Abstracts Index - with link to full paper where available

- by Author's Surname (updated 13 July 09)

‘Universal Opulence’: Smith on Technical Progress and Real Wages

Tony Aspromourgos (University of Sydney)

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The purpose of this paper is, firstly, to consider the character of Smith’s account of division of labour as a theory of technical progress. To the extent that Smith’s account does entail a vision of liberal or competitive commercial society as exhibiting ongoing technical progress, this must have implications for income distribution through time. The further purpose is therefore to consider, in particular, Smith’s conception of the course of real wages in competitive commercial society, and how this connects with his view of technical progress. A way of reconciling Smith’s theory of real wages and his prediction of high and rising real wages over time is suggested.

Schumpeter’s Price Theory

Harry Bloch (Curtin University of Technology)

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Schumpeter distinguishes between the circular flow of economic activity and economic development. The former is characterised by equilibrium, while the latter involves discontinuous change. The price theory associated with the circular flow is the well established Walrasian price system, while the price theory associated with economic development is only partially developed in Schumpeter’s own writings. Yet, it is the analysis of economic development that constitutes Schumpeter’s enduring contribution to economic thought.

This paper provides a critical examination of Schumpeter’s price theory as it applies when there is economic development. Chapter 8 of Business Cycles, contains a section, “the theory of the price level”, which is followed in Chapter 10 by a discussion of the variation in prices of individual commodities. These provide macro and meso (industry-level) analyses of pricing, respectively. The supporting micro analysis is drawn from Schumpeter’s other writings on entrepreneurship and creative destruction.

Hicks's Theory of the Wage Bargain: a Rational Reconstruction

William Coleman (ANU)

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This paper turns a light on Hicks’ theory of the wage bargain of 1932. The paper speculates upon the historical context of its genesis, and provides a rational reconstruction of Hicks' largely intuitive account of his theory. The implication of the Hicksian reconstruction for the wage rate bargain struck by a trade union and business confederation is compared with the corresponding Nash and Kalai-Smorodinsky solutions.

Towards a History of the Reserve Bank of Australia 1975-2000: Some Preliminary Themes

Selwyn Cornish (The Australian National University)

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The paper discusses some themes that will be pursued in a book covering the history of the Reserve Bank of Australia from 1975 to 2000. This will be the third volume in the history of Australia’s central bank. The first was L.F. Giblin’s – The Growth of a Central Bank. The Development of the Commonwealth Bank of Australia, 1924-1945 (1951); the second volume – In Reserve. Central Banking in Australia, 1945-75 (1992)– was written by C.B. Schedvin. The paper will highlight the significance of the Great Inflation, which began in Australia at the end of the 1960s, reached its apogee in the mid-1970s, and remained above the OECD average until the early 1990s. For Australia, the immediate causes of the Great Inflation were excess demand and excessive wage increases, fuelled by buoyant export earnings and high levels of capital inflow which increased the growth of the money supply. The failure to adjust the exchange rate, and lax fiscal and monetary policies, added to inflation. The ‘Great Inflation’ led to the demise of the Bretton Woods system of pegged exchange rates, which had served as the nominal anchor of the Australian monetary system, and began a search for a new monetary framework. Monetary targeting, a checklist of nominal indicators and inflation targeting – with periods of pure discretion in between - were used as alternative frameworks. The Bank’s tripartite charter of goals – ‘the stability of the currency of Australia’, ‘the maintenance of full employment in Australia’, and the ‘economic prosperity and welfare of the people of Australia’ - set out in the Commonwealth Bank Act of 1945, and repeated in the Reserve Bank Act of 1959, was increasingly interpreted in a way that placed greater emphasis on the inflation objective. The Bank’s policy instruments also were changed significantly. The regulatory system imposed during the Second World War and embodied in the Banking Act (1945), based on the Special Accounts/SRD/LGS system, ceilings on bank interest rates and bank lending advice, broke down and was unable to cope with inflation. Instead, the Bank placed greater emphasis on market instruments - open market operations, market determined interest rates (both bank interest rates and yields on government securities) and flexible exchange rates. A new operating procedure centred on the overnight rate for cash in the interbank market – the cash rate - replaced the ‘belt and braces’ collection of direct controls as the Bank’s preeminent policy instrument. Inflation targeting, market operations, and the new operating procedure involving the cash rate, when combined with the Bank’s increasing independence to pursue a low inflation target over the medium term, contributed to low rates of inflation from the early 1990s. As well as monetary policy, attention will also be directed to the Bank’s other major responsibility, the preservation of financial system stability. Here the development of new and more systematic systems for prudential supervision and regulation will be discussed.

In Search Of New Atlantis: What Can HET On Innovation Reveal About
The Path Out Of The 2009 Great Recession?

