Principals of Macroeconomics 5: Robinson and the Theory of Capital — John Weeks

In Chapter 1 of The General Theory Keynes famously refers to two “postulates of Classical economics”, one of which determines the demand for labour and the other the supply. He states that “I shall argue that the postulates…are applicable to a special case only and not to the general case”, with continuous full employment the “special case” and less than full employment the general case.

In the context of later parts of The General Theory (for example, Appendix on User Cost and Chapter 20 on “The Employment Function”) it is clear that Keynes wrote tactically in accepting the limited applicability of mainstream supply and demand for labour. With an eye to what he considered his important contributions to come later in his book, he apparently decided to not to fight a battle over the theory of the labour market.

Robinson took on this fight with her path-breaking 1953 article, “Production Function and the Theory of Capital”, which initiated what came to be called the Cambridge Capital Controversy. Superficially arcane and esoteric, this controversy goes to the heart of mainstream economics. I do not exaggerate when stating that if Robinson’s critique is correct, mainstream economic theory collapses....

Progressive Economy Forum

Principals of Macroeconomics 5: Robinson and the Theory of Capital

John Weeks

Ramanan — Misinterpretation Of Joan Robinson’s Quote On Dropping Rocks

Keeper Joan Robinson quote on trade.

The Case for Concerted Action

Misinterpretation Of Joan Robinson’s Quote On Dropping Rocks
V. Ramanan

Ramanan — Contrasting Joan Robinson And Paul Krugman’s Views On The Global Rules Of Trade

Interesting quote from Joan Robinson.

The Case for Concerted Action
Contrasting Joan Robinson And Paul Krugman’s Views On The Global Rules Of Trade
V. Ramanan

Also

Bill Mitchell competed on the Joan Robinson quote.

While Bill is obviously correct, the world continues to operate as if still on Bretton Woods, with the resulting being neo-mercantilism.

Ramanan — Joan Robinson And Nicholas Kaldor On Antagonism To Keynesian Ideas

Some good quotations.

The Case for Concerted Action
Joan Robinson And Nicholas Kaldor On Antagonism To Keynesian Ideas
V. Ramanan

Ramanan — More Free Trade Orthodoxies

Nice post on trade, citing Joan Robinson and Nicholas Kaldor.

The Case for Concerted Action
More Free Trade Orthodoxies
V. Ramanan

Edward Fullbrook — My evening with Joan Robinson and the Tractatus

Fun if you are interested in Joan Robinson, Ludwig Wittgenstein, Cambridge of the Twenties, and enjoy personal anecdotes.

Incidentally, I am surprised and not surprised that Joan Robinson confessed to not understand the first propositions of Wittgenstein's Tractatus Logico-Philosophicus. I am not surprised in that they sound like metaphysical statements and many if not most readers are at least initially confused by this appearance. 

I am surprised, however, than Robinson did not realize that they are logical propositions and therefore definitions, rules or, tautologies rather than descriptive statements. 

Taking the Tractatus as a metaphysical work is like taking Euclid's Elements as a metaphysical work instead of a mathematical one. Moreover, it contradicts what Wittgenstein says in the final propositions, as well as his purpose in offering an alternative to Russell and Whitehead's Principia Mathematica, which in Wittgenstein's view had foundered on the theory of types.

There is also an anecdote that Joan Robinson tells about Piero Sraffa's influence on Wittgenstein's later work, which Wittgenstein himself credited.

Cambridge was certainly an interesting place in those years.

Real-World Economics Review Blog
My evening with Joan Robinson and the Tractatus

Edward Fullbrook

Matias Vernengo — Sunday Reading: Economic Letters of Note

Another short review and a letter from John Kenneth Galbraith to Joan Robinson. It is timely given the present attention to the persisting paucity of women economists in the profession and the professional literature. Many feel that Joan Robinson never got the credit she was due.

Naked Keynesianism
Sunday Reading: Economic Letters of Note
Matias Vernengo | Associate Professor of Economics, Bucknell University

Jo Michell — Thoughts on the NAIRU

If you are following this.

Critical Macro Finance

Thoughts on the NAIRU
Jo Michell

V. Ramanan — The World Needs A Kaldorian Response

Before the crisis, the economics profession believed in two orthodoxies:

1. crude version of Monetarism, which treats the stock of money as exogenous and also claims that fiscal policy is impotent.
2. free trade.

While policy response following the 2008 crisis have made economists realize that the first orthodoxy is wrong, they are yet to realize the orthodoxy of the second. As Joan Robinson said in her 1973 article, The Need For A Reconsideration Of The Theory Of International Trade, “there is no branch of economics in which there is a wider gap between orthodox doctrine and actual problems than in the theory of international trade”. The recent consensus of the economics profession on the debate about the UK EU referendum highlights it. Instead of the invisible hand, we need a visible hand, i.e., a coordination at the international level. The leftist response as highlighted by Dani Rodrik are welcome but still leave the problem open. So one needs both this and a world-wide fiscal expansion with balance-of-payments targets.

The Case for Concerted Action
The World Needs A Kaldorian Response
V. Ramanan

Cameron Murray — The mysterious real interest rate of economic theory

The mysterious real interest rate - the one typically denoted as r in economic theory - does not have a real life counterpart. This is a problem for economic theory. And it is a major problem for policy makers relying on monetary policy to boost economic activity.

