Tag: Economics

Book Review: Wolff & Resnick, “Contending Economic Theories”

by Matthijs Krul

One of the core principles of scientific theory is that all theory is specific and limited in its domain. A theory which attempts to explain everything, explains nothing. Equally, the mere observation that ‘everything depends on everything else’ is, while undoubtedly true, useless for scientific inquiry – the virtue rests in identifying the specific and causal connections where possible, or at the very least a model or theory that can explain some subset of the totality of connections in a way that helps us solve problems. To point this out may seem banal, but Richard Wolff and Stephen Resnick would have done well to keep it in mind when writing their book, Contending Economic Theories: Neoclassical, Keynesian, and Marxian. As the name implies, this is a work of comparative economic theory, presenting the elementary (say, undergraduate level) versions of each of the theories in a way that allows novices in economics to compare and contrast their methods and approaches.

Such a book is a great idea, as there is a real shortage of clear and accessible comparative material that gives an overview of the different theoretical conceptions and methodological justifications that exist in economics, both orthodox and heterodox – not least because the interaction between method and content is perhaps nowhere as important as in that discipline. Moreover, as Marxist economists of some recent popular renown – at least in the case of Richard Wolff, as Stephen Resnick sadly died earlier this year – you’d expect the authors’ heterodox view of economic theory to make such a comparison more fair and useful than it would be if undertaken by an orthodox neoclassical historian of economics. Continue reading “Book Review: Wolff & Resnick, “Contending Economic Theories”” →

The Many Forms of Kenneth Rogoff: A Study in Neoclassical Economics Today

by Matthijs Krul

The opposition to austerity worldwide has been much strengthened by the loss of academic prestige incurred by the austerity camp in the field of economics. Carmen Reinhart and Kenneth Rogoff, both prominent neoclassical economists at Harvard University, were revealed to have made serious data errors in their influential paper on the history of public debt and its relation to economic growth. In this paper, “Growth in a Time of Debt”, the authors had argued that when “gross external debt reaches 60 percent of GDP”, a country’s annual growth declined by two percent, and “for levels of external debt in excess of 90 percent” GDP growth was “roughly cut in half.”(1) This has been widely seen as a major intellectual support for the austerity drive worldwide, and therefore the denouement of this paper has had a considerable impact. Not only did the paper leave out important data, but it also contained simple errors in spreadsheet calculation. This is all the more intriguing, and delicious for the press, because the counter-article’s co-author Thomas Herndon is still a graduate student, whereas Rogoff is one of the world’s most eminent neoclassical macroeconomists. Continue reading “The Many Forms of Kenneth Rogoff: A Study in Neoclassical Economics Today” →

Book Review: Michael Heinrich, “An Introduction to the Three Volumes of Marx’s Capital”

by Matthijs Krul

The first thing to note about the recently much discussed An Introduction to the Three Volumes of Marx’s Capital is that it is no such thing. What Michael Heinrich has done in this work is not give an introduction to the book for the new reader, but provide a critical summary of its contents seen from the point of view of the so-called ‘new critique’, also known as the ‘value-form’ analysis of Marxism. This particular analysis focuses, as Heinrich says in the introduction, on a particular interpretation of Marx’s value theory. This is not illegitimate: there are various major interpretations of Marx’s value theory, not least because of its complexity and opacity, and it makes sense for an author to be clear about his or her commitments to a particular one so that the reader knows what is going on. However, throughout the book the structure of the argument is more often than not polemical, explicitly or implicitly, against rival interpretations of Marx – both the attempts to make Marxism into a more general theory than Heinrich finds warranted, which he describes as “worldview Marxism” or “traditional Marxism”, and rival interpretations of Marx’s value theory specifically. While polemicizing, however, he declines to identify any of his opponents or opposing currents by name, making the exercise both fruitless as an effective counterargument – because a newbie would not know what it was a counterargument against – and as a contribution to the debate. Attacking opponents without naming them or explicitly citing their viewpoints is a dishonest strategy, but one sadly common in Marxist polemics, even about such seemingly abstract topics as value theory.(1)

