Power or Pure Economics?

229 Pages·1998·23.631 MB·English

by  Joseph A. Schumpeter, Yasuma Takata (auth.), Michio Morishima (eds.)

CLASSICS IN THE mSTORY AND DEVELOPMENT OF ECONOMICS
General Editor: Michio Morishima, Emeritus Professor of Economics,
London School of Economics
In the postwar years the discipline of economics has become highly
advanced by focusing upon issues which can be expressed in mathematical
terms and ignoring issues upon which it is difficult to make axiomatic
analysis. This series aims to make available in English texts which might
well have played a major role in the development of a more balanced -
not exclusively mathematical-economic theory but for the fact that they
were written in a language other than English. However, the series'
interest will also embrace mathematical and English-language works
where these appear to have been unduly neglected. The series will also
seek to make available in English important works that present the
experiences of non-English-speaking economies; it is hoped that these
will contribute greatly to making economics more comprehensive and
more widely applicable to a range of world economies in the future.
Titles include:
Marco Fanno
A CONTRIBUTION TO THE THEORY OF SUPPLY AT JOINT COST
THE MONEY MARKET
Hiroshi Hazama
THE mSTORY OF LABOUR MANAGEMENT IN JAPAN
Hiroshi Okumura
JAPANESE CORPORATION CAPITALISM
Alfonso de Pietro-Tonelli and Georges H. Bousquet
VILFREDO PARETO: Neoclassical Synthesis of Economics and
Sociology
Joseph A. Schumpeter and Yasuma Takata
POWER OR PURE ECONOMICS?
Yasuma Takata
POWER THEORY OF ECONOMICS
Giulio La Volpe
STUDIES ON THE THEORY OF GENERAL DYNAMIC ECONOMIC
EQUILmRIUM
Classics in the History and Development of Economics
Series Standing Order ISBN 0-333-71466-0
(outside North America only)
You can receive future titles in this series as they are published by placing a standing order.
Please contact your bookseller or, in case of difficulty, write to us at the address below with
your name and address, the title of the series and the ISBN quoted above.
Customer Services Department, Macmillan Distribution Ltd
Houndmills, Basingstoke, Hampshire RG21 6XS, England
Power or Pure
Economics?
Joseph A. Schumpeter
and
Yasuma Takata
Edited by Michio Morishima
Translated by Cyprian P. Blamires and Janet Hunter
First published in Great Britain 1998 by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG2l 6XS and London
Companies and representatives throughout the world
A catalogue record for this book is available from the British Library.
ISBN 978-1-349-14956-8 ISBN 978-1-349-14954-4 (eBook)
DOI 10.1007/978-1-349-14954-4
First published in the United States of America 1998 by
ST. MARTIN'S PRESS, INC.,
Scholarly and Reference Division,
175 Fifth Avenue, New York, N.Y. 10010
ISBN 978-0-312-21955-0
Library of Congress Cataloging-in-Publication Data
Schumpeter, Joseph Alois, 1883-1950.
Power or pure economics? I Joseph A. Schumpeter and Yasuma Takata
; edited by Michio Morishima ; translated by Cyprian P. Blamires and
Janet Hunter.
p. cm. - (Classics in the history and development of
economics)
Includes bibliographical references and index.
ISBN 978-0-312-21955-0 (cloth)
1. Equilibrium (Economics) 2. Power (Social sciences)
3. Distribution (Economic theory) 4. Economics. I. Takata,
Yasuma,1883-1972. II. Morishima, Michio, 1923- . m. Title.
IV. Series.
HB145.S297 1998
33O--dc2l 98-34978
CIP
Selection and editorial matter © Michio Morishima 1998
Text © the estates of Joseph A. Schumpeter and Yasuma Takata 1998
Translation (Part I) © Cyprian P. Blamires 1998
Translation (Part II) © Janet Hunter 1998
Softcover reprint of the hardcover 1s t edition 1998
All rights reserved. No reproduction, copy or transmission of this publication may be made
without written permission.
