Eurocentrism! In Economics?

The study of economics is very Eurocentric. This is reinforced by the reading in the History of Economic thought where once we get past the Physiocrats we’re really talking more about the history of economic thought in England – Smith, Ricardo, Malthus, Bentham, Say, Senior, Mill. Bastiat is Frenchy, so he’s the outlier. Marx was from Trier but he popped on over to France and then the image of Marx is him huddled over books in the reading room of the British Museum. He lived and died in England and sponged off an Engles-man.

We don't even know Ho over here either

And it doesn’t just stop there and spread out. I looked at the list of Economic Nobel winners (and real Nobel or not, it does represent the top line of the consensus of the more orthodox line of thought) and there is one person not from Europe or the Americas. And even then, Amartya Sen was educated in the Western system. That’s weird, right? This is subjective, but I can only think of a handful of people outside of this structure, some Aussies and a couple of Japanese Marxists.

So the question is why this is. Why did it begin that way and why does it persist? In a way I can understand why the Fathers of Economics are where capitalism started. You’re not going to study something as a system if you’re not close to it. And then if you are looking at how society reproduces itself in a non-capitalist or pre-capitalist system, what you are writing has no worth as capitalism took over the world. But where are the non-European or American economists? Are they, like Sen, pulled to the western canon and system? Do they exist but are marginalized? Or are they just not there? Who is the sub-Saharan Samuelson, the African Arrow, and the Thai Thaler? Should we be doing what we can to help create these people, and why haven’t we?

Marx and Capital: The Problem of Depreciation

One of the things that’s been bugging me about the Marxian value transformation into prices is the term of fixed capital that goes into prices.

It’s bugging me because the simplifying assumption is that this constant capital is thought to be used up in the process, and we know how much it was worth going in so that is easy to track.

The problem is that is a gross oversimplification, and I’m not sure if it is straight from Marx or if it is from Hunt’s editing. In accounting terms there is a way to track this sort of thing. If something is not automatically used up as supplies and will last a while, it is literally “capitalized”. This is done because of the matching principal where expenses need to go with income, and anything longer than a year shouldn’t be directly expensed, but the expense of the purchase applied over time. This shows how the machinery wears out. Then you have on your income statement the depreciation which is an expense but not a cash expense.

The complicating factor is that useful lives of capital equipment are based on convention. Your capital item may have an actual longer or shorter life than you plan for when you buy it. In account terms that’s something you can deal with down the road – write off my supercomputer if Moore’s law makes it obsolete or have a loom that is abnormally long-lasting so you’re getting production from it long after it has been fully depreciated. But in pricing terms, you need to know this beforehand, so that all the labor that went into the capital item is used up in your period however it is defined. I’m LTV until I die, but once you put the microscope on some of these things and start looking they are hard to quantify. I know capital is in itself controversial from Cambridge to the other Cambridge, but is there a place in Marx where he deals with such problems?

Value and Price: Quick Though on the Worth of Marx

One of the main difficulties I find with Marx is the determination of value and price and how they are different. In a way, value seems to be a qualitative subjective thing, but the word we use for it is synonymous with price. At least how much worth something has in relation to price.

Is it even possible to talk about value in the abstract without comparing it to something so that it has more or less value? Or even worse do we just put a number on it in terms of willingness to pay and point at the consumer or producer surplus and say that this was the value realized?

And then this is tangential, but one of the things that struck me when I was first reading on Marxian economics was that Marx himself didn’t have all the charts and graphs I was used to M – C – M’ was well and good but I wanted some of Marshall’s scissors on the page. And that kind of lead to the question in a larger sense about why Marx has been marginalized (pun intended). Is it because there aren’t enough charts and graphs? Is it because Economics has evolved as a British and then American science so the German Jew’s work isn’t important especially in light of the 20^th century and the people he inspired. Or is it just that no one really felt comfortable with the answer to the transformation problem?