Competition

The essay provides a rational reconstruction and a critical assessment the different notions of competition elaborated in the course of the history of economic thought. In particular, it focuses on i) Competition as Rivarly in a Race; ii) Competition as a Specific Market Structure; iii) Competition as a Discovery Procedure and, finally, iv) Competition as Class Struggle. Moreover, it briefly discusses some issues concerning competition policy.

Income Distribution and Consumption Patterns in a 'Classical' Growth Model

Istituzioni di Economia Politica, Volume I, Microeconomia, Seconda edizione

Essay on Profits

The entry discusses the 1815 Essay on Profits by David Ricardo. In particular, it focuses on Ricardo's analysis of Malthus's protectionist arguments and on Ricardo's criticism of the latter.

Methodological basis and the cogency of criticism: the cases of Clapham (1922) and Sraffa (1926)

La critica di Piero Sraffa alla teoria marshalliana del valore negli anni venti. Una prospettiva metodologica

Il saggio intende ricostruire la logica della ricerca scientifica del giovane Sraffa così come essa emerge dall'analisi degli articoli del 1925-26. I risultati che emergono si possono così riassumere. La critica di Sraffa alla teoria marshalliana del valore non è una critica di tipo logico in senso stretto: il che muove Sraffa non è quello di mettere in luce l'esistenza di alcuni non sequitur all'interno della costruzione teorica marshalliana; bensì di dimostrare che la portata empirica del modello marshalliano, una volta ricostruito in modo logicamente coerente, è ben più ristretta diquanto generalmente ammesso.

Sraffa and the problem of returns: a view from the Sraffa archive

About a quarter of a century ago, Carlo Panico and one of the authors of this chapter published a paper on ‘Sraffa, Marshall and the problem of returns’ (EJHET 1994) in which they explored links between Sraffa’s mid-1920s critique of Marshallian economics and the analysis developed some 35 years later in Production of Commodities. The 1994 contribution focused exclusively on Sraffa’s published works since his unpublished manuscripts were not yet freely accessible. With the benefit of hindsight, it may be claimed that Sraffa was a scholar who, during his lifetime, published little but wrote a lot (Kurz, 2008). Hence, when in December 1994 Trinity College Cambridge, UK, opened the Sraffa Arch…

Piero Sraffa on utility and the 'subjective method' in the 1920s: A tentative appraisal of Sraffa's unpublished manuscripts

The paper reconstructs Sraffa's assessment of utility-based and individualistic explanations of demand in Marshallian economics in the light of some fresh evidence provided by Sraffa's unpublished manuscripts of the 1920s. It is shown that Sraffa criticised the standard Marshallian explanation of individual consumption choices, emphasised the independent measurement requirement in explanation, lacked enthusiasm for the heuristic potentialities of the 'subjective method' in economic theorising and strove for an analysis of the phenomena of interdependence in the sphere of production as well as in the sphere of consumption.

How to pay for the war in times of imperfect commitment. Adam Smith and David Ricardo on the Sinking Fund

AbstractThe paper proposes a comparative analysis of Smith's and Ricardo's views on the sinking fund. It shows that Smith and Ricardo agreed in stressing the ineffectiveness of the sinking fund as a policy instrument targeted at public debt repayment and tax-burden relief, pointing out that its actual workings had paradoxically helped to increase rather than reduce British total debt-load. Moreover, their explanation of the sinking fund paradox integrates a defective fiscal commitment technology with powerful politicians’ incentives to siphon off the money stored in the sinking fund to meet sudden increases of public expenditure whenever the occasion arose.

Recensione di A. Roncaglia (2000). Piero Sraffa. His life, thought and cultural heritage. London: Routledge

Rational vs historical reconstructions. A note on Blaug

The paper focuses on Blaug's distinction between rational and historical reconstruction within the historiography of economics. Blaug's distinction is shown to be sterile and misleading and his definitions of no avail to clear thinking. Historical reconstruction (as defined by Blaug) is en empty box for reasons which are basically theoretical and not simply practical (as Blaug seems to hold). Moreover, Blaug's primary polemical target is Whig historiography and not rational reconstruction: the two concepts coincide only by means of an ad hoc definition. Blaug's criticism does not apply to other uses of the concept of rational reconstruction such as that proposed by Lakatos.

