Sunday, January 1, 2012

Joan Robinson on Hayek

"The whole argument, as we could see later, consisted in confusing the current rate of investment with the total stock of capital goods, but we could not make it out at the time."

- Joan Robinson, on Hayek's macroeconomics.

I'm still trying to get a sense of what she's getting at here, but I think it might be related to what I was confused about in this post.


  1. I would be inclined to say that price theory is very relevant here.

  2. I looked her up.

    Wow, was she ever wrong about North Korea.

    On China a direct quote:

    " was hard to believe that, in a socialist country, policy could have been the sport of personal ambition, and it was deflating to be told that the Cultural Revolution is over and that the new aim of policy is modernization."

    Sounds like she was a useful idiot.

  3. Daniel Kuehn: While this is slightly off-topic, are you going to do a post on Joan Robinson and charges against her of intellectual dishonesty?

    Michael Emmett Brady isn't alone in disliking her, although he has taken the time to make a case that Joan Robinson was an opportunistic intellectual fraud in the following books.

    A lot of people don't like her for her abrasive personality and her controversialising (like her statements about the PRC and North Korea, as Lord Vader just pointed out).

    Nevertheless, intellectual dishonesty is a serious charge that I don't think most economists have taken the time to write about. At least not in public...

  4. Intellectual dishonesty didn't come to mind in my brief sojourn through Joan Robinson world; my thinking was more like, hey lady, put down the crack pipe.

    Briefly, why do they say she was intellectually dishonest?

  5. A claim like "Maynard never took the twenty minutes to study the Theory of Value" looks awfully suspicious. She attributed the statement to Gerald Shove after Shove and Keynes had died.

    It doesn't hold up, considering the intimacy between Keynes and Marshall. Paul Samuelson has questioned her mathematical aptitude in private, according to one book by Marjorie (sp?) Turner. Richard Kahn is suspected of having helped write her magnum opus, The Economics of Imperfect Competition.

    People have accused her of intellectual dishonesty in part also because of her controversialising and intellectual capacity to be in question.

    You might want to read this review to get a better idea of where Michael Emmett Brady (and other accusers) are coming from, Lord Vader.

  6. We can talk about Joan Robinson in general or we can talk about the point she makes, or we can talk about Daniels point. I don't know much about Joan Robinson, so I'll pass on that. And the argument she makes here is so brief I have no way of understanding it without more context (and Delong's post doesn't give more).

    I think Daniels point is that there is confusion between investment and existing capital. I agree to some extent as the previous discussion showed. But, each presentation of ABCT that I'm aware of is consistent. There not all the same and don't set up the problem in the same way. Hayek's setting up of the problem in Price and Production is different to that in Pure Theory of Capital. Both are different to Mises. If you mix the setup of one of these theories with that of the others then things quickly get confusing.

  7. Blue...

    I read the review; then I ventured over to the guy's blog. Interesting (though unrelated) stuff at the blog. So thanks for introducing and all that.

  8. Lord Vader: Don't you mean his account web-page? Cos' the last time I checked, Michael Emmett Brady doesn't have a blog.

  9. Personal attacks on Joan Robinson don't refute any individual argument she made. Yes, Robinson supposedly had a disagreeable personality: but then so did Mises, whose praise of Italian fascism is on the same level as Robsinson's praise of China.

    Like any human being, she held (1) false views and (2) true views.

  10. Lord Keynes: Have you read the accusations that Brady posed in that review? He does seem to back up his statements with specific parts of that book...

  11. Robinson is confusing a modelling assumption for a statement of fact. The lectures Hayek delivered at LSE after 'his visit at cambridge' were later collected in 'Prices and production'. In it Hayek is explicit in saying that he is assuming that monetary demand for capital goods is equal to the total stock of capital goods only for the purpose of bringing his central concern, that of how monetary factors alter the structure of capital over time, into sharper relief. However Robinson later learned of Hayek's alleged confusion it wasn't by actually reading him.

    I think Hayek's answer to Kahn which Robinson relays later in the extract over at delong's - that his purchase of an overcoat would increase unemployment - is a similar case. The triangles she's talking about assume equilibrium and I can only imagine Hayek ever stating that a particular act of consumption would necessarily increase unemployment with view to such an assumption.

  12. Blue,

    My bad. I thought this was his blog:

    Not quite sure why I got that impression.

  13. "The triangles she's talking about assume equilibrium and I can only imagine Hayek ever stating that a particular act of consumption would necessarily increase unemployment with view to such an assumption."

    And yet some Austrians deny that Hayek assumed equilibrium positions as the starting point and end points in his early ABCT work.

    That anecdote illustrates nicely why Hayek's theory was considered rot: what relevance is an equilibrium state to the 1931 UK economy hit by depression? In fact, what relevance is it to any real world economy? General equilibrium does not exist in the real world.

  14. LK,

    We can all agree that general equilibrium doesn't exist, and Hayek would surely support you in that. But that doesn't mean that an economy cannot be close to general equilibrium.

    The question in Keynesian terms is if there is always excess production capacity. It's interesting that your namesake, the real Lord Keynes thought that "full employment" was a plausible state of real economies. That of course leads to the existence of a natural rate of frictional unemployment. Do you disagree with this?

    This is what I can never understand about the debate about Hayek's ABCT beginning in equilibrium/ full employment. Does anyone seriously think this isn't reasonable? Was the last 15 years before the 2008 crisis a period where the economy was performing under-capacity?

    To put it another way what historical evidence is there that economies have been performing persistently below capacity outside of recessions?

    I'm not sure I believe the anecdote about what Kahn said after the prices and production lecture. There aren't really many equations in P&P, or in Hayek's work in general. That said the question isn't if buying a raincoat on that specific date in 1931 causes employment to rise, I doubt even Kahn thought the question meant that. The subject is whether buying a raincoat at any time causes employment to rise.


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