Economic Philosophy (Routledge Classics) by Joan Robinson

Economic Philosophy (Routledge Classics) Reviews

• 
  BlackOxford

  Smoke and Mirrors
  
  Joan Robinson was a Keynesian economist, a Communist, a defender of the Cultural Revolution of Mao Zedong and of the ‘economic miracle’ of 1950’s North Korea - so not all that prophetically gifted. She nonetheless in one of the few economists who had something interesting to say about the implicit philosophy underlying their discipline.
  
  Robinson had a healthy non-philosopher’s understanding of philosophy. For her, philosophy is metaphysics, and “The hallmark of a metaphysical proposition is that it is not capable of being tested.” Scientistic types are likely to complain that this makes them useless in practice or as the focus of serious inquiry.
  
  But Robinson recognises precisely why metaphysics is so important to all science but especially to social science. “Metaphysical statements,” she says, “are a guide to conduct... and a quarry from which hypotheses can be drawn.” That is, metaphysics consists of the fundamental, largely shared, presumptions which are critical for structured discussion in any scientific discipline. Mostly these presumptions are taken for granted ‘as the way the world really is’ and ignored as ‘too obvious’ to be questioned.
  
  Metaphysics is an implicit set of rules which are typically condensed into an ideology. Ideology, she believes, is necessary to justify an economic system - capitalist, socialist, corporatist, or any other. Ideology is also necessary to guide the consciences of those who act within an economic system. It is the invisible glue that maintains order and integrity without the need for explicit laws or constraints except at the margins of the system.
  
  Economics, therefore, is in a sense a branch of theology. Its metaphysics creates a world that is real only because people think it so. Robinson uses the example of economic capital to make her point. The term capital is used in the formulation of many doctrines of economics. But there was, and still is, no consensus on what economic capital might be - a store of potentially productive wealth? The equipment required to manufacture and distribute goods? The organizational skills and ‘implicit knowledge’ of a workforce? An accounting residue of the difference between assets and liabilities? None or all of these?
  
  But as she says, “Economics is not only a branch of theology.” It does affect the consciences of individuals on a large scale, and it does take place in a sort of public ritual, a liturgy of work one might say. But it also, as such liturgy, affects the welfare, suffering, and physical state of its congregations. Economics is not just an evangelical religion, it is a political activity.
  
  “One of the great metaphysical ideas” in economics, perhaps its core, is that of ‘value’. Value “does not mean usefulness - the good that goods do us. It does not mean market prices.” Robinson quotes the late 18th century economist David Ricardo as setting the enduring conception of economic value:

  “The only quality necessary to make a measure of value a perfect one is that it should itself have value, and that value should itself be invariable, in the same manner as a perfect measure of length, the measure should have length and that length should be neither liable to be increased or not diminished, or in a measure of weight that it should have weight and that such weight should be constant.”

  
  
  In short, value is a convention, the only necessary component of which is a reliable scale or metric. There are any number of reliable metrics. So value in economics has no definite meaning. Rather it depends solely on the choice of metric. And metrics of value, because they are metaphysical entities, cannot be proven or disproven; they can only be accepted or rejected. “A metaphysical belief, as in the law of value, cannot be wrong.”
  
  This belief about value has always been problematic for the discipline. Ultimately it emerges as the concept of ‘utility’, essentially the personal, proprietary metric of value for each individual. As Robinson recognizes, this is somewhat of a dead end because, “Utility is a metaphysical concept of impregnable circularity; utility is the quality in commodities which makes individuals want to buy them, and the fact that individuals want to buy these commodities shows that they have utility.”
  
