A Bibliography Of Articles On Rent, Natural Resources, and the Space Economy

I have various results in examples with rent, and unsolved problems exist in the literature. Vienneau (2022) shows an example of the reswitching of the order of fertility and of the order of rentability in non-overlapping regions of the parameter space. D’Agata (1983) shows that, with intensive rent, the choice of technique can be non-unique away from switch points. Some wage curves along the frontier can slope up, and a cost-minimizing technique may not exist because of a cycle in a market algorithm. I have a well-behaved example with extensive and intensive rent. So some theorem might demarcate where intensive rent does not cause these issues. In my example, the order of fertility and of rentability are exactly opposite for some range of the rate of profits. In another reswitching example, intensive and extensive rent arise with a technology in which multiple agricultural commodities can be grown on each type of land. I would like to see a simple example of reswitching with exhaustible resources, if that makes sense

The following bibliography is not complete, but the later works are probably sufficient to locate additional earlier works. I probably should have more references for ecological economics.

• Baranzini, M. L., Rotondi C., and Scazzieri R. (eds.) 2015. Resources, Production and Structural Dynamics, Cambridge: Cambridge University Press.
• Barnes, Trevor and Eric Sheppard. 1984. Technical choice and reswitching in space economies. Regional Science and Urban Economics 14(3): 345-362
• Bidard, Christian. 2010. The dynamics of intensive cultivation. Cambridge Journal of Economics 34 (6): 1097-1104.
• Bidard, Christian. 2014. The Ricardian rent theory: an overview. Centro Sraffa Working Papers 8.
• Bidard, Christian. 2018. Ricardo and Ricardians on the order of cultivation. Journal of the History of Economic Thought 40(3): 389-399.
• Bidard, C and G. Erreygers. 2001a. The corn–guano model. Metroeconomica 52(3): 243–253
• Bidard, C and G. Erreygers. 2001b. Further reflections on the corn–guano model. Metroeconomica 52(3): 254–268
• Bidard, C and G. Erreygers. 2020. Exhaustible resources and classical theory. Oeconomia 10(3).
• D'Agata, Antonio. 1983. The existence and unicity of cost-minimizing systems in intensive rent theory. Metroeconomica 35(1-2): 147-158.
• Erreygers, Guido. 1995. On the uniqueness of cost-minimizing techniques. Manchester School 63(2): 145-166.
• Erreygers, Guido. 2026. Land, rent and reproduction. On Walras’s criticism of the classical theory of rent. Revue d'histoire de la pnesée économique 1(21)
• Fratini, Saverio M. 2016. Rent as a share of product and Sraffa's price equations. Cambridge Journal of Economics 40(2): 599-613.
• Gehrke, Christian. 2013. Rent, as a share of the produce, not governed by proportions. In: Levrero, E. S., A. Palumbo, and A. Stirati (eds.) Sraffa and the Reconstruction of Economic Theory: Vol. Three
• Gibson, Bill and Darryl McLeod. 1983. Non-produced means of production in Sraffa’s system: basics, non-basics and quasi-basics. Cambridge Journal of Economics 7(2): 141-150
• Huang, Biao. 2018. An exhaustible resources model in a dynamic input–output framework: a possible reconciliation between Ricardo and Hotelling. Journal of Economic Structures 7(1).
• Ianni, Guido. 2026. Class struggle and the international division of surplus: the distributive surface in the open economy. Metroeconomica
• Kurz, H. D. and N. Salvadori. 2011. Exhaustible resources: rents, profits, royalties and prices. In: Caspari, V (ed) The evolution of economic theory: essays in honour of Bertram Schefold. Routledge, London.
• Kurz, H. D. and N. Salvadori. 2015. The classical approach to exhaustible resources: Parrinello and the others. In: Kurz, H. D. and N. Salvadori N. Revisiting classical economics: studies in long-period analysis. Routledge, London
• Metcalfe, J. S. and I. Steedman. 1972. Reswitching and primary input use. Economic Journal 82(325): 140-157.
• Montani, Guido. 1975. Scarce natural resources and income distribution. Metroeconomica 27: 68-101.
• Montet, C. 1979. Reswitching and primary input use: a comment. Economic Journal 89(355): 642-647.
• Parrinello, S. 2004. The notion of effective supply and the theory of normal prices with exhaustible natural resources. Economic Systems Research 16(3): 311-22.
• Pasinetti, Luigi L. 2015. On the origin of the theory of rent in economics. In Mauro L Baranzini, Claudia Rotondi, and Roberto Scazieri (ed.) Resources, Production and Structural Dynamics. Cambridge: Cambridge University Press.
• Pavlik, C. 1990. Technical reswitching: a spatial case. Environment and Planning A: Economy and Space 22(8): 1025-1034.
• Quadrio Curzio, Alberto. 1980. Rent, income distribution, and orders of efficiency and rentability, in Pasinetti, L. L. (ed.) Essays on the Theory of Joint Production, New York: Columbia University Press.
• Quadrio Curzio, A. and Pellizzari, F. 2010. Rent, Resources, Technologies. Berlin: Springer.
• Ravagnani, Fabio. 2008. Classical theory and exhaustible natural resources: notes on the current debate. Review of Political Economy, 20(1): 79-93.
• Sau, Ranjit. 1986. Ground rent and super profit in the Sraffa system. Indian Economic Review. New Series 21(1): 51-60.
• Schefold, B. 1989. Mr. Sraffa on Joint Production and other Essays, London: Unwin-Hyman.
• Sheppard, E., and T. J. Barnes. 1990. The Capitalist Space Economy. London: Routledge.
• Verger, Yoann. 2015. A critique of attempts to introduce Hotelling's rule in Sraffa's theory.
• Verger, Yoann. 2021. Sraffa and the revenue of the owner of non-renewable natural resources: a note on the literature. In: Sinha, Ajit (ed.), A Reflection on Sraffa's Revolution in Economic Theory.
• Vienneau, R.L. 2022. Reswitching in a model of extensive rent. Bulletin of Political Economy 16(2): 133-146.
• Zaffari, Gabriel and Giacomo Sbrenna. 2026. Sraffa goes to space: spatial elements of political economy. Review of Political Economy 38(3): 840-861.

Marx: Why Have Any Science At All?

I like to point out that Marx had sense. Engels lent him the necessary pence.

The Unpaid Working Day As The Source Of Surplus Value

As demonstrated by Ian Steedman in the 1970s, the working day can be broken out into time paid to the worker and unpaid time. Steedman is echoing results established previously by Michio Morishima.

This decomposition takes the technique in use as given. A complication arises for the general case of joint production. The production of wool and mutton, both from sheep, is often cited as an example of joint production. The proper treatment of fixed capital, such as lathes and other machinery, is another example of joint production.

When calculating the part of the day that is required to produce the commodities that the workers buy out of their wages, the technique is not given. In the circulating capital case, the processes being operated, are scaled down. But in the case of general joint production, a different set of processes might be operated. The labor required to produce a net product of a given commodity basket, contrary to Marx, is not a sum of the labor values of the commodities in the basket. An explanation is provided in the closing chapters of Morishima's and Steedman's respective books. The labor required to produce a commodity basket is the solution of a linear program (LP) in which the processes are operated to produce the basket such that labor input is a minimum.

The decomposition of the working day is not dependent on Marx's theory of value. The unpaid part of the working day is the source of surplus, part of which is paid out as the revenue of the capitalist.

Illusions Of The Market

This decomposition of the working day is not necessarily apparent. The employer of a worker at Walmart sees they are being paid so much an hour. All of labor appears to be paid. Marx is quite aware of this appearance:

"Hence, we may understand the decisive importance of the transformation of value and price of labour-power into the form of wages, or into the value and price of labour itself. This phenomenal form, which makes the actual relation invisible, and, indeed, shows the direct opposite of that relation, forms the basis of all the juridical notions of both labourer and capitalist, of all the mystifications of the capitalistic mode of production, of all its illusions as to liberty, of all the apologetic shifts of the vulgar economists." -- Karl Marx, Capital, Vol. 1, chap 19.

These necessary illusions are not just for wages. A financial analyst does not calculate the rate of return for a firm based on how much a company expends on payroll. Rather the entire capital investment is examined, with conventional accounting for depreciation.

Here is another apposite paragraph from Marx:

"Vulgar economy actually does no more than interpret, systematise and defend in doctrinaire fashion the conceptions of the agents of bourgeois production who are entrapped in bourgeois production relations. It should not astonish us, then, that vulgar economy feels particularly at home in the estranged outward appearances of economic relations in which these prima facie absurd and perfect contradictions appear and that these relations seem the more self-evident the more their internal relationships are concealed from it, although they are understandable to the popular mind. But all science would be superfluous if the outward appearance and the essence of things directly coincided. Thus, vulgar economy has not the slightest suspicion that the trinity which it takes as its point of departure, namely, land - rent, capital - interest, labour - wages or the price of labour, are prima facie three impossible combinations." -- Karl Marx, Capital, Vol 3, chap 48: The Trinity Formula

It is no refutation of Marx to note that things look different in appearance.

Concluding Observations

I try to read Marx under the influence of the later Wittgenstein. Some sort of deeper essence does not exist that appears in empirical reality. Marx tries to be more systematic than Wittgenstein, but both are gathering observations for a purpose. Only a change in our form of life will remove the need for these reminders.

The Reswitching Pattern: A Fluke Case For Macaulay's Duration

This post documents an allusion to a reswitching pattern in a paper by Saverio Fratini.

