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The Making of a Post-Keynesian Economist: Cambridge Harvest The Making of a Post-Keynesian Economist: Cambridge Harvest 9780230_284692_01_prex.indd i 12/23/2011 4:54:18 PM 9780230_284692_01_prex.indd ii 12/23/2011 4:54:18 PM The Making of a Post-Keynesian Economist: Cambridge Harvest Selected Essays of G. C. Harcourt G. C. Harcourt Emeritus Reader in the History of Economic Theory, University of Cambridge; Emeritus Fellow, Jesus College, Cambridge; Professor Emeritus, University of Adelaide; Visting Professorial Fellow, University of New South Wales 9780230_284692_01_prex.indd iii 12/23/2011 4:54:18 PM © G. C. Harcourt 2012 Co-authors © Stephanie Blankenburg, Avi J. Cohen, John Grieve Smith, Mehdi Monadjemi 2012 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2012 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN: 978–0–230–28469–2 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Harcourt, Geoffrey Colin. The making of a post-Keynesian economist : Cambridge harvest / G. C. Harcourt. p. cm. “Volume 2.” Includes index. Summary: “The Making of a Post-Keynesian Economist: Cambridge Harvest gathers up the threads of the last decade of the author’s 28 years in Cambridge. The essays include autobiography, theory, review articles, surveys, policy, intellectual biographies and tributes, and general essays” – Provided by publisher. ISBN 978–0–230–28469–2 (hardback) 1. Harcourt, Geoffrey Colin. 2. Economists – Great Britain. 3. Keynesian economics. 4. Economics. I. Title. HB103.H26A3 2012 330.1596092—dc23 2011026910 [B] 10 9 8 7 6 5 4 3 2 1 21 20 19 18 17 16 15 14 13 12 Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne 9780230_284692_01_prex.indd iv 12/23/2011 4:54:18 PM Contents List of Figures viii Acknowledgements ix Introduction: The Making of a Post-Keynesian Economist: Cambridge Harvest 1 Part I Autobiographical Essay 1 ‘Horses for Courses’: The Making of a Post-Keynesian Economist (1999) 11 Part II Theoretical Essays 2 The Debates on the Representative Firm and Increasing Returns: Then and Now (2007) 55 with Stephanie Blankenburg 3 Paul Samuelson on Karl Marx: Were the Sacrificed Games of Tennis Worth It? (2006) 84 4 Capital-Reversing and Reswitching (2009) 99 5 Whatever Happened to the Cambridge Capital Theory Controversies? (2003) 112 with Avi J. Cohen 6 The Relevance of the Cambridge–Cambridge Controversies in Capital Theory for Econometric Practice (2007) 131 7 The Harrod Model of Growth and Some Early Reactions to It (2006) 152 8 On Mark Perlman and Joseph Schumpeter: Their Respective Approaches to Evolutionary Economics and the History of Economic Theory (2004) 158 v 9780230_284692_01_prex.indd v 12/23/2011 4:54:19 PM vi Contents Part III Review Articles 9 Monsters and Morals: Reviewing David Jenkins, Markets Whys and Human Wherefores. Thinking again about Markets, Politics and People, 2000 (2002) 167 10 On Paul Krugman on Maynard Keynes’s General Theory (2008) 171 Part IV Surveys 11 Joan Robinson and Her Circle (2005) 183 12 The Cambridge Economic Tradition (2003) 201 Part V Policy 13 New Labour and Constitutional Reform: Why not Introduce Compulsory Voting in all Elections? (2000) 211 14 The Economic Policies of Gordon Brown and the Treasury: Stability for What? (2001) 215 with John Grieve Smith 15 Chickens Coming Home to Roast (2003) 222 Part VI Intellectual Biographies and Tributes 16 The Vital Contributions of John Cornwall to Economic Theory and Policy: A Tribute from Two Admiring Friends on the Occasion of His 70th Birthday (1999) 229 with Mehdi Monadjemi 17 Wilfred Edward Graham Salter, 27 March 1929– 10 November 1963 (2007) 244 18 Peter Karmel: A Tribute (2009) 248 19 John Richard Wells, 1947–1999 (1999) 253 20 Second Address at the Memorial Gathering for Alister Sutherland, Trinity College, 30 October 2004 (2004) 256 9780230_284692_01_prex.indd vi 12/23/2011 4:54:19 PM Contents vii Part VII General Essays 21 ‘Despised and Rejected’ (1995) 261 22 Speech to Commerce Graduates at the University of Melbourne (2003) 266 Index 269 9780230_284692_01_prex.indd vii 12/23/2011 4:54:19 PM Figures 4.1 Joan Robinson’s pseudo production function 104 4.2 Samuelson’s straight line w-r relationships with ‘envelope’ and capital values 106 4.3 Capital-reversing and reswitching with capital values 107 4.4 Real