The Debate on Excess Capacity, Issues of Competition and Time

Abstract

There has been a great deal of soul-­‐searching in the economic community over the past few years. Economists of varying stripes have begun to question the academic and business paradigm which is the orthodox approach to economics. Questions of capital theory, of method, of normative philosophy are being reconsidered as the community questions the wisdom of the textbooks of Dornbusch and Bernanke, the truisms of Solow on growth and Friedman on financial markets, the intellectual sons of the marginalist revolution. The public and policymakers alike are also searching for alternatives, with proposals of a Tobin tax across Europe and occupations of Wall Street the most striking recent examples. Without doubt, the global financial crisis has done far more than simply cut the hair of the Samson of international finance, it has forced the jaws of orthodox economists to clamp down on Eve’s apple and awaken, naked and impure, outside the ivory walls and locked gates of Eden. They now lie, castrate, amongst the intellectual barrenness and moral decrepitude which was neoclassical economics. If they can open their eyes, they will see there are many rich traditions of heterodox thought which have persisted outside the bastions of economic Eden. These are not built from invisible hands, and they do not need to assume full employment or abstract from that which they do not understand to work. The theoretical underpinnings of these approaches are methodologically Babylonian, not Cartesian, and thus sustain themselves on more than just axioms (Dow, 1996). The insights of Keynes (1936), Robinson (1941), Steindl (1952), Sraffa (1960), Kalecki (1971), Marx (1971), Amadeo (1986a), White (1996), Missaglia (2007), Arestis and Sawyer (2009b), and Moudud (2010) are but a few authors whose contribution to understanding the phenomenon and implications of excess capacity cannot be understated. It would be a travesty of morality and justice for the Department of Political Economy at this University to be closed, amalgamated out, or in any other way undermined, because if there is one thing which the past few years 10 of economic experience and this body work shares in common, it is that pluralism leads to a better, greater, and more fruitful understanding. I pray the University makes the right decision.