Fratini refuted Cachanosky and Lewin' attempt to create a justification for Austrian capital theory and, thus, for the Austrian business cycle theory. Their justification is built on Macaulay's Duration as a measure of the average period of production. Duration is the elasticity of a stream of costs with respect to the interest factor (1 + r).

Capitalists want to adopt a technique with a longer Duration around any switch point. But an increased Duration can be associated sometimes with an increased output per worker and sometimes with a decreased output per worker. Austrian capital theory remains unfounded, ad hoc, and arbitrary. So does the Austrian theory of the business cycle.

The working paper version of Fratini's refutation is not behind a paywall. Fratini considers a flow-input, point-output technology, in which two techniques are available for producing a single consumer good: Fratini writes:

Proposition 3. Let R^* be an interest factor such that p_a(R^*) – p_b(R^*) = 0. In a small neighbourhood of R^*, if dp_a/dR – dp_b/dR ≠ 0, then a rise in the rate of interest entails a change of the method in use and the incoming method has an average period of production shorter than the outgoing one.

In the above proposition:

• r is the interest rate.
• R = (1 + r) is the interest factor.
• R^* is the interest factor t a switch point.
• p_a(R) is the cost of producting the commodity with technique A when the interest factor is R.
• p_b(R) is the cost of producting the commodity with technique B when the interest factor is R.

What happens when the derivatives of the cost of producing the commodity, with respect to the interest factor, are equal at the switch point? Then the techniques do not switch at the switch point. Two wage curves are tangent at a switch point. I call this fluke case a 'reswitching pattern'.

Computational Complexity For Linear Complementary Problems (LCPs) And Linear Programs (LPs)

1.0 Introduction

This post just states what I believe I know about the topic. I am interested in LCPs because the choice of the technique can be formulated as an LCP. Most of the references are beyond me.

2.0 Pivoting Algorithms and Interior Point Algorithms

Two types of algorithms exist for both LCPs and LPs:

• Pivoting methods: These methods start out with a feasible solution, more or less. This solution is improved by improving the basis, until an optimal feasible solution is found, if one exists.
• Interior point methods: These methods work outward, iteratively imposing constraints, until an optimal feasible solution is found.

George Dantzig's simplex algorithm is a pivoting method for LPs. The Lemke algorithm, originally formulated for bimatrix games, is a pivoting method for LCPs. The AI overview, from a Goole search, tells me:

"The Lemke algorithm is a general complementary pivoting method for solving linear complementarity problems (LCPs), whereas the Lemke–Howson algorithm is a specialized combinatorial variant specifically designed to find a Nash equilibrium in two-player (bimatrix) games."

For my purposes, then, I want to focus on the Lemke algorithm, not the Lemke-Howson algorithm.

While not the first, the Karmarkar algorithm is an interior point method for LPs.

3.0 Complexity Classes

A general LCP is NP-complete (Chung 1989). The general LP falls into the complexity class P.

A problem is in the complexity class NP if a non-deterministic algorithm exists that can solve it in polynomial time. If so, a deterministic algorithm also exists that can check a solution in polynomial time. Deterministic algorithms exist for solving problems in the complexity class P in polynomial time. Whether P is equal to NP, or merely a proper subset, is the great unsolved problem in computer science. If an algorithm can be found to solve any one of a number of problems in polynomial time, the equality of P and NP follows. Such problems, like the LCP, are said to be NP-complete (Cook 1983).

Some problems in algorithmic game theory are in complexity classes that lie between P and NP, if these complexity classes are indeed unequal (Roughgarden 2010). The class Polynomial Parity Arguments on Directed graphs (PPAD) is one of these intermediate classes.

4.0 Complexity of Algorithms for Solving LPs

The worst case of some interior point methods for solving LPs is polynomial time. The worst case for the simplex method is exponential, which is worse than polynomial time. The simplex method mostly performs in practice in polynomial time and better than interior point methods. For a long time, why this is so was a mystery.

Daniel Spielman and Shang-Hua Teng solved this mystery in 2004. They were awarded the Gödel prize a couple of year later for this work.

5.0 Special Cases of the LCP

Algorithms for solving the LCP in polynomial time have been found in special cases. These algorithms take advantage of special structures or properties of the square matrix that arises in the specification of a LCP. For example, Cottle, Pang, & Stone (2009) note the existence of a polynomial-time, interior-point algorithm for a LCP with a positive semi-definite matrix.

The solution to the LCP for specifying a long period position can be solved in polynomial time if the given rates of growth and profits are equal.

References

• Chung, S.-J. (1989). NP-completeness of the linear complementarity problem, Journal of Optimization Theory and Applications 60(3), pp. 393-399
• Cook, Stephen A. (1983) An overview of computational complexity, Communications of the ACM 26(6): 401-408.
• Cottle, Richard W., Jong-Shi Pang, & Richard E. Stone (1992, 2009) The Linear Complementary Problem, Society for Industrial and Applied Mathematics
• Karmarkar, N. (1984) A new polynomial-time algorithm for linear programming, Combinatorica 4: 373-395.
• Lemke, Carlton (1965) Bimatrix equilibrium points and mathematical programming, Management Science 11(7): 681-689.
• Lemke, C. E. & Howson, J. T. (1964). Equilibrium points of bimatrix games, SIAM Journal on Applied Mathematics 12 (2): 413–423
• Murty, Katta G. (1997) Linear Complementarity, Linear and Nonlinear Programming, Lemgo, Germany: Heldermann Verlag.
• Roughgarden, Tim. (2010) Algorithmic game theory, Communications of the ACM 53(7): 78-86.
• Spielman, Daniel A. & Shang-Hua Teng (2004) Smoothed analysis of algorithms: Why the simplex algorithm usually takes polynomial time, Journal of the ACM 51(3): 385–463.

Marx Did Not Care About Prices

Richard Wolff Responding To A Question On The Transformation Problem

The marginal revolution of the 1870s not only changed the answers. It also changed the questions. Neither the classical economists nor Karl Marx were studying the allocation of scarce resources among alternate uses.

The dynamic vision of classical political economy was about the wealth of nations, and the accumulation of capital. The latter concern meant classical political economists cared about distribution. They treated workers as consuming their wages, the landed gentry as spending their income on luxuries, and capitalists as investing their income back into growing their wealth. The classical political economists found they needed to know something about value or prices to pursue their main concerns. The theory of value was an unavoidable complication.

At one point, David Ricardo deplored the need for this complication:

"...After all[,] the great questions of Rent, Wages, and Profits must be explained by the proportions in which the whole produce is divided between landlords, capitalists, and labourers, and which are not essentially connected with the doctrine of value...

...The greater the portion of the result of labour that is given to the labourer, the smaller must be the rate of profits, and vice versa. Now this portion must essentially depend on the facility of producing the necessaries of the labourer - if the facility be great, a small proportion of any commodity, the result of capital and labour, will be sufficient to furnish the labourer with necessaries, and consequently profits will be high." -- David Ricardo, letter to McCulloch, 13 June 1820

Karl Marx took over this problem, to a considerable extent. In 1904, Hilferding tried to explain:

"In striking contrast with Böhm-Bawerk, Marx looks upon the theory of value, not as the means for ascertaining prices, but as the means for discovering the laws of motion of capitalist society." -- Rudolf Hilferding, Böhm-Bawerk's Criticism of Marx, Chapter 1: Value as an economic category

Joan Robinson had a low opinion of Marx's labor theory of value. But she was very clear that Marx's point was not about prices:

"Marshall did something much more effective than changing the answer. He changed the question. For Ricardo the Theory of Value was a means of studying the distribution of total output between wages, rent and profit, each considered as a whole. This is a big question. Marshall turned the meaning of Value into a little question: Why does an egg cost more than a cup of tea? It may be a small question but it is a very difficult and complicated one. It takes a lot of time and algebra to work out the theory of it. So it kept all Marshall's pupils preoccupied for fifty years. They had no time to think about the big question, or even to remember that there was a big question, because they had to keep their noses right down to the grindstone, working out the theory of the price of a cup of tea." -- Joan Robinson, 1953, An open letter from a Keynesian to a Marxist

I conclude with a bit from Richard Wolff, above:

"Marx's labor theory of value... has more to do with this notion of how labor is allocated in a society... Marx was not - let me put it another way. When I teach in the American university system, we begin by assuming all students want to understand the great mystery of economics which is why is the price of something what it is. Why is the price of a hamburger $5 and the price of a Mercedes much more than that? And we begin. That's very nice. It's perfectly good to make an economics built of that question. I'm going to now exaggerate to make my point. Marx wasn't interested in that, and I'm not either. I got many more interesting things I want to understand about this economy than why the prices of things are what they are. I understand if you're a capitalist you're very concerned about prices, but if you’re somebody else, you might have all sorts - you might be interested, but you have much more higher priority subjects... Marx is coming at it with a different agenda. And so he starts in a different place and takes it in a different way." -- Richard Wolff

Marx was interested in how can there be a return to ownership, at all, in a competitive market economy.

On The Suppression Of Lorie Tarshis' Keynesian Textbook

The General Theory of Employment, Interest, and Money, by John Maynard Keynes, precipitated an intellectual revolution. It presents a macroeconomic theory that supports policies for eliminating severe depressions in capitalist societies. Some economists produced their own works in trying to understand it. I think of Joan Robinson's Essays in the Theory of Employment & Introduction to the Theory of Employment Alvin Hansen's A Guide To Keynes, for example, or A. C. Pigou's Keynes's General Theory: A retrospective view. Given Keynes' attacks on Pigou's work, the last is fairly extraordinary.

