Re: [PEN-L] query: class consumption function
I have a new book coming out in July, Manufacturing Discontent, which might relate to Gene's question. Here are two short sections: _Planned Obsolescence_ The economy dissipates enormous energy in creating a steady stream of new products, most of which, like the finlets and Dagmars, offer no advantage other than novelty. In this vein, centuries ago, Adam Smith remarked: How many people ruin themselves by laying out money on trinkets of frivolous utility? What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it. All their pockets are stuffed with little conveniencies. They contrive new pockets, unknown in the clothes of other people, in order to carry a greater number. They walk about loaded with a multitude of baubles ..., some of which may sometimes be of some little use, but all of which might at all times be very well spared, and of which the whole utility is certainly not worth the fatigue of bearing the burden. [Smith 1759, IV.i.6, p. 180] Smith concluded that the desire for luxury is little more than a deception which rouses and keeps in continual motion the industry of mankind (Smith 1759, IV.i.9, p. 183). Smith's contemporary, the philosopher, Immanuel Kant, told a young Russian nobleman, Give a man _everything_ he desires and yet at this very moment he will feel that this _everything_ is not _everything_ (Karamzin 1957, pp. 40-41). The self-deception and disappointment to which Smith and Kant pointed undoubtedly predates market economies. Even so, no previous economy has ever used this conundrum as a central organizing principle. At the time in which Adam Smith wrote, he had no idea that the deception he described would involve anybody but the upper classes, who without the prod of new demands would satisfy themselves with greater leisure. A century and a half later, the great advertisers have successfully encouraged the majority of the population to dissipate resources on trinkets of frivolous utility. Hemlines rise and fall in order to make people dissatisfied with last year's wardrobe. Fashions change so fast that secondhand stores, such as Goodwill or the Salvation Army, cannot keep up with the flow of discarded clothing, even though much of it is of high quality and relatively new. These agencies have little choice but to export much of their donated clothing to impoverished nations. Nobody knows the horrendous resource cost of rapidly changing fashion, but again the experience of General Motors and the rest of the automobile industry is instructive. In a classic study of the economic costs of automotive design changes published in the conservative _Journal of Political Economy_ the year before Sloan's account of his work with General Motors appeared, three quite prominent economists, Franklin Fisher, Zvi Griliches, and Carl Kaysen, estimated that more than 25 percent of the selling price of a car came from the cost of model changes that were unrelated to performance (Fisher, Griliches, and Kaysen 1962). Since 1962, the speed with which new models of consumer goods proliferate has accelerated dramatically. The automobile industry pioneered planned obsolescence; it continues to push that strategy today. People who purchase a car can select from more than 1000 models. Nike offers a clear picture of how planned obsolescence has evolved. The first Nike shoe had a promotional life of seven years. By 1989, the marketing cycle was down to ten months (McQueen 2003, p. 187). Now, Nike creates 250 new shoe designs each season. The Swiss company that manufactures Swatch watches creates 140 different watch styles each year (Jenkins 1998). I doubt a new model watch is much more accurate than the model that preceded it. According to Jeffrey Madrick the Gap retail chain revamps its product line every six weeks, and changes its advertising frequently as well (Madrick 1998, p. 32). The Productscan Online database counted 33,678 new food, beverage, health and beauty aids, household and pet products introduced during 2003, up from less than 22,000 in 1994 (Productscan 2003). Madrick reported that the number has increased fifteen- and twenty-fold since 1970 (Madrick 1998, p. 32). Relatively few of these new products actually represent an improvement; they are simply marketing strategies. Paradoxically, constant style changes can actually limit the variety of products available to the public. When companies, such as Nike, go to great lengths to shower markets with a wide array of products, part of their strategy is to limit competition by filling the shelves with as many varieties as possible in order to prevent stores from stocking products from other brands. For example, when the Federal Trade Commission looked at five food products -- bread, hot dogs, ice cream, pasta and salad dressing -- it found that a foodmaker could pay anywhere from $2,313 to $21,768 per item
