In this overview we give a short survey of the way in which the theory of the firm has been formulated within the `mainstream' of economics, both `past' and `present'. One aim is to give an outline of the historical developments that led to the contemporary theories. As to a breakpoint between the periods, 1970 is a convenient, if not entirely accurate, dividing line. The major difference between the theories of the past and the present is that the focus, in terms of the questions asked in the theory, of the post-1970 literature is markedly different from that of the earlier (neoclassical) mainstream theory. The questions the theory seeks to answer have changed from being about how the firm acts in the market, how it prices its outputs or how it combines its inputs, to questions about the firm's existence, boundaries and internal organisation and the role of the entrepreneur. That is, there has been a movement away from the theory of the firm being seen as developing a component of price theory, namely issues to do with firm behaviour, to the theory being concerned with the firm as a subject in its own right.
Sunday, 12 July 2020
Saturday, 11 July 2020
From the IEA comes this podcast on Marxism at the Movies.
Complaints about left-wing bias in the movie industry are not new. You can find articles from as far back as the 1930s, in which right-wing commentators lambast Hollywood as, essentially, an outpost of the Soviet Union.
Today, the woke, virtue-signalling actor, ready to jump on every fashionable left-wing bandwagon, has become a popular cliché. Clichés, of course, often contain a very large grain of truth.
Since the beginning of the lockdown, the average Briton's TV consumption has gone up by almost an hour per day. For better or worse, movies and TV series are now a bigger part of our lives than ever before.
Dr Kristian Niemietz, IEA Head of Political Economy, turns film reviewer and speaks to Emma Revell, IEA Head of Communication, about two recent examples of dystopian science fiction-thrillers The Platform and Snowpiercer, asking are Marxists taking over cinema?
Tuesday, 7 July 2020
From the IEA comes this video in which Syed Kamall interviews Cento Veljanovski about the work of Ronald Coase.
Friday, 22 May 2020
This essay provides introductions to five of the major topics to do with the history of the theory of production and the theory of the firm. The first chapter is an introduction. The second considers the change from a normative approach to the theory of production to a largely positive approach. Before, roughly, the 17th century the main approaches to the theory of production were normative. The third looks at the relationship (or the lack of a relationship) between the division of labour and the theory of the firm. Even today the mainstream of economics does not emphasise the division of labour in the theory of the firm. In the fourth chapter, the development of the proto-neoclassical approach to production is examined. The development of theories of monopoly, oligopoly and perfect competition as well as the theory of input utilisation are discussed. The fifth chapter looks at Marshall’s idea of the representative firm. This was the main early neoclassical approach to the theory of industry-level production. Marshal wished to be able to construct an industry supply curve without having to assume all firms were identical. The sixth examines the challenges to the neoclassical model in the period 1940-1970. The last chapter is a short conclusion.
Sunday, 19 April 2020
When The New York Times launched its 1619 Project last year, it sought to "reframe the country's history by placing the consequences of slavery and the contributions of black Americans at the very center of our national narrative." What began as a series of articles in the Times magazine morphed into a collection of lesson plans for K-12 students and provoked an immediate controversy.
Five of the nation's most eminent academic historians co-signed a letter to the Times describing the project as "partly misleading" and containing "factual errors." And Northwestern University Professor Leslie M. Harris revealed that she had been a fact-checker on the series and that her warnings of a major error of interpretation had been ignored. But Harris also took "detractors of the 1619 Project" to task for "misrepresent[ing] both the historical record and the historical profession," writing that the "attacks from its critics are much more dangerous" than the Times' "avoidable mistakes."
Enter Phillip W. Magness, an economic historian, a research fellow at the American Institute for Economic Research, and the author of a new collection of essays on the project. Magness praises aspects of the series but he says that the project's editor, Nikole Hannah-Jones, is guilty of blurring lines between serious scholarship and partisan advocacy. And he has called for the retraction of an essay in the series by Princeton sociologist Matthew Desmond, which was headlined, "In order to understand the brutality of American capitalism, you have to start on the plantation."
Nick Gillespie spoke with Magness from his office in Great Barrington, Massachusetts, about what the Times gets right and wrong about U.S. history, capitalism and slavery, Abraham Lincoln's contested legacy, and why our interpretation of American history matters to contemporary society.
Saturday, 18 April 2020
From NPR's Planet Money comes this podcast on Lives Vs. the Economy. Hosts Sarah Gonzalez and Kenny Malone interview Betsey Stevenson and W. Kip Viscusi on how we value a life.
A question we've been hearing lately: "Is it worth it to shut down the economy to save lives?" Or "Should we let people die to save the economy?" The only way to answer this question is to figure out what a human life is worth ... in dollars. This happens all the time. In fact, U.S. government federal agencies have a very specific answer. They say a human life is worth about $10 million.
Today on the show, how economists came up with that number, why that number needs to exist, and an answer to the question: Is it worth it to restart the economy right now? (No. The answer is No.)
Friday, 17 April 2020
This week on The #GSPodcast Stephen Knight talks to Kristian Niemietz (@k_niemietz). Kristian is Head of Political Economy at IEA London and the author of ‘Socialism: The Failed Idea That Never Dies’. They talk about: Classical Liberalism, defining ‘socialism’, Communism v Socialism, the ‘Nordic model’, food banks and more.