Come back Marshall, all is forgiven? : Complexity, evolution, mathematics and Marshallian exceptionalism

Marshall was the great synthesiser of neoclassical economics. Yet with his qualified assumption of self-interest, his emphasis on variation in economic evolution and his cautious attitude to the use of mathematics, Marshall differs fundamentally from other leading neoclassical contemporaries. Metaphors inspire more specific analogies and ontological assumptions, and Marshall used the guiding metaphor of Spencerian evolution. But unfortunately, the further development of a Marshallian evolutionary approach was undermined in part by theoretical problems within Spencer's theory. Yet some things can be salvaged from the Marshallian evolutionary vision. They may even be placed in a more viable Darwinian framework.Peer reviewedFinal Accepted Versio

Sickonomics : Diagnoses and remedies

Original article can be found at: http://www.tandfonline.com/ Copyright Taylor & FrancisIn their recent analysis of the alleged decay in modern economics, Ben Fine and Dimitris Milonakis claim to find its source and origin in the "marginal revolution" of the 1870s. They argue that this development led to "methodological individualism" and the detachment of economics from society and history. I contest their account of the marginal revolution and of the role of Alfred Marshall among others. They also fail to provide an adequate definition of methodological individualism. I suggest that neoclassical economics adopted a denuded concept of the social rather than removing these factors entirely. No such removal is possible in principle. It is also mistaken to depict neoclassical economics as the science of prices and the market. In truth, neoclassical economics fails to capture the true nature of markets. I consider some sketch an alternative explanation of the sickness of modern economics, which focuses on institutional developments since World War II.Peer reviewe

A general refutation of Okishio’s theorem and a proof of the falling rate of profit

This is the first published general refutation of the Okishio theorem. An earlier refutation based on a specific example was published by Kliman and McGlone in 1988. Okishio’s theorem, published in 1961, asserts that if real wages stay constant, the rate of profit necessarily rises in consequence of any cost-reducing technical change. It proves this within a simultaneous equation (general equlibrium) framework. This paper establishes that this proposition is false within a differential equation (temporal) approach. In such a framework the denominator of the rate of profit rises continuously, regardless of whether or not there is technical change, unless capitalist consumption exceeds profit, as occurs in a slump. Okishio himself asserts that his theorem is ‘contrary to Marx’s Gesetz des Tendentiellen Falls der Profitrate’ – contrary to Marx’s law of the tendency of the rate of profit to fall. This assertion is, within the literature, universally taken to be the substantive content of the ‘Okishio Theorem’. Thus, if Marx’s approach to value is in fact temporal, and not simultaneist, this assertion by Okishio is false, since it applies not to Marx’s own theory, but to the interpretation of that theory subsequently attributed to Marx by a specific school of thought represented principally by Bortkiewicz, Sweezy, Morishima, Seton, and Steedman. The subsequent accumulation of hermeneutic evidence strongly supports the thesis that Marx’s theory is temporalist and not simultaneist. Since the Okishio theorem makes the general assertion that the rate of profit must necessarily rise if there are cost-saving technical changes, and since Kliman and McGlone demonstrate a particular case in which cost-saving technical change leads to a fall in the profit rate, the Kliman-McGlone paper is the first published refutation of the Okishio theorem. The present paper is a generalisation of this refutation which establishes the precise conditions under which the profit rate rise or falls, and establishes the general result that the profit rate necessarily falls as a consequence of capitalist accumulation with a constant real wage, until and unless accumulation ceases in value terms. Consequently the mathematical findings set out in this paper, refute the Okishio Theorem

On the Psychological Basis of Economics and Social Psychology

Neoclassical economic theory, with its roots (partly) in the marginal revolution of the Nineteenth Century, has been the dominant paradigm for economic thought throughout most of the Twentieth Century?up to the present day. However, for the past several decades economists have been deeply divided on the validity of neoclassical theory, thereby rendering the discipline less effective than it could be in helping to understand socio-economic change. A mathematical synthesis of prominent contributions to psychological and economic theory since the mid-Nineteenth Century has emerged in recent years, resulting in a substantive formulation of individual behavior. Rather than incorrectly assign utility directly to consumables thereby excluding time as an essential parameter, as is the case in mainstream economic theory, this new methodology assigns instantaneous utility exclusively to the expected (intertemporal) process-of-knowing attending mental/physical activity. The result is a canonical theory that represents the expectational and?barring surprise?actual time-dependent interaction of the individual with his environment, including other agents. The paper will provide an overview of basic and applied theory, and its relation to the mainstream and Austrian schools. Applications at the microeconomic level, including the psychological contribution to the real interest rate and the essential relationship between capital and labor, will be addressed. Also discussed will be the initial perceptions yielded by this new mathematical theory on the social psychology of group behavior, including the social-identity approach. New results will be provided on capital function, the etiology of interest rates, the nature of value, the determination of market prices, and other topics of interest

Uniform profit ratios

The equalization of profit rates as the outcome of free competition is one of the oldest tenets in theoretical economics. Being intuitively convincing its premises and implications, though, are not well defined. As Walras put it: ‘To state a theory is one thing; to prove it is another.’ First of all a consistent concept of profit is required. In the present paper the structural axiom set is taken as premise. Thereof the determinants of profit and the profit ratio follow. This makes it possible to definitively state the conditions for uniform profit ratios in a hierarchical market structure

Il contributo di La Volpe alla teoria dinamica dell'economia

The paper presents the dynamic theory proposed by La Volpe in 1936. This analysis has been innovative in many ways: general equilibrium is defined as temporary, the presence and the role of expectations are introduced, the intertemporal choice of the agents is determined in such a way as to anticipate the life-cycle theory, and some important problems that emerge in the dynamic analysis are addressed. The relevance of La Volpe's book led Michio Morishima to publish its English translation