Re: [PEN-L] query: class consumption function
From: michael perelman [EMAIL PROTECTED] ... I should add that although material goods may not be a guarantee of happiness, one particular type of commodity may be an exception in its ability to ward off unhappiness -- at least consumers seem to think so. In particular, many people turn to medication ... [Let's not neglect those who share Homer Simpson's pursuit of happiness:] May 3, 2005 Kick the Doughnut Habit, and Make Your Nutritionist Smile By MARTICA HEANER No matter which route Reginald Burns takes when he drives to work each morning in Houston, he knows every doughnut shop along the way. Almost every day, he stops for a fix: a Diet Coke and six doughnuts - any kind as long as they have just emerged from the fryer. A hot doughnut literally melts in your mouth, said Mr. Burns, 47, a finance director for a nonprofit organization. Doughnuts have long been an American breakfast staple. At the same time, their lack of quality nutritional content makes most nutritionists cringe. This contradiction makes them a perfect talking point in the debate over how strict dietary recommendations should be. Some dietitians believe that people should strive for an ideal diet, cutting out foods that that have been stripped of many nutrients, packed with potentially detrimental ingredients like the unhealthy kinds of fats or both. In this view, doughnuts don't make the cut. When it comes to health, the only thing good about them is the hole, Carla Wolper, a senior nutritionist at the New York Obesity Research Center. ... Some experts say succumbing to a warm doughnut's allure may increase cravings. Foods containing both sugar and fat are the most palatable and have an appealing mouth feel, said Dr. Kathleen Keller, an appetite researcher at the Obesity Research Center, adding that companies conduct extensive research to determine the exact sugar/fat proportions that are the most enticing. Such feel-good foods are not only hard to resist, they may actually be addictive in people with a stronger than normal genetic propensity to like foods that are especially high in fat and sugar. Brain scans using functional magnetic resonance imaging show that lean and obese people react differently not just to eating tasty foods, but even to looking at them. And high-carbohydrate foods like doughnuts, brain scan studies find, raise the levels of two brain chemicals, serotonin, linked to mood, and dopamine, associated with pleasurable, rewarding sensations, in obese and normal-weight people. Dr. Walter C. Willett, a Harvard researcher who is the author of Eat, Drink and Be Healthy, and a hard-liner when it comes to nutrition, recommends that people kick the doughnut habit. When it comes to health, I do not believe a person should compromise, he wrote in an e-mail message. But it is not always so easy. Dr. Eric Swartz, a chiropractor in Los Angeles, admits to a lifelong struggle to keep his doughnut consumption in check. I have managed to limit myself to eating them once a week, but I could not completely give them up because when I'm depressed, they always make me feel better, he said. ... http://www.nytimes.com/2005/05/03/health/nutrition/03cons.html Carl
Re: [PEN-L] query: class consumption function
for awhile, Winchell's Donuts used Homer Simpson as their poster boy, saying Donuts made me what I am today. JD On 5/3/05, Carl Remick [EMAIL PROTECTED] wrote: [Let's not neglect those who share Homer Simpson's pursuit of happiness:] May 3, 2005 Kick the Doughnut Habit, and Make Your Nutritionist Smile By MARTICA HEANER No matter which route Reginald Burns takes when he drives to work each morning in Houston, he knows every doughnut shop along the way. Almost every day, he stops for a fix: a Diet Coke and six doughnuts - any kind as long as they have just emerged from the fryer.
