Classicaism and Revolution

 For those of you of a branch of Orthodox Christianity still using the Julian calendar, such as the Russian branch, Merry Christmas! I am tempted to comment on the situation in Kazakhstan, but I think we do not know what is going on there yet, so not now.

Instead somehow I have been thinking about something that has something to do with economics, but I am going to look at it in other fields, namely the relationship between classicalism and revolution.  That this is complicated in that in economics we think of "classical economics" as something that is old and out date, the economics of Adam Smith, highly conventional if somewhat simplistic.  But then we usually identify Karl Marx as being a classical economist, but then he was also a revolutionary. However, modern neoclassical economists use this "classical" label to dismiss him as out of date, even as they retain the ideas of Adam Smith to some extent.

Anyway, I want to look at the use of this term in other disciplines and where it came from and how this curious relationship has operated. If one examines the origins of the term, it came from French, "classique," with this connected to "class." In older French something classique is of a higher class in some way, and thus presumably of a high quality. However from at least the 1620s in English the term also came to be applied to things that are from or inspired by the Greek and Roman civilizations. Most of this discussion in English at that time applied to literature, especially poetry.

Probably the earliest movement that sought to revive Greek and Roman models was in architecture and happened not long after the fall of the Western Roman Empire.  This was in architecture and started after 800 CE when Charlemagne founded the Holy Roman Empire, which indeed consciously attempted to revive the Roman Empire and its models. For the next 200 years what is known as Carolingian architecture dominated northwestern Europe, especially in Germany and France, which consciously imitated styles from the late period of the empire such as those found in Ravenna. A supreme example is the cathedral in Aachen, Germany, where Charlemagne is buried. It would be succeeded by the Romanesque style.

The Renaissance would see another round of this in architecture.  This was stimulated by the discovery of the writings of the great Roman architect, Vitruvius, whose ideas became the foundation for much of architecture from that period on. 

As it is the field where I see the dynamic between classicalism and revolution is in music, where none of this has anything to do with ideas from Greece or Rome, much as is the situation in economics. So what is called "classical music" is something very broad, the music that is not popular music, rock or jazz or country or whatever. In recent decades the divisions between these have at times been fuzzy, but we still generally know what is in what category. And even in the past when classical music was very clearly identified, classical composers would often draw on folk music or tunes as inspiration for their compositions.  But that is not the crucial issue.

Within classical music itself there is a subset of it that is called "the Classical school" or period. This is a style most prominently associated with Josef Haydn and Wolfgang Mozart, who mostly composed in the latter part of the 18th century, with Haydn actually lasting to 1809 while Mozart died young in 1791. This style and period followed the Baroque period, whose most famous members were J.S. Bach and Handel, although it originated earlier in Italy with Arcangelo Corelli with Antonio Vivaldi also a leading part of it. The Classical school would be followed the Romantic school, led by Beethoven, a student of Haydn's, who started out in the Classical style but moved on, with the Romantic style dominating pretty much of all the nineteenth century.

So Beethoven is seen as a revolutionary who modified and liberated music from a rule-dominated and formal school before him. Indeed, not just the Romantic school, but "modern" twentieth century classical music and beyond went further, breaking more and more of the rules and structures that Haydn and Mozart followed, being in a key, certain numbers of movements in symphonies and concerti, and especially the use of the sonata allegro form within movements, with two themes and variations. This almost became Freudian, with Haydn being called "Papa Haydn," whom all these later classical composers would rebel against, more and more, going to polytonality and atonal forms.

But then we have this other fact: in creating the Classical school, Haydn and Mozart themselves were revolutionaries who created new forms. Some of these were actual types of pieces or sets of instruments, such as the string quartet. Mozart, of course, was a star all his life, a prodigy who performed for royalty from age 5. But it is not well known that Haydn spent much of his career in obscurity at the Esterhazy estate in Hungary, toiling away on his composing.  It was actually fairly late in his life that he was really discovered, helped out ironically by Mozart when he was finally able to get to Vienna in the 1780s, with his real triumph coming in the 1790s when he spent time in London, on the verge of Beethoven's beginning to undo the structure he and Mozart had established.

Ironically possibly the most revolutionary core of the Classical school came from somebody else, someone famous and successful in his day, but who has been if not completely forgotten, pushed way down with his important role not known by many. This was the person Haydn and Mozart called "Papa Bach," the person who actually invented the sonata allegro form.  No, this was not the great Baroque composer, J.S. Bach, but the most important of his sons, Karl Phillip Emmanuel Bach. He was the actual revolutionary who founded the Classical school, with both Haydn and Mozart drawing off him. He was in his day a great success, the chief composer for the King of Prussia. But he would become forgotten both because he was superseded by Haydn and Mozart, but also in the nineteenth century after Mendelssohn revived the father, J.S. Bach, Somehow between his father and his followers, the real revolutionary who created the Classical school of classical music has been largely forgotten.

Barkley Rosser

This Life: faith, work, and free time

The blurbs on first few pages of Martin Hägglund's This Life are so surprisingly accurate that it would be hard to describe the book with an original superlative. "Monumental!" "Powerful!" "Important!" "Electrifying!" "Profound, thoughtful, compelling, and insightful!" Those blurbs were not idle puffery. All that is left for me to add is that I liked it very much. Oh, just one more thing...

Hägglund's premise is that spirituality, and consequently freedom, is grounded in our mortality. Secular faith arises from an acute awareness of the risk of losing the relationships we cherish and manifests in our commitment to act to sustain the lives of the objects of our affection. 

In this context, freedom is not an abstract absence of constraints on our actions but the presence of the possibility to do what needs to be done to fulfill our commitments. As Hägglund writes in the introduction, "secular faith is the condition of freedom. ... We are free because we are able to ask ourselves what we ought to do with our time."