capital-reversing and reswitching 108 4.5 ‘Dip’ in standard of living 108 5.1 Samuelson’s (1966) example of Wicksell Effects in a simple Austrian model 116 5.2 Demand for capital (per unit of labour) in Samuelson’s (1966) example 117 6.1 Short-period utilisation possibilities doubling up for long-period accumulation possibilities 133 6.2 Salter’s ‘best-practice’ iso-quant, assuming constant returns to scale 134 16.1 The market for residential mortgage and non-housing funds 239 viii 9780230_284692_01_prex.indd viii 12/23/2011 4:54:19 PM Acknowledgements First, I would like to acknowledge the co-authors of some of the essays in these volumes: Stephanie Blankenburg, Avi Cohen, John Grieve Smith, Prue Kerr, Mehdi Monadjemi, Peter Nolan, Ajit Singh, Sean Turnell and Catherine Walston. One of the real pluses of the community of scholars is that co-authors are also such close and supportive friends. I am a very lucky person. Second, I am most grateful to Janet Nurse, Jane Starnes and Grace Setiawan for being such wonderful, cheerful and uncomplaining typ- ists, and to Ha (Viet Ha Nguyen) for handling so expertly my e-mails, and for research assistance. The author and publishers wish to acknowledge with thanks the fol- lowing for permission to reproduce copyright material: Edward Elgar Publishing Ltd, Cheltenham, Glos. For permission to reprint Geoffrey Harcourt (1999), ‘ “Horses for Courses”: The Making of a Post-Keynesian Economist’, in Arnold Heertje (ed.), The Makers of Modern Economics, Volume IV, Cheltenham, UK and Northampton, MA: Edward Elgar Publishing, pp. 32–69 and Geoffrey Harcourt (2007), ‘The Debates on the Representative Firm and Increasing Returns: Then and Now’ In Philip Arestis, Michelle Baddelely and John S. L. McCombie (eds), Economic Growth, New Directions in Theory and Policy, Cheltenham, UK and Northampton, MA: Edward Elgar Publishing, pp. 44–64. Oxford University Press for permission to reprint ‘Paul Samuelson on Karl Marx: Were the Sacrificed Games of Tennis Worth It?’ in Michael Szenberg, Lall Ramratten and Aron A. Gottesman (eds), Samuelsonian Economics and the Twenty-First Century, New York: Oxford University Press, 2006, pp. 127–41. Edward Elgar Publishing Ltd, Cheltenham, Glos for permission to reprint Geoffrey Harcourt (2010), ‘Capital Reversing and Reswitching’, chap- ter 24 in Mark Blaug and Peter Lloyd (eds), Famous Figures and Diagrams in Economics, Cheltenham, UK and Northampton, MA: Edward Elgar Publishing, pp. 191–98. The American Economic Association for permission to reprint ‘Whatever Happened to the Cambridge Capital Theory Controversies?’ Journal of Economic Perspectives, vol. 17, no. 1, Winter 2003, pp. 199–214. ix 9780230_284692_01_prex.indd ix 12/23/2011 4:54:19 PM x Acknowledgements Edward Elgar publishing Ltd, Cheltenham, Glos. for permission to reprint Geoffrey Harcourt (2007), ‘The Relevance of the Cambridge– Cambridge Controversies in Capital Theory for Econometric Practice’, in Philip Arestis, Michelle Baddeley and John S. L. McCombie (eds), Economic Growth. New Directions in Theory and Policy, Cheltenham, UK and Northampton, MA: Edward Elgar Publishing, pp. 17–35 and Geoffrey Harcourt (2006), ‘The Harrod Model of Growth and Some Early Reactions to It’ in D. A. Clark (ed.), The Elgar Companion to Development Studies, Cheltenham, UK and Northampton, MA: Edward Elgar Publishing, pp. 219–23. Springer for permission to reprint ‘On Mark Perlman and Joseph Schumpeter: Their Respective Approaches to Evolutionary Economics and the History of Economic Theory’, Journal of Evolutionary Economics, vol. 14, 2004, pp. 127–30. The editor of Soundings for permission to reprint ‘Monsters and Morals: Reviewing David Jenkins, Markets Whys and Human Wherefores: Thinking again about Markets, Politics and People’ Soundings, 2003. The editor of the History of Economics Review for permission to reprint ‘On Paul Krugman on Maynard Keynes’ General Theory’, History of Economics Review, No. 47, Winter 2008, pp. 125–31. The editor of The History of Economic Ideas for permission to reprint ‘Joan Robinson and Her Circle’, History of Economic Ideas, vol. 9, 2001/2, pp. 59–71. Edward Elgar Publishing Ltd, Cheltenham, Glos. For permission to reprint Geoffrey Harcourt (2003), ‘The Cambridge Economic Tradition’, in J.
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