Archive
Click on the desired season for a list of all contributions
Autumn
Summer
Spring
Winter
- 30-03-2023: The systems theory of Ernst Haas
Author: E.A. Bakkum
Since halfway the twentieth century attempts are made to describe society by means of systems theories. They present schemes of interactions between actors within their institutional frames. The present blog elaborates on the systems theory, which Haas proposes around 1964 in his book Beyond the nation-state. Learning processes create a certain dynamics. Integration occurs, when the actors unite in collective organizations. The administrative apparatus is not neutral. The way of making decisions is adapted to the nature of the system ... Read more
Autumn
- 26-12-2022: Institutions of policy research
Author: E.A. Bakkum
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Summer
- 15-08-2022: The social cost-benefit analysis
Author: E.A. Bakkum
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- 05-07-2022: The labour market of seniors
Author: E.A. Bakkum
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Spring
- 15-06-2022: Annotations concerning labour relations (6)
Author: E.A. Bakkum
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Winter
- 20-01-2022: Annotations concerning labour relations (5)
Author: E.A. Bakkum
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Autumn
- 29-11-2021: Annotations concerning labour relations (4)
Author: E.A. Bakkum
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- 30-10-2021: Annotations concerning labour relations (3)
Author: E.A. Bakkum
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Summer
- 28-09-2021: Annotations concerning labour relations (2)
Author: E.A. Bakkum
- 27-08-2021: Annotations concerning labour relations (1)
Author: E.A. Bakkum
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- 04-07-2021: Varieties of capitalism
Author: E.A. Bakkum
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Spring
- 03-06-2021: Corporatism (3)
Author: E.A. Bakkum
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- 12-05-2021: Corporatism (2)
Author: E.A. Bakkum
- 11-04-2021: Corporatism (1)
Author: E.A. Bakkum
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Winter
- 27-03-2021: Positivism and constructivism
Author: E.A. Bakkum
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- 14-02-2021: Triangulation
Author: E.A. Bakkum
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- 28-01-2021: A century of Dutch cabinets
Author: E.A. Bakkum
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Autumn
- 14-12-2020: Statistical analysis
Author: E.A. Bakkum
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- 28-11-2020: Institutional influences on the economy (2)
Author: E.A. Bakkum
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- 08-10-2020: Institutional influences on the economy
Author: E.A. Bakkum
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Summer
- 05-09-2020: Four years of analysis of institutions
Author: E.A. Bakkum
The Gazette studies since at least four years the importance of national institutions. The individual and social advantages of institutions can be illustrated with rational arguments. However, the human psyche imposes clear limits on rationality. Institutions are quite rigid. They exhibit a variety, which is determined by culture. And they are obviously a source of power. Theoreticians want to establish categories of national regimes, but this is quite difficult. For, institutions partly emerge due to spontaneous diffusion. Finally, the ideas of the economist Liefmann are studied .... Read more
- 03-08-2020: Five years of analysis of actor models
Author: E.A. Bakkum
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- 03-07-2020: Policy applications of the exchange- and game-theory
Author: E.A. Bakkum
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Spring
- 20-06-2020: An application of the exchange- and game-theory in policy analysis
Author: E.A. Bakkum
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- 20-05-2020: Policy theories of reform
Author: E.A. Bakkum
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- 02-05-2020: Sociology of the actor-centred analysis
Author: E.A. Bakkum
For the sake of the inter-disciplinary approach a bridge is needed between the actor-institution analysis and the differentiation theory of sociology. The institutional analysis of Ostrom is described again. It is shown, that in many situations the homo economicus is willing to cooperate. Three system-theories are presented, namely of Parsons, Luhmann and Sabatier. Their advantages and drawbacks are summarized, as well as their implications for planning. The Leninist application of system theory is described .... Read more
- 03-04-2020: Game theory in the public administration (5)
Author: E.A. Bakkum
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Winter
- 10-03-2020: Game theory in the public administration (4)
Author: E.A. Bakkum
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- 10-02-2020: Game theory in the public administration (3)
Author: E.A. Bakkum
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- 14-01-2020: Game theory in the public administration (2)
Author: E.A. Bakkum
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Autumn
- 28-12-2019: Game theory in the public administration
Author: E.A. Bakkum
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- 05-12-2019: Applications of actor-centred institutionalism
Author: E.A. Bakkum
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- 15-11-2019: Interactions and institutions
Author: E.A. Bakkum
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Summer
- 27-09-2019: Institutional analysis of actors and networks
Author: E.A. Bakkum
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- 07-08-2019: Annotations concerning the actor-centred institutionalism
Author: E.A. Bakkum
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- 27-07-2019: Actor-centred institutionalism
Author: E.A. Bakkum
Since about a year the Gazette studies models of the public administration. They can bridge the gap between theories from economics and the political science. Recently policy analysis has developed the actor-centred institutionalism, which indeed combines the best of these two worlds. Rational behaviour is restricted by the institutions. Besides, the form of action is taken into account. It turns out that policies can be described well by methods from the social choice theory. Notably game theory and the Hicks-Kaldor compensation principle provide insights in policies .... Read more
Spring
- 25-06-2019: Annotations concerning performance management and performance indicators
Author: E.A. Bakkum
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- 02-05-2019: Social choice theories of decisions
Author: E.A. Bakkum
The social choice theory offers models of decisions, which are relevant for the public administration. For, the decision is a part of the policy cycle. Notably the social choice theory studies the formation of coalitions. The coalition game can have stable outcomes, which are in the core. It is conceivable, that the actors in the coaliton can transfer utility. Often the actors will exchange votes (logrolling). The Shapley value is a way to integrate morals in the social choice theory. Finally the applicability of the social choice theory will be discussed .... Read more
- 03-04-2019: Performance management and performance indicators
Author: E.A. Bakkum
Not yet translated
Winter
- 12-02-2019: Currents in the public administration
Author: E.A. Bakkum
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- 06-02-2019: Actor models in the public administration
Author: E.A. Bakkum
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Autumn
- 12-12-2018: Cases of public management
Author: E.A. Bakkum
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- 05-12-2018: The new public management
Author: E.A. Bakkum
Until now the Gazette has not presented a satisfactory connection between the actual description of public management and the various administrative theories. The present column wants to fill this lacuna by presenting two models of the administration, namely the bureaucracy and the new public management (NPM). It turns out that the NPM can solve several deficits of the bureaucracy. Therefore it has become more popular since 1980, and nowadays its instruments are frequently applied in practice .... Read more
- 05-11-2018: Health care and the size of the state
Author: E.A. Bakkum
The problem of the structure of health care is described, notably the adverse selection and the moral hazard. Next the optimal size of the state budget is studied. Empirical time series of the state ratio are presented. Various factors increase the ratio. The law of Wagner and the Baumol effect are explained. It is also explained, that various social groups are rent-seeking. This is true for citizens, politicians and the state bureaucracy .... Read more
- 02-10-2018: Annotations concerning social morals according to Binmore
Author: E.A. Bakkum
This column elaborates on the model, which Binmore uses to describe social morals. The source of empathy is traced back to primitive tribes. It is explained how Binmore attaches value to individuals. It turns out that the individual utility options have an effect on the chosen utility distribution. The theory of morals of Coleman is also explained, and compared in a calculation with the model of Binmore. Finally the various specific aspects of the models are separately addressed, such as the status quo and consensus .... Read more
Summer
- 02-09-2018: Distributing according to Nash
Author: E.A. Bakkum
The present column gives a detailed explanation of the axiomatic model of John Nash for the analysis of bargaining. Both the symmetric and the general variant are discussed. The model of Nash is associated with the model of Rubinstein for a negotiation with time pressure, with utilitarianism, and with the proportional method. It is shown, that from this Binmore derives a model of social morals. Finally the models are compared with experiences from practice .... Read more
- 20-08-2018: Pension and social benefits
Author: E.A. Bakkum
The present column discusses two policy fields, namely the pension system and the support of the poor. The costs of the pensions can be paid by means of pay-as-you-go or capital funds. The system must be proof against the future ageing of the population as a whole. Poverty is actually difficult to define. The relief of poverty can unintendedly and undesirably make the beneficiaries dependent. The poverty trap must be avoided. Therefore the present policy aims at activation .... Read more
- 02-08-2018: Fundamentals of welfare economics
Author: E.A. Bakkum
The present column describes several essential concepts and models of welfare economics. First the compensated demand curve, the consumer surplus, the rent of entrepreneurs, and the dead-weight loss are explained. Next, measures of social inequality are discussed. They are convenient in order to include the aversion against inequality in the social welfare function. The economist Binmore shows, that the latter inclusion can also be realized by combining the pure utilitarianism and the maximin principle of Rawls .... Read more
- 02-07-2018: Models of policies of education
Author: E.A. Bakkum
In a previous column the social utility of education has been analyzed. The professional literature about this theme often uses models. Several of these models are presented in the present column. It concerns two models of human capital, including a find by Mincer. The demand-supply model of Tinbergen is also explained succinctly. All of these models use econometrics in order to make them applicable for policy recommendations .... Read more
Spring
- 25-06-2018: The social utility of education
Author: E.A. Bakkum
