Printer Friendly

The Economic Theory of Structure and Change.

This book is about economic structure, the long-lived social and technological relations which propel and constrain economic activity and change. More precisely, it is about production structure, the input-output relations which link an economy's sectors. More precisely still, it is about models of production structure in economic theory, the visions of economic purpose which alternative models reveal, and the dynamics of system development which alternative models engender. In an earlier work, Foundations of Economics: Structures of Inquiry and Economic Theory, Baranzini and Scazzieri identify two competing lines of research in the advance of economic knowledge, one emphasizing social organization and production, the other emphasizing exchange, allocation, and choice. These classical and neoclassical perspectives reappear in the present volume, providing insights into changing economic structure and changing economic theory.

The book proposes classification schemes for a science of political economics, much in the tradition of Adolph Lowe's work On Economic Knowledge. Its nine demanding essays examine and extend theories of economic structure framed by Hicks, Leontief, Lowe, and Pasinetti on foundations laid by Boehm-Bawerk, Jevons, Marx, Quesnay, Ricardo, Smith and Walras. Contributions and challenges to the theory of economic structure and, in the nested spirit of this work, to the structure of economic theory, by Allais, Keynes, Schumpeter, and Sraffa are extensively treated as well. The volume's breadth and focus are conveyed by its contents: 1) Economic structure and political institutions by Lorenzo Ornaghi; 2) Economic structure and the theory of equilibrium by Takashi Negishi; 3) Structure and change within the circular theory of production by Heinrich Bortis; 4) Specification of structure and economic dynamics by Michael A. Landesmann and Roberto Scazzieri; 5) Vertical integration, growth and sequential change by Jean Magnan de Bornier; 6) The structural theory of economic growth by Harald Hagemann; 7) Economic theory and industrial evolution by Michio Morishima; 8) Production process and dynamic economics by Nicholas Georgescu-Roegen; and 9) Economic structure: analytical perspectives by Mauro Baranzini and Roberto Scazzieri.

Bortis introduces two useful dichotomies for studying economic structure and change. He distinguishes between linear and circular models of production, concepts he borrows from Sraffa, and between vertical and horizontal causality, concepts he traces to Keynes. Production is driven by individual pursuit of final goods in the linear models of neoclassical and Austrian economics; commodities merely sustain the social process of production in the circular models of classical and Keynesian economics. Bortis views economic relations as layered. Long-run institutional relations underlie medium-run technological relations underlie short-run market relations in his geological metaphor. Vertical causality cuts through these layers at an instant of time; outcomes are simultaneously and timelessly determined by all relations in a system.

Horizontal causality and interesting dynamics follow from the relations' differential adjustment speeds. Models which allow for horizontal causality can accommodate structural change. Short-run outcomes, for example, can impact and alter system parameters, as Bortis explains. A circular system can be launched on a spiralling path, as in Lowe's depiction of Smithian growth. Accretion and dissonance can also trigger violent and discontinuous change, as when crisis hits a Marxian world or when pessimism engulfs a Keynesian world. The earthquake latent in Bortis's model epitomizes the vulnerability of a complex system to discontinuity, an aspect of structural change that Bortis himself ignores. Only Georgescu-Roegen among the volume's contributors stresses discontinuity. Acknowledging Schumpeter, he questions the relevance to economic science of incrementalist Newtonian mechanics and champions as more appropriate the evolutionary, biological metaphor advanced by Stephen Jay Gould. As Morishima argues, theory must conform to reality. Georgescu-Roegen's critique is convincing amid the current fracturing of long-ensconced enterprises and empires.

In its entirety, The Economic Theory of Structure and Change is of interest only to specialists in economic methodology. Others may find selected essays to be of interest: Hagemann provides a comprehensive survey of works by Adolph Lowe and the Kiel School; de Bornier describes theories of transition advanced by Hicks and the Austrians; Morishima relates theory and history; the editors integrate a voluminous literature stemming from disparate schools. In no case, however, is the going easy.
COPYRIGHT 1992 Southern Economic Association
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Author:Malamud, Bernard
Publication:Southern Economic Journal
Article Type:Book Review
Date:Oct 1, 1992
Previous Article:Power and Economic Institutions: Reinterpretations in Economic History.
Next Article:Current Issues in Labour Economics.

Related Articles
Experiments in Economics.
Philosophy of Economics.
Recent Developments in Post-Keynesian Economics.
Reconstructing Keynesian Economics with Imperfect Competition.
The Experience of Free Banking.
The European Experience of Declining Fertility: A Quiet Revolution, 1850-1970.
The Economics of Earnings.
The Dynamics of the Wealth of Nations: Growth, Distribution and Structural Change. Essays in Honor of Luigi Pasinetti.
Theories of Technical Change and Investment: Riches and Rationality.
The Eclipse of the State Mental Hospital: {Policy, Stigma, and Organization.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters