Edizioni FrancoAngeli - Last issue of HISTORY OF ECONOMIC THOUGHT AND POLICY (1/2013)

Facts, Theories, and Policies in the History of Economics. An Introductory Note

Tue, 15 Apr 2013 8:00:00 GMT

Fabio Masini
Facts, theories, and policies can be considered as the vertices of a triangle. While many contributions explore along the edges of such triangle, between couples of poles, we claim that the history of economics thought is fundamentally interested in looking within the whole area of the triangle. The relationship among theories, public choices, and events is complex, often twodirectional, with some unforeseeable short circuits. In order to tackle such complexity, it is necessary to use an interpretative model that assumes a high degree of interdependence between such variables and focuses on the evolution of their mutual interactions over time. The paper aims to show that this is the approach that the works presented in this issue of the journal try to address and illustrates some of their key features, in particular country-specificity and ideological bias.

Rationalizing Incomes Policy in Britain, 1948-1979

Tue, 15 Apr 2013 8:00:00 GMT

Roger E. Backhouse, James Forder
Prices and incomes policies, aimed at directly controlling the rate of growth of prices, wages and profits, were a central element in British macroeconomic policy making from the Second World War until 1979. This paper revisits the operation of such policies and the rationales offered during this period. The only argument that makes sense in terms of modern orthodox theory, that an incomes policy can lower expectations of inflation, was very rare. The rationales more often suggested related closely to the institutional details of wage bargaining in oligopolistic labour markets. Virtually no one perceived labour markets as competitive with the wage determined by the marginal product of labour. But this argument gave the policy a significant and later forgotten rationale.

Germany after World War II: Ordoliberalism, the Social Market Economy and Keynesianism

Tue, 15 Apr 2013 8:00:00 GMT

Harald Hagemann
The post-1945 development of economics in Germany is characterized by important similarities as well as by some considerable differences compared to other European countries. The strong growth of international trade was accompanied by an increasing internationalization of economics that was simultaneously for a greater part a process of Americanization. The historically unmatched growth from 1950 to the early 1970s was associated by the growth of economics as an academic discipline and an increasing "economization" of public life. German economics also ran through the rise and fall of Keynesianism as well as a switch to monetarist ideas and supply-side policies in the mid- 1970s after the first oil price shock. On the other hand, some special factors exist which distinguish the German case from the development of economics elsewhere.The paper illustrates the relationship between the political and the economic sphere in Germany after WWII

Economic Theory and Policy in Dictatorship and Democracy: Spain 1939-1996

Tue, 15 Apr 2013 8:00:00 GMT

Juan Zabalza
The role played by economists and thus economic theory in implementing the Spanish economic policy during the second half of the 20th century is the main topic analysed in this article. Political framework indeed is crucial for understanding the relationships between Spanish economists and economic policy during the period. The authoritarian regime imposed by victorious General Franco did not leave room to economic rationality as he entrusted economic policy to engineers politically committed with the dictatorship. Later on, once these policies proved to be ruinous, a group of technocrats assumed the responsibility for economic policy on the basis of more rational principles although political goals prevailed on economic ones. The advent of democracy in the mid-1970s, however, meant the contribution of economists to both the transformation of the economic institutions and the implementation of the economic policy that took place during a period of economic turbulences.

The Italian Economists and the Crisis of the Nineteenseventies. The Rise and Fall of the "Conflict Paradigm"

Tue, 15 Apr 2013 8:00:00 GMT

Piero Bini
Between 1969 and the early nineteen-eighties a unique parabola took place in Italy that was both historical and theoretical. We are referring here to the birth, development and decline of a research project that had assumed Sraffa’s book Production of Commodities by Means of Commodities as its basic reference. At the beginning of this debate, the characteristics of Sraffa’s theory as an "open" scheme enabled it to produce a theoretical core having multiple derivations (both Keynesian and Marxian). In this system of scientific synergies a special role was played by the discussion concerning wages as "independent variable". The result was a meta-theoretical concept of wage as a price governed prevalently by social forces and power relations. We have called this complex research programme the "conflict paradigm". Successively the paper considers the reasons which, since the mid-seventies, started to corrode this compound doctrinaire alliance, first of all the intellectual disorientation caused by both the acute expressions of crisis in the second half of nineteen-seventies, and the criticism against the Sraffa’s theory as an "open" scheme, as a factor that deprived the study of economics of the solid anchor of equilibrium analysis.

