15 March 2007/Sophia Univ.
Tobins’s Keynesiansim (R. W. Dimand)
Atsushi KOMINE (Ryukoku University)
Summary
Tobin differs from
a) PK ... rejecting the IS-LM model, (object to throwing away the insights of neoclassical) [why?]
b) NK ... slighting involuntary unemployment and absence of market clearing
c) average AK ... less attention to monetary system, multi-assets, disequilibrium dynamics
d) NC ... rejecting stabilization policy for living wages
GT’s core (by Tobin)
(1) wages respond slowly to excess supply, affect real output
(2) vulnerability leads to involuntary unemployment
(3) capital formation depends on profit expectations and attitudes to risks
(4) (theoretically) money and wages flexibility do not stabilize economies
IS-LM
powerful instrument for understanding economies (for Tobin)
enlarge to general cases (multi-asset modeling)
Q and PK
Harcourt ... friendly, Minsky and Crotty ... hostile
original q ... observable market varible [average q?]
Hayashi q... shadow price, optimization [marginal q?]
Tobins insight
(duality) self-adjusting for small shocks [those who object this, PK?], but can be pushed outside of stability by large demand shocks [those who object this, NC?]
Comments
<1> Vision
Skidelsky 1992/1994: 539-540 (vision vs. rule of process)
(1) vision ... pre-analytic cognitive act, intuitive, what economists regard as important, hint, (European decline, socialization of investment, lack of investment opportunity)
(2) theorizing ... conceptualizing the contents of the vision, fixing elements into precise concepts that receive labels names to retain their identity, establish relations, (effective demand, liquidity preference, multiplier)
(3) scientific modelling... rigorous exclusion of variables other than those specified in the model (IS-LM, AD-AS, Philips curve)
[numerous models are possible according to one theorizing, thus not necessarily reflect the original vision.]
PK ... highly attached to Keynes’ vision.
NK, Friedman ... concentrated on his modelling. piece by piece
Tobin ... remarkably unique, aware of three elements, regarded them equally, contributed all three dimensions.
(1)[according to Dimand 2003, Tobin 1970, Tobin’s ideology is social democratic? “On Limiting the Domain of Inequality”, Journal of Law and Economics, October 1970]
(3)[multi-assets, why are they not perfect substitutions?, what is the limitation?]
<2> The Keynesian Revolution
Once KR, real, existed for almost everyone (even for counterparts)
Now, KR, getting obscure more and more
i.e. D. Laidler, Fabricating the KR (1999)
Criteria
(1) a set of three elements
theory (monetary theory of production), policy (discretionary monetary and fiscal policies), and economic thought (restrictive interventionism, welfare state = post-war consensus )
(2) rejecting typical, orthodox, traditional way of thinking
= long-run normal state ... norm, convergent point, gravity
dicotomy
I have said in another context that it is a disadvantage of ‘the long run’ that in the long run we are all dead. But I could have said equally well that it is a great advantage of ‘the short run’ that in the short run we are still alive. Life and history are made up of short runs. CW vol. 28: 62, The New Statesman and Nation, 10 July 1937.
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