arguments that justified the anomalous place of telecommunication networks in American political economy.

A Marshall-Walras Divide? A Critical Review of the Prevailing Viewpoints

De Vroey, M. — Fri, 06 Nov 2009 10:55:09 PST

The aim of this essay is to examine economists' views about the relationship between Marshallian and Walrasian theory. Are they complementary, as is usually believed, or do they constitute alternative research programs? I compare two viewpoints on this matter, the conciliatory and the antagonistic. After describing these, I present my own standpoint: I believe that there is a Marshall–Walras divide, but I have serious objections to the way in which the argument for this divide is usually made. In the last part of the paper, I examine the view held by several authors that an embryonic general equilibrium model is to be found in Marshall's Principles.

On Kaldor's "Logical Slip": A Possible Explanation

O'Connell, J. — Fri, 06 Nov 2009 10:55:09 PST

In outlining his theory of economic growth and income distribution, Kaldor made a "logical slip": while in his model, workers might save, workers' assets were accounted for. Kaldor acknowledged the strong influence of Kalecki and Keynes on his work. What is suggested here is that Kaldor may have "slipped" because he applied comments by, in particular, Keynes to the context of his own model. In Kaldor's case, however, the use of Keynes's remarks was not coherent.

A History of Econometrics in France: From Nature to Models

Barreto, H. — Fri, 06 Nov 2009 10:55:09 PST

Dennis Robertson: Essays on His Life and Work

Dimand, R. — Fri, 06 Nov 2009 10:55:09 PST

Carl Menger: Entre Aristote et Hayek; Aux sources de l'economie moderne

Gloria-Palermo, S. — Fri, 06 Nov 2009 10:55:09 PST

Modern Macroeconomics: Its Origins, Development, and Current State

Hoover, K. D. — Fri, 06 Nov 2009 10:55:09 PST

Sourcebook in Late-Scholastic Monetary Theory: The Contributions of Martin de Azpilcueta, Luis de Molina, S.J., and Juan de Mariana, S.J.

Langholm, O. — Fri, 06 Nov 2009 10:55:09 PST

Augustin Cournot: Modelling Economics

Le Gall, P. — Fri, 06 Nov 2009 10:55:09 PST

Revisiting Keynes: Economic Possibilities for Our Grandchildren

Meltzer, A. — Fri, 06 Nov 2009 10:55:09 PST

Compass of Society: Commerce and Absolutism in Old-Regime France

Tribe, K. — Fri, 06 Nov 2009 10:55:09 PST

Retailing Poisoned Milk? New Evidence on Keynes and Jevons's Hostility to John Stuart Mill

White, M. V., Inoue, T. — Tue, 01 Sep 2009 12:19:06 PDT

In his 1936 memoir of W. Stanley Jevons, J. M. Keynes argued that Jevons's pronounced hostility to the dominance of J. S. Mill's political economy was due, in large part, to the imposition of Mill's work on Jevons's teaching at Owens College (subsequently the University of) Manchester. Keynes reported that a recently discovered set of student lecture notes confirmed his argument. He was subsequently accused of poor scholarship in that regard, because the contents of the one known set of student notes did not tally with his description. It is shown here, however, that Keynes was referring to a different set of notes that have only recently been located. Keynes was misled, nevertheless, in assuming that the notes he examined could establish his case. Moreover, although Jevons's statements could be confusing, the available evidence indicates that his complaints about the constraints on his teaching were principally concerned with logic and philosophy, rather than with political economy.

Frank P. Ramsey: A Cambridge Economist

Duarte, P. G. — Tue, 01 Sep 2009 12:19:06 PDT

Frank Plumpton Ramsey was a Cambridge mathematician who produced profound work in logic, philosophy, mathematics and economics in the first-half of the twentieth century. He died at the age of twenty six, in 1930, and his contributions, despite being few in number, have been bearing fruits since then. Practitioners across those areas share the view that Ramsey was a genius ahead of his time. I explore in this article how Ramsey's image of a genius was created among eminent economists. I then discuss the main point of this essay: whether or not Ramsey may have had a research agenda in economics. His two major articles in this field seem to be unrelated. A common impression from these works and from Ramsey's interaction with other economists is that he was mostly a mathematician who was distracted by economists who from time to time sought his help with certain problems. Here I argue that Ramsey did have an economics research agenda, born out of his close relationship with Arthur Cecil Pigou. I support my thesis mostly with an archival evidence not explored thus far: some notes deposited at the University of Pittsburgh, here published for the first time.