Lorie Tarshis wrote the first undergraduate textbook, from a Keynesian perspective, for students in the United States. Initially, it seemed that this textbook would be successful. Here is an account at the time of an ignorant, reactionary intercession into university teaching:

"Once the atmosphere of hysteria is ignited, the most dubious creatures rush to exploit the honest fears of decent Americans. The recent textbook witch-hunt provides an edifying example. In August, 1947, on the letterhead of an organization calling itself The National Economic Council, Inc., a man named Merwin K. Hart wrote to every member of the boards of trustees of colleges using Elements of Economics, an economics text written by Professor Lorie Tarshis of Stanford University. An enclosed review denounced the book for its exposition of the doctrines of Lord Keynes and identified Keynesianism as a form of Marxism.

Hart's letter had an immediate effect. Organizations of small businessmen passed resolutions in his support. Trustees and alumni wrote outraged letters to college presidents. Yet who was Merwin K. Hart? His record had long been known to students of the American proto-fascist demimonde. He revealed his own notion of Americanism some months later when, in a speech before Harvard's Free Enterprise Society, he inveighed against the Marshall Plan and 'the international Jewish group which controls our foreign policy.' And, at the height of Hart's campaign, the ideas of Keynes were under equal brutal and ignorant attack from another source: that is, from the Communists themselves. 'Keynesianism,' wrote William Z. Foster, 'collides with Marxism at every point.' Foster and Hart, in fact, agreed in objecting not only to Keynes but to such proposals as the Marshall Plan as well; by the kind of reasoning Hart uses on other people, he should have had to classify himself as a Moscow agent.

Fortunately enough college presidents knew Hart's record to stand up courageously to the uproar. Dr. A. I. Strand of Oregon State College wrote bluntly to Hart: 'Your hands are dirty and you smell of foul associations, and now you have the effrontery to set yourself up as the protector of American youth! A greater insult to education has never come to my attention.' The American Economic Association eventually appointed a special committee to deal with the attacks on the Tarshis book and on other economic texts.

The issue is more fundamental than simply the fatuousness of mistaking Keynes for Karl Marx. If all Communism meant was deficit financing, then it would be hard to persuade anyone that it was very terrible. A genuinely Communist textbook would be unacceptable for its distortions of fact, as a Communist teacher, who imported his party views into the classroom, would be an incompetent teacher. The deeper issue is the freedom of the teacher to teach his subject according to his most responsible understanding of it, and not according to the ukase of a board of trustees, a legislature, a political party or a foreign country." -- Arthur Schlesinger, Jr. 1949. The Vital Center: The Politics of Freedom. Boston: Houghton Mifflin: 205-207.

Schlesinger turned out to be wrong. Tarshis’ textbook was successfully suppressed. By the way, my sometime correspondent, William F. Buckley, was equally ignorant and vile in God and Man at Yale. Paul Samuelson, in writing his textbook, consciously tried to avoid Tarshis' fate. He wrote lawyer-like.

Schlesinger's book is depressing. He deplores the ‘lurid atmosphere’ created by Attorney General Mitchell Palmer, with his 'notorious red hunts'. He says the House Un-American Activities Committee (HUAC) is going too far. But, as you can see above, Schlesinger, one of the co-founders of the Americans for Democratic Action (ADA), is all about denying communists employment. He says that the US State Department should be promoting the non-communist left (NCL) in Europe and elsewhere. We need a Third Force. Perhaps Graham Greene read this before writing his novel, A Quiet American. Pyle, the title character, sponsors murder and mayhem in Vietnam in order to find this Third Force. Schlesinger did not have his priorites sorted.

If this is the best of liberalism, I do not want it. (I have yet to read Sam Moyn's 2023 book, Liberalism Against Itself: Cold War Intellectuals and the Making of Our Times.) There will be none of Matthew McManus' The Political Theory of Liberal Socialism if liberals remain afraid of socialism.

Histories Of Heterodox Economics: A Small Bibliography

This is an aspirational bibliography in that I have not read Mata's book. I long ago read his doctoral thesis. I probably have forgotton most of the other books. Katzner's book, about the economics department at the University of Massachusetts at Amherst, is only a memoir in the last chapter.

• Donald W. Katzner. 2011. At the Edge of Camelot: Debating Economics in Turbulent Times. Oxford.
• J. E. King. 2004. A History of Post Keynesian Economics since 1936. Edward Elgar.
• Frederick S. Lee. 2011. A History of Heterodx Economics: Challenging the Mainstream in the Twentieth Century. Routledge.
• Tiago Mata. 2026. Radical Expectations: How the New Left Changed Economics. Cambridge.

Sraffa On Marx Being Approximately Correct

Sraffa (1960) is an epoch-making book. It is a part of a demonstration that neoclassical economic theory is incoherent and incorrect.

Ian Steedman created a stir in the 1970s. He turns Sraffa's theory against some aspects of Marx's theory of value. He argues that labor values are redundant in explaining prices of production and the rate of profits. This was a novel accusation. He also argues that many analyses, such as the effects of variations in the length of the working day, can be made at the level of prices of production.

Sraffa did not see his book as refuting Marx, either before or after publication. John Eaton wrote a review of Sraffa's book. Eaton was the pen name of Stephen Bodington. Sraffa wrote him a letter, in 1961, after this review. A draft is in Sraffa's archives:

"Dear Bodington,

It was most kind of you to send me through M[aurice] D[obb] an offprint of your article in Societa. I am grateful for this splendid review, which presents the subject in a more lucid and interesting way than I should have thought possible; it certainly sets a high standard for the discussion which I hope it will stimulate [initiate?].

should like to take this opportunity to try and give a brief answer to the question you hint at, when you express some doubts as to the usefulness of the construction of the 'Standard Commodity'. First of all I am convinced that it does represent a real property of the econ[omic] system; and while this could be described in other ways, it should not be ignored, even if it did not find immediate application. It is, however, applied in one or two cases in the book: For instance, in the proof that there is a unique set of all-positive prices in the case of single-product industries. (the proof isn't without importance for the number of sets of solutions is very large, being equal to the number of commodities in the system; if any appreciable proportion of these sets could be all-positive, a large element of uncertainty would be introduced.) Another application is for defining basic and non-b[asic] comm[oditie]s. (This can be done intuitively in a system of s[ingle]-p[roduct] industries, but in complicated cases of multi-product industries, this or some equiv[alent] math[ematical] construction is, I think, necessary.)

There are besides, many possible applications, which I have not mentioned in the book, in problems discussed by Marx. Take, e.g., the determination of a general rate of profits, from the rate of surplus value. Marx takes an average of the rates of profits, obtained from the proportion of the different commodities on the basis of 'values', and he gets, as he acknowledges, an approximately correct result. An exact result could however be obtained by taking, instead of a simple average, a weighted average: and it can be shown that the appropriate weights can be derived directly from the proportions in which the comm[odities] enter the st[andard] comm[odity]. Similarly, in th application of M[arx]'s notion of the comm[odity] produced by 'a cap[ital] of av[erage] org[anic] comp[osition]': for an exact result the average must be found in the same way. In other words, that comm[odity] is the st[andard] comm[odity].

I doubt, however, that it would at the present [time?] be wise to direct the discussion onto these lines.

With kind regards,

Yours sincerely," -- Piero Sraffa. D3.12.111/132

I cite Eatwell (1975) in explaining how the standard commodity is a commodity of average organic composition of capital. It provides a solution of the transformation problem.

In finding the general rate of profits, Sraffa starts with the value rate of profits in each industry. The value rate of profits is the ratio of surplus value to the sum of the value of variable capital and constant capital, with each found in the system of labor values. The rate of profits in the system of price of production is the weighted sum of the value rates of profits, where the weights are a modification of the weights for Sraffa's standard system. This weighted sum is one way that Sraffa draws a connection between labor values and prices of production. I have written about this before. Perri (2023) explains further.

Inasmuch as Marx's solution of the transformation problem is not exactly correct, it can be and has been set right.

References

• Enrico Bellino. 2006. Banfi, Eaton, Dobb and Johnson review Sraffa's Production of Commodities. Storia Del Pensiero Economico
• John Eatwell. 1975. Mr. Sraffa's standard commodity and the rate of exploitation. Quarterly Journal of Economics. 89(4): 543-555.
• Stefano Perri. 2023. Sraffa's response to Eaton's review: a note on the standard commodity and Marx's general profit rate.
• Piero Sraffa. 1960. Production of Commodities by Means of Commodities: A Prelude to a Critique of Economic Theory. Cambridge University Press.
• Ian Steedman. 1981. Marx after Sraffa. Verso.

Keen On Steedman On Marx

I have been reading Steve Keen's 1990 doctoral thesis. As I understand it, Marx explains the origin of surplus value, in Capital, by the distinction between the use value and exchange value of labor power. The use value is the labor expended under the capitalist's direction. This labor is generally more than the labor embodied in labor power. The labor embodied in labor power, under volume 1 assumptions, is the money wage.

Keen argues that Rudolf Hilferding's treatment of skilled labor is an application of Marx's use value/exchange value dialetic. Skilled labor is to be explained by the training that goes into upgrading a worker's skill. The value created by skilled labor is not to be explained by the transfer of the labor embodied in skilled labor as being depreciated over time. Hilferding writes, "The labor of the technical educator thus transmits, not only value (which manifests itself in the form of the higher wage), but in addition its own value-creating power." The value created by a skilled worker in a hour of time is not required to be in the same ratio to the value created by a unskilled laborer in a hour of time as the ratio of their respective wages. Their rates of exploitation can vary.

