Table Of ContentECONOMICS: AN ANTI-TEXT
Economics: An Anti-Text
Edited by
Francis Green
Department of Politics and Economics, Kingston Polytechnic
and
Petter Nore
Division of Economics, Thames Polytechnic
M
©Sam Aaronovitch, Bettina Berch, Monika Beutel, Ben Fine,
Andrew Glyn, Francis Green, Laurence Harris,
Sue Himmelweit, Rhys Jenkins, Simon Mohun,
Petter Nore, Bob Sutcliffe 1977
All rights reserved. No part of this publication
may be reproduced or transmitted, in any form
or by any means, without permission.
First edition 1977
Reprinted 1978, 1979
Published 1977 by
THE MACMILLAN PRESS LTD
London and Basingstoke
Associated companies in Delhi Dublin
Hong Kong Johannesburg Lagos Melbourne
New York Singapore and Tokyo
ISBN 978-0-333-21202-8 ISBN 978-1-349-15751-8 (eBook)
DOI 10.1007/978-1-349-15751-8
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Contents
List of Contributors vii
Introduction ix
PART 1
ECONOMIC METHODS AND ASSUMPTIONS
1 The Myth of Objectivity in Positive Economics 3
FRANCIS GREEN
2 The Individual as Basic Unit of Analysis 21
SUE HIMMELWEIT
3 Class in Contemporary Britain 36
MONIKA BEUTEL
PART2
MICROECONOMICS
4 Consumer Sovereignty 57
SIMON MOHUN
5 The Firm and Concentration 76
SAM AARONOVITCH
6 Wages and Labour 89
BETTINA BERCH
PART3
MACROECONOMICS
7 The Concept and Origin of Profit 105
BEN FINE
8 The Balance of Payments and the International 117
Economic System
LAURENCE HARRIS
vi Contents
9 Underdevelopment 132
RHYS JENKINS
10 Inflation 148
ANDREWGLYN
PART4
ECONOMIC THEORY AND THE STATE
11 Keynesianism and the Stabilisation of 163
Capitalist Economies
BOB SUTCLIFFE
12 The State 182
PETTER NORE
Notes and References 207
List of Contributors
FRANCIS GREEN teaches Economics at Kingston Polytechnic.
SUE HIMMELWEIT teaches Economics at Birkbeck College, London.
MoNIKA BEUTEL teaches Sociology at Hatfield Polytechnic.
SIMON MoHUN teaches Economics at Queen Mary College, London.
SAM AARONOVITCH teaches Economics at South Bank Polytechnic.
BETTINA BERCH teaches Economics at Williams College, Massachusetts.
BEN FINE teaches Economics at Birkbeck College, London.
RHvs JENKINS teaches Economics at the University of East Anglia.
ANDREW GL YN teaches Economics at Corpus Christi College, Oxford.
LAURENCE HARRIS teaches Economics at Birkbeck College, London.
Boa SUTCLIFFE teaches Economics at Kingston Polytechnic.
PETTER NoRE teaches Economics at Thames Polytechnic.
Introduction
This book is mainly written for students who come to economics in the
expectation of gaining an understanding of how economic society func
tions, and who have become disillusioned with the subject. They see
that many of the fundamental questions about economic society are
either dismissed or else cannot be handled by the so -called 'neoclassical/
neo-Keynesian synthesis' that totally dominates the teaching of econo
mics. It also addresses itself to teachers of standard economics courses
who, while being aware of the mounting criticisms against the orthodox
within the profession, nevertheless have had no coherent point-by-point
critique to recommend to students. Criticism of the subject, while never
absent, has been increasing over the last decade or so; indeed it has
spread so virulently that at times it might have surprised the economist
that orthodox economics still manages to survive.
This is no simple malaise as the attack appears to come from several
quarters. On the logical plane, the neoclassical theory has had to cope
with criticisms of its concept of capital from the Cambridge 'post
Keynesians';1 * a retreat was forced to the less useful, because more
general and complex, domain of general-equilibrium theory. More im
portantly, however, economic science has proved incapable of dealing
with the most pressing practical economic issues of present-day cap
italism, in particular the combination of high inflation and high un
employment, symptoms of the crisis through which capitalism is pass
ing in the mid -1970s. Among the various responses which economists
have made, an implicit retreat can be detected as a common thread,
namely that economics has become wedded to politics (they are rather
'living in sin'); economics as the isolated discipline-the science of re
source allocation -has had to be politely ignored as analysts are forced
*For notes, see pp. 207-15.
