Archive for November, 2006
Here’s To You, Mrs. Robinson
| Peter Klein |
I’m not a great fan of Joan Robinson but believe she has admirers among the O&M clientèle. So here’s a pointer to a new book on Robinson’s work and significance, Joan Robinson’s Economics: A Centennial Celebration (Cheltenham, UK: Edward Elgar, 2005). The volume, edited by Bill Gibson, stems from a 2003 conference on the centenary of Robinson’s birth. This passage from Michael Lawlor’s review in EH.Net may spark some interest:
One thing she particularly saw as useful in Marshall was his awareness of the difficulty of treating time by equilibrium constructs. Thus, rather than the highly artificial dynamic equilibria of modern theories of growth (of any stripe), she wanted dynamic economics to be “open” to uncertain expectations, technological change, habits, and the possible irreversibility that came with the “choice of technique.” In other words, she insisted that a theory of economic growth should be alive to the kinds of issues that, economic history teaches, have been real aspects of capitalist economies of the past. . . . She did not want to construct models that would reach the same “equilibrium” from radically different starting points, but ones that depended crucially on where a system began to determine part of where it ends up. In short, she wished for a dynamic economics in which a particular set of institutions and a particular history ought to be given its due as a factor that could influence the time path of an economy.
But as Donald Harris particularly emphasizes, this is no easy task. In fact one could say that her long struggle with a variety of complex approaches to such questions in the theory of economic growth (her most mature statements on this topic are to be found in Robinson, 1956 and 1962b) ended in her rejecting “equilibrium” altogether as a way to capture the manifold influences of “history” (Robinson, 1985).
Calligraphy by Committee
| Peter Klein |
The King James Bible, considered the greatest work of English prose, was composed a committee of 50 men.
Group projects, as any middle-school social-studies teacher can tell you, rarely produce inspiring results. But if you think writing by committee is hard, try drawing by one. That’s what Donald Jackson, the former official scribe for Britain’s Queen Elizabeth, signed up for when he agreed to create the first handwritten English Bible in 500 years.
Read the rest at OpinionJournal, and also visit the project’s home page.
I wonder how the 50 authors of the King James Bible got along? How did they control free riding? Were team members subject to peer review? How about 360-degree assessments? Did they work together on several projects or was this a one-shot game? (Sorry, a weekend of executive MBA teaching has left me unable to think like a regular human.)
Machlup on Equilibrium
| Nicolai Foss |
The notion of equilibrium in economics has been discussed on an earlier occasion here at O&M (here). Perhaps as a reaction to this, former guest blogger, Joe Mahoney, has mailed a long but important quotation from Fritz Machlup’s (1967) Essays in Economic Semantics (pp. 44-5, 54, 56-7) which is reproduced below. (Joe notes that “as a humorous aside the original 1963 version of the book was titled: Essays ON Economic Semantics, but since only one chapter of the book was actually ON the topic of economic semantics, the 1967 paperback version title was changed to Essays IN Economic Semantics” — very interesting!) Here is the quotation (and a few comment below): (more…)
Upcoming Events Page
| Peter Klein |
As a service to our readers, we have added an Upcoming Events page to O&M. You’ll see a button for it above. Here we will list and bookmark upcoming conferences, workshops, and symposia likely to interest the O&M crowd. (Well, likely to interest us, anyway.)
If you have a suggestion for an addition, please drop us a line.
Those Nutty Professors
| Peter Klein |
Anthony Grafton reviews William Clark’s Academic Charisma and the Origins of the Research University (University of Chicago Press, 2006) for The New Yorker. Clark focuses on Weber’s notion of charismatic authority and argues that the critical element in the development of the professorial role was not the lecture, but the “disputation,” or debate, a form of which survives today as the oral thesis defense. Peter Abelard was apparently a master of the disputation. Writes Grafton:
His triumphs in these “combats” made him, arguably, the first glamorous Parisian intellectual. A female disciple, Héloïse, wrote to him, “Every wife, every young girl desired you in absence and was on fire in your presence.” Their story has become a legend because of what followed: Héloïse, unwed, had a child by Abelard, her kin castrated him in revenge, and they both lived out their lives, for the most part, in cloisters. But even after Abelard’s writings were condemned and burned, pupils came from across Europe hoping to study with him. He had the enduring magnetism of the hotshot who can outargue anyone in the room.
I don’t wish Abelard’s fate, but it would be nice to have that kind of enduring magnetism. Anyway, the book sounds like a good read. (HT: Jackson Library Blog)
The Grameen Myth
| Peter Klein |
Jeff Tucker makes several interesting points today about Muhammed Yunus and the Grameen Bank. As you may know, microfinance in general, and Grameen in particular, have taken several hits here at O&M.
Some issues raised by Tucker and others he cites:
- The bulk of the wildly enthusiastic literature on Grameen — Tucker calls it “an echo chamber of hurrahs” — comes from the bank itself. Even the Nobel announcement cites not a single external source.
