nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2021‒03‒29
thirteen papers chosen by
Erik Thomson
University of Manitoba

  1. Why Was Keynes Not Awarded the Nobel Peace Prize After Writing "The Economic Consequences of the Peace"? By Jonung, Lars
  2. Ricardo’s Side of The Malthus Papers in the Collection of Kanto Gakuen University By Depoortère, Christophe
  3. War and Peace: Arthur C. Pigou as a Public Intellectual during World War I By Arthmar, Rogério; McLure, Michael
  4. From the accounts of Philosophie rurale to the physiocratic Tableau: François Quesnay as a precursor of national accounting By Le Masne, Pierre; Dupuy, Romuald; Roman, Philippe
  5. "Keynes's Theories of the Business Cycle: Evolution and Contemporary Relevance" By Pablo Gabriel Bortz
  6. Schumpeter's paradox reconsidered: The need for a theory of circular flow By Seo, Takashi
  7. Friedrich Hayek’s liberal dialectics By Claude Gamel
  8. Ordoliberalism and the social market economy By Feld, Lars P.; Köhler, Ekkehard A.; Nientiedt, Daniel
  9. Edith T. Penrose: Economist of "The Ordinary Business of Life" By Pattit, Jason M.; Pattit, Katherina G.; Spender, J C
  10. The Relation of Neoclassical Economics to other Disciplines: The case of Physics and Psychology By Stavros, Drakopoulos
  11. Review of “The Accademy of Fisticuffs. Political Economy and Commercial Society in Enlightenment Italy” by Sophus A. Reinert By Simon, Fabrizio
  12. Review of “F. A. Hayek: Economics, Political Economy and Social Philosophy” by Peter J. Boettke By Kolev, Stefan
  13. Review of “The Routledge Handbook of the History of Women’s Economic Thought” by Kirsten Madden and Robert W. Dimand By May, Ann Mari

  1. By: Jonung, Lars (Department of Economics, Lund University)
    Abstract: John Maynard Keynes became world famous with the publication of The Economic Consequences of the Peace in 1919, a harsh critique of the Versailles peace treaty. As a consequence, Keynes was nominated by German professors in economics for the Nobel Peace Prize three years in a row, 1922, 1923 and 1924. Because Keynes was put on the shortlist of candidates, he was evaluated in an advisory report in 1923, followed by one in 1924, prepared for the Nobel Committee of the Norwegian parliament. This paper summarizes the two reports on Keynes. The appraisals were highly appreciative of Keynes’s book as well as of his subsequent newspaper and journal articles on the peace treaty, raising the question: why did Keynes not receive the Peace Prize? The appraiser of Keynes even informed Keynes that he was “one of the foremost candidates proposed for the Nobel Peace Prize.” However, the Peace Prize was not awarded in 1923 and 1924 although Keynes was declared a worthy laureate. There are no protocols that shed light on this issue. Still, the events surrounding the evaluation process, in particular the public clash between two advisors of the Prize Committee on Keynes’s account of the negotiations at Versailles, encourage a speculative answer.
    Keywords: John Maynard Keynes; Nobel Peace Prize; Treaty of Versailles; reparations; Dawes Plan; Bretton Woods; Norway
    JEL: A11 B10 B31 D70 E12 E60 F30 F50 N10 N40
    Date: 2021–03–03
  2. By: Depoortère, Christophe
    Abstract: In 1997 and 2004, John Pullen and Trevor Hughes Parry published a set of manuscripts by and relating to Thomas Robert Malthus held at the Kanto Gakuen University in Japan. Their achievement is impressive. However a few important elements relating to these manuscripts escaped their attention. These elements concern Malthus, but also his very good friend and theoretical opponent David Ricardo.The purpose of this article is to point out these elements inasmuch as they enable 1) to establish the correct dating and contextualisation of some manuscripts, and 2) to attribute the true authorship of some other material.
    Date: 2020–12–01
  3. By: Arthmar, Rogério; McLure, Michael
    Abstract: This study reflects on Arthur Cecil Pigou’s role in public debate during the initial phase of the First World War over whether Britain should negotiate a peace treaty with Germany. Its main goal is to provide evidence that the Cambridge Professor framed his approach to this highly controversial issue from theoretical propositions on trade, industrial peace and welfare which he had developed in previous works. After reviewing his contributions on these subjects, Pigou’s letter to The Nation, in early 1915, suggesting an open move by the Allies towards an honourable peace with Germany, is presented along with his more elaborate thoughts on this same theme put down in a private manuscript. The negative reactions to Pigou’s letter are then scrutinized, particularly the fierce editorial published by The Morning Post. A subsequent version of Pigou’s plea for peace, delivered in his London speech late in 1915, is detailed listing the essential conditions for a successful conclusion of the conflict. To come full circle, the paper recapitulates Pigou’s post-war considerations on diplomacy, free trade and colonialism. The concluding remarks bring together the theoretical and applied branches of Pigou’s thoughts on war and peace.