Time looms over Hägglund's discussion of secular faith in the first part of the book and inevitably forms the ground of spiritual freedom in Part II. After all, time is precisely what is finite in "this life." At the beginning of chapter 5, "The value of our finite time," Hägglund affirms the writings of Karl Marx as containing "the greatest resources for developing a secular notion of freedom."

Hägglund's account of Marx's analysis of the concept of value is exemplary. As he points out, "Marx's critique of capitalism stands or falls" on that analysis. Unfortunately, he argues, Marx's analysis has been almost universally misrepresented as an extension of the labour theory of value as formulated by Adam Smith and David Ricardo rather than a critique of the theory's contradictions.

At one point in his discussion of Marx's analysis, Hägglund states that "Marx's account powerfully demonstrates that the measure of value under capitalism is contradictory," but does not provide an explicit explanation of why it is contradictory. Hägglund then offers his own explanation: capitalism "treats the negative measure of value as though it were the positive measure of value and thereby treats the means of economic life as though they were the end of economic life. This is very close to the explanation Marx did give in the Grundrisse of why the measure of value under capitalism is contradictory.

Hägglund cannot be faulted for overlooking Marx's explanation. He certainly wasn't the first. In fact, I haven't found any author who has written about Marx's explanation. It is "hidden in plain sight." The clue to its location is contained in the "striking" use by Marx  of "the English term disposable time in italics in the original (rather than the German verfügbare Zeit)."

Marx used the English term because it was a quotation from an English pamphlet. The pamphlet, The Source and Remedy of the National Difficulties was published anonymously in 1821. The author has subsequently been identified as Charles Wentworth Dilke. Marx cites the quotation profusely in the section of the Grundrisse on pages 704-709 (Penguin, 1973), which Hägglund describes as "luminous."

But Marx also cites the pamphlet earlier, on page 397, translating disposable time there as verfügbare Zeit. In the following paragraph, Marx offers the enigmatic but profound observation that, "The whole development of wealth rests on the creation of disposable time." He is here not referring specifically to the historical case of capitalism as becomes clear from the continuation of the paragraph:

The relation of necessary labour time to the superfluous (such it is, initially, from the standpoint of necessary labour) changes with the different stages in the development of the productive forces. In the less productive stages of exchange, people exchange nothing more than their superfluous labour time; this is the measure of their exchange, which therefore extends only to superfluous products. In production resting on capital, the existence of necessary labour time is conditional on the creation of superfluous labour time.

It is only in the last sentence that the distinctive characteristic of "production resting on capital" is identified. That characteristic is the reversal of the relationship between the necessary and the superfluous. Note that this is the only place in the Grundrisse where Marx refers to surplus labour time as superfluous (überflüssiger) labour time. 

Incidentally, disposable time in the above cited passage is rendered as disponibler Zeit rather than verfügbare Zeit. Nevertheless, the development of wealth resting on the creation disposable time is clearly a gloss on the quotation from the 1821 pamphlet.

The reversal of the necessary and the superfluous is taken up again by Marx on pages 608-610 where he discusses the necessity for capital of a relative surplus population and thus, "the relation of necessary and surplus labour, as it is posited by capital, turns into its opposite":

Labour capacity can perform its necessary labour only if its surplus labour has value for capital, if it can be realized by capital. Thus, if this realizability is blocked by one or another barrier, then (1) labour capacity itself appears outside the conditions of the reproduction of its existence; it exists without the conditions of its existence, and is therefore a mere encumbrance; needs without the means to satisfy them; (2) necessary labour appears as superfluous, because the superfluous is not necessary. It is necessary only to the extent that it is the condition for the realization of capital. Thus the relation of necessary and surplus labour, as it is posited by capital, turns into its opposite, so that a part of necessary labour - i.e. of the labour reproducing labour capacity - is superfluous, and this labour capacity itself is therefore used as a surplus of the necessary working population, i.e. of the portion of the working population whose necessary labour is not superfluous but necessary for capital.

This reversal of the superfluous and the necessary is, of course, echoed a third time in the luminous "fragment on machines" where the infamous moving contradiction of capital "diminishes labour time in the necessary form so as to increase it in the superfluous form; hence posits the superfluous in growing measure as a condition - question of life or death - for the necessary."

Marx's explanation, spread out over "three fragments on machines," of why capital's measure of value is contradictory rests in the reversal, under capitalism, of the relationship between necessary labour time and superfluous labour time and the resulting subordination of the necessary to the superfluous. As a result of this reversal, superfluous labour time becomes split into surplus labour time, on the one hand, and surplus labour capacity on the other -- both being equally "socially necessary" and the latter becoming both a condition for and a barrier to the realization of surplus value.

As I have mentioned previously, Marx did not use the term "socially necessary labour time" in either the Grundrisse or A Contribution to the Critique of Political Economy. In my view, the three fragments on machines, pp. 397-401, 608-610, and 704-709 foreshadow the darker implications of socially necessary labour time, which Marx both downplays and attributes to "laws" in Capital. Those mediate laws, however, are ultimately expressions of socially necessary labour time.

For example, socially necessary labour time goes unmentioned in chapter 25, which deals with the relationship between the accumulation of capital and the disposable industrial reserve population. The absolute general law of capitalist accumulation, however, is the working out of the inherent logic of socially necessary labour time.

Marx's conspicuous use of the concept of disposable time in the Grundrisse may offer a clue as to why Marx's analysis just happens to be so germane to an investigation of secular faith. As mentioned previously, Marx's source for the concept was The Source and Remedy of the National Difficulties. The author of that pamphlet, Charles Dilke, was a devotee to William Godwin, whose expression, "The genuine wealth of man is leisure, when it meets with a disposition to improve it." was an obvious influence on Dilke's "wealth... is disposable time and nothing more." 

Godwin was trained as a minister in the tradition of  Rational Dissent and retained his Calvinist modes of thought through subsequent phases of atheism and deism. His lifelong advocacy of universal leisure can be fruitfully interpreted as a modernization and reformulation in secular terms of Jean Calvin's doctrine of the particular calling, in which Godwin sought to elevate what he called the "contingent occupation" of leisure to equal status in "the business of life" with the "prescribed occupation" of a trade or profession.

