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Author: Alessandro Roncaglia
ISBN13: 978-0521691871
Title: The Wealth of Ideas: A History of Economic Thought
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Language: English
Category: Business and Finance
Publisher: Cambridge University Press (December 25, 2006)
Pages: 598

The Wealth of Ideas: A History of Economic Thought by Alessandro Roncaglia

Economic thought is seen as developing between two opposite poles: a subjective one, based on the ideas of scarcity and utility, and an objective one based on the notions of physical costs and surplus. Professor Roncaglia focuses on the different views of the economy and society and on their evolution over time and critically evaluates the foundations of the scarcity-utility approach in comparison with the Classical/Keynesian approach.

Economic thought is seen as developing between two opposite poles: a subjective one, based on the ideas of scarcity and utility, and an objective one based on the notions of physical costs and surplus.

The Wealth of Ideas book. De forma adicional Roncaglia ofrece una critica a los distintos problemas a los que se ha enfrentado la teoría económica en su formación y hasta nuestros días y como la creciente fragmentación de las áreas de investigación dentro del campo ofrecen múltiples oportunidades para el enriquecimiento de la investigación económica.

History of Economic Thought - Modern Economics. 4 MB·12,743 Downloads. Intellectual Sources of Marx's Ideas. Marx's Theory of History. An Outline of the History of Economic Thought. 84 MB·5,446 Downloads. An Outline of the. History of Economic. Alessandro Roncaglia - The Wealth of Ideas: A History of Economic Thought.

The evolution of economic thought can be traced back from its beginnings in classical antiquity up to the present day. In this book, Professor Alessandro Roncaglia offers a clear, concise and updated version of his award-winning The Wealth of Ideas, studying the development of economic thought through perspectives and debates on the economy and society over time

The metaphysical and epistemological fact is individual human beings are the ultimate cause and the ultimate end in the economic process NOT arbitrarily. Simply the better book in history of the economic thought. Advised to anyone it wants to know the evolution of the neoclassic thought and the sraffian critic. Warning: the approach is heterodox.

Alessandro Roncaglias new book on the history of economics is a very welcome. contribution to our understanding of the science, and the several courses it has taken. over the last 350 years, from its beginnings as a crucial element of modernity and. Enlightenment, to its arrival at its current, problematic juncture. is a revised English version of an earlier Italian text, with new material. bits a deep grasp of economic ideas and their grounding in the wider intellectual culture.

The Wealth of IdeasA History of Economic Thought by Alessandro Roncaglia.

The Wealth of Ideas: A History of Economic Thought. By Alessandro Roncaglia. Cambridge: Cambridge University Press, 2006.

The Wealth of Ideas, first published in 2005, traces the history of economic thought, from its prehistory (the Bible, Classical antiquity) to the present day. In this eloquently written, scientifically rigorous and well documented book, chapters on William Petty, Adam Smith, David Ricardo, Karl Marx, William Stanley Jevons, Carl Menger, Léon Walras, Alfred Marshall, John Maynard Keynes, Joseph Schumpeter and Piero Sraffa alternate with chapters on other important figures and on debates of the period. Economic thought is seen as developing between two opposite poles: a subjective one, based on the ideas of scarcity and utility, and an objective one based on the notions of physical costs and surplus. Professor Roncaglia focuses on the different views of the economy and society and on their evolution over time and critically evaluates the foundations of the scarcity-utility approach in comparison with the Classical/Keynesian approach.
Reviews: 6
There are several problems w/ this book:

1. It is blatantly biased; Kool Aid for Sraffa worshippers.

2. This version of the history of economic ideas is incomplete in general and ignorant of the evolution of "value" theory in particular. Where are the Spanish Scholastics; Saravia de la Calle (1544), Diego de Covarrubias Y Leyva (1550), Martin Azpilcueta (1556) & Juan de Lugo (1643)? One can argue these thinkers were subjective value marginalists 230 to 150 yrs. before Adam Smith wrote about natural prices, market prices, and the cost of production in Wealth of Nations (1776). And, these Spanish Scholastics preceeded -- by about 300 yrs. -- what Roncaglia calls the "Marginalist Revolution" in the late 19th Century which, in fact, was NOT a sudden transformation of economic thinking. For example, where are the post Adam Smith, pre "Marginalist Revolution" German economists (Hufeland, Fulda, Schaffle, Thunen, Rau, Hermann, Mangoldt, Kudler, Roscher, Mischler, etc.)? These German thinkers are the primary origin of Menger's version of subjective value theory (the non-Benthamite version of marginalism that is impervious to Sraffa's criticism) and their work proves there was no revolution. Roncaglia appears to accept TH Huxley's 1868 idea that political economy is 'an intensely Anglican science' and that all other thinkers are simply 'humble disciples accepting gladly orthodox English teaching.' The Anglican notion that there was a "Marginalist Revolution" in the late 19th Century is rubbish and it's sad Roncaglia believes it.