Re: [PEN-L] query: class consumption function
From: Jim Devine [EMAIL PROTECTED] for awhile, Winchell's Donuts used Homer Simpson as their poster boy, saying Donuts made me what I am today. [John Belushi got there first many years ago. From Saturday Night Live transcripts:] Little Chocolate Donuts Anouncer.Marv Albert [ open to John Belushi preparing to do the Olympic high jump ] Announcer: John Belushi is on his way to a gold medal in the Decathlon! They're setting the bar at seven feet - here's his approach.. [ John Belushi runs toward the bar. Quick cut to John jumping over the top of the bar. Quick cut to John landing on the grass. ] Announcer: He got it! Belushi's won the gold, now he's going for the world's record! [ cut to John Belushi running long-distance sprint and winning, as his fans crowd around him ] [ cut to John at home ] John Belushi: [ seated at breakfast table smoking a cigarette ] I logged a lot of miles training for that day. And I downed a lot of doughnuts. Little Chocolate Donuts. They taste good, and they've got the sugar I need to get me going in the morning. That's why Little Chocolate Donuts have been on my training table since I was a kid. [ cut to John Belushi going for the gold in the javelin toss ] Announcer: Little Chocolate Donuts. The donuts of champions. http://snltranscripts.jt.org/77/77fdonuts.phtml Carl On 5/3/05, Carl Remick [EMAIL PROTECTED] wrote: [Let's not neglect those who share Homer Simpson's pursuit of happiness:] May 3, 2005 Kick the Doughnut Habit, and Make Your Nutritionist Smile By MARTICA HEANER No matter which route Reginald Burns takes when he drives to work each morning in Houston, he knows every doughnut shop along the way. Almost every day, he stops for a fix: a Diet Coke and six doughnuts - any kind as long as they have just emerged from the fryer.
Re: [PEN-L] query: class consumption function
On Tuesday, May 3, 2005 at 10:04:51 (-0700) michael perelman writes: ... Hemlines rise and fall in order to make people dissatisfied with last year's wardrobe. ... Didn't hemlines become shorter and men's pants tighter during WWII to conserve fabric? Bill
Re: [PEN-L] query: class consumption function
One thing that the textbook blather about consumer sovereignty typically forgets is that if there are economies of scale, individual consumers have little say. Each item has to belong to one of a limited number of styles. Truly individualized clothing (say) is pretty costly. Hemlines rise and fall in order to make people dissatisfied with last year's wardrobe. ... -- Jim Devine [EMAIL PROTECTED] http://myweb.lmu.edu/jdevine
Re: [PEN-L] query: class consumption function
On 5/3/05, Jim Devine [EMAIL PROTECTED] wrote: for awhile, Winchell's Donuts used Homer Simpson as their poster boy, saying Donuts made me what I am today. JD --- The Winchell's-Simpson connection is via Frank Zappa, who wrote and sang about WDs in a couple of tunes way back. Matt Groenig is a huge Zappa fan. Ian -- We are what we compute [Duncan Foley]
Re: [PEN-L] query: class consumption function
Consumption and habituation? I'm reading Richard Layard on "Happiness." He talks about two sources of people spending more and not being happier for it. One is habituation -- and I think this is part of what I got from Marglin. Layard says of habituation "As I ratchet up my standards, this reduces the enjoyment I get from any given standard of living." (Still haven't gone back to Marglin, but thanks to both of you for the cites. I'll get there.) As I recall Marglin, he used the example of grad students living happily on almost no income, and then later being unable to live that way again. The second of Layard's mechanism is rivalry. "If others get better off, I need more in order to feel as good as before. So we have two mechanisms which help to explain why all our efforts to become richer are so largely self-defeating in terms of the overall happiness of society." Death to the permanent income hypothesis. That one never made sense to me. Gene Coyle Jim Devine wrote: And then, thanks to Jim, for getting to the part of Marglin I was thinking about -- the consumption function stuff. I'd had a mimeo of the Marglin and didn't remember that it was in two parts. So thanks, Jim. And now if I can just find that, Stephen Marglin, "What Do Bosses Do? Part II" _Review of Radical Political Economics_ v7, n1 (Spr. 1975): 20-37 But the "undertow" stuff is interesting. for more on the "underconsumption undertow", see http://myweb.lmu.edu/jdevine/talks/newOhio.htm
Re: [PEN-L] query: class consumption function
Jim only chose the word undertow because of his S. Cal. beach influences. Lucky he didn't draw on youthful [i.e., Chicago (non-U) ] influences or we would be hearing about wind :-) I dunno. What's wrong with a mighty wind? JD
