Regarding the Past Proceedings of the 20th Conference of the History of Economic Thought Society of Australia University of Queensland 11-13 July 2007 Edited by Peter E. Earl and Bruce Littleboy This book comprises complete texts and/or abstracts of refereed papers presented at the 20th Conference of the History of Economic Thought Society of Australia held at The Women’s College, University of Queensland, 11-13 July 2007. © Selection and editorial material Peter E. Earl and Bruce Littleboy; individual chapters, the respective contributors Published by The School of Economics University of Queensland St Lucia, Brisbane QLD 4072 Australia ISBN: 9781 8649 98 979 (pbk); 9781 8649 98 955 (CD-ROM) All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise, without the prior permission of the publisher. Printed in Australia by the University of Queensland Printery Contents List of Contributors v Introduction Peter E. Earl and Bruce Littleboy vii 1 History for Economics: Learning from the Past 1 Alexander Dow and Sheila Dow 2 Theories of Economic Development in the Scottish Enlightenment 9 Alexander Dow and Sheila Dow 3 Ethical Foundations of Adam Smith’s Political Economy 25 James E. Alvey 4 Smith and the Materialist Theory of History 44 Jeremy Shearmur 5 Post-Keynesianism and the Possibility of a Post-Keynesian Politics 62 Geoff Dow 6 George Stigler’s Rhetoric – Dreams of Martin Luther 78 Craig Freedman 7 Why is the Austrian School’s Methodology Problematical? 103 Troy P. Lynch 8 The Entrepreneur as a Leader: Frederick Lavington on Modern Business 128 Society Atsushi Komine 9 The Elastic Margin: Central Banking Theory and Practice in Colonial 143 Burma Sean Turnell 10 John Malcolm Ludlow, Victorian Christian Socialism and the Friendly 156 Society Act of 1875 David J. Gilchrist and Gregory C.G. Moore 11 Henry George in Queensland 187 John Pullen iii Regarding the Past: HETSA 2007 12 Crank or Proto-Monetarist? — J.K. Gifford and the Cost-Push Fallacy 200 J.E. King and Alex Millmow 13 History of Economic Thought at the University of Western Australia: 216 A Comparison of 1953 with 2003 Michael McLure 14 Is that a Spintria in your Pocket, or Are You Just Pleased to See Me? 225 Geoffrey Fishburn Abstracts of Papers Presented at the Conference but not Included in this Volume 237 iv List of Contributors James E. Alvey is a Senior Lecturer in Economics, Department of Economics and Finance, Massey University, Private Bag 11 222, Palmerston North, New Zealand, e-mail: [email protected]. Alexander Dow recently retired from his position as Professor of the Scottish Economy, Glasgow Caledonian Business Schoo,l Glasgow Caledonian University, Cowcaddens Road, Glasgow, G4 0BA, Scotland, UK, e-mail: [email protected]. Geoff Dow is an Associate Professor/Reader in Political Economy and Political Science in the School of Political Science and International Studies, University of Queensland, St Lucia, Brisbane, QLD 4072, Australia, email: [email protected]. Sheila Dow is Director of SCEME (Stirling Centre for Economic Methodology) and Professor of Economics at the University of Stirling, Stirling, FK9 4LA, Scotland, UK, e-mail: [email protected]. Peter E. Earl is an Associate Professor in the School of Economics, University of Queensland, St Lucia, Brisbane, QLD 4072, Australia, e-mail: [email protected]. Geoffrey Fishburn is a Visiting Fellow at the School of Social Sciences and International Studies, The University of New South Wales, Sydney 2052, [email protected] Craig Freedman is an Associate Professor of Economics at Macquarie University, North Ryde, Sydney, NSW 2109, Australia, e-mail: [email protected]. David J. Gilchrist is Associate Dean and Senior Lecturer in Accounting and Finance at the School of Business, University of Notre Dame, 19 Mouat Street, PO Box 1225, Fremantle, WA 6959, Australia, e-mail; [email protected]. John King is a Professor of Economics in the Department of Economics and Finance, La Trobe University, VIC 3086, Australia, e-mail: [email protected]. Atsushi Komine is an Associate Professor of Economics at Ryukoku University, 67 Fushimi-ku, Kyoto, 612-8577, Japan, e-mail: [email protected]. Bruce Littleboy is a Senior Lecturer in the School of Economics, University of Queensland, St Lucia, Brisbane, QLD 4072, Australia, e-mail: [email protected]. v Regarding the Past: HETSA 2007 Troy P Lynch is a PhD Candidate in the Department of Economics and Finance, La Trobe University, Bundoora, VIC 3086, Australia, e-mail: [email protected]. Michael McLure is a Senior Lecturer in Economics at the UWA Business School, University of Western Australia, 35 Stirling Highway, Crawley, WA 6009, Australia, e-mail: [email protected]. Alex Millmow is a Senior Lecturer in Economics, School of Business, University of Ballarat, VIC 3353, Australia, e-mail: [email protected]. Gregory C.G. Moore is an Associate Professor of Economics, School of Business, University of Notre Dame, 19 Mouat Street, PO Box 1225, Fremantle, WA 6959, Australia, e-mail; [email