Some inspiring words from Nobel prize-winning economist Edmund Phelps, as quoted in Will Hutton‘s How Good Can We Be (p.172):
“[Flourishing is] the heart of prospering – engagement, meeting challenges, self-expression and personal growth…a person’s flourishing comes from the experience of the new: new situations, new problems, new insights and new ideas to develop and share. Similarly, prosperity on a national scale – mass flourishing – comes from broad involvement of people in the processes of innovation; the conception, development and spread of new methods and products – indigenous innovation down to the grass roots.”
Hutton follows with his own take on the mass flourishing which he sees as an essential outcome of the good economy and society:
“…the smart economy, resting on innovation, is coterminous with a society that ceaselessly and restlessly sponsors mass flourishing: they are indispensable and interdependent concepts. This was the heart of the Enlightenment – makers, inventors and philosophers all interconnected, daring to think, to understand and to challenge old boundaries, infecting each other with the enthusiasm for the new while being part of a greater social awakening that affected everyone. This spirit imbued every branch of British economic and social life in the late eighteenth century; it was this as much as cheap labour, water mills and Europe’s first single national market that triggered the Industrial Revolution. Every age is different, but what is not different are the interdependencies between the economic and social that animate and lift the human spirit.”
Michael Hudson, the heterodox economics Professor whose work I have featured on this blog quite a bit this year, wrote a history and critique of theories of trade and development back in 1992. It was reissued in 2009 and I have just finished reading it.
His central thesis is that, to quote the subtitle, “trade and development concentrate economic power in the hands of dominant nations”. I will not be reviewing the book here, but here is an extract, the gist of which I have agreed with since I was a graduate student (p.169-70): Continue reading →
Marxist Professor Fred Moseley’s recent work Money and Totality was 20 years in the making. A couple of weeks ago, in the midst of reading it, I remarked on this blog that it was thoroughly engaging, at least for those interested in Marxist economic theory and its application to the analysis of capitalism. I also promised further comment, once I had finished it, so here goes.
Moseley’s interpretation of Marx’s theory is ‘macro’ ie macroeconomic, in that it begins logically with the operation of the economy as a whole, and then proceeds to the ‘micro’ or the operation of the individual parts of the economy in question.
The interpretation is ‘monetary’ in that it argues that Marx’s theory uses values or prices quantified in terms of money. Capitalism is a money-using system, and in fact Marx defines capital itself as money which is used to make more money, or ‘self-expanding value’.
The title of the book is thus explained: ‘money and totality’, the latter as describing the importance of the macroeconomic system as a whole. Continue reading →
The concept of utility is paramount in determining consumer demand in mainstream economics. Here Marx offers a brief but lively critique of Bentham’s utilitarianism from his own perspective on political economy, in which the social and the historical are vital to the analysis:
“To know what is useful for a dog, one must investigate the nature of dogs. This nature is not itself deducible from the principle of utility. Applying this to man, he that would judge all human acts, movements, relations, etc. according to the principle of utility would first have to deal with human nature in general, and then with human nature as historically modified in each epoch. Bentham does not trouble himself with this. With the driest naiveté he assumes that the modern petty bourgeois, especially the English petty bourgeois, is the normal man. Whatever is useful to this particular kind of normal man, and to his world, is useful in and for itself. He applies this yardstick to the past, the present and the future.”
Karl Marx, Capital, Volume I, footnote 51 to Ch. 24, p. 758
Money and Totality by Marxist economist Professor Fred Moseley was published last year and I have recently managed to get hold of a copy of the affordable paperback edition. For those interested in Marxist political economy and how it can contribute to understanding the workings and evolution of capitalism, this work, 20 years in the making, is surely worth some study.
Michael Roberts’ blog, which I often find informative in its alternative perspectives to both mainstream and Keynesian economic thought, can be found here. His review of the book is here, and Roberts is certainly enthusiastic about it, citing it as probably the best book on Marxist economic theory this century.
