Find counter arguments by entering NameVs… or …VsName.
The author or concept searched is found in the following 10 entries.
| Disputed term/author/ism | Author |
Entry |
Reference |
|---|---|---|---|
| Aggregate Production Function | Robinson | Harcourt I 11 Measurements/capital/Aggregate Production Function/RobinsonVsNeoclassical Economics/Robinson/Harcourt: In 1953 Joan Robinson wrote The Production Function and the Theory of Capital' (Robinson [1953-4])(1) in which she made a number of specific complaints about the state of economic theory and the state of some economic theorists, who soon were to become identified as the latter-day neoclassical whose [headquarter] is now Cambridge, Mass. Her complaints related to the ambiguity concerning the unit in which capital was measured in the neoclassical aggregate production function, the concentration on factor proportions and the neglect of factor supplies and technical progress in the explanation of distributive prices and shares, and what she saw as the deficiencies of the neoclassical definition of equilibrium. >Equilibrium, >Capital, >Measurements. Harcourt I 15 RobinsonVsWicksell: Joan Robinson's first complaint related to the fuzzy nature of the capital variable in the aggregate production function, the concept of which, she argued, was used by the neoclassicals to explain the distribution of income between profit-receivers and wage-earners in capitalist economies, taking as given the stocks of labour and capital and the knowledge of how one may be substituted for the other, so that their respective marginal productivities were known. >Capital/Wicksell. Harcourt I 16 Robinson(2): „The dominance in neoclassical economic teaching of the concept of a production function, in which the relative prices of the factors of production are exhibited as a function of the ratio in which they are employed in a given state of technical knowledge, has had an enervating effect upon the development of the subject, for by concentrating upon the question of the proportions of factors it has distracted attention from the more difficult but more rewarding questions of the influences governing the supplies of the factors and of the causes and consequences of changes in technical knowledge. Moreover, the production function has been a powerful instrument of miseducation. The student of economic theory is taught to write Q = f(L,K) where L is a quantity of labour, K a quantity of capital and Q a rate of output of commodities. He is instructed to assume all workers alike, and to measure L in man-hours of labour; he is told something about the index-number problem involved in choosing a unit of output; and then he is hurried on to the next question, in the hope that he will forget to ask in what units K is measured. Before ever he does ask, he has become a professor, and so sloppy habits of thought are handed on from one generation to the next.“(2)* Harcourt I 17 RobinsonVsNeoclassical economics: The neoclassical way of looking at the problem, Joan Robinson argues, directed interest away from the forces that determine the growth of capital and labour, and how technical advances affect growth, accumulation and income shares. Robinson/Harcourt: By contrast, her own interest in capital theory was in order to analyse what she regarded as a secondary factor in the list of factors which explain growth and distribution over time, namely, the role of the choice of techniques of production in the investment decision. The main propositions of The Accumulation of Capital, Robinson [1956](3), are established in a model in which there is only one technique of production available at any moment of time;(…) >Capital/Robinson. Harcourt I 25 Aggregate production function/Robinson/Harcourt: The costing and valuation process is repeated for all equipments, ws and rs and then the relationship between output per head and real capital is plotted to give Joan Robinson's version of the aggregate production function - her pseudo-production function - which has (…) a rather bizarre appearance relative to the smooth curves of the textbooks. RobinsonVsSolow: „It is an absurd, though unfortunately common, error to suppose that substitution between labour and capital is exhibited by a movement from one point to another along a pseudo-production function (see, for example, Solow [1970](4)). Each point represents a situation in which prices and wages have been expected, over a long past, to be what they are today, so that all investments have been made in the form that promises to yield the maximum net return to the investor. The effect of a change in factor prices cannot be discussed in these terms. Time, so to say, runs at right angles to the page at each point on the curve. To move from one point to another we would have either to rewrite past history or to embark upon a long future.