No paragraph of this pUblication may be reproduced, copied or transmitted save with
written permission or in accordance with the provisions of the Copyright, Designs and
Patents Act 1988, or under the terms of any licence permitting limited copying issued by
the Copyright Licensing Agency, 90 Tottenham Court Road, London WIP 9HE.
Any person who does any unauthorised act in relation to this publication may be liable to
criminal prosecution and civil claims for damages.
The authors' estates, editor and translators have asserted their rights to be identified as the
authors of this work in accordance with the Copyright, Designs and Patents Act 1988.
This book is printed on paper suitable for recycling and made from fully managed and
sustained forest sources.
10 9 8 7 6 5 4 3 2 1
07 06 05 04 03 02 01 00 99 98
Contents
General Editor's Introduction vii
Foreword: Joseph A. Schumpeter (1883-1950) and Yasuma
Takata (1883-1972) by Michio Morishima ix
PART I THE FUNDAMENTAL PRINCIPLE OF
DISTRIBUTION THEORY
Joseph A. Schumpeter, translated
by Cyprian P. Blamires
I Preliminary Remark 3
II The Economics and Sociology of Distribution 6
III Foundations of the Wage Theory 32
IV The Social Marginal Product 48
V Critical Discussion 53
VI Peculiarities of the Labour Market 61
VII The Wage Theorem of Unilateral and Bilateral Monopoly 67
VIII The Problem of the'A rtificial Rise' of Wages 72
PART II EQUILIBRIUM AND POWER
Thsuma Takata, translated by Janet Hunter
I Power and the Economy: The View of an
Anti-Schumpeterian 89
1 Introduction 89
2 Schumpeter's view of the economic effects of power 91
3 Can pure economic theory claim to have autonomy? 93
4 Power and the prices of factors of production 97
5 Counter-criticism of Schumpeter's theory 101
II Why Can Wages be Rigid? An Alternative Foundation
for Keynes' Premise 106
1 Keynes' supply function of labour, and his conscious
support for power theory 106
v
vi Contents
2 A reconsideration of wage theory 108
3 Involuntary unemployment in its true light 110
4 The economic behaviour of people within the
framework of the social order 114
III Why Interest Remains Positive even in Static
Equilibrium: Another Anti-Schumpeterian View 119
1 Introduction 119
2 The productivity of capital, and class relations 121
3 Theories of power since equilibrium theory 124
4 The dynamic theory of interest and power theory 126
5 New wage fund theory and power theory 129
6 The meaning and importance of the sociological
explanation 133
7 The subsidiary nature of consumer demand 135
8 The circumstances under which profit is absorbed as
interest - the separation of capitalist and enterprise 138
9 Conditions for realisation of profit - the advance
payment economy and capital shortage 140
10 The inevitability of capital shortage - power relations 144
IV Disequilibrium in Factor Markets due to Power, with
Special Reference to Agricultural Land Rent 152
1 Recognised theories of land rent 152
2 Disequilibrium due to power 154
3 Three kinds of power 157
V The 1\ventieth Century and Secular Disequilibrium
in the Economy: A Power-Theoretic View 161
1 Marx, Keynes and Schumpeter 161
2 A power-theoretic stagnation theory 165
Notes and References 170
Bibliography 185
Index 188
General Editor's
Introduction
This series, with its designation 'development of economics', has at
least four areas of focus, though it would be too restrictive to call them
aims.
Since the last war economics has become 'mathematicised' to what
could be deemed an excessive degree, so much so that mathematical
models are incorporated into the analysis even of questions where
there is no need for mathematical argument. As a result, those issues
which cannot be expressed in mathematical terms have been all but
forgotten. Moreover it has become almost impossible to establish links
between economics and other social sciences, in which mathematics
are little used. This increasing use of mathematics has thus meant that
economics has become isolated; the isolation has in its turn promoted
mathematical inbreeding.
