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ADVANCED HETERODOX ECONOMICS (ECON 5503) Fall 2012

Professor F. S. Lee Office: Manheim Hall 202D Office Hours: MW 10.00-11.00 or by appt. E-mail: leefs@umkc.edu Tel.: 816-235-2543

Lectures: Required Texts:

Wednesday, 1.00 3.45p.m., Royall Hall 204 L. L. Pasinetti, Lectures on the Theory of Production. R. Miller and P. Blair, Input-Output Analysis W. Leontief, The Structure of American Economy, 1919 1939 P. Sraffa, Production of Commodities by Means of Commodities. F. S. Lee, The Simple Mathematics of Linear Production Models. F. S. Lee (ed.), Social Provisioning, Embeddedness, and Modeling the Economy H. D. Kurz and N. Salvadori, Theory of Production: A Long Period Analysis A. Sinha, Theories of Value from Adam Smith to Piero Sraffa G. Chiodi and L. Ditta (eds) Sraffa or an Alternative Economics L. L. Pasinetti, Keynes and the Cambridge Keynesians Take home exam handed out on September 19, 2012 and returned on September 26, 2012worth 25% of your final grade Take home exam handed out on October 24, 2012 and returned on October 31, 2012worth 25% of your final grade Take home exam handed out on November 28, 2012 and returned on December 5, 2012worth 25% of your final grade. Final Exam, December 12, 2012, 1.00-3.00pmworth 25% of your final grade There will be no class on December 5, 2012it will be rescheduled for another day. It will be distribute and placed on Blackboard. 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.

Optional Texts:

Assessment:

Announcement: Problem Set: Description:

"This link will direct you to essential information regarding university policies, rules, and resources http://cas.umkc.edu/student-resources.asp "

Here are some great resources to help students build their math skills. The Khan Academy: http://www.khanacademy.org/math/algebra I've linked to the algebra section of this site, but there are short tutorials at all levels of math. I highly recommend to my students that they watch some of these in the algebra section, especially if they aren't solid on what a function is and why we are using them in economics. There are also some tutorials on graphing equations and such. Geogrebra: http://www.geogebra.org/cms/ This one is a very nice tool for graphing functions and playing around with them. You can run it in the browser or simply download a standalone version.

COURSE OUTLINE I. Introduction A. B. Production as a Circular Process and the Foundation of Heterodox Economics Brief Historical Excursus 1. 2. 3. 4. 5. Miller and Blair, Input-Output Analysis, Appendix C. 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. Walsh, V. and Gram, H. Classical and Neoclassical Theories of General Equilibrium, chs. 1-4. Langer, G. F. 1988. Corn: A Classical Landscape. Economic Notes 17.1: 5 21. 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. Gehrke, C. 2003. Alfred Kahler: A Pioneer of Input-Output Analysis. Unpublished. Kurz, H. D. 2011. Who is Going to Kiss Thorn Rose? On the Classical

6. 7.

Analytical Origins and Perspectives of Input-Output Analysis, Review of Political Economy 23.1: 25 47. II. A. Input-Output Modelling of the Economy Input-Output Representation of the Economy 1. 2. 3. 4. B. Miller and Blair, Input-Output Analysis, ch. 4.1-4.6 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. 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. Rose, W. and Miernyk, W. 1989. Input-Output Analysis: The First Fifty Years. Economic Systems Research, 1.2: 229-271.

The Simple Mathematics of Linear Production and Price Models 1. 2. 3. 4. 5. 6. 7. 8. Lee, F. S. "The Simple Mathematics of Linear Production Models". Pasinetti, Lectures on the Theory of Production, pp. 226 276. Miller and Blair, Input-Output Analysis, Appendix A. Kurz and Salvadori, Theory of Production, Mathematical appendix Takayama, A. 1974. Mathematical Economics. Hinsdale: The Dryden Press, pp. 359 - 391. Solow, R. 1952. "On the Structure of Linear Models," Econometrica 20.1 (January): 29 - 46. http://links.jstor.org/sici?sici=00129682%28195201%2920%3A1%3C29%3AOTSOLM%3E2.0.CO%3B2-3 Faddeeva, V. N. 1959. Computational Methods of Linear Algebra. New York: Dover Publications, Inc., pp. 117 - 127. Nikaido, H. 1968. Convex Structures and Economic Theory. New York City: Academic Press, pp. 87 108.

C.

Closed and Open Leontief Models 1. 2. 3. 4. 5. Pasinetti, Lectures, pp. 35 - 70. W. Leontief, The Structure of American Economy, 1919 - 1939. Miller and Blair, Input-Output Analysis, chs. 2, 5, 6 Schwartz, J. T. 1961. Lectures on the Mathematical Method in Analytical Economics. New York: Gordon and Breach, chs. 1 4. Leontief, W. Input-Output Economics.