The Gazette increasingly pays attention to the national economy. The present column analyzes the theory of the policy of education. Learning theories of adults are discussed, notably the cognitive and humanistic theory. The theory of human capital and the theory of screening are explained. A summary is presented of the recent policy theories with regard to the primary, secondary and tertiary education. Finally, the views of Van Kemenade and Tinbergen are discussed briefly .... Read more
- 18-05-2018: Social insurance
Author: E.A. Bakkum
An analysis of the welfare state can only succeed, when insight with regard to the income distribution exists. The present column presents a model for describing the social insurance. People appreciate security. Unfortunately, such insurances are amenable to adverse selection and moral hazards. Practical experiences are discussed, with small funeral funds, the insurance companies De Centrale and Bond Moyson, initiatives by the christian movement, and unemployment funds. Private initiatives are merely partly able to offer social security .... Read more
- 15-05-2018: The distribution of incomes
Author: E.A. Bakkum
Until now the Gazette has not paid much attention to the theory of income distribution. However, this theory is indispensable in the analysis of the welfare state. Therefore the present column discusses the main principles. The difference between gross and nett incomes is explained. Various pictures of the income inequality are shown, such as the frequency distribution and the Lorenz diagram. Several common measures of income inequality are described, among others the parameter of Pareto and the Gini coefficient .... Read more
- 12-04-2018: The evolution of institutions
Author: E.A. Bakkum
Economists become more and more interested in the social evolution, which is driven by the interactions between interest groups. The present column briefly discusses several essential aspects of evolution, such as group dynamics and the search for a good policy mix. The aim is to establish a social equilibrium. This is illustrated with an explanation of the coordination problems between groups, free riding within the group, and the application of game theory and population models on the evolution .... Read more
Winter
- 20-03-2018: Annotations regarding the welfare function
Author: E.A. Bakkum
Social welfare functions help to analyze questions regarding the distribution. They give insight in the moral choices of policy formation. The present column discusses several of these functions, and combines them with models of monetary utility, among others those of Ragnar Frisch. They are also compared with the justice theory of Rawls, albeit in the interpretation of Binmore. This knowledge is compared with older texts in the Gazette. Finally, related reports of the CPB and the WRR are discussed .... Read more
- 15-02-2018: Five years analysis of the welfare state
Author: E.A. Bakkum
The industrialization creates so much wealth, that it leads to the welfare state, The welfare state has a large diversity of forms. The present column describes several models, which try to order the diversity. After a general introduction about group behaviour and the policy mix there is a presentation of: the inclusion model, the paradigm of the radical centre, the trust model, and the three-worlds model. Finally, reports of the CPB and the WRR are discussed .... Read more
Autumn
- 27-12-2017: Economic reforms in the Netherlands
Author: E.A. Bakkum
During the cabinets Lubbers and Kok the Dutch economy has recovered miraculously. The present column studies the executed policies of these cabinets, by means of the book A Dutch miracle. It turns out, that corporatism or pluralism was preferred, depending on the policy field. The criticism of the policies is also analyzed. Balkenende and Fortuyn want to replace the corporatism by pluralism, possibly on an organic basis .... Read more
- 23-12-2017: The recovery of the Dutch economy
Author: E.A. Bakkum
After a deep recession during the early eighties of the last century, the Dutch economy has developed quite well, also in comparison with the European neighbouring states. This is caused by a package of radical social reforms. The present column illustrates this development with the help of economic indicators, such as the economic growth, labour participation, the costs of insurance for the disabled, the participation of older men, the labour productivity, and the investment quote .... Read more
- 28-11-2017: Models of privatization
Author: E.A. Bakkum
A previous column has analyzed how public goods can be supplied by private enterprises. There the market regulation was also discussed. The present column uses several of these insights in a model. The first model addresses the political phases of privatizations. The second model shows, how a private enterprise can be controled by means of subsidies. The third model discusses the regulation of a natural monopoly by means of its price structure .... Read more
- 22-11-2017: Privatizations
Author: E.A. Bakkum
In several previous columns attention has been paid to the positive incentives, which derive from private property. Therefore it is logical to now study the effects of privatizations in the public sector. The new institutional economics offers useful insights, which are summarized here. Also, ways of market regulation are presented. Several experiences with free markets are described. Finally, the radical criticism of E. Tonkens and the PvdA commision Van Thijn are discussed .... Read more
- 25-10-2017: Collective ownership of the means of production (2)
Author: E.A. Bakkum
It turns out that property rights of the production factors affect the incentives to produce. This column analyzes the incentives of the direction in the non-profit organization, the state bureaucracy, and the state enterprise. Also the social ownership in the Leninist paradigm is studied again. The Leninist principles are compared with those of the modern institutionalism. It turns out that in all these cases group morals are a decisive factor .... Read more
- 15-10-2017: The radical centre in Germany
Author: E.A. Bakkum
Twenty years ago the social-democratic parties had successes with the policy of the radical centre. The present column analyzes the experiences of the German SPD. The SPD-ideologist Thomas Meyer propagates a social democracy, which defends the positive fundamental rights. Attention is paid to both the view of the social-democratic main current, and the left wing within the SPD (Eppler and Nahles). The OECD data files are used for studying the policy effects of the radical centre .... Read more
Summer
- 17-09-2017: The radical centre and the Purple cabinets
Author: E.A. Bakkum
During the ninetees of the last century the ideology of the radical centre emerges, which henceforth is supported by centre-left parties. The present column again summarizes its principles. The American variant is described, which has laid the foundations. Next the policy of the two Purple cabinets in the Netherlands is studied, because these can also be ranked among the movement of the radical centre. Much attention is paid to the criticism within the PvdA with regard to its own Purple coalition .... Read more
- 03-09-2017: Collective ownership of the means of production
Author: E.A. Bakkum
The diversity of ownership forms has always fascinated the economists. The present column first describes several principles of property. Next an analysis is presented for three basic forms of ownership within the enterprise. The case of the production cooperation is studied in detail. Finally the social property is studied, such as is present in Leninism. The Leninist enterprise is modelled mathematically .... Read more
- 10-08-2017: Power models and practice
Author: E.A. Bakkum
It becomes increasingly common in economics to complement the traditional neoclassical paradign with models of human behaviour, such as power politics. The present column describes two models, where the tournament is combined with rent seeking. They are placed in the context of the revolt theory of J.S. Coleman. Furthermore, tournaments with immaterial (ideological) bonuses are discussed, similar to the proposal by D. Pels and the habit in Leninism .... Read more
- 15-07-2017: Models of power
Author: E.A. Bakkum
Group power plays an important role in economic systems. The present column presents three models of the abuse of power. First, the power distribution in networks is analyzed. It turns out that in bilateral exchange processes the power is determined by the position in the network. Next, the theory of rent seeking behaviour by interest groups is addressed. The goal is to redistribute the incomes. Finally, the theory of the tournament as a source of rewards is studied. The tournament can increase the motivation of risk-neutral workers, such as management .... Read more
- 02-07-2017: Models in the new institutional economics
Author: E.A. Bakkum
This column again presents several interesting models of new institutional economics. First the repeated game of the prisoners is analyzed. Next a model is presented, which takes into account the search costs on the market. Also useful are models, which describe the maintenance of norms. And finally the principal-agent model is again discussed. The used abstractions of human nature are tested with insights from psychology .... Read more
Spring
- 17-06-2017: Christian-democratic views on the general interest (2)
Author: E.A. Bakkum
In this column the present-day christian-democracy is studied. As a reminder the political philosophy of the state is summarized again. It is compared with the evolutionary institutionalism, which is now also applied in economics. Then the hallmarks of christian politics until the formation of the CDA are sketched. Against this background the ideas of five christian writers are discussed, namely H.M. de Lange, C. Huijsen, A. Rouvoet, J.P. Balkenende, and S. Buma. An evaluation concludes the column .... Read more
- 10-06-2017: Christian-democratic views on the general interest
Author: E.A. Bakkum
For years the Gazette has studied the ideological currents in politics. Here the question is central, how the will op the citizens is translated into policy. This column analyzes the view of the christian-democracy since its emergence until roughly 1990. The attention is focused mainly on the protestant pillar. The two dominant parties ARP and CHU are discussed, as well as their successor the CDA. Special attention is paid to the ideas of the well-known leaders W. Banning and J. Zijlstra. The social support for the christian-democracy is also studied .... Read more
- 02-05-2017: Five years theory of the labour market
Author: E.A. Bakkum
The Gazette elaborates on the theory of the labour market since its establishment. The present column gives a summary of some of the previous publications. Utility functions are described, which take into account the disutility of labour. The needs, motives and motivation of workers are studied, following De Man and Herzberg. The views of psychology and institutionalism on the labour market are explained. The hedonistic wage theory and opportunism are modelled .... Read more
- 03-04-2017: Social capital
Author: E.A. Bakkum
The present column studies the influence of social capital on the social progress. Notably the views of J.S. Coleman and R. Putnam are discussed. Putnam proposes an index for measuring social capital. He argues that society benefits from more social capital. Nonetheless, the conclusions remain controversial. Therefore the columns describes several alternative findings from psychology, philosophy, and institutionalism. This also does not eliminate the doubts about the conclusions .... Read more
Winter
- 02-03-2017: The new institutional economics
Author: E.A. Bakkum