MARSHALL, SRAFFA E LE 'SCATOLE VUOTE' DI JANNACCONE

Structural change in a Ricardian world economy: The role of extensive rent

Abstract We study an implication of the Ricardian theory of differential extensive rent in a free trade regime. To this effect we develop a Ricardian two country two commodity open economy model. We assume that, unlike labour, land is heterogeneous both within and across countries and that the ratio of high to low quality land is different among the trading countries. By means of a numerical example we show that as the process of worldwide capital accumulation (and population growth) proceeds an industrial country may find it convenient to increase its domestic corn production and even reverse completely the pattern of its imports and exports.

“Istituzioni di Economia Politica. Volume Secondo. Macroeconomia” (2006), Torino: Giappichelli.

Review of Marcel Boumans and Matthias Klaes (eds) (2013). Mark Blaug: Rebel with Many Causes. Cheltenham, UK and Northampton, MA, USA: Edward Elgar

Mark Blaug passed away on November 18, 2011. To honor his memory, two events were held in March 2012: a Memorial Conference at the Erasmus Institute for Philosophy and Economics, Rotterdam (NL), and a seminar hosted by the Scottish Centre for Economic Methodology at the University of Glasgow (UK). As Marcel Boumans and Matthias Klaes point out in their editorial Introduction, this book contains a collection of papers given at these two events and includes some additional papers submitted by people who were not able to attend the meetings “at such short notice” (p. 5). In addition, the book carries a Foreword by Alan Peacock and consists of two parts: part I has four chapters—written by John…

The Classical Notion of Competition Revisited

This article seeks to fill a lacuna within classical economics concerning the process of market price determination in situations of market disequilibrium. To this aim, first we distinguish the classical notion of free competition from the Walrasian notion of perfect competition and we argue that the latter is beset with some theoretical difficulties alien to the former. Second, we reconstruct in some detail Smith’s and Marx’s views concerning market price determination and show that Marx’s extensive use of metaphors and numerical examples foreshadows the modern taxonomy of buyers’ market, sellers’ market, and mixed strategy equilibrium in the capacity space of a standard Bertrand duopoly m…

Recensione di Sraffa or an alternative economics, edited by Guglielmo Chiodi and Leonardo Ditta, Houndmills, Basingstoke and New York, Palgrave Macmillan 2008

THE ITALIAN DEBATE ON MARSHALLIAN AND PARETIAN ECONOMICS AND THE INTELLECTUAL ROOTS OF PIERO SRAFFA'S 'Sulle relazioni fra costo e quantità prodotta'. A NOTE

Defense versus Opulence? An Appraisal of the Malthus-Ricardo 1815 Controversy on the Corn Laws

This article proposes a rational reconstruction of the arguments of Malthus and Ricardo in their 1815 essays, Grounds of an Opinion and An Essay on Profits, whereby a policy of free corn trade was repudiated and endorsed, respectively. Malthus envisaged defense and (trade-induced) opulence as two mutually alternative options and, if required to make a choice, he had no hesitation in choosing the former. By contrast, Ricardo excluded any such trade-off, arguing that even in the case of war or poor domestic harvest, foreign agricultural countries would be seriously damaged if they opted for restrictions on their corn exports to Great Britain.

Funding System

The entry discusses the 1820 article, Funding System, David Ricardo wrote for the Supplement to the sixth edition of the Encyclopedia Britannica. It also investigates Ricardo's views on public debt and capital levy

“Istituzioni di Economia Politica. Volume Primo. Microeconomia”

Price Theory and US Antitrust: a Note on an Enduring Legal Doctrine

Since the mid-1980s the post-Chicago approach to antitrust economics has produced a few game-theoretic models which have challenged many typical Chicago antitrust propositions. Yet, Chicago style antitrust has not yet lost its hold on u.s. antitrust. The paper suggests that the Chicago persistence within u.s. antitrust and, by the same token, the inhospitality of u.s. antitrust towards game-theoretical Industrial Organization theory owe much to the vitality of the legal doctrine according to which antitrust analysis should be consistent with traditional price theory. In particular, the paper analyzes two issues: i. the adoption of the equilibrium end-state notion of competition which is sti…

Piero Sraffa's lectures on the advanced theory of value 1928–31 and the rediscovery of the classical approach

Abstract Sraffa's Lectures on the Advanced Theory of Value 1928–1931 and his two preparatory Notes of summer and November 1927 provide a wealth of material, up to now unpublished, for a reconstruction of the early stage of his inquiry into the cognate fields of pure economic theory and its history. The three manuscripts show that in the late 1920s Sraffa rejected the Marshallian constant-cost interpretation of classical economics, an interpretation to which he had adhered in his 1925 and 1926 papers. Moreover, in the Lectures, Sraffa presents for the first time his own interpretation of classical economics based on the concepts of surplus, physical real costs and asymmetric treatment of dis…

“Piero Sraffa: economic reality, the economist and economic theory. An interpretation”.