Jerry Courvisanos (University of Ballarat)

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The 2009 “Great Recession” has created a severe collapse of business expectations to coincide with severe financial overexposure. In this economic climate there is the tendency for the private sector to withdraw from investing in the future and for the public sector to seek to protect the major institutions of capitalism. Both lead to the exclusion of innovation and the concomitant deterioration of the accumulation process. In this context, there have been calls by some prescient economists and politicians to recognise this severe downturn as the opportunity for the generation and implementation of new knowledge. Innovation needs to be generated - particularly eco-innovation into sustainable development - and supported with a large public and private accumulation programme.
In about 1623, Francis Bacon wrote a fable about a secret undiscovered island, Bensalem, in which scientific progress through innovation (Bacon’s “instauration”) created an idyllic economy where humanity was in concert with nature. This Bacon juxtaposed with another island, Atlantis, which gained wealth and prominence through its domination over nature, until nature took its revenge. From Adam Smith onwards writings on economics have recognised the power of innovation to drive an economy. Using Bensalem as the ideal, this paper appraises visions of innovation and accumulation from various HET schools (especially Neoclassical, Austrian, Schumpeterian, Post-Keynesian, Ecological) to assess what these schools can contribute to development of an ecologically sustainable economic trajectory out of the 2009 Great Recession.

Carl Menger Vs. His Successors In The Austrian Tradition On Capital And Its Structure

A. M. Endres (University of Auckland) and D. Harper (New York University)
a.endres@auckland.ac.nz and david.harper@nyu.edu

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We examine various, sometimes divergent, conceptions of capital and its structure in the Austrian tradition from Menger (1871) to Lachmann (1956).  We outline Menger’s methodological and philosophical position that recommends investigation of the morphology of capital—its shape, form and structure; it also recommends maintaining some ‘realisticness’ in the treatment of capital in economics. Prominent Austrian contributions are examined and compared along various dimensions: the existence or otherwise of ‘original’ factors of production; capital aggregation into a stock or fund; time conceptions; analytical domain assumptions, real versus money capital doctrines and the causal role of the entrepreneur in creating capital. We consider the extent to which Menger’s avowed followers and successors diverged from his original vision of capital, subsequent consequences for the development of Austrian capital theory and implications for the study of capital more generally.

Le Socialisme sans Donctrines – Charles Harper and the Foundation of Co-operative Agriculture in Western Australia

D. J. Gilchrist (University of Notre Dame Australia)

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Agricultural co-operation was one of the most important movements in the development of the economy of Western Australia. The establishment of some of the State’s most significant commercial concerns, including Westfarmers Ltd and CBH Ltd, came out of this movement in the early decades of the 20th century. In promoting the interests of such organisations during a period in which laissez faire principles were on the wane, those in control sought to link their commercial concerns with the more socially acceptable philosophical principles of Co-operative Socialism as they were described by Robert Owen and practiced by groups such as the Rochdale Pioneers. Drawing upon such principles to pursue commercial concerns allowed these promoters to emphasise the opportunity for social advancement and economic opportunity inherent in the co-operative model and to de-emphasise the underlying commercial nature of the organisation together with the material advantages sought by the members of the organisation, the leaders in the State Government who saw these creations as a means by which to promote growth, and the prominent Perth men of capital and finance who were actively involved in the creation of these enterprises. This analysis is undertaken by considering the life of Charles Harper, the founding father of agricultural co-operation in Western Australia. I will demonstrate that the co-operative form of agricultural organisation was introduced into Western Australia as a pragmatic response to economic issues that were singular to the Australian environment rather than simply as a result of considered social or economic philosophising imported from abroad.

Some Critical Perspectives on Böhm-Bawerk’s Capital and Interest, volume 1, A Critical History of Economic Theory, with special reference to his remarks on Turgot, Jevons and John Stuart Mill.

Peter Groenewegen (University of Sydney)

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Böhm-Bawerk’s Critical History of Interest Theory appeared in 1884 as the first volume of an eventual three volume treatise on capital theory, of which the second volume, Positive Theory of Capital, appeared in 1889. An English translation of the Critical History by William Smart appeared as early as 1890, and attracted considerable criticism in England and elsewhere.  This paper intends to critically review three significant and controversial aspects of Böhm-Bawerk’s history, namely his views on ‘Turgot’s Fructification Theory’ (Book I, chapter III) and ‘the minor systems’ developed by persons described by Böhm-Bawerk as ‘eclectics’, that is, John Stuart Mill and William Stanley Jevons. The last are treated in the same chapter by Böhm-Bawerk, that is, Book VII, chapter I. An earlier section of the paper will provide a brief overview of Böhm-Bawerk’s Critical History to enable those unfamiliar with its text to situate the three short sections here critically reviewed, in their proper places. A final section presents some conclusions.

Capital As A Layer Cake:
Menger And Lachmann On The Nature Of Capital

David A Harper (New York University) and Anthony M Endres (University of Auckland)
david.harper@nyu.edu and a.endres@auckland.ac.nz

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We elaborate a structural or morphological approach to the nature of capital that develops the work of Menger and Lachmann (the "ML trajectory"). We propose a layer-cake metaphor to capture the kernel of the ML approach and contrast it with the neoclassical metaphor of capital as an amorphous, homogeneous jelly. According to the ML approach, capital is combinatorial and is organized structurally and relationally. The approach examines capital as it exists "out there" in the world, as it is actually formed and experienced by entrepreneurs. Capital goods only exist and become productive once they are connected in entrepreneurs' production plans so that the focus is upon relations of complementarity between heterogeneous capital goods as used in production. Hence, capital is a layered structure: there is a nested hierarchy of capital goods, capital combinations and economy-wide capital structures. Using Bunge's theory of systems, we investigate how each of these entities is a concrete system at a different layer of economic reality. Both capital combinations and overall capital structure arise in an irreversible, causal-genetic process in real time and capital structure has the added distinction of being an emergent, spontaneous order.

