Qualms On Foreign Trade

"7.5. The idea that the opening of foreign trade bears a close resemblance to technical progress, in that in both cases additional processes of production are made available to the economy, is clearly expressed in Ricardo's Principles in the chapter 'On Foreign Trade'... Ricardo in fact compares the extension of trade to improvements in machinery, and, taking the real wage rate as given, investigates whether trade or improved machinery will have an impact on the general rate...

Hoisted From Comments: Query On Foreign Trade

A reader asks:"This is an unrelated discussion, but I was hoping that maybe you (or someone else reading this forum) could help me with a question that may also be of interest to you.How does a standard neo-Walrasian CGE (computational general equilibrium) model predict economic losses from trade liberalisation? I understand the logic behind the two goods and country case where welfare gains can be made through the elimination of trade barriers if there exists a comparative advantage...

Applied Sraffianism

"These allusions give incidentally some indication of the disproportionate length of time over which so short a work has been in preparation... As was only natural during such a time period, others have from time to time independently taken up points of view which are similar to one or the other adopted in this paper and have developed them further or in different directions from those pursued here." -- Piero SraffaDespite my appreciation of Bliss' 1975 book, I think the following...

A Prescient Passage From 1937

One can read Keynes as proposing an alternative theory of value. Hyman Minsky advances this reading to some extent. Classic texts for this reading include chapter 17 of the General Theory and Hugh Townshend's 1937 article on Keynes' book. The following passage is from the latter:"... The following example ... I have made, for the sake of clarity, so extreme as to be absurd if taken literally. Imagine the community, during a given short period, to be all asleep, so that in this...

Parallel Thoughts By Wittgenstein And Sraffa

Apparently Wittgenstein wrote the following in 1937:"The origin and the primitive form of the language game is a reaction; only from this can more complicated forms develop.Language - I want to say - is a refinement, 'in the beginning was the deed'." -- Ludwig Wittgenstein, Culture and Value (Translated by Peter Winch) (1980)And Sraffa, I guess, wrote the following in the early 1930s:"If the rules of language can be constructed only by observation, there can never be any nonsense...

Anger Can Be Power

What I'm reading:"The colonial world is a world cut in two. The dividing line, the frontiers are shown by barracks and police stations. In the colonies it is the policeman and the soldier who are the official, instituted go-betweens, the spokesmen of the settler and his rule of oppression. In capitalist societies the educational system, whether lay or clerical, the structure of moral reflexes handed down from father to son, the exemplary honesty of workers who are given a medal...

Minsky Versus Sraffa

Kevin "Angus" Grier reminisces about Hyman Minsky's dislike for Piero Sraffa. But he doesn't recall points at issue. Minsky expressed his views in print:"Given my interpretation of Keynes (Minsky, 1975, 1986) and my views of the problems that economists need to address as the twentieth century draws to a close, the substance of the papers in Eatwell and Milgate (1983) and the neoclassical synthesis are (1) equally irrelevant to the understanding of modern capitalist economies...

Wages, Employment Not Determined By Supply And Demand

1.0 IntroductionOne theme of this blog is that the introductory textbook model of the labor market is incorrect. Two recent papers make this point from the perspective of institutional economics.2.0 The Impossibility of a Perfectly Competitive Labour MarketThe abstract of the first paper under consideration states:Using the institutional theory of transaction costs, I demonstrate that the assumptions of the competitive labour market model are internally contradictory and lead...

"The Impossibility ... [Of] ... A Single Magnitude Representing ... The Quantity Of Capital"

Figure 1: From Sraffa's Production of Commodities by Means of CommoditiesSuppose people save more. A neoclassical and Austrian school1 idea is that then the supply of capital will have increased, in some sense. One would expect its price, the rate of interest, to be less, absent intervention by the monetary authorities. Entrepreneurs, if they were alert, would adopt more capital-intensive - that is...