  The central concept of classical economics therefore is grounded on a political objective that is made clear in its metaphysics: the justification of laissez-faire economics. Government involvement and interference in economic activity can only inhibit and impede the use of individual metrics of value and the exercise of personal utilities. That is, government is by its very nature economically coercive and freedom-reducing.*
  
  Precisely the same arguments are used in the 21st century by today’s neo- liberals as by the advocates of laissez-faire in the early 19th century. By the standards of metaphysics, they might not be right, but they are certainly not wrong. Interestingly, however, neo-liberals today add a small but important codicil to the historical metaphysical legacy. The metric of value, they believe, is not only entirely personal, it is also secret, even to the individuals who employ it. It is also immune from outside influence, things like advertising, public opinion, fear or irrational rumour.
  
  Consequently, the economic metaphysics of value, although intended to defend freedom of choice, in fact eliminates freedom by its insistence on a sort of succubus or demon of economic choice which directs human activity from a mysterious place in the Freudian Id.
  
  Philosophically, economics has recreated a Leibnizian world of isolated monads who know nothing beyond their own existence and only have the illusion of voluntary interaction with fellow-monads. In fact they are being manipulated and coordinated, as Leibniz reckoned, by God. Hence it doesn’t appear too much of a stretch to conclude that economics is very much the religion that deifies illusion as its object of worship. To the extent economics is also more than this, it is dangerous.
  
  *It is worthy of note, although economists don’t want to advertise the fact, that the problem of the individualistic and proprietary character of utility has been solved in financial economics by the convenient mechanism of ignoring utility theory altogether. In fact financial economics contradicts classical economics by proposing that, as far as investment is concerned, there are uniform rules of rational preference that apply rigidly to all investors. Utility theory plays no part in financial economics whatsoever. Financial Economics has a very different ideological interest than laissez-faire. It’s agenda, starting with the early 20th century American Robber Barons, has been the justification of corporate consolidations as in the public interest. Freedom for financial economics means not the freedom to follow one’s preferences, but the freedom to follow the dictates of financial theory unencumbered by governmental interference. It’s a strange old world.
• 
  Donald

  The book is very funny in an incisive way. I had flashbacks to economics courses I took 20 years ago now, with Robinson slicing through a lot of the ideology in the discipline. Robinson is openly ambiguous about the achievements of economic theory. She respects particular insights and the accumulation of achievements and admits where she can't improve on the status quo. But this balance made me want to get back into reading about economics.
• 
  Will

  "Meanwhile, from the orthodox camp the labour theory, with its disagreeable smell, had been swept out and utility had come in.
  
  "Utility is a metaphysical concept of impregnable circularity; utility is the quality in commodities that makes individuals want to buy them, and the fact that individuals want to buy them shows that they have utility.
  
  "It came into vogue first in connexion with the theory of relative prices. Purporting to be a quantity, it could be spoken of in terms of total, average and marginal, and so used to explain the old puzzle of water and diamonds. The total utility of water is indefinitely great, since life itself depends on it. When individuals have all they need they are not willing to pay for any more. In Aden, however, where water is scarce, it commands a price and the quantity that an individual consumes is cut back to the amount whose marginal utility is equal to the price. How do we know? It must be so, for price is the measure of marginal utility." (p. 48)
  
  
  "Not only that, the doctrine of diminishing marginal utility applied to income itself. As Marshall put it--
  
  

  A stronger incentive will be required to induce a person to pay a given price for anything if he is poor than if he is rich. A shilling is the measure of less pleasure, or satisfaction of any kind, to a rich man than to a poor one. A rich man in doubt whether to spend one shilling on a single cigar, is weighing against one another smaller pleasures than a poor man, who is doubting whether to spend a shilling on a supply of tobacco that will last him a month. The clerk with 100 pounds a year will walk to business in a much heavier rain than the clerk with 300 pounds a year; for the cost of a ride by tram or omnibus measures a greater benefit to the poorer man than to the richer. If the poorer man spends the money, he will suffer more from the want of it afterwards than the richer would. The benefit that is measured in the poorer man's mind by the cost is greater than that measured by it in the richer man's mind.

  
  
  "This points to egalitarian principles, justifies Trade Unions, progressive taxation and the Welfare State, if not more radical means to interfere with an economic system that allows so much of the good juice of utility to evaporate out of commodities by distributing them unequally.
  