Carl Menger’s Liberalism Revisited

Yukihiro Ikeda (Keio University)

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Presented here is another look at Carl Menger, the founder of the Austrian School of Economics. Since his main works are written in the field of economic theories and economics methodology, his standing point in matters of economic policy remains to be unknown. He planned to publish further volumes following his Principles including one on economic policies, but this task was never accomplished. On the other hand, later Austrians are famous or notorious for being vehement supporters of economic liberalism; typical examples are Ludwig Mises, Friedrich Hayek and Murray Rothbard. In this paper we concern ourselves with economic liberalism of Menger, relying upon his lectures to the Prince Rudolf, his lectures on Public Finance at Vienna University as well as his 1883 book on methodology. Although Menger’s liberalism is quite apparent in his lectures to Rudolf, his arguments in the Public Finance lectures can be interpreted differently. There Menger endeavours to show the importance of progressive taxation. Thus it can be safely said that his liberalism, if any, is a moderate one compared with later Austrians. In the paper I also sketch an intriguing difference between Rudolf and his mentor, seen in their interpretations of French Enlightenment.  

W. B. Sutch and his Economics of National Independence - a Reappraisal.

Saburo Ito

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In these turbulent economic times, governments play an important role in the economy through the policies they implement. The Development Research Group at the World Bank recently wrote: "An important lesson from past experience is that the short-term responses to a crisis - macroeconomic stabilization, trade policies, financial sector policies and social protection - cannot ignore longer-term implications for both economic development and vulnerability to future crises." (Policy Research Working Paper 4779). One economist acutely aware of this 70 years ago was New Zealander William Sutch. His influence on economic policy during New Zealand's balance of payments crises of 1938 and 1958 cannot be understated. This paper examines those policies impacting on trade and his economic thought. In particular, his doctrine of 'manufacturing in depth' that formed the basis of his development theory aimed at reducing New Zealand's dependence on agricultural export earnings. Ultimately, his policies did not result in the type of development he had envisioned for New Zealand, but times have changed since his death over 30 years ago, and much of his economic thought has relevance in any current discussion about the future direction of New Zealand's economic development.

Law Reform, Registration and Credit in Seventeenth century England

Seiichiro Ito (Ohtsuki City College)

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The law reform movement during the Interregnum in England produced numerous proposals for land registries.  After the Restoration, however, the idea of land registration enlarged to having economic connotations and created the controversy over the role of registration as a settled and reliable basis of credit.  While the discussions over law reform were entirely in the context of English law, the ensuing controversy on whether and how land registries should be erected was set in the more economic and international field where England had to compete with and, sometimes, to imitate her rivals in trade, particularly Holland. One side of the English pamphleteers in the controversy repeatedly insisted that land registration would clarify the ownership of land, offer safer security to make a firm foundation of credit, and, as a result, improve English trade.  The other side argued that such excessive openness of information would be hazardous to credit.  However, it was clear that for both of them the central issue was about the role of registration in creating more reliable credit. 

Subverting Say’s Law:
Keynes, Commons and Harlan McCracken
Steven Kates (RMIT University)

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Harlan Linneus McCracken is possibly the least known economist of the twentieth century relative to the level of influence he has had. It was McCracken’s Value Theory and Business Cycles, based on his doctoral thesis written while a graduate student of J.R. Commons at the University of Wisconsin in the 1920s, that when finally published in 1933 may have been the single largest influence on Keynes in giving the General Theory the direction it took in attacking Say’s Law. This paper will trace the relationship between Commons and McCracken and then between McCracken and Keynes to show the importance of Commons in shaping Keynes’s ideas. The paper will also show a more direct relationship between Commons and Keynes in the writing of the General Theory.The paper will argue that the General Theory owes much of its orientation and focus to the work undertaken by McCracken while a student of Commons in the 1920s. But while Keynes was deeply influenced by Commons both directly and indirectly, it will also be argued that Keynes cannot properly be described as a member of the Institutionalist school.

On Essays in Biography by Keynes

Richard J. Kent (Kent State University)

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Keynes was an excellent writer. Some of his best writing is in his biographical sketches and essays. Keynes devoted a lot of his time and effort on biographical writings, both as an author and as editor of the Economic Journal. In this paper Keynes as a writer and editor of biographical sketches and essays is discussed and analyzed.
Some of Keynes’s contemporaries thought biography was really his métier. Certain notable qualities of Keynes as a biographer that have been mentioned are discussed. Why Keynes wrote Essays in Biography is analyzed and compared with his motivation for writing Essays in Persuasion
Keynes’s writing of Essays in Biography is discussed, and new information about this presented.  In the preface to the French edition of the General Theory Keynes wrote, “it fell to my duty, when I first became a youthful editor of the Economic Journal to write the obituaries of many of [the school of French Liberal economists] – Levasseur, Molinari, Leroy-Beaulieu…”  It appears Keynes may actually have only written one of these.
In his review of Volume X of the Collected Writings of John Maynard Keynes, Essays in Biography, Robbins writes that it contains “the entire corpus of Keynes’s biographical writings.”  Volume X does not contain the entire corpus of Keynes’s biographical writings.  There are at least four additional essays in biography by Keynes that are not published in his Collected Writings, and there may be many more. 
In the paper thirteen obituaries in the Economic Journal during Keynes’s editorship, which do not have an author listed, are discussed.  Based on the style of the obituaries it is argued that Keynes wrote most of them.  Keynes may have actually written as many as twelve of them.    
Finally, there are over thirty announcements of the death, mostly of economists, in the Economic Journal during Keynes’s tenure as editor, many of which, if not all, may also have been written by him.