Why can this dialectic not apply to fixed capital, also known as machinery? According to Keen, Marx did momentarily so apply it in the Grundrisse. The use value of a drill, for example, is so many holes drilled over the life of the drill. But, at a more abstract level, the use value of the drill is a value-creating power. Just as the concrete labor performed by a particular kind of skilled laborer is, strictly speaking, incommeasurable with a particular expenditure of unskilled labor, so the concrete application of a drill is also incommeasurable. But, if you think of the one as having value-creating power, in units of abstract labor time, why cannot the other have value-creating power? If so, fixed capital is just as much a source of surplus value as labor power.

The point of this post, though, is to record a footnote for my commonplace book:

"Rosdolsky['s] contribution certainly called into question the traditional interpretation of Marx, but as for actual revisions of Marx's theory on the basis of Rosdolsky's work, little of merit has happened. Marxian theory in general has been in turmoil since the publication, at much the same time as The Making of Marx's Capital was translated into English, of Steedman's Marx after Sraffa (NLB, London, 1977). In fact Sraffian criticism of Marx predates Steedman's book - as Meek's second edition clearly illustrates. However Steedman's work was the most accessible of these critiques, and the most strident. Steedman's demonstration of the implications for the labour theory of value of Sraffian analysis has left Marxism in disarray, with many deserting the fold. Meek's introduction and appendix to his second edition of Studies , and his Smith, Marx and After (Chapman and Hall, London, 1977) imply that he was amongst the many inclined to this position. Those that remain are split into two camps, with one calling for the theory of value to be dropped from Marxism altogether (l.c. Carling, Hodgson, Bose) while the other argues that value, somehow, is fundamental. This second camp is itself heavily divided, with some for business as usual along the lines of the traditional interpretation (l.c. Sweezy and Shaikh), others explaining surplus on the basis of unequal exchange (l.c. Desai, Bowles and Gintis), and still others seeking refuge in Marx's discussion of concrete versus abstract labour (l.c. Mohun, Carling, Sekine) or the non-commodity nature of labour (Bowles and Gintis, Mohun, Laibman)." -- Steve Keen (1990).

I should expand the list of references below to contain more than one.

I tend to not like dialectical arguments, and I try to confine my analysis to to the level of prices of production. I need to look at labor values, in some sense, in calculating the labor expended in a stationary state to produce a given net output. I do this, following, say, Samuelson, in noting a switch point exhibits capital-reversing. I can see why some find the level of prices of production too confining. Marx goes further in volume 1. For example, consider his presentation of primitive accumulation and the 'double freedom' of the worker under capitalism. Or his distinction between absolute and relative surplus value. Maybe a good analysis should treat labor values anyways.

In contrast to Steedman, Sraffa did not see his book as refuting Marx. After the publication of his book, he wrote a letter to John Eaton (pseudonym of Stephen Bodington) responding to Eaton's review (Perri 2023). In it, he started with the value rate of profits in each industry. The value rate of profits is the ratio of surplus value to the sum of the value of variable capital and constant capital, with each found in the system of labor values. The rate of profits in the system of price of production is the weighted sum of the value rates of profits, where the weights are a modification of the weights for Sraffa's standard system. This weighted sum is one way that Sraffa draws a connection between labor values and prices of production.

References

• Stefano Perri. 2023. Sraffa's response to Eaton's review: a note on the standard commodity and Marx's general profit rate

Yanis Varoufakis Has A Podcast

Varoufakis Interviewing Richard Wolff

I recently stumbled across the podcast Econoclasts. Usually, he co-hosts with the Wolfgang Munchau, a journalist. The above is an extract from the end of an episode where Varoufakis, by himself, interviews Richard Wolff.

It takes lots of study to show why marginalist economics is wrong. Varoufakis says that he no longer can recommend to students that they do that study. He asks Wolff what he does. Wolff responds:

"Well, here's what I tell them. And again I share much of what you have to say. In the ten years I spent at Harvard, Yale, and Stanford, I had to learn, I had to teach neoclassical microeconomics and Keynesian macroeconomics and all the rest. I believed then as I guess you did, too, that this was necessary. I had to understand how the system, not just how it worked, but how it rationalized itself, how it imagined itself to be working.

I did learn early on that the system also understands that dichotomy. So, it has economics departments who develop the ideological cover, as you put it, the rationale, why it all works out for an optimal - look at the language - an equilibrium - more silly language, you know - a system that is neither optimal nor presenting itself as all of that.

And then they have a business school where you actually learn a little bit about how to market something, how to go. They recognize the separation of function.

So, I say to students, you have to do something else, which I had to figure out how to do. I'm going to save you the time. And they look at me, but this is what I do, and I'm answering your question. You have to learn Marxian economics. You do. You have to immerse yourself in the volumes of Capital, in the other literature. Not because everything is clear there, it isn't. Not because there aren't contradictions, there are. Not because there's nothing in neoclassical economics you can't make use of. It's not that.

It's that if you think what I am doing is interesting, it's not me. And it's not what I got at Harvard and Yale. What it is, it comes out of trying to squeeze useful understanding out of the Marxian tradition, separated from the propaganda and from the mistakes and the lessons that weren't learned that should have been, in order to do that - you have to do, and the university cannot do that for you precisely because it fits your description. It’s not - it could care less.

It never was interested in - I never had a class in 10 years and except for Paul Baran, I never had a class in which anybody ever put together a Marxian idea, a neoclassical idea, and then went with us as students through what they had to say, where they were silent and shouldn't have been, where ' etc., etc. None of that was ever done. I had to do all that myself or with a few other students. But the payoff is you get a way of thinking, a way of posing questions that you can then use for all of the new material that Marx, you know, died long before it became relevant.

You know that you try to do that when you try to understand the Cloud. What does the Cloud make possible? What are these conglomerations of wealth and power able to do that capitalists couldn't do before? Where does that take us? Where are the obstacles? What is our best - You need a critical mentality.

And I know many people believe they can develop that on their own. I don't think so. I think if you really want to get beyond Marx, which is fine, you got to go through it to get beyond it. You can't skip over it At least, I’ve never seen anyone pull that off." -- Richard Wolff

I learned Marx on my own. It would be challenging to get through even the first volume of Capital in a semester. The teacher could use one of a number of textbooks. (For some reason, I do not have Resnick and Wolff's Contending Economic Theories in that list.)

Ludwig Von Mises Led A Cult In New York City

When Von Mises came to American, he could not get an academic position. He ended up at New York University, funded by the Volker fund and the Foundation for Economic Education (FEE), not the normal academic position. He had a seminar, so to speak, from 1948 to 1969. I should find these experiences inspiring. Von Mises started his seminar past retirement age, when he was older than me

His students consisted of the usual youngsters seeking credit for a grade and a weird cohort of adults, who attended year after year.

"As Robert Nozick … said, 'In 18 years of teaching at Princeton and Harvard, I never encountered any professor teaching a seminar where non-degree-seeking adults would continue to attend year after year . . . [Mises was] unique in attracting mature minds without demanding discipleship.'" -- Brian Doherty. 2008. Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement.

Israel Kirzner describes what many saw as Von Mises’ arrogance:

"But by the time I was at his seminar, he was of advanced age and had heard all of the arguments in favor of other points of view. There's no doubt he felt convinced that he knew what was valid and invalid. That awareness on his part was fairly obvious to anyone, from body language if you like, and it could be that some members of the seminar might have felt put off." -- Kirzner, quoted by Doherty

Kirzner also comments on the weird cohort:

"Another aspect of those years that has to be kept in mind is that for various sociological reasons Mises became surrounded by people who were very eager to protect him. Some of those well-meaning individuals may have projected an image Mises is not to be criticized, not to be disagreed with. That was unfortunate..." -- Kirzner, quoted by Doherty

Margit Von Mises, the great man's wife describes the behavior of his acolytes:

"four or five students had formed a group in order to protect the professor against dissident students who opposed his views. They occupied a table ahead of the class next to the professor in order to be ready to protect him against any possible violence." -- Margit Von Mises, quoted by Doherty

Murray Rothbard was one of these followers. Others included Bettina Bien Greaves, Richard Cornuelle, Percy Greaves, Leonard Liggio, Ralph Raico, George Reisman, Hans Sennholz, Louis Spadaro, and Leland Yeager. George Koether was another admirer:

"Mises's friend George Koether, an editor at Look magazine, commissioned a bronze bust of the great scholar." -- Doherty

I have not exhausted the oddities of Von Mises' seminars. These cult meetings were important in preserving the Austrian school until the 1974 South Royalton Conference on Austrian Economics

Thomas Sowell Despises Democracy And Supports Imperialism

I quote:

"when another famine struck India in the nineteenth century, now under the colonial rule of British officials and during the heyday of free market economics, opposite policies were followed, with opposite results:

'In the earlier famine one could hardly engage in the grain trade without becoming amenable to the law. In 1866 respectable men in vast numbers went into the trade; for the Government, by publishing weekly returns of the rates in every district, rendered the traffic both easy and safe. Everyone knew where to buy grain cheapest and where to sell it dearest and food was accordingly bought from the districts which most urgently needed it.'