Postscript: see also my Historical Materialism conference presentation on Disposable time, surplus population, and the limitation of the hours of labour in which I discuss the significance of "three fragments on machines" from Marx's Grundrisse.

The Department of Comparative Advantage

 Somewhere on the web recently, I saw this anecdote:

Asked whether Ringo was the best drummer in the world, John Lennon replied: he's not even the best drummer in The Beatles.

Happy New Year, everyone!

Mr. Etcetera

The subtitle of T. R. Malthus's Essay on the Principle of Population advertised its inclusion of "remarks on the speculations of Mr. Godwin, M. Condorcet, and other writers." In volume I of Capital, Marx did not mention William Godwin's name.  One might say, rather, that Marx studiously avoided mentioning Godwin. He did, however, engage in a sustained disparagement of Malthus -- particularly his essay on population. This alone would make Marx's silence on Godwin remarkable.

Consider the following "exchange" between Godwin, Malthus and Marx:

Godwin's name appears first in the subtitle of Malthus's essay. "Godwin" appears 63 times in the essay and "Godwin's" 37 times. "Condorcet" appears only 14 times and "Condorcet's" 11. The essay was primarily a response to Godwin. But Marx referred to the essay as having been celebrated by the oligarchy as "the infallible antidote to the doctrines of Condorcet, etc. ..." The  etcetera stood for the suppressed name of Godwin (u.a. -- und andere -- in the original German).

In his The Condition of the Working Class in England, Engels had cited Godwin, along with Jeremy Bentham, as "two great practical philosophers of latest date" and had singled out Godwin especially as "almost exclusively the property of the proletariat" upon which the latter had developed "a literature, which consists chiefly of journals and pamphlets, and is far in advance of the whole bourgeois literature in intrinsic worth."

In March of 1845, Engels wrote to Marx recommending the exclusion of Godwin from a proposed library of the history of socialism  "despite the many excellent passages in which Godwin touches on communism." The reasons for leaving Godwin out were his "anti-social" conclusions and the prospect that Marx was going to write a "complete critique of politics." Subsequently, in his 1861-63 manuscripts that were published as Theories of Surplus Value, Marx explicitly excluded Godwin from his historical review of theories of surplus value:

These reviews are only intended to show on the one hand in what form the political economists criticized each other, and on the other hand the historically determining forms in which the laws of political economy were first stated and further developed. In dealing with surplus-value I therefore exclude such eighteenth century writers as Brissot, Godwin and the like, and likewise the nineteenth-century socialists and communists.

Marx did, however, review Malthus's 1798 essay, in which he criticized Godwin -- including passages from The Enquirer, published the year before -- making this oddly specific exclusion also peculiarly self-contradictory. Was there perhaps an more substantial reason for the omission?

In The Right to the Whole Produce of Labour, Anton Menger disputed Engels's account, in the preface to volume 2 of Capital, of the origins of the theory of surplus value, declaring that, "The real discoverers of the theory of surplus value are Godwin, Hall, and especially W. Thompson." 

Engels scoffed at Menger's insinuation that Marx's citations in Capital were intentionally deficient, dismissing the absence of reference to Godwin as a trivial exception to an otherwise comprehensive scholarly apparatus: "nowhere does he [Menger] quote a single English author not already quoted by Marx, apart from perhaps Hall and world-famous people like Godwin, Shelley's father-in-law."

Godwin was, in fact, Mary Shelley's father and thus Percy Shelley's father-in-law. That was an obvious diversion. More relevantly, Godwin was the author of An Enquiry Concerning Political Justice and The Enquirer and it was in that capacity that Malthus criticized his views. Engels, of course, knew this. He knew that "Shelley's father-in-law" wrote "many excellent passages in which Godwin touches on communism." Engels knew that Godwin's practical philosophy had spawned a worthy proletarian literature. Engels was gaslighting.

Ironically, in their endeavor to inflate Marx's genius and originality, Engels and Marx obscured the substantive core of his contribution, which was heroic in its own right. Parts of that contribution were derivative. In itself, that is not a bad thing. It simply acknowledges the collective nature of the "general intellect." But there is now the residue of 150 years of the Marx sui generis cult to deal with. Even Marx acknowledged, albeit obliquely, that it would be an anachronism to regard him as the founding father of "the political economy of the working class."

In his inaugural address to the International Working Men's Association, Marx hailed passage of the English Ten Hours' Bill as "not only a great practical success; it was the victory of a principle; it was the first time that in broad daylight the political economy of the middle class succumbed to the political economy of the working class." The Ten-Hour Act was passed by parliament in May of 1847. Marx, of course, was unknown in England at that time and his study of political economy and collaboration with Engels had only begun a few years earlier.

So where was this "political economy of the working class" to be found that Marx had extolled in his inaugural address? It was, according to Engels, contained in the journal and pamphlet literature formed on the basis of the reception by the working class of the practical philosophies of Bentham and Godwin.

Dare I Disagree With David Ignatius?

 In today's Washington Post, intel columnist David Ignatius had a ten question multiple choice quiz about what will happen in 2022. He provided his own answers at the end, effectively forecasts.  Many I agree with and some, speculative about tech developments and such like, I have no opinion on.  However on two very important ones I think I disagree with him, if not overwhelmingly so.

One of these was about prospects for Iran and the US and others to put back together the JCPOA nuclear deal that Donald Trump removed the US from.  I am burned as I expected Biden to quickly rejoin the deal with minimum fuss once he got back in office. But he did not do so, insisting on demanding all sorts of extra things out of Iran about missiles and this and that.  No deal has been made and now Iran has a hard line government.  Yes, formal negotiations have been restarted in Vienna, but to me they do not seem to be going anywhere, and Iran has now substantially expanded its nuclear capability.  Ignatius forecasts that Iran will negotiate a deal under pressure from Russia and China.  I am afraid I am skeptical, although I would love to see it.

