Re: WWW -- Harrod home-page (fwd)

["schulte-baeuminghaus" <cresscourt@xxxxxxxxx>]

Gunnar,

I'm not sure that I follow all of this rather tortuous reasoning - by
others as well as yourself.
If it means - to the practical policymaker - that there is no
multiplier effect - that one set of expenditures does not lead to
others - then I suspect that we will have to agree to disagree.
But please don't let this lead us into disputation. I'd prefer just to
leave it at that.
All best wishes.


James


----------
>From: "Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>
>To: "James Cumes" <cresscourt@xxxxxxxxx>
>Subject: Fw: WWW -- Harrod home-page (fwd)
>Date: Fri, May 25, 2001, 3:04 am
>

>
aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa
aaaaaaaaa
> aaaaaaaaaaaaaaaaaaaaaDear James:
>
> I just sent the following message to PKT.
>
> The viewpoint expressed therein would seem to accord perfectly with
> Geoffrey's long-standing complaint that the "multiplier" concept is
> incomprehensible.
>
> Gunnar
>
>
>
> ----- Original Message -----
> From: "Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>
> To: <pkt@xxxxxxxxxxxxxxxx>
> Sent: Friday, May 25, 2001 12:01 AM
> Subject: Re: WWW -- Harrod home-page (fwd)
>
>
>> James:
>>
>> Re. the following:
>>
>> > it seems a rather barren quest to determine who
>> > was "first."
>> > Much more important is our current understanding of the concept and
>> > its practical role in policy.
>>
>> The 10th (1976) edition of Samuelson's 'Economics' explains and defin
>> multiplier concept as follows:
>>
>> "Modern income analysis shows that an increase in investment will increase
>> national income by a multiplied amount - by an amount greater than itself!
>> Investment spending - like any independent shifts in governmental,
> foreign,
>> or family spending - is high-powered, double-duty spending, so to speak.
>>
>> "This amplifed effect of investment on income is called the "multiplier"
>> doctrine; the word "multiplier" itself is used for the numerical
> coefficient
>> showing how much above unity is the increase in income resulting from each
>> increase in investment."
>>
>> "The multiplier is the number by which the change in investment must be
>> multiplied in order to present us with the resulting change in income."
> (p.
>> 226)
>>
>> And what does all this mean?
>>
>> It means that analysis of an economy's income and expenditure accounts -
>> "modern income analysis" - reveals a greater than one-to-one ratio between
>> entries labeled "income" and "investment".
>>
>> Yet, "investment" in factor inputs to the economy's production process is
>> another label for "income" received by suppliers of factor services - as
> in
>> the Circular-Flow view of the economic process.
>>
>> Thus, it would seem to follow that the concept of a multiplier greater
> than
>> one is rooted in the definitions used by national accountants WITHOUT
> regard
>> to the underlying - elementary - economics involved.
>>
>> Gunnar
>>
>>
>>
>>
>>
>>
>>
>>
>>
>> ----- Original Message -----
>> From: "schulte-baeuminghaus" <cresscourt@xxxxxxxxx>
>> To: "J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>; "Daniele Besomi"
>> <dbesomi@xxxxxxxxxxxxx>; "Post Keynesian Thought" <pkt@xxxxxxxxxxxxxxxx>
>> Sent: Thursday, May 24, 2001 9:09 PM
>> Subject: Re: WWW -- Harrod home-page (fwd)
>>
>>
>> > Giblin might be regarded as a "primitive" in relation to the
>> > multiplier - not unusual in the development of concepts of this kind.
>> > He had and rather crudely articulated the basic theme of the
>> > multiplier which was then to be refined, over a period of some years,
>> > by others who could claim, with some justification, to have given
>> > clearer definition to the concept so that it became more useful as a
>> > tool of economic understanding and policy.
>> > Within that context, it seems a rather barren quest to determine who
>> > was "first."
>> > Much more important is our current understanding of the concept and
>> > its practical role in policy.
>> > This role is something of which Keynesians in particular should be
>> > aware.
>> > Those who turn their backs on Keynesian concepts tend to turn their
>> > backs - inter alia - on that of the multiplier.