D.

Social Accounting Matrices and other Special Topics 1. Miller and Blair, Input-Output Analysis, chs. 9-11.

2. III.

Miyazawa, K. and Masegi, S. 1963. Interindustry Analysis and the Structure of Income-Distribution. Metroeconomica, 15: 89 103.

Sraffian Production-Price Models A. Sraffas Production-Price Model 1. 2. 3. 4. 5. 6. 7. 8. 9. B. R. L. Meek, "Mr. Sraffa's Rehabilitation of Classical Economics," Scottish Journal of Political Economy 8 (1961), pp. 119 - 136. Pasinetti, Keynes and the Cambridge Keynesians, Book II. Kurz and Salvadori, Theory of Production, chs. 1 and 13. Aspromourgos, T. 2004. Sraffian Research Programmes and Unorthodox Economics. Review of Political Economy 16.2 (April): 179 206. Kurz, H. D. and Salvadori, N. 2005. Representing the Production and Circulation of Commodities in Material Terms: On Sraffas Objectivism. Review of Political Economy 17.3 (July): 413 - 441. Kurz, H. D. and Salvadori, N. 2006. Input-Output Analysis from a Wider Perspective: A Comparison of the Early Works of Leontief and Sraffa. Economic Systems Research 18.4 (December): 373 390. Sinha, Theories of Value from Adam Smith to Piero Sraffa, ch. 4: 277-281, 310 - 332. Kurz, H. B. 2006. The Agent of Production are the Commodities Themselves: On the Classical Theory of Production, Distribution and Value. Structural Change and Economic Dynamics 17: 1 26. Chiodi and Ditta, Sraffa or Alternative Economics, chs. 3, 4, 5, 7, 14.

Production for Subsistence and the Price System 1. 2. Sraffa, Production of Commodities, pp. 3 - 5. Pasinetti, Lectures, pp. 71 - 73.

C.

Production with a Surplus and the Price System 1. 2. 3. 4. 5. Sraffa, Production of Commodities, pp. 6 - 11. Pasinetti, Lectures, pp. 71 - 73. Kurz and Salvadori, Theory of Production, chs. 3 and 4. Harris, D. 1981. On Timing of Wage Payments. Cambridge Journal of Economics 5: 369 382. 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. E.

Pasinetti, Lectures, pp. 74 - 84.

Prices, Wages, and the Rate of Profit: the relationship between the wage rate and the rate of profit 1. 2. 3. 4. Sraffa, Production of Commodities, pp. 34 - 40 and 81 - 87. Pasinetti, Lectures, pp. 84 - 92 and 151 - 167. Kurz and Salvadori, Theory of Production, chs. 3, 4. Sinha, Theories of Value from Adam Smith to Piero Sraffa, ch. 4: 295 297.

F.

The Rate of Profit and Non-Basic Commodities 1. 2. Sraffa, Production of Commodities, 90 - 91. Pasinetti, Lectures, pp. 104 - 111.

IV.

Alternative Heterodox Production and Price Models A. The Classical Production-Price Model 1. 2. 3. 4. Clark, D. 1984. "Confronting the Linear Imperialism of the Austrians." Eastern Economic Journal 10 (April-June): 107 - 127. Ricardo, D. 1821. On the Principles of Political Economy and Taxation, Vol. 1, The Works and Correspondence of David Ricardo, ch. 1. Edited by P. Sraffa. Cambridge: Cambridge University Press, 1975. 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. Dmitriev, V. 1974. V. K. Dmitriev: Economic Essays on Value, Competition and Utility. Edited by D. M. Nuti. London: Cambridge University Press, pp. 39 - 80.

B.

The Burchardt Production-Price Model 1. 2. Nurske, R. 1935. "The Schematic Representation of the Structure of Production," Review of Economic Studies 2 (June): 232 - 244. 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. Kregel, J. A. 1975. The Reconstruction of Political Economy: An Introduction to Post-Keynesian Economics. 2nd. ed. London: The Macmillan Press, chs. 1 - 8. 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. Asimakopulos, A. 1975. "A Kaleckian Theory of Income Distribution,"

3. 4. 5.

6. 7. 8. 9.

Canadian Journal of Economics 8 (August): 313 - 333. Robinson, J. 1956. The Accumulation of Capital. London: Macmillan, chs. 7 - 22. Kaldor, N. 1955. "Alternative Theories of Distribution." Review of Economic Studies 23 (March): 83 - 100. Lee, F. S. 1998. Post Keynesian Price Theory. Cambridge: Cambridge University Press, ch. 7. 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.

C.

The Lowe Production-Price Model 1. 2. 3. 4. Lowe, A. 1952. "A Structural Model of Production," Social Research 19 (June): 135 - 176. Clark, D. 1984. Confronting the Linear Imperialism of the Austrians: Lowes Contribution to Capital and Growth Theory. Eastern Economic Journal 10.2: 107 27. Lowe, A. 1976. The Path of Economic Growth. Cambridge: Cambridge University Press, ch.s. 1-7. 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.

2.

3. 4. 5.

Pasinetti, L. L. 1993. Structural Economic Dynamics: A Theory of the Economic Consequences of Human Learning. Cambridge: Cambridge University Press, ch. 2. Pasinetti, L. L. 1988. Growing Subsystems, Vertically Hyper-Integrated Sectors and the Labour Theory of Value. Cambridge Journal of Economics 12: 125 134. Trigg, A. B. and Lee, F. S. 2005. Pasinetti, Keynes and the Multiplier. Review of Political Economy 17.1: 29 43. Pasinetti, Keynes and the Cambridge Keynesians, Books I and III. 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.

E.

Bortis and Classical-Keynesian Modeling of the Economy 1. 2. 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. Bortis, H. 2012. Shackles 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.

3. 4. V.

von Ah, A. 2012. Institutions and the Long-Period Theory and Policy of Employment. von Ah, A. 2010. Sraffa and the Long-Period Theory of Employment.

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

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. 2. 3. Chiodi, G. 1992. On Sraffas Notion of Viability. Studi Economica 46:5 23. Chiodi, G. 1998. On Non-Self-Replacing States. Metroeconomica 29.1: 97 107. Chiodi, G. 2010. The Means of Subsistence and the Notion of Viability in Sraffas Surplus Approach. In S. Zambelli (ed.) Computable, Constructive and Behavioural Economic Dynamics, 318 330. De Gregori, T. R. (1987) Resources are not: they become: an Institutional theory, Journal of Economic Issues, 21, pp. 12411263.

4. 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. Sraffas Circular Process and the Concept of Vertical Integration. Political Economy: Studies in the Surplus Approach 2: 3 16.

2. 3. 4. 5. 6. 7.

M. C. Howard, "Austrian Capital Theory: An Evaluation in Terms of Piero Sraffa's Production of Commodities by Means of Commodities," Metroeconomica 32 (1980), pp. 1 - 23. Gaitskell, H. T. N. 1936. "Notes on the Period of Production - Part I." Zeitschrift fur Nationalokonomie 7 (December): 577 - 595. Gaitskell, H. T. N. 1938. Notes on the Period of Production Part II. Zeitschrift fur Nationalokonomie 9 (July): 215 244. Leontief, W. 1991. The Economy as a Circular Flow. Structural Change and Economic Dynamics 2.1: 181 212. Kurz and Salvadori, Theory of Production, ch. 13. 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. 2. 3. 4. 5. DOrlando, F. 2007. A Methodological Note on Long-Period Positions. Contributions to Political Economy 26: 17 26. Sinha, Theories of Value from Adam Smith to Piero Sraffa, ch. 4: 321 330. F. S. Lee, Full Cost Prices, Classical Price Theory, and Long Period Method Analysis: A Critical Evaluation, Metroeconomica 37 (1985), pp. 199 219. I. Steedman, "Questions for Kaleckians," Review of Political Economy 4 (1992) pp. 125 - 151. 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. Lee, Social Provisioning, Embeddedness, and Modeling the Economy, ch. 3. DOlrando, F. (2005) Will the classical-type approach survive Sraffian theory?, Journal of Post Keynesian Economics, 27: 633-654.

6. 7. C.

Agency, Surplus, and the Coordination of Economic 1. 2. 3. 4. 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. Pasinetti, L. L. (2001) The principle of effective demand and its relevance in the long run, Journal of Post Keynesian Economics, 23: 383-390. Pasinetti, L. L. (2005) From pure theory to full economic analysisa place for the economic agent, Cachiers d'conomie Politique, 2: 211-216. Lee, F. S. and Jo, T.-H. (2011) Social surplus approach and heterodox economics, Journal of Economic Issues, 45: 857-875.

D. E.

Aggregation, State and other Institutions Multiplier 1. 2. Serrano, F. L. P. (1995a) The Sraffian Supermultiplier, PhD diss., St. Edmunds College, University of Cambridge. 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. 2. Sinha, A. and Dupertuis, M.-S. 2009. Sraffa and the Question of Equilibrium, Cahiers dEconomie Politique, 56: 91 100. Sinha, A. 2012. Sraffas Theory: A Theory of Value without the Notion of Equilibrium.