Cambridge Economics in the Post-Keynesian Era

Ashwani Saith is an Emeritus Professor at the International Institute of Social Studies, Erasmus University Rotterdam, and former Professor of Development Studies & Director, Development Studies Institute, London School of Economics.

• Volume I.- 1 Cambridge, That Was: The Crucible of Heterodox Economics.- 1.1 The Narrative.- 1.2 Evolutions and Revolutions.- 1.2.1 The Great Banyan of Heterodox Traditions.- 1.2.2 Cohorts.- 1.2.3 The Cambridge Habitat.- 1.2.4 Which Cambridge?.- 1.3 Regime Change.- 1.3.1 The World of Cambridge: Stories Within.- 1.3.2 Worlds Beyond Cambridge: Neoliberalism at the Gates.- 1.4 The Dialectic of Competing Paradigms.- 1.4.1 Laissez-Faire: “Receding at last into the distance”.- 1.4.2 The Force of Ideas.- 1.4.3 Opposition Brewing.- 1.4.4 Evolutions and Hegemonic Incorporation.- 1.4.5 Ideological: Not the Techniques but the Purposes of Economics.- 1.4.6 Sociological: Mathematical Whiz-Kids and Ageing Dinosaurs.- 1.4.7 Beyond Kuhnian Reductionism.- 1.4.8 Mankiw’s Pendulum.- 1.4.9 Solow’s À La Carte Approach.- 1.4.10 Silos and Trenches.- 1.4.11 Joan Versus Hahn—History Versus Equilibrium.- 1.5 Semantics and Pedantics.- References.- 2 The Warring Tribes.- 2.1 A Sanctuary of Sages.- 2.1.1 Class to Community: The Cement of War.- 2.1.2 Community to Conflict: Cement to Sand.- 2.1.3 A Pride of Savage Prima Donnas.- 2.2 Faculty Wars.- 2.2.1 Paradise Lost.- 2.2.2 Fault Lines Within.- Wynne Godley: No Legacy No Synthesis, No Textbooks—The Samuelson Factor.- Shifting Student Preferences?.- “Irrelevance” and Irreverence: Joan and K-Theory.- Inbred Insularity, Complacency.- Simultaneities in the Demographic Lifecycle.- Lack of Internal Group Coherence.- The Heterodox Camp: No Chairs—Sorry, Standing Room Only.- A Break in Intergenerational Transmission, in the Reproduction of Traditions.- 2.3 Godfathers, Uncles and Nephews: The Gathering Foe.- 2.3.1 The Trojan Horse: By the Pricking of My Thumbs.- 2.3.2 Forming the Academy.- Meanwhile, at the Orthodox Party—A Merry Game of Musical Chairs.- 2.3.3 The Chess Master.- 2.4 The Campaign: How the War Was Lost and Won.- 2.4.1 The Orthodox Gambit: Capture the External Commanding Heights.- 2.4.2 Carrots and Commanders.- 2.4.3 Modus Operandi: Masters, Mandarins and Interlocking Committees.- References.- 3 Worlds Beyond Cambridge: The Global Web of the ‘Neoliberal Thought Collective’.- 3.1 Conjunctures.- 3.1.1 1930s, The Prelude.- LSE Versus Cambridge.- Émigré Economists: The Benefactions of Lenin and Hitler.- 3.1.2 1940s, The Cascade.- 3.1.3 Keynesianism: Divergent Receptions.- Post-war Affinity in the UK.- Post-New Deal Hostility in the USA.- 3.2 Spreading the Word: Messiahs, Messages, Methods.- 3.2.1 Ideas and Ideologies: Manufacturers and Retailers.- 3.2.2 USA: Early Ideological Entrepreneurs of Libertarianism.- Harold Luhnow: The Volker Fund and its Dollars.- Foundation for Economic Education (FEE) and its Facilitators.- 3.2.3 Europe: Friedrich Hayek and the Mont Pelerin Society.- Antecedents.- Pilgrims Atop a Mountain, Mont Pelerin, Switzerland, April 1947.- Financial Sponsors.- The First Meeting of Minds.- Sarcastic Schumpeter, Sceptical Solow, Scathing Samuelson.