>> > That is the real cause for regret.
>> > It would be a cause for lesser, though still understandable regret, if
>> > Giblin were not accorded a place in the history of economic thought -
>> > if only a modest one in keeping with the modest character of the man.
>> >
>> >
>> >
>> > James Cumes
>> >
>> >
>> >
>> >
>> > ----------
>> > >From: "J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>
>> > >To: "Daniele Besomi" <dbesomi@xxxxxxxxxxxxx>
>> > >Subject: Re: WWW -- Harrod home-page (fwd)
>> > >Date: Thu, May 24, 2001, 10:10 pm
>> > >
>> >
>> > > Daniele,
>> > >       I have not checked on Giblin.  I was taking it
>> > > on faith that the claim about him was correct.  Guess
>> > > I'll go have to look at his lecture.
>> > >       I think that you are right that the Kalecki model
>> > > is not exactly the same as the Harrod model.  Clearly
>> > > Harrod developed his version, that certainly feeds in
>> > > a more straightforward way into the standard Samuelson
>> > > version independently from Kalecki.  The fact of the matter
>> > > is that Kalecki's model as it was published in Econometrica
>> > > (I have not read either the French or Polish language versions)
>> > > has some mathematical problems.  It is not a fully consistent
>> > > model.  Essentially that was what Kaldor did in 1940 in his
>> > > "Trade Cycle" paper in the EJ, developed a modified version
>> > > of the Kalecki model that was fully self-consistent.  The
>> > > mechanism is not exactly the same as in the Harrod-Samuelson
>> > > version.
>> > > Barkley Rosser
>> > > ----- Original Message -----
>> > > From: "Daniele Besomi" <dbesomi@xxxxxxxxxxxxx>
>> > > To: <rosserjb@xxxxxxx>
>> > > Sent: Thursday, May 24, 2001 2:20 PM
>> > > Subject: Re: WWW -- Harrod home-page (fwd)
>> > >
>> > >
>> > >> Dear Barkley Rosser,
>> > >>
>> > >> I have sent this to Steve a couple of days ago, after he forwarded
> your
>> > >> messages to me (I am not a PKT subscriber, but I just have had a look
>> at
>> > >> the archives); not having had any further messages from him, I am not
>> sure
>> > >> he has forwarded it to you (I didn't have your address). So here it
> is,
>> > >> with a few additional comments.
>> > >>
>> > >> Here you have my feedback on Kalecki (and I'd like to hear what you
>> think
>> > >> of it) and a reply on Goodwin (on which I have no doubts). On Kalecki
>> I'd
>> > >> like to add that I don't think Harrod borrowed his mechanism from
> him:
>> > >> besides of his difficulties in understanding Kalecki's math, he came
> to
>> > >> this mechanism in a completely different way: his methodological and
>> > >> epistemic reflections, which preceded Kalecki, are a fundamental part
>> in
>> > >> the whole construction; the multiplier-accelerator model is just the
>> > >> surface.
>> > >>
>> > >> As to Giblin: the PKT discussion seems to have shifted on who
> invented
>> the
>> > >> multiplier: Giblin is surely one of the candidates (but the
> literature
>> on
>> > >> that is rather bulky & growing: new candidates keep adding), but at a
>> > > quick
>> > >> look (the paper is posted at
>> > >> http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/giblin/australi.htm ) I
>> > > haven't
>> > >> seen a trace of the multiplier-accelerator trade cycle mechanism.
>> > > Actually,
>> > >> his rate of growth does not depend on the accelerator nor on the
>> > >> multiplier, and even less on their interaction, but on increased
>> > >> productivity and  on population growth.
>> > >>
>> > >> This is not to defend "my" claim (which goes back to Samuelson,
>> really),
>> > >> nor to defend Harrod (by the way, his multiplier-accelerator was
>> expounded
>> > >> before The Trade Cycle, in an obscure journal called Anglodania,
>> published
>> > >> by the British Imprt Union in Copenhagen, February and March 1936,
>> being a
>> > >> transcription of a lecture delivered on 10 January and written down a
>> few
>> > >> days before). I am just having doubts about Kalecki.
>> > >>
>> > >> Priority, after all, is not a very important matter. Harrod, at any
>> rate,
>> > >> was consciusly assembling a mechanism based on the multiplier and the
>> > >> acceleration principle -which cannot be said of the forerunners cited
>> so
>> > >> far.