We carry out a textual analysis of Sraffa's main published contributions to pure economics in order to elaborate a rational reconstruction of an aspect of Sraffa's implicit methodology which has not yet been duly investigated. We refer to the threefold relationship between ‘economic reality’, ‘the economist/observer’ and ‘economic theory’. We elucidate the constraints which, for Sraffa, should bind the economists' arbitrariness and we trace the elements of continuity and evolution from the 1925–6 critique of Marshallian economics to Production of Commodities.

Is Food Self-Sufficiency Conducive to Long-Term Growth? An Assessment of Malthus (1803) on the International Corn Trade.

In this article, we have reconstructed Malthus’s views on growth and international corn trade in the second edition of his An Essay on the Principle of Population (1803) and shown their theoretical consistency with Malthus’s food self-sufficiency policy proposal advanced in Grounds of an Opinion on the Policy of Restricting the Importation of Foreign Corn ([1815] 1986b), the protectionist pamphlet that elicited Ricardo’s vehement reaction in “Essay on Profits.” Malthus’s (1803) main thesis was that the contemporary British unbalanced growth pattern was not viable. In order to avoid premature stagnation, he thought that Great Britain should both follow a pattern of balanced growth and pursue…

The Sylos Postulate reconsidered

This chapter makes a textual comparison between the 1957 2nd Italian edition and the 1962 1st American edition of Oligopoly and Technical Progress, showing that Sylos Labini added to the later edition some fresh sections concerning new firms’ entry and incumbents’ reaction which partially contradict Modigliani’s 1958 presentation of the Sylos Postulate. The theoretical differences between Sylos Labini and Modigliani with regard to the assumption of constant output are traced back to their different modelling strategies on how to tackle the issue of external firms’ conjectures in determining the long-run oligopoly equilibrium price.

From endogenous growth to stationary state: The world economy in the mathematical formulation of the Ricardian system

AbstractWe analyse international trade in a Pasinetti–Ricardo growth model in the world economy scenario in which several small trading countries coexist and international commodity prices are determined by the interplay of supply and demand amongst them. We demonstrate that all the trading countries eventually reach the stationary state, though this process is not monotonic and the dynamics of capital and population may actually push some countries towards the stationary state and others away from it. We also use our model to assess an argument which Malthus employed in the second edition of An Essay on the Principle of Population (1803) to support a policy of agricultural protectionism.

Istituzioni di Economia Politica, Volume II, Macroeconomia, Seconda edizione

From 1925/1926 articles to 1960 book: some notes on Sraffa's not so implicit methodology

Recensione di Heinz D. Kurz (2016). Economic Thought. A Brief History (translated by Jeremiah Riemer). New York: Columbia University Press, pp. ix + 208. ISBN: 978-0-231-17258-5.

An appraisal of Piero Sraffa's 'The Laws of Returns under Competitive Conditions'

The paper proposes a new interpretation of Sraffa's 1926 Economic Journal article, ‘The Laws of Returns under Competitive Conditions’, according to which the latter derives from the same strategy of research which underlies its 1925 Italian precursor, ‘Sulle relazioni fra costo e quantità prodotta’. Sraffa tested the explanatory power of a Marshallian monopolistic partial equilibrium model and concluded that that model is able to treat one source of variable returns (firm-internal economies); but this articulation of Marshall‘s theory does not substantially improve on the trade-off between logical consistency and empirical relevance which afflicted the theory in its whole. © 2001, Taylor & …

The Ricardian system: a graphical exposition

Ever since its publication, Pasinetti’s 1960 paper has been a primary reference for all scholars interested in Ricardian economics. However, Kaldor's 1955-6 diagram is a very effective tool for depicting the salient features of the Ricardian system and its full heuristic potentialities are still under-explored. Accordingly, we give it pride of place in this paper. In what follows, after a brief presentation of a slightly amended version of Kaldor’s original diagram, we show how this diagram may be modified to represent Pasinetti’s two-sector model of a closed economy. Next we use it to analyse alternative consumption patterns. Finally, we employ a variant of Kaldor’s diagram to study a two-…

Colonies

The entry discusses David Ricardo's three main analytical arguments related to the colonial issue: i) colonies as a source of new fertile land and therefore as a viable solution to the problem of decreasing returns on domestic land; ii) colonies as possible outlet markets able to absorb domestic excess supply; and, finally, iii) the effects of trade restrictions between a colony and its mother country.

