“Hear ye, hear ye!”… a new and important book on capitalism

We interrupt the regularly scheduled programming to bring to your attention notice of a new work by Anwar Shaikh, Professor of Economics at the Graduate Faculty of Political and Social Science of the New School University. Professor Shaikh’s latest book is Capitalism: Competition, Conflict, Crisis (Oxford University Press, 2016) a tome of over 900 pages (‘fifteen years in the making’) that has been well-received by critics both inside and outside the profession of Economics. I first learned of Shaikh’s work from his concise entries in the four volume, The New Palgrave: A Dictionary of Economics (1987), edited by John Eatwell, Murray Milgate and Peter Newman, and newly published in a more accessible series of paperback volumes, one of which is Marxian Economics (W.W. Norton & Co., 1990). And while re-reading an earlier and indispensable book he edited, Globalization and the Myths of Free Trade (Routledge, 2007), I decided to look him up again and learned of this new work. Professor Shaikh had Gary Becker(!) as one of his teachers (in the interview linked to below, Shaikh explains precisely why and how Becker influenced him), and speaks of Joan Robinson, Robert Heilbroner, and Luigi L. Pasinetti as among those who have helped shape his study of economics.

From his personal website, a short summary of the book:

“Competition and conflict are intrinsic features of modern societies, inequality is persistent, and booms and busts are recurrent outcomes throughout capitalist history. State intervention modifies modified these patterns but does not abolish them. My book is an attempt to show that one can explain these and many other observed patterns as results of intrinsic forces that shape and channel outcomes. Social and institutional factors play an important role, but at the same time, the factors are themselves limited by the dominant forces arising from ‘gain-seeking’ behavior, of which the profit motive is the most important.

These dominant elements create an invisible force field that shapes and channels capitalist outcomes. The book’s approach is very different from that of both orthodox economics and the dominant elements in the heterodox tradition. There is no reference whatsoever to an idealized framework rooted in perfect firms, perfect individuals, perfect knowledge, perfectly selfish behavior, rational expectations, and so-called optimal outcomes. Nor is there any need to explain particular observed patterns as departures from this Edenic state arising from ‘imperfections’ of various sorts. The book develops microeconomic and macroeconomic theory from real behavior and real competition, and uses it to explain empirical patterns in microeconomic demand and supply, wage and profits, technological change, relative prices of goods and services, interest rates, bond and equity prices, exchange rates, patterns of international trade, growth, unemployment, inflation, national and personal inequality, and the recurrence of general crises such as the current one which began in 2007-2008.”

See too this informative interview with Marshall Auerback of the Institute for New Economic Thinking on YouTube.