Institutions are a popular theme in the Gazette. The present column discusses two currents of the new economic institutionalism. Oliver Williamson takes the neoclassical paradigm as his starting-point, and Douglas North develops an evolutionary theory. Both analyze the transaction costs. Cases are studied of adverse selection, self-enforcing contracts, and moral hazard. Time-inconsistency, the principal-agent problem, sunk investments and learning-processes (innovation, immitation) are discussed .... Read more
- 10-01-2017: Economic networks and groups (2)
Author: E.A. Bakkum
About three years ago the Dutch economics P. Frijters presented an economic theory, which combines a group model with the concept of the homo economicus, who is capable of love. The present column tests the theory with the help of knowledge from sociology and psychology. It turns out that these two disciplines indeed support the hypotheses in the theory of Frijters. The insights are applied to reality, namely the enterprise, the bilateral transaction, the cartel, and the branch organization .... Read more
Autumn
- 09-11-2016: Economic networks and groups
Author: E.A. Bakkum
Although group processes are often ignored in economics, it is known from sociology and psychology that they do exert influence. The economist R.H. Coase has already pointed to the costs of the operation of markets and organizations. Recently, among others the economist P. Frijters and the sociologist J.S. Coleman have elaborated on this phenomenon. The present column describes the group dynamics with the help of the book of D.R. Forsyth. Discussed are leadership, the influence of group norms, decisions, and conflicts within the group and between groups .... Read more
- 23-10-2016: The protestant trade union movement (2)
Author: E.A. Bakkum
It is controversial among economists and sociologists, how much weight must be attached to morals in socio-economic processes. The present column tries to answer this question by studying the history of the trade union federation CNV. The position of the protestant trade union movement is studied for the periods of, successively, the social rebellion around 1918, the corporatism in the interbellum, the reconstruction after 1945, and the rise of New Left after 1966. Although morals are quite flexible, and often do do not live up to their pretensions, they yet do exert influence .... Read more
Summer
- 15-09-2016: Annotations regarding happiness economics
Author: E.A. Bakkum
Happiness economics is still in full development. The present column elaborates on several controversial points in this discipline. Various types of utility are studied, among others of the cognitive and affective type. The phenomenon of unemployment is an illustration of this. All in all the monistic utility seems yet to be most useful. Observations of feelings have a rate-scale, with a fixed reference point. Happiness increases with the individual income, also at the national level. So there is no reason for state paternalism, such as a policy of braking growth .... Read more
- 15-08-2016: Liberalism and communitarianism
Author: E.A. Bakkum
The economic order is determined by the image of man, that is adhered to. Since socialism was discredited, liberalism has become universally dominant. However, communitarianism is an alternative. The present column describes communitarianism, as well as a variant, multiculturalism. The relation with marxism is also discussed. Amitai Etzioni is an important ideologist of communitarianism. He introduces the I&We model, and the new Golden Rule. Pieter Hilhorst suggests ideas for its practical implementation .... Read more
- 10-07-2016: The protestant trade union movement (1)
Author: E.A. Bakkum
Several previous columns have studied the mission of the trade union movement. The present column elaborates on this, but with special attention to the morals. The protestant trade union movement is a promising object of analysis for the role of the moral factor. The development of Patrimonium into the CNV is described. Notably the liberal and communitarian views on the trade union movement can be compared with each other. The main text is illustrated with many fascinating examples from practice, which for convenience are presented as footnotes .... Read more
Spring
- 04-06-2016: The social paradigm of Kuyper and Slotemaker de Bruine
Author: E.A. Bakkum
With the establishment of the European democracy, confessional politics began to organize, and this made it a redoubtable competitor of the social-democracy. The present column describes the principles, that protestant leaders have formulated for their political parties. After a general introduction, the ideas of two early politicians are analyzed, namely those of Abraham Kuyper and Jan Slotemaker de Bruine. Here the emphasis is placed on their proposals for the social policy, which particularly in their times attracted much attention .... Read more
- 20-05-2016: The discount in intertemporal valuations
Author: E.A. Bakkum
Decisions can have far-reaching consequences for the future. Therefore the economic science has invented models, that allow to calculate the consequences of decisions. They attach an inter-temporal discount to the utility function. The present column extends the Walrasian model with an inter-temporal utility. Next it is applied in an overlapping generation (OLG) model. Some criticism by behavioural economics is discussed. Finally, it is explained how Van Praag discounts memories and expectations in the utility optimization .... Read more
- 15-04-2016: Annotations regarding the rational choice paradigm
Author: E.A. Bakkum
Several recent columns focus on the rational choice paradigm (RCT) of Coleman. The present column makes some annotations with regard to his theory, notably originating from the social psychology. Thus the social sciences are integrated better. The learning model of Kolb shows the dynamics in the individual cognition. The RCT can be complemented with models of group structures. It is also desirable to take into account the various motivations and principles of distributive justice. And finally not all means are entirely commensurable .... Read more
Winter
- 15-03-2016: Norms in the rational choice paradigm
Author: E.A. Bakkum
Any society controls the human behaviour by developing her own morals. The morals also affect the economy, and partly determine its efficiency and the social welfare. Nevertheless, little is known about the formation of norms. The present column explains norms by means of the rational choice paradigm. For this purpose the value rationality is analyzed. It is explained how norms can be enforced. An obvious method is sanctioning, but internalization is also conceivable. Various mathematical models are discussed .... Read more
- 11-02-2016: The radical centre
Author: E.A. Bakkum
During the eighties the original ideology of the social-democracy failed ineluctably. Perforce the social-democratic parties have transformed their programs into the radical centre (Third Way, Neue Mitte). Subsequently the radical centre has been very successful in elections. The present column analyzes the politics of the radical centre. Its hallmark is pluralism. The variants in England and Germany get special attention. They are compared with the Van Waarde project in the Netherlands .... Read more
- 21-01-2016: A linear system of action
Author: E.A. Bakkum
The famous sociologist J.S. Coleman develops in his book Foundations of social theory a model of social exchange. In essence the model is based on the neoclassical theory of Walras, Jevons and Edgeworth. Coleman shows that she can be applied to social situations, beyond the economy. Then power replaces wealth. The present column discusses his formulas. Several fascinating cases are also elaborated, such as the occurrence of transaction costs or uncertainty. The column ends with illustrative examples .... Read more
Autumn
- 23-12-2015: The principal-agent model
Author: E.A. Bakkum
For a long time it was believed that a hierarchy is very suited for executing policies. However, the principal-agent model has created doubts about this belief. The present column presents an extensive explanation of this model, which has led to a revaluation of market operations, also in the public sector. Behavioural economics suggests several improvements. Finally, the mathematical model is described in detail, at least for the case of the unobservable effort of the agent .... Read more
- 25-11-2015: Reputation signals in the economy
Author: E.A. Bakkum
Many economic transactions have a time asymmetry, which forces the actors to trust each other. Trust is in the last resort built on a reputation. The present columns shows that actors signal their reputation to each other by choosing a certain behaviour. After a general introduction, based on the ideas of the sociologist J.S. Coleman, the signalling is illustrated with examples of the behaviour in oligopolies, of the policy of the central bank, and of applicants on the labour market .... Read more
- 13-11-2015: A new-Keynesian model of the monetary policy
Author: E.A. Bakkum
Traditionally the monetary policy has been analyzed wit the AS-AD model. However, nowadays a new-Keynesian model is preferred, which is based on the Phillips curve and on the aggregated demand. The present column describes this model. Here, variants are also discussed, namely the Barro-Gordon model and a model with an infinite time horizon. The autonomy of the Central Bank is studied. It turns out that empirically the personal happiness is affected by inflation and unemployment .... Read more
- 24-10-2015: The mission of the trade union movement (3)
Author: E.A. Bakkum
Various columns in the Gazette have tried to describe the mission of the trade union movement. The present column studies the mission, that the Dutch trade union movement developed during the seventies of the last century. First, the then economic situation is analyzed, and the socio-cultural spirit of the time is sketched. The latter is illustrated with several characteristic biographies. Finally, the propaganda in industries and the then union actions are explained .... Read more
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- 02-10-2015: The substitution of wage and leisure time
Author: E.A. Bakkum
The neoclassical theory assumes that the wage and the leisure time are more or less substitutes. This column explains, that according to R. Layard the substitution is not quite rational, due to human rivalry and habituation. Furthermore, a model of collective bargaining is presented, with the wage and leisure time as stakes. It reminds of the work of Sam de Wolff. Finally, it is discussed that in happiness economics, Van Praag analyzes the human preferences by means of the probit method .... Read more
Summer
- 24-09-2015: The mission of the trade union movement (2)
Author: E.A. Bakkum
The trade union movement is a cartel with a special character. The present column analyzes the influence, that it can exert on the wage level and on the functioning of the enterprises. The democratic structure of a trade union is described. Unfortunately the materialism of trade unions sometimes also causes penal behaviour. Next the mission of the Dutch trade union movement is studied for the postwar period, which is characterized by corporatism and by the controlled-wage policy. At the time the morals serve as a line of action. Nowadays there are theories, that can model the collective bargaining. However, they are difficult to apply to reality .... Read more
- 07-09-2015: Social-democratic views on the general interest (3)
Author: E.A. Bakkum
