A critique of orthodox economics : an alternative model / Harold Lydall.

Format:

Book

Author/Creator:

Lydall, Harold.

Language:

English

Subjects (All):

Economics.

Economics--Methodology.

Neoclassical school of economics.

Physical Description:

xii, 190 pages : illustrations ; 23 cm

Place of Publication:

New York : St. Martin's Press, 1998.

Summary:

Modern, neoclassical economics is a theory of general equilibrium, based on assumptions of perfect competition, perfect knowledge of existing technology, and timeless-static-adjustment. Although useful for some purposes, this theory suffers from serious defects, both in its assumptions and in its predictions. In particular, it fails to account for the growth of firms, for wide contemporary differences in technology between different firms and countries, and for the great sweep of economic development over the past two centuries. Its fundamental weakness is that it eliminates any role for the entrepreneur. In the alternative model presented in this book, there is perfect competition in parts of primary industry, but not in the markets for most manufactures and services, nor in the supply of finance. Technology is much wider than in the standard concept of the "production function", covering all aspects of organization, including methods of efficient large-scale operation. The model provides a key to the problems of economic development of poor countries and of unemployment in rich countries.

Contents:

1 The Causes of Economic Growth 1

2 Neoclassical Theory 13

Basic assumptions of neoclassical theory 13

Marshallian theory 14

Walrasian theory 20

Attempts to solve the general equilibrium problem 22

The exclusion of the entrepreneur 25

3 Technology 31

Production versus speculation 31

Narrow versus wide technology 32

Public versus private technology 36

The neoclassical concept of technology 41

Some major flaws in the theory 42

4 The Entrepreneur 51

The entrepreneur as marketer 52

The entrepreneur as innovator 54

The entrepreneur as uncertainty-bearer 58

5 The Innovating Firm 65

The neoclassical theory of the firm 65

An alternative theory 67

The growth and decline of firms 70

The size distribution of firms 73

Changes in total supply 75

Is there an equilibrium of marginal cost? 77

The earnings of technological superiority 79

6 Product Differentiation 85

The demand for differentiated products 87

The basic flaw in Chamberlin's model 89

Rational behaviour in a product-differentiated market 91

The position of the price ceiling 93

The short-run behaviour of a product-differentiated firm 96

7 Aggregate Analysis 101

The relation between size of firm and the profit margin 102

The net profit margin 107

The effects of technological progress 114

Two theories of income shares 117

The effects of changes in aggregate demand 122

8 The Employment Limit 129

Defects in the neoclassical model 130

The Keynesian model 132

An alternative approach 135

United States experience 137

The basic ingredients of a constructive policy for employment 139

9 Economic Development 143

The essence of economic development 145

Development policy 147

Development and inequality 148

10 The Role of Government 155

Education 157

Infrastructure 160

Finance 160

Information 161

Exports 161

Taxation 161

Regulation 162

Migration 162

11 Summary: The Case for a New Approach 165

Neoclassical theory 166

The basic neoclassical assumptions 167

Two deductions from the assumptions 169

The predictions of the theory 170

Basic assumptions of the alternative model 172

The growth of firms 174

The aggregate picture 175

Aggregate implications of the model 178

Further applications of the alternative model 179

The alternatives 183.

Notes:

Includes bibliographical references (pages 185-186) and index.

ISBN:

0312211430

OCLC:

37705269