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1/2Economic & Political Weekly EPW august 14, 2010 vol xlv no 33 31

book review

An Intellectual Phenomenon Called

Joan Robinson

Amit Bhaduri

Joan Robinson by G C Harcourt and Prue Kerr(London: Palgrave Macmilla n), 2009; pp x+270,65.00.

One of the most colourful and ver-

satile economists of the 20th

century, Joan Robinson, aroused

admiration and hostility from the profes-

sion in almost equal measure. The volume

under review by Harcourt and Kerr on

Joan Robinson, in the Great Thinkers in

Economics series edited by Thirlwall,

helps us to understand this apparently

puzzling phenomenon in an apparently

scientic subject.

It would be a misleading over-simplica-

tion to say that the admiring and the dis-

paraging comments were simply from two

sides of the political divide. Joan Robinsons

contribution to academic economics was

so obviously important from a theoretical

point of view that even those who thor-

oughly disagreed with her world view could

not simply dismiss it. The issues involved

often went to the heart of the subject, andthe main merit of the book lies in explain-

ing them accurately to an uninitiated audi-

ence in an accessible way. Professional

economists who worry about the relation

between economics as a body of scientic

principles, and economics as ideology (or

rhetoric) would benet enormously by un-

derstanding the intellectual phenomenon

in economics called Joan Robinson.

This book would remain valuable for a

very long time because it illuminates the

complex relation between science and

ideology in economics which received

considerable attention in Robinsons writ-

ings throughout her life. During one of her

visits to Poland, I was told she made a very

interesting observation. The best test of a

scientic theory in economics, she is re-

ported to have said, is when you change your

politics, but do not change the economic

principles you apply. Its truth should be

apparent after the recent crisis. Stimulat-

ing demand through scal policy has beenaccepted by dogmatic free marketers, not

only in the United States and Europe, but

even in India by economists trained in the

World Bank type ideology.

A Rebel

Robinson was by instinct an intellectual

rebel, a rebel not identied either with the

orthodox Left or Right. This is because her

rebellious instinct was subservient to acute

logical reasoning, not by commitment to

any ideology. Professional economists

could not simply ignore her logically craft-

ed arguments. Brought up on the Marshal-

lian tradition of partial equilibrium analy-

sis (of mostly perfect competition), Joan

Robinson received international fame and

attention with the publication of her Eco-nomics of Imperfect Competition (1933). It

was a masterpiece in microeconomic theory

of the time. Most economists would have

developed vested interests in the particular

line of research which brought them such

professional success, and would have de-

fended its usefulness till the end of their

life. Joan Robinson did exactly the oppo-

site! She began to question its importance

as a line of research and, joined soon the

emerging Keynesian revolution in Cam-

bridge which reshaped macroeconomics.

Harcourt and Kerr document (Chapters 3

and 4) that for a while (mostly during the

1940s) three almost parallel lines of en-

quiry proceeded in her work, as she tried

sorting out the relation between imperfect

market structures and Keynesian theory.

First, and most obvious was the relation

between imperfect competition (the falling

demand curve) and deciency of aggregate

demand. Second, since Marx had con-

nected his theory of exploitation with therealisation problem arising from insufcient

demand, she found it natural to explore

the links between Marx and Keynes. And

nally, the analytical overlap between the

theories of Marx and Keynes despite their

diametrically opposite attitude to capital-

ism the former theorised to destroy it,

and the latter theorised to preserve it ledRobinson to face the question of the role of

ideology in economic theory, helping her to

formulate her own views about the role of

the state and the market especially in the

context of post-war planning in Britain. It

was now an intellectual challenge to rec-

oncile these three aspects in a comprehen-

sive analytical framework. Joan Robinson

searched for this framework throughout

her life, and her most perceptive work was

probably simulated by this search. She

searched relentlessly with complete intel-

lectual honesty, often admitting her own

mistakes about false starts without caring

for academic respectability or recognition,

and broke many intellectual conventions

in the process.

The attempt at reconciling theoretically

the three aspects of her enquiry was made

in herAccumulation of Capital (1956) with

its central propositions briey reformulated

in a short volume,Essays in the Theory of

Economic Growth (1962). She believed,probably rightly that such a framework

should be embedded in long period ten-

dencies of capitalist growth by generalis-

ing the General Theory in the long period

setting. Joan Robinson was the rst in the

immediate circle of Keynes to recognise

that the link between Marx and Keynes

could be deciphered through Kaleckis

work, while Harrod (1939) had already

provided the basic analytics for setting

Keynes analysis in the context of the long

period. A central point of her theory of

growth, combining Kalecki and Harrod,

was the two-way relation between the

rate of prot and the rate of economic

growth. In her scheme, growth affects

prot through realisation (Kaleckis version

of the multiplier mechanism) and prot

affects growth through an investment

function inuenced by prot expectations

(which can be similar to an accelerator-

like relation of Harrod).

