Predestined to Heterodoxy

Predestined to Heterodoxy or How I Became a Heterodox Economist

Frederic S. Lee

            How I ended up being a heterodox economist did not involve a flash of light on the road to Damascus or some similar event.  Rather, in hindsight, I was ‘predisposed’ to becoming one.  The journey started before I was born.  My father’s father was a lawyer working in Washington D.C. for the federal government in the 1920s and early 1930s.  Much of his time was spent writing legislation for Congressmen, especially in the area of agriculture price supports.  As a result he was called upon by the Roosevelt Administration in 1933 to help write the Agricultural Adjustment Act, which was an attempt to establish a governmental mechanism to manage and stabilize the farm sector.  Consequently, for my father, the 1930s was not a time of desperation, but being a child growing up in an affluent home where important figures from the Roosevelt Administration visited and discussed pressing economic and social issues.  However, the Great Depression did catch his attention and he became interested in Marxism (and nearly joined the Communist Party at one time).  He acquired many of the writings of Marx, Engels, Lenin, and Stalin; and his parents contributed to the collection by, for example, giving my father for his 20th birthday in 1944 Lenin’s State and Revolution. [1]

In 1942 my father went off to Hamilton College where, after military service in the Pacific, he graduated in 1947.  While at Hamilton, he took an economics course from John Gambs, the well-know Institutionalist economist and one of the co-founders of the Association for Evolutionary Economics.  After graduating, my father went to Columbia University Law School, where he found time to take an economics course given by that arch neoclassical economist, Fritz Machlup.  However, my father found the subject matter such nonsense that he left the course and has never taken another economics course since.  Finally, while attending the Columbia Law School he happened on a couple of occasions to have coffee with Paul Sweezy.  My father became a labor lawyer and worked for the National Labor Relation Board.

My mother’s father was born in London and his father, as the unsubstantiated family story goes, was a member of the Independent Labor Party who left England for Canada and then the United States to escape the class system.  Thus, her father grew up politically aware and in circa 1916 acquired Marx’s three volumes of Capital which were displayed prominently on his book shelves as I was growing up. [2]   My grandfather had another significant feature:  he obtained a Ph.D. in political science in 1921 from Columbia University. [3]   My mother was a politically active, progressive Democrat.  So between my mother and father I grew up in a house where progressive politics and civil and workers rights were considered the norm and the book shelves were filled with Joan Robinson’s Introduction to the Theory of EmploymentAccumulation of Capital, and Collected Economic Papers, Piero Sraffa’s Production of Commodities by Means of Commodities, Paul Baran’s and Paul Sweezy’s Monopoly Capital, Robert Brady’s Business as a System of Power, Clarence Ayres’s The Problem of Economic Order, the works of Marx, and the books of other heterodox economists.

When I went to university in 1968 I majored in history and did not take a single economics course.  Mostly apolitical in my first two years, the Vietnam War, civil rights, and the women’s movement made little impression on me.  But this changed during the summer of 1970 when, for reasons lost to memory, I began reading books more intensely and expanding my intellectual horizons.  So in my final year at university (1970-71) I became interested in philosophy because, for me, it dealt with issues that were relevant to my own intellectual growth.  It also helped me, after a fashion, to start comprehending the social and political turmoil around me.

I continued taking philosophy classes after graduation, especially in the area of the philosophy of science.  But my interest in the subject began to wane once I realized that after 1800 the really interesting social questions were not being examined by philosophers, but by economists.  Consequently, I started reading books on economics, one of the first being Robert Heilbroner’s The Worldly Philosophers, followed by Thorstein Veblen’s The Theory of the Leisure Class, and then followed by various books on dialectical materialism and Marxism, and ending with the first volume of Capital. [4]   However, in retrospect, I am not sure that I understood much of what I had read, but I certainly thought so at the time.  So by the end of 1972 I had a little knowledge of what constituted heterodox economics which I knew from my father was different from neoclassical economics; but I did not really know what neoclassical economics was.