“ (Robinson [1971(5)], pp. 103-4. Harcourt I 25/26 Harcourt: Moreover (…) neither the wage rate nor the reward to capital can be obtained by suitable partial differentiation of the factor ratio relationship. Harcourt I 29 Equilibrium: It has been stressed that an implication of Joan Robinson's definition of equilibrium is that points on the pseudo-production function are equilibrium positions and that comparisons between points are just that, comparisons of one equilibrium position with another. >Equilibrium/Robinson. Time/process/accumulation/Harcourt: The comparisons are certainly not a description of a process - a change - whereby accumulation occurs and new, or, rather, different techniques (technical progress is ruled out by assumption) replace old ones as a result, for example, of changes in relative factor prices. >Factor price. Neo-Keynesianism: Moreover, a point which has been reiterated again and again in the literature by neo-Keynesians, especially by Joan Robinson, is that the application of results obtained from such equilibrium comparisons to long-period analyses of actual changes can be, at the least, most seriously misleading and, usually, just plain wrong. Neo-neoclassical economics: This fact vitiates many analyses of the past and, to be fair, has been countered in recent years by an enormous growth of models in which out-of-equilibrium processes are explicitly analysed, often (but not exclusively) by neo-neoclassical economists equipped with the appropriate techniques to do so. *Harcourt: I have changed the notation of the original article in order to make it consistent with the notation of this book. 1. Robinson, Joan (1953-4). 'The Production Function and the Theory of Capital', Review of Economic Studies, xxi, pp. 81-106. 2. Ibid. p. 81 3. Robinson, Joan [1956] The Accumulation of Capital (London: Macmillan). 4. Solow, R.M. [1970] 'On the Rate of Return: Reply to Pasinetti. Economic Journal, LXXX, pp.423-8. 5. Robinson, J. [1971] Economic Heresies: Some Old-fashioned Questions in Economic Theory (New York: Basic Books). |
EconRobin I James A. Robinson James A. Acemoglu Why nations fail. The origins of power, prosperity, and poverty New York 2012 Robinson I Jan Robinson An Essay on Marxian Economics London 1947 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
| Economic Cycle | Keynesianism | Mause I 226 Economy/Keynesianism: In the sense of Keynesian approaches, economic fluctuations can be on the demand side of the goods markets if the spending decisions of companies and private households are driven by uncertainty and exuberance (so-called animal spirits by Keynes). Income distribution can also influence demand for goods, for example if the upper income groups have a lower marginal selling tendency than the lower income groups. (1) See Supply/Neoclassical Economics. Keynesian models justify economic cycles by the inherent instability of the private sector (fluctuations in private consumption and investment demand, in net exports and demand for money). In the event of underutilization of production capacities due to low demand, the central bank or the government should intervene to stabilise demand through a mix of interest rate cuts, tax cuts and higher spending (so-called expansive monetary and fiscal policy). >Economy/Neoclassical Theory. KeynesianismVsNeoclassical Economics). 1. Behringer, Jan, Christian A. Belabed, Thomas Theobald, und Till van Treeck. Einkommensverteilung, Finanzialisierung und makroökonomische Ungleichgewichte. Vierteljahreshefte zur Wirtschaftsforschung 82 (4), 2013, p. 203– 221. |
Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018 |
| Equilibrium | Neoclassical Economics | Harcourt I 23 Equilibrium/Neoclassical economics/Harcourt: Equilibrium to the neoclassical economist, though, is a position towards which an economy is tending to move as time goes by, possibly a reference to Marshall's description of the nature of equilibrium prices in his analysis of supply and demand but now applied to the motion of the system as a whole. It reflects the attempt by neoclassical economists to handle 'time' within their analytical framework. >Equilibrium/Robinson. RobinsonVsNeoclassical economics: Joan Robinson says the approach is fundamentally wrong-headed; an economy cannot get into a position of equilibrium - either it is in one and has been for a long time, or it is not.* If it is in equilibrium, a given item of capital equipment has the same value whether it be valued at its expected future earnings discounted back to the present at the ruling rate of profits, or as work done in order to produce it, cumulated forward to the present at the ruling rate of profits (supposing, for the moment, that equipment is made by labour alone). Rate of profits/capital/investments: : Moreover (…) the rate of profits on capital has a definite meaning and is equal to the expected rate of profits on investment. Complication: With more sophisticated techniques whereby durable capital goods help to make capital goods (and/or circulating ones also help), we have to use a more complicated model in which there are balanced stocks of durable capital goods. Formalization: Used capital goods are treated as one-year-older goods {jointly produced with consumption goods), in order to avoid the puzzle of tracing productive inputs back to the Garden of Eden. * This definition of equilibrium includes the analysis in the theory of economic growth which is associated with the concept of Golden Ages - steady-state, long-run equili- brium growth paths. For a thorough account of this branch of the modern theory of economic growth, see Hahn and Matthews [1964](1), part 1. 1. Hahn, F. H. and Matthews, R. C. O. [1964] 'The Theory of Economic Growth: A Survey', Economic Journal, LXXIV, pp. 779-902. |
Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
| Equilibrium | Robinson | Harcourt I 22 Equilibrium/RobinsonVsNeoclassical Economics/Robinson/Harcourt: the concept as defined by Joan Robinson,[is] a concept which she contrasts strongly with that of 'the neoclassical economist' whose concept she regards as containing 'a profound methodological error . . . which makes the major part of [the] neoclassical doctrine spurious' (Robinson [1953-4](1), p. 84). Def equilibrium/Robinson: (…) a situation in which expectations are fulfilled so that a given rate of profits has long been ruling and is confidently expected to continue to do so in the future. Harcourt: This definition overcomes the 'puzzles which arise because there is a gap in time between investing money capital and receiving money profits [and] in that gap events may occur which alter [in an unforeseen way] the value of money'. Idealization: Implicit in the definition are assumptions of perfect foresight and lack of uncertainty, the removal of which, Solow considers, has far more serious consequences for the neoclassical theory of capital than any puzzles associated with measuring 'it' or 'its' marginal product (see Solow [1963a](2), pp. 12-14). Harcourt I 23 Uncertainty/Robinson: „To abstract from uncertainty means to postulate that no such (unforeseen) events occur, so that the ex ante expectations which govern the actions of the man of deeds are never out of gear with the ex post experience which governs the pronouncements of the man of words [unless he is an accountant], and to say that equilibrium obtains is to say that no such events have occurred for some time, or are thought liable to occur in the future.“ (Robinson [1953-4](1), p. 84.) >Equilibrium/Neoclassical economics. RobinsonVsNeoclassical economics: (…) an economy cannot get into a position of equilibrium - either it is in one and has been for a long time, or it is not.* If it is in equilibrium, a given item of capital equipment has the same value whether it be valued at its expected future earnings discounted back to the present at the ruling rate of profits, or as work done in order to produce it, cumulated forward to the present at the ruling rate of profits (supposing, for the moment, that equipment is made by labour alone). Rate of profits/capital/investments: Moreover (…) the rate of profits on capital has a definite meaning and is equal to the expected rate of profits on investment. Complication: With more sophisticated techniques whereby durable capital goods help to make capital goods (and/or circulating ones also help), we have to use a more complicated model in which there are balanced stocks of durable capital goods. Formalization: Used capital goods are treated as one-year-older goods {jointly produced with consumption goods), in order to avoid the puzzle of tracing productive inputs back to the Garden of Eden. >Production function/Robinson, >Labour time/Robinson, >Aggregate production function/Robinson. * This definition of equilibrium includes the analysis in the theory of economic growth which is associated with the concept of Golden Ages - steady-state, long-run equili- brium growth paths. For a thorough account of this branch of the modern theory of economic growth, see Hahn and Matthews [1964](3), part 1. 1. Robinson, Joan (1953-4). 'The Production Function and the Theory of Capital', Review of Economic Studies, xxi, pp. 81-106. 2. Solow, Robert M. [1963a] (Professor Dr. F. De Vries Lectures, 1963) Capital Theory and the Rate of Return (Amsterdam: North-Holland). 3. Hahn, F. H. and Matthews, R. C. O. [1964] 'The Theory of Economic Growth: A Survey', Economic Journal, LXXIV, pp. 779-902. |
EconRobin I James A. Robinson James A. Acemoglu Why nations fail. The origins of power, prosperity, and poverty New York 2012 Robinson I Jan Robinson An Essay on Marxian Economics London 1947 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
| Loans | Neoclassical Economics | Rothbard III 421 Loans/Neoclassical economics/RothbardVsNeoclassical economics/Rothbard: Where is the producers’ loan market? This market is always the one that is stressed by writers, often to the exclusion of anything else. In fact, “rate of interest” generally refers to money loans, including loans to consumers and producers, but particularly stressing the latter, which is usuallyquantitatively greater and more significant for production. The rate of interest of money loans to the would-be producer is supposed to be the significant rate of interest. In fact, the fashionable neoclassical doctrine holds that the producers’ loan marketdetermines the rate of interest (…). >Neoclassic economics, >Rate of interest/Rothbard. Rothbard III 422 RothbardVsNeoclassical economics: this sort of approach completely overlooks the gross savings of the producers and, even more, the demand for present goods by owners of the original factors. Instead of being fundamentally suppliers of present goods, capitalists are portrayed as demanders of present goods. >Production structure/Rothbard, >Production/Rothbard. This approach misses the point very badly because it looks at the economy with the superficial eye of an average businessman. The businessman borrows on a producers’ loan market from individual savers, and he judges how much to borrow on the basis of his expected rate of “profit,” or rate of return. The writers assume that he has available a shelf of investment projects, some of which would pay him, say 8 percent, some 7 percent, some 3 percent, etc., and that at each hypothetical