- 3.2.4 UK: Antony Fisher, Global Venture Capitalistof Think Tanks.- 3.3 Branding the Message: The ‘Nobel’ Prize.- 3.3.1 The Stockholm Connection: Ideological Entrepreneurs.- 3.3.2 Some Early Awards: Setting the Direction.- Jan Tinbergen—Ragnar Frisch 1969.- Samuelson 1970.- Gunnar Myrdal—Friedrich von Hayek 1974.- Milton Friedman 1976.- 3.3.3 Mont Pelerin Society and the ‘Nobel’—A Golden Embrace.- 3.3.4 Cambridge Heterodoxy?.- 3.3.5 ‘An Ideological Coup’.- 3.4 Reaching Politics: Weaponising the Message.- 3.4.1 Santiago de Chile: Pinochet the Pioneer.- Chicago and its Cowboys.- Thatcher: Romancing Pinochet’s Chile.- 3.4.2 The White House: Reagan, a Disciple.- 3.4.3 10 Downing Street: Thatcher, a Devotee.- More than its Weight in Gold—The Market Price of Symbolic Capital.- 3.4.4 Pulling Together.- 3.5 Besieging Cambridge: The Chicago–MIT–LSE Trinity.- 3.5.1 A Cross-Atlantic Triangle.- 3.5.2 Diversity of Practice.- 3.5.3 Unity of Purpose.- References.- 4 Camp Skirmishes Over Interstitial Spaces: Journals, Seminars, Textbooks.- 4.1 The Battle of Teruel—The Day before.- 4.2 Journals.- 4.2.1 EJ Leaves ‘Home’—The Loss of a Flagship.- 4.2.2 CJE Arrives—A Forum of One’s Own.- 4.2.3 Cambridge Economic Policy Review: One Crowded Hour of Glorious Life.- 4.3 Seminars.- 4.3.1 Cambridge Economic Club—A Marshallian Precursor: 1884–1890, 1896–?.- 4.3.2 Political Economy Club: From Keynes to Robertson to Kahn—Dazzling to Dour.- 4.3.3 The Marshall Society: A Socialisation into Economics and Its Purposes.- 4.3.4 Piero Sraffa’s Research Students Seminar: A Precocious Nursery.- 4.3.5 In Retrospect, Austin Robinson on the Cambridge Circus: The Engine Room of The General Theory.- 4.3.6 Cambridge–LSE Joint Seminar: Jousting Juniors.- 4.3.7 Kahn’s ‘Secret’ Seminar at King’s: Fires in the Kitchen.- 4.3.8 The Richard Stone Common Room: Typhoo and Typhoons.- 4.3.9 Ajit Singh’s Political Economy Seminar at Queens’: Young Turks.- 4.3.10 Arestis and Kitson Political Economy Seminar at St. Catherine’s College.- 4.3.11 Hahn’s Churchill Seminar: OnlyMaths and Neoclassicals, Others Beware.- 4.3.12 Cambridge Growth Project Seminar at DAE.- 4.3.13 Hahn’s ‘Quaker’ Risk Seminar: The Rising Tide.- 4.3.14 Matthews’s CLARE Group: The Master’s Lodge of Moderate Practitioners.- 4.3.15 Lawson—Realism and Social Ontology: Ways of Seeing and Framing.- 4.4 Textbooks.- 4.4.1 Distant Thunder: Keynes and McCarthy, Tarshis and Samuelson.- 4.4.2 Lawrence Klein and the Paradox of The Keynesian Revolution.- Puzzle.- Ph.D.—At Samuelson’s Feet.- Cowles Commission—The New Dealers.- The Keynesian Revolution: The Extra Chapter— Klein, Then a Closet Marxist?.- Beyond Keynes.- UMich and McCarthyism.- Policy to Forecasting.- Resolution.- 4.4.3 ‘Death of a Revolutionary Textbook’: Robinson and Eatwell.- 4.4.4 An ‘Applied Economics’ Textbook That Wasn’t: Joan and Young Friends.- 4.5 The Battle of Teruel—The Day After.- Appendix 4.1: First off the Blocks: Mabel Timlin’s Keynesian Economics, 1942.- References.- 5 The DAE Trilogy.- 5.1 Origins and Evolution.- 5.1.1 Origins.- 5.1.2 Evolution: Substance and Styles.- 5.1.3 Foundations of Stone.- 5.1.4 Reddaway’s Method: Eclectic Development.- 5.1.5 Godley: Turbulent Times.- 5.2 End of the Golden Age: The Decade of Discontent.