x Introduction
to consider the political presence of workers and unions and the increas
ing importance of the capitalist state. Other attacks, perhaps less urgent,
have come from a variety of sources associated with the discovery of
ecology -economists have been called on to reconsider such questions
as whether there are any natural limits to the expansion of the eco
nomy ,2 or whether economies of scale are really all that important.3
But the crisis in economics has expressed itself most clearly in the
revival of interest in what is loosely called 'radical' economics. The
failure of conventional economics has led to the renewed development
of Marxist political economy, both in the United Kingdom and else
where. More and more institutions of higher learning are finding them
selves with courses in Marxist economics at all levels, usually as an
optional subject among many. However, the effect of this has been
partly to channel the criticism into reasonably safe streams, leaving the
main courses in economic theory relatively untouched. Thus, despite
the turmoil amongst fully fledged economists, the student is forever
taught the same conventional theory; and the analysis of the criticisms
must usually be kept to a minimum simply because they are confusing.
This book is offered as an aid to understanding the correct criticisms
that have to be made of the orthodoxy, and by so doing hopes to stimu
late interest in taking an alternative approach in the understanding of
the capitalist economy. (We do not wish to deny the relevance of 'gut
feelings' in the consideration of a theory; but criticism based on faulty
groundwork is quite common in our subject, and tends to be counter
productive; we have clearly attempted to avoid it in compiling this
book.) It is intended therefore to be read not primarily as a textbook
in its own right but as a subversive companion to any of the normal
textbooks that are used in mainstream economics courses; it is thus an
intervention at the centre of undergraduate economics teaching. The
levels of the chapters have been designed where possible to be easily
understandable by a first-year undergraduate. (There are inevitably a
few points -notably in Chapter 4 -where the concept being criticised,
for example 'Pareto optimality', might in some cases not be met with
until the second year of the standard economics degree.) At the same
time the book may be used by the student of economics at any stage of
his studies. Indeed its appeal should not be limited to the current gener
ation of undergraduates, and will, we hope, extend to anyone with an
interest in the subject.
While the various contributions have received some critical discus
sion from all the contributors collectively, each chapter remains finally
Introduction xi
the particular contributor's own work. There are therefore clearly some
views expressed iil some chapters which are not held unanimously.
Nevertheless, the coherence of the book derives from the fact that all
criticisms are made from a Marxist perspective. This means that it is
necessary in each case to distinguish Marxist from bourgeois criticisms
of the orthodoxy. But it also raises the problem of making criticisms of
mainstream economics, from a Marxist perspective, without using
Marxist categories of analysis. We have felt that it was best to avoid us
ing the latter as far as possible in the interests of being intelligible to the
reader who has never encountered Marx. Nevertheless, in some cases it
has proved necessary to develop an explicitly Marxist criticism. The an
alysis developed in the last two parts of Chapter 4 serves therefore as a
reference point for other parts of the book.
In referring to our object of criticisms, several names were possible:
'mainstream', 'orthodox', 'conventional' and 'bourgeois' economics are
some. More often than not, the term used is 'orthodox economics', in
preference in particular to the more aggressive 'bourgeois' economics.
The latter term has the advantage of being consistent with a conclusion
of the book, that orthodoxy is an aspect of bourgeois idealogy. It has
the drawbacks that, on the one hand, using the term in the course of
each chapter anticipates its conclusion, and, on the other hand, that it is
a term not too familiar with and possibly objectionable to an Anglo
Saxon readership. The result is a compromise: the possible terms are
used interchangeably, and the only distinction we would wish to pre
serve is that between orthodox economics and non -orthodox economics
which is nevertheless within the bourgeois framework.
The book is structured in four parts, and designed broadly to match
any of the usual textbooks. Part 1 concerns issues in economic science.
Opening with a critique of the notion of 'positive' economics, it pro
ceeds in Chapter 2 with a critique of the fundamental concept of the
atomistic individual in economics, complemented in Chapter 3 by a re
assertion of the central empirical importance of class.
Part 2 (Chapters 4 to 6) covers issues which normally arise under the
specifically microeconomics section of the standard course; while Part
3 (Chapters 7 to 10) concerns macroeconomic questions. We make this
distinction only because that is normally what is done, but the line of
demarcation is nowadays becoming increasingly blurred. A few words
are particularly necessary about Chapters 6 and 7, both concerned with
distribution. The difference is that Chapter 6 is chiefly concerned to
criticise the neoclassical theory of wage differentials; while Chapter 7,
