 | GetTextbooks.com Compare Prices & Save up to 90% | | |
|
| Login | Sign up | Settings | New! iPhone App | My Wish List | My iBundle |
 | | Capitalist Development in the Twentieth Century: An Evolutionary-Keynesian Analysis (Modern Cambridge Economics Series) by John Cornwall, Wendy Cornwall ISBN-10: 9780521341493 ISBN-10: 0-521-34149-3 ISBN-13: 9780521341493 ISBN-13: 978-0-521-34149-3 Hardcover 2001-08-20 Cambridge University Press Find Lowest Price |
Editorials | ||
Product Description Capitalism in the twentieth century has been marked by periods of persistent bad performance alternating with episodes of good performance. Cornwall and Cornwall draw upon Schumpterian, Institutional and Keynesian economics to investigate how far these swings can be explained as integral to capitalist development. The authors consider the macroeconomic record of the developed capitalist economies over the past 100 years (including rates of growth, inflation and unemployment) as well as the interaction of economic variables with the changing structural features of the economy in the course of industrialization and transformation. | ||
Reviews | ||
The Cornwalls don't have a clue about what Keynes did in the GT The Cornwalls have written a book that seeks to show that supply side theories of unemployment(like Pigou's 1933 book,The Theory of Unemployment,which could only explain voluntary or frictional unemployment)can't explain involuntary unemployment.Only a demand side theory can explain involuntary unemployment both in the long run and the short run.Demand insufficiency(primarily the insufficiency in both short run and long run investment in durable capital goods such as plants,factories,machinery,equipment that then impacts the consumption goods industries in a negative way)is the major problem in all modern,capitalist economies over the last 100 plus years.The Cornwalls then incorporate a discussion of the possible effects of a lack of appropriate institutions(or malfunctioning institutions) in creating,exacerbating or magnifying the amount of involuntary unemployment in a modern,capitalist economy in the short run and the long run.The failure of the institutional structure over time to evolve in an optimal fashion means that demand deficiency will always be a potential problem in the short or long run.Technically,they demonstrate the empirical failures of practically all Phillips curve augmented neoclassical models using either rational expectations(just assume a normal distribution),real business cycles(they also just assume a normal distribution),or monetarism(You guessed it.Monetarists also just assume a normal distribution).However,the Cornwalls do not explicitly seem to realize that all neoclassical schools rely fundamentally on the assumption of normality.There is massive empirical evidence(see any paper or book by Benoit Mandelbrot over the last 50 years)that the distributions are not normal,but Cauchy or Frechet.This fact alone explains why the empirical forecasts of all neoclassical models fail empirically.The Invisible Hand of the Market is nothing other than a normal probability distribution.All neoclassical schools collapse without the assumption of normality.The first criticism of the Cornwall's book is that they do not appear to understand this,since their econometric results use the same flawed econometric approach.The second criticism applies to practically all economists(which includes the Cornwalls).They have no clue to what it was that Keynes did in the General Theory.The primary reason is that they have accepted at face value a number of canards spread around the world by Richard Kahn and Joan and Austin Robinson starting in the mid 1930's.The two most damaging canards are ,1)Keynes was a poor mathematician by 1927 who did not understand microeconomic theory and 2)Keynes provided no formal mathematical model of his theory of effective demand in the GT.Of course,the mathematical model of his theory of effective demand is contained in chapters 19(and the extremely important appendix to chapter 19),chapter 20,and chapter 21 in the form of elasticity analysis.Keynes had to do this because Pigou's results are expressed in terms of elasticities.Any mathematically literate reader can simplify the elasticities to arrive at the following result,which Keynes first spelled out twice on p.261 of the GT:w/p=mpl/(mpc+mpi),where w/p is the (actual = expected)real wage,mpl is tha aggregated marginal product of labor derived from an aggregated neoclassical production function(p.283 of the GT),mpc is the marginal propensity to spend on consumption goods,and mpi is the marginal propensity to spend on investment goods.Pigou's elasticities simplify to w/p=mpl.Pigou was implicitly assuming that Say's law ,mpc+mpi=1,held.This is the equation that Keynes pointed out was missing from Pigou's model.If mpc+mpi<1,you automatically obtain a number of multiple equilibria.It is impossible for labor, in the aggregate,to cut their money wage in order to reduce unemployment since the real wage must rise in order to maintain the resource optimality condition.This result holds in the long or short run.This result holds irrespective of the historical,institutional,social,political,legal or economic structure.This result holds for every time period of recorded history.The Cornwalls,like the critical realists(Hodgson,Chick,Dow,Fleetwood,Runde,etc.),Post Keynesians,institutionalists,and historicists,don't have a clue.The claim made on pp.65-66 of the Cornwall's book that"Keynes understated the role of AD in influencing macroeconomic outcomes"and the p.46,ft.3 claim that Keynes did not employ the language of constrained optimization when he talked about the labor market simply means that the economics profession in 2005 knows no more about Keynes's model of his general theory today than they knew in 1936.Such is the sorry state of economic theory today.It can only be hoped that, some day in the near or distant future,some economist ,who understands basic differential and integral calculus ,will decide to work through the results reported by both Pigou and Keynes and make the obvious comparison-contrast that Keynes made in the appendix to chapter 19 of the GT. | ||