The Interaction between Economic Theories and Policies in Belgium, 1944-2000

Tue, 15 Apr 2013 8:00:00 GMT

Erik Buyst
We analyse the impact of economists on post-war economic policy in Belgium. The severe budgetary and monetary crisis of the mid-1920s which brought the country on the brink of hyperinflation and a state moratorium, framed economic policy for several decades to come. Until the mid-1950s inflation fighting and a stable currency became an obsession in both economic thought and policy. In this climate the penetration of Keynesianism and of regional development policies was seriously delayed. Therefore the period between the mid-1950s and early 1960s was an important watershed. From then Keynesianism in its various forms blossomed. New paradigms, such as the monetarist counter-revolution and supply-side economics, failed to make a breakthrough in academia and had little or no impact on economic policy. Reckless economic policies in the aftermath of the two oil crises temporarily broke down the long run consensus concerning a stable currency.

Who Came First: Politicians or Academic Economists?

Tue, 15 Apr 2013 8:00:00 GMT

Johan Lonnroth
In this text an analysis is presented concerning who were first to form and accept new macroeconomic policy ideas in Sweden: economic politicians or professional economists. Those ideas were later to be accepted in international mainstream economics. Four paradigmatic shifts, all of them connected to economic - unemployment and/or inflation - crises, are studied: 1) The so called New Economics in the 1930s; 2) the forming of the Rehn & Meidner model and its implementation in the 1940s to 1960s; 3) the gradual shift from Keynesianism to monetarism and norm based theory during the last three decades of the 20th century; 4) the effects on economic thinking of the crisis in 2008/09. The result is that in cases 1, 2 and 4 initiatives to change policies rather came from politicians than from academic professional economists. In case 3 the result is more uncertain.

Central Banking, Japanese Style: Economics and the Bank of Japan, 1945-1985

Tue, 15 Apr 2013 8:00:00 GMT

Masazumi Wakatabe
The paper deals with the relationship between economics and monetary policy from 1945 to 1984, conducted by the Bank of Japan. During the period Japan has experienced almost all types of growth rate change from high inflation to disinflation, and the monetary policy of the BOJ was discussed, and sometimes criticized. The paper shows that the behavior of the BOJ has been trying to be consistent with its particular interpretation of the policy objective, prescriptions, and past history as well as its bureaucratic concern over its own survival as an organization. However, this does not mean that there has been no conflict of ideas within the BOJ. Despite its attempt to portray itself as a unified entity, there have been several strands of thought within it, which evolved historically.

Rethinking the Monetarist Experience: Monetary Theory and Monetary Policy in the United States

Tue, 15 Apr 2013 8:00:00 GMT

Benjamin K. Johannsen, Bradley W. Bateman
In the history of monetary theory and monetary policy, there can be little doubt that the 1980’s are seen as a watershed. Following a disastrous decade of inflation and recession in the 1970’s, the monetarist ideas of Milton Friedman are largely seen to have triumphed then over the older Keynesian demand management policies. The moment of monetarism’s ascendancy is probably seen most often as 1979 – the year that Margaret Thatcher was first elected as Prime Minister of Britain, having run for office on an explicit platform of monetarist ideas, as well as the year that Paul Volcker was named chair of the Federal Reserve’s Board of Governors in the United States. The purpose of this essay is to focus on what happened in the United States after Volcker’s appointment as chair of the Federal Reserve.