During the preceding months two columns about the social-democratic views on the general interest have appeared. They allow the social-democracy to translate the collective well-being into a political target- or policy-function. However, in the course of time this view has changed considerably, The present column describes the views of six leaders from the most recent decades, namely Hans van den Doel, Helmut Schmidt, François Mitterrand, Paul Kalma, Femke Halsema, and Gerhard Schröder. They clearly illustrate the rise of the Third way ideology .... Read more
- 29-07-2015: Economic systems in the Third World
Author: E.A. Bakkum
Since more than a century the capitalist west tries to combat the poverty in the Third World. The present column discusses several economic theories, which make suggestions for an effective development policy. First, the dualism of J.H. Boeke is described. Next, the proposals of the planning committee of the United Nations, chaired by Jan Tinbergen, are studied. This is concluded with a retrospection in 1992, mainly by H.W. Singer. As a complement, the views of the then Novib director M. van den Berg are summarized. And an impression is given of the operational methods of private aid organizations .... Read more
- 06-07-2015: The importance of innovation
Author: E.A. Bakkum
In the previous columns it has been tried to analyze the interaction between innovation and economic growth. Innovation is a difficult and ill-understood phenomenon. The present column presents a survey of some common ideas about innovation and R&D. It starts with a historical review, and then describes the actual scientific ideas. The view of the original social-democracy is also discussed. Finally, a simple mathematical model of research and development is presented .... Read more
Spring
- 18-06-2015: Experiences with economic planning
Author: E.A. Bakkum
Many columns of the Heterodox Gazette address the theory of the economic planning. In theory the planning in capitalism is an adequate alternative for market operations. Thus the question arises how good planning has performed in practice, in comparison with pure market economies. The present column evaluates the plan-policy in France by means of a comparison with the ordoliberalism in West-Germany. First the policy in both states is sketched for the period 1950-1970. Next the developments of the economic growth in both neighbours is analyzed .... Read more
- 28-05-2015: Limitations on the demand side policy
Author: E.A. Bakkum
Since the seventies of the last century the demand side policy has lost much of its popularity. The present column sketches the developments of the political debate at the time. For this purpose, first the views of the then leading persons Den Uyl, Lubbers, Kok, and Wagner are analyzed. Next the rise of the new theoretical ideas are sketched. The demand side policy bases on the Phillips curve. The economists Friedman and Lucas doubt its validity, and stress the importance of the adapting and rational expectations .... Read more
- 15-05-2015: Social-democratic views on the general interest (2)
Author: E.A. Bakkum
The democracy can only prosper, when the state succeeds in translating the desires of the citizens into a good policy. This column analyzes the philosophical ideas about this problem, and notably how the various political thinkers want to morally fill in the general interest. Their design appears to rest on two pillars, namely the security of existence and the personal autonomy. Views from the social-democratic history are studied, namely those of Karl Kautsky, Pieter Jelles Troelstra, Joop den Uyl, Oskar Lafontaine, Anthony Giddens, and Wouter Bos .... Read more
- 14-04-2015: Economic statistics of Europe and North-America
Author: E.A. Bakkum
Nowadays there are sufficient statistical data available (also on the internet) to compare the performances of various economical systems. Thus time series can be constructed, as well as cross sections for a number of states. The present column makes such an analysis for the economic growth rate, the labour productivity, the unemployment, the budget deficit, the public debt, the trade balance, and the size of the administration. The data are copied from the files at Eurostat and at the Groningen Growth and Development Centre .... Read more
Winter
- 31-03-2015: The development of the European market
Author: E.A. Bakkum
For the time being the European Union is globally the most powerful trading block. Moreover, the united European market is not yet finished, but in full development. That process creates uncertainty, but it also offers chances. The present column tries to sketch this fascinating phenomenon in rough lines. The information is notably copied from Industrial organization in context by Stephen Martin, and from Économie, sociologie et histoire du monde contemporain by Alain Beitone. In addition Economic planning and policies has been consulted. Next it is sketched how the Great Recession since 2007 influences Europe .... Read more
- 25-03-2015: Several models of trusts and cartels
Author: E.A. Bakkum
It is a paradox, that the modern theory of economics provides some support for the claim of the original social-democracy, that the industry would inevitably evolve into an ever increasing concentration. The present column discusses four models of combinations (trusts and cartels, oligopolies), copied from the book Industrial organization in context by Stephen Martin. Bundling of products is an efficient means of power. Price discrimination also has huge advantages, when the oligopoly is able to dictate these. Thanks to these techniques the combination can cleverly react to the reservation prices of the buyers. Thus a combination with a monopoly can even push her competitors and buyers from the market, if desired .... Read more
- 11-03-2015: Social-democratic views on the general interest
Author: E.A. Bakkum
The democracy can only prosper, when the state succeeds in translating the needs of the citizens into a good policy. In a previous column it is explained that during this translation the state applies its own ethics. That ethics obtains its form in the political struggle between the various political movements. The present column elaborates on this argument with some insights of the political scientist Lambert J. Giebels, like pluralism. Next views on state ethics are presented of several social-democratic thinkers from the social-democratic history, namely Curt Geyer, Willem Bonger, Eduard van Cleeff, Erhard Eppler, Thijs Wöltgens, Jos de Beus en Monika Sie Dhian Ho .... Read more
- 24-02-2015: The political philosophy of the state
Author: E.A. Bakkum
Many columns on this portal stress, that economic markets can function merely, when they are regulated by the state. The crucial question is how the state can translate all individual needs into a general policy. The present column starts with a recapitulation of the insights, that your columnist has acquired until now. Next these insights are compared with the views of four authors, namely Herman van Erp in Het politiek belang, Johan Graafland in Economics, ethics and the market, Rutger Claassen in Het huis van de vrijheid, and Siep Stuurman in Kapitalisme en burgerlijke staat .... Read more
- 06-02-2015: The debate about the industrial concentration
Author: E.A. Bakkum
Of old the social-democracy has defended the opinion, that the economy is subject to the progressing concentration of industries. More and more combinations (trusts and cartels) were supposed to form, which would lay the foundation for political imperialism. The present column studies this doctrine by means of two sources, namely Trusts en kartels by F.M. Wibaut and Das Finanzkapital by R. Hilferding. Their prediction is compared with modern economic ideas about collusion and concentration. Although it is true that often the perfect competition is absent, the apocalyptic vision of the future is totally unsound .... Read more
- 26-01-2015: Behavioural economics
Author: E.A. Bakkum
Behavioural economics offers a useful supplement to happiness economics, which is already prominently present on this portal. This column discusses behavioural economics by means of the book An introduction to behavioral economics by N. Wilkinson. First, the phenomenon of the bounded rationality is explained. Next, several special themes are studied, notably the portfolio management, irrational preference functions, altruism and resentment, and the discounting of time preferences. The conclusion is that the homo economicus in traditional economics is irreconcilable with the psychological insights .... Read more
- 04-01-2015: The mission of the trade union movement
Author: E.A. Bakkum
Since more than a century the trade union movement is an institutional factor in the functioning of the labour market. She is a cartel of workers. The present column analyzes the capability of the movement to influence the labour market. First, the expectations of the founders of the trade union movement are discussed (here personified in Jan Oudegeest). Next the true social position of the movement is studied, first after half a century (in the late sixties), and subsequently after another half of a century (at present). Finally a subjective perspective of the trade union movement is sketched briefly .... Read more
Autumn
- 08-12-2014: Economic planning by the state
Author: E.A. Bakkum
On this webportal many models of state intervention in the economy have been described. The present column consults the work of Jan Tinbergen in order to show that state intervention is often inevitable. The state formulates policy goals in order to optimize the welfare of its citizens. A plan is designed for the realization of these goals with the available policy instruments. The planning makes an intensive use of models. The convergence theory of Tinbergen is also discusses, as well as the comments of the economist Hans van den Doel (mainly known from Nieuw Links) .... Read more
- 17-11-2014: Annotations regarding the public branch-corporations
Author: E.A. Bakkum
This column complements a previous discussion about the public branch-corporations (publiekrechtelijk bedrijfsorgaan, in short PBO) with many annotations, They show that the input of individuals influences the political developments. Among the leaders are J. Veraart, D.U. Stikker, E. Kupers, W. Drees and H. Vos. The position of the trade unions during the German occupation in 1940-1945 is discussed extensively. During this period the Foundation of Labour (Stichting van de Arbeid) is formed. There is also an analysis of the ideas of the social-democracy and the roman-catholics immediately after the liberation. Finally, the opinions of present-day politicians with regard to the PBO are summarized .... Read more
- 30-10-2014: The efficiency of the planned economy
Author: E.A. Bakkum
This column studies the efficiency of the planned economy by means of three books: Plan, Interessen and Aktivität der Werktätigen by R.A. Belousov, Plan - Markt - Demokratie by K. Steinitz and D. Walter, and Von Marx zu Markt by W. Brus and K. Laski. The Leninist arguments in favour of central planning (also called command economy) are once more discussed. Next a sketch is presented of the real situation in the Soviet Union, the GDR and Hungary. The failure of these states is explained by means of the principal-agement problem. Finally, some proposals are made for a socialism with a market economy .... Read more
- 20-10-2014: Monopolistic competition and oligopoly
Author: E.A. Bakkum
It is often assumed, that markets are ruled by perfect competition. However, in practice the monopolistic competition and the oligopoly are much more common. The present column describes the possibilities for the entrepreneurs in monopolistic competition to differentiate their products. This type of market is the polypoly. The requirement of a maximal profit allows to derive the best-reaction function. The various variants of the oligopoly are also studied, namely the types of Cournot, von Stackelberg and Bertrand. The entrepreneurs can control the price or the quantity, and choose the behaviour of a satellite or initiator .... Read more