All elementary as this may seem, in terms of economic principles, it was made possible politically only because the British colonial government was not accountable to local public opinion." -- Thomas Sowell. 2011. Basic Economics: A Common Sense Guide to the Economy, fourth edition. p. 64-65

The ‘Nobel’ laureate Amartya Sen has a very different view of famines. Naturally, Sowell does not tell the student that or even who he is quoting. I think Sowell is quoting W. W. Hunter, The Annals of Rural Bengal: Vol. I. The Ethnical Frontier of Lower Bengal, with the Ancient Principalities of Beerbhoom and Bishenpore (1868). The Irish, too, might have a view on how the English handled famines outside England.

Here is an old interview in which Sowell says that third world countries that were lucky enough to be colonized by European powers have better prospect of development.

I do not expect to like Basic Economics. It has no math, no graphs, and no charts. I may not appreciate where he explains things that others would describe with functions - e.g., supply and demand.

'Nobel' Prize-Winning Economists Show Capitalism Is Not Efficient

The bankers at the Swedish central bank, in the 1960s, wanted to justify their political independence. It would be nice if the general public thought of them as experts in some sort of science, not making political decisions in favor of the owning class. So they set up a 'Nobel' prize, that is, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

The first prize was awarded in 1969. You can find the start of a list here. The table below provides an inadequate overview of a selection of winners of this ‘Nobel’ prize.

Table 1: Selected 'Nobel' Prizes

Year	Economist(s)	Work
1978	Herbert Simon	When making choices all people deviate from the strictly rational. He described companies as adaptable systems, with physical, personal, and social components
2001	George Akerlof, Michael Spence, Joseph Stiglitz	Demonstrated that markets in which agents have asymmetric information can be inefficient.
2002	Daniel Kahneman	Demonstrated experimentally that people do not maximize utility. His research on decision-making under uncertainty resulted in the formulation of a new branch of economics, prospect theory
2013	Robert Shiller	Found that stock prices fluctuate much more than corporate dividends. Shiller’s conclusion was therefore that the market is inefficient.
2017	Richard Thaler	Paid special attention to three psychological factors: the tendency to not behave completely rationally, notions of fairness and reasonableness, and lack of self-control.
2021	David Card	Showed empirically that labor markets are not to be explained by supply and demand. Among other things, increasing the minimum wage does not necessarily lead to fewer jobs, as was previously thought.

I do not claim that these, and other 'Nobel' prizes add up to an alternate paradigm. (I have one.) But those who want to understand capitalism might pay some attention to some of this work.

Live Action Role Playing (LARPing) For Propertarians

Milton Friedman was an illogical advocate of right wing capitalism. C. B. MacPherson, in examining Friedman's Capitalism and Freedom, writes "One almost despairs of logic". Harry Johnson writes about the success of Friedman's monetarist counter-revolution by treating Friedman 'as if' he made up an oral tradition at Chicago. I am finding James Forder's Milton Friedman (2019) very critical of Milton. He writes of other accusations of Milton just making things up or otherwise behaving as a charlaton, including in Great Britain.

But never mind that. This post is about how his descendants engage in LARPing. Do you find them absurd?

Capitalism and Freedom is co-dedicated to Milton's son, David. David continues the silliness with his book, The Machinery of Freedom. His fantasy novel, Salamander, has the system of magic partially taken from LeGuin's Earthsea series and partially built on linear algebra. (This is the only one of his three fantasy novels I have read. I find it amusing.) David is an active participant in the Society of Creative Anachronisms, where he is known as Duke Cariadoc of the Bow. In addition to this LARPing, he writes about saga-period Iceland as a model of how law might work in a capitalist society.

Patri Friedman is the son of Davd Friedman. His confusion about LARPing can be seen in his founding of the Seasteading Institute. He was the executive director at its founding in 2008, with a large donation from Peter Thiel. He continued the LARPing with the founding of the Future Cities Development Corporation. No, Patri, you are not Lycurgus, the legendary author of Sparta's constitution. I am sorry that Paul Romer promotes this anti-democratic idea. Furthermore, Patri promotes the bizarre ideas of trans-humanism.

This LARPing may strike you as a combination of harmless recreation and silliness with no chance of being implemented. But here we are, with rich effs close to political power.

For Marx, Prices Coordinate Distributed Labor Activities Under Capitalism

Marx provides a supposed proof of the labor theory of value (LTV) in the first section of the first chapter of the first volume of Capital. The worth of his analysis depends on neither the soundness nor the validity of this argument about the third thing. If you are interested in Marx, you should be willing to see where he goes after chapter 1. I find most insightful the last section in chapter 1, the bit on commodity fetishism.

Manufacturing goods in an ongoing society depend on many activities happening in parallel. For example, somebody must be mining iron for the blacksmith to be manufacturing horse shoes out of steel. Under capitalism, nobody is coordinating these activities. For Marx, this coordination results from prices under the anarchy of production characterizing capitalism. Capitalists see whether they are making lots of profits or not in marketing the commodities produced under their direction. Each capitalist adjusts their establishments accordingly.

Marx explains his overall approach to the theory of value in a much-quoted 11 July 1868 letter to Ludwig Kugelmann:

Dear Friend,

The children are getting on well, though still weak.

Thank you very much for the things you sent. Definitely do not write to Faucher, otherwise this mannequin pisse will feel too important. All he has achieved is that, if a second edition appears, I shall aim a few necessary blows at Bastiat where I speak about the magnitude of value. This wasn't done before, since the 3rd volume will contain a separate an extensive chapter about the 'vulgar economy' gentry. Incidentally, you will find it quite natural that Faucher and consorts derive the 'exchange value' of their own scribblings not from the amount of labour power expended, but from the absence of such expenditure, that is from 'saved labour'. Moreover, the worthy Bastiat did not even himself make this 'discovery', so welcome to these gentry, but just 'cribbed' it, in his usual manner, from much earlier authors. His sources are of course unknown to Faucher and consorts.

As for the Centralblatt, the man is making the greatest concession possible by admitting that, if value means anything at all, then my conclusions must be conceded. The unfortunate fellow does not see that, even if there were no chapter on 'value' at all in my book, the analysis I give of the real relations would contain the proof and demonstration of the real value relation. The chatter about the need to prove the concept of value arises only from complete ignorance both of the subject under discussion and of the method of science. Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish. And every child knows, too, that the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society's aggregate labour. It is SELF-EVIDENT that this necessity of the distribution of social labour in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves. And the form in which this proportional distribution of labour asserts itself in a state of society in which the interconnection of social labour expresses itself as the private exchange of the individual products of labour, is precisely the exchange value of these products.

Where science comes in is to show how the law of value asserts itself. So, if one wanted to 'explain' from the outset all phenomena that apparently contradict the law, one would have to provide the science before the science. It is precisely Ricardo's mistake that in his first chapter, on value, all sorts of categories that still have to be arrived at are assumed as given, in order to prove their harmony with the law of value.

On the other hand, as you correctly believe, the history of the theory of course demonstrates that the understanding of the value relation has always been the same, clearer or less clear, hedged with illusions or scientifically more precise. Since the reasoning process itself arises from the existing conditions and is itself a natural process, really comprehending thinking can always only be the same, and can vary only gradually, in accordance with the maturity of development, hence also the maturity of the organ that does the thinking. Anything else is drivel.

The vulgar economist has not the slightest idea that the actual, everyday exchange relations and the value magnitudes cannot be directly identical. The point of bourgeois society is precisely that, a priori, no conscious social regulation of production takes place. What is reasonable and necessary by nature asserts itself only as a blindly operating average. The vulgar economist thinks he has made a great discovery when, faced with the disclosure of the intrinsic interconnection, he insists that things look different in appearance. In fact, he prides himself in his clinging to appearances and believing them to be the ultimate. Why then have science at all?

But there is also something else behind it. Once interconnection has been revealed, all theoretical belief in the perpetual necessity of the existing conditions collapses, even before the collapse takes place in practice. Here, therefore, it is completely in the interests of the ruling classes to perpetuate the unthinking confusion. And for what other reason are the sycophantic babblers paid who have no other scientific trump to play except that, in political economy, one may not think at all!

But satis superque [Enough and more than enough]. In any case, it shows the depth of degradation reached by these priests of the bourgeoisie: while workers and even manufacturers and merchants have understood my book and made sense of it, these 'learned scribes' (!) complain that I make excessive demands on their comprehension.

I would not advise reprinting Schweitzer's articles, though Schweitzer has made a good job of them for his paper.

You would oblige me if you sent me a few issues of the Staats-Anzeiger.

You should be able to get Schnacke's address by enquiring at the Elberfelder.

Best greetings to your wife and Fränzchen.

Yours,

K. M.

Apropos. I have received an article by Dietzgen about my book; I am sending it to Liebknecht.

I fault Marx for spending so much time in rewriting volume 1 of Capital after its publication. He should have put more time in preparing the later volumes for publication. Some have recommended that on a first reading, you skip the first chapter. I could see an argument that Marx should have worked on rewriting chapter 1 a few more times.

Markets As Automata, Theory Of Computation, Etc.

I do not expect this post to be well-posed. I suggest that the following researchers provide elements for an interesting approach to economics:

• Michel Callon: Applied Actor-Network Theory to financial markets. [I KNOW EVEN LESS ABOUT THIS.]
• Karin Knorr Cetina: the sociology of finance. Use of algorithms in financial markets.
• Donald MacKenzie: Edinburgh school for sociology of knowledge. Performativity and counter-performativity of financial markets.
• Philip Mirowski: Markets as automata. Parallels with Chomsky hierarchy. Economies as evoloving ecology of market automata.
• Kumaraswamy Vela Velupillai: Constructivism in economics, including in Sraffa's work.