- The idea that the poor can best escape poverty through self-employment, rather than working for wages, goes against all historical experience. Rising living standards for the poor, in all other countries and historical episodes, has come from wage increases driven by increases in labor productivity.
- The claim that the binding constraint on entrepreneurial activity in countries like Bangladesh is credit, rather than management or entrepreneurship, has become a mantra that is asserted but never demonstrated.
- Yunus himself has founded 16 companies other than the Grameen Bank, all of which went bankrupt. Critics think he funds these projects via the Bank, siphoning off the huge government and philanthropic grants that fund the Bank’s activities. Because the bank does not publish audited financial statements, no one knows for sure.
- Bangladesh consistently ranks near the bottom of the standard indexes of economic freedom. The main obstacles to development in Bangladesh are high trade barriers, a vast array of state-owned enterprises, high taxes, corruption, political violence, etc. The claim that microfinance, rather than fundamental institutional reform, is the key to growth strains credulity.
More on Law and Entrepreneurship
| Peter Klein |
Our conception of “law and entrepreneurship” . . . encompasses positive law (including constitutions, statutes, and regulations), common law doctrines, and private ordering that relate to “the discovery and exploitation of profitable opportunities by new firms.” While much entrepreneurship research focuses on the characteristics of entrepreneurs or on the performance of entrepreneurial firms, law and entrepreneurship studies should focus on the legal structure and regulation of entrepreneurial firms.
Science and Public Funding
| Peter Klein |
As discussed previously on these pages, the relationship between scientific research (basic and applied) and public funding is more subtle and complex than is usually assumed. The current issue of the Independent Review features an article by William N. Butos and Thomas J. McQuade, “Government and Science: A Dangerous Liaison?”, exploring this relationship in detail. Write Butos and McQuade:
There are serious reasons . . . for thinking that the liaison between government and science carries with it unrecognized dangers for the functioning and integrity of science as a reliable generator of knowledge. It is not so much that government seeks to exert a blatant and crude control over the content and direction of scientific inquiry — although such heavy-handed intrusion has precedents, most notably in the USSR — but that the structure and conduct of seemingly benign and generous government funding of science has side effects that generate instabilities in scientific activity in the short run and corrode the structure and adaptability of the system of science itself in the long run.
Dan Klein’s fine EconJournalWatch has published two recent pieces on the effects of public funding on research in two branches of applied economics, by Larry White on monetary economics and E. C. Pasour, Jr., on agricultural economics.
Election Day
| Peter Klein |
Today is election day in the US and, like a majority of my fellow American citizens, I’m exercising my cherished right not to vote. Unlike most Americans, however — but like Brian Doherty — I’m proud, not ashamed. “Don’t vote,” I say. “It only encourages them.”
Just to show you that economists have a sense of humor, let me share these pictures of my office door, decorated by my colleagues in 2004 in a vain attempt to shame me for not voting. (Don’t miss the Dr. Seuss-inspired poem.)
Some good non-voting resources: this piece in Slate and this archive. I think Tyler Cowen gets it right: “Overall I view voting as a selfish act, usually done for purposes of self-image…. I fondly recall Gordon Tullock’s point: ‘The paradox is not why people vote, but why everyone doesn’t vote for himself.’ “
Network Positions and Competitive Advantage
| Nicolai Foss |
One of the most important trends in strategic management research over the last decade or so has no doubt been the application of arguments developed in sociology by the likes of Mark Granovetter and Ron Burt. In the hands of able interpreters, such as Gautam Ahuaja, Olav Sorenson, Brian Uzzi, Toby Stuart, and many others, these arguments mark the real advent of sociology as a forceful voice in the conversation of strategic management scholars, a conversation that had until clearly been dominated by arguments drawn from various fields in economics.
Although I am usually impressed with the efforts of the above scholars, I have also sometimes felt a bit uneasy when reading papers that draw on the sociology literature on networks. Theoretical development seems conspicuous by its absence. Many things seem to be taken as exogenos, notably positions themselves. Moreover, the literature often seems to suggest that network positions may be associated with competitive advantage, but the precise mechanism that makes this happen is far from clear. (more…)
The Wizard of Oz as Monetary Allegory
| Peter Klein |
In recent remarks on literature in economic discourse (here and here) I forgot to mention Hugh Rockoff’s classic “The ‘Wizard of Oz’ as a Monetary Allegory” (Journal of Political Economy, August 1990):
The Wonderful Wizard of Oz, perhaps America’s favorite children’s story, is also an informed comment on the battle for free silver in the 1890s. The characters in the story represent real figures such as William Jennings Bryan. This paper interprets the allegory for economists and economic historians, illuminating a number of elements left unexplained by critics concerned with the politics of the allegory. It also reexamines Bryan and the case for free silver. Far from being monetary cranks, the advocates of free silver had a strong argument on both theoretical and empirical grounds.