interest rate he will borrow in order to invest in those projects where his return will be as high or higher. In other words, if the interest rate is 8 percent, he will borrow to invest in those projects that will yield him over 8 percent; if the rate is 4 percent, he will invest in many more projects - those that will yield him over 4 percent, etc. In that way, the demand curve for savings, for each individual, and still more for the aggregate on the market, will slope rightward as demand curves usually do, as the rateof interest falls. The intersection sets the market rate of interest. Rothbard: Superficially, this approach might seem plausible. It usually happens that a businessman foresees such varying rates of return on different investments, that he borrows on the market from different individual savers, and that he is popularly considered the “capitalist” or entrepreneur, while the lenders are simply savers. >Loans/Rothbard. Rothbard III 423 RothbardVsNeoclassical economics: The cardinal error here is an old one in economics - the attribution of value-productivity to monetary investment. There is no question that investment increases the physical productivity of the productive process, as well as the productivity per man hour. Indeed, that is precisely why investment and the consequent lengthening of the periods of production take place at all. But what has this to do with value-productivity or with the monetary return on investment,(…)? Solution/Rothbard: (…) producers benefit, not from the gross revenue received, but from the price spread between their selling price and their aggregate factor prices. >Factors of production/Rothbard. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
| Loans | Rothbard | Rothbard III 377 Loans/future goods/investment/exchange/Rothbard: What (…) are the specific types of future goods that enter the time market? There are two such types. Rothbard III 378 One is a written claim to a certain amount of money at a future date. The exchange on the time market in this case is as follows: A gives money to B in exchange for a claim to future money. The term generally used to refer to A, the purchaser of the future money, is “lender,” or “creditor,” while B, the seller of the future money, is termed the “borrower” or “debtor.” >Credit, >Time/Rothbard, >Time preference. The reason is that this credit transaction, as contrasted to a cash transaction, remains unfinished in the present. When a man buys a suit for cash, he transfers money in exchange for the suit. The transaction is finished. In a credit transaction he receives simply a written I.O.U., or note, entitling him to claim a certain amount of money at a future date. The transaction remains to be completed in the future, when B, the borrower, “repays the loan” by transferring the agreed money to the creditor. Comsumer goods: Although the loan market is a very conspicuous type of time transaction, it is by no means the only or even the dominant one. There is a much more subtle, but more important, type of transaction which permeates the entire production system, but which is not often recognized as a time transaction. This is the purchase of producers’ goods and services, which are transformed over a period of time, finally to emerge as consumers’ goods. >Service/Rothbard, >Production/Rothbard, >Investments/Rothbard, >Capitalism/Rothbard, >Evenly Rotating Economy. Rothbard III 421 Loan market/RothbardVsNeoclassical economics/Rothbard: Where is the producers’ loan market? This market is always the one that is stressed by writers, often to the exclusion of anything else. In fact, “rate of interest” generally refers to money loans, including loans to consumers and producers, but particularly stressing the latter, which is usuallyquantitatively greater and more significant for production. The rate of interest of money loans to the would-be producer is supposed to be the significant rate of interest. In fact, the fashionable neoclassical doctrine holds that the producers’ loan marketdetermines the rate of interest (…). >Neoclassic economics, >Rate of interest/Rothbard. Rothbard III 422 RothbardVsNeoclassical economics: this sort of approach completely overlooks the gross savings of the producers and, even more, the demand for present goods by owners of the original factors. Instead of being fundamentally suppliers of present goods, capitalists are portrayed as demanders of present goods. >Production structure/Rothbard, >Production/Rothbard. This approach misses the point very badly because it looks at the economy with the superficial eye of an average businessman. The businessman borrows on a producers’ loan market from individual savers, and he judges how much to borrow on the basis of his expected rate of “profit,” or rate of return. The writers assume that he has available a shelf of investment projects, some of which would pay him, say 8 percent, some 7 percent, some 3 percent, etc., and that at each hypothetical interest rate he will borrow in order to invest in those projects where his return will be as high or higher. In other words, if the interest rate is 8 percent, he will borrow to invest in those projects that will yield him over 8 percent; if the rate is 4 percent, he will invest in many more projects—those that will yield him over 4 percent, etc. In that way, the demand curve for savings, for each individual, and still