Marcel Boumans and Matthias Klaes, eds., Mark Blaug: Rebel with Many Causes (Cheltenham, UK, and Northampton, MA: Edward Elgar, 2013), pp. ix + 302, $140. ISBN 978-1-78195-566-6.

Recensione di C. Sunna (2004). Popolazione, Sviluppo e Benessere. La riflessione degli economisti dall’età moderna all’età contemporanea. Università degli Studi di Lecce, Pubblicazioni del Dipartimento di Filosofia e Scienze Sociali, Nuova Serie, Saggi n. 12, Lecce: Edizioni Milella

Introduction

This collection of essays is a tribute to Neri Salvadori, the man and scholar, teacher and friend, whom the scientific community owes important works in the tradition of Piero Sraffa’s revival of the classical economists’ approach to the problems of value, income distribution, capital accumulation, technical progress, scarce natural resources, economic development and growth. The essays in this book have all been freshly written and contain original work with novel ideas in the areas mentioned. In this introduction we first summarize briefly Neri Salvadori’s academic career, his work and his intellectual and organisational activities and then provide a short overview of the essays collected…

Economic Logic with Internal Consistency (and Not Only Formal Rigour)

As is well known, during his life Sraffa never published a work explicitly devoted to epistemological issues. This fact should not be interpreted to indicate Sraffa’s lack of interest in such concerns. From Sraffa’s unpublished manuscripts – kept at the Wren Library of Trinity College, Cambridge, and from the books of his personal library – we see that Sraffa had a strong interest in questions of philosophy of 8science (Kurz and Salvadori, 2005). Therefore, a reconstruction of Sraffa’s epistemological theory can only be conjectural and must not leave out of consideration his unpublished manuscripts. In a previous work (Salvadori and Signorino, 2007), we analysed a specific aspect of Sraffa’…

Mark Blaug revisited: a rebel with many causes

We clarify Blaug’s thought as well as Sraffa’s though on the relationship between rational and historical reconstructions we devote a section to the analysis of some of Sraffa’s unpublished documents concerning the reconstruction of Classical economics.

Recensione di Value, Distribution and Capital. Essays in honour of Pierangelo Garegnani, edited by G. Mongiovi and F. Petri, 1999, London: Routledge

Jevons on the Ricardian Theory of Distribution. An Interpretation

The paper reconstructs Jevons' strategy of interpretation of Ricardian economics in the light of some hermeneutic categories. Jevons' basic goal appears to be a critical assessment of the net scientific content of Classical economics. He envisages a three steps exegetical strategy: first he points out the scientific standards all economic theories should conform to and elaborates his new economic theory in compliance with these standards; then he scrutinizes the corpus of received economic doctrines in the light of his theory and, finally, he passes his sentence. Jevons' belief that truth in economics is one prevents him to recognize that what he calls scientific errors may actually be theo…

Chamberlin, Edward Hastings

The entry describes the life and analytical contributions of the US economist Edward Chamberlin (1899 -1967). It reconstructs the development of Chamberlin's thought on the issue of monopolistic competition and compares it with the Economics of Imperfect Competition by Joan Robinson.

Consumption patterns, development and growth: Adam Smith, David Ricardo and Thomas Robert Malthus

In this paper we combine the classical analysis of luxury consumption with the classical theories of development and growth. We also focus on the role played, within classical economics, by institutional factors such as the structure of property rights and contractual arrangements in determining consumption patterns and investment in agriculture. In particular, we show that Ricardo's and Malthus' different views on the role of consumption expenditure in promoting growth depend on Ricardo's acceptance (Malthus' refusal) of Say's law of markets and on Ricardo's exclusion (Malthus' inclusion) of a non-commodity option such as leisure from (in) the range of available consumption alternatives.