Re: [PEN-L] query: class consumption function
Paul: as shareholders/bondholders/bankers shift power away from management they take corporate profits away from re-investment and towards capitalist consumption. This will also create an undertow - albeit under-investment rather than underconsumption. But both forms of undertow may come from a common source: the recent rise in power of the capitalist owners vis a vis their workers. is this view yours or Marglin's? why is it true (if it is)? -- Jim Devine [EMAIL PROTECTED] http://myweb.lmu.edu/jdevine
Re: [PEN-L] query: class consumption function
Here Michael Jensen becomes relevant. He insisted that the corporate owners could use the proceeds better than corporate manangement. He wanted mangement to be strapped for funds so that they would have to hunt for efficiencies. He later recanted much of what he wrote. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
Re: [PEN-L] query: class consumption function
Once again, I start with appreciation for Paul's long answer to my query about Marglin -- amazing summary. And then, thanks to Jim, for getting to the part of Marglin I was thinking about -- the consumption function stuff. I'd had a mimeo of the Marglin and didn't remember that it was in two parts. So thanks, Jim. And now if I can just find that, But the undertow stuff is interesting. As I think about macro and climate change in the same tiny lobe of my brain, I guess I start with the (semi-conscious) assumption that workers don't save anything. And since (if) they don't, then the way to deal with climate change is to stop growth in the economy. And the way to do that is to cut, sharply, hours of work. Cut sharply and keep on cutting. Meaning: class struggle. Marglin's ideas have been stewing in my brain for a long time. Thanks again, comrades. Gene Jim Devine wrote: Paul: as shareholders/bondholders/bankers shift power away from management they take corporate profits away from re-investment and towards capitalist consumption. This will also create an undertow - albeit under-investment rather than underconsumption. But both forms of undertow may come from a common source: the recent rise in power of the capitalist owners vis a vis their workers. is this view yours or Marglin's? why is it true (if it is)?
Re: [PEN-L] query: class consumption function
Paul writes:Marglin points out ... that Corporate Management has a higher propensity to invest profits than Corporate Ownership (shareholders) who more favor distributing profits as dividends (hence Capitalist Consumption as a simplification). I don't know if Managers have a greater propensity to invest over-all. They definitely have a greater propensity to invest in their own enterprises, while Owners are more likely to invest in other enterprises. On the other hand, Managers tend to invest in themselves a lot, giving us these outrageous CEO rewards. Part of that -- stock options -- weakens the gap between Management and Ownership. In any event, both are parts of the capitalist class. And I think we would all agree that with the rise of neo-liberalism the Corporate Management-Corporate Ownership balance of power has tilted towards Ownership. Hence, logically a shift in *propensity* towards distributing profits to shareholders rather than retaining them for investment. I guess the rise of Jensenism or the stockholder power movement (see Michael Perelman's post) is part of the neoliberal policy revolution. My supposition comes when I say that the relative rise in Ownership over Management is linked to the fact that the workers are weaker. One part of Management's role (dealing with the workers) is less critical; also, ownership can afford to have crises with its management without the fear that they will lose their shirt to workers; also, there have been political changes giving greater incentives (literally) to receiving dividends; also the social/political climate will no longer foster problems in the face of big dividend payments; etc, etc. Big personal payments to Management has also made it easier to wean them off of a desire to invest profits (carrot and stick). So I think this part is true (and I see it assumed in some research), but I would like to see more research on the point. Managers do much more than just dominate workers. This leaves one offsetting and muddy point. Early in this process, Management turned to other sources of finance: bonds, banks, etc. Was this linked to the rise in Ownership power? (i.e. Management's effort to retain a strong middleman role by bringing in other players? Use of Investment Bankers