In this scheme, class distribution of in-come also affects the multiplier relation

by affecting the savings propensity, and

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BOOK REVIEW

august 1 4, 2010 vol xlv no 33 EPW Economic & Political Weekly32

this brings into the argument the impact

of exogenous technical progress on in-

come distribution. One point not men-

tioned by the authors of this volume is the

unfortunate intellectual insularity of the

Cambridge school. Although Robinson in

particular had been trying to integrate the

market structure of imperfect competitionwith aggregate demand in her work, she

overlooked Josef Steindls seminal work

on this very theme,Maturity and Stagna-

tion of American Capitalism (1951) written

in post-war Oxford under the intellectual

inuence of Kalecki. Undoubtedly, The

Accumulation of Capital would have been

enriched by Steindls theoretical and em-

pirical insights on the subject.

Robinsons growth theory made novel

connections with theories of value and

distribution through its treatment of capi-

tal. She took the lead from Wicksell, and

showed how change in relative price be-

tween capital and consumer goods at dif-

ferent rates of prot (an old problem due

to Ricardo) plays havoc with the traditional

production function. It becomes both a

useless and a misleading tool of analysis,

destroying in particular the marginal pro-

ductivity theory of distribution. Since she

had already established in her scheme

that prot was inuenced by growth, themarginal productivity of capital was

unnecessary for her analysis. Moreover,

outside a one commodity world it was a

logically faulty concept, and gave a mis-

leading explanation of the rate of prot

through relative scarcity of capital as a

factor of production. In the rejection of the

relative scarcity explanation of prot, her

economics came dangerously close to

upsetting a main ideological pillar of con-

ventional economics. Conventional econo-

mists who had found it so convenient to

believe in an apologetic justication of

prot as the reward (for temporal or inter-

temporal) scarcity of capital hated that

their beliefs were being questioned on

logical grounds.

Sraffas classicProduction of Commodi-

tities by Means of Commodities (1960) set

matters to rest by exposing the logical

hollowness of the entire neoclassical para-

digm, and its explanation of prot in parti-

cular. For conventional academic wisdomit became a logical disaster. Marginal

productivity theory of prot was shown to

have no logical foundation. Re-switching

of technique was shown to be possible, as

the same method of production (tech-

nique) could be protable both at a rela-

tively low and a relatively high real wage

rate and yet be unprotable in the inter-

mediate range. Thus it destroyed irrevoca-

bly the inverse relation between the rateof prot and the capital-labour ratio,

measuring the relative scarcity of capi-

tal in aggregate models.

Capital Controversy

In this demolition job of neoclassical capi-

tal theory, Joan Robinson again became a

main player, and popularised its implica-

tions for economic theory through her

writings. The debate on capital theory was

logically won with its devastating implica-

tions for standard theory, and yet nothing

changed in the profession! Business con-

tinued as usual, because the vested intel-

lectual interest in standard neoclassical

economics as a worldwide industry was

too great. It also made clear that economic

ideology in the service of capitalism does

not need logic on its side! In disgust, Joan

Robinson picked up the word mampsimus

from the dictionary which means persisting

deliberately in mistake (pp 103-05).

However, in her search for a more real-istic and logically coherent theory of capi-

talistic growth, Joan Robinson herself be-

gan to see that the capital controversy

could play only a limited negative role. It

was useful for clearing up the ideological

cobwebs of neoclassical theory about dis-

tribution and prot. And yet, a realistic

theory of economic growth has to meet a

different and even more difcult challenge.

A theory of growth that wishes to illumi-

nate history has to take the question of path

dependence far more seriously. The his-

torically inherited stock of capital goods

in this sense raised a different set of issues

in this context which had been ruled by the

assumption of malleability of the stock of

capital. Her idea of the pseudo production

function in which each point on an imag-

ined production function had its capital

stock consistent with its past history entailed

a deeper criticism of the equilibrium

method in economic theory. She had found

an incomplete answer already in herAccu-mulation by comparing different equilibrium

growth paths, but as she rightly insisted,

comparison is a very unsatisfactory way

of understanding change.

By taking snapshots of different posi-

tions and comparing them, you hardly un-

derstand how things change or develop

from one position to another through

time. It is a problem to which we do not

know the answer. Irreversibility in time,path dependence arising in particular

from past mistakes in forecasting the

future or small probability chance events

combine in historical (as well as biological)

processes. We can describe them in his-

torical narratives, but their complexities

remain analytically intractable. With the

intellectual honesty typical of her, Joan

Robinson refused to fudge the problem,

and insisted on the distinction between

accumulation in historical and in logical

time to highlight the contrast. Joan Robinson

became a source of discomfort to other

economists, as she admitted candidly that

she did not know the answer and was try-

ing to nd a way. Because, through this

admission she made us aware how most

academic economists were simply fudg-

ing their answers by avoiding the real

analytical issues. Towards the end of her

life, she was fond of repeating in lectures

and private conversations that economics

is an important subject, mainly because itprevents you from being fooled by other

economists! This is a lesson we all need to

take to heart in this media age confronted

frequently with economists who have

either turned politicians or pretend to be

modern pundits.

Amit Bhaduri (abhaduri40@hotmail.com) is

professor emeritus at the Jawaharlal Nehru

University, New Delhi.

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