- 08-10-2014: The establishment of public branch corporations
Author: E.A. Bakkum
The present column presents a complete picture of the manner, in which after the end of the Second Worldwar the public branch corporations (in Dutch publiekrechtelijke bedrijfsorganen, in short PBO) were established. They aim to order the economy, and are lead by the social economic council (in short SER). During this period the governments are dominated by the roman-red coalitions of social-democrats (PvdA) and catholics (KVP). In 1950 both the Law on the PBO and the Law on the OR (industrial councils) are published. A large part of the entrepreneurs dislikes the PBO, because they fear the dominance of the general interest .... Read more
Summer
- 14-09-2014: Empirical laws in happiness economics
Author: E.A. Bakkum
A merit of the new discipline of happiness economics is that various new empirical laws have been discovered, that describe human behaviour. The present column gives a summary of some laws, by means of four recent books: Happiness and economics by Bruno Frey et al., Happiness quantified by Bernard van Praag et al., Happiness by Richard Layard, and Economics, ethics and the market by Johan Graafland. Notably it is studied how happiness, utility and satisfaction relate to welfare, work and income, politics, ethics, and the neoliberal dogma .... Read more
- 04-09-2014: Ethics in happiness economics
Author: E.A. Bakkum
Ultimately human life is a search for meaning. The common economics believes unjustly that the solution is found in the accumulation of wealth. This column presents several new insights from the happiness economics. They are taken from the books Economics, ethics and the market by Johan Graafland and Happiness by Richard Layard. An early predecessor of happiness economics is the ethics of the historical materialism, which is elaborated in Ethik und materialistische Geschichtsauffassung by Karl Kautsky .... Read more
- 17-08-2014: The socialist paradigm around 1950
Author: E.A. Bakkum
In previous columns it is described how around 1930 the social-democracy experiences an identity crisis, especially in Germany and Italy, but also elsewhere in Europe. The theme of the socialization does not catch on, and the fascism dictates the order. The present column analyzes the recovery of the social-democracy in the following twenty years. The study consults three ideological works, that were published at the time. It concerns Ordening der wereldproductie by Wibaut, Ordening als socialistische etappe by Van den Tempel (Jr.), and International economic integration by Tinbergen .... Read more
- 07-08-2014: Notes for an open economy with variable prices
Author: E.A. Bakkum
In the book Economic policy: principles and design the well-known economist Jan Tinbergen shows that the state can develop a policy for controlling the economy. The policy consists of a set of goals, and the corresponding instruments. The present column describes two models with variable prices and foreign trade, which allow to analyze the policy. The price elasticities are also taken into account. Besides, the first model contains a system of taxes. The models are copied from the mentioned book .... Read more
- 01-08-2014: Three models with a money market
Author: E.A. Bakkum
The well-known Dutch economist Jan Tinbergen develops in his book Economic policy: principles and design three simple models, which take into account the behaviour of the money market and of banking. The first model addresses the financing of the public sector, and the importance of the capital positions. In the second model the money- and capital-flows are traced, with special attention for the banks. The third model includes the central bank, so that the money creation is analyzed at the micro-economic level .... Read more
- 24-07-2014: The Phillips curve and the AS-AD model
Author: E.A. Bakkum
For years the IS-Lm model was popular. However, it has the disadvantage, that the price inflation is not taken into account. Namely, the model assumes a constant price level. In order to understand inflation, it is useful to study the so-called Phillips curve. It turns out, that the unemployment must be kept at the NAIRU level. Thanks to such insights the IS-LM model can be transformed into the superior AS-AS model. Nowadays the AS-AD model has again become obsolete due to its serious faults .... Read more
- 21-07-2014: The IS-LM model
Author: E.A. Bakkum
This column presents the well-known IS/LM model, that tries to explain the interaction between the commodity market and the money market. The commodity market is dominated by the investment function. On the money market especially the speculation is relevant. The two markets affect each other by means of the rate of interest. Some believe that the IS/LM model is a synthesis of the neoclassical paradigm and the theory of Keynes .... Read more
- 17-07-2014: Money, capital and monetarism
Author: E.A. Bakkum
In this column the theory of money is discussed. The functions of money are summarized, and the various types of money and liquidity masses are defined. The operation of the money- and capital-markets is described, and the role of the Central Bank is explained. The exchange rate is explained with a few simple theories, such as the theory of the parity of purchasing power. The meaning of the money quantity is explained with the equation of exchange. Finally the theory of monetarism is succinctly analyzed .... Read more
- 11-07-2014: Wage policy for employment
Author: E.A. Bakkum
It is sometimes argued that unemployment can be reduced by a targeted wage policy. This column analyzes the relation between the wage level and newly created of jobs. First, the employment in a single enterprise is studied, with the neoclassical paradigm. The scale- and substitution-effects due to a changing wage level are analyzed, in the short and long run. Next the problem is modeled by means of the neoricardian theory. Finally a macro-economic model of Jan Tinbergen is presented .... Read more
- 03-07-2014: The plan of labour
Author: E.A. Bakkum
This column describes the plan of labour, which in 1935 is propagated by the political party SDAP in order to mitigate the effects of the economic depression, and in order to generate an upturn. Both Het plan van de arbeid and the Handboek voor het plan van de arbeid have been studied. Several criticisms are also discussed. In essence, the crisis-plan is the policy to increase the purchasing power, which later has been underpinned by the theory of Keynes. Furthermore, the plan-report contains a structure-plan, which aims to create an economic order consisting of the PBO .... Read more
Spring
- 16-06-2014: Socialization and branch councils
Author: E.A. Bakkum
This column describes that in the twenties and thirties of the previous century the political party SDAP wants to realize the socialization. For this purpose she invents the intermediate phase of the public branch council (in short PBO). The ideas are presented in two reports, namely Bedrijfs-organisatie en medezeggenschap and Nieuwe organen. The first building-blocks for this reform of the state are furnished by the then party leader P.J. Troelstra. The battle for the PBO is not a hallmark of the social-democracy, but a typically Dutch phenomenon. The public councils are actually publicly controlled cartels .... Read more
- 12-06-2014: Aggregation in the value balance
Author: E.A. Bakkum
The present column shows, that the intertwined balance in kind can be transformed into a value balance. It is obvious, that this first requires a price formation. The presented theories are copied from the books Ökonomisch-mathematische Methoden und Modelle by V.S. Nemchinov, Verflechtungs-bilanzierung by V.V. Kossov, and Volkswirtschafts-planung by an East-German collective of authors. The last two mentioned books originate from the second-hand bookshop Helle Panke in Berlin. An important aspect is the aggregation of .... Read more
- 09-06-2014: Rationality in planned prices
Author: E.A. Bakkum
An often heard criticism of the planned economy, and of state enterprises, is that the absence of a private market makes the price formation irrational. Yet the Polish economist Oskar Lange has already in 1937 refuted this criticism. The present column sketches this controversy. Besides, it is explained how the price formation is organized in the former Leninist planned economies. The Leninist price formula uses a fascinating value modification. The plan encompasses both the material streams and the money streams .... Read more
- 26-05-2014: A model of the labour market
Author: E.A. Bakkum
In the book Economic policy: principles and design the well-known Dutch economist Jan Tinbergen describes an interesting micro-economic model of the labour market. The model excels thanks to two hallmarks. First, both the properties of the unemployed and those of the offered positions are modelled in detail by means of the method of Quetelet. And second, the preference of the unemployed is expressed in a cardinal utility function. The model allows to calculate the distribution of the labour incomes .... Read more
- 17-05-2014: The socialization report of the SDAP
Author: E.A. Bakkum
The present column discusses the SDAP-report Het socialisatie-vraagstuk, which was published in 1920. The aim is to re-evaluate the made proposals. For this purpose other sources of that era have also been consulted, such as Problemen der socialisatie by J. van den Tempel. Criticism can be found in Het socialisatie-rapport der SDAP by Joh.J. Belinfante and in Socialisatie by A. Zeegers. F.M. Wibaut, one of the authors of the report, replies in Over de kritiek op het socialisatie-rapport .... Read more
- 24-04-2014: Socialism in the clutch of evolution
Author: E.A. Bakkum
In a previous column it is stated, that there are sound technical arguments in favour of the socialist system of production. Yet the practical experiences are rather disappointing, or at least not durable. Why is that so? The present column tries to answer that question, and consults several sociological sources. It concerns notably Économie et sociologie by François Cusin and Daniel Benamouzig. Besides Why nations fail by Daron Acemoglu and James Robinson analyzes completely in the tradition of the Historical School .... Read more
- 17-04-2014: Open economy with variable prices
Author: E.A. Bakkum
Since the beginning this portal has presented many models for calculations of the macroeconomic national dynamics. The present column addresses two themes, which were not yet discussed, namely the influence of the prices and the influence of the foreign trade. It is true that the price system has been explained by the theory of Sraffa, but she is hardly capable of modelling dynamical behaviour. The Dutch economist Jan Tinbergen has made several proposals to extend the Harrod-Domar model with a price effect. The inclusion of the foreign trade is essential for the modelling of a state, that disposes of an open economy .... Read more
- 11-04-2014: Multi-sector growth models with intertwined monetary matrix
Author: E.A. Bakkum
In a series of recent columns growth models from the book Mathematical models of economic growth by Jan Tinbergen have been described. It always concerns simple models, with one or two sectors. In the present column multi-sector models will be described, which moreover contain formulas for the exchange of production factors between sectors. Besides here each sector can produce investment- or capital-goods. Notably the model of Feldman and the fundamental model of the dynamic intertwined balance are discussed again .... Read more
- 09-04-2014: Two-sector growth models
Author: E.A. Bakkum
