i Classical Economics Today ii ANTHEM OTHER CANON ECONOMICS The Anthem Other Canon Economics series is a collaboration between Anthem Press and The Other Canon Foundation. The Other Canon— also described as “reality economics”— studies the economy as a real object rather than as the behavior of a model economy based on core axioms, assumptions and techniques. The series includes both classical and contemporary works in this tradition, spanning evolutionary, institutional and post- Keynesian economics, the history of economic thought and economic policy, economic sociology and technology governance, and works on the theory of uneven development and in the tradition of the German historical school. Series Editors Erik S. Reinert— Chairman, The Other Canon Foundation, Norway and Tallinn University of Technology, Estonia Rainer Kattel— Tallinn University of Technology, Estonia Wolfgang Drechsler— Tallinn University of Technology, Estonia Editorial Board Ha- Joon Chang— University of Cambridge, UK Mario Cimoli— UN- ECLAC, Chile Jayati Ghosh— Jawaharlal Nehru University, India Steven Kaplan— Cornell University, USA, and University of Versailles, France Jan Kregel—Levy Economics Institute of Bard College, USA, and Tallinn University of Technology, Estonia Bengt- Åke Lundvall— Aalborg University, Denmark Richard Nelson— Columbia University, USA Keith Nurse— University of the West Indies, Barbados Patrick O’Brien— London School of Economics and Political Science (LSE), UK Carlota Perez—London School of Economics, Technological University of Tallinn, Estonia; Research Affiliate, and SPRU, Science and Technology Policy Research, School of Business, Management and Economics, University of Sussex, UK Alessandro Roncaglia— Sapienza University of Rome, Italy Jomo Kwame Sundaram— Tun Hussein Onn Chair in International Studies, Institute of Strategic and International Studies Malaysia iii Classical Economics Today Essays in Honor of Alessandro Roncaglia Edited by Marcella Corsi, Jan Kregel and Carlo D’Ippoliti iv Anthem Press An imprint of Wimbledon Publishing Company www.anthempress.com This edition first published in UK and USA 2018 by ANTHEM PRESS 75– 76 Blackfriars Road, London SE1 8HA, UK or PO Box 9779, London SW19 7ZG, UK and 244 Madison Ave #116, New York, NY 10016, USA © 2018 Marcella Corsi, Jan Kregel and Carlo D’Ippoliti editorial matter and selection; individual chapters © individual contributors The moral right of the authors has been asserted. All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book. British Library Cataloguing- in- Publication Data A catalogue record for this book is available from the British Library. ISBN- 13: 978- 1- 78308- 750- 1 (Hbk) ISBN- 10: 1- 78308- 750- 1 (Hbk) This title is also available as an e- book. v CONTENTS List of Illustrations vii Preface ix Acknowledgments xi Chapter One The Reconstruction of an Alternative Economic Thought: Some Premises 1 Salvatore Biasco Chapter Two Reflections on Unity and Diversity, the Market and Economic Policy 7 Jan Kregel Chapter Three Ending Laissez- Faire Finance 19 Mario Tonveronachi Chapter Four Democracy in Crisis: So What’s New? 33 Michele Salvati Chapter Five The Democracy of Ideas: J. S. Mill, Liberalism and the Economic Debate 45 Marcella Corsi and Carlo D’Ippoliti Chapter Six Turgot and the Division of Labor 61 Peter Groenewegen Chapter Seven Agricultural Surplus and the Means of Production 73 Gianni Vaggi Chapter Eight The Role of Sraffa Prices in Post- Keynesian Pricing Theory 89 Geoffrey Harcourt Chapter Nine Classical Underconsumption Theories Reassessed 97 Cosimo Perrotta Chapter Ten On the “Photograph” Interpretation of Piero Sraffa’s Production Equations: A View from the Sraffa Archive 113 Heinz D. Kurz and Neri Salvadori Chapter Eleven On the Earliest Formulations of Sraffa’s Equations 129 Nerio Naldi vi vi CLASSICAL ECONOMICS Today Chapter Twelve Normal and Degenerate Solutions of the Walras- Morishima Model 153 Bertram Schefold Chapter Thirteen Trading in the “Devil’s Metal”: Keynes’s Speculation and Investment in Tin (1921– 46) 167 Maria Cristina Marcuzzo and Annalisa Rosselli Chapter Fourteen The Oil Question, the Prices of Production and a Metaphor 189 Sergio Parrinello Chapter Fifteen Europe and Italy: Expansionary Austerity and Expansionary Precariousness 201 Davide Antonioli and Paolo Pini Chapter Sixteen Adam Smith and the Neophysiocrats: War of Ideas in Spain (1800– 4) 223 Alfonso Sánchez Hormigo Bibliography 243 List of Contributors 253 Index 257 vii ILLUSTRATIONS Figures 13.1 Tin shares (£) in Keynes’s portfolio 176 13.2 Tin prices (£ per ton) and tin shares prices (£ per unit) 179 13.3 Interlocking directorships and mining agencies in tin industry 184 15.1a Annual change in labor income share 2000– 7 204 15.1b Annual change in labor income share 2008– 15 205 15.2 Unit labor cost (growth rates) 206 15.3a Unit labor cost index (Canada, France, Germany, Japan, United States, United Kingdom) 207 15.3b Unit labor cost index (Italy, Greece, Ireland, Spain) 207 15.3c Unit labor cost index (Czech Republic, Estonia, Finland, Hungary, Poland, Slovak Republic, Slovenia) 208 15.3d Unit labor cost index (Austria, Belgium, Denmark, Netherlands, Sweden, Luxembourg) 208 15.3e Unit labor cost index (Australia, Iceland, Korea, Switzerland, Norway) 209 Tables 13.1 London standard tin (£ per ton), monthly average price 168 13.2 LME tin turnovers (000 tons) 169 13.3 Number of operations in tin futures and options made by Keynes 171 13.4 Keynes’s total profits and losses in tin derivatives (£) 173 13.5 Keynes’s holdings of tin shares 175 13.6 Dividends distributed by some tin companies in Malaya from their foundation to 1951 185 viii ix PREFACE This collection of essays provides a tribute to Alessandro Roncaglia, one of the most important representatives of what has come to be a threatened species: the classical polit- ical economist. His work has provided insight into the joint journey of economic theory with eco- nomic history and its application to economic policy related to both the past and the present problems of an evolving economy. While economic history serves the classical economist as insight into the diverse the- oretical development underpinning of economic policy debates, the focus is always on the objective of understanding the economy in which he/she lives and works. The clas- sical economist is thus bound to think that economic theory is “historically conditioned” (Sylos Labini, 2005): as social systems evolve, the appropriate theory to represent a cer- tain phenomenon must evolve too. Therefore, plurality in methods, including history of economic thought, must be a deliberate choice. As Salvatore Biasco stresses in his contribution to this volume, At the base of a nonmainstream way of looking at the economy, from a descriptive and nor- mative perspective, cannot be but social complexity, uncertainty and innovative dynamics. Through these lenses, the aggregate behaviour of the economy is studied as determined by constantly evolving endogenous events, which are fed by a number of driving forces: unstable and potentially explosive relationships; nondeterministic developments; a financial system closely interconnected to the real economy but also able to acquire an autonomous dimen- sion; and a social dynamic that changes in parallel to the whole process and that at the same time affects it. These contributions in honor of Roncaglia’s work follow in this tradition, dealing with themes that have characterized his work or that represent expressions of his personal- ity, his interests and method. Geoffrey Harcourt, Heinz Kurz, Nerio Naldi and Neri Salvadori all deal with one of Roncaglia’s major contributions to classical economics, that is, the presentation, interpretation and extension of Piero Sraffa’s work on the clas- sical theory of prices. Marcella Corsi, Carlo D’Ippoliti, Peter Groenewegen, Cosimo Perrotta, Alfonso Sánchez and Gianni Vaggi all provide essays reflecting the great leg- acy of classical economists and the interpretation of their work, a permanent source of inspiration for Roncaglia. Jan Kregel, Michele Salvati and Mario Tonveronachi provide an integration of the work of the classics with the more modern contributions to this tradition in the work of John Maynard Keynes, Hyman Minsky and Josef Steindl, econ- omists who also provided inspiration for Roncaglia’s work on economic policy. Other x x CLASSICAL ECONOMICS Today contributions deal with topics of great relevance for Roncaglia (e.g., the oil market) while the macroeconomic picture of the impact of austerity measures given by Davide Antonioli and Paolo Pini is much in line with Roncaglia’s view of economists not “as ser- vants or as princes” but as citizens, socially and politically engaged, as any citizen should be (Roncaglia, 2017). It is our hope that these essays will incite an interest in Alessandro Roncaglia’s life work and a revival of interest in classical political economy. Marcella Corsi, Jan Kregel and Carlo D’Ippoliti References Roncaglia, A. 2017. “The Economist as an Expert: A Prince, a Servant or a Citizen?” In Experts on Trial: A Symposium. New York: Institute for New Economic Thinking (INET). Available at: https:// www.ineteconomics.org/