While we think of the nominal interest rate minus inflation as getting close to the theoretical concept of real interest rates, changing this value in practice through central bank operations does not actually change the real return on capital and stimulate investment through that channel.

Why?

Because the price of capital is determined by the interest rate! We have known this for a long time. Joan Robinson wrote about the circularity of reasoning when we measure the quantity of capital by its price. She was ignored. As I expect to be.…

Fresh economic thinking

The mysterious real interest rate of economic theory
Cameron Murray

Barkley Rosser — The Revenge Of Joan Robinson: Capital Theory Controversies Revive

It was just two years ago that Thomas Piketty's book, Capital, made the best seller lists. Right now considerable attention is being paid to Anwar Shaikh's voluminous magnum opus, Capitalism. Both of these books take as their central issue that of the underlying forces driving secular trends in income distribution, particularly the division between wage incomes and profit or interest-based incomes.

Curiously, Piketty's theory remains firmly in the neoclassical camp regarding the questions raised by the old Cambridge, England school. He notes those controversies, but more or less dismisses them, perhaps reflecting the influence of being at MIT for a long period of time, even as he mocks excessive mathematical abstraction of much of modern growth theory. Jamie Galbraith and others, including Shaikh, have taken Piketty to task for his dismissal of the issues raised by those old controversies,…

Shaikh is an old fan of Sraffa's and a participant in the original debates. While he also does not present most of his theory as drawing on these old arguments, his approach is much closer to it in flavor and atmosphere, even if he eventually draws more heavily on modern econophysics methods. These fit nicely into his more Marxist approach, even as he downplays Marx. But, of course, it was Marx who more sharply posed these questions regarding the nature of capital and how it affects income distribution, as well as power distribution, within societies.…

Econospeak
The Revenge Of Joan Robinson: Capital Theory Controversies Revive
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

Barkley Rosser — The Legacy of Joan Robinson

Nice summary of Joan Robinson and her influence on economics and Post Keynesianism in particular.

Econospeak
The Legacy of Joan Robinson
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

Ramanan — Kalecki And Keynes

Joan Robinson quote.

The Case for Concerted Action
Kalecki And Keynes
V. Ramanan

Ann Pettifor — On brilliant, neglected women economists – for Woman’s Hour

While there have been women since Joan Robinson that have won prizes including the Nobel Prize, Palgrave’s editors are quite clear: Joan Robinson was the only woman among the great economists.

I am a great fan of Joan Robinson. She was a philosopher.

Robinson had avoided mathematical modeling like the plague. She once famously said: ”I never learned math, so I had to think.

There is nothing wrong with using mathematics as a tool. Joan Robinson had to do it in order to think about economics. But she did it in her head. This is indicative of a high degree of mathematical literacy rather than ignorance of math. But when math becomes substance, then something is wrong. 

Math is entirely tautologous and says nothing specifically about the world, only the logical structure for understanding it. Math is a branch of logic and it is useful for dealing with quantity. There is  much more to logic than math, but logic is also entirely tautologous. Logic and math must be informed by both keen observation and correct judgment. 

Robinson got that. She and Piero Sraffa stuck it to Paul Samuelson and Robert Solow in the Cambridge capital debate, Samuelson having been the champion of mathematical modeling in economics. Robinson and Sraffa did this on logical grounds.

Debtonation
On brilliant, neglected women economists – for Woman’s Hour

Ann Pettifor

Joan Robinson — Economic Philosophy (1962) free download

Joan Robinson

Economic Philosophy (1962)

Free Download

Internet Archive

ht Jan Milch

Magpie — Reading Robinson: Introduction (part i)

After John Maynard Keynes, Joan V. Robinson (1903-1983) was the most influential figure of the original Keynes' “Circus” at the University of Cambridge; and her active role promoting Keynesian economics earned her the title of “patron saint of Post-Keynesian economics”.

Magpie's Asymmetric Warfare
Reading Robinson: Introduction (part i)
Magpie

Lord Keynes — Joan Robinson on Marx’s Labour Theory of Value: A Few Points

Joan Robinson’s An Essay on Marxian Economics (1966) is her extended analysis and critique of Marxism, and this should be of great interest to Post Keynesians given Robinson’s role in developing Post Keynesian theory.

Some quick points….

Social Democracy For The 21St Century: A Post Keynesian Perspective
Joan Robinson on Marx’s Labour Theory of Value: A Few Points
Lord Keynes

Robert Vienneau — Paul Romer Confused On Capital Theory

On Romer making stuff up. Yet another smackdown. I've lost count.

Thoughts on Economics
Paul Romer Confused On Capital Theory
Robert Vienneau

Ramanan — Free Trade? Heterodox Dissent

Useful quotes from Joan Robinson and Wynne Godley. Definitely keepers.

The Case For Concerted Action
Free Trade? Heterodox Dissent
Ramanan

Oleg Komlik — Joan Robinson: Economics has always been partly a vehicle for the ruling ideology

The quote above taken from her book Economic Philosophy (p. 7) which you may free download here:
Robinson, Joan. 1962. Economic Philosophy. London: C. A. Watts.

Economic Sociology and Political Economy
Joan Robinson: Economics has always been partly a vehicle for the ruling ideology

Oleg Komlik | Chairman of the Junior Sociologists Network at the International Sociological Association, a PhD Candidate in Economic Sociology in the Department of Sociology and Anthropology at Ben-Gurion University, and a Lecturer in the School of Behavioral Sciences at the College of Management Academic Studies