After the discussions of various types of one-sector models in the previous columns, the present column studies two-sector models. They originate again from the book Mathematical models of economic growth by Jan Tinbergen. These models allow to study the economic structure, just like the theory of Sraffa. Thus the path of balanced growth can be found. Moreover, the utilization of the production capacity can be optimized .... Read more
- 02-04-2014: One-sector growth models with production functions
Author: E.A. Bakkum
Now that a previous column has succinctly explained production functions, the present column will present several macro-economic growth models from the book Mathematical models of economic growth of the well-known Dutch economist Jan Tinbergen. A relation will be derived between the growth rates of the economic variables (capital, labour, technical development). The starting point is the Cobb-Douglas production function. The situation with complementary factors is also studied .... Read more
Winter
- 31-03-2014: Dynamics in macro-economic production functions
Author: E.A. Bakkum
Until now this webportal has somwhat neglected the neoclassical production theory. The present column makes up for this omission by describing the micro-economic theory of production functions. Essential concepts such as the complementarity and the substitution of production factors are explained. The isoquant is introduced, as well as the occurrence of various types of scaling effects. The problems of macro-economic production functions, such as in the model of Solow, are addressed .... Read more
- 24-03-2014: One-sector models with scarce capital
Author: E.A. Bakkum
Two years ago this web portal discussed two dynamic one-sector models, which have been used in the planning activities of the former Leninist economies. In fact these are difference versions of the Harrod-Domar model, which use time dependent structure parameters. This makes the models completely dynamical. In the present column several planning instruments of the famous Dutch economist Jan Tinbergen will be explained, also based in the Harrod-Domar model. His planning models take into account the delays in investment and the replacements .... Read more
- 12-03-2014: The homo economicus
Author: E.A. Bakkum
All kinds of motives affect the economic activities. Economics and notably the neoclassical theory try to simplify the complex of motivations as much as possible. Often the ideal-type of the homo economicus is used, in despite of the many objections. The present column shows why this assumption is not realistic. Notably the importance of group actions and the accompanying morals or ethics are discussed .... Read more
- 26-02-2014: Optimization of the growth
Author: E.A. Bakkum
In many columns it has been explained how the Leninist planning agency chooses the optimal growth path, usually by means of intertwined matrices. The western economists commonly prefer to calculate the growth path by means of dynamic one-sector models. The present column describes an optimization model of the Dutch economist Jan Tinbergen, from his book Mathematical models of economic growth. The model is based on a utility function. Tinbergen concludes that such models can not determine the optimal growth, because as yet there is a lack of realistic utility functions .... Read more
- 20-02-2014: The use value of a product
Author: E.A. Bakkum
An essential question in economics concerns the measurement of the utility of a product. The present column describes two approaches, which both attempt to solve this problem. The first one refers to the use value and the target function in the Leninist paradigm. It stems from Miroslav Toms in his book Der Gebrauchswert und seine Messung. The second one refers to the subjective utility function of the neoclassical theory. It is developed by Bernard van Praag in his book Individual welfare functions and consumer behavior .... Read more
- 16-01-2014: The motivation for work
Author: E.A. Bakkum
This column surveys the present knowledge with regard to the motivation for work. First, it will be explained how the modern labour economics models the motives. Here the wage and the income are essential. Next some alternative sources for motivation are discussed, as presented in the human resource management. The results are compared with the happiness economics, as presented by B.M.S. van Praag. Finally, the marxist criticism is discussed .... Read more
- 09-01-2014: The historical-ethical paradigm
Author: E.A. Bakkum
This column describes again the origin and the ideas of the old and the young Historical School. Next it is sketched how the Historical School influenced the American Institutionalists, and in particular Thorstein Veblen. In an evaluation of these ideas an analysis is made of the historical, ethical and antropological aspects in modern economics. Finally it is explained how the neoclassical paradigm has been revived in the Washington Consensus, and again has produced disappointing results .... Read more
Autumn
- 30-12-2013: The attitude towards labour
Author: E.A. Bakkum
When a portal derives its name from Sam de Wolff, it has the moral obligation to elaborate on job satisfaction and the pleasures of work. In the present column both concepts are related to the so-called attitude towards labour. Here the discussion is presented, which has been published by the Leninist sociologist Rudhard Stollberg in his book Soziologie der Arbeit (acquired at the second-hand bookshop Helle Panke). The analysis is placed in the context of the Leninist science .... Read more
- 16-12-2013: The growth theory of Baars
Author: E.A. Bakkum
Until now growth theories have been prominently present on the portal of the Gazette. The present column describes the growth theory, which has been presented in 1937 by the engineer-economist Asse Baars. Since, this theory has become obsolete for practical applications, but she is still interesting for historical reasons. For, she can be considered as a predecessor of the one-sector model of R.M. Solow, which has been discussed in a previous column. The theory of Baars contains many elements, which form the foundation of the later model of Solow .... Read more
- 27-11-2013: Power as an economic factor
Author: E.A. Bakkum
Usually economists do not study phenomena of power, and leave this analysis to the sociologists and psychologists. This columns starts by explaning the MAR theory about the exercise of power. She is combined with the theory of networks and groups of the economist Paul Frijters. Next this analytical framework is applied to the theory of the aristo-democracy of Van Cleeff and Pels, and to the historical materialism of Gorter .... Read more
- 24-11-2013: Social factors in the economy
Author: E.A. Bakkum
This column describes how groups use their power to influence the economic processes. The general framework for the interaction between groups and markets is provided by the book An economic theory of greed, love, groups and networks by Paul Frijters. Next it is explained how Heiner Ganßmann in Politische Ökonomie des Sozialstaats applies the frame to the political economy. And finally the Leninist version of the theory is explained with the help of the book Moral und Gesellschaft by Bernd Bittighöfer and Jürgen Schmollack .... Read more
- 07-11-2013: Unemployment control in the thirties
Author: E.A. Bakkum
Until the Great Depression, which started in 1929, nearly all states adhered to an economic policy of laissez faire, so that interventions were scarce. The thirties mark a turning-point, because henceforth the states take on the task to stabilize the economy. The present column discusses some Dutch efforts and developments of that period. The study of the engineer-economist Asse Baars presents an interesting theory of the time. Besides, the provision and expansion of employment are described by means of statistical .... Read more
- 21-10-2013: Alternative scales of the utility for monetary incomes
Author: E.A. Bakkum
In a preceding column it has been explained how according to Van Praag and Ferrer-i-Carbonell the income satisfaction question yields an indicator for the utility of the personal income. The indicator can be measured on an ordinal scale by means of the ordered probit method. The present column describes how the cardinal probit yields an alternative scale. Besides, the income evaluation question is discussed, which measures the utility for an arbitrary income. This indicator can also be scaled, at choice, in an ordinal or cardinal manner, by means of the least squares method. The scales are applied to .... Read more
- 11-10-2013: Scale of the utility for monetary incomes
Author: E.A. Bakkum
At the moment this portal has already placed many columns concerning measures for utility, and related variables such as preferences and satisfaction. A measurement requires a scale. The present column studies the scaling methods, which are used in the science of sociology. In the general discussion the methodological frame is introduced, including some excursions to Leninist works (with thanks to the second-hand bookstore Helle Panke). Next the Probit method is explained, in the form that Bernard van Praag applies to the scaling of the utility for monetary incomes .... Read more
Summer
- 30-09-2013: Exchange processes in the Edgeworth box
Author: E.A. Bakkum
The theory of the individual utility functions allows to model the operation of the competitive market. In particular it can be proven, that the competitive equilibrium really exists, provided that certain conditions are satisfied. This model can be clarified by using the so-called Edgeworth box, a rectangle which represents a bilateral market. Thus it can be shown that the individual preferences finally lead to a market price, so that all markets are cleared completely .... Read more
- 16-09-2013: R. Kuyper and P. Wiedijk about the marxist theory of value
Author: E.A. Bakkum
The labour movement of the nineteenth century obtained its legitimacy from the introduction of the innovative theory of surplus value by Karl H. Marx. This cross-polination of a social movement and a theory is probably unique in the economic history. Therefore it is interesting to study how the Dutch workers parties applied this economic paradigm. A special aspect for the Netherlands is, that the formation of theory started only around 1900. At the time the theory of surplus value .... Read more
- 28-08-2013: Bad Godesberg: the nationalization debate
Author: E.A. Bakkum
In the past decades the central planning of the economy has become suspect. That was not always the case. Originally the social-democracy has pleaded in favour of collective property. Here the German SPD has done pioneering work. Already in 1891 the programme of Erfurt wanted to nationalize notably the oligopolies. However, three quarters of a century later, in the programme of Bad Godesberg (1959), the SPD preferred a surprising new ideological orientation. The doctrine of nationalization .... Read more
- 17-08-2013: External effects in the labour market
Author: E.A. Bakkum
In a previous column about the public goods a text about external effects has been announced. Here it is, with an application to labour. A situation with external effects is formed out of the competitive market, and therefore she is not Pareto optimal. The optimal situation can still be reached by means of laws (for instance quota), Pigouvian taxes, or a negociation process. An externality or external effect occurs, as soon as the utility level and therefore the well-being of an actor in the .... Read more
- 14-08-2013: The utility of money in risky investments
Author: E.A. Bakkum
An important economic phenomenon is the portfolio of individuals. The portfolio theory studies the form, in which individuals keep their capital. The theory commonly uses the hypothesis of the expected utility of such a portfolio. It turns out, that wealthy individuals tend to display a behaviour of risk aversion. This column reverts to the utility theory of money of Van der Wijk, in order to illustrate the various economic implications of the portfolio theory. Besides the utility theory of money of Van Praag .... Read more