The laws of supply and demand, as presented in neoclassical economics, are muddled and confused. Demand for consumer goods, for eample, is the result of households maximizing some non-existent utility subject to constraints. A market is an unanalyed entity, generally with no brokers who make markets, willing to trade on either side. Although not discussed, the market in neoclassical microeconomics is typically a posted price market, corresponding to the lowest level of the Chomsky hierarchy.

Those who specialize in finance might say they observe something like supply and demand in order books. But those curves are not the supply and demand curves presented in introductory economics and in neoclassical microeconomics. These financial markets are structured, with algorithmic rules for matching bids and offers. They often parallel future markets, capable of going into backwardation and contango.

A certain sort of mathematics is needed to fully analyze markets. I happen to be able to write computer code, in some languages to some extent. And I have been exposed to a perspective that computers should be designed to execute our algorithms, which are abstract mathematical entities independent of such implementation.

At one point, I was quite aware of IEEE 754-2019. IEEE Standard for Floating-Point Arithmetic. At one level of abstraction, I would think of my algorithms as applying to real numbers. I also worried about underflow and overflows and other details. (By the way, some editions of Numerical Recipes contain bugs. You have to read and think, not just copy the code.) I also worried about computational complexity. I probably did not worry about any more than whether or not an algorithm could be implemented in polynomial time and how a parallel implementation can provide speedup. From literature on algorithmetic game theory, I know that if P ≠ NP, complexity classes exist in-between.

So I do not adopt a constructivist approach to economics and mathematics. But I appreciate the provision of algorithms to solve economic problems. And I see that Sraffa does that. I do not know of any evidence that Sraffa and Wittgenstein talked about this, even given Wittgenstein's work on the foundations of mathematics.

Greg Mankiw Confusing Students About Money And Investment

"It was thenceforth no longer a question, whether this theorem or that was true, but whether it was useful to capital or harmful, expedient or inexpedient, politically dangerous or not. In place of disinterested inquirers, there were hired prize fighters; in place of genuine scientific research, the bad conscience and the evil intent of apologetic." -- Karl Marx

Suppose you run a restaurant. You think that you could expand if you paved your parking lot or put a deck up out back. You convince your local bank manager. The bank credits their own account with an asset and credits your account with a loan. That asset, for the bank, is a promise from you to pay off the loan, probably as a series of payments. You spend the money in your account by paying a paving or building contractor.

The bank has created money. No third party must first choose to increase their saving rate and deposit money in the bank. You are able to obtain resources to implement plans for increased production.

The author of a prominent introductory textbook for economics has another, confused story:

Financial intermediaries are financial institutions through which savers can indirectly provide funds to borrowers. The term intermediary reflects the role of these institutions in standing between savers and borrowers. Here we consider two of the most important financial intermediaries: banks and mutual funds.

Banks If the owner of a small grocery store wants to finance an expansion of his business, he probably takes a strategy quite different from that of Intel. Unlike Intel, a small grocer would find it difficult to raise funds in the bond and stock markets. Most buyers of stocks and bonds prefer to buy those issued by larger, more familiar companies. The small grocer, therefore, most likely finances his business expansion with a loan from a local bank.

Banks are the financial intermediaries with which people are most familiar. A primary job of banks is to take in deposits from people who want to save and use these deposits to make loans to people who want to borrow. Banks pay depositors interest on their deposits and charge borrowers slightly higher interest on their loans. The difference between these rates of interest covers the banks' costs and returns some profit to the owners of the banks." -- Greg Mankiw. 2018. Principles of Economics, 8th edition p. 545.

Mankiw then goes on with archaic nonsense about loanable funds and government spending crowding out private investment.

Why do economists teach balderdash?

I have been reading J. W. Mason and Arjun Jayadev's new book, Against Money. I have pointed out Mankiw's confusion and foolishness before.

Competing Ballot Propositions

I have occasionally written about vote-counting protocols.

Onondaga County is to the west of me. Syracuse, NY, is their major city. Members of the county legislature currently have term limits of 12 years. Twelve years is three terms. They are currently arguing about term limits for the County Executive, of 12 or 16 years. The Democrats support the former, and the Republicans support the latter. The County Executive is currently a Republican.

The County Executive has proposed a curious set of ballot initiatives, leaving it up to the voters. One initiative will set a term limit of twelve years. Another will set a term limit of sixteen years. If neither initiative gets a majority of votes, the County Executive will continue to serve without a term limit. If both pass, the one with more votes will prevail.

I do not know if any precedent exists in New York State for dueling ballot initiatives, and, apparently, some argument exists among the county legislature about this question. I suspect the results of votes on California ballot initiatives have posed some such challenge of interpretation.

How to draw district lines and how to count votes is an interesting mathematical question. This question is often entangled with racism in the United States, both in ensuring white supremacy and in fighting it.

Was There A Communist State In Paraguay In The Seventeenth And Eighteenth Century?

People have been organized in diverse ways in many societies across time and space. A communist state existed for a century and a half in Paraguay in the seventeenth and eighteenth century. I doubt many socialists today want this degree of regimentation. This state extended into Argentia and Brazil.

The Jesuits, formally named the Society of Jesus, is a religious order in the Catholic church. The Guarani are an indigenous people in South America.

The Jesuits agreed with the Spanish king, in 1609, to found communities along the Parani River. These communities, called 'reductions', were each organized around a mission. Each was ruled by a cacique, that is, a Guarani chief, under the direction of the Jesuits. Collectively, these missions were eventually called the Rio de Plata missions. They reached a population of almost 150,000 in 30 missions in 1732.

Life in these reductions was regimented under the 1689 General Rules of the Missions. Land was farmed communally, with crops and cattle introduced by the Jesuits. There were also individual fields, albeit with inefficient farming. As with life in a monastery, mornings began with hymns and mass, and many feast days were celebrated. Meals were communal. The Jesuits provided education to the children, as you might expect.

I note above that the population under Jesuit guidance grew to a large extent. Original contact between Europeans and the indigenous people resulted in the spread of deadly, contagious diseases. The Jesuits moved a good portion of the population in the missions twice. The Jesuits armed the population to fend off neighbors who tried to kidnap people to force into slavery. The Guarani thereby had militias. Eventually, the Jesuits moved some communities to more remote areas. Portugal gained territory in Brazil in the Treaty of Madrid in 1750. The Jesuits moved some communities out of Portuguese territory.

This experiment in a theocratic communism came to an end in 1767. Spain expelled the Jesuits from the Americas. This expulsion had more to do with European politics than anything going on in these missions.

Naturally, Jesuits put this history in a good light.

References

• Massimo Livi-Bacci and Ernesto J. Maeder 2004. The missions of Paraguay: the demography of an experiment. Journal of Interdisciplinary History xxxv(2): 185–224.
• Philip Caraman. 1976. The Lost Paradise: The Jesuit Republic in South America. [I have not read this. The title is evocative.]
• Paraguay: The Noble Ruins of Paradise.

Two Ways To Think About Fixed Capital

1.0 Introduction

This post presents two approaches to fixed capital. The first emphasizes power and convention. It emphasizes that the 'money world', as Mason and Jayadev (2026) put it, is not a direct reflection of physical properties of production. The second is much closer to a determined model, with one degree of freedom.

I have at least one previous post, more abstractly on these themes

2.0 Depreciation as Accounting Conventions and Mediated by the Exercise of Power

Robert Paul Wolff points out that how overhead costs are allocated is a political exercise in many firms. Two managers on the same level might each be in charge of the production of a specific product. Suppose these products are produced in the facility. Each manager wants upper management to see that they are making the most profits for the company. In is in the interest of each to see that as much of possible of the overhead for running the facility is applied to their rival's department.

A given machine might be used in multiple production processes, resulting in the production of different products. The allocation of overhead costs here follows the above logic.

Sometimes (many times?), no fact of the matter exists for how to allocate costs. As I understand it, the Generally Accepted Accounting Principles (GAAP) includes different conventions for depreciation. Some models I have seen assume radioactive decay so to speak. Tax law specifies what can be allowed.

3.0 Depreciation and the Economic Life of Machines as an Aspect of Prices of Production

Another way of thinking about fixed capital is as in Sraffa (1960). Enough equations are given for prices to be determined, corresponding to a given wage or rate of profits. The data include inputs and outputs, in disaggregated physical terms, for all combinations of ages of machines. These detailed specifications are not based solely on the age, but the entire history of each machine.

Alessandro Roncaglia showed, back in the 1970s, that a countable infinity of equations can arise when production processes can require inputs of combinations of machines. The theory of pure fixed capital includes assumptions that rule out this possibility.

Sraffa derives the formula for an annuity from his treatment of a machine of constant efficiency. But the analysis generalizes. This approach is in tension with the first approach.

4.0 Conclusion

I will continue exploring mathematical puzzles. I like to think that Sraffa presents the elements of an alternative theory, not just an immanent critique of 'neoclassical' theory. The analysis points outside itself.

Reference

• Mason, J. W. and Arjun Jayadev. 2026. Against Money. University of Chicago.

