Joan Robinson Research Paper

Early in her career Joan Robinson set out her views on methodology for economics, (Robinson 1932a, Harcourt 1990a). Her procedure was to identify and make explicit her assumptions and to develop a ‘box of tools’ for understanding and exploring the analytical object, to construct a logically sound analysis of the processes concerned: these successive stages she saw as independent of each other. Extending these views, she suggested (1937b, pp. 99–102) that controversy could result from lack of understanding, lack of knowledge, errors of logic, from working from different assumptions but, most commonly in economics, from differences in (political) objectives: the goals of a theory could direct its analysis as well as its policy conclusions. Throughout her life she argued that economics is not neutral, it is always ideologically driven. Nevertheless she believed that it was possible to develop pure analysis independently of dispute.

Her early contributions to economic theory were mainly in the realm of value theory (microeconomics, as it is called now) and The Economics of Imperfect Competition (1933), her first book, generously acknowledged her debts to Marshall (via Pigou), Kahn, Austin Robinson, Shove, and Sraffa. It was a controversial and much celebrated success, revealing her great clarity of thought and exceptional analytical powers. It was her interpretation, within a Marshallian context, of several contemporary theoretical issues. In particular, it was a response to the heretical claims about decreasing costs and increasing returns being made in the Economic Journal, especially Sraffa (1926), Symposium (see Robertson et al. 1930), and including Robinson (1932b). Robinson replaced an analytical basis in Marshall’s free competition with one in imperfect competition, where free competition became a special case. She also moved the focus from Marshall’s long period to a short period. Within that context the book also presented new concerns. On the basis of the downward sloping demand curve for each firm, Robinson introduced the marginal revenue curve as an integral analytical construct. She showed how the response of relative factor shares to a change in demand depended on whether you used her partial analysis of the elasticity of substitution or Hicks’, aggregate. She reconceived Marshall’s ‘representative’ firm as an ‘equilibrium’ firm where each such firm faced a less than infinitely elastic demand curve for its product in a monopolistic market. What then became ‘the industry’ in such a market? And was the simple profit-maximising rationale too reductionist to depict the firm? How was a monopolist to be identified theoretically? Or a duopolist? How indeed was imperfect competition definable?

The Economics of Imperfect Competition provoked; each stage of the theoretical process, even her geometrical method, incited reaction. More controversial than her analysis were its implications for policy. She represented perfect competition theory as demonstrating that the economy left alone would generate the optimal outcomes: it suggested a political philosophy of laissez faire. Imperfect competition showed that left alone the economy could become stuck at a position of unemployed capacity and labour and indeed, at that time, this was the case. The debates on the elasticity of substitution further illustrated what the emerging critique of perfect competition theory could mean for the status quo. The issues raised in this book were to fill the journals for decades to come. She herself came to reject its analyses (postwar) as a ‘shameless fudge.’

Robinson’s interests were not confined to micro- economics. During this time she was a member of a group of economists who met to discuss John Maynard Keynes’s Treatise on Money (1930) and his emerging new theory. His ideas appealed to her, they represented a break from the orthodox and they were focused on the pressing problem of the persistence of high levels of unemployment. As a member of the Circus, with Meade, Kahn, Austin Robinson, and Sraffa, Robinson contributed to the critical scrutiny of drafts of Keynes’s The General Theory (1936). A formidable group, but they were persuaded by the dissenting view of the behaviour of investment and of saving in Keynes’s new theory of output and employment. Immediately following the book’s publication, she wrote to develop its themes and analysis. Essays in the Theory of Employment (1937a) and the popular Introduction to the Theory of Employment (1937b) were both published in the year following The General Theory (and in the same year that her second daughter was born). She sent Keynes drafts of the two books as well as the proofs, and the related correspondence reveals his respect for Robinson in her role as his interpreter. Introduction is still one of the best guides to The General Theory.

During the interwar years, Michal Kalecki had a major impact on Robinson’s thinking. His preemptive version of the theory of effective demand, which interwove imperfect competition with a macroeconomic theory of distribution, was based on Karl Marx’s schema of reproduction and his analysis of the realisation crisis. She integrated his double-sided relation between investment and profits and his shortperiod theory of income distribution to develop her theory of employment and output. Kalecki provided a structural base to Robinson’s theoretical explorations and extensions of Keynesianism and later of growth. During the war Robinson wrote An Essay on Marxian Economics (1942). Her interest was partly attributable to Kalecki’s and Sraffa’s Marxist-based work, and partly to the structure of society portrayed by, and fundamental to, such classical and Marxist analysis; her continued dissatisfaction with orthodox theory was also reflected in her essay which compared Marxian with mainstream ideas.

