Showing papers in "History of Political Economy in 1989"

Smith, Bentham, and the Development of Contrasting Ideas on Entrepreneurship

Abstract: A comparative reading of The Wealth of Nations and of The Theory of Moral Sentiments has made it possible to identify the characteristics of Smith's 'undertaker', and to reveal the irreconcilable nature of these with those that Bentham ascribed to 'projectors'. In particular, Smith developed a multi-functional theory of entrepreneurship, although his analysis essentially focused on the undertaker as risk-bearer. By contrast, Bentham developed a mono-functional theory, one based on the revolutionary concept of the 'innovator' or 'creative entrepreneur'. And it also transpires that he anticipated - sometimes in an extremely surprising fashion - many of the components of Schumpeter's analysis of the subject. (This abstract was borrowed from another version of this item.)

On Some Classical Monetary Controversies

Abstract: This chapter uses the classical money model introduced in Chapter 2 to explain the different views of Adam Smith and David Hume on banking and the price-specie-flow mechanism (PSFM). These differences reappeared in the debates between the Banking School and the Currency School over Peel’s Bank Charter Act, the Banking School echoing Smith and the Currency-School echoing Hume. Smith’s theory of banking was also echoed by J. B. Say in his explaining his law of the markets. Say’s Law (Identity) is in fact analytically equivalent to Fullarton’s law of reflux. Cairnes’s Humean quantity-theoretic interpretation of the effects of gold discoveries in California and Australia is shown to be inferior to an interpretation consistent with a Smithian classical interpretation.

From Marx to the Okishio Theorem: A Genealogy

Abstract: In the history of ideas it sometimes happens that insights arise full blown and theories are developed without reference to prior formulations. It is more usual, however, to find that a given theory has antecedents and is based, to a smaller or larger degree, on ideas which preceded it. This is the case with the theory that has become known as the Okishio Theorem. The theorem, named after Nabuo Okishio, was first presented in 1961 in Okishio’s paper ‘Technical changes and the rate of profit,’ and deals with a criticism of the Marxian law of the tendential fall of the rate of profit. In presenting his proof that under capitalism the rate of profit is bound to rise rather than decline, Okishio cites Shibata, who cites Moszkowska, who cites . . , , etc. The argument contained in the Okishio Theorem goes back in a straight line to Tugan-Baranowsky and to Marx himself. Its elements can, in fact, be traced to Ricard0.I We intend to show that rudiments of this particular criticism of the Marxian law appear in Marx’s own, lastpublished work, Capital I. There, Mam proposes an alternative theory of technical change and accumulation which, like the Okishio Theorem, arrives at a rising rather than falling rate of profit in a capitalist economy. Marx’s theory of the decline of the rate of profit (DROP), as published in Capital 111, is based on the relative size of the two opposing effects of the introduction of technical changes into the economy. On the one hand, competition and accumulation tend to increase the organic composition of capital CIV-the ratio of constant to variable capital; on the other, innovations tend to raise the rate of surplus value SIX where S is the total surplus value extracted. Profit in NIarx’s terms, is equal to surplus value, and the rate of profit T is calculated as S/(C + V), the ratio of surplus value to total cost. The rate of profit can be expressed as T = s/ (q+ 1) and clearly depends on s and q (where s = S/V and q = C/V). Since technical changes are assumed to be labor saving, each new in-

Patinkin's interpretation of Keynes and the Keynesian cross

Abstract: Professor Patinkin (1988) has provided yet another interesting but, in my view, incorrect attempt to redeem the 45° cross as the ‘proper’ interpretation of Keynes’s General Theory. Patinkin rejects the Fusfeld (1985) description of a report by Arthur E. Burns of the latter’s discussion with Keynes regarding the graphical representation of Keynes’s aggregate supply and demand analysis.