as power brokers?) No doubt there were also lots of other reasons to bring in these other players (favorable taxation for debt, etc), so this needs to be sorted out and the resulting financial fragility needs to be spelled out. I don't know. So in short: there *may* be TWO undertows - declining worker income and a reduced corporate propensity to invest. And they may be both the result of the decline in worker power. Of course these face two offsetting trends that are also the result of the decline in worker power: the rise in capitalist consumption and the rise in profitability from the decline in wages (i.e. a move along the *new* propensity to invest curve). The late 1990s boom was based on an investment boom (backed by a consumption boom, with both being debt-financed), one that lead to over-investment. I think I can tell a story of how a consumption boom can exist despite an underconsumption undertow, but I don't see one for an investment boom despite an underinvestment undertow. All of this is consistent with the *type* of analysis that Marglin had. But he presented (IMHO) his particular (and maybe atypical) era as a universal under capitalism. Also, What Do Bosses Do? (part I) was a micro-analysis. Looking at the insides of corporations and other capitalist management structures is useful, but we have to look at intercorporate relationships, the changing structure of industries, etc. JD
Re: [PEN-L] query: class consumption function
This is probably just the problem of internet communication - I am saying (or trying to say) nothing you haven't heard before. (Dumenil's last book comes to mind.) I am just now laying it out differently so we can see the contrast with Marglin. (At least I think this is what I am doing.) 1) A shift in Corporate propensity to investment in the real sector Jim D. citing me: Paul writes:Marglin points out ... that Corporate Management has a higher propensity to invest profits than Corporate Ownership (shareholders) who more favor distributing profits as dividends (hence Capitalist Consumption as a simplification). I don't know if Managers have a greater propensity to invest over-all. They definitely have a greater propensity to invest in their own enterprises, while Owners are more likely to invest in other enterprises. On the other hand, Managers tend to invest in themselves a lot, giving us these outrageous CEO rewards. Part of that -- stock options -- weakens the gap between Management and Ownership. In any event, both are parts of the capitalist class. I am saying the Managers of Company A have a higher propensity to invest than its Owners in the *real* sector. The owners of Company A may also then invest in Company B (although some of their dividends will go to Capitalist Consumption), BUT that is *portfolio* investment in Company B. The *real* sector investment of Company B will be decided by its Managers who - these days - have shifted to a new and *lower* propensity to consume curve (just like the Managers of company A). .. .. 2) Trends and Counter Trends So in short: there *may* be TWO undertows - declining worker income and a reduced corporate propensity to invest. And they may be both the result of the decline in worker power. Of course these face two offsetting trends that are also the result of the decline in worker power: the rise in capitalist consumption and the rise in profitability from the decline in wages (i.e. a move along the *new* propensity to invest curve). The late 1990s boom was based on an investment boom (backed by a consumption boom, with both being debt-financed), one that lead to over-investment. I think I can tell a story of how a consumption boom can exist despite an underconsumption undertow, but I don't see one for an investment boom despite an underinvestment undertow. As I said, there was also a counter trend: less worker power also produced lower wages which gave - at least as a *ONE SHOT* - higher profits and thus a higher incentive to invest. Hence the investment boom in the '90s. Put another way: there was a shift from one 'propensity to invest' curve to a lower one (because of stronger Owners) but there was also a temporary move up the *new* 'propensity to invest' curve (because of the one shot influence of lower wages). BTW: I found a poor quality PDF of Marglin's paper at: http://post.economics.harvard.edu/faculty/marglin/papers.html I hope I didn't sound unappreciative of his work. (In 1975 how many people thought the post-war arrangements would end?) BTW2: Jim only chose the word undertow because of his S. Cal. beach influences. Lucky he didn't draw on youthful influences or we would be hearing about wind :-) Paul
Re: [PEN-L] query: class consumption function