>> > >>
>> > >> **********
>> > >> Dear Steve,
>> > >>
>> > >> Thank you for forwarding this. Could you please pass a copy of my
> reply
>> on
>> > >> to Barkley Rosser as well?
>> > >>
>> > >> As the remark that Kalecki pre-dated Harrod: firstly, Kalecki's
> paper,
>> > >> although published in 1935 (Econometrica, and a less mathematical
>> version
>> > >> in French in the Revue D'Economie Politique) was read in 1933 at the
>> > >> Econometrician's meeting, and was previously published in Polish. I
>> would,
>> > >> however, hesitate in calling it a multiplier-acceleration model. The
>> > >> acceleration principle is surely there (Kalecki indeed got it from
>> > >> Aftalion), but I am not so sure about the multiplier. A fundamental
>> > >> ingredient of the multiplier is definitely present, namely, the
>> inversion
>> > >> of the causal nexus between saving and investment (or, in Kalecki's
>> > >> version, profit and expenditure). There is also a formula involving
> the
>> > >> equivalent of 1/s. But this is obtained in quite a different way from
>> the
>> > >> multiplier: Kalecki says that profit depends on the capitalists'
>> > >> expenditure, and expenditure in part depends on profits (there is a
>> > >> constant part + a variable part), and if the relationship is linear
> we
>> > > have
>> > >> a coefficient the denominator of which amounts to the saved part of
>> > >> variable profit. Although the quantification of the effect of
> increased
>> > >> expenditure on consumption looks very much like a multiplier, it only
>> > >> spreads increases in consumption, not total expenditure, while for
> JMK
>> the
>> > >> effect is global, as it includes (and indeed is centred on)
> investment.
>> > >>
>> > >> In his 1939 article cited by Barkley Rosser, Samuelson recognises
>> Harrod's
>> > >> as the first multiplier-accelerator model (pre-dating as it does
> Hansen
>> > > and
>> > >> Haberler). Did Samuelson know of Kalecki's model? I would think it
>> > > unlikely
>> > >> he didn't; if he did, he did not recognise K's model as including the
>> > >> multiplier. Harrod as well knew of Kalecki (some correspondence
>> survives
>> > >> between them: Kalecki thanked Harrod for agreeing with his theory in
>> spite
>> > >> of not having understood the maths behind it, and suggested that
> Harrod
>> > >> read the less mathematical version in French).
>> > >>
>> > >> As to Goodwin: the story does not precisely run like that. Goodwin
>> claimed
>> > >> that he drew Harrod's attention on Tinbergen's review of The Trade
>> Cycle
>> > > in
>> > >> German, where T. pointed out that Harrod's model, which contained no
>> lags,
>> > >> was not suitable for describing a cycle but only exponential growth
>> (but
>> > > T.
>> > >> was wrong, because he transcribed H's model in terms of a linear
>> > >> differential equation; but H's model is nonlinear -and not only for
> the
>> > >> reason Goodwin explained years later, namely that the "ceiling" and
>> > > "floor"
>> > >> impose non-linearities-: both the multiplier and the accelerator
> change
>> in
>> > >> the course of the cycle, and this is fundamental to Harrod's theory).
>> > >> Goodwin thus claimed he was responsible for re-addressing H's theory
>> from
>> > >> cycles to growth. But this is a myth, as shown by A. Jolink in the
>> > > European
>> > >> Journal Hist. Ec. Thought, 1995: Tinbergen sent himself his review to
>> > >> Harrod (I suspect Harrod may have asked Goodwin's help for reading
> it,
>> as
>> > >> his German was rather poor. But this is just a conjecture. Harrod
>> himself,
>> > >> in 1964 correspondence with Matthews, did not recollect anything like
>> that
>> > >> -nor anything about Goodwin's role in the whole business).
>> > >>
>> > >> In 1936 Goodwin was a graduate student at Oxford. Harrod was one of
> his
>> > >> examiners.
>> > >>
>> > >> I'd be glad to know how the Kalecki/multiplier argument strikes you,
>> and
>> > >> Barkley.
>> > >>
>> > >> Thanks again for sending me this. Be well, Daniele
>> > >>
>> > >>
>> > >> _____________________________
>> > >> Daniele Besomi
>> > >>  c.p. 7
>> > >> 6950 Gola di Lago
>> > >> Switzerland
>> > >>
>> > >> Phone and fax: + 41 91 9433635
>> > >>
>> > >>
>> > >>
>> > >
>> >
>> >
>>
>