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Robert Vienneau

Articles by Robert Vienneau

Another Example Of The Factor Price Frontier In The Space Of Rental Prices

1 day ago

Figure 1: Real Factor Price Frontier1.0 Introduction

I am planning on posting at an even slower rate for a while.

This post continues my exploration of a way of visualizing the choice of technique proposed
by Carlo Milana.
In this post, I show how to correctly apply his visualization to
an example from my 2017 ROPE paper.

2.0 Technology

Two techniques are available for producing corn, the consumption good. Each technique consists of a flow-input, point-output
technology, with a finite number of dated labor inputs. The technology can also be represented with intermediate
produced commodities explicitly shown.
Table 1 sets out the example as a Leontief input-output table, in some sense.
Each column lists the inputs in a production
process needed to produce a unit output of the

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On “Democratic Socialism”

15 days ago

1.0 Introduction

This post is about some usages of the phrase
"democratic socialism".

2.0 Democratic Socialists of America (DSA)

In the context of current American politics, I think the most salient usage
today of this phrase is associated with Bernie Sanders’ campaign and
with the Democratic Socialists of America.

DSA was founded in 1982
when the Democratic Socialist Organizing Committee (DSOC) merged
with the New American Movement (NAM). The DSOC was established
with Michael Harrington leading others out of the
Socialist Party (SP)
(Gorman 1995: p. 144-145). Apparently, 500 people attended
the DSOC founding convention in 1973 (Harrington 1988: 17).

Michael Harrington will forever be known for The Other America.
In this book, he deliberately did not use the word "socialism". And

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Two Propositions: Neoclassical Economics Is Incoherent; A Classical Theory Of Value Exists

22 days ago

[embedded content]Some Mathematics Useful In Understanding Classical Political Economy
I consider the following to have been well established about half a century ago:

Marginalism or so-called neoclassical economics is impossible to formulate consistently and with practical applications.
A mathematically rigorous approach to the classical theory of value, from William Petty through David Ricardo,
including Karl Marx, exists.

Mainstream economists ignore the truth of both propositions. Until they stop spouting lies and nonsense, these propositions should be re-iterated again and again.
(On the other hand, I appreciate the work involved in compiling
National Income and Products Accounts.)

I find a difficulty in publishing re-iterations of these propositions. I expect editors and

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Update To Example In Vienneau (2019)

February 23, 2020

Maybe this post should be titled "Erratum" or "corrigendum". I have an example in my paper last year in which wage frontiers are supposed
to vary with two parameters. One is the markup in the "iron" industry. And the other is σ t. The example should be
as in Table 1. All the theory and the visualizations in the paper work out with this example.

Table 1: Technology for Producing Steel and Corn
InputIndustryIronCornAlphaBetaLabora0,1 = 1aα,0,2(t) = (5191/5770) e(1/10) – σ taβ,0,2 = 305/494Irona1,1 = 9/20aα,1,2(t) = (1/40) e(1/10) – σ taβ,1,2 = 3/1976Corna2,1 = 2aα,2,2(t) = (1/10) e(1/10) – σ taβ,2,2 = 229/494
Vienneau, Robert L. 2019. Structural economic dynamics, markups, real Wicksell effects, and the reverse substitution of labor.
Structural Change and Economic Dynamics 50: 216-226.

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February 20, 2020

John Weeks
Joan Robinson’s contributions to the Cambridge Capital Controversy (CCC).
from 2006, on Daily Kos, about one of my attempts to explain the CCC.
A post,
from 2016, on Naked Capitalism about how the CCC shows microeconomics is all wet.
J. W. Mason has a
explaining a definition of
Doyne Farmer, Fotini Markopoulou, Eric Beinhocker, and Steen Rasmussen, in an essay in Aeon,
Collaborators in creation,
provide an overview of complexity economics.
An overview, from 2018, about how women were deliberately kicked out of software development in Great Britain.