- 5.3 The Trilogy: Discrete Episodes or a Serial Campaign?.- Appendix 5.1: DAE—Finding a Good Home.- References.- 6 Cambridge Economic Policy Group: Beheading a Turbulent Priest.- 6.1 Charged Conjuncture.- 6.1.1 Imbroglios of 1974: Old Versus New Cambridge Versus the Establishment.- 6.1.2 The Enigma of Kahn.- 6.1.3 Kaldor: On Radical Policy Implications of New Cambridge, 1976.- 6.1.4 Cambridge Squabbles: Spillover into Whitehall?.- 6.1.5 Triggering Crisis: The Pivot of the OPEC Price Hikes.- 6.1.6 1979: Enter Margaret Thatcher, Right-Wing, Upfront.- 6.1.7 The Case of the Odd Consensus: The Letter by 364 Economists, 1981.- 6.1.8 Thatcher in the Garage of the Federal Reserve.- 6.1.9 1981: Brixton Riots, Toxteth Fires: “A Concentration of Hopelessness”.- 6.1.10 TheCEPG: A Thorn in the Thatcher Hide.- 6.1.11 The Bogey of Import Controls and the Spectre of Bennism.- 6.2 SSRC and CEPG: Dispensing Instant Injustice.- 6.2.1 Posner’s Parlour.- 6.2.2 Posner’s Process.- 6.3 Epilogue.- 6.3.1 Vengeance.- 6.3.2 The Team Scattered.- 6.3.3 The Model Reincarnated.- 6.3.4 The Rehabilitation of Wynne.- 6.3.5 Wynne Godley: ‘My Credo’ ….- 6.3.6 The Pacification of the CEPG.- Appendix 6.1: Old Cambridge, New Cambridge, 1974: and All the King’s Men.- 1. Letter WG to RFK 23 May 1974. JVR/ vii/228/3/3.- 2. Letter NK to RFK 20 May 1974. JVR/ vii/228/3/14-16.- 3. Letter from RFK and MP to NK 24 May 1974. JVR/vii/228/3/17-20.- 4. Letter from RFK and MP to NK 28 May 1974. JVR/vii/228/3/24.- 5. Letter from FC to RFK 29 May 1974. JVR/7/228/3/25.- 6. Reply from RFK to FC 6 June 1974. JVR/7/228/3/24.- 7. In the interim, NK replied to RFK and MP. JVR/7/228/3/26.- 8. Letter from NK to RFK. RFK/12/2/132/3.- References.- 7 ‘Unintended’ Collateral Damage? The Cambridge EconomicPolicy Group and the Joseph-Rothschild-Posner SSRC Enquiry, 1982.- 7.1 Joseph—Rothschild—Posner—Godley.- 7.2 The Posner-the-Saviour Narrative.- 7.3 Setting Up the Enquiry.- 7.4 Who Proposed Rothschild?.- 7.5 Rothschild Report Writing Process.- 7.6 The Judgement of Rothschild.- 7.7 Between Draft and Release and Response: Handshakes and Cigars.- 7.8 Did Posner Get Away with Just a Change of Name?.- 7.9 CEPG—Collateral Damage? Or, Traded Down the River?.- 7.10 The Rothschild Report: Gleanings on Macroeconomic Modelling.- 7.11 Lord Kaldor—Off the Record, Off the Cuff, Off the Mark?.- 7.12 Lord Harris’ Vitriol.- 7.13 Catholicity and Independence.- 7.14 Rothschild’s Last Word.- 7.15 Joseph’s Last Laugh.- References.- 8 Cambridge Growth Project: Running the Gauntlet.- 8.1 Background and Conjuncture.- 8.1.1 The Decision.- 8.2 Substantive Issues.- 8.2.1 No Innovation?.- 8.2.2 Catholicity, Turnover and the Value of Disaggregation.- 8.2.3 Use of Input-Output Tables.- 8.2.4 CGP Presence in PolicyDebates.- 8.2.5 Insularity.- 8.2.6 On Exploiting the Cheap Labour of Graduate Students.- 8.3 Issues of Procedural Probity.- 8.3.1 Shifting Goalposts Across Evaluations.- 8.3.2 Unequal Application of Criterion of Commercial Funding.- 8.3.3 Public Good or Private Resource?.- 8.3.4 ESRC Ignored CGP Model Performance: Why?.- 8.3.5 Compromised ‘Independent’ Evidence.- 8.4 Other Concerns.- 8.4.1 ‘Reds’?.- 8.4.2 Crowding Out Competitors?.- 8.4.3 Deadweight Loss of Built-up Intellectual Capital.