Re: Bruno Ventelou responds to Peter Dorman

[Peter Dorman <dormanp@xxxxxxxxxxxxxxxxxxx>]

My thanks to Bruno.  Incidentally, the idiosyncratic French economist
Serge-Cristophe Kolm has an approach to nonconvexity somewhat similar to
mine.

As for intellectual history, it is actually the institutionalists,
rather than Keynes, who prefigured "interactive nonconvexity".  It was
quite common, once upon a time, to argue that firms had multiple
strategies available to them (which we would now call locally
profit-maximizing), and that what businesses do is identify, choose, and
implement such strategies.  (There is even some of this in Marshall.)  I
really wish the Cantabrigians had picked up on this approach rather than
imperfect competition in their attempt to ground Keynesian theory
microeconomically.  In particular, I have always felt that "Notes on
User Cost" is just the first half of an argument, and requires an
institutional theory of the firm (indeterminacy of firm-level strategy
with respect to inventories) to finish the job.  (OK, nonergodicity will
do it too, but that's not my way....)

Peter

Greg Nowell wrote:
>
> I translate Bruno Ventelou's note to me and include the
> original French.   I don't really want to be his
> interlocutor on this group, but I do want to bring his
> work to the attention of the PKT discussion group, so
> here it is, by way of publicity.  Please note, folks
> that this is in theory an *introductory intellectual
> history* of what came before Keynes, Keynes, and many
> strands of thinking that followed, so I find myself
> rather bemused by the heavy intellectual apparatus
> brought to bear on the translation of "substitutabilite
> brute."  --gn
>
> Here's le Professeur Ventelou:
>
> Gross substitutability is the correct term, used in
> micro textbooks.  The notion of multiple equilibria,
> based on very orthodox arguments, seems to me necessary
> to present in this part of the book.  The most orthodox
> references to Keynes refer to it,  showing that
> wherever there are multiple equilibria, it is possible
> for the government to intervene to move market actors
> to the "right equilibrium."  This is not necessary for
> Keynesian policy in the strict sense of the term, but
> it suffices to show that even orthodox economics does
> not exclude public intervention.  I chose Wald because
> he published in 1933!  But Arrow et al are better known
> for their equivalent, and better stated, results.
>
> The notion of subsequent (posterieurs) multiple
> equilibria, including the most heterodox ones based on
> non-participation in exchange, are very interesting,
> and very useful in interpreting Keynes in the largest
> sense of the term.  BUT,
>
> 1.  Keynes didn't know about them;
> 2.  They are less convincing, for orthodox readers,
> than arguments coming from orthodox theory.
>
> Nonetheless, Peter Dorman is right.  I should take up
> better this second, more expansive reinterpretation of
> multiple equilibria.  I tried to do that in Chapter 5
> of the 1997 version of Lire Keynes et le Comprendre,
> but at the time I didn't understand the question
> well.   I'm much more comfortable with it now.  I
> intend to take it up in the second French edition, and
> naturally with you [Greg Nowell], in the English
> translation.
>
> --BV.
>
> Aprhs lectures des dibats :
>
> "Gross substituability" est le bon terme (celui utilisi
> dans les manuels de
> microico)
>
> La notion d'iquilibres multiples (celle basies sur ces
> seuls arguments trhs
> orthodoxes) me parant nicessaire ` prisenter dans cette
> partie. Les lectures
> de Keynes (les plus orthodoxes) y font rifirence, en
> montrant que l` oy il y
> a iquilibres multiples, il y a possibiliti pour le
> gouvernement d'intervenir
> pour orienter les agents sur le "bon iquilibre". Il ne
> s'agit pas
> nicessairement d'une politique keynisienne au sens
> stricte du terme, mais
> cela suffit ` montrer que l'iconomie mjme orthodoxe
> n'exclut pas
> l'intervention publique. Wald est choisi pour sa date
> 1933!!! C'est Arrow,
> et al qui sont connu pour leurs risultats iquivalents
> (mais mieux dits).
>
> Les notions d'iquilibres multiples postirieures
> (celles, plus hitirodoxes,
> basie sur la non participation ` l'ichange) sont trhs
> intiressantes, et
> utile pour riinterpriter Keynes d'une manihre trhs
> large. MAIS
> 1 Keynes n'a pas pu en avoir connaissance
> 2 elles sont moins convainquantes (pour les orthodoxes)
> que des arguments en
> provenance directe du corpus orthodoxe...
> Nianmoins P Dorman a raison, il faudrait que j'aborde
> mieux cette deuxihme
> riinterpritation large de Keynes par les iquilibres
> multiples (dans le
> chapitre 5 de la version 97 de LKC, je m'y essaye mais
> ` l'ipoque je
> connaissait mal cette question. Aujourd'hui je me sens
> plus ` l'aise. Je le
> ferai donc prochainement, ` la fois pour une seconde
> idition frangaise, et
> bien s{r avec toi pour une traduction en anglais).
>
> --
> Gregory P. Nowell
> Associate Professor
> Department of Political Science, Milne 100
> State University of New York
> 135 Western Ave.
> Albany, New York 12222
>
> Fax 518-442-5298