I happen to think the minimum wage in the United States should be raised. I’ll go along with the
consensus of $15 an hour.

I also happen to
know
that, even under ideal conditions, wages and employment cannot be
explained
by supply and demand.

Some economists, who I no (other) reason to disrespect, seem to think my true statement about labor
economics can be discredited by
attacking my motivations.
So they point out how, under (incoherent) neoclassical theory, higher minimum wages can be justified
by, for example, the theory of monopsony.
But my motivations are almost the opposite.
I take the evidence
that neoclassical economics is wrong about labor markets as a launching into the illogic
of mainstream economics.
(Is this
the most recent meta-analysis on minimum wages?)

The attack,

Blair Fix argues that economists
argue in a circle in putting forth the marginal productivity theory of distribution.
I know that there is no such consistent theory anyways. It occurs to me that
process recurrence, as well as the reswitching of techniques, can be used to demonstrate this
inconsistency.

Suppose you completely know the technique being used in an economy to produce its output. And,
which is even more impossible, you know all other possible techniques. I am thinking of
a technique being specified with something like a Leontief input-output matrix, in
physical terms. Assume, counterfactually, that all these techniques exhibit constant
returns to scale. With these assumptions, you know the physical marginal product
of each input into production, whether it is previously

This post, as suggested, extends this
one-good example. I assume a constant returns-to-scale technology, as specified in Tables 1 and 2. Labor is advanced to the capitalists,
and wages are paid out of the surplus at the end of the year (period of production). The capitalists (incorrectly) expect the technology in
existence at the start of the year to continue to exist. I assume prices of (re)production prevail.

Table 1: Inputs for The Technology
InputProcess(I)(II)(III)Labor30 eσ0,1(1 – t)180 eσ0,2(1 – t)(39/2) eσ0,3(1 – t)New Widgets100One-Year Old Widgets010Two-Year Old Widgets001
Table 2: Outputs for The Technology
OutputProcess(I)(II)(III)New Widgets3 eσ1,1(t – 1)(7/4) eσ1,2(t – 1)(237/20) eσ1,3(t – 1)One-Year Old Widgets100Two-Year Old Widgets010
Only a newly produced widget is a

I am being published
in Structural Change and Economic Dynamics. Currently, this link is without my corrections to proofs, I guess.

Research highlights:

Technical progress and variations in industry markups can change characteristics of the labor markets.
A numeric example illustrates the theory of the choice of technique.
In the example, switch points are created and destroyed with varying coefficients of production and varying markups.
Around some switch points, higher wages are associated with greater employment, given the level of net or gross output
Graphical displays are provided for visualizing these results.

Abstract: This article presents an example in which perturbations in relative markups and
technical progress result in variations in characteristics of the labor market.

I know that the idea of a "natural rate" of unemployment or a
non-accelerating inflation rate of unemployment (NAIRU)
makes no
sense.
I cite, for example, James Galbraith’s 1998 book,
Created Unequal: The Crisis in American Pay.
I think Colin Rogers’ 1989
book is related.

Jared Bernstein
gives
the idea of a natural rate of unemployment at the first of four examples of ideas that [mainstream] economists have gotten
wrong for decades. This is not the first
example of a case where Post Keynesians
(and only Post Keynesians(?)) could explain an empirical phenomenon decades in advance.

Figure 1: A Pattern Diagram
I have put up a
working paper
with the post title.

Abstract: This article considers Harrod-neutral technical progress in the context of an analysis of the choice of technique.
In a model of the production of commodities by means of commodities, neutral technical change is compatible with the reswitching of
techniques, capital reversing, process recurrence, and the reverse substitution of labor. A taxonomy of fluke switch points is
applied to an example, illustrating how these phenomena can arise and vanish in the course of neutral technical progress.

I get various fluke switch points, as is typical of my examples. By assuming Harrod-neutral technical change, I
end up with the structure in Figure 2, in one slice of the parameter space.