The other one, where I am forecasting a more optimistic outcome has to do with the current Russia-Ukraine situation.  Bottom line for Ignatius is pessimistic, that Russia will make cyberattacks on Ukraine that lead to people freezing this winter, will allow the Donbas separatists to attack Ukrainian forces and expand their territory of conrtrol, and then create broader chaos in Ukraine that will justify a full-scale invasion by Russia of Ukraine.

I think a more optimistic answer is more likely, although certainly not certain. This one says that Putin will gradually pull troops back after some sort of sufficiently face-saving deal is cut.  This seems to be what people in Ukraine think, although maybe the generally astute Ignatious knows better. But I hope he is wrong for this coming new year.

Snovem godem (Russian for Happy New Year), you all!

Barkley Rosser

Memorializing Memorial

 On Tuesday, the Russian Supreme Court ordered the dissolution of the International Memorial Foundation, the oldest human rights group in Russia, founded in the final years of the Soviet regime by Andrei Sakharov, to investigate crimes carried out by the Stalin regime. They were officially labeled a "foreign agent" in 2016. They are being dissolved for sllegedly failing to follow through on the many requirements that an organization labeled that is supposed to do.

On Wednesday a lower court in Moscow ordered the dissolution of its companion group, the Memorial Human Rights Center. That will go to appeal, so may be awhile before the final order for its dissolution comes. But that looks pretty inevitable.  It was actually labeled a foreign agent  in 2014, but it is being banned as a supposed terrorist organization. It supports current victims of political oppression, with somewhat over 400 people on its current list.  Several of those have been labeled as "terrorists," so supporting them supposedly makes this branch of Memorial a terrorist organization.

A major question arising from these decisions, which have brought a storm of protest from human rights organizations around the world, such as Amnesty International, is what will happen to the unique set of records and data these groups, especially the first, have gathered.  These include the personal records of over 60,000 victims, as well as data on 3 million victims, as well as details about the gulag camps.  Perhaps more telling is that there are also records on 42,000 people who secretly helped the Stalin regime engage in their activities.  Reportedly the current government does not want those names publicized.  This really says a lot about this decision and what is going on there more generally right now.

At least for the moment it does not look like Russia will invade Ukraine.

Snovem godem (happy new year in Russian), you all.

Barkley Rosser

A Free Market is Always Full of Cheap Ideas

 

I may have scoffed in the past at the notion of "the marketplace of ideas" but I am coming around to think that maybe it's not such a bad metaphor. Back in the days of primitive economy, families, clans, tribes produced and consumed their own subsistence. If a surplus was produced beyond what was to be set aside for contingencies, it might be given as a gift to a neighboring group, setting up the obligation of a reciprocal gift.

Eventually, gift exchange was supplemented and/or supplanted by barter. What was traded, though, was still the superfluous produce after the group had met its own needs. Production for markets only gradually encroached upon production for need that incidentally produced a surplus. In societies dominated by capital, superfluous production became a condition for necessary production.

In such societies, "superfluous" speech -- advertising, propaganda, entertainment -- also became a condition for communication of "truth" -- or at least "news." Thus, the metaphor of the "marketplace of ideas" is not so outlandish -- it just doesn't mean what Oliver Wendell Holmes presumably thought it meant. There is no "one man, one voice" competition. Instead, monopolies of word and image determine what will be heard and seen the most. As A. J. Liebling wrote, "freedom of the press is limited to those who own one."

Social media has created the illusion that anybody can become a celebrity in a viral heartbeat, as if the circuits of social media amplification were not as dominated by advertising, propaganda, and entertainment as any television network. What the competition of the market tests, though, is not the "truth" of ideas but their marketability. That is to say, their superfluity relative to truth.

Paul Samuelson On Knut Wicksell

 Something I have been dong for several years now is serving as Senior Coeditor of the Fourth Edition of the New Palgrave Dictionary of Economics, with the original one published back in 1894 in London (my coeditors are Matias Vernengo and Esteban Perez). As part of this effort, a multi-year project, I have been reading cover-to-cover, the entire Third Edition, coedited by Steve Durlauf and Larry Blume, which came out several years ago.  It is 15 volumes, just shy of 15,000 pages, with about 3800 entries, with at least 37 Nobel Prize winners contributing to them.  I have been at this for two and a half years and am nearing the end, possibly finishing even before New Year's, although maybe just a bit shy.

Entries are still there from the 1890s, with quite a few written by F.Y. Edgeworth. Some of these old ones are biographical entries about now totally obscure figures from Britain in the late 1800s.  Even for ones not by Nobel Prize winners, there are many entries that are written by people about things that are named for those people themselves, e.g. "Bowen's cost disease," and many more. Certain topiics, obvious prominent ones, have multiple entries as updates have been added to later editions.  This new one will definitely have some of those. Probably in the coming year, this project will become my leading professional research activity, although I shall not completely shut down other activities, and I shall continue to edit the Review of Behavioral Economics.

Anyway, from time to time I have come across entries by prominent people from which I have learned a lot. Often I do not see those coming.  One did yesterday along those lines, a biographical entry on Knut Wicksell written by none other than the late Paul Anthony Samuelson, last thing I expected.  But Wicksell is a curious and complicated figures, and I learned a lot from this entry, although I have increasingly heard or seen various people citing him for this and that.  It seems he was both at the fountainhead of many intellectual streams as well as combining apparently contradictory ideas.

Why Samuelson came to write this entry I think has to with Wicksell's primordial role in the Cambridge capital theory controversies. Dating back to the 189s, and essentially predating both J.B. Clark and Cobb and Douglas, Wicksell thought seriously about aggregate production functions and their connections with income distribution.  Clark, of course, famously posed the marginal productivity theory of factor income distribution, and Cobb and Douglas cooked theirs up in the 1920s as a way to supposedly explain the then apparent constancy of capital and labor shares in the US economy (which has not held for some time now as the capital share has risen, see Piketty among others). Wicksell actually had an early version of the Cobb-Douglas production function, but also independently developed the marginal productivity theory of factor income distribution.  However, unlike Clark or Cobb and Douglas, he was aware of potential problems with all this. ones that were later highlighted in the Cambridge capital theory controversies.

In particular that controversy involved much discussion of "Wicksell Effects" (which has its own separate entry written by Edmund Burmeister). These arise from the problem that any aggregate of capital must be a value category, price times quantity, as there is no such thing as "leets" or an actual aggregate capital, unless one wants to make capital simply be time, or something like that.  But Wicksell was onto that issue as well, as we shall see shortly. In any case, he was aware of the possibility of "capital paradoxes," if not precisely the reswitching case that got much attention later due to Sraffa and Joan Robinson. He had the more general case, that there could be a "perverse" relation between the rate of interest (or marginal rate of profit) and the aggregate capital-labor ratio.  This would be due to price effects going "the wrong way." These perverse price effects are what have come to be called "Wicksell effects" and if they are strong enough, they can bring about the overall capital paradox. 

I give Samuelson credit for pulling lots of pieces together in a fair-minded and largely sympathetic way, even though he was viewed as the big "loser" in the Cambridge capital theory debates.  But indeed, Wicksell did more that I was aware of. although knew about some of what Samuelson wrote about, and he managed to show how it all sort of hangs together in an odd sort of way.

So, Samuelson argues that in his first book in 1893 Wicksell produced a micoeconomic general equilibrium model that essentially combined Walras and Bohm-Bawerk, especially the latter's average-period-production version of capital, which would become the main Austrian theory of capital, and which Bohm-Bawerk used to criticize Marx's labor theory of value, which Wicsell also rejected. Samuelson argued in effect that along with Alfred Marshall and his fellow countryman and professional rival, Gustav Cassel, he was one of the big three essential founders of neoclassical economics, although with Irving Fisher following in his footsteps on some of this quite closely.

More than either of those, Wicksell would use his microeconomic theory to develop his macroeconomics theory, which was hugely influential on both the proto-Keynesian "Swedish Svhool" (or "Stockholm School") as well as on major Austrian business cycle theories especially those of von Mises and Hayek. This came about as he derived the idea of the "natural rate of interest" out of his micro theory (something I had not previously realized fully), that which is an equilibrium in which the financial markets are stable (assuming no government action), with this part of a general equilibrium.  From this it was easy to argue that a "too low" interest rate could "overstimulate" the macroeconomy while a "too high" one could depress it, and indeed the Austrians would use this to blame central banks for causing business cycles by pushing interest rates up and down arbitrarily, thus leading to fluctuations that did not need to happen.

The "Swedish School" focused less on that and more on forms of aggregate demand, with Wicksell's input to this coming from seeing that there could be endogenous unemployment, which would reduce production.  He was playing in a lot of ballparks and combining theories that others later would separate to argue about: Keynesians versus Austrians effectively. 

A completely separate strand I was unaware of but of great interest to Samuelson personally had to do with the concept of public goods, or more properly speaking "collective consumption goods," with Samuelson writing the definitive textbook papers on this topic in 1954.  But he long argued that this idea came from certain Swedish economists, notably Erik Lindahl.  But Lindahl apparently got it originally from Wicksell, with Lindahl one of Wicsell's few students. So Wicksell was also the originator of this idea.

Indeed, apparently for all his ultimate influence, for most of his career, in contrast to his rival Cassel, he was an outsider, only briefly holding a professorship at Lund when Lindahl was his most prominent student. He was constantly in trouble for his radical leftist political activism, despite not being a Marxist. He was a strict pacifist, and involved with many social causes, including womens' rights. At the end of his life in the 1930s, he apparently lived in Stockholm where he became a kind of informal hovering influence over the Stockholm School and an advocate of its expanding welfare state, although with no professional position at that time. He was himself poor much of his life due to his poor employment situation arising from his political activism, a real outsider, and also because so many of his economic ideas were so far ahead of anything anybody around him knew of or understood for so long.

Indeed, looping back to the capital theory debates, Samuelson emphasizes for all his Walrasian and Austrian neoclassicism, and his analysis of the marginal productivity theory of factor income distribution, he did not see this as showing any sort of "optimality" much less social justice.  He was well aware that a laissez-faire equilibrium outcome might be not only inefficient because of problems like no markets for public goods, but because of unfair and unequal income distribution.

Barkley Rosser

Addendum, Dec. 29: I have now read three more entries on Wicksell in the Palgrave, and I must correct certain comments I made in the above post, which I shall do here without changing that post.  

Samuelson's entry is titled, "Wicksell and Neovlassical Economics." This was followed by Ed Burmeister's entry, "Wicksell Effects," then the actual rather long biographical entry by G.C. Uhr, the person who in 1951 coined the term "Wicksell effects," and then an entry on "Wicksell's Theory of Capital" by Massimo Pivetti. I shall add both corrections as well as additional material from these entries and going back to look again closely at Samuelaon's entry.

On his life, my biggest mistake was to claim he lived into the 1930s.  He lived from 1851 to 1926, so he did  not serve in person as an adviser to the leaders of the "Stockholm School who would advise the Swedish Social Democratic governments in bringing about modern Swedish welfare state, which Wicksell fairly well predicted in a book on socialism published in 1905 (never translated into English). He proposed a mixed economy, along with the welfare state and fair taxation, he allowed for nationalizations of monopolistic firms while supporting private firms or cooperatives in more competitive markets such as agriculture.