  "But on the other hand the whole point of utility was to justify laisser faire. Everyone must be free to spend his income as he likes, and he will gain the greatest benefit when he equalizes the marginal utility of a shilling spent on each kind of good. The pursuit of profit, under conditions of perfect competition, leads producers to equate marginal costs to prices, and the maximum possible satisfaction is drawn from available resources.
  
  "This is an ideology to end ideologies, for it has abolished the moral problem. It is only necessary for each individual to act egoistically for the good of all to be attained." (pp. 53-54)
  
  
  "Edgeworth, as we saw above, and many after him, took refuge in the argument that we do not really know what greater equality would promote greater happiness, because individuals differ in their capacity for happiness, so that, until we have a thoroughly scientific hedonimeter, 'the principle 'every man, and every woman, to count for one,' should be very cautiously applied.'
  
  "Many years ago, this point of view was expressed by Professor Harberler: 'How do I know that it hurts you more to have your leg cut off than it hurts me to be pricked by a pin?' It seemed at the time that it would have been more telling if he had put it the other way round." (p. 139)
  
  As should be evident from the quotations, Robinson writes with a withering sarcasm and a skill rare in economists. It is unfortunate that she did not update this book later in life, to reflect the further evolution of her views. It is unfortunate, too, that it was Milton Friedman's book Capitalism and Freedom, published two years earlier, that won a wide readership with the lay public.
• 
  Hewram

  کتاب مفاهیم و نظریه های پایه ای و تاریخی اقتصاد را با دیدی فلسفی مرور می کند. با این حال باید گفت بخش های از آن قدیمی و غیرکاربردی است و تنها میتواند برای پژوهش گران سیرتاریخی عقاید اقتصادی جالب باشد.
  با توجه به قدیمی بودن نگارش کتاب، متن هم برخی جاها نامفهوم و سنگین بود (که بعید است از ترجمه باشد).
  درکل کتاب نکات بنیادین و جالبی از مفاهیم و نظریه های را در بر دارد.
• 
  Tristan

  Rather depressingly, Robinson seems to have written this book in a period of time in which the re-ascendancy of neoclassical ideology was unthinkable, now that laissez-faire had been thoroughly and obviously disproven that dogma, economics could move on to answering better questions of how to enact public policy via investment/spending (in typical Keynesian manner) while being clear-eyed (in their view) about the intractability of economic social antagonism. (again, typically Keynesian) Unfortunately, the period on the 25 year either side of the end of the second world war, the "welfare state," the acceptability of price controls as public policy (god please bring back price controls) now seems like an aberration bookended by unrestricted speculation, economic turbulence, and (more recently) austerity oriented policy that seems anathema to the ethos of a politics that seeks full employment.
  
  A lot of the jargon in the book is hard to pin down for a relative layperson. Robinson is very widely read and is not afraid to casually plumb the deeper points of any given argument. A more focused read with attention to technical details would probably solve this issue, as would returning after familiarizing oneself with some of the relevant ideas from other literature. In terms of style, her dry, eye-rolling, sense of humour makes it genuinely fun to read, even if you don't always fully get what she's poking fun at.
• 
  Gavin

  The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.
  

  
  (That looks glib, but in context - a Keynesian socialist critique - it's not. It's an inconvenient fact in that framework, and as such it's a clue to the grand trajectory we are
  all unequally traversing under this doubly-maligned
  mixed system.)
  
  A relative insider being pessimistic about economics' prospects of ever becoming a Science. This coupling of economy to metaphysical matters suited me at the time. But there has been
  an empirical turn in economics (though decades after this), and I no longer look for a binary Science/Nonscience judgment. (After all,
  even particle physics is ridden with cognitive bias.) Instead there are only differing concentrations of objectivity / naturalism / quantification / successful prediction /
  insensitivity to speaker prestige / empiricism.
• 
  John Mihelic

  This is about Economic Philosophy from Joan Robinson. Robinson was able to basically look at things at both a higher level and a different angle. She was able to see kind of the wheels that turned and put together in a way that didn't get too mucked up by looking at the granularity of stuff. Chris says are generally clear and well written and should be read by anybody who's interested in economics especially if you're someone who is interested in economics, but you think that the current state of the profession and the science has gone off at our right angle at some point.
• 
  Alex Nelson

  Robinson investigates what it means to be "scientific" in economics. She uses Popperian falsification for the criteria, which seems weak...she doesn't really give any examples of scientific concepts in economics.
  
