Thursday, June 11, 2015

#tbt Joan Robinson 1972 The Second Crisis of Economic Theory

More often than not I find my curmudgeonly self channeling the snark of Joan Robinson. To me, Robinson was the best economist to ever live.

First, Robinson, unlike many (dare I say most?) economists is actually concerned with economic history and the history of economic thought. To her, a theory was only as good as it was able to explain a particular situation that actually happens in the real world.

Second, Robinson rarely, if ever used math. The distinct advantage to this approach is that she actually talks about real things. So focused was Robinson on real things instead of math, that she led the charge on the UK side of the Capital Controversy which ultimately demonstrated the folly of neoclassical production functions theoretically, mathematically and empirically.

In this particular piece, she takes on the economic orthodoxy's response to the "Second Crisis" - that of increasing inflation coupled with economic stagnation. To her both crises - that of the great depression and that of the great stagflation - evidence a fundamental failure to seriously consider the questions Keynes tried to evoke: How do we maintain near-full employment, and what is employment for?

Download the article here