The risk of such an approach is that it either agitates against straw opponents, making the author seem more convincing by arguing against views that his main interlocutors do not really hold, or that it creates any number of false dichotomies: making the author’s viewpoint seem strictly contrasting to those of others, when it is by no means certain that they cannot be compatible or reconciled. Heinrich does both of these to some extent. Now this may also follow somewhat from the generally philological style of argument that pervades the book, and is not a reflection on Heinrich’s ill intent or conscious deception. But it does further take away the purpose of the book as an ‘introduction’, rather suggesting it should be read more as a polemic in the form of a restatement or reinterpretation of Marx’s theories. That is of itself fair enough, and happens plenty; but it would be better to explicitly advertise it as such, certainly in a time when many are newly seeking out radical understandings of economic theory and may encounter this as a guide to Marx’s magnum opus, which it simply is not. Of course, with a work of this type, one can always find any number of expressions and formulations of issues that one would have written differently. Nitpicking such things is not helpful; I will therefore not mention all of the minor points of disagreement or different emphases I would have, but outline a few of the central issues. Continue reading “Book Review: Michael Heinrich, “An Introduction to the Three Volumes of Marx’s Capital”” →

Book Review: Paul Cantor & Stephen Cox (eds.), “Literature and the Economics of Liberty”

by Matthijs Krul

It has often been remarked that if Marxism is still dominant somewhere, it must surely be in cultural studies and in literary criticism, especially in academia. For whatever historical contingencies have made it so, it is undeniable that, at least within the Anglosphere, these disciplines have proven particularly pervasively and stubbornly Marxist in their approach since that body of thought was introduced within them. While the methods have been very divergent, between cultural materialism and the New Criticism, and by no means all of the scholars in these fields have been Marxists, it seems that Marxism left a bigger and more lasting stamp on them than on any other. One may wonder what Marx would have made of this – while he was fond of literature and he and his family often discussed novels, poetry, and theatre, surely he would have found the scientific conquest of history and what is now called economics more important. However that may be, one interesting product of this influence of Marxism has been the school of literary criticism interested in ‘economics and literature’ – in a broad sense, both the application of economic ideas to the study of literature or its production as well as the reflection of such ideas in the content of the literary works themselves. This, too, has often been Marxist in its approach, or at least socialist in its sympathies.

For this reason, it is interesting to see something quite rare: a work of literary criticism, explicitly with an economic mode of interpretation, written from the political-economic right. It is rare enough to have economists who read anything, as is easily revealed by the profound lack of humane imagination that prevails in the charmed circles of neoclassical economics disputes (as for example Philip Mirowski has observed). It may be for this reason that such a book has been written by a series of economically informed literary critics: all but one of the contributors to Paul Cantor and Stephen Cox’s volume, Literature and the Economics of Liberty, are professors of English lit. It also seems suitable that they are not, in fact, writing from a neoclassical point of view, but explicitly with the purpose of promoting the Austrian School of economics in and through their analysis of literature. This school distinguishes itself in several respects from neoclassical economics, and is properly considered heterodox: mainly because, while it is even much more strongly free trade in orientation, its epistemology and methods are vastly different. It rejects modelling, econometrics, and quantification as the guiding principles of economic theory, and rejects equilibrium ideas, preferring instead to understand markets as inherent results of human activity, naturally created heuristics for the discovery of information under conditions of uncertainty. It sustains such an approach through some strong axiomatic notions of human nature, and much of the Austrian School literature is a working out of the philosophical consequences of this view of human nature: the Smithian person – with the natural tendency to ‘truck, barter, and exchange’ – writ large. All the accoutrements of modern capitalism are merely the result of letting this natural habitus of humanity do its thing, and therefore the more free the markets, the more free the people. Continue reading “Book Review: Paul Cantor & Stephen Cox (eds.), “Literature and the Economics of Liberty”” →