protected]. John Pullen is an Honorary Fellow, and was previously Associate Professor of Economics, in the School of Economics, University of New England, Armidale, New South Wales 2351, Australia, e-mail: [email protected]. Jeremy Shearmur is a Reader in Philosophy, School of Humanities, Australian National University, Canberra, ACT 0200, Australia, e-mail: [email protected]. Sean Turnell is a Senior Lecturer in Economics at Macquarie University, North Ryde, Sydney, NSW 2109, Australia, e-mail: [email protected]. vi Introduction Peter E. Earl and Bruce Littleboy The title of the Conference from which these papers are drawn indicates the spirit in which the papers were presented. ‘Regarding the Past’ expresses how historians of economic thought value both the ideas expressed in earlier times and the policies introduced to solve the problems that were faced then. Sometimes we have already learned from our forbears, but sometimes we remain ignorant to our cost. There is a stock of inherited wisdom that merits exploration and contemporary reflection. With evolutionary twists and shifts in context, theoretical and policy issues of the past recur. Many modern economists are too busy or too unaware to pause and to look back. There are many possible ways to organize the proceedings of this kind of conference. On this occasion, with Alexander Dow and Sheila Dow as keynote speakers (on their first visit to Australia) and joint authors of a pair of related papers, it seemed natural to begin with their two contributions. Given that their second paper addresses theories of economic development in the Scottish Enlightenment, it was appropriate to follow with papers presented by Jim Alvey and Jeremy Shearmur on aspects of Adam Smith’s work. There was a fairly obvious segue to the sharply contrasting papers by Geoff Dow (no relation of the keynote speakers) and Craig Freedman on the fate of economic policy after Keynes. Beyond there, the sequence was less obvious, though it was pretty clear that the R-rated chapter by Geoffrey Fishburn, with its graphic illustrations, had to be hidden away as the tailpiece of the book to reduce the chances of it being seen by impressionable undergraduates studying the history of economic thought. Considered broadly, however, these papers fall into two main groups. One looks at institutions, and the other at individual writers. It soon becomes apparent that these are two aspects of one over-arching idea. Scientific insight into economic well- being proceeds from applying theories to make the existing system work better or altering the system itself. Economists therefore need both a tool-kit and a portfolio of designs. Both are technologies, ideas and methods that allow us to draw more valuable output from our available resources. We are both tool-users and architects. Some individuals have provided new tools and others new designs; the great thinkers did both. As the structure of the economy changes, so do the theories devised to explain its workings. It helps first to have some sense of structure that goes beyond simply the monopoly/perfect competition spectrum of the structure-conduct-performance approach to industrial organization that dominated competition policy from the 1930s onwards. Had economists paid more attention to the work of the neglected Marshallian, Frederick Lavington, the subject of Atsushi Komine’s paper, industrial economists might have developed a sense of the significance of the vertical and horizontal linkages in the fabric of economic organization half a century sooner than vii Regarding the Past: HETSA 2007 they did. Lavington seems to have been way ahead of his time in recognizing the growing significance of the multi-product firm and complexity of supply chains. But there are also structural features that may prove timeless. The emergence of money-using economies remains contested terrain. Some are convinced that money emerges spontaneously to facilitate market exchange prior to the existence of governments, while others are equally adamant that money (which makes orderly market exchange possible) is a creation of governments. Geoffrey Fishburn returns to pre-Christian Rome to look at the use of money-like brothel tokens, whose precise role is hotly contested. En route to Fishburn’s paper, reader will encounter two other case studies that bring the history of economic thought and economic history together in the course of analysing the processes shaping the development of different kinds of economic institutions. One, by Michael Gilchrist and Greg Moore, deals with the development of accounting regulations in the context of the 1871 Friendly Society Act, bringing out the way that the institutional system affects how individuals and policy-makers frame their decisions; the other, Sean Turnell’s examination of the development of central banking in Burma, is a lesson in how human agents can design the structure within which they operate to the extent that circumstances permit.