Unresolved Issues in Fiscal Policy: Metaphors in Collision

Bruce Littleboy (University of Queensland)

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Recent debates over the suitability of fiscal policy in part reflect an Austrian critique of the Keynesian approach. The meaning and significance of the source of the dispute may not yet have been identified, especially so far as the effects of deficit financing are concerned. In some respects, the debate barely extends beyond assertion and metaphor. It may be possible to accept much of the Austrian vision while preserving significant scope for forms of Keynesian fiscal policy. George Shackle generally wrote little about policy issues, but his views on fiscal policy suggest that some sympathy with the Austrian vision can be consistent with fiscal intervention. 

The Categorical Requisite of Mises’s
Pure Time-Preference Theory of Interest

Troy P Lynch (La Trobe University)

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Ludwig von Mises affirmed a pure time-preference theory of interest. He asserted this theorem as a categorical requisite of human action. He rejected Eugen von Böhm-Bawerk’s productivity theory of interest. He also rejected Böhm-Bawerk’s and Frank Fetter’s psychological and time preference explanations of a theory of interest. His presentation of time preference is advocated as a necessary condition of interest, even in a world without the existence of capital goods or the capitalistic method of production. This paper has three aims. The first is to show the rationalist basis for Mises’s pure time-preference theory of interest. The second is to examine the relation between the pure time-preference theory and roundabout methods of production. The third is to discuss the connection between the pure time-preference theory and the market rate of interest.

Happiness and Religion: Joseph Priestley’s Theological Utilitarianism

Akihito Matsumoto (University of Hyogo)

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Joseph Priestley (1733-1804) is one of the most prominent English thinkers in the late eighteenth century. The main purpose of the present paper is to show Joseph Priestley’s idea of utilitarianism (the theological utilitarianism) which differs from that of Jeremy Bentham (the secular utilitarianism). The difference stems from the discrepancy in their understanding of ‘happiness.’ Priestley’s concept of ‘happiness’ implies that human beings can keep endeavoring toward the ‘higher happiness’ in the future guided by the divine providence. In short, for Priestley, ‘happiness’ means the ‘perfection’ of human nature or ability by which the greatest good is accomplished. It is thus possible to say that Priestley develops theological utilitarianism which is based on his Christian belief in God.

This paper also attempts to show that Priestley’s utilitarianism has a similar structure to that of Francis Hutcheson and David Hartley. Though Hutcheson is known for first creating the phrase ‘the greatest happiness of the greatest member,’ his utilitarianism differs from that of Bentham. In other words, Hutcheson’s utilitarianism is similar to that of Priestley. Hartley are known a person who gives a great influence to Priestley. I also focus on similarities between their utilitarianism. In doing so, we can understand notions of theological utilitarianism well.

            The following three points will conclude the paper:

  1. Priestley presupposes the ideas of natural law and natural right as well as social contract theory, whereas Bentham accepts none of them. Priestley‘s utilitarianism is constructed based on his theological system.
  2. Priestley asserts that there is a natural order of priorities in pursuing pleasure and avoiding pain, and therefore the greatest happiness can be necessarily realised by following the natural order. Bentham, on the other hand, claims that the greatest happiness is brought about by the gross of pleasure irrelevant to the natural order.
  3. Though Hutcheson and Hartley also develop the theological utilitarianism, as a Presbyterian minister and a Hartley’s follower Priestley succeeds to their ideas.

Thirty Years of Economics: UWA and the WA Branch of the Economic Society from 1963 to 1992

Michael McLure (University of Western Australia)

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This paper overviews the evolution of economics at the University of Western Australia (UWA) in the thirty years to 1992, with attention given to the leadership of professorial staff, fragmentation in the vision for the economics program and the role of research and research training in that program. The study also considers the place of the Western Australian (WA) Branch of the Economic Society of Australia in economics in this State. Not withstanding some significant fragmentation within the UWA economics department, which had to be confronted when developing a unified view on the direction of the economics program, the thesis of the study is that the department met with considerable success as it worked to re-balance its program. In regard to the WA Branch of the Economic Society, two main issues have emerged: the success of the Shan memorial lecture, which is undertaken in partnership with UWA; and a progressive reduction in the participation of senior UWA economists in the administration of the Society’s WA Branch.

