The Marginal Productivity Theory Of The Price Of Capital: An Historical Perspective On The Origins Of The Codswallop

Although it might have been expected that, by this point in time, the unacceptability of the marginal productivity theory of the return on capital would be universally agreed, that is evidently not the case. Popular textbooks still propound the dogma to the innocent. This note is presented in the hope that a succinct indication of the origins of the theory it will contribute to a more general appreciation of the unrealistic and illogical nature of this doctrine.

An Inquiry Into The Theory, Causes And Consequences Of Monitoring Indicators Of Health And Safety At Work

This paper engages in an interdisciplinary survey of the current state of knowledge related to the theory, determinants and consequences of occupational safety and health (OSH). First, it synthesizes the available theoretical frameworks used by economists and psychologists to understand the issues related to the optimal provision of OSH in the labour market. Second, it reviews the academic literature investigating the correlates of a comprehensive set of OSH indicators, which portray the state of OSH infrastructure (social security expenditure, prevention, regulations), inputs (chemical and physical agents, ergonomics, working time, violence) and outcomes (injuries, illnesses, absenteeism, job satisfaction) within workplaces. Third, it explores the implications of the lack of OSH in terms of the economic and social costs that are entailed. Finally, the survey identifies areas of future research interests and suggests priorities for policy initiatives that can improve the health and safety of workers.

Native language, spoken language, translation and trade

We construct new series for common native language and common spoken language for 195 countries, which we use together with series for common official language and linguis-tic proximity in order to draw inferences about (1) the aggregate impact of all linguistic factors on bilateral trade, (2) whether the linguistic influences come from ethnicity and trust or ease of communication, and (3) in so far they come from ease of communication, to what extent trans-lation and interpreters play a role. The results show that the impact of linguistic factors, all together, is at least twice as great as the usual dummy variable for common language, resting on official language, would say. In addition, ease of communication is far more important than ethnicity and trust. Further, so far as ease of communication is at work, translation and inter-preters are extremely important. Finally, ethnicity and trust come into play largely because of immigrants and their influence is otherwise difficult to detect.

Native language, spoken language, translation and trade

We construct new series for common native language and common spoken language for 195 countries, which we use together with series for common official language and linguis-tic proximity in order to draw inferences about (1) the aggregate impact of all linguistic factors on bilateral trade, (2) whether the linguistic influences come from ethnicity and trust or ease of communication, and (3) in so far they come from ease of communication, to what extent trans-lation and interpreters play a role. The results show that the impact of linguistic factors, all together, is at least twice as great as the usual dummy variable for common language, resting on official language, would say. In addition, ease of communication is far more important than ethnicity and trust. Further, so far as ease of communication is at work, translation and inter-preters are extremely important. Finally, ethnicity and trust come into play largely because of immigrants and their influence is otherwise difficult to detect.

A Framework for Analyzing Language and Welfare

The paper proposes a general model that will encompass trade and social benefits of a common language, a preference for a variety of languages, the fundamental role of translators, an emotional attachment to maternal language, and the threat that globalization poses to the vast majority of languages. With respect to people’s emotional attachment, the model considers minorities to suffer losses from the subordinate status of their language. In addition, the model treats the threat to minority language as coming from the failure of the parents in the minority to transmit their maternal language (durably) to their children. Some familiar results occur. In particular, we encounter the usual social inefficiencies of decentralized solutions to language learning when the sole benefits of the learning are communicative benefits (though translation intervenes). However, these social inefficiencies assume a totally different air when the con-sumer gains of variety are brought in. One fundamental aim of the paper is to bring together contributions to the economics of language from labor economics, network externalities and international trade that are typically treated separately.

A Framework for Analyzing Language and Welfare

The paper proposes a general model that will encompass trade and social benefits of a common language, a preference for a variety of languages, the fundamental role of translators, an emo-tional attachment to maternal language, and the threat that globalization poses to the vast ma-jority of languages. With respect to people’s emotional attachment, the model considers minor-ities to suffer losses from the subordinate status of their language. In addition, the model treats the threat to minority language as coming from the failure of the parents in the minority to transmit their maternal language (durably) to their children. Some familiar results occur. In particular, we encounter the usual social inefficiencies of decentralized solutions to language learning when the sole benefits of the learning are communicative benefits (though translation intervenes). However, these social inefficiencies assume a totally different air when the con-sumer gains of variety are brought in. One fundamental aim of the paper is to bring together contributions to the economics of language from labor economics, network externalities and international trade that are typically treated separately.