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Universal Basic Income: Some Advocates And Analysts

February 15, 2020

"In fact, the realm of freedom actually begins only where labour which is determined by necessity
and mundane considerations ceases; thus in the very nature of things it lies beyond the sphere of
actual material production. Just as the savage must wrestle with Nature to satisfy his wants,
to maintain and reproduce life, so must civilised man, and he must do so in all social formations
and under all possible modes of production. With his development this realm of physical necessity
expands as a result of his wants; but, at the same time, the forces of production which satisfy
these wants also increase. Freedom in this field can only consist in socialised man, the
associated producers, rationally regulating their interchange with Nature, bringing it under their
common control, instead of

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Reswitching With Markup Pricing And Fixed Capital

February 8, 2020

Figure 1: Two Dimensional Pattern Diagram1.0 Introduction

This post extends an example from Bertram Schefold. It presents markup pricing in an example with a machine that can be operated for two years
or junked after one year. This is a case of joint production in which, unlike in
some cases,
the choice of technique can still be analyzed by the construction of the wage frontier. Also, I do not think the question of
requirements for use enter in here, and all matrices are square.
As usual, this is a proof that "the marginal productivity theory of distribution" (and the neoclassical theory of
supply and demand) "is all bosh" (Robinson 1961).

2.0 Technology

Table 1 shows the coefficients of production for the three processes comprising the available technology. Inputs must
be available

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Precursors of Piero Sraffa

January 31, 2020

I want to consider contributions to economics after 1870 that reconsidered classical or Marxist
economics, used input-output models and linear algebra, or bear a family resemblance to
at least some points in Sraffa’s 1960 book.

Vladimir K. Dmitriev. Used input-output analysis in an interpretation of Ricardo’s
theory of value.
Ladislaus Bortkiewicz. Had a simple three-good model, with one basic good,
input-output model of prices of production. Sraffa and others argued against
aspects of his interpretation of Marx’s theory of value.
Georg von Charasoff. Apparently, around 1909 and 1910, he came up with the concept of
"original capital". In a infinite series, much like Sraffa’s reduction to dated
labor, the capital goods needed more and more indirectly in
producing some given net output

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Why Does The Labor Theory Of Value Work Empirically As A Theory Of Prices?

January 25, 2020

[embedded content]Anwar Shaikh On The Transformation Problem
Lots of empirical work shows that prices tend to be proportion to the labor embodied in commodities. My references in this
document this claim. Furthermore, empirical wage-rate of profits curves tend to be close to straight lines.
This is not what, say, Sraffa’ mathematical economics would lead me to expect. What explains these
surprising empirical findings?

Almost 34 minutes in, in the above video, Shaikh makes the above point about the contrast
between theory and empirical findings. He concludes with speculation, including with
comments on Bertram Schefold’s work with input-output matrices formed out of random

I offer some speculations myself in this post. I do not have much theory to back these

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Only The Super-Rich Can Save Us!

January 18, 2020

Neoliberals are hostile to labor unions and every other institution that would allow the vast majority of the population
to have some effect on how we are ruled.
And they have been so successful that
only the super-rich can save us, as the title
of a Ralph Nader novel a few years back had it. A couple of recent examples of journalism are about movements
of the super-rich:

Sheelah Kolhatkar writes, in the New Yorker, about Patriotic Millionaires.
Theodore Schleifer writes, in Vox, about Resource Generation.

I suspect most of the super-rich, however, are vicious, reactionary fools. Apparently,
Benjamin Page, Jason Seawright, and Matthew Lacombe provide
evidence in their recent book,
Billionaires and Stealth Politics.
I’ve read and
commented on their previous working paper.

In the

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Towards the Derivation of the Cambridge Equation with Expanded Reproduction and Markup Pricing

January 11, 2020

I have a new working paper.

Abstract: Does the Cambridge equation, in which the rate of profits in a steady state is equal to the quotient
of the rate of growth and the savings rate out of profits, hold in an economy with widespread non-competitive markets?
This article presents a multiple-good model of markup pricing in an attempt to answer this question. A balance equation
is derived. Given competitive conditions, this model can be used to derive the Cambridge equation. The
Cambridge equation also holds in a special case of markup pricing, with one capital good and many
consumption goods being produced. No definite conclusions are reached in the general case.

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The Factor Price Frontier In The Space Of Factor Rental Prices

January 7, 2020

Figure 1: Real Factor Price Frontier1.0 Introduction

Carlo Milana has proposed
a new way of visualizing the choice of technique, including in the case
of reswitching. This way of describing what he has done is not neccessarily
how he thinks of it.
In this post, I describe his approach with a reswitching example, in a model
of the production of commodities by means of commodities.

2.0 Technology

Table 1 shows the coefficients of production for this example.
Coefficients of production specify inputs per unit output.
Each process takes a year
to complete. Inputs are totally used up in the production of the outputs.
(This example is taken from one of my papers.)