The Economist as Gadfly: The Machinations of Lord John Vaizey’s life

Alex Millmow (University of Ballarat)

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It has been 25 years since Lord John Vaizey, the English economist and educationist passed away in July 1984. Today, Vaizey is almost a forgotten figure in modern British history and even more in the fields of political economy and economics of education where he first made his mark. His work is now rarely cited and, even in political histories of the Thatcher decade, or the travails of the Labour governments before then, his name rarely reappears. This paper reassesses his life, especially the last decade of his life when Vaizey, basked in the limelight, and enjoyed some of the glittering prizes. It was a decade when Vaizey took some major ideological turns, one of the most controversial being his decision to leave the Labour party after 30 years of membership. The paper revisits the reasons why Vaizey renounced democratic socialism, Keynesianism and, along with that, the beguiling promises of social science. It reflected his peculiar interest in political failure along with disillusionment in democratic socialism. The switch meant that this Cambridge-trained economist who described himself once as ‘a deeply flawed puritan, dedicated to work, self improvement, the cultivation of the intellect, goodness and truth’ had to convert, albeit reluctantly, to monetarism and ditch the post-war Keynesian consensus.

Placing William Foster Lloyd in Context:
The Oriel Noetics versus the Christ Church Realists

Gregory Moore (University of Notre Dame, Australia) and Michael V. White (Monash)
gmoore@nd.edu.au and Mike.White@buseco.monash.edu.au

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The enigmatic William F. Lloyd, an individual for whom there are no anecdotes or character sketches from the historical records to draw on, is the subject of this study. In particular, we wish to provide the contemporary (and modern) context for those of Lloyd’s economic ideas that, according to many, anticipated modern theoretical conceptions. The two most famous declarations in which modern concepts are attributed to Lloyd are E. R. A. Seligman’s (1903) conjecture that Lloyd used the law of diminishing marginal utility to derive a modern theory of value, and Garret Hardin’s (1968) assertion that Lloyd was one of the earliest scholars to recognise the tragedy of the commons. We argue that Lloyd developed his economics ideas at the very end of an era in which political economy at Oxford was driven by two charismatic dons, Richard Whately and Charles Lloyd (brother of William F. Lloyd), who operated from power bases at the then two dominant colleges at Oxford—Oriel and Christ Church respectively—and who wielded their influence via their two most famous and more capable charges, Nassau Senior (who Whately prepared for exams) and Robert Peel (who Lloyd prepared for exams). We conclude that William F. Lloyd’s (non-marginalist!) economic framework emerged out of the debates driven by the Whately-Senior and Lloyd-Peel axes and, further, was ultimately deployed to attack the poor law reforms that were being engineered by Senior in the early 1830s.

The Political Economy of Edmund Burke: A New Perspective

Nobuhiko Nakazawa (Kansai University)

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In this paper I throw a new light on a relatively neglected aspect of Edmund Burke’s economic thought. Many scholars have recognized its central assumptions as advocacy of a freely competitive market economy and justification of commercial policies of laissez-faire. But this conventional interpretation is unsatisfactory and incomplete. Strangely enough, though he frequently referred to political economy and prided himself on being a political economist, there have been very few extensive studies of how he understood political economy itself.

In the first part of this paper I reconstruct Burke’s conception of political economy in the historical and intellectual context. He conceived that prudential management of the national financial resources and balance of trade was more fundamental than preference for a self-regulating market economy or need for capital accumulation. His political economy is an essential constituent of his moral politics. It is similar to what is called public finance rather than modern sophisticated economics. This recognition is very helpful to understand two rival faces of political economists in his works. He distinguished the two political economists in relation to his fear of corruption in public finance. Proud to be a ‘true’ political economist not only prudential but also well versed in political economy, Burke attacked corrupt and ignorant ‘false’ political economists when he inveighed against the age of ‘sophisters, oeconomists, and calculators’.

The second part demonstrates Burke’s view on economic policy by focusing on the relationship between his political economy and politics. He was convinced that politicians including political economists had to serve the general good by applying general rules to changing circumstances under the guidance of prudence ( ‘the first of all virtues’ in politics). Axioms of political economy which Burke lay down in his works were not absolutely dominant. They were subordinate to the primary aim of his politics, i.e., the general good. In spite of his praise for laissez-faire and parsimony in the matter of economic policy, he stressed that these axioms can often admit exceptions and discretions according to prudence. His position on this is very similar to Adam Smith’s exception about laissez-faire: defense is more important than opulence. Moreover, it can be said that his views on economic policy is closer to those of Keynes rather than those of Hayek and Friedman.

This paper concludes that Burke was far from a student of the cold logic of the metaphysical and dogmatic laissez-faire economist. He was qualified as a political economist in a sense that he was a practical and prudential politician well-informed about the national finance and balance of trade.

Keynes Or Knight: Who Was First With The Risk-Uncertainty Distinction?

Rod O’Donnell (Macquarie University)

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Both J.M. Keynes and F.H. Knight emphasised a risk-uncertainty distinction and made it an essential theme in the economic theories for which they are best known. Regarding historical priority, two questions are relevant – who first presented the distinction in a written work, and who first promulgated the distinction to wider audiences? This paper reaches the following conclusions. On the first question, the honours belong to Keynes, for he advanced the distinction in an unpublished fellowship dissertation of 1907 whilst Knight was still an undergraduate studying natural science. It was not until 1916 that Knight set out his own ideas in a doctoral dissertation. The answer to the second question is more complicated for it depends on the nature of the promulgation and the type of audience.  If promulgation is understood as appearance in a published work, the honours are shared, since both had books containing the distinction published in 1921, each publication being a revised version of the earlier dissertation. Three differences are important here.  Firstly, Keynes’s book was in philosophy (Treatise on Probability) while Knight’s was in economics (Risk, Uncertainty and Profit).  Secondly, the distinction received secondary treatment in Keynes’s book relative to his main theme of probability, whereas in Knight’s book it was a primary theme as indicated by its title.  Only later, with the General Theory of 1936, did the distinction come to the fore in Keynes’s economic thinking.  Thirdly, each author’s conceptual foundations are different, and it cannot be presumed that their respective distinctions are identical.  In sum, while Keynes was first in presenting his distinction in a written (philosophical) work, Knight was first in promulgating and emphasising his distinction in a published work addressed to economists.  This helps explain the common, but mistaken, idea among economists that historical priority belongs to Knight in 1921 who preceded Keynes in 1936.