Figure 2: A

"One of the curious things about our educational system, I would note, is that the better trained
you are in a discipline, the less used to dialectical method you’re likely to be.
In fact, young children are very dialectical; they see everything in motion, in
contradictions and transformations. We have to put an immense effort into training
kids out of being dialecticians."
— David Harvey, Companion to Marx’s Capital: The Complete Edition. Verso (2018).

I do not have children, and I am not sure I understand Harvey’s claim. But one writer
I liked was Jean Piaget.
(I also want to mention Seymour Papert.)

I take from him that children think in a way that can be described
by advanced mathematics. I think, in particular, of topology and
modern
algebra.
The idea is children take time to

Carlo Milana has posted a paper on arXiv. I was prepared to accept this paper’s claims. Economists have developed
price theory. Referring to Sraffian "paradoxes" and "perverse" switch points is a matter of speaking.
There does not exist separate Sraffian and neoclassical versions of price theory. For a result to be "perverse",
it need only contradict outdated neoclassical intuition. But it is as much a part of the mathematical economics
as any other result. (It is another matter that much teaching in microeconomics is inconsistent with the mathematics.)

In equilibrium, the price of the services of each capital good in use is equal to the value of the marginal product
of that good, with all prices discounted to the same moment in time. This discounting implies that the interest
rate

[embedded content]Young Children Policing Group Members
This post presents examples of psychologists inducing stress in experimental subjects, some showing why we need Institutional Review Boards (IRBs).
Some of the older studies involved so much suffering that experimental subjects suffered Post-Traumatic Stress Disorder (PTSD). I recall
that at the end of the 1976 movie, The Tenth Level, about the Milgram experiment, starring William Shatner, the scientists are discussing what they
would do if they were experimental subjects. Would they refuse to torture others? And one says to Shatner/Milgram something like,
"It seems to me, you have already been tested and failed."

Yudkin, Van Bavel, and Rhodes: Almost the only somewhat happy story here. Toddlers are willing to close a fun slide,

This post is about the misrepresentation of Sraffian
capital theory in Lewin and Cachanosky (2019). I cannot
recommend this short book. Presumably, it is meant as
an introduction. But I do not see it as succeeding.
I do not see what a more advanced audience would
get out of it that is not available in a few
recent papers by Lewin and Cachanosky.

Before proceeding to my main theme, let me note that I
agree with some parts of this book, mainly where
Lewin and Cachanosky draw on Ludwig Lachmann,
to parallel themes in Joan Robinson’s emphasis
on historical time.
They state that no physical measurement of capital
exists and that capital is not a factor of production,
with a demand function.
They state, probably as influenced by Jack Birner, that Hayek never set out a coherent
and internally

Figure 1: APP Around Switch Points1.0 Introduction

I take it that the Austrian theory of the business cycle builds on Austrian capital theory. The following two claims
are central to Austrian capital theory:

Given technology, profit maximizing firms adopt a more capital-intensive, more roundabout technique at a lower interest rate.
The adoption of a more roundabout technique increases output per worker.

Originally, Eugen von Böhm-Bawerk proposed a physical measure of the average period of production, but economists of the
Austrian school have been distancing themselves from this position for well over half a century. I have
argued that the
first claim fails, even in a framework without any scalar measure of capital-intensity or the average period of production.

Recently, Nicholas

Those who understand price theory reject the theory of the Austrian Business Cycle (ABC).
I am thinking here that its logical invalidity follows from post-Sraffian capital theory.
It is also wrong because of its reliance on the concept of the natural rate of interest.

Some years ago, I tried to get published a demonstration that ABC theory was in error.
I forget how many journals rejected it. Four or five articles
here
are from this series of revisions.
The rejections from the journals more sympathetic to Post Keynesians
generally said that everybody knows that ABC theory is wrong.
The rejections from the journals more sympathetic to the Austrian school
said that I ought to read more and more obscure literature.
Some of this helpful for understanding of the history of ABC theory,
but

I have been thinking of posting a review of Quiggin’s book, but this is not it. I suppose I should
mention that I am in the acknowledgements.