He was 50 years old before he got his professorship at Lund in 1901, where he remained until retirement in 1916, when he moved to Stockholm. Thus it was this final decade of his life, ending in 1926, when he acted as the senior adviser to the rising economists such as Hammerskold, Palander, Lundberg, and Ohlin, who would in the 1930s become famous and influential as the Stockholm School. Prior to 1901 Wicksell was indeed barely able to make ends meet, and had trouble publishing his various books due to his outsider political and religious radicalism and activism, which extended to issues of population control as he was a fan of Malthus and also Mill's feminist positions. He actualy did not get his PhD in economics at Uppsala until 1895, with some objecting to allowing his extremely important 1893 book as a thesis.

I have three further comments on his ideas. Onw is that indeed he was aware of environmental issues as part of his critique of laissez-faire capitalism. 

Another is that he only occasionally allowed for aggregate capital. He viewed labor and land as the fundamental factors of production, and his production theory involved dated quantities of these factors, with capital arising heterogeneously in each period as tied to these dated quantities of those factors, this drawing on his Austrian influence, which came from Carl Manger whose lectures he attended in Vienna in the 1880s. The role of time and the rate of interest thus arose as the necessary component tying all this together.

Finally I need to slightly modify the matter of how he saw aggregate demand varying. His theory of changes in employment involved variations in land-labor ratios, with him drawing critically on Ricardo's theory of rent. Indeed, his major work translated into English in the 1930s (along with his influential Lectures in Political Economy from 1906) was titled Rent, Value, and Capital. As it was, while much of his focus in his discussion of the natural rate of interest was on the price level, he also recognized that it was only when the economy was in full general equilibrium with the interest rate at its natural rate that there would also be full employment. If the interest rate was above that then indeed there could be unemployment. His followers in the Stockholm School, such as Ohlin, would extend this to more clearly formalize this as involving fluctuations in aggregate demand in a proto-Keynesian way.

A Looming Anniversary Passes

 Yesterday was the 30th anniversary of the end of the Soviet Union.  I previously posted here about this looming anniversary, arguing that the large troop buildup of Russian troops on the Ukrainian border along with the many strong demands being made by V.V. Putin of various parties reflected his high awareness of this looking anniversary, which has been only barely mentioned or noticed in the western media.  

As it is, the anniversary passed without an invasion. Not only that there are reports from such sources as NPR, France 24, The Hill, and some other sources, although not yet such places as the NY Times or the Washington Post, that Putin has ordered a withdrawal of something like 10,000 of those troops out of about 104,000 reportedly there. This certainly still leaves a large enough contingent to carry out a serious invasion, if he wished, and certainly to continue threatening one.  However, these same reports say that after an especially tense time this past Wednesday, Dec. 22, which included phone calls with German Chancellor Scholze and President Biden, Putin gave an end of year speech the following day that while still issuing various threats and demands, also indicated that there may be diplomatic discussions about all this in early January. It looks like a very dangerous moment has passed without a major war breaking out.

I get the earliest edition of WaPo, and today's said nothing about any of this, including even Putin's speech three days ago, and certainly nothing about the anniversary that just passed. It had two stories on Ukraine and Russia.  One was about how a war could easily happen navally in the Sea of Azov, where borders are ill-defined with both nations having ports on it, but Russia dominating it, and Ukraine basically having no navy.  The story recounted numerous incidents initiated by Russian naval vessels against various Ukrainian ships, most of them commercial vessels.

The other was about internal Ukrainian politics, particularly about how Ukrainian President Zelensky is apparently going after some oligarchs, something the article admitted is popular there.  But the tone of the article was basically that he is nuts to be doing this in the face of a possible Russian invasion. No mention of any pullbacks or warming by Putin. The story recounted as something quite astounding that apparently in Kyiv nobody is all that worried about a Russian invasion, something I noted in my earlier post. It may be these people are foolish, but so far it is looking like their lack of fear of an impending invasion seems justified.  I hope that continues to be the case, whatever else happens there.

Barkley Rosser

It's A Wonderful Life: Faux Populism

 Somewhere I never saw a full version of this classic, Its a Wonderful Life, but here it is on Christmas Eve, an official Christmas classic. I was always suspicious of it, from all I had heard, but it looks less worth than I had heard. I mean, really, local bank owner gets into real estate problems? And the well-intentioned owner is somehow some great hero? He is offered total control of local monopolies. Heck, today's WaPo noted that the real hero is the wife, played by Donna Reed, Indeed she saves the day in many ways, including the final money pile-on to save him.

OK, so now I have finally seen the whole thing, but, I think I got the bottom line already above. 

Merry Christmas, you all

Barkley Rosser

RIP Sharon L. O'Hare

 I know, I know, my part of this blog is increasingly resembling an obituary column. But, heck, people I know who are conneted to econ keep dying, although this one was not as well known as others. Sharon Lyn O'Hare was a former student of mine 40 years ago at James Madison University, and while she never finished her PhD at Boston College, she was a decade later a colleague of mine in our department for five years. After then she left academia and ended up holding a high position in the City of Richmond government, director of its Office of Economics and Management, before retiring early.

She moved back to her home, Staunton, VA, 25 miles southwest of here, where her mother, Nancy O'Hare, lived also an old friend and former Speech and Pathology prof at JMU as well as a former mayor of Staunton, with Nancy still alive.

Anyway, Sharon died last Friday at age 59 after falling in her home and fracturing her skull.  I am about to go attend her funeral in Staunton in a few minutes.  She was not just a former student and colleague but also a good friend.  I find this one hitting me harder personally than some of these.

Anyway, Merry Christmas, you all.

Barkley Rosser

Whole Lotka Shakin' Goin' On

In a 1967 festschrift for Maurice Dobb, Richard Goodwin published an influential paper, "A Growth Cycle" on the "class struggle" model of cycles in economic growth. I only became aware of this famous paper because it had occurred to me that the dynamics of relative surplus population, necessary labour time, and socially necessary labour time might resemble a Lotka-Volterra predator-prey model.

Painting by Richard M. Goodwin

Goodwin's model dealt ultimately with the relationship between wages and profits, which seems like a logical place to start. But I think it is wrong. In my view -- and interpretation of Marx -- a more fundamental disequilibrium exists between labour capacity and employed labour power. There is always a relative surplus population (industrial reserve army) in capital and fluctuations in its size regulates the supply and demand for labour power and thus the value of the aggregate "wages fund."

I suspect that profits (or surplus value?) could be brought into a labour capacity/socially necessary labour time model through something like a predator/prey/parasite analysis, with surplus value being "parasitic" rather than "predatory." The implication of my alternative model is unusual -- "class struggle" appears in it as endogenous to labour -- the counterpart to competition between firms.

I don't do mathematical modeling so if there is anyone who does and finds these comments of interest, I would love to see what you come up with.

George Floyd and Jesus

 I am commenting on:

https://www.insidehighered.com/news/2021/12/16/controversial-artwork-twice-stolen-catholic-university?utm_source=Inside+Higher+Ed&utm_campaign=3df3839bde-DNU_2021_COPY_02&utm_medium=email&utm_term=0_1fcbc04421-3df3839bde-197481033&mc_cid=3df3839bde&mc_eid=502bbb1a16

A painting at Catholic University depicting Mary holding Jesus, with the latter's face resembling that of George Floyd, has been stolen.  It aroused all kinds of controversy.  

When I was growing up, my father was teaching and pursuing his doctorate in physics at CUA. Many are the Saturdays I spent running around the sub-basement of the physics building while he was working.

My parents were Catholics and raised us as Catholics, too. But they, and we children as a consequence, were inspired by the activist church that emerged after Vatican ll and left the Church when all that faded. It was a heady time.  I remember in particular playing guitar at Mass and singing a song whose scriptural lyric, quoting Jesus, might well be heeded by those who find the painting in question offensive. 

"Whatsoever you do to the least of my brothers, that you do unto me."

A Looming Anniversary

 Sighhhh...

The possibility of a Russian invasion of Ukraine is now front page news, with little sign that Putin is going to move his massive military buildup by the border back anytime soon, even if he does not invade.  After the phone call this past week between him and Biden, supposedly lower level negotiations have started, but it is unlikely Putin is going to be given anything dramatic that he has been demanding, such as a written guarantee Ukraine will not join NATO, something that polls now say 58% of Ukrainians support in the face of the ongoing threats and invasions and annexations and other provocations that Putin keeps indulging himself in, with a loud stream of propaganda over the past year that involves simply questioning there being any legitimacy to a Ukrainian state separate from Russia at all.  What did Putin think all this noise would bring about in Ukraine? Is he actually deluded about popular opinion there?

Yes, there are almost still some areas under Ukrainian military and political control in eastern Ukraine where Russian speakers dominate and who might prefer to be under Russian control, either as part of a separatist republic like the current Russian-supported Luhansk and Donetsk republics, or as part of Russia itself as Crimea has become effectively since its annexation, although that remains unrecognized by most of the rest of the world.  Perhaps Putin will insist on invading some of those territories presumably adjacent to those currently existing republics, thus expanding the territory under his effective control before backing off.  But, perhaps he will prefer just to keep everybody on a long term state of high alert for various reasons. Presumably he is aware of which areas would be more willing to accept such control, given that clearly the vast majority of Ukraine would oppose it, which would make ruling such territory very difficult, even if he were to conquer it, which he probably could if he really pushed it, although this would surely bring a major economic cost in being shut out of the international SWIFT financial system, which would certainly make life difficult for his crony oligarch pals.

Probably the most dramatic expansion he could do and maybe even sort of get away with, although I think it would itself probably bring that expulsion from the SWIFT system, would be to conquer Kharkiv (Ukrainian name, "Kharkov" being the Russian name). This is the second largest city in Ukraine after the capital, Kyiv ("Kiev" Russian name), at about 1.5 million. This is a city with a majority Russian speakers, although I do not know current sentiment.  As it is, it nearly joined to become another separatist republic when Luhansk and Donetsk did. A "local" separatist group did briefly seize control of the city hall, what happened in Luhansk and Donetsk, but unlike in those cities, after a few days the local police, not the Ukrainian military, removed them, and that was that. It and its surrounding province and remained fully a part of Ukraine, without any of the fighting happening there since. But that would be a big prize for Putin.  As it is, the city of Donetsk, which is in the separatist territories, is officially the fifth largest city of Ukraine at about 900,000, a major center of heavy industry. 

So, why is he doing this now?  One reason, rarely mentioned in the media reports, is this looming anniversary, which I am sure is very much on his mind: Christmas Day.  It was 30 years ago on December 25, 1991, that the Soviet flag was lowered over the Kremlin in Moscow and the Russian flag was raised. Putin has on more than one occasion declared that event to be "the worst socio-political catastrophe in world history," or words to that effect, surely a completely absurd statement. But he seems to take it seriously, and many reports do note his desire to somehow undo "the end of the Cold War," even as these reports somehow fail to note this looming 3oth anniversary of that end.

A front page story in today's Washington Post by its main Moscow correspondent, Robyn Dixon, lists six reasons why Putin is making this push.  The first is effectively this "redo the end of the Cold War" one, even as she fails to notice this looming anniversary as probably a factor in that. 

The second is the ongoing claim reinforced by Putin's long June essay on the issue that Ukraine "is not even a state," that it is or should really be at most "a protectorate" of Russia, if it even should be independent at all.  This is clearly historically absurd even if it is true that prior to the 20th century there was at most only briefly anything resembling a separate and independent Ukrainian state. Of course when one goes back far enough in time to when there was first a unified Russian-Ukrainian state, it was ruled out of Kyiv, not out of Moscow or St. Petersburg, a detail Putin and his spokespeople prefer to ignore.  But even acknowledging several centuries of Russian rule over Ukraine, even in those periods there were parts of modern Ukraine that Russia never ruled, notably the highly nationalistic western part that was ruled alternately by Poland and Austria at different times. I think even Putin is not keen on trying to rule those unruly anti-Russians there.