    Date: 2020–12–01
  4. By: Le Masne, Pierre; Dupuy, Romuald; Roman, Philippe
    Abstract: Quesnay’s Tableau, as it appears in Philosophie rurale, is an understandable, robust and innovative construction despite detail errors. It provides a precise representation of the economic circuit. The accounts of chapter VII of Philosophie rurale are introduced and we explain how Quesnay’s Tableau comes from these accounts. The transposition of the accounts of chapter VII and of the Tableau into two input-output tables shows the balance of resources and uses. In order to shed light on the progress of exchanges along the year, the Tableau is also transposed into three double-entry accountings (proprietors, farmers and artisans).
    Date: 2020–12–01
  5. By: Pablo Gabriel Bortz
    Abstract: This paper traces the evolution of John Maynard Keynes's theory of the business cycle from his early writings in 1913 to his policy prescriptions for the control of fluctuations in the early 1940s. The paper identifies six different "theories" of business fluctuations. With different theoretical frameworks in a 30-year span, the driver of fluctuations--namely cyclical changes in expectations about future returns--remained substantially the same. The banking system also played a pivotal role throughout the different versions, by financing and influencing the behavior of return expectations. There are four major changes in the evolution of Keynes's business cycle theories: a) the saving–investment framework to understand changes in economic fluctuations; b) the capabilities of the banking system to moderate the business cycle; c) the effectiveness of monetary policy to fine tune the business cycle through the control of the short-term interest rate or credit conditions; and d) the role of a comprehensive fiscal policy and investment policy to attenuate fluctuations. Finally, some conclusions are drawn about the present relevance of the policy mix Keynes promoted for ensuring macroeconomic stability.
    Keywords: John Maynard Keynes; Business Cycle; Fiscal Policy; Monetary Policy; Financial System; Uncertainty
    JEL: B31 E12 E32 E44 E63
    Date: 2021–03
  6. By: Seo, Takashi
    Abstract: This study focuses on the well-known theme of Schumpeter’s system of economic theory. Specifically, the study discusses Schumpeter’s paradoxical stance on Walras’ general equilibrium theory, which Louçã (1997) called Schumpeter’s paradox. We reconsider the significance of the notion of circular flow in business cycle theory, after recognising the continuity from static to dynamic theory, and then to business cycle theory that integrates these theories. In doing so, we focus on the fact that Schumpeter called the equilibrium in the cyclical process a circular flow or a stationary process and proposed his own concept of neighbourhoods of equilibrium, which was not found in Walras’ general equilibrium theory. Through such an analysis, we propose that Schumpeter’s paradox is eased to some degree and that the theory of circular flow should be explored further.
    Keywords: Schumpeter, Walras, Kuznets, Business cycles, Circular flow, General equilibrium, Neighbourhood of equilibrium
    JEL: B25 B31 B41 E32
    Date: 2021–03–25
  7. By: Claude Gamel (LEST - Laboratoire d'économie et de sociologie du travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Although they lived a century apart, Hayek might be considered as the liberal counterpart of Marx: not only both carried out transdisciplinary studies but they also used a dialectic approach. According to Hayek, the evolution of human societies cannot remain under control because the "spontaneous social order" is opposed to "organisations", an opposition that rests upon a conflict between two kinds of rationality set at the epistemological level (I). That can only be overcome through the fine tracking of "abstract rules of just conduct" in the legal order (II). However Hayek's pessimistic view holds ground and this is the result of the divergence, in the field of economics, between the rules necessary for market order and a conception of justice within society that is too ambitious and can even be so corrosive as to destroy it (III). To conclude, we shall ask the question what act as safeguard nowadays so as to allow liberal societies to survive, as Hayek sought to guarantee.
