Econ 5503

Econ 5503 Advanced Heterodox Economics

Fall 2013

Required Texts:

  • R. Miller and P. Blair, Input-Output Analysis
  • M. S. Morgan, The World in the Model
  • L. L. Pasinetti, Lectures on the Theory of Production (on Blackboard)
  • F. S. Lee (ed.), Social Provisioning, Embeddedness, and Modeling the Economy (on Blackboard)
  • P. M. Lichtenstein, An Introduction to Post-Keynesian and Marxian Theories of Value and Price (on Blackboard)

Optional Texts:

  • H. D. Kurz and N. Salvadori, Theory of Production:  A Long Period Analysis
  • L. L. Pasinetti, Keynes and the Cambridge Keynesians
  • P. Sraffa, Production of Commodities by Means of Commodities (on Blackboard)

Support Materials:

  • F. S. Lee, The Simple Mathematics of Linear Production Models (on Blackboard)
  • Web sites to help students build their mathematical skills:
  • The Khan Academy: http://www.khanacademy.org/math/algebra
  • Geogrebra: http://www.geogebra.org/cms/

Assessment:        

  • Take home problem I handed out on September 5, 2013 and returned on September 12, 2013—worth 10% of your final grade
  • Take home problem II handed out on October 24, 2013 and returned on October 31, 2013—worth 10% of your final grade
  • Take home problem III handed out on November 21, 2013 and returned on December 3, 2013—worth 10% of your final grade
  • In-class Exam I on September 26, 2013—worth 20% of your final grade
  • In-class exam II on November 7, 2013—worth 20% of your final grade
  • Final Exam, December 11, 2013, 3.30-5.30pm—worth 30% of your final grade

Announcement:

  • There will be no class on September 24, 2013.  Attendance at the Missouri Valley Economics Association conference, October 17-19, 2013—additional information to follow.

Problem Set:  It will be distributed and placed on Blackboard.

Course Description:

The course examines various theoretical approaches and topics, both historically and currently, that constitute heterodox economics.  In particular, the course deals in depth with the mathematical and economic properties of heterodox production and price models.  After reviewing the mathematics of linear production-price models, the module will examine Leontief, Sraffian, and other heterodox price and production models.

Link for essential information regarding university policies, rules, and resourceshttp://cas.umkc.edu/student-resources.asp

Please refer to the following web page and the linked resources for critical information regarding course policies and resources. You are expected to abide by all the rules and regulations regarding student conduct referenced in these pages.  http://cas.umkc.edu/CPR/

 

COURSE OUTLINE

I. Introduction:  Production as a Circular Process and the Foundation of Heterodox Economics

A.    Linear vs. Circular Circuit of Production

  1. Burchardt, F.  “The Schemata of the Stationary Circuit in Bohm-Bawerk and Marx,” pp. 3-11, the rest of the paper is quite difficult.
  2. Marx, K.  1971.  Capital:  A Critique of Political Economy, vol. II, The Process of Circulation of Production, ed. By F. Engels.  Moscow:  Progress Publishers, chs. 1-3, 20.
  3.  Nurske, R.  1935.  The Schematic Representation of the Structure of Production Review of Economic Studies 2 (June):  232 – 244.
  4. Clark, D.  1984.  “Confronting the Linear Imperialism of the Austrians.”  Eastern Economic Journal 10 (April-June):  107 – 127.

B.   Methodology and Models

  1. Lee, F. S.  2012.  “Critical Realism, Grounded Theory, and Theory Construction in Heterodox Economics.”
  2. Morgan, The World in the Model, ch. 1, 3, 6, 10

C.   Corn Model

  1. Langer, G. F. 1988.  “Corn:  A Classical Landscape.”  Economic Notes 17.1:  5 – 21.
  2. Ricardo, D.  1815.  “An Essay on the Influence of a Low Price of Corn on the Profit of Stock.”  In Pamphlets and Papers, 1815 – 1823, Vol. 4, The Works and Correspondence of David Ricardo, pp. 1 – 42.  Edited by P. Sraffa.  Cambridge:  Cambridge University Press, 1966.

II.  Input-Output Modelling of the Economy

A.   Input-Output Representation of the Economy

  1. Miller and Blair, Input-Output Analysis, ch. 4.1-4.6
  2. K. J. Horowitz and M. A. Planting, Concepts and Methods of the U.S. Input-Output Accounts, http://www.bea.gov/papers/pdf/IOmanual_092906.pdf, chs. 1 – 6, 12.
  3. US input-output tables can be found at http://www.bea.gov.  Also see http://www.bls.gov/home.htm; http://www.census.gov/wholesale/index.html.