Frank Ramsey's Notes on Saving and Taxation

Duarte, P. G. — Tue, 01 Sep 2009 12:19:06 PDT

A Liberal Economist and Economic Policy Reform in Nineteenth-Century Greece: The Case of Ioannes Soutsos

Psalidopoulos, M. M., Stassinopoulos, Y. — Tue, 01 Sep 2009 12:19:06 PDT

This paper analyses the critique of Ioannes Soutsos (1804–1890), the first academic economist of modern Greece, toward priorities, weaknesses and shortcomings of Greek economic policy of the 19^th century. Emphasis is laid in his interventions in 1843 (when the first constitution was introduced), in 1863 (when a new king was appointed as head of the country) and in 1876-9 (when foreign lending was resumed after a long financial embargo against Greece). These interventions reveal a liberal economist who was a precursor in what is today known as constitutional economics, who stressed the role of efficient institutions for the promotion of economic development and favored sound public finance as a basis for a strong currency and a prerequisite of growth.

The paper puts Soutsos' economic policy recommendations against his theoretical formation as an economist, and examines his views on methodology and the influences Pellegino Rossi and Jean-Baptiste Say exerted in his thought and writings. In this context European economic liberalism of the 19^th century is revisited and the question about its relevance for the new-born states of South-Eastern Europe, where nationalism was a major ideological current, requiring a financially strong state, is examined.

On the Other (Invisible) Hand...

Brewer, A. — Tue, 01 Sep 2009 12:19:06 PDT

The invisible hand as it appears in the Theory of Moral Sentiments is commonly treated as an afterthought in discussions of the version in the Wealth of Nations, but it deserves attention in its own right. I will argue that there is an entirely coherent (if not entirely plausible) economic argument underpinning the invisible hand of the Theory of Moral Sentiments. It is quite different from the invisible hand argument of the Wealth of Nations, not because of any conflict but because they address different questions. The argument in the Theory of Moral Sentiments allowed Smith to maintain an ironic distance from the inequality and greed that he saw around him while arguing that it did no harm, and allowed him to resolve, at least to his own satisfaction, an age-old debate about the ethical and political consequences of luxury consumption. Some of these themes were further developed in the Wealth of Nations, but without the phrase 'invisible hand', which was switched to a different part of the argument.

Reexamination of Thornton's Innovative Monetary Analysis: The Bullion Debate during the Restriction Once Again

Arnon, A. — Tue, 01 Sep 2009 12:19:06 PDT

The Restriction period that began in England in 1797 marked a crucial turning point for monetary theory and policy. The debates during the Restriction concerning the relationship between inflation, the exchanges and monetary aggregates came to be known as the "Bullion Debate." The Bullionists were critical of the Bank of England and supported a return to convertibility, whereas the anti-Bullionists defended both the Bank and inconvertibility.

This paper re-evaluates Henry Thornton's seminal contribution to monetary theory and argues that Thornton's pathbreaking Paper Credit (1802) presents an innovative and consistent anti-Bullionist position. His views differ from those of the Bank of England and other anti-Bullionists; unlike them, he rejected the Real Bills Doctrine and Smith's monetary thinking in general as it applied to both convertible and inconvertible monetary arrangements. Thornton stressed the discretionary role the Bank played in managing the monetary system under both currency regimes.

After 1802 and particularly as a member of the famous Bullion Committee, Thornton played an important role on the side of the Bullionists; later scholars therefore describe him as a "moderate Bullionist." However, his reserved support for convertibility during this period reflects his disappointment with the Bank directors whose fundamental misunderstanding of the monetary system threatened the stability of the British economy. For this reason, the shift in Thornton's position is better understood as a pragmatic political response to an untenable situation resulting from the directors' mismanagement, not as a reversal of his monetary theory.

Jacob Viner and the Chicago Monetary Tradition

Nerozzi, S. — Tue, 01 Sep 2009 12:19:06 PDT

The paper aims at assessing Jacob Viner's role in that brand of monetary thought which historians associate with the Chicago School and whose origins can be retraced in the writings and teaching of Frank Knight, Lloyd Mints, Henry Simons and Viner himself. After a brief description of the prolonged debate over the origins and nature of the so called "Chicago Monetary Tradition", we examine Viner's analyses and policy proposals drawing particular attention to: his analysis of the Great depression; his proposals for monetary expansion and banking reform; his shift of emphasis in favour of Fiscal Policy; the evolution of its monetary framework in the early 1930's. Finally, we compare his position with the ones associated with the early Chicago school and with the ones stemming from the Harvard economic department where Viner had been trained and with which he continued to entertain important ties.