paul wrote:In its ultimate form, Kaldor-Pasinetti speaks to income distribution (driven by the difference in capitalist/worker savings rates) but is silent on the causes of the difference in those saving rates. This theorem was an evolution - before the Pasinetti Theorem, Kaldor had workers holding no savings. Conversely, the Marglin article speaks to capitalist/worker saving rates (workers=zero) but is silent on what drives income distribution. luckily, it's Marglin's question that concerns me now. JD
Re: [PEN-L] query: class consumption function
Jim D. writes: luckily, it's Marglin's question that concerns me now. I am not too sure what you mean...but what I was trying to say at the end was that Marglin's question may be shaking the wrong end of the stick. Paul
Re: [PEN-L] query: class consumption function
I sorta have an idea about why the income distribution is getting worse worse (one-sided class war and all that), but my research is focusing on the impact (underconsumption tendencies?) I am not too sure what you mean...but what I was trying to say at the end was that Marglin's question may be shaking the wrong end of the stick. Paul -- Jim Devine [EMAIL PROTECTED] http://myweb.lmu.edu/jdevine
Re: [PEN-L] query: class consumption function
Now I follow you. Your work on what you have called the undertow from reduced worker consumption that will pull down the neo-lib type boom has been intriguing. Please keep us posted on whatever emerges. And, coming back to the Marglin discussion for a second, as shareholders/ bondholders/bankers shift power away from management they take corporate profits away from re-investment and towards capitalist consumption. This will also create an undertow - albeit under-investment rather than underconsumption. But both forms of undertow may come from a common source: the recent rise in power of the capitalist owners vis a vis their workers. Paul At 11:57 AM 4/27/2005 -0700, you wrote: I sorta have an idea about why the income distribution is getting worse worse (one-sided class war and all that), but my research is focusing on the impact (underconsumption tendencies?) I am not too sure what you mean...but what I was trying to say at the end was that Marglin's question may be shaking the wrong end of the stick. Paul -- Jim Devine [EMAIL PROTECTED] http://myweb.lmu.edu/jdevine
Re: [PEN-L] query: class consumption function
Thanks for the encouragement. Wow, that article is a 'blast from the past' - it has been quite a while since I read it so I probably should pass on the question. But it is a very thought provoking question (and with the intoxication of encouragement)...so here goes. If I recall correctly, one theme of Marglin article (published by URPE in the early '70s) is that key elements of the capitalist production process (first the 'putting out' system; then the factory system) were chosen because they offered higher profits for the capitalist (thanks to things like control of the labor force) and that these production processes were NOT necessarily the technically superior choice at the time. On reflection, I believe Marglin's line of thinking covers BOTH the marxian and the ricardo-sraffian perspectives. (I suppose this is not surprising, given Marglin's views at the time.) At first blush there is the obvious link to the marxian tradition of the struggle for control the production process (I wonder if whether Harry Cleaver and Marglin interacted). And Marglin's version of the origins of the 'putting out' system and the factory system are consistent with some (but not all) historians working in the marxist tradition. But the sraffian tradition also relates to Marglin's point - by bringing out the way market economies can produce sub-optimal results in their choice of capital techniques. This inefficiency of capitalism really should have been highlighted as the more relevant outcome of the 'Cambridge capital theory' (instead of just 'reswitching'). A few years after Marglin's article, Vivian Walsh wrote a Cambridge micro textbook Classical and Neoclassical Theories of General Equilibrium that brings this out well (the book is a better course text than Robinson/Eatwell, btw). Essentially, the dated-labor/reswitching effects mean that production possibilities curves are not smooth nor convex. So, capitalists may well choose a technique that has a higher profit rate even though that technique will produce less for society as a whole. What Marglin shows on an historical basis (great historical moments, path dependency) a Sraffa-Classical model shows as an ongoing and inherent flaw in capitalist markets for capital. [Two coincidences, btw: The prominent right-wing refutation of Marglin's article was written by David Landes (tittle: What bosses *really* do 1986), the same fellow Jim D. and I were discussing in the Nazi economics thread (AFIR, Landes wrote a fairly ugly article, with lots of ad hominus red baiting). Also, wasn't it Marglin who produced the quickly-smothered Harvard 'alternative' intro course that emphasized Behavioral Economics (which pen-l's recent thread pointed to as a 'comer')? Marglin seems to have had a trajectory very similar to Sam Bowles.] Paul Gene C. writes: Paul, Thanks for this -- very useful to me. If you are familiar with Margolin's What Do Bosses Do?, where would you slot that in? Gene Coyle