- 07-08-2013: A dynamic model of growth and conjuncture
Author: E.A. Bakkum
In previous columns attention has been paid to dynamical phenomena such as the economic growth and the conjuncture. The present column describes a multiplier-accelerator model, which is able to describe both phenomena at once. The model has been invented and published by the famous economist Luigi L. Pasinetti. It turns out that some simple mathematical formulas for the national income and for the investments with time lags are sufficient for the generation of a dynamic behaviour .... Read more
- 01-08-2013: The social character of individual preferences
Author: E.A. Bakkum
The common consumer theory portrays the individual as a homo economicus, who selfishly maximizes his utility. However, the authors of the book Das materielle und kulturelle Lebensniveau des Volkes und seine Planung (an acquisition bought from Hoblank24 in Berlin) describe the individual as a homo politicus. This column discusses several aspects of their alternative view. Also it is once more argued that the cardinality of utility is essential for an understanding of the economic phenomena .... Read more
- 11-07-2013: The saturation in indifference curves
Author: E.A. Bakkum
The common neoclassical paradigm is by necessity limited to a specific behaviour of consumers. When it is accepted that utility is measurable and can be saturated, then it becomes possible to study the satisfaction of needs in a more general sense. This column starts with the analysis of the utility slope. Next a model of indifference curves by the Russian economist K.K. Val'tukh is explained. His formula can be applied in practice for the description of the target function in planning calculations with a many-period optimization by means of an intertwined balance .... Read more
Spring
- 30-06-2013: The cardinality of the marginal utility
Author: E.A. Bakkum
Since about a century the economic theory is dominated by the paradigm of the marginal utility, which has been discovered first by H.H. Gossen, in 1854. A disadvantage of such a dominant position of a paradigm is, that she is gradually beaten down into a dogma. Each textbook contains the same phrases, and a reasonable discussion is hardly possible any more. This column presents two original thinkers about the marginal utility, namely the Leninist economist K.K. Val'tukh (with thanks to the second-hand bookshop Hofbuchhandlung in the German Löwenberg), and the Dutch economist B.M.S. van Praag .... Read more
- 17-06-2013: The demand for public goods
Author: E.A. Bakkum
A large part of the twentieth century the economic debate was dominated by the controversy between the adherents of the liberal and planned economy. The question is how far the state should go in providing for the human needs and group interests. The present column first describes the view of the Leninist economicst Belousov (with thanks to the second-hand bookshop Helle Panke in Berlin). Next it is explained how the liberal theory of the Walrassian equilibrium models the supply of public goods in a Pareto optimal situation. This column .... Read more
- 09-06-2013: The marginal utility of money according to Jacob van der Wijk
Author: E.A. Bakkum
Jacob van der Wijk was a pharmacist, and in his leisure time also a social democrat and marxist. However he has become nationally known for his studies about the distribution of wealth and income. His largest merit is the discovery of the logarithmic frequency distribution of incomes and wealth, incidentally at the same time (1931) as the Belgian R. Gibrat. The unique part of the theory of Van der Wijk is the connection of the distribution with the psychical income (say, utility). Thus his studies model the marginal utility of money .... Read more
- 23-05-2013: Calculation of business cycles in two branches
Author: E.A. Bakkum
An important question in the research of business cycles is how the market fluctuations, which are naturally inevitable in an imperfect world, are maintained by the economic system itself. In a previous column about the theory of Kalecki it has already been remarked, that indeed the system can under certain circumstances bring itself in a state of oscillation. The present column illustrates this phenomenon by means of an example, which originates from the well-known economists Joan Robinson and John Eatwell. It is a two-sector model .... Read more
- 20-05-2013: The theory of business cycles according to Kalecki
Author: E.A. Bakkum
Michal Kalecki is one of the greatest economists in the era halfway the twentieth century. He formulated the theory of the economic dynamics, together with J.M. Keynes. At the same time he developed a theory of business cycles. That theory is discussed in the present column. The essence of his theory is a one-sector model of the accelerator-multiplicator type. Kalecki makes a careful analysis of the investment function, which is at the heart of such models. Another hallmark of Kalecki's theory is the inclusion of the income distribution .... Read more
- 15-05-2013: Business cycles
Author: E.A. Bakkum
This column summarizes the principles of business cycles. First, attention is paid to the form of the cycles, and to the division in four phases, namely recession (or depression), recovery, prosperity, and decay. The method of Wesley Mitchell is applied for ordering several statistical data. They are compared with the theory of business cycles according to De Wolff. And finally a short description is given of some other theories of business cycles, which suggest possible causes .... Read more
- 08-05-2013: Algebraic sets in the production theory
Author: E.A. Bakkum
Many columns on this webportal discuss the input-output model of Leontief. The characteristics of the Leontief model are the constant returns to scale, labour as a separate production factor, and the absence of coupled production. In fact it is a linear model and thus a special case of the economic theory of capitalist production. In the general theory also non-linear production processes can be described. Then it is convenient to formulate the theory in terms of algebraic sets .... Read more
- 22-04-2013: Decomposition and dating of quantities in the production
Author: E.A. Bakkum
Various preceding columns have presented discussions of production models, that use intertwined matrices (sometimes called Leontief models, input-output tables, or balances). The present column describes methods for the calculation of the material coefficients of the total or full input (in the German language Bedarf, Aufwand) in the production. Besides, a method is presented for the dissection of prices into quantities of dated labour .... Read more
- 10-04-2013: The pleasure, disutility and quality of labour
Author: E.A. Bakkum
In a previous column the marginal disutility of labour has been discussed. The present column studies the positive side, namely the pleasure of labour and the quality of labour. An effort is made to construct a historic path, by means of a three noteworthy books. They are Arbeidsvreugde by H. de Man, Das Bewußtsein der Arbeiter by F. Deppe, and Van waarde by M. Sie Dhian Ho. These books all combine empirical studies and a sociological analysis. Together they show how the disutility of labour (German: Arbeitsleid) .... Read more
Winter
- 20-03-2013: The social utility function
Author: E.A. Bakkum
In 1854 Hermann Gossen was the first person to apply the concept of utility to economics. Half a century later his idea had become the influential neoclassical paradigm. Vilfredo Pareto imposed a radical restriction on the concept of utility by rejecting the cardinal measurement of utility. Since then the economics in the west has abandoned the idea of the social utility function or the welfare function. The East-European plan economists disagreed (the second-hand book shop Helle Panke in Berlin supplies interesting books .... Read more
- 27-02-2013: Substitution of the production factors in the theory of Sraffa
Author: E.A. Bakkum
In a previous column it has been explained how the formation of prices is realized in the various economic paradigms. The present column is a direct continuation of that text. In an example it will be shown how the substitution of the production factors relates to the change of the production technique. The example uses the neoricardian model of Piero Sraffa. An attempt is made to connect this formalism to the neoclassical substitution of production factors. .... Read more
- 11-02-2013: Price determination by scarcity and costs
Author: E.A. Bakkum
The price of a product can be determined by its scarcity, or by the costs, which must be made for its production. The optimal distribution or allocation of the scarce products is the fundamental concern of the neoclassical paradigm. This question can be solved with the method of linear programming. On the other hand, the relation between the product prices and the production costs is described by the neoricardian model of Sraffa. The construction of input-output tables is a hallmark of this approach. .... Read more
- 04-02-2013: Neoricardian reswitching of the technique
Author: E.A. Bakkum
In the neoricardian theory of Piero Sraffa it is shown that there is no evident relation between the distribution of income (wage and profit) and the choice of the technique for production. It is even conceivable that with the progress of time subsequent switches between two techniques occur (the so-called reswitching). In this way Sraffa undermines several fundamental assumptions of the neoclassical (marginalistic) macro-economics. For she relies on factor substitution: in case of for instance a rising rate of interest .... Read more
Autumn
- 17-12-2012: Choice of the technique in the neoricardian theory
Author: E.A. Bakkum
In the two previous columns about the neoricardian theory of Piero Sraffa the equations of the price system and of the material growth have been described. In those columns the production process is given in advance. The present column will explain how the choice of the production technique is brought about. It turns out that the switch to another production process is determined by the shape of the wage curve. The choice for a process is based on the extra-profit, which is predicted by the wage curve of the alternative process .... Read more
- 05-12-2012: Growth in the neoricardian theory of Sraffa
Author: E.A. Bakkum
In a previous column the neoricardian theory of Piero Sraffa has been explained. An interesting property of this theory is, that she can also model the economic growth. The theory is dynamic. She is directly related to the input-output models of Leontief, and to the matrix formulation of the intertwined balances. It turns out that the growth rate is the dual of the rate of profit. In this column it is assumed, that the reader already has knowledge about the principles of the neoricardian .... Read more
- 15-11-2012: The falling rate of profit in the labour theory of value
Author: E.A. Bakkum
The law of the tendential fall of the rate of profit is an important part of the classical paradigm. Notably Karl H. Marx has made efforts in order to maken this law popular, evidently within the framework of the labour theory of value. In the past decades the law has gained a renewed interest, thanks to the adherents of the temporal single system interpretation (TSSI). Since then Andrew Kliman has published two books about the theory and practice of the TSSI. The interpretation has also .... Read more
- 25-10-2012: Price formation in a planned economy
Author: E.A. Bakkum