Robinson’s interpretation of Marx again illustrates her approach to constructing theory. Responses to her book were to her methodology, as well as to her critical remarks about both Marxian and neoclassical economics. She extracted from Marx’s writing the circuits of deductive logic with their attendant assumptions and political implications. The methodology of her censorship was not so inclusive as to embrace Marx’s theory of history and of the processes of change. Yet it was these elements—the centrality of historical analysis to Marx’s method and of class to understanding effective demand—that attracted Robinson to Marx’s writings. The pervasive implications of time and history underlay her vision of capitalism and informed all of her subsequent economic research even though she ultimately was to abandon the classical method. Her book was a challenge to her colleagues to read and learn from Marx, if selectively and from a Keynesian perspective. It remains a useful introduction to Marxist economics.

In the early postwar years Robinson became committed to developing a dynamic analysis of capitalism. Inspired by Harrod’s (1939, 1948) studies of longperiod growth, The Rate of Interest and Other Essays (1952) was a collection in preparation for this project, in particular. The generalization of The General Theory attempted to extend Keynes into the long period. This essay was an interpretation of Keynes in terms of the Marshallian short period, characterized by uncertainty, incompatible decisions and unrealizable expectations, by a new definition of equilibrium. The elements of Robinson’s growth theory were coming together in a non-neoclassical and long- period framework.

Integral with Robinson’s exploration of long-period accumulation was an increasing dissatisfaction with the conceptual and logical foundations of neoclassical theory and its method, for which she became most well-known, if not best understood. She prefaced her constructive contributions to dynamic theory with the critique of the neoclassical production function, Robinson (1953–4). This research paper fired a debate that continued for more than two decades. The implications of these exchanges were for the legitimacy of the very concept of capital and hence of the aggregate production function, fundamental to neoclassical theory. In particular, Robinson targeted its distribution analysis and its corollary, value theory. Ultimately, she criticized its method, that ‘the neo-neoclassics still refuse to understand the difference between a comparison of timeless equilibrium positions and the effects to be expected from a change taking place at a particular moment’ (1978a, p. xix). That particular moment was characterised by its own inherited structure of decisions, expectations, and uncertainties. She rejected the neoclassical method of long-period equilibrium as a point towards which the actual economy is moving; the implied stationarity of that theory meant that the movement towards it, and the rest point were logical, not historical. Her own account would not be in equilibrium terms but would take into account the actual features of the economy, the existence of uncertainty, and disappointed expectations. Her understanding of capitalism was based on classes and relations of conflict, while the neoclassicals begin with technical factors and harmonious distributive shares. What she wanted to put in the place of neoclassical theory was not a rival complete theory, which she considered would be only another ‘box of tricks,’ but an approach that started from institutions, history, and the ‘rules of the game’ (Harcourt 1990b). Robinson’s optimism about the power of economic debate was continually frustrated, yet she determinedly defended what seemed to her to be right and just arguments. Her conservative colleagues, she felt, treated new ideas ‘like heresies.’

The Accumulation of Capital (1956) continued the ‘generalization’ within a classical framework. The questions she set out to explore were: what are the conditions for cumulative long-term growth of income and capital (Golden Age) and what is the outcome of this process in terms of growth of gross and net output and the distribution of income between wages and profits, given a certain evolution through time of the labor force and technology? Inspired by Harrod’s ‘fruitful provocation,’ The Accumulation of Capital brought together Marx’s historicism, Harrod’s economic dynamics, and Wicksell’s capital theory. True to her methodology, she started out by presenting her most basic model and then devoted the rest of this remarkable book to relaxing the ‘most severely simple’ assumptions and tracing out the implications. ‘The whole argument,’ she proposed, ‘is set out … as an analytical construction, with the minimum of controversy’ (1956, p. x). In contrast to the mathematical style endemic to American economics, Robinson wrote her entire work of pure theory in literary form. It was a difficult book to assimilate and several years later she followed it up with a hands-on guide. Exercises in Economic Analysis (1960) fills in the gaps, clarifies obscurities, and extends the arguments from The Accumulation of Capital. Its object, Robinson stated, was ‘to sort out questions’ (1960, p. xx). It offers readers an opportunity to formulate for themselves the analytical examples she derives in The Accumulation of Capital. This book (1960) was immediately followed by Essays in the Theory of Economic Growth (1962) which presents a retrospective introduction for the ‘too terse’ earlier (1956) book. Although there was a hint of re-switching in Robinson (1953–4) as well as in The Accumulation of Capital, Robinson dismissed the phenomenon at the time and saw it as a distraction from the main methodological point of her critique of neoclassical capital.

