This book examines the historical and methodological development of the consumption function in economics. It provides a discussion of the key stages in the theoretical evolution of the concept, from the beginning of the 20th century through to the modern day. Particular attention is given to the ways in which Thorstein Veblen, John Maynard Keynes, James Duesenberry, Franco Modigliani, Richard Brumberg, and Milton Friedman conceptualized consumption. Further, it examines the latest theoretical and methodological developments within the neoclassical, as well as the heterodox economics traditions. By connecting the history of consumption function to the methodological frameworks in which consumption theories were devised, the work also brings into the fore the important economic policy implications associated to various consumption formulations.  This book offers insight into how different schools of economic thought have defined consumption and how these ideas inform modern economic theories and political discussions. It will be of interest to students and researchers working on macroeconomic policy, economic theory, and the history of economic thought. 

The debate regarding the relationship of economics to psychology and related fields has intensified in the last couple of decades. This is mainly due to the rise of behavioural economics which—contrary to mainstream economics—openly claims to pay attention to psychological findings to enrich economic theory and to provide more realistic policy advice.1 One can broadly classify Nima Bassiri’s latest book in this framework. Still, there is an important difference: Bassiri’s work employs an almost reverse point of view in the sense that he studies the impact of economic ideas, concepts and tools on psychiatry. It focuses on the history of psychiatry in the nineteenth century, and more specifically on how psychiatrists felt compelled to diagnostically approach mental illness (madness) through an economic lens. In other words, it examines how psychiatry has used economic reasoning for diagnostic purposes.

Ideas concerning the role, function, and nature of labor unions and their leadership can be found in 19th century economics literature. Even since this early period, a division between orthodox and non-orthodox approaches toward the study of labor unions can be discerned.  The orthodox framework was formed in the late 19th century with the gradual establishment of Marginalism, and it consolidated itself with the dominance of early neoclassical economics. Orthodox economic theory did not devote much attention to the economic analysis of unions. On the contrary and during the same period, non-orthodox economists such as Sidney and Beatrice Webb and early institutionalists (e.g. Richard Ely), had paid considerable attention to the study of unions, perceiving them as politico-economic organizations and emphasizing their wider role as social institutions (McNulty, 1980). The legacy of those two approaches continued in the 20th century and contemporary analyses of labor unions. The orthodox approach (originating mainly from the work of John Dunlop), generally conceives unions as purely economic units, analogous to firms, which can be studied by applying the standard tools of microeconomic theory. In this framework, the notion of union leadership plays a minimum role. In contrast, the non-orthodox viewpoint (originating mainly from Arthur Ross’ works), embraces a holistic, institutional-political-based attitude to labor unionism (Kaufman, 2002).

Τhe idea that social influences and social interactions play a central role on individual economic decisions has had a long presence in the history of economics. With the emergence of marginalism, this idea went into background and the concept of atomistic individual became established in mainstream economic rationality. Starting in the 1970’s, there were some attempts to reintroduce non-atomistic preferences in mainstream microeconomic theory in the form of social interactions, interdependent preferences, keeping up with the Joneses, social identity, social preferences, and status concerns. Social preferences have started to have a growing impact among mainstream microeconomics with the advent of behavioral economics, but still they are not in the hard core of the standard theory of choice. The paper argues that atomistic preferences are still prevalent, especially in the form of the assumption of representative agent. It also focuses on the role of methodological individualism and on the theoretical implications of relaxing the assumption of atomistic individual, as main explanations of the resilience of the mainstream economic rationality.

The issue of interpersonal comparisons of utility is about the possibility (or not) of comparing the utility or welfare or the mental states in general, of different individuals. Embedded in the conceptual framework of utilitarianism, interpersonal comparisons were admissible in economics as part of the theoretical justification of welfare policies until the first decades of the twentieth century. Under the strong influence of the scientific philosophy of positivism as reflected in the works of early neoclassical economists and as epitomized by Lionel Robbins, utility comparisons were subsequently rejected as a value judgement. Robbins’ methodological stance is still prevalent among mainstream economists. Despite the explicit rejection of comparability by the majority of economists, interpersonal comparisons are necessary for many key policy issues, such as progressive taxation, social welfare policies, GDP-based welfare comparisons, cost–benefit analysis, and public goods provision. In this paper, the case of interpersonal utility comparisons is discussed as an illustrative example of the usefulness of the study of the role of value judgements, and generally of the interrelationship between ethics and economics. It is argued that the current tension between theory and policy practice might be resolved through the efforts of prominent economists and philosophers to challenge positivism, and especially its problematic treatment of value judgements and of ethical assumptions in general. The discussion also provides more strength to the view that policy makers and their economic advisers cannot avoid ethical questions in their analysis of the workings of the economic system