While I am only a little way through the book, I am finding it both clearly written and thoroughly absorbing. Moseley repeats the same central arguments over and over, presenting his key thesis from different perspectives, using some basic algebra and substantial textual evidence to support his case. While some may find this irritating, I have so far found it helpful in grasping the point of the work. Continue reading →
This quote, by Cambridge Marxist economist Maurice Dobb, writing in the 1970s, is taken from a chapter on economics and ideology. He argues that an ideology or ‘vision’ of society is inseparable from economic theories, even when this is not acknowledged or operates on an unconscious level. This extract describes the importance of the subjective in the formation of new ideas.
“There is always a subjective element in the march of knowledge, not only in the sense that action and experiment play a crucial role, but that these are preceded and shaped by the formation of concepts. Current problems are something created as much by thought-inspired human action upon an existent situation as by the given objective (but changing) situation itself; and in this sense can be said to represent continually, in varying degree, a contradiction between the two. Problems arising in this way then form the starting-point of new thinking, the formation of new concepts and new theories; and to this extent the latter are always relative to a particular historical context. These changing concepts and ideas represent in part a commentary upon or interpretation of – a ‘reflection’ if one cares to use so passive a simile – the objective situation from the particular perspective in which it is seen. But since inherited ideas and concepts, operating as a refractive medium, affect this perspective and the resulting vision of the situation, new ideas are always at the same time a critique of old ideas which form the heritage of thinking; hence these new ideas are necessarily shaped in part by the antithetical relation in which they stand to the old as well as being empirical statements about actuality.”
Maurice Dobb (1973), Theories of value and distribution since Adam Smith, p.17
“The outstanding fact is the extreme precariousness of the basis of knowledge on which our estimates of prospective yield have to be made. Our knowledge of the factors which will govern the yield of an investment some years hence is usually very slight and often negligible. If we speak frankly, we have to admit that our basis of knowledge for estimating the yield ten years hence of a railway, a copper mine, a textile factory, the goodwill of a patent medicine, an Atlantic liner, a building in the City of London amounts to little and sometimes to nothing; or even five years hence. In fact, those who seriously attempt to make any such estimate are often so much in the minority that their behaviour does not govern the market.”
John Maynard Keynes (1936), The General Theory of Employment, Interest and Money, Ch.12, p.149
This short extract of a talk by the thoroughly engaging Marxist economist Richard Wolff makes a useful point: that the domain of markets is and should be limited, even under capitalism. This is realized in the fact that all so-called market economies are in fact mixed economies, with a range of non-market institutions such as the state, the legal system, public services etc. which both support the functioning of markets, and help to temper their excesses.
You may or may not take Wolff’s viewpoint to its logical conclusion: the case for some form of socialism. But it is important to recognize from this that markets are political, cannot really be ‘free’, and that the mixed economy, while it may evolve and change, is what we live in for now. Pure market or planned economies remain unachievable utopias.
“It is strange that two authors that have provided us with the deepest understanding of the workings of modern capitalism, Marx and Hayek, have little to say about specific economic policies. Marx advocates the broad but undetailed policy of central or collective planning and public ownership. Hayek’s policy stance is diametrically opposed to that of Marx but is hardly less bland: we are offered the generalities of more market competition and extended private ownership. Hayek, like Marx and his followers, has very little to say in detailed, policy terms. The common blindness to varieties of capitalism disables their theoretical systems in policy terms.
The way out of this difficulty is to place the detailed analysis of capitalist institutions and of national and corporate cultures at the centre of the stage. Institutional economics thus provides a fruitful approach to the formulation of relevant and operational economic policies. With the notable exception of Veblen, many leading institutionalists in the past have been deeply involved in the development of economic policy. Much of this work was based on empirical study, but there is no reason why work in the future should not be guided by the deepest theoretical and methodological insights. Instead of empty formalism there is the possibility that economics may thus be capable of providing inspiration and sagacious guidance for those in government, finance and business.”
Geoffrey M. Hodgson (1999), Economics and Utopia, p.148
There is much to admire and draw on in Hodgson’s reboot of ‘old institutionalist’ economics, Continue reading →
“We must go round about to find the roots of our own beliefs. In the general mass of notions and sentiments that make up an ideology, those concerned with economic life play a large part, and economics itself (that is the subject as it is taught in universities and evening classes and pronounced upon in leading articles) has always been partly a vehicle for the ruling ideology of each period as well as partly a method of scientific investigation.”