Another good resource is Michael Watts’s The Literary Book of Economics (Intercollegiate Studies Institute, August 2003).
Conference on Ragnar Nurkse
| Peter Klein |
The Tallinn University of Technology, Estonia, and The Other Canon Foundation, Norway, are organizing a 2007 conference to celebrate the birth of Ragnar Nurkse, often called a Norwegian or Swede but in fact the world’s most important Estonian economist. Here is the call for papers. “This conference will discuss Nurkse’s work also in relationship to his contemporaries in development economics, and the common elements of development economics from Antonio Serra to Nurkse — among them technology, finance, institutions, problems of foreign ownership — will be highlighted.”
Nurkse was an occasional visitor to Mises’ private seminar at the Vienna Chamber of Commerce. He rejected the Austrian theory of capital, however, preferring a model in which capital is virtually homogeneous and self-reproducing. (See his “The Schematic Representation of the Structure of Production,” Review of Economic Studies, June 1935.)
New Evidence on Multinational Transfer Pricing
| Peter Klein |
The economic theory of the firm is ultimately about the differences between inter- and intra-firm transactions. How, for example, are employment contracts different from arms-length transactions with independent contractors? (Alchian and Demsetz, in the famous passage in their 1972 article about “firing the grocer,” say there is no difference; Coase and Simon argue otherwise.)
We know little about how intra-firm purchase and supply arrangements differ from those between firms. However, thanks to a new dataset, the Linked/Longitudinal Firm Trade Transaction Database (LFTTD) from the US Census and Customs Bureaus, we now know something about how such transactions are priced. A new paper by Andrew Bernard, Bradford Jensen, and Peter Schott, “Transfer Pricing by U.S.-Based Multinational Firms,” uses the LFTTD data to compare export prices for “related-party” and “arms-length” transactions among US multinationals. Bernard, Jensen, and Schott find that intra-firm transactions are priced significantly lower than sales of the same good to arms-length customers. (more…)
“Original” Institutional Economics
| Peter Klein |
Nicolai has noted that evolutionary economics is weak on public policy. But things may be changing. The theme for the 2007 meeting of the Association for Evolutionary Economics is “Contributions of Institutional Economics to Public Policy Debates: Past and Present.” Here is the call for papers.
Note that “evolutionary” is defined here as “institutional/evolutionary.” The instructions say the papers “must be grounded in and contribute to the literature of Original Institutional Economics in the tradition of Commons, Veblen, Mitchell, Kapp, Myrdal, Polyani, etc.”
I confess this is the first I’ve seen the term “original institutional economics.” I can see why the organizers prefer it to “old institutional economics,” the term used by new institutional economists to describe the early twentieth-century American institutionalists whose contributions are largely forgotten today. (Coase: “Without a theory they had nothing to pass on except a mass of descriptive material waiting for a theory, or a fire.” )
Political Correctness and Public Sector Management
| Nicolai Foss |
The following is ephemera, but we have noted from the blog stats that our readership appreciates this category of posts. And we believe in giving the market what the market wants.
I was recently accused by an (admittedly weird) external lecturer here at CBS for having fascist sympathies. I thought my political leanings were classical-liberal, which I would tend to associate with rather the opposite of fascism. Oh well; the reasoning of this person was that I ran a blog that linked to the Ludwig von Mises Institute; that institute was known for being associated with people who had an unconventional view of the American Civil War; a view, this person added, that any sane human being would recognize as fascist! QED
I was reminded of this incident when I read this story in the UK newspaper, The Daily Mail. (more…)
David Landes on Family Firms
| Peter Klein |
Economic historian David Landes’s new book, Dynasties: Fortunes and Misfortunes of the World’s Great Family Businesses, focuses on the family firm (discussed here, here, and here). As described by the New York Times, Landes wants to suggest that “the business-school mythos of the ‘professional manager’ has led to a persistent underestimation of the importance of family firms. Fully a third of Fortune 500 companies can properly be characterized as family businesses, and on average they outperform the ‘professionally managed’ firm by a surprisingly large margin.”
Grounded Theory
| Nicolai Foss |
At least until recently I considered “grounded theory” to be one of my favorite Hermann Göring words (“When I hear the word ‘grounded theory’ I reach for my Browning”). I know that this is an assessment that many practicioners of a, dare we say more “positivist” research methodology share. Too often I have witnessed presentations where “grounded theory” comes across as a bad excuse for not knowing the relevant literature. Epistemologically, grounded theory sometimes stands out as a variant of naïve inductivism. (more…)
Pomo Periscope V: Motivation Theory Under Attack
| Nicolai Foss |
As we know pomo is placing its tentacles virtually everywhere. Having long ago attacked and partially conquered organization studies, pomo is now increasingly visible in the organizational behavior field. Here is an extract from the blurb for a recent book, The Passion of Organizing: (more…)
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