Method and analysis in Piero Sraffa's 1925 critique of Marshallian economics

This paper provides an analysis of the logical structure and analytical content of Piero Sraffa's 1925 Italian paper, ‘Sulle relazioni fra costo e quantita prodotta’. It shows that Sraffa's criticism of the supply side of Marshall's theory of value in a competitive partial equilibrium model involves analytical and methodological issues. Endorsing an agressive methodology Sraffa logically reconstructs Marshall's model on variable returns to determine its empirical domain. He demonstrates that the latter encompasses only the empirically irrelevant cases of specific factor industries and specific external economies industries and that it cannot be generalized to non-specific factor industries …

Natural and market prices

The entry investigates the distinction between natural and market prices within Ricardo's economics. It also discusses the analytical similarities and differences between Smith and Ricardo on this issue.

Recensione di U. Maki (ed) (2002). Fact and Fiction in Economics. Models, Realism and Social Construction. Cambridge: CUP

Adam Smith on Monopoly Theory. Making good a lacuna

This article analyses Adam Smith's views on monopoly by focusing on Book IV and V of The Wealth of Nations. It argues that the majority of scholars have assessed Smith's analysis of monopoly starting from premises different from those, actually though implicitly, used by Smith. We show that Smith makes use of the word 'monopoly' to refer to a heterogeneous collection of market outcomes, besides that of a single seller market, and that Smith's account of monopolists' behaviour is richer than that provided by later theorists. We also show that Smith was aware of the growth-retarding effect of monopoly and urged State regulation. © 2014 Scottish Economic Society.

On the limits to the long-period method in classical economics. A note

On a first reading of Theory of Production, Kurz & Salvadori (1995) appear to confine the empirical domain of the long-period models of the classical theory of value and distribution to stationary economies with non-constant returns to scale and to growing economies with constant returns to scale. Such a reading is shown to be untenable since it merges the two levels of exploring the extension of a model and of testing a theoretical hypothesis. Conversely, the way Kurz & Salvadori tackle the problems of price dynamics and returns to scale in growing economies is shown to be compatible with what appears to be Sraffa's (implicit) strategy of research.

Note a margine di un simposio sul contributo di Piero Sraffa alla storia del pensiero economico

Paolo Sylos Labini Vindicated

In the first part of our chapter we critically discuss i) Modigliani’s 1958 interpretation of Sylos Labini’s Oligopolio e Progresso Tecnico (1957), ii) the following debate concerning the Sylos Postulate −the assumption according to which “potential entrants behave as though they expected existing firms to adopt the policy most unfavourable to them, namely, the policy of maintaining output while reducing the price (or accepting reductions) to the extent required to enforce such an output policy” − and iii) the incumbent’s choice of productive capacity to install as strategic entry deterrence. In the second part of the chapter we develop a model in which, as in Dixit (1980), there are three …

From stationary state to endogenous growth: International trade in the mathematical formulation of the Ricardian system

In his 1814–15 correspondence with Malthus and in his Essay on Profits, Ricardo championed the free importation of wage goods as a highly effective growth-enhancing policy. In order to capture this aspect in the mathematical formulation of the Ricardian system first introduced by Pasinetti in 1960 in the context of a closed economy, we produce a variant of that model where the economy is a small open one. We show that this economy is characterised by endogenous growth since the growth rate is bounded from below and we locate two thresholds concerning the allocation of labour among the two sectors of the economy and the pattern of international trade.

A rejoinder

economics in the mirror of the financial crisis

The structure of the Chapter is as follows. In Section 2 I discuss some of the factors that may have played a role in causing the crisis and emphasise that supporters of different economic theories will assign different weights to each factor in their analyses. As a consequence, suggested economic policies are highly sensitive to the economic theory employed in evaluating the set of causes. In Section 3 I seek to defend economists from the common charge that their inability to foresee the crisis is a clear sign of the lack of scientific status of their discipline. In my view, the main liability of mainstream economics lies elsewhere, in its excessive trust on the self-equilibrating mechanis…

Recensione di Susumu Takenaga (ed) (2016). Ricardo and the Japanese Economic Thought. Selection of Ricardo studies in Japan during the interwar period. Routledge History of Economic Thought no.14, London and New York: Routledge, pp. 259. ISBN: 978-1-138-85361-4 (hbk), 978-1-315-64251-2 (ebk).