  Concepts which are, uh, "beyond scientific" are considered "metaphysical". She considers both "value" (from classical economics) and "utility" (from the marginalist paradigm) both "metaphysical concepts". Great. But are there any scientific concepts?
  
  Before answering that question, Robinson does insist that a concept status as metaphysical ought not diminish it in the least...in which case, I feel like asking "Does it matter if a concept is either metaphysical or scientific?" The answer appears to be a resounding "No"...so why bother with the distinction? Never mind!
  
  Are there any scientific concepts in economics?!
  
  "...not really..." appears to be the answer. Or perhaps more accurately "Yes, but they're built atop a metaphysical foundation or within a metaphysical framework."
  
  I take exception with Robinson's criteria for falsifiability, since it seems naive and poorly construed. We must directly test a model varying one parameter at a time.
  
  But indirect testing ("If this concept were true, then it has these direct consequences and these indirect implications. We can test these indirect implications") apparently is suspect and rejected...
  
  Worse, Robinson appears to confuse the Popperian notion of metaphysics as "An untestable proposition" with the Logical postivist's notion "An unspeakable proposition". She dissects the proposition "All men are created equally" as a positivist would, then insists it --- by sheer coincidence! --- cannot be tested...because it already had the status as metaphysical before even considering testability! *sigh*
  
  All in all, the book is very thought provoking. I still need to mull over various points raised, but its absolutely dee-lightful!
• 
  Ryan

  It wasn't necessarily that it was bad, as the primary theme is certainly agreeable across the ages. Rather, much of it seemed quite outdated (occasionally to the extent of being obsolete, perhaps). Definitely still worth the read if the subject is of interest to you, though.
• 
  Jenny

  Read chapter 3 for the economic pluralism reading group. It was a brilliant critique of the concept of utility and how the Marginal Revolution brought it into the heart of modern economics. Really want to read the rest of the book as well.
• 
  T

  “No one, of course, is conscious of his own ideology, any more than he can smell his own breath” (42).
• 
  Omar Fakhry

  ”Here the metaphysical theory has been transformed into a scientific hypothesis — the hypothesis that under capitalism real wage rates do not rise. It seemed very plausible at the time, but it has turned out to be wrong. This, indeed, is proof of its scientific status. A metaphysical belief, as in the law of value, cannot be wrong and this is the sign that there is nothing to be learned from it. For obvious reasons, it was the dogmatic rather than the scientific element in Marxism that supported a great historic movement and blossomed into an orthodox ideology. The scientific element atrophied, for science progresses by trial and error, and when it is forbidden to admit error there can be no progress. Even to this day, Marxists prefer to deny that capitalism has raised the standard of life of the workers, or else to deny that Marx predicted that it would not, choosing to sacrifice the scientific element in the development of his thought in order to prop up the dogmatic element.” (Page 40)
  
  Joan got that wrong. Early in Marx's career, he did say that, but then he corrected himself. What he did say was that wages would decline relative to capitalist income. In the contemporary USA, hourly wages have been steadily declining since the Vietnam War, with a brief interruption after US victory in the Cold War. Working-class standards of living were until recently more or less preserved by working longer hours and an end to the old tradition of monogamous couples with the husband as breadwinner and the wives being housewives. Indeed the family itself is pretty much on the way out. But what has been true all along is that whether or not wages go up here and there, the incomes of the capitalist class have grown enormously, in the US and most everywhere else. So the decline in relative wage rates has been universal during and since Marx's time.
• 
  Cool_guy

  This should be the first thing you read if you want to learn about economics. All those graphs and charts and numbers can be intimidating, especially if you're a humanities nerd like me. In fact economists want you to be afraid; a lot of them think they're scientists, so they take offense to anyone who dares to make an economic proposal without an advanced degree. Robinson calls this "hiding in the thickets of algebra."
  