The Trade-Off between Rigor and Relevance: Sraffian Economics as a Case in Point

Blaug, M. — Wed, 20 May 2009 08:58:32 PDT

Piero Sraffa published Production of Commodities by Means of Commodities in 1960, and this enigmatic little book invited explanations of its meaning, particularly as its subtitle, Prelude to a Critique of Economic Theory, held out hopes of an ambitious research program. In the almost half-century since its publication, it has attracted a small following, particularly in Europe, but it has failed to make much of an impact on American academic economics. This is odd because Sraffian economics in many ways satisfies the relentless concern of mainstream American economics with mathematical rigor. As a species of general equilibrium theory, Sraffian economics is indeed rigoros but it appears to be irrelevant to the sort of issues that concern modern economists.

Money Doctoring after World War II: Arthur I. Bloomfield and the Federal Reserve Missions to South Korea

Alacevich, M., Asso, P. F. — Wed, 20 May 2009 08:58:32 PDT

We explore the foreign economic policy activities of Arthur I. Bloomfield, a prominent economist of the Federal Reserve Bank of New York in the 1940s and the 1950s. During the cold war, Bloomfield headed several missions to South East Asia, assisting local authorities in shaping new foreign exchange regimes and banking institutions. Bloomfield's most successful mission concerned the constitution of a new central bank in South Korea, established in June 1950.

In line with the Fed's new strategy established by Robert Triffin, head of the Latin American section, Bloomfield moved away from the dogmatic style of Edwin Kemmerer that dominated U.S. overseas missions in the first half of the twentieth century; "Southern" economies, in fact, rather than benefiting from Kemmerer's policies, had been increasingly hit by cyclical instability. According to Triffin and Bloomfield, U.S. overseas missions should loosen constraints on the activity of economic institutions and policy authorities, in order to increase their effectiveness as guarantors of financial stability and promoters of national development.

We examine this episode in the light of the U.S. postwar foreign economic relations and the concept of "embedded liberalism." The Bloomfield missions to South Korea show with great clarity the principal features of the Fed's new foreign strategy and the need to examine the actual advisory activity of Fed economists during the 1940s: they were at the intersection between domestic and international political and economic systems. Ultimately, they played a major role in forging the actual foreign policy of the United States.

Charles Dunoyer and the Emergence of the Idea of an Economic Cycle

Benkemoune, R. — Wed, 20 May 2009 08:58:32 PDT

This article shows that Charles Dunoyer sought to reinterpret Sismondi's theory of crises in a manner that would render it compatible with Say's political economy. While Sismondi considered that crises of overproduction proved the dysfunctionality of an economy founded upon free competition and called for legislative intervention, Dunoyer drew the conclusion that such economies were naturally subject to alternating periods of "activity" and "relapse." Using the innovative idea of the cycle, Dunoyer incorporated Sismondi's theory into the Sayardian conception of political economy in which men have to adapt their behaviour to the nature of things, or suffer the consequences.

On Jevons's Handling of Differential Equations in the Context of His Principle of Exchange, and the Early Reactions

Grattan-Guinness, I. — Wed, 20 May 2009 08:58:32 PDT

An important part of Jevons's economic theory was his theory of exchange of commodities. For justification he drew upon several aspects of differential equations and their applications, especially a principle in mechanics associated with equilibrium. Unfortunately his use of the principle was faulty. The error is analyzed here, along with his handling of differential equations in general, and the reactions to these aspects of his economic theory made by contemporaries, especially Marshall, Walras, and Edgeworth. These were often critical, though not over his misuse of the mechanical principle!

Habits and Expectations: Dynamic General Equilibrium in the Italian Paretian School

Pomini, M., Tusset, G. — Wed, 20 May 2009 08:58:32 PDT

Between the two world wars, the theory of general economic equilibrium received notable impetus in Italy from the work of the Paretian School. This consisted of a small, but very active, group of economists, whose best-known members at the time were Luigi Amoroso and Giulio La Volpe. One of the main aspects of the research program carried out by the followers of Pareto was their attempt to dynamize the theory of general economic equilibrium. These economists believed that research on static economics was by then complete although they were well aware that some analytical problems were still unsolved, and they advanced the construction of dynamic models using new and sophisticated mathematical tools such as functional calculus. However, despite its originality, the Paretian approach to dynamics, at least in the fields of pure theorizing, did not have a significant impact on the understanding of economic dynamics in the postwar period; we attempt to explore why.