The Contribution of E.L. Wheelwright to the Principles of Political Economy

Phillip Anthony O’Hara (Global Political Economy Research Unit,  Curtin University) 

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This purpose of this paper is to examine in some detail the contribution of Edward Lawrence Wheelwright (1921-2008) to political economy. We explore this question by examining the nature of Wheelwright’s work within the context of some of the major principles of political economy. The first principle examined is that of historical specificity, where we detail the nature of his contribution to situating the problems examined in an historical context. Then we go on to explore the extent to which he sought an explanation for problems within the framework of circular and cumulative causation, rather than taking deterministic views of phenomena. Thirdly we analyse the extent to which Wheelwright sought to explore the contradictions of modern capital and socialism, paying special attention to the conflict between capital and labor, finance and industry, competition and monopoly, and the environment versus durable fixed capital or profit. Next we examine his work on uneven development and the extent to which it contributed to comprehending global inequality. And lastly we explore the extent to which Wheelwright examined policy and governance and the degree to which he took a decentered approach to these problems. From this perspective we are better able to judge whether Wheelwright made a major contribution to the principles of political economy, either through theory or empirics, or both.

A Japanese Contribution to the Calculation Debate: K. Yamamoto's Economic Calculation

Hiroyuki Okon (Kokugakuin University)

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In this paper, the author will introduce Katsuichi Yamamoto’s books on economic calculation in the socialist society to the English speaking world. After having a glimpse of Yamamoto’s life, his book, Economic Calculation: Fundamental Problem of Planned Economies, which was published in 1932, will be discussed. Usually the historian of economics recognizes Trygve J. B. Hoff’s 1938 book, Economic Calculation in Socialist Societies as the first systematic study on economic calculation debate, it will be argued that Yamamoto’s book is the fist one in the history of the calculation debate. In this book, after having recognized “The Significance of the Problem of Economic Calculation”, Yamamoto systematically examined nine major views on possibility of economic calculation. They are those of Neurath, Tschajanoff, Varga, Strumilin, Leichter, Kautsky, Heimann, von Mises, and Halm. This book is very significant for the following reasons. First, it is the very first systematic study of the possibility of rational economic calculation in the sociality society. Secondly, his discussion on the weakness of the Market socialism is very original. Thirdly, Yamamoto’s recognition that the possibility of rational economic calculation is the fundamental problem of planned economy led him to sharp criticism of economic control by Japanese government during wartime. So Yamamoto shows that the calculation debate is critical for the critical study of government interventionism.

Trade in a Messy World: Three Studies in Jacob Viner’s International Economics

Paul Oslington (Professor of Economics, Australian Catholic University).  

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This paper explores Jacob Viner’s approach to international economics through three topics relevant to small open economies: 
1)  His advocacy of a real cost theory of value through the 1930s, against Haberler and others (for instance in Viner 1937). 
2)  His work on the burden of a tariff (Viner 1936 and 1938).
3)  His contribution to the theory of customs unions (Viner 1950).
In each case it can be argued that his work has been either misunderstood by subsequent interpreters, or unjustly overlooked.  Being misunderstood most concerned Viner – as he wrote to another prominent international economist in the 1950s: “I must say that I found some difficulty in recognizing the relevance to what I published in 1950 of some of what you attribute to me with respect to customs unions”, and asks that critics “base their verdicts on what I have actually written”. On being overlooked Viner maintained silence, despite the urgings of friends, in relation to several topics where he had just claims to be recognized as the originator of an important idea (including the compensation criteria for gains from trade, theory of second best, effective protection).
For each of the three topics I will analyse what Viner wrote and why, how he has been interpreted by subsequent international economists working on the topic, and what was Viner’s influence. I will also consider also what general conclusions can be drawn about Viner’s approach to international economics in relation to his work on intellectual history. 

Teaching and Research in Economics in Western Australia, 1935-1963:
Overcoming the Constraints of Depression and War.

Ray Petridis (University of Notre Dame, Australia)

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Edward Shann finally resigned his professorial post at the University of Western Australia after a period of disquiet about his frequent absences. Satisfaction evaporated at the appointment of his replacement, A. G. B. Fisher as Fisher moved on after two years. Economics was left rudderless for almost four years as financial constraints and the onset of war further depleted the academic staff. The appointment of F. R. E. Mauldon as professor in economics in 1941, heralded a gradual improvement in staffing. In the immediate post-war period a pool of talented students was recruited through war service schemes and from younger matriculants. Many of those in the early post-war cohorts made their mark as original researchers and in academia. After several false starts the Faculty of Economics was established in 1954 under the stewardship of Mauldon and in 1961 the Faculty of Economics and Commerce was established under the leadership of Mauldon’s successor, Ivor Ian Bowen. Interaction with the business and the wider community was mainly instigated by the professors but was never as close as in the Shann era. Participation in the Economic Society of Western Australia by the academic staff was sporadic and in the post war era only a minority of the staff were especially active.      