Dissatisfied with her quest for a long-period theory of growth, Robinson looked more to Kalecki’s theory of cycles as a depiction of capitalism. She was a pioneer in the development of what was to become post-Keynesian theory, its bases in Sraffa’s interpretation of Ricardo and in Kalecki’s interpretation of the theory of employment. To this she brought ‘a general framework of longand short-period analysis which will enable us to bring the insights of Marx, Keynes, and Kalecki into coherent form and apply them to the contemporary scene’ (1978b pp. 1, 18). Within this framework, post-Keynesian theory offered a ’method of analysis which takes account of the difference between the future and the past’ (1978b, p. 12). Here was a broad conceptual structure that brought together Robinson’s major theoretical concerns. From this analysis, post-Keynesian theory is evolving in several, not always compatible, directions, establishing its authority in the body of economic theory.

Robinson was a charismatic teacher; she inspired successive generations of students to develop their own ideas from her methods of analysis and brilliant insights, to think critically and for themselves. She spent many years demonstrating that ‘mainstream teaching has been inculcating defective methodology’; she wanted to provide a logically sound, historically based dynamic approach to first-year economic analysis. An Introduction to Modern Economics (1973) with John Eatwell was a response to the ‘fashionable textbooks [of] mainstream’ economics. It presented a history of thought, a classical-cum-Kaleckian postKeynesian analysis. It was an ambitious, presumptuous book, at once a critique of neoclassical theory, and a terse introduction to the alternative. Robinson overestimated the intuitive powers of her audience and it proved too difficult for beginners; it remains a challenge for more advanced students.

Throughout her life Robinson pursued an active interest in the Third World, in India and China in particular, and in the Soviet Union. Her initial writing on development was based on the growth models developed in The Accumulation of Capital. Kalecki influenced this book. Development, she argued, should proceed by appropriate land reform and industrialization in both agriculture and manufacture, mindful of the balance of payments constraint and a minimum real wage or its equivalent. Socialist development, she continued, could mobilize savings and enable the state to organize the investment of the surplus, so achieving faster if not more efficient accumulation and growth than under capitalism; socialism, furthermore, led to a more equitable distribution of income (although the standard of living she saw as a political decision). She was less enthusiastic about the Soviet-style socialism of Eastern Europe than she was about China. Her mission to eradicate poverty and to meet basic needs always guided her judgements. She leaves a body of work; some reprinted in her Collected Economic Papers as well as Robinson (1979), on development planning and socialism that is relevant and provocative.

Joan Robinson depicted her work as an agenda for discussion as well as formulating the questions. Yet she has left an important legacy in her substantial literary output. She wrote for colleagues, students, and for the general, interested reader. As well as her many books, there is a stream of challenging evaluative essays written through the 50 years of her career. Her writing includes a theoretically rigorous critique of neoclassical economics that as yet goes unanswered; the questions she has raised present a formidable program for further research. She leaves an exacting methodology, a theoretical structure, and significant analytical details of a new, unified system of political economy.

Bibliography:

1. Harcourt G C 1990a Joan Robinson’s early views on method. History of Political Economy 22: 411–27
2. Harcourt G C 1990b Robinson, Joan Violet. In: Lord Blake, Nichols C J (eds.) The Dictionary of National Biography 1981–1985. Oxford University Press, Oxford, UK, pp. 346–7
3. Harcourt G C 1996 Some reflections on Joan Robinson’s changes of mind and their relationship to post-Keynesianism and the economics profession. In: Marcuzzo M C, Pasinetti L, Roncaglia A (eds.) The Economics of Joan Robinson. Routledge, London, pp. 317–29
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