The next two years were significant in my embryonic development as a heterodox economist.  In the summer of 1973 I got my first economic publication as a letter in a local Marxist-Leninist paper critically evaluating the role of cartels in the definition of imperialism as the highest form of capitalism. [5]   That autumn I got married to a very sensible woman, Ruth Buschman, and hence became socially responsible and civilized person over night.  In addition, my wife thought that a life without books, learning, social activism, and international travel was not a life worth living. Hence, she has supported materially, emotionally, and intellectually my long trek to becoming a heterodox economist and obtaining a Ph.D. in economics; has provided significant financial support for my terrible habit of buying lots of economic books no matter what the costs; and has enjoyed with me international travel and living overseas.  Finally, I began to seriously and systematically reading economic texts and book.  At the time I was married I was working in New York City as a supply clerk for the U.S. Army Corp of Engineers.  The job was not difficult; thus I was able to read extensively on the job.  Using Joseph Schumpeter’s A History of Economic Analysis as a guide (see his ‘List of Books Frequently Quoted’), I read in succession Adam Smith, David Ricardo, Alfred Marshall, William Stanley Jevons and finished the year out with Keynes’s General Theory and Joan Robinson’s Economic Heresies.

Feeling confident of my knowledge of economics, I decided to enroll in two graduate classes in economics at New School for Social Research in January 1974, one on ‘Reading and Using Capital” taught by Frank Roosevelt and the second on ‘Theory of the Business Cycle’ taught by Alfred Kahler.  In the former class, Marx and the first volume of Capital were the focal points; but in the latter, Kahler who did pioneering work on input-output economics, had the class read articles by Friedrich Hayek, Ralph Hawtrey, Hans Neisser, Nicholas Kaldor, Michal Kalecki, and Schumpeter.  Much of the class was over my head, but I still obtained an A- and an abiding interest in input-output economics.  At the same time I continued my historical reading of economics, starting with Richard Cantillon and ending with Knut Wicksell.

In September 1974, I transferred to a two-year supply clerk position with the Corp of Engineers in Riyadh, Saudi Arabia.  By the time I took the position I knew that I wanted to get a Ph.D. in economics and become a professor.  However, I had heard horror stories of how professors treated their graduate assistants.  To avoid this, I took the position in Saudi Arabia in order to accumulate enough savings so that I would not have to be a teaching assistant (and the chance to live overseas was also a plus).  And I achieved this end.

While in Saudi Arabia, I took correspondence courses in introductory micro and macro economics, labor economics, international economics, and calculus.  I also continued my reading, taking in Jacob Viner on ‘Costs’, John Bates Clark on ‘Distribution’, John R. Hicks on ‘Wages’, and a phalanx of heterodox economists including Maurice Dobb’s Theories of Value and Distribution Since Adam Smith, V. K. Dmitriev’s Economic Essays on Value, Competition and Uitlity, Paolo Sylos-Labini’s Oligopoly and Technical Progress, Robinson’s Essays in the Theory of Employment, and Kalecki’s Theory of Economic Dynamics.  I even started Sraffa’s Production of Commodities but after reading a few pages and understanding very little I gave up.  During this time my most memorable experience was reading Roy Harrod’s The Life of John Maynard Keynes while spending an afternoon and early evening in a Beirut jail.

Returning to New York City in August 1976, I entered the School of General Studies at Columbia University in order to complete my undergraduate education in economics in preparation for going to graduate school.  Thus, I took the conventional courses in macroeconomics, economic development, industrial organization, mathematical economics, and mathematics.  I also took a course in the history of economic thought from Alexander Erlich and a course from John Eatwell on ‘the theory of effective demand’.  It was during this period that I began to delve deep into heterodox economics, especially heterodox microeconomics.  Immediately upon returning to the States, I acquired and read Adrian Wood’s book A Theory of Profits; and I continued with reading articles and books on pricing, costs, and the business enterprise by Hall and Hitch, Philip Andrews, Kaldor, Josef Steindl, Kalecki, Gardiner Means, and Alfred Eichner.  From these readings I wrote papers for my classes that formed the beginnings of my life-long agenda of developing a heterodox alternative to neoclassical microeconomic theory.  One paper was simply titled ‘Microeconomics’ while a second was titled ‘Competition and Classical Economics’; and my paper for Eatwell’s class was titled ‘Price Theory, the Firm and Manufacturing Business’.