more for the aggregate on the market, will slope rightward as demand curves usually do, as the rateof interest falls. The intersection sets the market rate of interest. Superficially, this approach might seem plausible. It usually happens that a businessman foresees such varying rates of return on different investments, that he borrows on the market from different individual savers, and that he is popularly considered the “capitalist” or entrepreneur, while the lenders are simply savers. Rothbard III 423 RothbardVsNeoclassical economics: What is the basis for the alleged shelf of available projects, each with different rates of return? Why does a particular investment yield any net monetary return at all? The usual answer is that each dose of new investment has a “marginal value productivity,” such as 10 percent, 9 percent, 4 percent, etc., that naturally the most productive investments will be made first and that therefore, as savings increase, further investments will be less and less value-productive. This provides the basis for the alleged “businessman’s demand curve,” which slopes to the right as savings increase and the interest rate falls. The cardinal error here is an old one in economics - the attribution of value-productivity to monetary investment. There is no question that investment increases the physical productivity of the productive process, as well as the productivity per man hour. Indeed, that is precisely why investment and the consequent lengthening of the periods of production take place at all. But what has this to do with value-productivity or with the monetary return on investment,(…)? Solution/Rothbard: (…) producers benefit, not from the gross revenue received, but from the price spread between their selling price and their aggregate factor prices. >Factors of production/Rothbard. Rothbard III 1002 Loans/loan market//Rothbard: Market interest rate/purchasing power: Recorded interest rates in the boom will generally rise, in fact, because of the purchasing-power component in the market interest rate. An increase in prices (…) generates a positive purchasing-power component in the natural interest rate, i.e., the rate of return earned by businessmen on the market. >Natural interest rate. Rothbard III 1003 Free market: In the free market this would quickly be reflected in the Ioan rate, which (…) is completely dependent on the natural rate. But a continual influx of circulating credit prevents the Ioan rate from catching up with the natural rate, and thereby generates the business-cycle process.(1) Loans: A further corollary of this bank-created discrepancy between the Ioan rate and the natural rate is that creditors on the Ioan market suffer losses for the benefit of their debtors: the capitalists on the stock market or those who own their own businesses. The latter gain during the boom by the differential between the Ioan rate and the natural rate, while the creditors (apart from banks, which create their own money) lose to the same extent. >Credit expansion, >Business cycle/Rothbard, >Boom/Rothbard, >Interest rate/Rothbard. 1. Since Knut Wicksell is one of the fathers of this business-cycle approach, it is important to stress that our usage of "natural rate" differs from his. Wicksell's "natural rate" was akin to our "free-market rate"; our "natural rate" is the rate of return earned by businesses on the existing market without considering Ioan interest. It corresponds to what has been misleadingly called the "normal profit rate," but is actually the basic rate of interest. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
| Measurements | Robinson | Harcourt I 11 Measurements/capital/Aggregate Production Function/RobinsonVsNeoclassical Economics/Robinson/Harcourt: In 1953 Joan Robinson wrote The Production Function and the Theory of Capital' (Robinson [1953-4])(1) in which she made a number of specific complaints about the state of economic theory and the state of some economic theorists, who soon were to become identified as the latter-day neoclassical whose [headquarter] is now Cambridge, Mass. Her complaints related to the ambiguity concerning the unit in which capital was measured in the neoclassical aggregate production function, the concentration on factor proportions and the neglect of factor supplies and technical progress in the explanation of distributive prices and shares, and what she saw as the deficiencies of the neoclassical definition of equilibrium. >Equilibrium, >Capital, >Measurements. Harcourt I 15 RobinsonVsWicksell: Joan Robinson's first complaint related to the fuzzy nature of the capital variable in the aggregate production function, the concept of which, she argued, was used by the neoclassicals to explain the distribution of income between profit-receivers and wage-earners in capitalist economies, taking as given the stocks of labour and capital and the knowledge of how one may be substituted for the other, so that their respective marginal productivities were known. >Capital/Wicksell. Harcourt I 16 Robinson(2): „The dominance in neoclassical economic teaching of the concept of a production function, in which the relative prices of the factors of production are exhibited as a function of the ratio in which they are employed in a given state of technical knowledge, has had an enervating effect upon the development of the subject, for by concentrating upon the question