The Beat of the Economic Heart: Joseph Schumpeter and Arthur Spiethoff on Business Cycles

The paper discusses the relationship between Arthur Spiethoff and Joseph A. Schumpeter, the men and their works. Had it not been for Spiethoff Schumpeter would in all probability have forever been lost to scientific work. It was Spiethoff who brought the Austrian back to academia and research after a sequence of serious mishaps in politics and banking. Spiethoff's contribution to an analysis of business cycles is then summarized and important similarities and some differences between it and Schumpeter's are pointed out. The view of Spiethoff and Schumpeter that cycles are endogenous and cannot possibly be eliminated without at the same time eliminating the dynamism of the capitalist economy is then couterposed with views of some of their contemporaries and particularly modern mainstream macroeconomics that this is not so.Schumpeter; Spiethoff; business cycles; innovations; creative destruction

The Contributions of Two Eminent Japanese Scholars on the Development of Economic Theories: Michio Morishima and Takashi Negishi

There can be no doubt that Michio Morishima and Takashi Negishi are two of the most important historians of economic thought of the recent past. Both authors contributed numerous papers and books to the subject, dealing with the works of major economists from the very inception of systematic economic thought at the time of the classical economists up until modern times. And both authors combined a vivid interest in modern economic theory with an interest in what past masters had to say. The paper assesses and compares the motivations of the two authors to engage in the history of economic theories, their similar, but different approaches to do historical research, and their achievements in this regard. Given the remarkable amount of work each one of them accomplished, the paper has to focus attention on a subset of the themes the two authors dealt with. The emphasis will be on (i) their treatment of the classical theories of value, distribution and capital accumulation, especially those of Adam Smith and David Ricardo, (ii) their discussion of the contributions of Karl Marx and some Marxists, (iii) their interpretation of some early and mature marginalist economists, especially Léon Walras, Eugen von Böhm-Bawerk and Knut Wicksell, and (iv) their views about the achievements of John Maynard Keynes. Given the intrinsic complexity of each of these themes, it goes without saying that the paper is bound to proceed largely in terms of synthetic statements.Negishi, Takashi; Morishima, Michio; general equilibrium; Marxist economics; trade; growth

In Favor of Rigor and Relevance. A Reply to Mark Blaug

The paper discusses Mark Blaug’s recent criticisms of “Sraffian economics”. It is shown that none of the criticisms stand up to close examination. Blaug commits a number of elementary blunders and mistakes the mathematical form of an argument for its content. He variously contradicts himself and puts forward bold contentions that cannot be sustained. The paper concludes with an obvious plea for rigor and relevance.Piero Sraffa;Mark Blaug; General Equilibrium

Innovations and Profits Schumpeter and the Classical Heritage

The paper discusses the problem of innovations and profits from a Schumpeterian perspective using the analytical tools of modern classical economics. The concept of “circular flow” is formalised and Schumpeter's zero-profits assumption investigated. Next a typology of process innovations is discussed using a simple two-sector framework. In Schumpeter profits are transitional phenomena. In the conditions contemplated, increases in labor productivity will lead to rising real wages. The argument is generalized to product-cum-process innovations in systems with joint production where a bad that is costly to dispose of is transformed into a good that can be marketed profitably

Capital Theory, Crises, and Business Cycles: The Triangular Debate between Hayek, Keynes, and Sraffa

The paper discusses aspects of the triangular debate between Hayek, Keynes, and Sraffa on economic crises, business cycles and the role of capital theory in an analysis of these phenomena. It is argued that Sraffa was both critical of Hayek's monetary overinvestment theory and Keynes's use of the concept of commodity rates of interest Sraffa had employed in his criticism of Hayek and of Keynes's theory of liquidity preference

White Elephants and Other Non-basic Commodities: Piero Sraffa and Krishna Bharadwaj on the Role and Significance of the Distinction between Basics and Non-basics:

After the publication of Production of Commodities by Means of Commodities ( Sraffa, 1960 ), a lot of attention was devoted to 'reswitching', that is to the fact that a technique is cost-minimising at two disconnected ranges of the rate of profits and not so in between these ranges. We owe Krishna Bharadwaj (1970, Schweizerische Zeitschrift für Volkswirtschaft und Statistik, 106, 409–429) an important contribution to the debate by stating and proving a general result concerning the maximum number of switches between two techniques that have at least one switch point on the wage-frontier. She proved that the maximum number of switches coincides with the number of distinct commodities, without double counting, that enter directly or indirectly into at least one of the alternative methods of production. This means that if the alternative methods produce a commodity that is basic in both techniques, then non-basics in both techniques play no role in this, whereas if the alternative methods produce a non-basic commodity in at least one technique, then a role is played also by those non-basics that enter directly or indirectly into the production of at least one of the alternative methods of production. JEL Code: B12, B21, B31, B51, D24, D5

The Contributions of Two Eminent Japanese Scholars on the Development of Economic Theories: Michio Morishima and Takashi Negishi

There can be no doubt that Michio Morishima and Takashi Negishi are two of the most important historians of economic thought of the recent past. Both authors contributed numerous papers and books to the subject, dealing with the works of major economists from the very inception of systematic economic thought at the time of the classical economists up until modern times. And both authors combined a vivid interest in modern economic theory with an interest in what past masters had to say. The paper assesses and compares the motivations of the two authors to engage in the history of economic theories, their similar, but different approaches to do historical research, and their achievements in this regard. Given the remarkable amount of work each one of them accomplished, the paper has to focus attention on a subset of the themes the two authors dealt with. The emphasis will be on (i) their treatment of the classical theories of value, distribution and capital accumulation, especially those of Adam Smith and David Ricardo, (ii) their discussion of the contributions of Karl Marx and some Marxists, (iii) their interpretation of some early and mature marginalist economists, especially Léon Walras, Eugen von Böhm-Bawerk and Knut Wicksell, and (iv) their views about the achievements of John Maynard Keynes. Given the intrinsic complexity of each of these themes, it goes without saying that the paper is bound to proceed largely in terms of synthetic statements