B.   The Simple Mathematics of Linear Production and Price Models

  1. Lee, F. S. “The Simple Mathematics of Linear Production Models”.
  2. Pasinetti, Lectures on the Theory of Production, pp. 226 – 276.
  3. Miller and Blair, Input-Output Analysis, Appendix A.
  4. Kurz and Salvadori, Theory of Production, Mathematical appendix
  5. Nikaido, H.  1968.  Convex Structures and Economic Theory.  New York City:  Academic Press, pp. 87 – 108.

C.   Closed and Open Leontief Models

  1. Pasinetti, Lectures, pp. 35 – 70.
  2. Miller and Blair, Input-Output Analysis, chs. 2, 5, 6
  3. Schwartz, J. T.  1961.  Lectures on the Mathematical Method in Analytical Economics.  New York:  Gordon and Breach, chs. 1 – 4.
  4. Rose, W. and Miernyk, W.  1989.  “Input-Output Analysis:  The First Fifty Years.” Economic Systems Research, 1.2:  229-271.
  5.  Kurz, H. D. and Salvadori, N.  2000.  “Classical Roots of Input-Output Analysis: A Short Account of its Long Prehistory.”  Economic Systems Research 12.2:  153 – 179.

D.   Social Accounting Matrices and other Special Topics

  1. Miller and Blair, Input-Output Analysis, chs. 9-11.
  2. Miyazawa, K. and Masegi, S.  1963.  “Interindustry Analysis and the Structure of Income-Distribution.”  Metroeconomica, 15:  89 – 103.

III. Sraffian Production-Price Models

A.  Sraffa’s Production-Price Model

  1. Lichtenstein, Introduction to Post-Keynesian and Marxian Theories of Value and Price, chs. 1-6.
  2. Pasinetti, Keynes and the Cambridge Keynesians, Book II.
  3. Kurz and Salvadori, Theory of Production, chs. 1 and 13.
  4. Kurz, H. D. and Salvadori, N.  2005. “Representing the Production and Circulation of Commodities in Material Terms:  On Sraffa’s Objectivism.”   Review of Political Economy 17.3 (July):  413 – 441.
  5. Sinha, A.  2010.  Theories of Value from Adam Smith to Piero Sraffa. London:  Routrledge, ch. 4: 277-281, 310 – 332.

B.   Production for Subsistence and the Price System

  1. Sraffa, Production of Commodities, pp. 3 – 5.
  2. Pasinetti, Lectures, pp. 71 – 73.
  3. Lichtenstein, Introduction to Post-Keynesian and Marxian Theories of Value and Price, ch. 7.

C.   Production with a Surplus and the Price System

  1. Sraffa, Production of Commodities, pp. 6 – 11.
  2. Pasinetti, Lectures, pp. 71 – 73.
  3. Lichtenstein, Introduction to Post-Keynesian and Marxian Theories of Value and Price, ch. 7.
  4. Kurz and Salvadori, Theory of Production, chs. 3 and 4.
  5. Sinha, Theories of Value from Adam Smith to Piero Sraffa, ch. 4: 281 – 294.

D.   Prices, Wages, and the Rate of Profit:  the relationship between relative prices and the rate of profit

  1. Sraffa, Production of Commodities, pp. 12 – 17.
  2. Pasinetti, Lectures, pp. 74 – 84.
  3. Lichtenstein, Introduction to Post-Keynesian and Marxian Theories of Value and Price, ch. 7.

E.   Prices, Wages, and the Rate of Profit:  the relationship between the wage rate and the rate of profit

  1. Sraffa, Production of Commodities, pp. 34 – 40 and 81 – 87.
  2. Pasinetti, Lectures, pp. 84 – 92 and 151 – 167.
  3. Lichtenstein, Introduction to Post-Keynesian and Marxian Theories of Value and Price, ch. 8.
  4. Kurz and Salvadori, Theory of Production, chs. 3, 4.
  5. Sinha, Theories of Value from Adam Smith to Piero Sraffa, ch. 4: 295 – 297.