of the proportions of factors it has distracted attention from the more difficult but more rewarding questions of the influences governing the supplies of the factors and of the causes and consequences of changes in technical knowledge. Moreover, the production function has been a powerful instrument of miseducation. The student of economic theory is taught to write Q = f(L,K) where L is a quantity of labour, K a quantity of capital and Q a rate of output of commodities. He is instructed to assume all workers alike, and to measure L in man-hours of labour; he is told something about the index-number problem involved in choosing a unit of output; and then he is hurried on to the next question, in the hope that he will forget to ask in what units K is measured. Before ever he does ask, he has become a professor, and so sloppy habits of thought are handed on from one generation to the next.“(2)* Harcourt I 17 RobinsonVsNeoclassical economics: The neoclassical way of looking at the problem, Joan Robinson argues, directed interest away from the forces that determine the growth of capital and labour, and how technical advances affect growth, accumulation and income shares. Robinson/Harcourt: By contrast, her own interest in capital theory was in order to analyse what she regarded as a secondary factor in the list of factors which explain growth and distribution over time, namely, the role of the choice of techniques of production in the investment decision. The main propositions of The Accumulation of Capital, Robinson [1956](3), are established in a model in which there is only one technique of production available at any moment of time;(…) >Capital/Robinson. *Harcourt: I have changed the notation of the original article in order to make it consistent with the notation of this book. 1. Robinson, Joan (1953-4). 'The Production Function and the Theory of Capital', Review of Economic Studies, xxi, pp. 81-106. 2. Ibid. p. 81 3. Robinson, Joan [1956] The Accumulation of Capital (London: Macmillan). |
EconRobin I James A. Robinson James A. Acemoglu Why nations fail. The origins of power, prosperity, and poverty New York 2012 Robinson I Jan Robinson An Essay on Marxian Economics London 1947 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
| Neoclassical Economics | Sen | Brocker I 881 Neoclassical Economics/SenVsNeoclassics: 1. Sen is directed against all tendencies in economics to describe the world as quasi-science with mechanistic models.(1) There was nothing against the premise of rationality, but against the assumption of an omnipresent selfishness.(2) I 882 Neither egoism nor altruism can be assumed.(3) However, this altruism is reinterpreted by some authors: >Altruism, >Egoism. I 882 SenVsNeoclassical Economics: 2. VsMathematizability: The program of quantitative maximization is based on the assumption of commensurability of all utility functions. This presupposes the exchangeability of all goods and services. According to Sen, however, this is not the case. People constantly aim at different and often completely incommensurable (hedonistic as well as moral, material as well as ideal and practical as well as aesthetic etc.) goods at the same time and weigh them flexibly, which should have priority in each case. >Actions/Sen, >Markets/Sen. 1. Amartya Sen, Ökonomie für den Menschen. Wege zu Gerechtigkeit und Solidarität in der Marktwirtschaft, München 2000, S. 101f. 2. Ibid. p. 147 3. Ibid. p. 332 Claus Dierksmeier, „Amartya Sen, Ökonomie für den Menschen (1999)“ in: Manfred Brocker (Hg.) Geschichte des politischen Denkens. Das 20. Jahrhundert. Frankfurt/M. 2018 |
EconSen I Amartya Sen Collective Choice and Social Welfare: Expanded Edition London 2017 Brocker I Manfred Brocker Geschichte des politischen Denkens. Das 20. Jahrhundert Frankfurt/M. 2018 |
| Productivity | Rothbard | Rothbard III 423 Rate of return/productivity/Rothbard: Why does a particular investment yield any net monetary return at all? The usual answer is that each dose of new investment has a “marginal value productivity,” such as 10 percent, 9 percent, 4 percent, etc., that naturally the most productive investments will be made first and that therefore, as savings increase, further investments will be less and less value-productive. This provides the basis for the alleged “businessman’s demand curve,” which slopes to the right as savings increase and the interest rate falls. The cardinal error here is an old one in economics - the attribution of value-productivity to monetary investment. There is no question that investment increases the physical productivity of the productive process, as well as the productivity per man hour. Indeed, that is precisely why investment and the consequent lengthening of the periods of production take place at all. But what has this to do with value-productivity or with the monetary return on investment, (…)? >Demand/Rothbard, >Production/Rothbard. Suppose, for example, that a certain quantity of physical factors (and we shall set aside the question of how this quantity can be measured) produces 10 units of a certain product per period at a selling price of two gold ounces per unit. Now let us postulate that investment is made in higher-order capital goods to such an extent that productivity multiplies fivefold and that the same original factors can now produce 50 units per period. The selling price of the larger supply