Henry George on Value from Obligation

 John Pullen (University of New England)

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Henry George distinguished between value created by production and value created by what he called “obligation”. He argued that value from production adds to both individual wealth and common wealth; whereas value from obligation adds to individual wealth i.e. the wealth of an individual who has the power to impose the obligation on others – but not to common wealth. It merely redistributes wealth from one individual to another. He claimed that there are numerous examples of values being created by obligations, the principal example being the ownership of land. Although George’s concept of value from obligation leaves a number of questions unanswered, this paper argues that the concept remains a useful analytical tool that does not deserve to be neglected in the history of economic thought.

Hayek’s Road to Serfdom in Contexts

Jeremy Shearmur, (Philosophy, School of Humanities, Australian National University)

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Hayek’s Road to Serfdom is often (and understandably) seen as a piece of popular war work, or (and I believe mistakenly) seen as written against a ‘Keynesian’ welfare state.  In this paper, I will sketch what I will argue to be a more adequate picture of its contexts, and will say a little about its character in the light of these.  The three themes that I will highlight are: (a) Hayek’s concerns about ‘planning’; (b) a wider intellectual enterprise, the significance of which has been stressed by Bruce Caldwell in recent work.  Parts of this were published as his ‘Scientism and the Study of Society’, ‘The Counter-Revolution of Science’ and ‘Individualism True and False’ – while The Road to Serfdom was a popular account of what was intended to be a final part of this project; (c) Hayek’s reflections on the character of the Nazi regime in Germany (e.g. as formulated by way of a memo and book reviews concerning Germany in the Nazi period, but prior to the Second World War.)

On the Transformation in Tooke’s Monetary Thought

Matthew Smith (University of Sydney)

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Among those commentators who have closely studied Thomas Tooke’s (1774-1858) political economy, there is general agreement that there was a transformation in his monetary thought after 1838 from an ‘orthodox’ quantity theory position to his novel anti-quantity theory banking school position. The purpose of this paper is to ascertain the nature of this transformation in Tooke’s thinking. To this end the paper begins by detailing the main elements of Tooke’s early pre-banking school monetary thought, it then examines the evolution of his pre-banking school thought up to 1838 before examining the transformation to his banking school thought after 1840. The paper shows that in contrast to the view of most commentators, the transformation in Tooke’s monetary thought was entirely consistent with the main principles of political economy he had developed early on and largely reflected the development of his views about monetary behaviour that were formulated from his empirical findings.

Wieser’s epistemological position as a reformulation of Menger’s empiricism

Natsuka Tokumaru (Ph.D of Kyoto University in Japan)

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In the attempt to improve Menger’s economic theories, Wieser frequently discusses methodological and epistemological issues. Although he develops his own position, the prevailing literature indicates that interest in that position is rather low. I suggest that Wieser’s epistemological position is an attempt to solve the problem of demarcation in the social sciences. In order to solve that problem, Wieser discusses the role and the different forms experience has in the social sciences. Wieser’s position is the result of a critical analysis and the reformulation of an empirical position that Menger developed in his Grundsätze der Volkswirthschaftslehre. Wieser maintains that economics is an empirical science and supports that claim by discussing the focus of subjective value theory, i.e. marginal utility. Since Wieser explains that ‘experience’ comes in different forms, I suggest that he uses that concept in at least four different meanings. 1) ‘Experience’ as stored in language; by referring to Menger’s economic analysis he argues that experience is stored in common pre-scientific as well as in scientific language and that language analysis is an important source of social knowledge. 2) ‘Experience’ as introspection or inner observation of ‘motive power’; according to Wieser empirical statements ought to be classified into statements describing introspection and statements describing observations. He regards introspection as a special source of empirical knowledge because it provides certain knowledge about ‘motive power’ of economic activities. In his view statements describing introspection ought to be the basis for general statements or theories (‘psychological inductivism’). According to Wieser, Menger’s theory of imputation fails because it is based on observations and not on personal experiences. 3) ‘Experience’ as mental experiment; Wieser believes that by specifying the conditions of social situations, mental experiments help to clarify the complex causal relations that exist in real social situations. This view is the result of Wieser’s attempt to clarify Mengers idea of causality. 4) ‘Experience’ as observation. Wieser is aware that observations of social phenomena are part of the empirical basis of economics. However, according to him social phenomena are the result of different ‘motivational energies’triggered not only by humans but also by social organizations or even nations as well. Since he applies the idea of motivational energy in order to explain observable social phenomena, I would like to call this position ‘methodological motivationalism’. This particular position may help to explain his later work: his support of interventionalism and his turn to sociology.