Jorge Besada raves at the Mises Institute.
Peter Boettke on his blog.
Tyler Cowen lists Quiggin’s book in his current reading.
Diane Coyle on her blog.
David Gordon at the Mises Institute.
Richard Holden at Inside Story.
Arnold Kling on his blog.
"hayekian" raves.

Quiggin has a response to a couple of
the above. By the way, he had a paper,
in 1987, on public choice.

I think any reviewer should note that Quiggin is extremely generous to
Hazlitt’s
Economics in One Lesson. Hazlitt does not mention "opportunity cost". By focusing on this
concept, Quiggin makes Hazlitt seem more coherent than he is. I agree with Quiggin that this coherence does
not

Figure 1: A Pattern Diagram
Consider an example of the production of commodities, in which many commodities are produced within
capitalist firms. Suppose two techniques are available to produce a given net output.
These techniques use the same set of capital goods, albeit in different proportions.
They differ in process in use for only one industry. Given the qualification about
the same capital goods, generic (non-fluke) switch points are the intersection of the
intersection of the wage curves for two techniques that differ in exactly one process.

Suppose that, due to technological progress, some coefficients of production decrease
in the process unique to the Alpha technique.
Figure 1 shows a possible pattern diagram
for this generalization of a previous
example.
Here, switch points

The Growing Importance of Finance in the Post-War U.S. Economy
As I understand it, Marco Rubio takes from Post Keynesians the idea that, during the post-war
golden age, investment decisions
were dominated by industrial firms. But now, they are dominated by financial corporations.
This change has been accompanied by deleterious effects on economic growth, stagnant wages, and
an upward shift in the distribution of income and wealth.
The increasing importance of finance in the economy in the United States, at least, is
illustrated by the above graph. The impact of the global financial crisis is immediately
apparent in 2008.

The distinction between having investment directed by finance or by industry
might not make any sense to you if you think of every investment as like
purchasing a

Ezra Klein
writes about
John Kenneth Galbraith’s concept of countervailing power.
Ingrid Kvangraven and Carolina Alves are
busting myths about heterodox economics. I have written before about economics as a study of the
reproduction of
society.

Ben Holland, of Bloomberg News, writes an article,
Marco Rubio puts out a paper citing obscure left-wing economists. Rubio’s position paper is
here.
I do not find, say, Wynne Godlay, Hyman Minsky, Mariana Mazzucato, and many proponents of Modern Monetary Theory
and Stock-Flow Consistent modeling particularly obscure or left-wing.

Perspectives on Politics, a journal of political science, has a
special issue,
with open access on the causes and consequences of Trump.

1.0 Summary of Defense

Last month, Mike Munger
purports
to "summarize the basic argument for capitalism" (emphasis added).
He acknowledges his argument is superficial. I find it excessively so.
Munger argues that capitalism:

Supports the division of labor
Provides price signals so as to direct production appropriately
Promotes economies to scale

Ultimately, this defense is that capitalism delivers the goods.
Here’s a well-expressed, simple defense that, partially,
argues along these lines:

It is possible to defend our economic system on the ground that,
patched up with Keynesian correctives, it is, as he put it, the
‘best in sight’. Or at any rate that it is not too bad, and change
is painful. In short, that our system is the best system that we
have got.

Or it is possible to

Figure 1: Wage-Rate of Profits Curves
Consider a comparison of comparison of stationary states. Net output is taken
as given, and a unit of net output is the numeraire. Technology consists
of a finite set of techniques. In each technique, net output is produced
from inputs of labor and produced circulating capital goods. No fixed
capital is used, and land of the best quality is in such abundance that
it is free. Also assume constant returns to scale.

One can find a wage-rate of profits curve for each technique.
The cost-minimizing technique at is the technique its wage curve
on the outer envelope, also known as the wage-rate of profits
frontier, at that wage. Switch points are points at which two or
more wage curves intersect (on the frontier). Suppose the same
gross vector

Many years ago, I used to argue, on Usenet, about the Cambridge Capital Controversy. Many mainstream economists
used to ignorantly assert,
when pretending to respond, that an application of the CCC to labor economics
was my idea alone. So I used to demonstrate that this was false by quoting from the literature.
As far as I can see, mainstream economists are still mostly trained into ignorance.