The book Grundfragen der sozialistischen Preistheorie, again an acquisition which was bought from the second-hand bookshop Helle Panke in Berlin, discusses an uncommon problem, namely the price formation in an economy with central planning. In the west it is generally assumed that product prices can only emerge from the demand and supply on the market. The collective of authors under the leadership of the East-German economist K. Ambrée shows that the planned price formation does work. The planned product price can .... Read more
- 18-10-2012: The Historical School
Author: E.A. Bakkum
The dominant economic paradigms are the classical theory, the neoclassical theory, and the Keynesian macro-economics. All other paradigms are simply labeled with the term heterodox. This column discusses such an alternative paradigm, namely the historical-ethical movement. Her views were propagated by the Historical School, which became popular mainly in Germany. She includes the state socialists, also called Katheder socialists .... Read more
- 05-10-2012: Growth in the one-sector models of Domar and Harrod
Author: E.A. Bakkum
In the west the macro-economic theory of J.M. Keynes has opened the door for the development of growth models for a single sector. Keynes himself has mainly studied the conjunctural phenomena. R.F. Harrod was the first to introduce a growth model, and in it he stresses the dynamics. Several years later E. Domar extended the model with elegant mathematical formulas. Nowadays their results are commonly presented as .... Read more
Summer
- 27-09-2012: Growth in the one-sector model of Solow
Author: E.A. Bakkum
The American economist R.M. Solow developed in 1956 a growth model, which describes the economic system as a whole, that is to say, as a single sector or branch. The model interprets the national income with the help of a production function, which has the advantage that the factor labour is included explicitely as a variable in the model. Thus the model encompasses the technological progress, in the sense that the labour productivity .... Read more
- 17-09-2012: Annotations with regard to multi period optimization
Author: E.A. Bakkum
In a previous column the optimization for central planning has been described. She employs the method of linear programming. In the book Volkswirtschaftsplanung, again a gem bought at the second-hand bookshop Helle Panke, Hans Knop shows how some improvements can make that model applicable to reality. The approach that has been presented in the previous column is rather schematic, and ignores important economic phenomena. .... Read more
- 03-09-2012: Marginal disutility in the labour theory of value
Author: E.A. Bakkum
Following H.H. Gossen and W.S. Jevons Sam de Wolff bases his theory of value on the disutility of labour. In this way he opposes the Austrian School, that denied the existence of a relation between the production costs and the value of the end products. In the Austrian view the value originates completely from the subjective preferences in the consumption. In the course of time .... Read more
- 26-08-2012: A fundamental model for multiperiod optimization
Author: E.A. Bakkum
The book Volkswirtschaftlicher Reproduktionsprozeß und dynamische Modelle by the East-German economist Eva Müller is a goldmine of fascinating models, with a surprising diversiy. Here one finds keynesian growth models, next to input-output (Leontief) models, and three-sector models after the manner of Marx. But she also presents linear programming and optimization problems. The present column discusses her .... Read more
- 16-08-2012: The three-sector model of Feldman
Author: E.A. Bakkum
Actually the title of this column is misleading, because the dynamic three-sector model that is discussed here originates from J. Robinson and J. Eatwell. However they mention empathically, that their model is inspired by the works of Feldman. Therefore your columnist gives the credit to the latter person. G.A. Feldman is a Russian economist, who has contributed significantly to the development of the .... Read more
- 15-08-2012: Dynamic three-sector models
Author: E.A. Bakkum
The book Volkswirtschaftlicher Reproduktionsprozeß und dynamische Modelle by the East-German economist Eva Müller is a source of inspiration for anybody, who is interested in dynamic growth. An earlier column describes the way in which she expresses two versions of the well-known national income model. In these models the national economy is presented as one large homogeneous sector. In two other columns it is .... Read more
- 06-08-2012: The intertwined balance with investment equation
Author: E.A. Bakkum
For the time being most columns on this internet portal concern the economic growth. The growth numbers determine to what extent the given social system has a veritable perspective for the future. That partly explains the interest of your columnist for the theories from the former Leninist states in Eastern Europe, that were competing with the west. The second-hand bookshop Helle Panke in Berlin is a goldmine for the acquisition of a small collection of books about central planning in the German Democratic Republic. An asset .... Read more
- 22-07-2012: Two dynamic one-sector models
Author: E.A. Bakkum
Until now this web portal has paid much attention to the phenomenon of the economic growth. By doing so it has become clear, that it is possible to model growth. The economist Eva Müller explains that this can even be done at the level of the various productive branches, by means of the dynamic intertwined balance. However if one is only interested in the efficiency of the general economic development, then such models are too detailed. In those .... Read more
- 19-07-2012: The optimal size of the national product
Author: E.A. Bakkum
One of the most original parts in the main work Het Economisch Getij of Sam de Wolff is the paragraph, where he describes the driving forces behind the size of the national product. In fact the size of the production is not the main theme of the research of De Wolff, for this focuses on the business cycles. However, De Wolff thinks that the conjuncture can only be understood in .... Read more
- 16-07-2012: Shocks in the rate of surplus value as a cause of crises
Author: E.A. Bakkum
Sam de Wolff tries in his main work Het Economisch Getij to offer a better foundation for the marxist view on the economic conjuncture. Here he adopts the starting point that the fluctuations in the size of the total product are causes by the economic expansion process itself. In an earlier column it is explained how De Wolff develops an advanced version of the growth model of Marx. He shows how .... Read more
- 10-07-2012: The fundamental model of the dynamic intertwined balance
Author: E.A. Bakkum
The phenomenon of the economic growth is one of the prominent scientific themes, because it directly influences our prosperity. Economists try to discover the conditions, that contribute to growth. An earlier column shows how the East-German economist Eva Müller expresses the dynamic growth model of Karl Marx in mathematical formulas. That column is followed by a second .... Read more
Spring
- 25-06-2012: The TSS Interpretation of Andrew Kliman
Author: E.A. Bakkum
Already in 1907 the labour theory of value of Marx got somewhat into discredit, after the economist L. von Bortkiewicz had found a problem in the marxist transformation of labour values into product prices. In the sixties this critique has been stated in a more clear and understandable way by P. Sraffa and his adherents. The marxist theoreticians did not succeed in finding an appropriate response to .... Read more
- 18-06-2012: The transformation problem in the theory of Marx
Author: E.A. Bakkum
In this column an exposition is given of the so-called transformation problem in the theory of Karl H. Marx. This problem deserves attention, because it has been used by adversaries of Marx to discredit the marxian theory. The first criticism of the transformation was already passed in 1907 by the economist L. von Bortkiewicz. In the sixties this criticism has been formulated in a more clear and .... Read more
- 13-06-2012: The neoricardian theory of Piero Sraffa
Author: E.A. Bakkum
In 1960 the economist Piero Sraffa published the book Production of commodities by means of commodities, that would radically change the thinking about the macro-economic development. Notably the contents implies an effective refutation of the marginalist analysis of macro-economics, which until that moment was leading. The shock among the neoclassical economists was enormous. Even now, half a century later, .... Read more
- 11-05-2012: Annotations concerning the LTV of de Wolff
Author: E.A. Bakkum
At the beginning of the twentieth century Sam de Wolff developped his own version of the labour theory of value (LTV), which may be called interesting and original. However, De Wolff has not found the time, at least in his main work Het Economisch Getij, to elaborate on the consequences of his model. The present column has the aim to make a first start. The starting-point is the model, that .... Read more
- 07-05-2012: The LTV of de Wolff for two products
Author: E.A. Bakkum
A preceding column describes the labour theory of value (abbreviated LTV) of Sam de Wolff. With her de Wolff tries to advance and innovate the traditional LTV of Karl Marx. In the labour theory of value the (exchange) value of a product is equal to the amount of labour time, that is spent on the product. The work of De Wolff is characterized by a combination of the LTV and the marginal analysis, in the way it .... Read more
- 02-05-2012: The labour theory of value of Sam de Wolff
Author: E.A. Bakkum
One of the most important questions in the economic science is the manner in which the product prices are brought about. She determines what the value is, that consumers attach to a certain product. Following Adam Smith and especially David Ricardo, Karl Marx has developed a theory of value, that makes the value of a product entirely dependent on the amount of labour time, which .... Read more
Winter
- 05-02-2012: The growthmodel of Marx according to Sam de Wolff
Author: E.A. Bakkum
In a preceding column the dynamical growthmodel of Karl Marx has been described. Marx uses his model especially in order to study whether the various industrial branches can trade with each other, without causing economic disturbances. In the twentieth century authoritative economists have elaborated on this concept. Worth mentioning are .... Read more
- 30-01-2012: The dynamical growthmodel of Karl Marx
Author: E.A. Bakkum
The economic theory of Karl Marx flourished in the period between 1880 and about 1920, when she was the intellectual foundation for the rapidly expanding labour movement. As the labour movement integrated into the existing order, it distanced itself gradually from the marxist doctrine. In Russia, where after a coup d'état the Leninists had established a dictatorship, the theory of Marx became fossilized into .... Read more
24-01-2012: Natural cycles in the model of Sam de Wolff
Author: E.A. Bakkum
In a preceding column the dual cycle movement of the conjuncture is described, that has been derived by Sam de Wolff on the basis of the index number of Sauerbeck and of other empirical data. De Wolff has not limited himself to the empirical data of the conjuncture, but he has added a modeltheoretical explanation. From his materialistic orientation as a marxist De Wolff locates the cause.... Read more
- 11-12-2011: The dual cycle according to Sam de Wolff
Author: E.A. Bakkum
Since the onset of the scientific research of economics the phenomenon of the crisis has received much interest. In the crisis the economic growth reaches its upper boundary, whereupon during the recession a correction is applied. As this process repeats itself constantly in the historical time, it creates a pattern, which is called the business cycle or conjuncture. .... Read more