    Abstract: Hayek peut être considéré, à un siècle de distance, comme l'homologue libéral de Marx, non seulement par le caractère transdisciplinaire de la réflexion, mais surtout par le recours à une démarche dialectique. Selon Hayek, l'évolution non maîtrisable des sociétés humaines oppose « ordre social spontané » et « organisations » et repose sur un conflit de « rationalité » d'ordre épistémologique (I). Cette opposition ne peut être surmontée, dans l'ordre juridique, qu'au prix du repérage délicat de « règles abstraites de juste conduite » (II). Le pessimisme propre à Hayek résulte alors, dans le champ de l'économie, de la divergence entre les règles nécessaires à l'ordre du marché et une conception trop ambitieuse de la justice en société qui risque de le détruire (III). D'où l'évocation, en conclusion, de la pertinence aujourd'hui des garde-fous à mettre en place, pour que, selon Hayek, les sociétés libérales puissent malgré tout survivre.
    Keywords: liberalism,dialectics,organisations,rules of just conduct,liberalisme,dialectique,ordre spontané,règles de juste conduite
    Date: 2021
  8. By: Feld, Lars P.; Köhler, Ekkehard A.; Nientiedt, Daniel
    Abstract: [Introduction] Contrary to its usage in current political discourse, the term neoliberalism originally referred to those schools of economic thought that opposed laissez-faire liberalism and wanted to assign a more active role to the state. Faced with the economic turmoil of the late 19th and early 20th century - including the poverty of the working class, concentrations of power in the hand of large corporations and multiple monetary and economic crises - neoliberals posited that the government should intervene in private markets in order to uphold competition. [...]
    Date: 2021
  9. By: Pattit, Jason M.; Pattit, Katherina G.; Spender, J C
    Abstract: When Edith T. Penrose became Fritz Machlup’s student in the late-1940s, she found little in mainstream or Austrian economics to guide her as she began her explorations into the growth of the firm. While she acknowledged Kenneth Boulding’s influence on her work, we suspect she drew on a broader tradition that includes, among others, Alfred Marshall, Frank Knight (Boulding’s teacher), and Ronald Coase. We seek to demonstrate Penrose’s connection to this ‘invisible college’, particularly to Knight, and its influence on her investigation of the growth of the firm. Given mainstream economists’ pursuit of rigor at the expense of practical relevance and their continuing inattention to Coase’s work, we suggest Penrose’s work on the growth of the firm can be understood as part of a broader tradition represented by this ‘invisible college’, leading to useful new insights for business strategy and business ethics scholarship.
    Keywords: Penrose’s language of the firm; the theory of the growth of the firm; business ethics
    JEL: M0 N0 N8
    Date: 2021–03
  10. By: Stavros, Drakopoulos
    Abstract: Since the emergence of the classical school, the scientific ideal of physical sciences has been a constant influence on economic theory and method. Its influence is still present in contemporary neoclassical economics. Similarly to the case of physics, classical economists were very open in incorporating psychological elements in the economic discourse. This openness towards psychology continued with prominent Marginalist economists, like Jevons and Edgeworth, who were eager to draw from psychological ideas found in earlier authors. In the first decades of the 20th century, a major conceptual change in economics took place which is also known as the Paretian turn. This conceptual change, initiated mainly by Vilfredo Pareto, and completed, in the first decades of the 20th century, by J. Hicks, R. Allen and P. Samuelson, attempted to remove all psychological notions from economic theory. The legacy of the Paretian turn can still be identified in the significant reluctance of the contemporary orthodox economic theory to incorporate the findings of the new behavioral economics, a field with a discernable psychological bent. This chapter argues that the history of the relation of those two subjects to economics can lead to some potentially useful observations concerning the nature of contemporary neoclassical economics. It will also be maintained that the relationship of neoclassical economics to physics ultimately constrained its interaction with psychology.
    Keywords: Economic Methodology; Economics and Psychology; Economics and Physics; History of Economic Thought
    JEL: B0 B40
    Date: 2021–03
  11. By: Simon, Fabrizio
    Abstract: Book Review of “The Accademy of Fisticuffs. Political Economy and Commercial Society in Enlightenment Italy” by Sophus A. Reinert
    Date: 2020–09–01
  12. By: Kolev, Stefan
    Abstract: Book Review of “F. A. Hayek: Economics, Political Economy and Social Philosophy” by Peter J. Boettke
    Date: 2020–09–01
  13. By: May, Ann Mari
    Abstract: Book Review of “The Routledge Handbook of the History of Women’s Economic Thought” by Kirsten Madden and Robert W. Dimand
    Date: 2020–09–01

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