Thomas Tooke on the Corn Laws

Smith, M. — Wed, 20 May 2009 08:58:32 PDT

This article examines Thomas Tooke's (1773–1858) position on the English Corn Laws from 1815 until their repeal in 1846. It shows that like most classical economists, Tooke was a strong supporter of free trade who vehemently opposed the Corn Laws, believing that they generally contributed toward greater instability in the price of corn without effectively protecting domestic farming and securing for Britain a ready supply of corn. The article also explores Tooke's view on the distributional impact of the Corn Laws, showing that distinct from Ricardo's position, he believed they tended to redistribute income in favor of landlords at the expense of workers rather than capitalists. Indeed, it is shown that above all Tooke opposed the Corn Laws because they tended to lower the living standards of working people and, at times of unproductive harvests, contributed to acute shortages of foodstuffs that imposed much hardship onto the "lowest classes" of society.

Adam Smith and the Labor Theory of (Real) Value: A Reconsideration

Peach, T. — Wed, 20 May 2009 08:58:32 PDT

This article questions the widely held opinion that Adam Smith confined his use of a labor theory of exchangeable value to an "early and rude state of society" in which independent laborers exchange the surplus products of their labor. It is argued that Smith did not explicitly disavow a more general application for the theory; that he continued to invoke (changes in) quantities of labor as principal determinants of (changes in) exchangeable value in all states of society; and that he had, in his own terms, some theoretical justification for his position. Moreover, it is argued that the lengths to which he went to obtain an association between the concepts of real price/real value and expended labor, ultimately to the point of abandoning his own declared choice of "real measure," is compelling evidence of his commitment to an albeit rudimentary labor theory of exchangeable value.

The Route of All Evil: The Political Economy of Ezra Pound

Howson, S. — Wed, 20 May 2009 08:58:32 PDT

The Economics of Keynes in Historical Context: An Intellectual History of the General Theory

Laidler, D. — Wed, 20 May 2009 08:58:32 PDT

The Chicago School: How the University of Chicago Assembled Thinkers Who Revolutionized Economics and Business

Laidler, D. — Wed, 20 May 2009 08:58:32 PDT

Hayek and the Natural Law

O'Brien, D. P. — Wed, 20 May 2009 08:58:32 PDT

A Feasible and Objective Concept of Optimal Monetary Policy: The Quadratic Loss Function in the Postwar Period

Duarte, P. G. — Tue, 17 Feb 2009 08:54:29 PST

Monetary economists argue that they adopted quadratic loss functions because the latter delivered easy solutions to complex stochastic models. In that narrative, Simon (1956) and Theil (1957) are mentioned by their proofs that models with quadratic objective functions have the certainty equivalence property, which made their solutions feasible for the computers available at that time. Appearing in that narrative are Poole (1970) and Sargent and Wallace (1975), who were among the first to apply the tool to monetary economics. In this article I argue that in addition to offering "solutions feasibility," the use of a quadratic loss function to characterize the behavior of central banks also inaugurated an objective way of talking about optimality. In this respect, the tool stabilized the discourse on optimal monetary policy.

The Harvard Economic Service and the Problems of Forecasting

Friedman, W. A. — Tue, 17 Feb 2009 08:54:29 PST

The Harvard Economic Service pioneered the business of economic forecasting by publishing a weekly newsletter on economic conditions, starting in 1922. The Harvard forecasting model, developed by the statistician and economist Warren Persons, gained international renown for its three-curve A-B-C chart, which rendered business fluctuations as the ebb and flow of speculation (A), business (B), and banking (C). The service was directed by C. J. Bullock, who promoted Harvard's forecasting service around the world by forming collaborative agreements with John Maynard Keynes, Lucien March, Corrado Gini, and other prominent economists of the time. The Harvard Economic Service, however, attracted criticism for its purely empirical approach, its failure to make consistently accurate predictions, and its pursuit of commercial objectives in a university setting. The Harvard group's efforts to build a forecasting service are an early chapter in the evolution of the social sciences, the growth of a class of financial analysts, and the commercialization of academic knowledge.

Martin Luther's Doctrine on Trade and Price in Its Literary Context

Langholm, O. — Tue, 17 Feb 2009 08:54:29 PST

This paper examines some of Martin Luther's economic ideas from a largely neglected point of view. Religious issues naturally dominated his writings. When he turned to economic subjects, his primary focus was on the usurious practices of the banks and trading companies of his times. His utterances on those subjects, in form and content, present a biased picture of his thought. Having received an academic training at the highest level, in scholastic philosophy, including scholastic economics, Luther wrote with great authority about market behavior, about cost and demand as price determinants, and argued against economic coercion, collusion, and certain monopolistic practices. It is frequently possible to tie Luther in with medieval literary traditions on these subjects and sometimes to identify a specific source.