  Robinson is here to tell you not to worry. Economics isn't a science. It can't answer moral questions, like how a society should be organized. That's answered elsewhere, although many mainstream economists would disagree. Economics, Robinson reassures us, is merely a tool for the allocation of resources (she's skeptical if you can ever really do that successfully, but whatever). But where we want those resources to go is a question of values. When you remember that, you'll stop flinching whenever you see a graph.
  
  I'm no expert on economics, and I never will be. But now that I've read enough about the subject, I can tell when I'm being lied to or when something is a good idea. It took me a long time to get here. I thought I didn't have the skills - I was in the basic math track in high school. I would've been a lot less anxious if I'd started with this book.
• 
  James Graham

  I liked the thesis as laid out: much of economics deals in metaphysical or ideological claims, and we should investigate them for what they are.
  
  But the author makes a poor attempt at pursuing this. She gets sidetracked into the success or otherwise of competing economic theories, forgets to talk about the apparent ideologies involved, and wants to talk about where the economics went wrong.
  
  She’ll then make her own ideological claims (e.g. “redistribution of wealth would be a good thing”, “governments could and should direct investment flows”) without investigating those, but dismisses her targets as ideological and so lacking in economic content for their claims.
  
  There’s a lot of interesting history of economic thought in the book, and I think it does that well. It’s just that those discussions don’t often line up with thesis of the book.
• 
  Ethan

  It's okay. The popperianism leaves a lot to be desired, the critiques of Marx here are a little misplaced and seems to me to display a misunderstanding of his method and the terminology he deploys (being brief to avoid pretentiousness here, but not appreciating in any substantive manner the difference between VALUE and value as it manifests in concrete money, value as in use-value, etc. is certainly a problem when the criticism then groups Marx with Ricardo and co.)
  
  The section on marginalism seems to me okay though.
• 
  Dio Mavroyannis

  Finished this last week. I can't say I found it very compelling. She makes some rather common sense things, such as that ideology always plays an important role and the idea of objective economics is nonsense. I mostly bought this book for the utilitarian attacks but I don't find her critiques particularly elegant or interesting, just seems like the usual regurgitations. I don't NOT recommend it because it is relatively easy to read and short.
• 
  Márcia Figueira

  "Aceitamos que a agressão é um sintoma de fraqueza e a gabolice uma falta de autoconfiança. Todavia, em termo nacionais, a vanglória, a opressão e os cinismos são bastante aceitáveis. "
• 
  Pablo Paniagua Prieto

  This book is so bad and weak it doesn't even deserve a book review
• 
  Publius Decius Max

  I remember first stumbling upon the name Joan Robinson in a letter written by Paul Samuelson. The letter was from a student of his named Nancy K. Hyde who lambasted Samuelson's writings in his economics textbook. Specifically, the statement: "Of course, there are always a few women and cranks, longer on intuition than brains...", which could be found on p.377 of his 7th edition textbook. Nancy was rightfully upset at his writings. Samuelson, in a written response, apologized and revised the sentence for the 8th edition. He also concluded the letter by encouraging Nancy to pursue economics, saying there are too few women in the field, and that the best economist he knew also happened to be a woman, namely, Joan Robinson.
  
  The review is written with a substantial delay. 3* may have been too harsh, I quite liked the book. Could have been 4*. Some of the chapters were absolutely fantastic, whilst others were quite unremarkable, which is why I settled in the middle. It is not everyday one encounters analyses around the metaphysical underpinnings of economics. Robinson is also a fantastic writer, and highly quotable. Society needs more economists like Robinson to-day. Highly recommend.