of product will be less; let us assume that it will be cut in half to one ounce per unit. The gross revenue per period is increased from 20 to 50 ounces. Does this mean that value-productivity has increased two and a half times, just as physical productivity increased fivefold? Certainly not! For (…) producers benefit, not from the gross revenue received, but from the price spread between their selling price and their aggregate factor prices. Rothbard III 424 The increase in physical productivity will certainly increase revenue in the short run, but this refers to the profit-and-loss situations of the real world of uncertainty. The long-run tendency will be nothing of the sort. The long-run tendency, (…) is toward an equalization of price spreads. How can there be any permanent benefit when the cumulative factor prices paid by this producer increase from, say, 18 ounces to 47 ounces? This is precisely what will happen on the market, as competitors vie to invest in these profitable situations. The price spread, i.e., the interest rate, will again be 5 percent. Thus the productivity of production processes has no basicvrelation to the rate of return on business investment. This rate of return depends on the price spreads between stages, and these price spreads will tend to be equal. The size of the price spread, i.e., the size of the interest rate, is determined (…) by the time-preference schedules of all the individuals in the economy. For RothbardVsNeoclassical economics see >Loans/Neoclassical Economics, >Interest rates/Rothbard. Rothbard III 577 Productivity/labour/Rothbard: there is danger in using a term such as “productivity of labor.” Suppose, for example, we state that “the productivity of labor has advanced in the last century.” The implication is that the cause of this increase came from within labor itself, i.e., because current labor is more energetic or personally skillful than previous labor. This, however, is not the case. Marginal productivity: An advancing capital structure increases the marginal productivity of labor, because the labor supply has increased less than the supply of capital goods. This increase in the marginal productivity of labor, however, is not due to some special improvement in the labor energy expended. It is due to the increased supply of capital goods. The causal agents of increased wage rates in an expanding economy, then, are not primarily the workers themselves, but the capitalist-entrepreneurs who have invested in capital goods. The workers are provided with more and better tools, and so their labor becomes relatively scarcer as compared to the other factors.(2) >Marginal productivity. 1. For brilliant dissections of various forms of the “productivity” theory of interest (the neoclassical view that investment earns an interest return because capital goods are value-productive), see the following articles by Frank A. Fetter: “The Roundabout Process of the Interest Theory,” Quarterly Journal of Economics, 1902, pp. 163–80, where BöhmBawerk’s highly unfortunate lapse into a productivity theory of interest is refuted; “Interest Theories Old and New,” pp. 68–92, which presents an extensive development of time-preference theory, coupled with a critique of Irving Fisher’s concessions to the productivity doctrine; also see “Capitalization Versus Productivity, Rejoinder,” American Economic Review, 1914, pp. 856–59, and “Davenport’s Competitive Economics,” Journal of Political Economy, 1914, pp. 555–62. Fetter’s only mistake in interest theory was to deny Fisher’s assertion that time preference (or, as Fisher called it, “impatience”) is a universal and necessary fact of human action. For a demonstration of this important truth, see Mises, Human Action, New Haven, Conn.: Yale University Press, 1949. Reprinted by the Ludwig von Mises Institute, 1998. pp. 480ff. 2. It should be understood throughout that when we refer to increases in wage rates or ground rents in the expanding economy, we are referring to real, and not necessarily to money, wage rates or ground rents. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
| Rate of Return | Rothbard | Rothbard III 423 Rate of return/productivity/Rothbard: Why does a particular investment yield any net monetary return at all? The usual answer is that each dose of new investment has a “marginal value productivity,” such as 10 percent, 9 percent, 4 percent, etc., that naturally the most productive investments will be made first and that therefore, as savings increase, further investments will be less and less value-productive. This provides the basis for the alleged “businessman’s demand curve,” which slopes to the right as savings increase and the interest rate falls. The cardinal error here is an old one in economics - the attribution of value-productivity to monetary investment. There is no question that investment increases the physical productivity of the productive process, as well as the productivity per man hour. Indeed, that is precisely why investment and the consequent lengthening of the periods of production take place at all. But what has this to do with value-productivity or with the monetary return on investment, (…)? >Demand/Rothbard, >Production/Rothbard. Suppose, for example, that a certain quantity of physical factors (and we shall set aside the question of how this quantity can be measured) produces 10 units of a certain