The net result is that the discipline of economics has lost many of the
capabilities which it formerly possessed. Moreover, since such capabil
ities have been dispensed with in the selection of specialists, it has
become more and more difficult to shift economics away from the path
along which it is now proceeding.
One effective means of correcting this tendency, and of giving the
contents of economics a better balance, is to dig out some of the
economics of the past, and to learn again from those who have gone
before us. In the earlier decades of this century economics was not the
overwhelmingly English-language-dominated discipline that it has
become in the postwar period. There were top-class economics
achievements in French, German, Italian and other languages as
well. My intention, therefore, is to select from the papers and books
written in other languages some which I consider to contain useful
knowledge and suggestions, which may help to promote a more
balanced economic theory. By translating these works into English,
they will be made available to all. This is the first point we will take
account of. It is also added that the series' interest is not confined to
non-English works; wherever unduly neglected English works are
found, proper consideration will be given to them. Secondly, I will
try to annex to the series wherever possible critical biographies of
vii
viii General Editor's Introduction
scholars active in a wide variety of fields, apart from mathematical
economics, in order better to learn from them.
This series is not, however, necessarily 'anti-mathematical'. It is also
the intention to include in the series works which might well have
played a major role in the mainstream development of economics in
the postwar years, but the misfortune that they were written in a
language other than English has caused them to remain unknown.
The first volume in the series is one such work. This, therefore, is the
third point we have in mind.
Finally, modern national economies have not all evolved in an
identical fashion. In Japan, for example, and in some other non
English-speaking economies, there have developed perfectly viable
and, indeed, efficient economic systems. Work to clarify the structures
of these kinds of economic system has been accumulating, but mostly
in the language of the country itself. I am also anxious, therefore, to
incorporate into the series translations of works in this area, and also
research on the historical experience of these economies.
Given the four areas of focus which I have outlined above, the series
as a whole will inevitably have a somewhat 'motley' character. While
the works may be somewhat disparate, though, I want to build up
series in which all the volumes will prove enjoyable and interesting to
read. The endeavour involves a great deal of translation work, meaning
that publication at regular intervals is likely to be impossible. In addi
tion, there are many candidates whose work must be considered for
inclusion. This, of course, makes a great deal of work for a single
editor, and therefore it will take time for him to put the project into
orbit. My fervent hope, however, is that this series, which, among other
things, expresses my own philosophy on the need for a more balanced
economics, will succeed in arousing the interest of both students
and specialists in a wider economics, and educate them in that
economics.
MICHIO MORISHIMA
Foreword: Joseph A.
Schumpeter (1883-1950)
and Yasuma Takata
(1883-1972)
Michio Morishima
I
Following the publication in 1914 of E. von B6hm-Bawerk's 'Macht
oder 6konomisches Gesetz', 1 there appeared other works expressing
similar opinions to those of B6hm-Bawerk. The work published by
Schumpeter in 1916 and included in this volume, which asserted with
clarity and intensity that the fundamental law of distribution must
follow economic principles, marked a line from B6hm-Bawerk through
Schumpeter which established the basic line of what was subsequently
to become the main school of economics, the Neo-classical school.
Yasuma Takata sought to reconsider this line of thought. In 'Power
and the Economy', the third essay in Part I of his Power Theory of
Economics (already included in this series), Takata challenged Marx's
materialist perspective, the idea that economics determines politics.
Through making it clear how in the feudal period power had con
trolled the economy, he claimed that the materialist perspective was
not something which held true throughout history. However, in a
capitalist age, when all political forces have to be regarded as the
outcome of economic competition, where the often inconsistent
plans of all agents are regulated by the market and entrusted to the
judgement of the market, the role of politics and sociological elements
in explaining economic phenomena has gradually diminished, until
finally pure economics (the Neo-classical school) has come to be
regarded as the most important tool for elucidating economic
problems.
In this respect the difference between the anti-Marxist economists
and Marx himself is not all that great. Of course, for Marx pure
economics was Marxist economics, and not the theories of
ix