Robert W. Clower

The Emergence of Economic Organization

A model of decentralized markets is studied, in which transactors follow simple adaptive rules. Transactions are coordinated by specialist trading firms that bear the costs of market disequilibrium. Starting from an initially autarkic situation in which none of the institutions that support exchange exist, computer simulation shows that for a wide range of parameter values a fully developed market economy will emerge spontaneously. Moreover, in virtually every case where a market economy develops, one of the commodities traded will emerge as a universal medium of exchange, being traded by every firm and changing hands in every act of exchange.

EFFECTIVE CONTROL THROUGH COHERENT DECENTRALIZATION WITH PREEMPTIVE GOALS

Abstract : This paper shows that control through decentralization can be affected in general if additional information in the form of preemptive goals is delegated to individual units as well as prices. It is shown that the procedure is a robust one and results in small errors in profit. The technique of preemptive goals providing further control advantages in an economy where structural change is taking place over time as reflected by changing technological coefficient matrices of individual units is indicated.

The Transactions Theory of the Demand for Money: A Reconsideration

This paper deals with a class of models of the demand for money that includes the Baumol-Tobin and other inventory-theoretic models as special cases. Among other things, the analysis shows that many supposedly robust comparative-statics propositions derived by earlier writers do not survive even modest generalization. More generally, the results of the paper strongly reinforce other recent research in indicating the need for a wholesale reconstruction of the microfoundations of contemporary monetary theory.

Axiomatics in Economics

A correspondent who heard me talk last year about Economics as an Inductive Science interpreted me as saying axiomatic theories are useless. Since I neither said nor intended to say anything of the sort, I answered him to that effect, and shortly after received a second note to inform me that in any event my published address [13] did little but disparage neowalrasian theory, a charge I had no wish to deny. So his question was Why did you so disparage neowalrasian analysis?, and my answer was: Because I think neowalrasian theory has been generally deleterious to the advancement of economic science. Although that remark is dated, the sentiment it expresses has not changed. I know my 1993 address struck some as concerned more with generalities than specifics; so I have no one but myself to blame if what I considered refutations were regarded by some as fulminations [57, 96]. In the discussion that follows, I focus on specifics, hoping thereby to persuade readers that my unsupportive attitude towards neowalrasian theory deserves to be emulated by all thoughtful economists.

Economics as an Inductive Science

All who have taught macroeconomics at any time during the past forty years will know this feeling well; for macroeconomic theory has been riddled with Kuhnian anomalies [32, 202 ff.] since its inception. Strangely, few teachers of microeconomics seem embarrassed by the purely theoretical material they teach and which their students are required to read and regurgitate, although microtheory is at least as objectionable as macroeconomic theory. That we who teach any kind of pure theory ought to be as embarrassed with microeconomics as with macroeconomics is the position I propose to argue here. Before I proceed, let me emphasize that by pure theory I do not mean what most working economists, including, I imagine, our most recent Nobel Laureates, Douglas North and Robert Fogel, mean when they use the word theory without further qualification. Generally speaking, we mean by theory the fact-oriented creative mixture of intuition, casual empirical knowledge, and seat-of-the pants logic that is found in virtually all applied economic analysis and, indeed, in virtually everything called economics before 1950 [20, 284]. By pure theory I mean the axiomatically-based neowalrasian analysis of Arrow-Debreu [3], Debreu [15], Arrow and Hahn [4] and closely related offshoots that serve as a standard of economic correctness in all modern

Keynes and the Classics: A Dynamical Perspective

Although it is possible to draw various purely technical distinctions between modern and pre-Keynesian economics, it is mainly with respect to matters of intellectual orientation that the two are strikingly different. Many and diverse reasons have been advanced to explain why this should be so, most of them plausible, all of them fairly elaborate. The purpose of this note is to add an element of unity and simplicity to these explanations by suggesting a straight-forward dynamical interpretation of the foundations of Keynesian and classical thought.

Beyond microfoundations: Taking markets seriously: groundwork for a Post Walrasian macroeconomics

Apparatus having a plurality of elements disposed relative to each other or movable to different positions relative to each other in which the positions correspond to information and that information may be read-out in matrix form or as characters and forms of writing according to the invention. The apparatus are manipulatable by movable parts of the bodies of handicapped operators for control of other apparatus. Apparatus for communicating with the blind provide outputs according to a communication system of symbols and characters and writing and reading apparatus for the blind operate within the communication system.

Classical Monetary Theory Revisited

In Part II of their important article on Monetary and Value Theory: A Critique of Lange and Patinkin ,1 Messrs. Archibald and Lipsey assert that the classical dichotomy consists in building a model in which Walras Law does not hold .2 Since every classical economist whose writings I know clearly subscribed with full force and fervour to Walras Law, I am unable to regard as valid either this assertion or Archibald and Lipseys interpretation of classical monetary theory. The purpose of this paper is to exhibit a classical theory in which:

Monetary History and Positive Economics

If successful prediction were the sole criterion of the merit of a science, economics should long since have ceased to exist as a serious intellectual pursuit. Accurate prognosis is not its forte. The real strength of the discipline lies in another direction—namely, in its apparently limitless capacity to rationalize events after they happen. This helps explain the indifference of most economic theorists to “the lessons of history†; men to whom all things are possible have little to learn from experiments conducted in the laboratory of time. It also helps explain the indifference of most economic historians to abstract theory; what have they to learn from a subject that “yields no predictions, summarizes no empirical generalizations, provides no useful framework of analysis†?

Stock and Flow Quantities: A Common Fallacy

Confusion between symbols and the things to which symools refer is fairly common in every science. In most cases, loose argument of this kind is analytically innocuous and may be permitted to pass without comment. When a well known economist asserts that a change in a stock quantity has the dimensions of a flow, however, and proceeds to criticize the work of other writers on the basis of his own confusion, a rebuke is in order before the fallacy gains a secure foothold in the literature. According to Patinkin, . . . the excess demand for money as a stock has the dimensions of a flow. For it is the difference between the stock of money at two points of time. .. .2 The nature of the fallacy is best seen by going to its source. Thus, if x(t) refers to the stock of a given commodity at the beginning of period t, the flow of the same commodity during period t is then represented by