Πρωταρχικός στόχος αυτού του βιβλίου είναι η παρουσίαση βασικών θεμάτων της Οικονομικής Επιστήμης με όσο το δυνατόν απλό αλλά ακριβή και επιστημονικό τρόπο. Είναι γραμμένο σε εισαγωγικό επίπεδο και είναι προϊόν εμπειρίας πολλών ετών διδασκαλίας σε προπτυχιακούς φοιτητές που δεν είχαν διδαχθεί οικονομικά σε αυτό το επίπεδο. Τα πρώτα επτά κεφάλαια (κεφάλαιο 1 μέχρι και κεφάλαιο 7) εξετάζουν θεμελιώδη ζητήματα Μικροοικονομικής και τα επόμενα έξι κεφάλαια εξετάζουν θεμελιώδη ζητήματα Μακροοικονομικής (κεφάλαιο 8 μέχρι και κεφάλαιο 13). Σε κάθε κεφάλαιο περιγράφονται οι μαθησιακοί στόχοι και παρουσιάζονται οι έννοιες-κλειδιά. Το επίπεδο ανάλυσης δεν προϋποθέτει γνώσεις οικονομικών, αλλά εισάγει τον οικονομικό τρόπο σκέψης με χρήση συγκεκριμένων παραδειγμάτων και διαγραμμάτων τα οποία διευκολύνουν την κατανόηση των οικονομικών φαινομένων. Η δε μαθηματική ανάλυση περιορίζεται εκεί όπου είναι απολύτως αναγκαία. Σε αρκετές περιπτώσεις υπάρχουν αριθμητικά παραδείγματα-ασκήσεις που δείχνουν τον τρόπο εφαρμογής των θεωρητικών εννοιών. Με τα δεδομένα αυτά το βιβλίο δεν προορίζεται μόνο για φοιτητές οικονομικών σχολών, αλλά απευθύνεται και σε φοιτητές άλλων συγγενών ή λιγότερο συγγενών πεδίων, όπου τα εισαγωγικά οικονομικά θεωρούνται χρήσιμες γνώσεις. Προφανώς, μπορεί να χρησιμεύσει και σε κάθε ενδιαφερόμενο αναγνώστη που επιθυμεί να κατανοήσει βασικές οικονομικές έννοιες και επίκαιρες οικονομικές συζητήσεις.

This work presents and discusses chapter two of Marc Lavoie’s book Post-Keynesian Economics: New Foundations. It begins by analysing the concepts of uncertainty and rationality which are extremely important for the post Keynesian approach, and for economic theorizing in general. The notions of fundamental uncertainty and the closely related concept of procedural rationality, are employed in order to build the foundations of a theory of household choice. It proceeds by investigating the repercussions of the theory in a lexicographic/hierarchical analytical framework. In this framework, groups consume different goods depending on their respective needs, income effects are more important than substitution effects, and price competition has a secondary role. It is also shown that Lavoie’s approach does not only draw from the work of Keynes and other major post-Keynesian theorists, but also utilizes contributions from other strands of heterodox economics, thus providing an agenda for a possible theoretical synthesis.

This book discusses key issues in economic policy in the context of the history of economic thought. Most of the current and past academic controversies in economics are, explicitly or implicitly, centred around the application and form of economic policy. This is particularly evident in the post-WWII period, with the appearance of economic policy as a distinguishable subfield, but important elements of various economic policy issues can be found throughout the history of economic thought. This book discusses various topics in economic policy – such as questions over state spending and taxation, income redistribution, and the role of money – with each chapter focusing on a particular period or major school of economic thought ranging from the ‘prehistory’ of economics up to the present day. Specific chapters of the volume cover the main schools of economic thought from different national and theoretical traditions, incorporating mercantilism, the Physiocratic School, the German Historical School, Marxism, the Austrian School, institutional economics, Keynesian economics, behavioural economics and more.

Abstract Contrary to Keynes’ and Duesenberry’s consumption theories, absolute or relative income plays a minimal role in the life-cycle and in the permanent-income hypotheses. It plays an even lesser role in contemporary orthodox consumption functions which are extensions of these two theories in a rational-expectations framework. As a result, the theoretical effectiveness of fiscal policy for raising output is greatly diminished. The paper argues that Keynes’ and Duesenberry’s approaches were marginalised not because of their empirical or theoretical shortcomings, but because of emphasising the psychological and social influences on consumption patterns, and because of not employing the intertemporal utility maximising framework.

The methodological foundations of mainstream economics have been cited as one of the main reasons for its failure to account for the economic crisis of 2008. In spite of this, the status of economic methodology has not been elevated. It is argued that this is due to the persistent aversion towards methodological discourse by most mainstream economists. This attitude has a long presence as exemplified in Frank Hahn’s (1992) work. After focusing on the debate originating after the publication of Hahn’s arguments, the paper offers a categorization of the main explanations for mainstream methodological aversion. Subsequently, it suggests an explanation based on the role of the physics scientific ideal, arguing that the endeavour to achieve the high scientific status of physics by following the methods of physics, contributed to the negative mainstream attitude towards economic methodology. The relevant writings of the extremely influential mainstream economists Irwin Fisher and Milton Friedman, reinforce the assertion that the alleged hard science status of economics renders methodological discussions and especially methodological criticism, rather pointless. The paper also calls for a more systematic discussion of this issue, especially in the wake of the line of argument that links the recent failings of mainstream to its methodological basis