American Economic Reform in the Progressive Era: Its Foundational Beliefs and Their Relation to Eugenics

Leonard, T. C. — Tue, 17 Feb 2009 08:54:29 PST

This essay explores the progressive beliefs other than human hierarchy that inclined Progressive Era economic reform toward eugenics. It argues the following: that the progressives believed in a powerful, centralized state, conceiving of government as the best means for promoting the social good and rejecting the individualism of (classical) liberalism; that the progressives venerated social efficiency; that the progressives believed in the epistemic and moral authority of science, a belief that comprised their view that biology could explain and control human inheritance and that the still nascent sciences of society could explain and control the causes of economic ills; that the progressives believed that intellectuals should guide social and economic progress, a belief erected upon two subsidiary faiths, a faith in the disinterestedness and incorruptibility of the experts who would run the technocracy they envisioned, and a faith that expertise could not only serve the social good, but also identify it; and that, while antimonopoly, the progressives believed that increasing industrial consolidation was inevitable, and desirable, consistent with their faith in planning, organization, and command.

F. Y. Edgeworth's Treatise on Probabilities

Baccini, A. — Tue, 17 Feb 2009 08:54:29 PST

Probability theory has a central role in Edgeworth's thought; this article examines the philosophical foundation of the theory. Starting from a frequentist position, Edgeworth introduced some innovations to the definition of primitive probabilities. He distinguished between primitive probabilities based on experience of statistical evidence, and primitive a priori probabilities based on a more general and less precise kind of experience, inherited by the human race through evolution. Given primitive probabilities, no other devices than the rules of calculus of probabilities are necessary for inferring complex probabilities, as the ones defined by Bayes's theorem—an enlargement of the frequentist tradition as defined by Venn. The notion of probability is objective; the passage from the objective sphere to the epistemic one requires rules external to the theory of probability. Edgeworth distinguishes between two notions: credibility, which is the direct translation of probability into the epistemic sphere and which obeys the same rules of the latter; and belief, which has a weak relation with probability, based as it is not only on experiential knowledge, but also on "instinct and sentiment." According to a nineteenth-century tradition, belief is the base of human action; Edgeworth concludes therefore that probability is not useful for the theory of decision. We propose to classify Edgeworth's theory of probability as precursor of modern eclectic or pluralistic tradition on probability, and according to which probability has an irreducible dualistic nature.

One Analogy Can Hide Another: Physics and Biology in Alchian's "Economic Natural Selection"

Levallois, C. — Tue, 17 Feb 2009 08:54:29 PST

Today, Alchian's "Uncertainty, Evolution, and Economic Theory" (1950) is hailed by evolutionary economists as a most important piece that resumed an evolutionary brand of theorizing in economics after the eclipse of the interwar period. On the other hand, Alchian's article is also cherished by mainstream economists who consider it to be a powerful defense of the maximization principle in the theory of the firm. Our examination of the early intellectual life of Alchian shows that it was his involvement in military systems analysis at the RAND Corporation that led him to reckon that uncertainty was a fundamental obstacle to marginal analysis. We then demonstrate that Alchian's economic natural selection is a statistical argument that, if phrased in biological parlance, owes its logic to statistical mechanics. This invites us to reconsider the strong opposition usually made between evolutionist and mechanist modes of thinking.

Measuring Inequality: Pareto's Ambiguous Contribution

Maccabelli, T. — Tue, 17 Feb 2009 08:54:29 PST

Pareto was probably the first economist to suggest a way of measuring the inequality of incomes. But the interpretation of his index came to be an object of contrasting judgments. This paper offers a reconstruction of the debate that involved Pareto's index, aimed at clarifying his thought on the question. The thesis is that Pareto has not made any contribution to the criteria for measuring inequality and, as such, has to be evaluated using other parameters.

The Cambridge Companion to Keynes

Davis, J. — Tue, 17 Feb 2009 08:54:29 PST

Thorstein Veblen and the Enrichment of Evolutionary Naturalism

Kilpinene, E. — Tue, 17 Feb 2009 08:54:29 PST

Considerations on the Fundamental Principles of Pure Political Economy, by Vilfredo Pareto

Tarascio, V. J. — Tue, 17 Feb 2009 08:54:29 PST

The Pareto School and Italian Fiscal Sociology

Tarascio, V. J. — Tue, 17 Feb 2009 08:54:29 PST

Family Fictions and Family Facts: Harriet Martineau, Adolphe Quetelet, and the Population Question in England, 1798-1859

Waterman, A. M. C. — Tue, 17 Feb 2009 08:54:30 PST