- 8.4.4 Gratuitously Offensive: Up Close and Out of Order.- 8.4.5 The Consortium: ‘Revived Talk of Conspiracy Theory’.- 8.4.6 In Defence, a Lone Voice, Overruled.- 8.5 Epilogue: CGP—Life After Death?.- Appendix 8.1: CGP Staff Members, Timeline 1960–1987.- Appendix 8.2: Publications of CGP Staff.- References.- 9 The DAE Review 1984–1987: A Four-Year Inquisition.- 9.1 The Campaign of Attrition.- 9.1.1 Occluded Origins.- 9.1.2 Two Stages, Two Committees.- 9.2 The Orthodox Gambit.- 9.2.1 The Agenda Revealed.- 9.2.2 The Game Plan: Four Options.- Closure.- Separation.- Absorption.- Capture.- 9.2.3 External Critiques: Collusion as Consultation?.- 9.3 The Heterodox Defence.- 9.3.1 Solidarity, Testimonies, Rebuttals.- 9.3.2 Chinks in the DAE Armour?.- 9.4 On the Rack: Bleeding the DAE.- 9.4.1 The Secretary General, The Prince and the Chess Master.- 9.4.2 The Capture.- 9.4.3 How it Transpired, Perhaps Not Just by Chance.- 9.4.4 Checkmate: A Constitutional Coup.- 9.5 Epilogue.- Appendix 9.1: DAE Review Committees: Composition and Terms of Reference.- First Advisory Committee. Constituted: Easter Term 1984; Reported: May 1985.- Second Advisory Committee: Constituted: Easter Term 1985; Reported April 1987.- Appendix 9.2: Labour Studies Group: Dispersed, Not Defeated.- References.- Volume II.- 10 Sociology: The Departure of ‘Stray Colleagues in a Vaguely Cognate Discipline’.- 10.1 Early Years: Hostility, Neglect, Subordination.- 10.2 Sociology: Growing Up Amongst Economists.- 10.3 Hostile Public Spaces: SSRC, Rothschild-1982 and Sociology.- 10.3.1 Entrenched Resistance to the Emergence of SSRC.- 10.3.2 In the Court of Public Opinion: Open Season on Sociology.- 10.3.3 The Joseph–Rothschild Assault.- 10.4 Back in Cambridge, 1984–1986: To Remain Or to Exit, That Was the Question.- 10.4.1 Sociology in the DAE Review: Crossfire and Crossroads.- 10.4.2 Cometh the Hour, Cometh … Tony Giddens.- 10.5 Archival Insights: Harboured Preferences Revealed.- 10.5.1 Do Please Stay, Pleaded the Heterodox.- 10.5.2 Clear Out Now, Growled the Orthodox.- 10.5.3 Do What Is Best for You, Whispered the Faculty Board.- 10.5.4 Time to Choose: The Sociologists Speak.- 10.6 Leaving Home, a Space of Its Own.- References.- 11 Development on the Periphery: Exit and Exile.- 11.1 Cambridge Development Studies: The Heterodox Inheritance.- 11.1.1 The Capitalist Economy and Its Cambridge Critics.- 11.1.2 Bridges to Development.- 11.2 Evolution of the Teaching Project: Multiple Identities.- 11.2.1 Timelines.- 11.2.2 In University Space: The Professionalisation of ‘Development Studies’.- The Early Years: Fine-tuning Imperial Instruction, 1926–1969.- Turbulence and Transformation: Revising the Mandate, 1969–1982.- 11.2.3 In Faculty Space: The Disciplining of ‘Development Economics’.- 11.2.4 Against the Mainstream: Subaltern Perspectives.- 11.3 Development Research: Ebbs and Flows.- 11.3.1 Cambridge–India Highway: Cambridge in India.- 11.3.2 Cambridge–India Highway: India in Cambridge.- 11.3.3 Not Just India.- 11.3.4 Bi-modal Distribution of Development Interest.- 11.4 1996: Divorce and Eviction.- 11.5 A Credible Counterfactual.- Appendix 11.1: Arguments in Support of Continuation of Development Studies Course in Cambridge.- References.