P. Garegnani:

"The idea that demand and supply for factors of production determine distribution has become so deeply ingrained in economic thought that
it is almost viewed as an immediate reflection of facts, and not as the result of an elaborate theory. For the same reason, it is easily
forgotten how comparatively recent that theory is. In the first systematic analysis of value and

Fact: If you use the word "carceral" instead of "prison" your argument immediately becomes more persuasive.

Good praxis is to use words like "praxis" that nobody understands.
— Matthew Yglesias (5 April 2019, on Twitter)

A large academic literature
exists around Antonio Gramsci’s Prison Notebooks. Topics discussed
include the relationship of civil society to the state, hegemony, the contrast between consent and
coercion, class alliances in political parties, Fordism, the contrast between a "war of position" and
a "war of movement", the contrast between organic intellectuals and traditional intellectuals, and
the concept of a passive revolution.

When writing his notebooks, Gramsci had to be concerned with Fascists guards reading them and tearing
them up in displeasure. Thus, he

1.0 Introduction

This post is on current events. The plane crashes of the Boeing 737 Max 8 airplane is
arguably
about
more than a software bug.
I point out in this post that you can read about how the United States’
Federal Aviation Administration (FAA) is supposed to certify software and electronic hardware in airplanes
yourself.
In some sense, this post is not about software bugs, but rather about software engineering certification processes that
fit into a larger systems engineering perspective.

2.0 FAA Resources

The FAA provides lots of resources associated with DO-278C,
Software Considerations in Airborne Systems and Equipment Certification,
the primary document of interest in this context.

You can find an overview of the FAA Airplane Certification Service
here.
Position papers

Arindrajit Dube writes an obituary for Alan Krueger, in Slate.
Maria Cristina Marcuzzo, at INET, highlights Krishna Bharadwaj’s contributions to economics.
Longtime commentator Emil Bakkum’s web page, collecting a variety of resources, is here.
An advocate of Modern Monetary Theory, Brian Romanchuk is apparently writing a book about models supposedly of Dynamic Stochastic General Equilibrium. Some recent posts include:
Questions about time scales in DSGE models. Anticipations have a time scale and so does calendar time as it passes.
A tutorial introduction to the limitations of linear models of business cycles. Basically, they either explode or decay, with possibly sinusoidal variation. Persistent cycles can only exist because of driving noise.
A long summary of problems with DSGE. Some

1.0 Introduction

By "libertarianism",
I mean propertarianism, a right-wing doctrine.
In this post, I want to outline some ways of arguing against this set of ideas.
(On this topic, Mike Huben
has much more extensive resources
than I can allude to.)

2.0 On Individual Details

I like to use certain policy ideas as a springboard for
arguments that they have no coherent justification in economic theory.
Unsurprisingly, the outdated nonsense market fundamentalists push does not have empirical support either.
I provide some bits and pieces here.

Consider the reduction or elimination of minimum wages. More generally, consider advocacy of
labor market flexibility.
I like to provide numerical examples in which firms, given a level and composition of net output,
want to employ more workers at

This is current events,
and but post is about current events in Britain in 1920. Lenin comments on reports of a dispute between Lloyd George
and H. H. Asquith, both leaders of the Liberal party:

[In] the speech delivered by Prime Minister Lloyd George on March 18, 1920… Lloyd George entered into a
polemic with Asquith (who had been especially invited to this meeting but declined to attend) and
with those Liberals who want, not a coalition with the Conservatives, but closer relations with the
Labour Party. (In the above-quoted letter, Comrade Gallacher also points to the fact that Liberals are
joining the Independent Labour Party.) Lloyd George argued that a coalition — and a close coalition at
that — between the Liberals and the Conservatives was essential, otherwise there might be a