An Incomplete Temporalization:
The Reason For Böhm-Bawerk’s Regression

Shigeki Tomo (Kyoto-Sangyo University)

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This paper tries to explain the reason for Böhm-Bawerk’s intellectual shift with respect to time element from his earlier to later models. The remarkable phenomenon has been already noticed and was once reported by the present author as the regressive temporalization from Fisherian to Wicksellian (Tomo 1997). But there seems to have not been clearly given any explanation for the theoretical necessity for Böhm-Bawerk’s ostensible regression.
The answer will be that Böhm-Bawerk’s detemporalization must be required for the purpose of establishing a macroeconomic model of distribution explicitly reflecting the fundamental recognition that capitalist production needs time.  In order to evaluate inputs and outputs for specifying the amount of wealth (total or surplus value) to be distributed, it is required to assume a price system which remains constant during the production process. This assumption would be destroyed if the empirical fluctuation of market price over time should be rigorously taken into account.
After his 1884 declaration that the theory of interest belongs to that of value, Böhm-Bawerk started his reexamination of Mengerian subjective theory of value and price until 1886 and came to assert that the marginal utility theory of value is consistent with the law of cost (average cost = market price in the long run). In the sense that the last equation is adopted in 1888 as one of three components of Böhm-Bawerk’s period-of-production model, the assertion could be interpreted as a prelude towards his conscious detemporalization for the sake of creating a theory of distribution, and his concept of the average period of production must be the completion of Böhm-Bawerk’s regression with respect to time element.
The definition of the average period of production adding up the quantities of labour existing in different time periods violates Böhm-Bawerk’s own temporal idea that two things of physically the same kind and quality must be economically regarded as different, if they exist in the different points of time.  Surely he consciously applied this idea in criticizing Marxian exploitation theory of interest in 1884, but he did not repeat it any more in his arguments in Karl Marx and the close of his system, in 1896. One could also interpret this transformation as a circumstantial evidence for Böhm-Bawerk’s temporal regression.
The construction of distribution theory obliged Böhm-Bawerk not only to give it up to keep his earlier temporal ideas, but also to neglect Menger’s emphasis in Chapter V of Grundsätze that every price level is always strictly subject to time and place of transaction. Böhm-Bawerk’s neglect must have led to Menger’s famous recollection that “the time will come when people will realize that Böhm-Bawerk’s theory is one of the greatest errors ever committed.”

Wilfred Edward Graham Salter: The Merits of a Classical Economic Education

Ernst Juerg Weber (University of Western Australia)

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During his honours research on an index of industrial production at the University of Western Australia, Salter gained a firm understanding of the composite commodity theorem. The applied work on the index of industrial production provided him with the analytic foundations for his two famous contributions to economics, in capital theory and international trade theory. In his Ph.D. thesis at the University of Cambridge he agreed with Joan Robinson that it is impossible to measure the aggregate capital stock because the assumptions of the composite commodity theorem do not hold in a general equilibrium framework. But Salter was not bothered by the elusive nature of capital because he saw no need to measure the capital stock in the first place. He developed a vintage model of capital, in which technological progress occurs at the margin of the capital stock, when new investment goods are installed. In the dependent economy model Salter, however, accepted the aggregation of exportables and importables because in a small open economy the terms of trade is unaffected by domestic economic policy. Thus, Salter recognised that the capital stock is an invalid aggregate in a macroeconomic model, but internationally traded goods are a valid aggregate in the dependent economy model. His success as an economic theorist lies in the fact that he understood when to apply the composite commodity theorem as an analytic tool, and when not to use it.

Intellectual History (IH) and the History of Economic Thought (HET): A Personal View.

Donald Winch (University of Sussex)

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Attendees may also be interested in Donald Winch's recent HES Denver speech (200kb PDF)

HET has until recently largely been practitioner history: economists writing for the edification of fellow economists by dealing with genealogical questions in a teleological or ‘Whig’ fashion. Who begat whom and how far was modern economics prefigured in earlier writings? My decision to do historical research was made at the end of what can be seen, retrospectively, as a ‘golden age’, when HET was an integral part of an economist’s way of thinking rather than a separate sub-discipline. But my choice of the way in which history should be written was conditioned, negatively, by the historiographic pronouncements of such leading practitioners as Schumpeter, Samuelson, and Stigler.

There were more positive models to hand when I undertook a revisionist study of Adam Smith’s Politics (1978) designed to recover his intentions as an author by setting his texts within the eighteenth-century linguistic context within which they were conceived. In a collaborative book on That Noble Science of Politics (1983), derived from cross-disciplinary teaching at the University of Sussex, the same approach was applied to a longer period of British intellectual history. The contrast between HET and IH was underlined by experience in writing on Robert Malthus as a Christian political economist and moralist. Based on more recent work in Wealth and Life (2009), a book dealing with political economy in Britain during the period 1848 to 1914, I have contrasted the doctrinal or HET approach to the transition from ‘classical’ to ‘neo-classical’ economics with that of IH

The talk ends with some remarks on what has been called, in the Australian context, the ‘history wars’ surrounding the classification of HET; and on the trend in literary and cultural studies called ‘the new economic criticism’ seen as a warning about the misuses to which HET can still be put. This apart, some grounds for optimism concerning the current state of the history of economics, whether pursued in HET or IH fashion, are given in conclusion.

Sponsored by:

The University of Notre Dame AustraliaMannkal Economic Education FoundationEconomic Society of WA