Jack Birner On The Cambridge Capital Controversy

I have been rereading Jack Birner's 2002 book, The Cambridge Controversies in Capital Theory. Birner is an economist of the Austrian school. He probably generally disagrees with me on lots of matters. Torward the start of the introduction, he writes:

"Four decades ago the best minds in economics were engaged in a confrontation which the entire profession followed in the pages of the leading journals almost as if it were a soccer match. It has become customary to distinguish two opposing groups of economists to the debate..." -- Jack Birner (2002: 1)

And he expresses astonishment that the results of this dispute are ignored:

"What I do want to draw attention to is that the conclusions reached in that debate constitute a rare example of a set of formally proven, uncontestable, undeniably true and reliable results in economics... They can be summarized by saying that the K of the production function that modern economists so confidently and fully rely on for their theoretical and empirical work can only be used in conditions where there is only a single, homogeneous capital good. One does not need to have a degree in economics to know that in reality this is not the case. The economy consists of a bewildering variety of buildings, machines, software, skills and ways of organizing production. And as everyone who has filed a corporate tax declaration knows, it is not even possible to give more than a rather inexact estimate of their value. In other words, not only is there no intuitive justification for the use of aggregate, homogeneous K, we have proofs by Nobel-calibre economists assisted by 100 per cent certain mathematical techniques that demonstrate without a shred of doubt that this K cannot and should not be used for the objectives it is currently used for. Nevertheless, economists go about their business as if these proofs did not exist. That some of them are the very same people who produced these proofs earlier makes things even more curious. The fact that production functions with the same aggregate K figure prominently in all current textbooks of macroeconomics is worse than curious: it is deeply worrying." -- Jack Birner (2002: 1-2)

I do not think the situation is different today. I agree with Birner that the overall point of the CCC is not at all clear from the details of the match. The participants were worrying about local details. I think more was at stake than an aggregate theory. I like to emphasize the labor 'market' in my expositions. Fabio Petri, among others, emphasizes mistakes in what the early marginalists thought could be consistently taken as given in their theory.

Birner considers the role of idealizing assumptions in mathematical models. He considers the relations of such ideal models to models that more 'factual', that is, closer to being able to be applied empirically.

The trend, for decades, in the philosophy of science is to be descriptive, to try to understand how specialists in specific disciplines become convinced of their ideas. The CCC poses a problem for the methodologist.

I'm am doubtful about Birner's methodology at points. He draws upon some scholars I like. For example, he draws on Arthur Koestler's The Sleepwalkers: A History of Man's Changing Vision of the Universe. Koestler points out that Copernicus was focused on narrow points. One of the virtues of a geocentric model, for him, was that it got rid of equants. An equant is a circular orbit that has uniform velocity around a point displaced from its center.

Likewise, economists in the CCC were focused on narrow points about, say, Samuelson's surrogate capital and Robinson's pseudo-production function. For Birner, Sraffa and Garegnani were about the only ones awake.

In some sense, Birner does not resolve his problem. He concludes most economists are still asleep.

Socialism Succeeding In Emilia-Romagna

Emilia-Romagna is a region in Italy, north of Tuscany. I have written about its capital, Bologna, before.

About a third of the gross domestic product of Emilia-Romagna is produced by co-operatives. About two thirds of those who reside in Emilia-Romagna participate in co-ops in some ways. (See this article from John Duda.) Apparently, co-ops in Italy go back to the nineteenth century, surviving through the fascists in the twentieth century.

Article 45 of the 1947 Italian constitution promotes co-ops. It states:

The Republic recognises the social function of co-operation of a mutually supportive, non-speculative nature. The law promotes and encourages co- operation through appropriate means and ensures its character and purposes through appropriate checks.

The law safeguards and promotes the handicrafts.

A capability for a worker to take unemployment benefits at once to set up a co-op is one of the provisions of the 1985 Macora law.

A society with a large co-operative segment will have related institutions. Co-ops will market to each other. Scholars, such as Vera Zamagni at the University of Bologna, will study them. Competition among co-ops might be less cut-throat. The study of management and administration at academic institutions will have curriculum supporting co-ops. Mutual banks might be set up to loan to co-ops, and other financial institutions will have more practice in making such loans. Co-ops might set up institutes to perform research into processes and products improving their technology.

The 1986 book, The Second Industrial Divide: Possibilities for Prosperity, by Michael J. Priore and Charles Sabel, is supposed to be of interest on this topic.

Anomalous Switch Points

I have a new working paper at the Centro Sraffa. The abstract follows:

Abstract: This article presents examples of models of rent with decreasing wage frontiers; with unique, square cost-minimizing techniques at a given rate of profits; but without the wage maximization property. Anomalous switch points are highlighted, where an anomalous switch point has properties that contrast with generic switch points in models of circulating capital. This article presents a numeric example of a switch point along a single wage curve, with no other wage curve intersecting at the switch point. Other numeric examples are of switch points in which only the scale, not the operated processes, vary between the cost-minimizing techniques at the switch point. A fake switch point is presented in which prices vary only for goods which are not commodities under the non-cost minimizing technique, also known as ghost commodities.

The Roosevelt Dime And Fluoridated Water: Communist Plots

Franklin Delano Roosevelt died in 1945, and World War II ended with the Japanese surrender in August. Germany had surrendered in May. The Roosevelt dime was introduced in 1946. John Sinnock, an artist at the mint, designed the obverse. His initials are under Roosevelt’s head.

The Soviet Union was the ally of the United States in fighting the fascists. This quickly changed. Somehow anti-communists became convinced that the J. S. on the Roosevelt dime stand for Joseph Stalin. I don't know what advantage the communists were supposed to get out of this plot.

When I first saw Dr. Strangelove, I thought the idea that fluoridated water was a communist plot was quite comic. I did not realize that Kubrick did not make this up. Anti-communists believe this. I do not know if they talk about, "Sapping our precious bodily fluids," as General Jack D. Ripper does in the movie.

I have documented some other stupid stuff anti-communists and anti-Marxists have said.

On Building On Pasinetti's Lectures On The Theory Of Production

I have been re-reading Pasinetti's 1977 book. I claim I am original in partitioning parameter spaces with fluke switch points, concrete numerical examples, certain diagrams for visualizing certain analyses, and extending the capital critique to non-competitive markets. I have noted that participants in the 1966 QJE symposium, including Pasinetti, explicitly noted the possibility of fluke switch points.

Pasinetti’s Lectures contain:

• The algebra repeated in my derivation of Hayek's triangle (p. 91, p. 118).
• An explanation of how a switch point can occur along a single wage curve. The numeraire is a basic good. Two techniques differ in the method or process for producing a non-basic good (p. 161).
• A fluke case with three or more wage curves intersecting at a switch point (p. 164).

The first is an elaboration of Sraffa's reduction to dated labor quantities. I do not feel obligated to cite Newton when I take a derivative. This reduction is close to that. I do not see others linking up this analysis to Hayek's triangles, though,

Pasinetti does not provide a figure or numeric example illustrating the second point. Land is non-basic. Perhaps I should note this in my example with fixed capital and rent.

Pasinetti does provide a figure with three wage curves intersecting in a single switch point. But citing articles from 1966 is sufficient.

C129.4r: Harcourt on Translation Of Sraffa (1925)

This letter is from G. C. Harcourt to Piero Sraffa. As I understand it, Sraffa later refused permission for this translation to be published while he was alive. The translation now available is from Alessandro Roncaglia and John Eatwell.

Adelaide, South Australia 5001
Telephone: 23 4333

Department of Economics
14th April 1970.

Piero Sraffa, Esq.,
Trinity College,
CAMBRIDGE, U.K.

Dear Piero,

Just a short note to say how delighted I was that you will let Mario Nuti translate the Italian version of your 1926 article for Australian Economic Papers. We will, of course, honour strictly your conditions. It really is very generous of you and I personally am extremely grateful.

I hope to be in Cambridge next January for 4 – 6 weeks and hope very much that we may meet then. I hear from Vincent from time to time, he seems to be flourishing. I have just come back from three marvellous months in Japan. I wrote a book on capital theory while there, expanding the assertions of my survey article into, I hope, persuasive arguments.

With all good wishes,

Yours ever,
Geoff. [Handwritten]
G. C. HARCOURT
Professor of Economics

Some Cambridge Controversies in the Theory of Capital is the book Harcourt mentions writing while visiting Japan. I do not know who Vincent is.

Elsewhere

John Conway on Besicovitch

• Abram Besicovitch was friends with Sraffa and gave him advice on mathematics.
• Clara Mattei defines capitalism.
• A documentary, "Amazon created the socialist dream". I think the narrator does not know about linear programming. But maybe deep learning is better for some applications.
• Pol Antràs explores capital theory:
• An 'Austrian' model if international specialization, working paper, 2026, with Adrian Kulesza.
• Measuring the average period of production, AEA Papers and Proceedings, 2025, with Vitalii Tubdenov. As far as I can see, this paper defines the APP to be Bohm Bawerk's obsolete average with simple, not compound, interest.
• Interest rates and world trade: an 'Austrian' perspective, AEA Papers and Proceedings, 2023.
• Bob Murphy interviews Pol Antràs.
• Arin Dube has a substack.
• Paul Krugman interviews Arin Dube.

Instability, A Problem For The Theory Of Supply And Demand

General Equilibrium Theory (GET) is the most rigorous and most developed version of the theory of supply and demand. More than half a century ago, economists discovered that GET does not support the just so stories many economists still tell. (Experimental economists have validated Scarf's example of instability.)

Franklin Fisher was an authority on this topic.