Re: [PEN-L] query: class consumption function
I think Gene was refering to What do Bosses Do? (Part II) which has a class consumption function in it. Thanks for the reminder. Marglin does good work. JD On 4/26/05, Paul [EMAIL PROTECTED] wrote: Thanks for the encouragement. Wow, that article is a 'blast from the past' - it has been quite a while since I read it so I probably should pass on the question. But it is a very thought provoking question (and with the intoxication of encouragement)...so here goes. If I recall correctly, one theme of Marglin article (published by URPE in the early '70s) is that key elements of the capitalist production process (first the 'putting out' system; then the factory system) were chosen because they offered higher profits for the capitalist (thanks to things like control of the labor force) and that these production processes were NOT necessarily the technically superior choice at the time. On reflection, I believe Marglin's line of thinking covers BOTH the marxian and the ricardo-sraffian perspectives. (I suppose this is not surprising, given Marglin's views at the time.) At first blush there is the obvious link to the marxian tradition of the struggle for control the production process (I wonder if whether Harry Cleaver and Marglin interacted). And Marglin's version of the origins of the 'putting out' system and the factory system are consistent with some (but not all) historians working in the marxist tradition. But the sraffian tradition also relates to Marglin's point - by bringing out the way market economies can produce sub-optimal results in their choice of capital techniques. This inefficiency of capitalism really should have been highlighted as the more relevant outcome of the 'Cambridge capital theory' (instead of just 'reswitching'). A few years after Marglin's article, Vivian Walsh wrote a Cambridge micro textbook Classical and Neoclassical Theories of General Equilibrium that brings this out well (the book is a better course text than Robinson/Eatwell, btw). Essentially, the dated-labor/reswitching effects mean that production possibilities curves are not smooth nor convex. So, capitalists may well choose a technique that has a higher profit rate even though that technique will produce less for society as a whole. What Marglin shows on an historical basis (great historical moments, path dependency) a Sraffa-Classical model shows as an ongoing and inherent flaw in capitalist markets for capital. [Two coincidences, btw: The prominent right-wing refutation of Marglin's article was written by David Landes (tittle: What bosses *really* do 1986), the same fellow Jim D. and I were discussing in the Nazi economics thread (AFIR, Landes wrote a fairly ugly article, with lots of ad hominus red baiting). Also, wasn't it Marglin who produced the quickly-smothered Harvard 'alternative' intro course that emphasized Behavioral Economics (which pen-l's recent thread pointed to as a 'comer')? Marglin seems to have had a trajectory very similar to Sam Bowles.] Paul Gene C. writes: Paul, Thanks for this -- very useful to me. If you are familiar with Margolin's What Do Bosses Do?, where would you slot that in? Gene Coyle -- Jim Devine [EMAIL PROTECTED] http://myweb.lmu.edu/jdevine
Re: [PEN-L] query: class consumption function
Paul, Thanks for this -- very useful to me. If you are familiar with Margolin's "What Do Bosses Do?", where would you slot that in? Gene Coyle Paul wrote: Since no one else has replied, I'll try. I didn't know what you meant by "best source", so I am assuming "authoritative". Also, I think it is important to keep separate the Classical/Marxian and the Left-Keynesian (although many do not) on this particular issue of propensity to consume. To me, when the classicals (including Kalecki) assume 'workers save zero' this isn't just economy of modeling - it is a simplifying way of presenting a class relationship. When Cambridge adds worker savings in the Kaldor-Pasinetti form they also give it the role of driving the wage-profit