Table 1: Coefficients of Production for The Technology
InputSteel IndustryCorn IndustryAlphaBetaLabor1275/4641

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Some People Who Have Shaped Economics

January 2, 2020

"The University [of Chicago] is the best investment I ever made in my life." — John D. Rockefeller

Consider the following people and selected activities:

Lewis Brown founded the American Enterprise Institute, in 1938.
Jasper Crane cofounded the Foundation for Economic Education, in 1946.
Leonard Read cofounded the Foundation for Economic Education, in 1946.
Harold Luhnow, even before 1947, directed spending for the Volker Fund.
Sir Antony Fisher funded the Institute for Economic Affairs, around 1956.
Lord Ralph Harris, first general director of the Institute for Economic Affairs.
Arthur Seldon, first editorial director of the Institute for Economic Affairs.
F. A. Harper founded the Institute for Humane Studies, in 1961.
Charles Koch funded the development of the Virginia school,

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January 1, 2020

I study economics as a hobby. My interests lie in Post Keynesianism, (Old) Institutionalism, and related paradigms. These seem to me to be approaches for understanding actually existing economies.The emphasis on this blog, however, is mainly critical of neoclassical and mainstream economics. I have been alternating numerical counter-examples with less mathematical posts. In any case, I have been documenting demonstrations of errors in mainstream economics. My chief inspiration here is the Cambridge-Italian economist Piero Sraffa.In general, this blog is abstract, and I think I steer clear of commenting on practical politics of the day.I’ve also started posting recipes for my own purposes. When I just follow a recipe in a cookbook, I’ll only post a reminder that I like the recipe.Comments

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2019 Nobel Prize Celebrating The Triumph Of Institutionalism?

December 26, 2019

[embedded content]Elizabeth Warren Echoing A View Institutionalists Understand
This year, the "Nobel prize" in economics went
to Abhijit Banerjee, Esther Duflo, and Michael Kremer. They champion empirical economics over theory. Previously, institutionalist
economics was described as ‘theory without measurement’ (Koopmans 1947). Does
institutionalist economics
parallel the supposed
mainstream empirical turn?

Although institutionalists, as far as I know, did not have the resources to create
randomized control trials (RCTs), they did collect and analyze statistical data.
I think especially of
Wesley Clair Mitchell
and the National Bureau of Economic Research (NBER).

Institutionalists was not atheoretical, I think. They developed qualitative analytical concepts.
I think of C. E. Ayres

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A Fake Switch Point in an Example With Circulating Capital

December 14, 2019

Figure 1: A Switch Point and a Fake Switch Point on Wage Curves1.0 Introduction

In the analysis of the choice of technique, I typically consider examples of technology with a finite number of
techniques. For each technique, I find the wage as a function of the rate of profits. The outer
envelope of these curves shows the cost-minimizing technique at each rate of profits (or each level of the
wage). Points on more than one wage curve are switch points.

This approach is valid when, for example, all techniques produce the same set of commodities,
and each commodity is basic, in the sense of Sraffa. That is, all commodities enter directly or
indirectly into the production of all commodities.

But another requirement is that prices of all commodities in common between two techniques

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The Interest Rate: Prime, Overnight, Or The Rate On T-Bills

December 10, 2019

As far as I am concerned, cost-push inflation is a
of class conflict between workers and owners.
In the late 1970s, Paul Volker and Ronald Reagan took the side of the owners.
I am willing to accept that Volker genuinely believed in Milton Friedman’s
quantity theory of money. And, since then,
workers have been getting a smaller
in increased productivity.
Some obituaries of
exhibit an understanding of what he did.

But I want to talk about my recollection of how interest rates have been covered in the
press from that time. Of course, at any given time, there are a whole range and time
structures of interest rates. When Volker drove the interest rate
above 20 percent, the focus in news coverage was, as I recall it, on the prime
rate, that is, the

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The Cambridge Equation, Expanded Reproduction, and Markup Pricing: An Example

December 6, 2019

1.0 Introduction

I have sometimes set out Marx’s model of
expanded reproduction,
only with prices of production instead of labor values.
I assume two goods, a capital good and a consumption good, are produced with constant technology.
If one assumes workers spend all their wages and capitalists save a constant proportion of
profits, one can
the Cambridge equation in this model.

The Cambridge equation shows that, along a steady state growth path, the economy-wide rate of profits
is determined by the ratio of the rate of growth and the saving rate out of profits.
Maybe one should not use causal language here. The Cambridge equation is a necessary,
consistency condition for smooth reproduction in a capitalist economy.