F.   The Standard Commodity and the Standard System

  1. Sraffa, Production of Commodities, pp. 18-33.
  2. Pasinetti, Lectures, pp. 104-111.
  3. Lichtenstein, Introduction to Post-Keynesian and Marxian Theories of Value and Price, ch. 9.
  4. Kurz and Salvadori, Theory of Production, ch. 4.

G.   The Rate of Profit and Non-Basic Commodities

  1. Sraffa, Production of Commodities, 90 – 91.
  2. Pasinetti, Lectures, pp. 104 – 111.

 

IV. Alternative Heterodox Production and Price Models

A.    Linear Heterodox Production-Price Model

  1. Pasinetti, L. L.  1981.  “The Rate of Interest and the Distribution of Income in a Pure Labor Economy.”  Journal of Post Keynesian Economics 3 (Winter):  170 – 182.
  2. Harris, D. J.  1974.  “The Price Policy of Firms, the Level of Employment and Distribution of Income in the Short Run.”  Australian Economic Papers 13 (June):  144 – 151.
  3. Asimakopulos, A.  1975.  “A Kaleckian Theory of Income Distribution,” Canadian Journal of Economics 8 (August): 313 – 333.

B.   The Burchardt Production-Price Model

  1. Kalecki, M.  1954.  Theory of Economic Dynamics:  An Essay on Cyclical and Long-Run Changes in Capitalist Economy.  In Collected Works of Michal Kalecki, Vol. 2, Capitalism:  Economic Dynamics, pp. 205 – 348.  Edited by O. Osiatynski.  Oxford:  Clarendon Press.
  2. Kregel, J. A.  1975.  The Reconstruction of Political Economy:  An Introduction to Post-Keynesian Economics.  2nd. ed.  London:  The Macmillan Press, chs. 1 – 8.
  3. Kaldor, N.  1955.  “Alternative Theories of Distribution.”  Review of Economic Studies 23 (March):  83 – 100.
  4. Harcourt, G. C.  1965.  “A Two-Sector Model of the Distribution of Income and the Level of Employment in the Short Run.”  Economic Record 41 (March):  103 – 117.
  5. Tcherneva, P. R.  2012.  “Inflationary and Distributional Effects of Alternative Fiscal Policies:  An Augmented Minskyan-Kaleckian Model.”

C.   The Lowe Production-Price Model

  1. Lowe, A.  1952.  “A Structural Model of Production,” Social Research 19 (June): 135 – 176.
  2. Lowe, A.  1976.  The Path of Economic Growth.  Cambridge:  Cambridge University Press, ch.s. 1-7.
  3. Hagemann, H. and Kurz, H. D.  1998.  Political Economics in Retrospect:  Essays in Memory of Adolph Lowe.  Cheltenham:  Edward Elgar, ch. 6.

D.   Pasinetti and the Modeling of Structural Change

  1. Pasinetti, Keynes and the Cambridge Keynesians, Books I and III.
  2. Pasinetti, L. L.  1981.  Structural Change and Economics Growth:  A theoretical essay on the dynamics of the wealth of nations.  Cambridge:  Cambridge University Press, ch. 1 – 2.
  3. Pasinetti, L. L.  1993.  Structural Economic Dynamics:  A Theory of the Economic Consequences of Human Learning.  Cambridge:  Cambridge University Press, ch. 2.
  4. Pasinetti, L. L.  1988.  “Growing Subsystems, Vertically Hyper-Integrated Sectors and the Labour Theory of Value.”  Cambridge Journal of Economics 12:  125 – 134.
  5. Trigg, A. B. and Lee, F. S.  2005.  “Pasinetti, Keynes and the Multiplier.”  Review of Political Economy 17.1:  29 – 43.

E.    Bortis and Classical-Keynesian Modeling of the Economy

  1. Bortis, H.  2003.  “Keynes and the Classics:  Notes on the Monetary Theory of Production.”  In Modern Theories of Money, 411 – 474.  Edited by L.-P.
  2. Bortis, H.  2012.  “”Shackle’s Years of High Theory 1926-1939 [- 1960] and the Making of Classical-Keynesian Political Economy:  From the Exchange Paradigm to a Monetary Theory of Production”.

 

V. Heterodox Production and Price Models

A.   Modeling the Economy

  1. Miller and Blair, Input-Output Analysis, ch. 11.
  2. Lee, F. S.  1998.  Post Keynesian Price Theory.  Cambridge:  Cambridge  University Press, ch. 12.
  3. Lee, Social Provisioning, Embeddedness, and Modeling the Economy, chs. 1, 8.