"Yet the very power and elegance of equilibrium analysis often obscures that it rests on a very uncertain foundation. We have no similarly elegant theory of what happens out of equilibrium, of how agents behave when their plans are frustrated. As a result, we have no rigorous basis for believing that equilibria can be achieved or maintained if disturbed. Unless one robs words of their meaning and defines every state of the world as an 'equilibrium' in the sense that agents do what they do instead of doing something else, there is no disguising the fact that this is a major lacuna in economic analysis.

Nor is that lacuna only important in microeconomics. For example, the Keynesian question of whether an economy can become trapped in a situation of underemployment is not merely a question of whether underemployment equilibria exist. It is also a question of whether such equilibria are stable. As such, its answer depends on the properties of the general (dis)equilibrium system which macroeconomic analysis attempts to summarize. Not surprisingly, modern attempts to deal with such systems have been increasingly forced to treat such familiar macroeconomic issues as the role of money." -- Franklin M. Fisher. 1987. Adjustment processes and instability. In J. Eatwell, M. Milgate, P. Newman, The New Palgrave: A Dictionary of Economics. Macmillan.

As far as I know, although some interesting work has been done, this gap still exists.

Reswitching In A Model With Exhaustible Resources?

1.0 Introduction

Part of my program is to construct numeric examples of the reswitching of techniques and of other capital-theoretic 'paradoxes' in a variety of models. Models of exhaustible resources, under some interpretation, provide another opportunity.

2.0 Background

A dispute exists on how compatible the existence of exhaustible resources is with the long period method. An excessively simple analysis is to treat payments for exhaustible resources like rent paid for 'the original and indestructible powers of the soil' (Ricardo 1951: 67). At a given point in time, the cost of mining a resource varies among deposits, and rent varies among mines in use. More than one mine is typically operated for an exhaustible resource because of constraints on the capacity at which mine can be operated. This, arguably, is Ricardo's approach in Chapter III, on the rent of mines, in his Principles. Sraffa (1960), too, groups 'land and mineral resources' together, under the heading of natural resources. Kurz & Salvadori (2009, 2015) read both Ricardo and Sraffa as having a somewhat more sophisticated approach

Parrinello (1983) and Schefold (1989) consider exhaustible resources as such. Bidard & Erreygers (2001, 2020), with the corn-guano model, argue that exhaustible resources are inconsistent with the long period method. The story associated with the model is about an island which was populated by dodos. Manure increases the yield of corn. But, since the dodo is extinct, no more guano is being made in the story. Eventually, capitalist farmers must adopt the backstop technology. They argue that a royalty for an exhaustible natural resource will vary over time, in accordance with the Hotelling rule. All prices will vary over time, as long as exhaustible resources are used in production

Parrinello (2004) and Kurz & Salvadori (2009, 2011, 2015) argue that when the resource will be exhausted is not well-enough known for the Hotelling rule to fully apply. In Kurz & Salvadori's models, a constraint on mines limits how much of each exhaustible resources can be brought above ground in each production period. The price of unmined exhaustible resources increases in accordance with the Hotelling rule, but the rent on mines can decrease in parallel, leaving the price of mined resources unchanged over time. Even though this is an intertemporal model, the prices of produced commodities do not vary over time.

For Ravagnani (2008), the royalty for an exhaustible resource provides another degree of freedom and is set as a percentage of production by conventions and social norms, much like the natural wage in Ricardo and Marx. Huang (2018) builds on Kurz & Salvadori and treats exhaustible resources by introducing processes to search for resources.

3.0 Parameters

Tables 1 and 2 specify a technology that extends an example from Kurz & Salvadori (2011) to include the production of iron. Iron and corn are basic commodities in the sense of Sraffa. Each column in Table 1 specifies the inputs needed to operate the process at a unit level. Each column in Table 2 specifies the corresponding outputs for the process, when operated at a unit level. All processes exhibit constant returns to scale (CRS).

Table 1: Inputs for The Technology

Output	Process
	I	II	III	IV	V	VI	VII	VIII
Labor (Person-Yrs.)	a0,1	a0,2	a0,3	a0,4	a0,5	a0,6	-	-
Iron (Tons)	a1,1	a1,2	a1,3	a1,4	-	-	-	-
Corn (Bushels)	a2,1	a2,2	a2,3	a2,4	-	-	-	-
Oil Underground (Barrels)	-	-	-	-	a3,5=1	-	a3,7=1	-
Menthane Underground (K-Litres)	-	-	-	-	-	a4,6=1	-	a4,8=1
Extracted Oil (Barrels)	-	-	a5,3=1	-	-	-	-	-
Extracted Menthane (K-Litres)	-	-	-	a6,4=1	-	-	-	-

Table 2: Outputs for The Technology

Output	Process
	I	II	III	IV	V	VI	VII	VIII
Iron (Tons)	b1,1 = 1	-	-	-	-	-	-	-
Corn (Bushels)	-	b2,2=1	b2,3=1	b2,4=1	-	-	-	-
Oil Underground (Barrels)	-	-	-	-	-	-	b3,7=1	-
Menthane Underground (K-Litres)	-	-	-	-	-	-	-	b4,8=1
Extracted Oil (Barrels)	-	-	-	-	b5,5=1	-	-	-
Extracted Menthane (K-Litres)	-	-	-	-	-	b6,6=1	-	-

The first process produces iron. The next three processes produce corn. The first corn-producing process is part of a backstop technology. The other two use oil and menthane as fertilizer, respectively. Processes V and VI are extraction processes. Processes VII and VIII are conservation processes.

The extraction processes, V and VI, are constrained not to produced more than a maximum output in any year. I let t_o be the maximum output for oil extraction in a year. Let t_m be the maximum output for menthane extraction in a year. The data also includes the specification of q_uo, the initial quantity of unexextracted oil, and q_um, the initial quantity of unextracted menthane.

Final demand, y₁ and y₂ for iron and corn, are the last parameters needed to specify this model.

4.0 Selected Price Variables

I need to specify techniques and quantity flows for each technique. The amount of unextracted oil and methane will vary over time. Depending on the parameters, only some techniques will be feasible.

Table 3 defines the price variables that will be found by solving the price equations. Rent on mines and the prices of unextracted exhaustible resources vary over time, as reflected in the notation.

Table 3: Selected Price Variables

Variable	Definition
p1	Price of a ton iron.
p2	Price of a bushel corn.
po	Price of a barrel of extracted oil.
pm	Price of a kilo-litre of extracted methane.
puo(t)	Price of a barrel of unextracted oil at the end of the tth year.
pum(t)	Price of a kilo-litre of unextracted menthane at the end of the tth year.
rhoo(t)	Rent per barrel oil extracted in a year.
rhom(t)	Rent per kilo-litre methane extracted in a year.
w	The wage.
r	The rate of profits.

6.0 Conclusion

My problem is to find numeric values for model parameters such that reswitching results. This reswitching might be analogous to the reswitching of the order of efficiency. Perhaps for some ranges of the rate of profits, the backstop technology is operated along with the extraction of oil. And, at other ranges, the backstop technology is operated along with the extraction of methane.

Or maybe the solution will be that corn is produced with process III, without the backstop technology, at some ranges of the rate of profits. And, at other ranges, corn is produced with process IV, also without the backstop technology.

This post only poses a problem. I do not think it do difficult to see that capital-theoretic 'paradoxes' can appear in Kurz and Salvadori's approach to exhaustible resources. I suppose it would be good to have concrete examples.

References

• Bidard, C. and G. Erreygers. 2001. The corn-guano model. Metroeconomica 52(3): 243-253.
• Bidard, C. and G. Erreygers. 2020. Exhaustible resources and classical theory. History, Methodology, Philosophy 10(3): 419-446.
• Huang, B. 2018. An exhaustible resources model in a dynamic input-output framework: A possible reconciliation between Ricardo and Hotelling. Journal of Economic Structures, 7(1): 1-24.
• Kurz, H. D. and N. Salvadori. 2009. Ricardo on exhaustible resources and the Hotelling rule. In Aiko Ikeo and Heinz D. Kurz (eds), A History of Economic Theory: Essays in Honour of Takashi Negishi. London: Routledge.
• Kurz, H. D. and N. Salvadori. 2011. Exhaustible resources: Rents, profits, royalties and prices. In Volker Caspari (ed.), The Evolution of Economic Theory: Essays in Honour of Bertram Schefold. London: Routledge, 39-52.
• Kurz, H. D. and N. Salvadori. 2015. The 'classical' approach to exhaustible resources. Parrinello and the others. In Heinz D. Kurz and Neri Salvadori (eds), Revisiting Classical Economics. Studies in Long-Period Analysis. London: Routledge, 304-316.
• Parrinello, Sergio. 1983. Exhaustible natural resources and the classical method of long-period equilibrium, in J. Kregel (ed.), Distribution, Effective Demand and International Economic Relations, London: Macmillan, pp. 186–99
• Parrinello, Sergio. 2004. The notion of effectual supply and the theory of normal prices with exhaustible resources. Economic Systems Research, 16(3): 311-322.
• Ravagnani, Fabio. 2008. Classical theory and exhaustible natural resources: notes on the current debate. Review of Political Economy, 20(1).
• Ricardo, David. 1951. The Works and Correspondence of David Ricardo: Volume 1: On the Principles of Political Economy and Taxation. Cambridge: Cambridge University Press.
• Schefold, Bertram. 1989. Mr. Sraffa on Joint Production and Other Essays, Routledge.
• Sraffa, Piero. 1960. The Production of Commodities by Means of Commodities: A Prelude to a Critique of Economic Theory. Cambridge: Cambridge University Press.