The third is the "security buffer" argument. Of all of the ones in this list this may have some credibility.  But Putin's own aggressive actions against Ukraine have, as already noted, turned most of Ukrainian public opinion against Russia, with a full 72% viewing Russia as a "hostile power" and pushing toward exactly those outcomes Putin does not want: Ukraine joining both the EU (62% in favor) as well as NATO (58%). He has brought about exactly what he does not want, and no amount of phony claims that the current Ukrainian government is run by a bunch of Nazis will undo that.

The fourth is essentially the fuller more explicit version of what is in the first one, the "One Russia" argument, that Ukraine really is not or should not be a separate state, and that it and Belarus should be part of Russia, or at least that Ukraine should become as subordinate to Russia as Belarus currently is. This has at times, including in Putin's June essay, involved making clearly false claims that there is not even a separate Ukrainian language or culture. However, more precisely there is the other possibly justifiable argument of admitting that there are two languages (at least) and that Russia needs to protect Russian speakers who are supposedly discriminated against and oppressed by the Ukrainian government. This was the bottom line justification for the annexation of Crimea and the support for the current separatist republics.  Again, this might be used to justify conquering some more territory in the eastern region, but that argument will not extend very far.

Then we have the "exporting chaos" argument, one that clearly has zero justification. This is based on the lie that the Ukrainian government is a total mess and not functional, when in fact it is currently democratic and fighting local corruption, if not fully successfully.  This becomes its real threat to Putin, a neighboring example of such a state, democratically run with full civil freedoms, a looming contrast to what is going on in Russia, where conditions are poor with mismanagement of the pandemic leading to a newly intensified lockdown in much of the country, and reports of Putin's poll numbers reaching new lows as he kills off or imprisons any credible rival. Of course the fake claim that the Ukrainian government is run by Nazis is part of all this, fitting in with the security buffer argument ("the Great Patriotic War!!!), although there are certainly some neo-Nazi groups operating in Ukraine who have at times had influence on governments, although not on the current one. And, of course, a Great Patriotic War abroad is always a good way to distract citizens from local problems and unhappiness, although there are some indications this may not be as popular as this stuff was in the past.  

Finally there is the claim of "Echoes of Russia's Imperial History." This may sell in Russia, but it does not do so anywhere else.  Allowing nations to claim as theirs whatever they once ruled at some time in the past when they were at their greatest power peak of expansionary rule is a recipe for total global war, given how many of such claims are totally in conflict.

I shall close by noting another unpleasant point that pretty much everybody ignores.  It is that in fact both the US and UK promised to "defend the territorial integrity of Ukraine" in the 1994 Budapest Accord, the other parties to which were Russia and Ukraine. This was the agreement that went along with Ukraine giving up its nuclear weapons to Russia.  Neither the US nor UK followed up on that when Russia seized control of Crimea and then annexed it. As it is, based on that Accord, maybe NATO has no grounds for defending Ukraine against a Russian invasion, but both the US and UK are already derelict in failing to do so previously, and will be even more so if they do nothing if Russia further invades, although probably the only thing that will happen in that case will be an imposition of much more serious economic sanctions.  In any case, I hope there is no invasion, and I hope Putin can hold himself back from doing so without making too much more tension. Heck, one virtue of being an authoritarian leader is that one can change the narrative and policy at any time one wants to.  This whole aggressive move has his been his doing without any substantial provocation by outside parties.  He can just stop doing it if he chooses at any point without any threat to his rule, I think.  I hope he decides that. Although I am sure this is going to go on at least past this looming anniversary and probably into next year sometime on the best of possible outcomes.

Barkley Rosser

PS: I just noticed that spell check does not like the currently correct "Kharkiv" but seems to prefer the Russian "Kharkov."  Gag.

More Partsanization Of The Environment

 The Environmental Protection Agency was founded during the presidency of Republican Richard Nixon, if perhaps with some lack of enthusiasm. The first national cap and trade (or "tradable emissions permits") system, for SO2, was instituted during the presidency of Republican George H.W. Bush. In 2008, Republican John McCain had an alternative plan to that proposed by Democrat Barack Obama for dealing with global warming, not all that different, mostly perhaps in scale.  Likewise even in 2012, while he was less specific, Republican Mitt Romney still at least gave lip service to doing something about this matter.

While he is not outright denying that global warming is happening as the more extreme members of his party argue, incoming Republican Governor of Virginia, Glenn Youngkin, supposedly a moderate Republican, has nevertheless announced his intention to remove Virginia from its participation in the not widely publicized Regional Greenhouse Gas Initiative (RGGI) of which Virginia has been the southernmost participating states, the others including most of those to its northeast. This is indeed a cap and trade system for greenhouse gases. This RGGI is probably more open to criticism by those who argue that it has been too weak, too ineffective in substantially reducing greenhouse gas emissions in the states participating in it. But at least it is pushing in the right direction and provides an institutional foundation for doing more.

So it really sticks out that incoming Governor Youngkin wants out of it. Why?  Oooh, he will save Virginia taxpayers money, actually people who pay for electricity.  The estimate he provided yesterday (as reported in today's Washington Post metro section) is about $52.44 per average customer per year in utility bills, with him complaining that the RGGI is not really doing anything.  He promises an alternative, but gives no hint of what that might be. As it is, this strictly short term possible monetary gain is likely to be offset, possibly more than fully offset, by other monetary costs that will probably increase, such as higher flood insurance for people living in the state, quite aside from the broader issue of global warming.

Anyway, this seems to be a further degradation of the Republican Party.  Here we have a supposedly moderate Republican, who clearly feels he must indulge the irresponsibility of the Trumpist/extremist wing of his party, in going against the long-running more responsible past of members of his party with respect to environmental policy.  It may be that Youngkin will not be able to do this by executive order, or may be delayed in doing so. But that he wants to and will probably try to is simply sad in my view.

Barkley Rosser