nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2022‒08‒22
six papers chosen by
Erik Thomson
University of Manitoba

  1. Karl Marx´s Theory of Capitalism Exposition, Critique, and Appraisal By Escudé, Guillermo J.
  2. Sen and Sraffa: Description as Theory By Syed Mohib Ali
  4. Homo economicus to model human behavior is ethically doubtful and mathematically inconsistent By M. Lunkenheimer; A. Kracklauer; G. Klinkova; M. Grabinski
  5. Kantian Epistemology in Examination of the Axiomatic Principles of Economics: the Synthetic a Priori in the Economic Structure of Society By Mughal, Adil Ahmad
  6. From Addition to Multiplication: The Labour Theory Of Value and the Economic Institutions of Capitalism. Part One: Profit and Surplus-Value in light of Transaction Costs By Alberto Battistini

  1. By: Escudé, Guillermo J.
    Abstract: This book gives a clear synthesis of Marx’s theory of Capitalism and its relation with economic theory as it evolved over the course of the last 300 years. It places Marx’s though in perspective, comparing it with the main aspects of the economic theories that preceded it, including not only the Classical Adam Smith and David Ricardo but also economists like Cantillon, Turgot, and Ramsay that Marx chose to ignore with respect to the crucial issue of entrepreneurship because it was incompatible with his Theory of Surplus Value. But the book also contrasts Marx’s theory with Walras’, the Neoclassical economist whose influence on contemporary mainstream economic theory was most lasting. The analytical aspects of Marx’s theory are rigorously expressed by means of the technique of Input-Output Analysis, which is explained from the most elementary level in order to make the book self-contained. Each of the multiple topics of Marx’s complex and refined theory is explained in detail, including his theory of money, the heterogeneity in kinds of labor and in productive techniques, the turnover of capital, Simple and Extended Reproduction, his theory of the economic cycle, his theory of ground rent, his theory of productive and unproductive labor, and his view of the main tendencies of capitalist society. The book is structured in accordance with the development process of Marx’s thought. Hence, it begins with the life project he generated in his youth and drove him from the study of history and philosophy to that of Political Economy, on the one hand, and political praxis, on the other. Hence, Parts I, II, and IV of the book respectively address A) the philosophical-methodological foundations of his scientific endeavor (his Historical Materialism); B) his scientific theory of capitalist society as expressed in Capital; and C) his political thought and praxis, which had enormous effects over the course of the 20th century. Part III of the book addresses our critique of Marx’s theory of Capitalism. Beyond our criticisms, however, the book shows that Marx made important contributions to the comprehension of the functioning of Capitalism in the more conventional part of his theory, which we denominate ‘exoteric’ in order to contrast it with his ‘esoteric’ Theory of Surplus Value which was the foundation of his view of the exploitation of wage labor in Capitalism.
    Keywords: Marx's theory of capitalism; Marx's theory of surplus value and its critique; Comparison of Marx's and Walras' economic theories; Historical Materialism; Marx's political project and its critique; appraisal of Marx's influence in the light of the world events of the 20th century.
    JEL: B00 B31 B40 B51
    Date: 2021
  2. By: Syed Mohib Ali
    Abstract: The article engages with Amartya Sen’s interpretation of Piero Sraffa’s Production of Commodities by Means of Commodities (PCMC). Sen has the distinction of highlighting the philosophical and methodological aspects of Sraffa’s work. In this regard, Sen has highlighted the role of counterfactuals in economic theory and the role of value theory in political economy as a matter of ‘social communication’. On these two issues, there is considerable discussion in recent Sraffian scholarship that is concerned with the significance of Sraffa’s critique of marginalist theory and the rehabilitation of classical economics. The article scrutinizes Sen’s interpretation of PCMC and highlights several noteworthy contributions and insights. While being sympathetic to the substantive points of criticism entailed by PCMC, Sen misunderstands Sraffa’s ‘critique of economic theory’ and the reasoning involved in such a critique. A critical reading reveals that Sen’s interpretation of Sraffa is more reflective of his own work on the ‘choice basis of description’ than an appreciation of Sraffa’s theoretical project. Despite the misunderstandings, the article highlights the similarities in vision between Sen’s interpretation of Sraffa and Sraffa’s revival of classical economics. By undertaking such a critical reading, the article raises important issues about method and the scope of economic enquiries
    Date: 2022–06
  3. By: Leonardo Ivarola (Instituto Interdisciplinario de Economía Política de Buenos Aires - UBA - CONICET)
    Abstract: In the present paper it is argued that differences among economic models are basically differences in their selected part of the real world these models try to account for. Therefore, their range of applicability to a target system turns out to be important for their selection to particular purposes. In this respect, an approach based on the similarity of models to a target system and to the modelers’ purposes is provided. It is also argued that models vary in values of similarity. These values will help agents to select the model that best meets the role of examining some phenomenon of interest.