- 12 From Riches to Rags? Economic History Becomes History at the Faculty of Economics.- 12.1 Introduction: Economics and Economic History.- 12.2 The Pre-War Period: 1939, Marshallian.- 12.2.1 At the Faculty of History.- Cunningham to Clapham via Marshall.- Clapham to Postan via Power.- 12.2.2 At the Faculty of Economics and Politics.- Maurice Dobb, 1900–1976.- 12.3 Post-War Period-I, 1945–1980s: Post-Keynesian.- 12.3.1 At the Faculty of Economics and Politics.- On the DAE Side.- On the Faculty Side.- 12.3.2 At the Faculty of History.- ‘Munia’ Postan.- The Turn to Business Studies-I, David Joslin 1965–1970.- The Turn to Business Studies-II, Donald Coleman 1971–1981.- 12.4 Post-War Period-II, 1980s: Unravelling and Divergence.- 12.4.1 At the Faculty of History.- The Turn to Business Studies-III, Barry Supple 1981–1993.- Modern Times: Martin Daunton 1997–2015.- 12.4.2 At the Faculty of Economics: Turbulence, Transitions and Affinities.- Cluster 1: Humphries—Horrell.- Cluster 2: Kitson—Solomou—Weale.- Cluster 3: Ogilvie—Edwards.- Cluster 4: Toke Aidt.- 12.5 c.2020, Here, to Where?.- 12.5.1 Economic History at the Faculty of Economics: Full Stop?.- 12.5.2 At the Faculty of History: New Turnings.- Appendix 12.1: Economic History and Accounting at the DAE.- Appendix 12.2: Locating Phyllis Deane in National Accounting and Feminist Discourse: A Supplementary Note.- References.- 13 Research Assessment Exercises: Exorcising Heterodox Apostasy from ‘Economics’.- 13.1 The Agenda.- 13.2 The Teaching Body: Unification, Hierarchy, Control.- 13.3 1986: Swinnerton-Dyer and the Genesis of the RAE.- 13.4 1986–1989: Frank Hahn and the Orthodox Capture of the RES.- 13.5 Through the RES: Controlling Panel Selection.- 13.6 Outcomes.- 13.7 Consequences and Critiques.- 13.7.1 Gaming.- 13.7.2 Competition and Conflict: Managerialism.- 13.7.3 Individual Stress.- 13.7.4 Medium Over Message: Diamonds for Ever.- 13.7.5 Unethical Research Practices and Shaky Quality Proxies.- 13.7.6 The Atrophy of Collective Research Traditions and Environments.- 13.7.7 The Loss of Intrinsic Values.- 13.7.8 Undervaluation of Undergraduate Teaching.- 13.8 The Suppression of Heterodox Economics and Economists.- 13.9 Follow Big Brother: Elimination of Heterodoxy in USA.- 13.10 1662, Deja Vu.- References.- 14 Reincarnations.- 14.1 In a Nutshell, à la Joan.- 14.2 Purges and Purification.- 14.3 Triumphalism.- 14.4 A Royal Mess: The Queen’s Question.- 14.5 Students Speak Up.- 14.5.1 In Cambridge.- 14.5.2 Elsewhere.- 14.6 Faculty Performance: A Summary Report Card.- 14.6.1 Global Ranks.- 14.6.2 RAEs, REFs.- 14.7 Exiles and Reincarnations.- 14.7.1 The DAE Flagships: CGP and CEPG.- 14.7.2 DAE Industrial Economics: Alan Hughes and the CBR.- 14.7.3 Judge Business School.- 14.7.4 The Economic Historians.- 14.7.5 Sociology: That ‘Vaguely Cognate Discipline’.- 14.7.6 Development.- 14.8 Reluctant Regrets.- 14.8.1 Robin Matthews.- 14.8.2 Frank Hahn.- 14.8.3 David Newbery.- 14.8.4 Tony Atkinson.- 14.8.5 Francois Bourguignon.- 14.8.6 Alan Blinder.- 14.8.7 Peter Diamond.- 14.8.8 Partha Dasgupta via Robert Neild.- 14.8.9 Another Snowflake Moment?.- 14.9 Donors: Leveraging a Reboot?.- 14.10 The Great Banyan.- Appendix 14.1: Letter of Protest by Graduate Students, 2001 1073 References.