In addition to classes there was one other significant event while at Columbia and perhaps the most important in my entire academic career. It was my discovery of Alfred Eichner.  In November 1975 I had bought his book The Megacorp and Oligopoly and started reading it.  Then in February one of my teachers who knew of my interests suggested that I should go and talk to Eichner who happened to work close by.  So in February 1977 I walked into Eichner’s office and said “Professor Eichner, I would like to talk about the determination of the mark-up.”  And Eichner and I commenced to discuss it for the next hour.  It was at this point that I got ushered into Post Keynesian economics officially so to speak.  Eichner became my mentor, dissertation advisor, and a friend.  That evening at home I told my wife about the meeting and she was relieved that there existed somebody like me in economics—that I was not alone.

While at Columbia, I decided to pursue my Ph.D. at Edinburgh University because the economics department offered a specialization in industrial economics.  Eichner told me I was making a mistake and suggested that I go to Rutgers University where Paul Davidson and Jan Kregel taught.  He was right; so after a year at Edinburgh, I entered Rutgers in Fall 1978.  However, I spent my year at Edinburgh obtaining a better understanding of neoclassical theory and developing a more extensive understanding of Post Keynesian-heterodox microeconomics.  My readings included Davidson’s Money and the Real World and Kregel’s The Reconstruction of Political Economy:  An Introduction to Post-Keynesian Economics; and I even subscribed to the first issue of the Journal of Post Keynesian Economics.

When I entered Rutgers I was a Post Keynesian-heterodox economist; and with Davidson, Kregel, Eichner, and Nina Shapiro as my professors, there was no chance that I would deviate.  Over the three years at Rutgers I wrote papers on various themes in Post Keynesian-heterodox microeconomics, such as the relationship between market prices and prices of production in the context of a Sraffian price model, the net profit margin, and the general theory of industrial prices.  In addition, as a result of a course I took with Kregel, I wrote my first major economics article, “The Oxford Challenge to Marshallian Supply and Demand:  The History of the Oxford Economists’ Research Group,” which appeared in the November 1981 issue of Oxford Economic Papers.  Finally, in my second year at Rutgers, 1979-80 I taught an introductory microeconomics course.  Given some leeway in what to teach I put together a set of lecture notes that was also the basic text for the students.  The notes introduced microeconomics in terms of a Sraffian input-output framework, delineating a Post Keynesian approach to the business enterprise, pricing, and markets along with a discussion of neoclassical micro.  In the final section of the notes a Sraffian input-output pricing model was used to examine questions such as market prices and convergence to prices of production, changes in prices of production due to changes in wage rates, profit margins, and technology, and changes in distribution due to changes in profit margins and wage rates.  I entered Rutgers as a Post Keynesian-heterodox economist with an overriding interest in developing a Post Keynesian-heterodox microeconomic theory that would completely replace neoclassical microeconomic theory; and I left it, thanks to my professors, infinitely more capable of achieving that goal.

[1] Much of the collection now resides on my bookshelves.

[2] I acquired them in 1972 upon his death and have read all three volumes.

[3] His dissertation was on “The Pressure of the Interests on Government:  A Study of the Political Activities of the National Trade Board.”

[4] Starting in June 1971, I have maintained a record of all the books, articles, and papers that I have read by month and year.  To date I have read 9260 books, articles, and papers (some more than once) over the past 33 years or approximately 280 per year.

[5] To this day, I am still interested in cartels as a capitalist-collective form of market governance.