This post derives the Cambridge equation with markup

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November 30, 2019

David Graeber’s review of Robert Skidelsky’s Money and Government: The past and Future of Government.
A TED talk, by Nick Hanauer, on how complexity economics is
replacing "neoliberal" economics. He is especially interested in reciprocity.
A 2014 interview by Bill Moyers, of Paul Krugman, on Piketty’s book.
Mariana Mazzucato, with a talk
on the value of everything. She also has a 2013 TED talk.
Heinz Kurz on the Cambridge capital controversy.
Bertram Schefold on the CCC and his recent research.

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Literature Distinguishing Large Corporations And Finance From Competitive Firms

November 23, 2019

A considerable body of literature has been published, during the last century, arguing that a movement away from competitive
markets must be recognized in trying to describe and understanding contemporary capitalism. The literature I am thinking
of emphasizes big business, corporations, and finance. Here are some selections, not all of which I have read:

Rudolf Hilferding (1910). Finance Capital: A study of the latest phase of capitalist development.
Adolfe A. Berle and Means (1932). The Modern Corporation and Private Property.
Bruno Rizzi (1939). The Bureaucratization of the World
James Burnham (1941). The Managerial Revolution: What is happening in the world.
Joseph Schumpeter (1950). Capitalism, Socialism, and Democracy
Josef Steindl (1952). Maturity and Stagnation in American

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The Rate of Profits is Not the Scale Factor

November 15, 2019

Figure 1: Rate of Profits Unequal to Scale Factor for Rate of Profits
This post continues the example in the previous
I modify the prices equations so that the rate of profits in producing corn
is (s1 r̂), and the rate of profits in producing ale
is (s2 r̂). The solution to the price equations are:

pcorn = 16 [16 + (s1 – s2) r̂]/[204 + (3 s1 + 9 s2) r̂]

pale = 32 [10 – (s1 – 3 s2) r̂]/[204 + (3 s1 + 9 s2) r̂]

w = 4 [51 – (9 s1 + 5 s2) r̂ – s1s2 r̂2]/[204 + (3 s1 + 9 s2) r̂]

where r̂ is what I have been calling the scale factor for the rate of profits.

I want to show that, only in exceptional cases can the the markups s1 and s2 be rescaled
such that the scale factor is equal to the economy-wide rate of profits, whatever the distribution of income.
For concreteness,

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An Example Of The Labor Theory Of Value

November 6, 2019

Figure 1: Variation of Prices of Production with Wages and Markups1.0 Introduction

This post documents an example in my working paper,
The Labor Theory of Value and Sraffa’s Standard Commodity with Markup Pricing.

2.0 Technology

Consider a simple economy in which corn and ale are each produced from inputs of labor, corn, and ale.
Inputs for unit outputs are shown in the columns in Table 1. Obviously, the units of measure should not
be taken serious. Inputs are totally used up in the production of outputs. I abstract from the existence
of fixed capital, land, and joint production.

Table 1: The Technology
InputIndustryCornAleLabor1 Person Year1 Person-YearCorn(1/8) Bushels(3/8) BushelsAle(1/16) Pints(1/16) Pints
The standard net product consists of (9/16) bushels corn and (3/16) pints

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Keen’s Debunking Economics Most Popular Among Popular Critiques

November 1, 2019

Table 1: Selected Critiques
AuthorBookNumberRatingsMeanRatingMoshe AdlerEconomics for the Rest of Us214Rod Hill & Tony MyattThe Economics Anti-Textbook134Steve KeenDebunking Economics, 1st edition253 to 4Debunking Economics, 2nd edition564 to 5Paul OrmerodThe Death of Economics103 to 4John QuigginEconomics in Two Lessons24John WeeksEconomics of the 1%134 to 5
Steve Keen seems to be the most popular of those writing internal critiques of economics directed towards the common reader. I selected the
above books and looked at rankings on Amazon’s United States website. You can spend lots of time reading the comments.

I am not sure about how to characterize this genre. I am more focused on theory than offering political programs.
Would Robert Reich’s Saving Capitalism be excluded?
But what

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The Labor Theory of Value and Sraffa’s Standard Commodity with Markup Pricing

October 23, 2019

I have uploaded a
working paper
with the post title.

Abstract: This article demonstrates relationships that are transparent in Sraffa’s
standard system hold even when relative rates of profit vary persistently among industries.
Even with such variations, total constant capital, total variable capital, total surplus value,
and the rate of profits are unaltered by evaluation at labor values and at prices of production
in Sraffa’s standard system. These results buttress those who see in the standard commodity
a solution for Marx’s so-called transformation problem.