The literature on neoliberalism is large. Here are some scholarly books on this subject or on related matters:

The power of market fundamentalism: Karl Polanyi’s critique, by Fred Block & Margaret R. Somers (2016).
Undoing the demos: Neoliberalism’s stealth revolution, by Wendy Brown (2015).
The great persuasion: Reinventing free markets since the Depression, by Angus Burgin (2015).
The strange non-death of neoliberalism, by Colin Crouch (2013).
The birth of biopolitics: lectures at the Collège de France, 1978 – 1979, by Michel Foucault (2010).
The illusion of free markets: Punishment and the myths of natural order, by Bernard E. Harcourt (2012). (I haven’t read this one.)
A brief history of neoliberalism, by David Harvey (2007).
Masters of the universe: Hayek, Friedman, and the birth

Figure 1: A Production Network
I here comment on Baqaee and Farhi (2018). I am still trying to absorb it. I suppose that it is
nice that an economist at Harvard is revisiting the Cambridge Capital Controversy (CCC).
(Where is Michael Mandler these days?)

My major criticism is they do not do what their title claims. That is, their supposed microeconomic foundations
are still up in the air.

In many CCC examples, technology
is specified in terms of fixed-coefficient production processes. Sometimes, more than one process is available
for producing a specified commodity. This structure gives rise to a choice of technique. If one wanted, one could formulate
a programming problem, in each sector, whose solution is a production function for that sector. This production
function would not be

I tend to be doubtful, albeit sometimes amused, by comments drawing on Hegel. But I thought I would adopt
some of that sort of language for a post.

Capitalism constantly revolutionizes production, leading to a fantastic increase in productivity.
An ever more diverse set of commodities is produced, including for consumption.
Machines for making, controlling, and communicating with other machines, are constantly being
introduced, reducing the labor time needed to produce any commodity.

For the diversity in commodities to be sold, workers, who constitute the most part of
consumers, must develop their abilities to appreciate as much as possible. Likewise,
they must developers their capabilities to be able to change the industry in which
they work:

But if, on the one hand, variation of

This is merely a list and, as usual, off the top of my head.

Paul A. Samuelson (1966). A summing up. Quarterly Journal of Economics 80: 568-583.
Mark Blaug (1975). The Cambridge revolution: Success of failure? A critical analysis of Cambridge theories of value and distribution. Institute of Economic Affairs.
Joseph E. Stiglitz (1974). The Cambridge-Cambridge controversy on the theory of capital: A view from New Haven.
Christopher J. Bliss (1975). Capital Theory and the Distribution of Income. Elsevier North-Holland.
Avinash Dixit (1977). The accumulation of capital theory. Oxford Economic Papers 29: 1-29.
Edwin Burmeister (1980). Capital Theory and Dynamics, Cambridge University Press.
Frank Hahn (1982). The neo-Ricardians. Cambridge Journal of Economics 6: 353-374.
Andreu Mas Colell

Here is a list of female economists I have learned from or would like to know more about:

Jane Marcet
Harriet Martineau
Charlotte Perkins Gilman
Rosa Luxemburg
Edith Penrose
Joan Robinson
Krishna Bharadwaj
Anne Mayhew
Phyliss Deane
Victoria Chick
Ingrid Rima
Nancy Folbre

Obviously, this list reflects my interests and biases. This list is off the top of my head.

Don Harris
is a Stanford economist. Apparently, this post is on current events. His daughter,
Kamala Harris is the junior senator from California and
has announced that she is running for President of the United States. I gather Don and his
wife divorced when Kamala was quite young, and that his ex-wife raised her.

I do not know much about Harris’ personal history. I did not even know that he was
Jamaican.
Did he give Michael Manley any advice?
(This is a great movie.)
It is his more theoretical work that I am aware of.
It is decades since I have read his AER article and book, and I do not
recall much about them.
I find that I happen to have handy the other five items in the reference below,
including Harris’ foreword to a reprint of the Bukahrin book.

If I do remember anything about