distribution - hence a very different view of class relations. (This reminds me of the 'transformation' issues, and that may not be coincidental. Marx is incomplete when not transforming inputs but he may be trying to simplify larger relationships. Often the "corrections" bring in whole different relationships.) Kalecki Essays in the Theory of Economic Fluctuations, 1939 Ch. 3 "A Theory of Profits", 1942, Economic Journal 52 (207-207) Kaldor "Alternative Theories of Distribution" 1956, Review of Economic Studies 23(2) Hahn The Share of Wages in the Trade Cycle", 1950, Economic Journal The Share of Wages in National Income 1951, Oxford Eco Papers 3(2) Sidney Weintraub An Approach to the Theory of Income Distribution, 1958. Boulding A Reconstruction of Economics, 1950 I can't give good references for a definitive empirical work (maybe that is telling). Anyone out there? If you come across one pls let me know. Meanwhile in the more mainstream neoclassical Keynesian tradition here is a useful very recent paper by Lawrence Klein that does show the impact of income distribution on propensity to consume over 50 years. http://www.newschool.edu/cepa/conferences/papers/050415_klein_the-wealth-effect.pdf Klein's data analysis can't deal directly with the worker-profit comparison because he uses the Gini coefficient as a measure. So today's income compression among wage earners (the shrinking "middle class") gets mixed in with and partly offsets the growing inequality between wages vs. profit income. Inequality is different than class distinctions. Jamie Galbraith prefers a Theil statistic; I might go for the Atkinson or a Squared Coefficient of Variation. Hope this helps. Paul Jim D. writes: what's the best source (both theoretically and empirically) on the classical/left-Keynesian/Marxian notion that workers have a higher marginal propensity to consume than do property-owners?
Re: [PEN-L] query: class consumption function
Since no one else has replied, I'll try. I didn't know what you meant by best source, so I am assuming authoritative. Also, I think it is important to keep separate the Classical/Marxian and the Left-Keynesian (although many do not) on this particular issue of propensity to consume. To me, when the classicals (including Kalecki) assume 'workers save zero' this isn't just economy of modeling - it is a simplifying way of presenting a class relationship. When Cambridge adds worker savings in the Kaldor-Pasinetti form they also give it the role of driving the wage-profit distribution - hence a very different view of class relations. (This reminds me of the 'transformation' issues, and that may not be coincidental. Marx is incomplete when not transforming inputs but he may be trying to simplify larger relationships. Often the corrections bring in whole different relationships.) Kalecki Essays in the Theory of Economic Fluctuations, 1939 Ch. 3 A Theory of Profits, 1942, Economic Journal 52 (207-207) Kaldor Alternative Theories of Distribution 1956, Review of Economic Studies 23(2) Hahn The Share of Wages in the Trade Cycle, 1950, Economic Journal The Share of Wages in National Income 1951, Oxford Eco Papers 3(2) Sidney Weintraub An Approach to the Theory of Income Distribution, 1958. Boulding A Reconstruction of Economics, 1950 I can't give good references for a definitive empirical work (maybe that is telling). Anyone out there? If you come across one pls let me know. Meanwhile in the more mainstream neoclassical Keynesian tradition here is a useful very recent paper by Lawrence Klein that does show the impact of income distribution on propensity to consume over 50 years. http://www.newschool.edu/cepa/conferences/papers/050415_klein_the-wealth-effect.pdf Klein's data analysis can't deal directly with the worker-profit comparison because he uses the Gini coefficient as a measure. So today's income compression among wage earners (the shrinking middle class) gets mixed in with and partly offsets the growing inequality between wages vs. profit income. Inequality is different than class distinctions. Jamie Galbraith prefers a Theil statistic; I might go for the Atkinson or a Squared Coefficient of Variation. Hope this helps. Paul Jim D. writes: what's the best source (both theoretically and empirically) on the classical/left-Keynesian/Marxian notion that workers have a higher marginal propensity to consume than do property-owners?
[PEN-L] query: class consumption function
what's the best source (both theoretically and empirically) on the classical/left-Keynesian/Marxian notion that workers have a higher marginal propensity to consume than do property-owners? -- Jim Devine [EMAIL PROTECTED] http://myweb.lmu.edu/jdevine