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Actually Existing Socialism In A Capitalist Setting?

October 19, 2019

Elements of a post capitalist society are and have been
in actually existing capitalism.
This post points out a couple of examples.

The Green Bay Packers is a community-owned (non-proper) football team in the National Football League (NFL).
One can find some arguing that they
And some are concerned to
this claim.

Decades ago, some universities in the United States set up research and development organizations that then became independent, not-for-profit companies.
For example, here is the
web site
for SRC, formerly Syracuse Research Corporation.
This means, apparently, that they re-invest what they make.
IRS Publication 557
explains how to apply for status as a 501(c) organization.

A quick Google search gets me to the
National Center for Employee

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Structural Economic Dynamics and Fake Switch Points

October 10, 2019

Figure 1: A Pattern Diagram with Joint Production1.0 Introduction

This post completes an example. I analyzed bits of this example
here and
This post may make no sense if you have not read a long series of previous posts
or, maybe, the papers highlighted
and here.
I am interested in how and if my approach to analyzing and visualizing variations in the choice
of technique with technical progress extends to joint production. The example suggests fake switch points
do not pose an insurmountable obstacle for such an extension.

2.0 Technology

I repeat the specification of technology.

I postulate an economy in which two commodities, corn and linen, can be produced from inputs of corn, linen, and labor. Managers
of firms know of three processes (Tables 1 and 2) to produce corn

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October 5, 2019

Here is a post from a blog
devoted to cybercommunism. The blogger is glowing about Paul Cockshoot’s work on refuting Hayek’s supposed refutation of the possibility
of a post-capitalist society.
William Milberg
writes about how it is becoming more
common to use the word "capitalism", a word mainstream economists had mostly stopped using.
Herbert Giants and Rakesh Khurana write
about the corrupting effects of neoclassical economics on what is taught in business school and then practiced by corporate elites.
Osita Nwanevu writes,
in The New Republic, about the enthusiasts that showed up at last weekend’s Third MMT Conference.
Lisa Schweitzer studies urban environments. In a blog post, she expresses irritation at Paul Romer’s arrogance, admittedly filtered through a glowing New York Times

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Variation in Standard Commodity with Relative Markups

September 28, 2019

I am not sure about the economic logic in this post. Maybe somebody like D’Agata or Zambelli could do
something with this. These ideas were suggested to me by email with a sometime commentator.

I start out with notation for Sraffa’s price system, modified in an unusual way to
allow for persistent variations in the rate of profits among industries:

a0 is a row vector of labor coefficients in each of n industries.
A is a Leontief input-output matrix, where ai, j
is the quantity of the ith commodity needed as input to produce one unit of the jth commodity.
S is a diagonal matrix, where all off-diagonal elements are zero. sj, j is
the markup on non-labor costs in the jth industry.
p is a row vector of prices.
w is the wage.
r is the scale factor for the rate of profits.

The coefficients

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A Fluke Case Over The Wage Axis

September 21, 2019

Figure 1: Wage Curves and The Price of Corn for the Fluke CaseIntroduction

This post extends a
previous post.
I am basically introducing structural dynamics into an example, by Bidard and Klimovsky of fake switch points.

At a rate of profits of zero in the example, the price of corn is zero for Alpha, one of the two techniques
that is cost-minimizing there and for somewhat higher rates of profits. At a time before the fluke
case, only the Gamma technique is cost-minimizing at a rate of profits of zero. The price of corn,
as calculated with the Alpha technique, is negative at a rate of profits of zero.
Alpha prices become non-negative only for positive rates of profits. This possibility cannot
arise in examples with only single production and the choice of technique analyzed by the

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A Pattern Over The Wage Axis In A Case Of Joint Production

September 16, 2019

Figure 1: Wage Curves with Corn as Numeraire1.0 Introduction

This post presents an example of a fluke switch point in which the choice of technique cannot be analyzed
by the construction of the wage frontier. Under joint production, the technique that is cost-minimizing,
for a given rate of profits, does not necessarily maximize the wage. Nevertheless, one can still see
what I call a pattern over the wage axis in this case. The example is a generalization of
the numerical example in Bidard & Klimovsky (2004).

2.0 Technology

I postulate an economy in which two commodities, corn and linen, can be produced from inputs of corn, linen, and labor. Managers
of firms know of three processes (Tables 1 and 2) to produce corn and linen. Each process produces net outputs of corn and
linen as a

Read More »