    Keywords: Similarity, Economic models, Mechanisms, Possibility tree, Substantive assumptions, Domain of applicability
    JEL: B41
    Date: 2021–06
  4. By: M. Lunkenheimer; A. Kracklauer; G. Klinkova; M. Grabinski
    Abstract: In many models in economics or business a dominantly self-interested homo economicus is assumed. Unfortunately (or fortunately), humans are in general not homines economici as e.g. the ultimatum game shows. This leads to the fact that all these models are at least doubtful. Moreover, economists started to set a quantitative value for the feeling of social justice, altruism, or envy and the like to execute utilitarian calculation. Besides being ethically doubtful, it delivers an explanation in hindsight with little predicting power. We use examples from game theory to show its arbitrariness. It is even possible that a stable Nash equilibrium can be calculated while it does not exist at all, due to the wide differences in human values. Finally, we show that assigned numbers for envy or altruism and the like do not build a field (in a mathematical sense). As there is no homomorphism to real numbers or a subset of it, any calculation is generally invalid or arbitrary. There is no (easy) way to fix the problem. One has to go back to ethical concepts like the categorical imperative or use at most semi quantitative approaches like considering knaves and knights. Mathematically one can only speculate whether e.g. surreal numbers can make ethics calculable.
    Date: 2022–07
  5. By: Mughal, Adil Ahmad
    Abstract: Transcendental Analytic, in Critique of Pure Reason, combines the space and time as conditions of the possibility of phenomenon from Transcendental Aesthetic with the pure magnitude-intuition notion. The property of continuity as a qualitative result of the additive magnitude brings the possibility of connecting with experience, even though only as a potential because of the a priori necessity from assumption, as syntheticity of the a priori task of a scientific method of philosophy given by Kant, which precludes the application of categories to something not empirically reducible to the content of such a category's corresponding and possible object. This continuity as the qualitative result of a priori constructed notion of magnitude lies as a fundamental assumption and property of, what in Microeconomic theory is called as, 'choice rules' which combine the potentially-empirical and practical budget-price pairs with preference relations. This latter result is the purest qualitative side of the choice rules' otherwise autonomously quantitative nature. The theoretical, barring the empirical, nature of this qualitative result is a synthetic a priori truth, which, if at all, it should be, if the axiomatic structure of economic theory is held to be correct. It has a potentially verifiable content as its possible object in the form of quantitative price-budget pairs, yet, the object that serves the respective Kantian category is qualitative itself which is utility. This article explores the validity of Kantian qualifications for this application of 'categories' to the economic structure of society.
    Keywords: Categories of Understanding, Continuity, Convexity, Psyche, Revealed Preferences, Synthetic a priori
    JEL: B4 B49 D0 D01 D9
    Date: 2022–06–15
  6. By: Alberto Battistini
    Abstract: this three-parts study presents an institutional and evolutionary -or a qualitative and intersubjective-re-interpretation of Marx’s version of the labour theory of value. More specifically, in this Part One Marx’s own contribution to that theory - that is, the theory of surplusvalue, or the difference between use-value and exchange-value of labour power as a determinant of profit in perfectly competitive conditions and of the contradictory nature of the capital accumulation process- is re-dis-covered. Accordingly, the amount that would have been the cost of obtaining the same commodity in the noncapitalist Commodity ? Money ? Commodity circuit -that is, in the market of independent or smalland medium-size producers, takes the place of the direct and indirect quantity of working hours contained in a given commodity, thus representing its exchange value. By applying - as Marx did- the same pricing rule which holds for the other commodities to labour power, therefore, the quantity of labour socially necessary to produce subsistence goods is in its turn substituted with the amount that is possible to earn from independent participation in the production process, without specific means of production in the usual meaning of the term. Since the step in terms of surplus-labour is then skipped for theoretical as well as practical reasons, the use-value of labour-power corresponds to the exchange-value of the commodities. Consequently, as in Marx, also in this case a kind of profit that derives from the difference between the use-value and the exchange-value of labour-power, but measured in terms of transaction costs, comes to light. Moreover, because it derives from the aforementioned difference, this kind of profit is not eliminated by competition. As a consequence, it should be named as ‘Marxian’ or ‘industrial’ profit in order to distinguish it from monopoly profit, which instead derives from price setting. On the basis of this result, in the next two Parts of the study the hypothesis that the principle of the maximization of this kind of profit might work as a general positive principle for the economic domain, including as special cases Pareto-efficiency and conflict, will be verified
    Keywords: transaction costs; wealth effects; use-value; exchange-value; team production; methodological individualism
    JEL: A10 B00 C70 P10 D02
    Date: 2022–07

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