product per period at a selling price of two gold ounces per unit. Now let us postulate that investment is made in higher-order capital goods to such an extent that productivity multiplies fivefold and that the same original factors can now produce 50 units per period. The selling price of the larger supply of product will be less; let us assume that it will be cut in half to one ounce per unit. The gross revenue per period is increased from 20 to 50 ounces. Does this mean that value-productivity has increased two and a half times, just as physical productivity increased fivefold? Certainly not! For (…) producers benefit, not from the gross revenue received, but from the price spread between their selling price and their aggregate factor prices. Rothbard III 424 The increase in physical productivity will certainly increase revenue in the short run, but this refers to the profit-and-loss situations of the real world of uncertainty. The long-run tendency will be nothing of the sort. The long-run tendency, (…) is toward an equalization of price spreads. How can there be any permanent benefit when the cumulative factor prices paid by this producer increase from, say, 18 ounces to 47 ounces? This is precisely what will happen on the market, as competitors vie to invest in these profitable situations. The price spread, i.e., the interest rate, will again be 5 percent. Thus the productivity of production processes has no basicvrelation to the rate of return on business investment. This rate of return depends on the price spreads between stages, and these price spreads will tend to be equal. The size of the price spread, i.e., the size of the interest rate, is determined (…) by the time-preference schedules of all the individuals in the economy. For RothbardVsNeoclassical economics see >Loans/Neoclassical Economics, >Interest rates/Rothbard. Rothbard III 794 Rate of return/Rothbard: Suppose that [someone] normally purchases original factors for 100 and then sells the product for 120 ounces two years later, for an interest return of 10 percent per annum. Now suppose that a decrease in the demand for money or an increase of money stock propels a general upward movement in prices and that all prices double in two years' time. >Production factors/Rothbard, >Production structure/Rothbard, >Price/Rothbard. Then, just because of the passage of time, an entrepreneur who purchases factors for 100 now will sell for 240 ounces in two years' time. Instead of a net return of 20 ounces, or 10 percent per annum, he reaps 140 ounces, or 70 percent per annum. Problem: It would seem that a rise in prices creates an inherent tendency for large-scale profits that are not simply individual rewards for more accurate forecasting. Rothbard III 795 Solution: However, more careful analysis reveals that this is not an extra profit at all. For the 240 ounces two years from now is roughly equivalent, in terms of purchasing power, to 120 ounces now. Rate of return: The real rate of net return, based on money's services, is the same 10 percent as it has always been. It is clear that any Iower net return would amount to a decline in real return. A return of a mere 120 ounces, for example, would amount to a drastic negative real return, for 100 ounces would then be invested for the equivalent gross return of only 60 ounces. It has often been shown that a period of rising prices misleads businessmen into thinking that their increased money profits are also real gains, whereas they only maintain real rates of return. Replacement costs: Consider, for example, "replacement costs" - the prices which the businessmen will now have to pay for factors. The capitalist who earns 240 ounces on a 100-ounce investment neglects to his sorrow the fact that his factor bundle now costs 200 ounces instead of 100. Businessmen who under such circumstances treat their monetary profits as real profits and consume them soon find that they are really consuming their capital. >Profit/Rothbard, >Rate of profit/Rothbard, >Natural rate of interest/Rothbard, cf. >Market interest rate/Fisher, >Pure rate of interest/Rothbard. 1. For brilliant dissections of various forms of the “productivity” theory of interest (the neoclassical view that investment earns an interest return because capital goods are value-productive), see the following articles by Frank A. Fetter: “The Roundabout Process of the Interest Theory,” Quarterly Journal of Economics, 1902, pp. 163–80, where BöhmBawerk’s highly unfortunate lapse into a productivity theory of interest is refuted; “Interest Theories Old and New,” pp. 68–92, which presents an extensive development of time-preference theory, coupled with a critique of Irving Fisher’s concessions to the productivity doctrine; also see “Capitalization Versus Productivity, Rejoinder,” American Economic Review, 1914, pp. 856–59, and “Davenport’s Competitive Economics,” Journal of Political Economy, 1914, pp. 555–62. Fetter’s only mistake in interest theory was to deny Fisher’s assertion that time preference (or, as Fisher called it, “impatience”) is a universal and necessary fact of human action. For a demonstration of this important truth, see Mises, Human Action, New Haven, Conn.: Yale University Press, 1949. Reprinted by the Ludwig von Mises Institute, 1998. pp. 480ff. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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