Still More On Why We Should Bury The Marginal Productivity Theory Of The Price Of Capital: A Supplementary Note

The purpose of this note is to supplement the author’s earlier remarks on the unsatisfactory nature of the neoclassical account of how the return on capital is determined. (See Strathclyde Discussion Paper 12-03: “The Marginal Productivity Theory of the Price of Capital: An Historical Perspective on the Origins of the Codswallop”). The point is made via a simple illustration that certain matters which are problematical in neoclassical terms are perfectly straightforward when viewed from a classical perspective. Basically, the marginalist model of the nature of an economic system is not fit for purpose in that it fails to comprehend the essential features of a surplus-producing economic system as distinct from one merely of exchange.

Caught Between Theory and Practice: Government, Market, and Regulatory Failure in Electricity Sector Reforms

The world-wide electricity sector reforms of the early 1990s have revealed the considerable complexities of making market driven reforms in network and infrastructure industries. This paper reflects on the experiences to date with the process and outcomes of marketbased electricity reforms across less-developed, transition and developed economies. The reforms outcomes suggest similar problems facing the electricity sector of these countries though their contexts vary significantly. Many developing and developed economies continue to have investment inadequacy concerns and the need to balance economy efficiency, sustainability and social equity after more than two decades of experience with reforms. We also use a case study of selected countries that in many respects represent the current state of the reform though they are rarely examined. Nepal, Belarus and Ireland are chosen as country-specific case studies for this purpose. We conclude that the changing dynamics of the electricity supply industry (ESI) and policy objectives imply that analysing the success and failure of reforms will indeed remain a complex process.

Nearer to Sraffa than Marx: Adam Smith on Productive and Unproductive Labour

This paper supercedes an earlier attempt I made to pin down the meaning and significance of Adam Smith’s theory of productive and unproductive labour. (Strathclyde Discussion Papers in Economics, No.08-05) My conclusion then was that while Smith’s understanding of what was needed to achieve economic growth was sound, his discussion was marred by apparently conflicting definitions of productive labour. That (essentially conventional) interpretation does not, I now believe, do justice to Smith. Revision is therefore called for: hence the present paper.

Ghosts in contemporary African diasporic literature : re-visioning history, memory and identity

Starting from the observation that ghosts are strikingly recurrent and prominent figures in late-twentieth African diasporic literature, this dissertation proposes to account for this presence by exploring its various functions. It argues that, beyond the poetic function the ghost performs as metaphor, it also does cultural, theoretical and political work that is significant to the African diaspora in its dealings with issues of history, memory and identity. Toni Morrison's Beloved (1987) serves as a guide for introducing the many forms, qualities and significations of the ghost, which are then explored and analyzed in four chapters that look at Fred D'Aguiar's Feeding the Ghosts (1998), Gloria Naylor's Mama Day (1988), Paule Marshall's Praisesong for the Widow (1983) and a selection of novels, short stories and poetry by Michelle Cliff. Moving thematically through these texts, the discussion shifts from history through memory to identity as it examines how the ghost trope allows the writers to revisit sites of trauma; revise historical narratives that are constituted and perpetuated by exclusions and invisibilities; creatively and critically repossess a past marked by violence, dislocation and alienation and reclaim the diasporic culture it contributed to shaping; destabilize and deconstruct the hegemonic, normative categories and boundaries that delimit race or sexuality and envision other, less limited and limiting definitions of identity. These diverse and interrelated concerns are identified and theorized as participating in a project of "re-vision," a critical project that constitutes an epistemological as much as a political gesture. The author-based structure allows for a detailed analysis of the texts and highlights the distinctive shapes the ghost takes and the particular concerns it serves to address in each writer's literary and political project. However, using the ghost as a guide into these texts, taken collectively, also throws into relief new connections between them and sheds light on the complex ways in which the interplay of history, memory and identity positions them as products of and contributions to an African diasporic (literary) culture. If it insists on the cultural specificity of African diasporic ghosts, tracing its origins to African cultures and spiritualities, the argument also follows gothic studies' common view that ghosts in literary and cultural productions-like other related figures of the living dead-respond to particular conditions and anxieties. Considering the historical and political context in which the texts under study were produced, the dissertation makes connections between the ghosts in them and African diasporic people's disillusionment with the broken promises of the civil rights movement in the United States and of postcolonial independence in the Caribbean. It reads the texts' theoretical concerns and narrative qualities alongside the contestation of traditional historiography by black and postcolonial studies as well as the broader challenge to conventional notions such as truth, reality, meaning, power or identity by poststructuralism, postcolonialism or queer theory. Drawing on these various theoretical approaches and critical tools to elucidate the ghost's deconstructive power for African diasporic writers' concerns, this work ultimately offers a contribution to "speciality studies," which is currently emerging as a new field of scholarship in cultural theory.

