Articles I Michio Morishima and John R. Hicks: the Two Superstars of Economics There are the two economics superstars The Hicks-Morishima who have greatly influenced my academic ca- Approach Reconsidered reer. They are Michio Morishima, Osaka University and London School of Economics, and John R. Hicks, London School of Eco- Another Look at the Interdependence nomics and Oxford University. To tell the of Several Markets truth, both of them already passed away. Aca- demically, however, they seem to be still alive: indeed, their outstanding accomplishments will never be forgotten in economic science. The main aim of this paper is to reconsider and shed new light on a topic named the Hicks- Yasuhiro Sakai Morishima approach to the interdependence Shiga University / Professor Emeritus of several markets. Although such approach has been rather neglected for some time, I am sure that even now, it is worthy of serious re- consideration, presumably giving a new guide toward an integrated grand theory of social sci- ence in the twenty-first century. No doubt, this should be the direction of future research to be strongly desired by both Morishima and Hicks in their late years. When I was a graduate student at the Uni- versity of Rochester, I was fortunate to meet with Mr. Masayoshi Hirota, a "very serious man with highly samurai spirits," who so fondly argued night and day with me about life phi- losophy, world matters, and of course 072 THE HIKONE RONSO Summer / July 2020 / No.424 economic science. According to Hirota, we completion of my doctoral dissertation (1972) should not have any fears about the seemingly Axiomatic Foundations of Consumption and high levels of American universities. Osaka Production Theories submitted to The Universi- University seemed to be at least on a par with, ty of Rochester, with my main thesis advisor and even better than, University of Rochester. being Professor Lionel W. McKenzie. After Hirota proposed me to do a joint work on gen- finishing my Ph. D. work and publishing many eral equilibrium theory with the final aim of theoretical papers in international journals, I publishing academic papers in professional could spend a happy life at Pittsburgh, in journals of high prestige. We worked very hard which Professor Asatoshi Maeshiro and his by utilizing every space of the Rochester cam- wife Kazuko kindly helped me in many ways. pus, namely the university library, class rooms, All those nice things happened to my rather student dining rooms, and the graduate stu- long American life in the period 1968-1976.1) dent center. After some time of our joint I can vividly recall that at the very end of research, there came our final product, Hirota 1973, my important meeting with Michio Mor- and Sakai (1969), which aimed to open a new ishima took place in New York City. More horizon in theoretical studies in production exactly, he was invited to deliver a special lec- theory. Although our joint paper had a hum- ture at Econometric Society North American ble yet attractive title "On Substitution and Meeting at New York Hilton Hotel, with Pro- Scale Effects in Production Theory," it was fessor Lawrence W. Klein of Pennsylvania quite unfortunate that because of some minor serving as a respectable chairman. The audi- technical reasons, it missed a publication op- ence filled the hall to overflowing. Professor portunity. Akira Takayama, a noted international econo- In hindsight, I am sure that my joint re- mist, sat in the very front seat, taking so many search experience with Mr. Hirota, or "Osaka pictures. All the people seemed to have a very samurai scholar," has constantly given us a great happy time by enjoying the presence of the stimulus for the execution of our research proj- memorable trio, namely Morishima, Klein and ect on economic theory. Indeed, having been Takayama. Then, Morishima stood up and de- encouraged a great deal by the Hirota-Sakai livered a historical speech: "Kark Marx is so cooperation, I myself continued to learn many great! I have no doubt that he is academically advanced mathematical tools which were ap- still alive after one hundred years of his death!" plicable not only to production theory, but In an instant, the whole audience stood up and also to consumption theory as well. The final applauded his powerful speech.2) result of my continuous research effort was the 1) In September 1972, I submitted my Ph.D. disserta- Morishima of Osaka University and Lawrence Klein of tion to the University of Rochester, with Professors Lio- the University of Pennsylvania. nel W. McKenzie and James Friedman being thesis ad- 2) More exactly speaking, Professor Morishima's invited visers. As we seen in Sakai (1972), the thesis consisted of lecture was titled the two parts. The first part carefully discussed