Tony Aspromourgos

Is an Employer-of-Last-Resort Policy Sustainable? A review article

A radical proposal to address decisively the problem of mass involuntary unemployment, by way of a government committing itself to stand ready as ‘employer of last resort’, has recently been put forward by L. Randall Wray and others. To the question of how such large-scale policies would be financed, there has been a suggestion that issuing outside money would suffice. This review employs some simple modelling to show the limits to ‘printing money’ as a means of financing such an employment policy. The review also critically scrutinizes the claim that the policy can simultaneously act as an antiinflationary device, as well as some other aspects of the proposals.

Sraffian research programmes and unorthodox economics

This paper provides an overview of the main currents in the development of the intellectual project inaugurated by Piero Sraffas Production of Commodities by Means of Commodities. Five research programmes are detailed (together with some further extensions): the nature and significance of long‐period equilibria; the Cambridge Growth Equation and the monetary determination of interest, as alternative theories of distribution; the Sraffa–Keynes synthesis; and the critique of marginalism. The paper also sketches the relations between the Sraffian project and other unorthodox strands in economics. Future prospects for orthodoxy and non‐orthodoxy are canvassed. A substantial literature survey is included. Correspondence Address: Tony Aspromourgos, School of Economics & Political Science, University of Sydney, Sydney NSW 2006, Australia. Email: T.Aspromourgos@econ.usyd.edu.au   Some day economics may become a science.   (attributed to J.M. Keynes, 1932: Rymes, 1989, p. 83)

Keynes, Lerner, and the Question of Public Debt

This essay examines Keynes’s views on public debt, taking as its point of departure his 1943 confrontation with Abba Lerner on the issue. It also exhaustively considers the wider intellectual relationship between the two men, as well as Keynes’s other commentaries on public debt in the 1930s and 1940s. The essay concludes that the key issue distinguishing Keynes’s rather more cautious view of feasible and desirable public debt trajectories, vis-a-vis Lerner’s position, is Keynes’s attentiveness to the psychology of the debt markets, which is, in turn, an expression of his sensibility toward theory versus practice.

Entrepreneurship, risk and income distribution in Adam Smith

Abstract The treatment of functional income distribution in classical economics has commonly been interpreted in terms of a tripartite distinction between the roles of, and the returns to, labour, capital and land, with the classical income distribution theories explaining the determination of rates of wages, profits and rents. Is there then any distinct role for entrepreneurship in the classical approach to distribution and prices? Is it absent from those theories, or subsumed under other economic functions? How is entrepreneur remuneration understood, if theorised at all? These questions are addressed in relation to the political economy of Adam Smith in particular.

‘Universal opulence’: Adam Smith on technical progress and real wages

Abstract This paper first considers the character of Smiths account of division of labour as a theory of technical progress. In so far as Smiths account does entail a vision of liberal or competitive commercial society as exhibiting ongoing technical progress, this must have implications for income distribution through time. The paper therefore also considers, in particular, Smiths conception of the course of real wages in competitive commercial society, and how this connects with his view of technical progress. A reconciliation of Smiths theory of real wages and his prediction of high and rising real wages over time is suggested.

The invention of the concept of social surplus: Petty in the Hartlib Circle

Among other innovative and important contributions to the formation of political economy, William Petty is the originator of the concept of an economic or social surplus, a vital element in the formation of classical economics. It therefore is a natural and intriguing question, how Petty came to develop his seminal formulations of surplus. Our argument is that the concept took form in his thought as a result of stimulus provided by Pettys involvement in the agricultural technology programme of Samuel Hartlib and his ‘Circle’.

Thomas Piketty, the Future of Capitalism and the Theory of Distribution: A Review Essay

This essay reviews Thomas Piketty’s Capital in the Twenty-First Century (2014). The focus is upon the conceptual framework and theoretical interpretation of the empirical findings assembled in the book, rather than those empirical findings themselves (which are, in any case, broadly incontestable). The core theoretical logic of the distributional dynamics is explained and subjected to scrutiny with respect to the theory of distribution in particular, but also the theory of growth.

Keynes’s General Theory After 75 Years: Chapter 24 and the Character of ‘Keynesian’ Policy

The Great Financial Crisis led to a revival of interest in ‘Keynesian’ economic policy, understood as temporary, debt‐financed fiscal activism in response to a short‐run, albeit particularly deep, macroeconomic contraction. But Keynes’s theory led him to diagnose involuntary unemployment as a long‐run problem, and one for which competition (via wage and price flexibility) was not a solution. Consequently, his policy proposals were more far‐reaching than short‐run fiscal activism. The final chapter of The General Theory provides the appropriate point of departure for reflecting on the difference between Keynes’s policy position and what later came to be regarded as Keynesian policy.

Can (and Should) Monetary Policy Pursue a Zero Real Interest Rate, Permanently?

In the final chapter of the General Theory Keynes raises the possibility of instituting a permanent policy of very low interest rates, as part of his response to the deficiencies of mature capitalism. This paper examines the grounds for such a policy, in terms of both descriptive theory and normative principles. It then appraises the practicability of the policy in relation to three obstacles: the consequent need for an alternative policy instrument for targeting inflation; the possibility that cheap money might be a potent encouragement to speculation; and the constraints imposed on monetary policy choices by globally integrated financial markets.

Adam Smith's Treatment of Market Prices and Their Relation to "Supply" and "Demand"

Smith’s approach to market prices is a dynamic conception of price adjustment in response to market imbalance, in terms of deviation of actual prices from normal price. Latter-day demand functions are not part of this conception. Neither are latter- day supply functions – and relations between quantity produced and normal price are highly contingent, depending on competing factors in each particular industry, as well as forces external to particular industries. His analyses of situations in which production is inelastic in relation to effectual demand confirms a tacit supposition of his treatment of market prices: demand-prices are incapable of determinate theoretical expression.