Suppliers of Priors: A Theory of Retailing Inspired by the Market for Chinese Antiquities

Adverse selection may thwart trade between an informed seller, who knows the probability p that an item of antiquity is genuine, and an uninformed buyer, who does not know p. The buyer might not be wholly uninformed, however. Suppose he can perform a simple inspection, a test of his own: the probability that an item passes the test is g if the item is genuine, but only f < g if it is fake. Given that the buyer is no expert, his test may have little power: f may be close to g. Unfortunately, without much power, the buyer's test will not resolve the difficulty of adverse selection; gains from trade may remain unexploited. But now consider a "store", where the seller groups a number of items, perhaps all with the same quality, the same probability p of being genuine. (We show that in equilibrium the seller will choose to group items in this manner.) Now the buyer can conduct his test across a large sample, perhaps all, of a group of items in the seller's store. He can thereby assess the overall quality of these items; he can invert the aggregate of his test results to uncover the underlying p; he can form a "prior". There is thus no longer asymmetric information between seller and buyer: gains from trade can be exploited. This is our theory of retailing: by grouping items together - setting up a store - a seller is able to supply buyers with priors, as well as the items themselves. We show that the weaker the power of the buyer�s test (the closer f is to g), the greater the seller�s profit. So the seller has no incentive to assist the buyer � e.g., by performing her own tests on the items, or by cleaning them to reveal more about their true age. The paper ends with an analysis of which sellers should specialise in which qualities. We show that quality will be low in busy locations and high in expensive locations.

Did Keynes in the General Theory significantly misrepresent J S Mill?

It has been alleged that J M Keynes, quoting in the General Theory a passage from J S Mill's Principles, misunderstood the passage in question and was therefore wrong to cite Mill as an upholder of the 'classical' proposition that 'supply creates its own demand'. We believe that, although Keynes was admittedly in error with respect to, so-to-say, the 'letter' of Mill's exposition, he did not mislead readers as to the 'substance' of Mill's conception. The purpose of this paper is to demonstrate that J S Mill did indeed stand for a 'classical' position, vulnerable to Keynes's critique as developed in the General Theory. [This is a revised version of an earlier working paper: 'Keynes, Mill and Say's Law', Strathclyde Papers in Economics, 2000/11]

‘Right Back Where We Started From’: From ‘The Classics’ To Keynes, And Back Again

The purpose of this paper is to highlight the curiously circular course followed by mainstream macroeconomic thinking in recent times. Having broken from classical orthodoxy in the late 1930s via Keynes’s General Theory, over the last three or four decades the mainstream conventional wisdom, regressing rather than progressing, has now come to embrace a conception of the working of the macroeconomy which is again of a classical, essentially pre-Keynesian, character. At the core of the analysis presented in the typical contemporary macro textbook is the (neo)classical model of the labour market, which represents employment as determined (given conditions of productivity) by the terms of labour supply. While it is allowed that changes in aggregate demand may temporarily affect output and employment, the contention is that in due course employment will automatically return to its ‘natural’ (full employment) level. Unemployment is therefore identified as a merely frictional or voluntary phenomenon: involuntary unemployment - in other words persisting demand-deficient unemployment - is entirely absent from the picture. Variations in aggregate demand are understood to have a lasting impact only on the price level, not on output and employment. This in effect amounts to a return to a Pigouvian conception such as targeted by Keynes in the General Theory. We take the view that this reversion to ideas which should by now be obsolete reflects not the discovery of logical or empirical deficiencies in the Keynes analysis, but results rather from doctrinaire blindness and failure of scholarship on account of which essential features of the Keynes theory have been overlooked or misrepresented. There is an urgent need for a critical appraisal of the current conventional macroeconomic wisdom.

The Effects of Experience on Preference Uncertainty: Theory and Empirics for Public and Quasi-Public Environmental Goods

This paper develop and estimates a model of demand estimation for environmental public goods which allows for consumers to learn about their preferences through consumption experiences. We develop a theoretical model of Bayesian updating, perform comparative statics over the model, and show how the theoretical model can be consistently incorporated into a reduced form econometric model. We then estimate the model using data collected for two environmental goods. We find that the predictions of the theoretical exercise that additional experience makes consumers more certain over their preferences in both mean and variance are supported in each case.