axiom- Marx in the Light of Modern Economic . It was nothing but a Walras memorial lecture at atic approaches to consumption theory, the second part Theory the North American Meeting of Econometric Society. mathematical foundations of production theory. I Although it was first read at Hilton Hotel, New York, in would like to point out that Chapter 3 in Part 2, titled 28 December 1973, it was later published as a leading ar- , was An Axiomatic Approach to Input Demand Theory ticle of (see Morishima, 1974). It was real- based on my joint work with Dr. Masayoshi Hirota with Econometrica ly lucky that I myself was right there as an attentive au- further refinements. Very fortunately, a still further re- dience. This constitutes one of never-to-be-forgotten vision of this Chapter was published in International memories in my long academic life. Economic Review, which was first published by Michio The Hicks-Morishima Approach Reconsidered Yasuhiro Sakai 073 In what follows, I would like to just pick mind was how Hicks' market laws aforemen- up Hicks' great book Value and Capital (1939, tioned would had to change by the 1946), carefully discussing how closely Hicks introduction of distance and space. In my and Morishima have been connected by this student days, I was literally swamped with masterpiece. A famous writer Naoki Komuro such a very difficult problem. (2004) once remarked: (Morishima, 1999) During the Second World War, Morishima It was quite fair to say that in those days, served as a naval cadet whose duty wasto Morishima stood high and alone in the Japa- break a secret code of the enemy. When he nese academia: in fact, the research level of left home toward a battlefront, he carried an Morishima went far beyond the one of any or- important book with himself. That book dinary Japanese economist. He was a man of was nothing but a newly published text Va l - courage and determination. The major aim of ue and Capital by Hicks, then a rising star this paper is to reconsider Hicks' law of market economist of the United Kingdom, one of exchange in a new modern fashion, thus fur- Japan's hostile countries. Nevertheless, Mor- ther extending the Hicks-Morishima approach ishima, who faithfully conducted his secret with my unique flavor attached to it. mission of code breaking, dared to exert all I have met with Hicks several times. My his energy to fully understand the Hicks most memorable moment took place when I new book, and safely could return home attended the International Conference in (Komuro, 2004) Honor of J.R. Hicks, Bologna, Italy, in 1991. It gave me a great and unforgettable memory. Later in his life, Morishima (1999) got a The outline of this paper is as follows. The sudden surge of nostalgia for his youth: second section will deal with s simple model of general equilibrium — the excess demand ap- When I [Morishima] was a Kyoto Universi- proach a la Hicks and Morishima. The third ty student just after the last war, I was fondly section will discuss many non-normal cases. reading Value and Capital by J.R. Hicks. The issues of instability, multiple equilibrium He discovered the following law of critical and non-existence will be successively taken up. importance: "Let the excess demand for one In the fourth section, we will turn to the prob- good increase. Then, not only will its price lem of comparative statics. The impact of will rise, but also the prices of other substi- parameter changes on equilibrium values will tutive goods will rise, whereas the prices of carefully be investigated. Final remarks will be complementary goods will decline." I no- made in the fifth section, with reference to ticed, however, that he carelessly neglected Morishima's life-long dream of a grand synthet- the undeniable truth that any economic ac- ic approach to a so-called "symphonic tivity including market trading had to economics." operate at some distance in a space. My question which would naturally arise in my 074 THE HIKONE RONSO Summer / July 2020 / No.424 II A Simple Model of I suppose that Morishima would apparent- General Equilibrium: ly agree with those reasons. In order for the The Excess Function excess demand approach to become very famil- Approach a la iar to the academic circle, we would have to do Hicks and Morishima a sort of extraordinary work for publicity and sales effort. Morishima had special courage to Saying is one thing. But doing is another. write a new style of economics text (1984) The Now let us discuss the working and perfor- Economics of Industrial Society, in which he ad- mance of a simple model of general opted the Hicks-Morishima approach again. equilibrium. To this end, we will adopt the ex- Unfortunately, history repeated itself : it again cess demand approach a la Hicks and received a rather dull response.