Unlike Piketty's famous tome, this is proper textbook presenting a Unified Theory of every aspect of the Economy without any reliance on standard assumptions of Utility Maximization, Perfect Competition, Rational Expectations and so on. This book has two great strengths
1) Shaikh is a superb scholar of Classical and 'heterodox' Economics- his exposition is magisterial and not tendentious in any way.
2) Shaikh has embraced the methods of 'Econophysics' and produces compelling empirical evidence for some truly innovative, indeed revolutionary, insights and predictions.
Make no mistake- this is a path-breaking academic textbook but the author has worked very hard to express himself as clearly as possible so as to reach the intelligent layman who has no time for Academic point-scoring or Epistemological Methodenstreit.
Shaikh is a very very bright guy who could easily dazzle us with his literary skills and encyclopedic knowledge of fashionable things like 'chaos' and 'turbulence'. But he simply isn't interested in celebrity status.
He is a man of the Left- he volunteered to go teach in a school in Harlem in the late Sixties- and has been a Professor at the New School for many years. Yet he doesn't wear his heart on his sleeve or play the 'race' card. This is because his Theory is based on Reality and he wants us to use it to make things better.
It may be objected that Marxism, nowadays, is represented by the likes of Varoufakis. It is a pose, a gimmick, nothing more. Shaikh's empirical and original theoretical work already attracts attention and gets incorporated in the models of the truly smart. But Marxism isn't about being smart its about 'attitude' and being entitled enough to indulge in 'retro' histrionics- thus Shaikh's book can't become a best-seller like Piketty's. All this may be true. However, the fact is, whether you are a young person choosing a career or a middle aged man worried about your pension, or a retired person wondering how much you can afford to gift away to your children, we all need to have a better model of what is going to happen in the Economy. Shaikh's book helps us do this.
1) Shaikh is a superb scholar of Classical and 'heterodox' Economics- his exposition is magisterial and not tendentious in any way.
2) Shaikh has embraced the methods of 'Econophysics' and produces compelling empirical evidence for some truly innovative, indeed revolutionary, insights and predictions.
Make no mistake- this is a path-breaking academic textbook but the author has worked very hard to express himself as clearly as possible so as to reach the intelligent layman who has no time for Academic point-scoring or Epistemological Methodenstreit.
Shaikh is a very very bright guy who could easily dazzle us with his literary skills and encyclopedic knowledge of fashionable things like 'chaos' and 'turbulence'. But he simply isn't interested in celebrity status.
He is a man of the Left- he volunteered to go teach in a school in Harlem in the late Sixties- and has been a Professor at the New School for many years. Yet he doesn't wear his heart on his sleeve or play the 'race' card. This is because his Theory is based on Reality and he wants us to use it to make things better.
It may be objected that Marxism, nowadays, is represented by the likes of Varoufakis. It is a pose, a gimmick, nothing more. Shaikh's empirical and original theoretical work already attracts attention and gets incorporated in the models of the truly smart. But Marxism isn't about being smart its about 'attitude' and being entitled enough to indulge in 'retro' histrionics- thus Shaikh's book can't become a best-seller like Piketty's. All this may be true. However, the fact is, whether you are a young person choosing a career or a middle aged man worried about your pension, or a retired person wondering how much you can afford to gift away to your children, we all need to have a better model of what is going to happen in the Economy. Shaikh's book helps us do this.
2 comments:
Hi Vivek,
I recall that Anwar Shaikh's criticism of the Okishio theorem- whereby an innovation in a basic industry causes profit rate for the innovator as well as all other entrepreneurs to rise (if real wages are constant- as by the iron law)- was itself criticized, by Van Parijs for example, as 'neo-classical' or 'Cartesian'.
Interestingly, Van Parijs is now famous as a sponsor of the 'Basic Income' manifesto which is being considered by some smaller European countries. He has also suggested a language tax- especially on globally hegemonic 'English'- and this might be of interest to Indian readers of your blog.
Since then Shaikh has developed a more sophisticated model- based on dynamic turbulence which is empirical in the 'econophysics' sense but still committed to the Marxian notion of Crisis. He does this by drawing a distinction between types of Capitalist and argues that there is equalization between entrepreneurs with the same innovative genius across fields. However, there is a basic problem with Okishio and his critics, in fact a more general problem which reappears in every ergodic result in Trade & Growth theory which can also be derived from the Perron-Frebonius theorem. This has to do with the assumption that the underlying matrix is non-negative. This is bound to be violated in any model which distinguishes between 'basic' and 'non-basic' or 'consumer' and 'capital' or 'tradable' and 'non-tradable' goods.
Marx's famous statement- 'No capitalist ever voluntarily introduces a new method of production, no matter how much more productive it may be, and how much it may increase the rate of surplus-value, so long as it reduces the rate of profit'- only applies is there is no barrier (e.g. a patent law) to imitation and if the rate of innovation is faster than that barrier erodes and no class has achieved satiety. Clearly, industries exist where all these conditions are met and the rate of profit can rise as a result of innovation. Moreover, if the higher profit rate industries grow faster than others then the general profit rate will rise. Of course, in real world economies, innovators or their evangelists, may gain a rent on ability and this may be irrationally capitalized leaving such innovators sitting on piles of cash because they don't want to bid up the price of the new innovators whom they will sooner or later absorb or be absorbed by. Shaikh has pointed out that a cash pile in a 'sunset' industry is negatively valued by the Market whereas an Apple or a Microsoft sitting on a windfall gains a premium because it is believed they will be able to acquire and exploit the innovations of the 'new kids on the block' more cheaply than anybody else.
There is a 'Crisis' for Social Democracies at the moment based on deciding whether 'workers' should be reclassified as 'disabled'. Obviously there is a moral hazard here as well as a principal-agent problem- workers are also voters and 'disability' affects reproductive success- at least for men. In this context, Van Parijis's proposals gains salience- instead of a disability check, that segment of the population which can't exert downward pressure on relevant real wages (i.e those in the expanding high profit rate sector) can be fobbed off with a Basic Income or, in the case of non-English speakers, allowed to specialize in Sunset industries (upon whom the incidence of the English tax would be too heavy) while singing their native folk songs.
Many thanks, Martin, for your erudite comment. I wonder if Braess's paradox- whereby removing part of a network can improve things while adding to it can worsen outcomes- is relevant w.r.t to your observation re. the Perron-Frebonius theorem. In other words, even the distinction between who is causing and who is solving the problem of congestion breaks down just as the distinction between consumption and capital goods etc becomes problematic.
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