B.   Agency, Prices, Output, and Employment

  1. Lee, F. S.  1998.  Post Keynesian Price Theory.  Cambridge:  Cambridge  University Press, ch. 12.

C.   Modeling the Core of the Economy

  1. Lee, F. S. 2012. “Post-Keynesian price theory: from pricing to market governance to the economy as a whole, in G. C. Harcourt and P. Kriesler (eds.) Handbook of Post-Keynesian Economics, Oxford: Oxford University Press.

D. Special Analytical Topics

  1. Chiodi, G.  1992.  “On Sraffa’s Notion of Viability.”  Studi Economica 46:5 – 23.
  2. Chiodi, G.  1998.  “On Non-Self-Replacing States.” Metroeconomica 29.1:  97 – 107.
  3. Chiodi, G.  2010.  “The Means of Subsistence and the Notion of ‘Viability’ in Sraffa’s Surplus Approach.”  In S. Zambelli (ed.) Computable, Constructive and Behavioural Economic Dynamics, 318 – 330.
  4. De Gregori, T. R. 1987, Resources are not: they become: an Institutional
    theory, Journal of Economic Issues, 21, pp. 1241–1263.

VI. Conclusion:  comparing and evaluating the heterodox production and price models

A.   Schema of Production, Circular Production, and Input-Output Heterogeneity

  1. Pasinetti, L. L.  1986.  “Sraffa’s Circular Process and the Concept of Vertical Integration.”  Political Economy:  Studies in the Surplus Approach 2:  3 – 16.
  2. Kurz and Salvadori, Theory of Production, ch. 13.
  3. Gehrke, C. and Kurz, H. D.  2006. “Sraffa on von Bortkiewicz: Reconstructing the classical theory of value and distribution.”   History of Political Economy 38.1:  91 – 149.

B.    Prices, Profits, and Income Distribution

  1. D’Orlando, F.  2007.  “A Methodological Note on Long-Period Positions.” Contributions to Political Economy 26:  17 – 26.
  2. Sinha, Theories of Value from Adam Smith to Piero Sraffa, ch. 4: 321 – 330.
  3. F. S. Lee. 1985.  “Full Cost Prices, Classical Price Theory, and Long Period Method Analysis:  A Critical Evaluation,” Metroeconomica 37, pp. 199 – 219.
  4. I. Steedman. 1992. “Questions for Kaleckians,”  Review of Political Economy 4: 125 – 151.
  5. Trigg, A. 2008. Quantity and price systems: toward a framework for coherence between Post-Keynesian and Sraffian economics, in J. T. Harvey and R. F. Garnett (eds.), Future Directions for Heterodox Economics, Ann Arbor: The University of Michigan Press.
  6. Lee, Social Provisioning, Embeddedness, and Modeling the Economy, ch. 3.
  7. D’Olrando, F. 2005. “Will the classical-type approach survive Sraffian theory?” Journal of Post Keynesian Economics, 27: 633-654.

C.        Agency, Surplus, and the Coordination of Economic

  1. Pasinetti, L. L. 1997. The principle of effective demand, in G. C Harcout and P. A. Riach (eds.) A ‘Second Edition’ of The General Theory, London: Routledge.
  2. Pasinetti, L. L. 2001. “The principle of effective demand and its relevance in the long run,” Journal of Post Keynesian Economics, 23: 383-390.
  3. Pasinetti, L. L. 2005. “From pure theory to full economic analysis—a place for the economic agent,” Cachiers d’économie Politique, 2: 211-216.
  4. Lee, F. S. and Jo, T.-H. 2011. “Social surplus approach and heterodox economics,” Journal of Economic Issues, 45: 857-875.

D. Aggregation, State and other Institutions

E. Multiplier

  1. Serrano, F. L. P. 1995a. The Sraffian Supermultiplier, PhD diss., St. Edmund’s College, University of Cambridge.
  2. Serrano, F. L. P. 1995b. “Long period effective demand and the Sraffian supermultiplier,” Contributions to Political Economy, 14: 67-90.

F. Organizing Theorizing:  Non-Equilibrium vs. Equilibrium

  1. Sinha, A. and Dupertuis, M.-S.  2009.  “Sraffa and the Question of Equilibrium,” Cahiers d’Economie Politique, 56:  91 – 100.
  2. Sinha, A.  2012.  “Sraffa’s Theory:  A Theory of Value without the Notion of Equilibrium”.