3. Roncaglia's false claim that attacks by Kaldor in 1942 on Hayek's "Ricardo Effect" -- using a comparative static equilibrium methodology -- somehow refutes the dynamic path of intertemporal discoordination & adjustment caused by credit expansion BEFORE a final equilibrium is reached. Contrary to Kaldor, Moss & Vaughn (1986) point out, "The problem is not to learn about adjustments by comparing states of equilibrium but rather to ask if the conditions remaining at T1 make the transition to T2 at all possible. Kaldor's approach indeed assumed away the very problem that Hayek's theory was designed to analyze, the problem of the transition an economy undergoes in moving from one coordinated capital structure to another."

It's worth belaboring this point. As Steele (1992) explains, Hayek's earlier works (1929/1933 and 1931/1935) re: the impact upon investment incentives of a fall in the rate of interest (brought about by new money or new savings) ARE mutually compatible w/ Hayek's later two books (1939 and 1941) re: the impact upon investment incentives of changes in relative prices. Kaldor was wrong to represent the `interest rate effect' and the `relative prices effect' as inconsistent theoretical formulations. Steele further explains, "It is NOT the relative price rise of intermediate goods in the earlier stages of production which enhances their yields. Rather, the relative enhancement of their time-discounted yields (the result of new saving and the reduced rate of interest) attracts investment and causes their prices to rise. (This is the process which eventually restores equilibrium, but only in the absence of forced saving). It is hardly surprising that defenders of the Keynesian faith were able to play upon alleged contradictions between the 'two versions' of Hayek's theory."

4. Roncaglia's false claim that Sraffa's refutation of Bohm-Bawerk's "average period of production" -- a notion Menger himself described as 'one of the greatest errors ever committed' 80 years BEFORE publication of Sraffa's Production of Commodities by Means of Commodities in 1960 -- somehow overturns Menger's formulation of subjective value theory. On the one hand, to his credit, Roncaglia notes Menger's criticism of Bohm-Bawerk (in a footnote on Pg 312) but Roncaglia does not attempt to explain WHY. However, on the other hand, Roncaglia then contends (none the less) that Sraffa somehow refutes Menger using Bohm-Bawerk's average period of production w/o explaining HOW. Menger's theory is the foundation for Bohm-Bawerk's work on capital and interest and in no way does Bohm-Bawerk undermine this foundation. Consequently, Pg 458 of Roncaglia's book is simply absurd.

It is specifically because Bohm-Bawerk rejected the notion of an aggregate homogeneous physical capital stock that he constructed a theory that linked the amount of output obtainable from varying degrees of roundaboutness to the idea that production takes time. Neither of his explanatory errors (using an average period of production & a fixed subsistence fund) are characteristics of his theoretical approach. In fact, Bohm-Bawerk's approach clearly & correctly identifies the implications of profit maximization, factor prices, and the price of borrowed money on the use of capital goods in intertemporal production, w/in the context of an increasing division of labor that is accompanied by the accumulation of capital. And this is precisely WHY Bohm-Bawerk's work is an important building block in understanding the causal impact of monetary disequilibrium on relative prices in the intertemporal structure of production during a boom & bust cycle.

To be clear, the debates between Kaldor, Sraffa, Hayek, Knight & others during the interwar period were concerned w/ whether or not a general theory of the business cycle could explain & predict the economic phenomena experienced at that time. The interwar economic crisis provoked a crisis in economic thinking at that time, just as our current economic crisis calls into question the validity of economic thinking today (i.e., the effectiveness of Keynes inspired Govt borrowing to boost aggregate demand to reduce unemployment). And it is w/in this context that the participants argued over whether or not a PORTION of Bohm-Bawerk's theory was suitable for use in such a theory. Specifically, Hayek demonstrated in "Prices and Production" that Bohm-Bawerk's average period of production can only be used w/ modification (i.e., by focusing on a period of investment NOT production, etc.). Moverover, these debates highlighted how macroeconomic equilbrium theories are poorly suited to describing the real world change dynamics of relative price adjustment w/in monetary economies based on roundabout production; these equilbrium theories do not pay enough attention to entrepreneurial decision making on a microeconomic level and the process in which entrepreneurs, interacting w/ each other, change their production processes such that the macroeconomic result is a change from one technique to another. Again, Bohm-Bawerk's capital-intensive direction is correct but only w/ modification can some of his explanations be used to correctly inform business cycle theory.

The Sraffa Hayek debate is best known for its lack of clarity. As Knight said to Morgenstern: "I wish he [Hayek] would try to tell me in a plain grammatical sentence what the controversy between Sraffa and Hayek is about. I haven't been able to find anyone on this side who has the least idea." Sraffa and Hayek did not agree on how best to model a monetary economy and, unlike Kaldor, Sraffa had not read Hayek's "Monetary Theory and the Trade Cycle" before Sraffa attacked Hayek's "Prices and Production." Clearly, Sraffa & Hayek defined equilibrium very differently w/ respect to natural interest rates. The fact that Keynes abandoned in his 1936 "General Theory" the use of the natural interest rate concept that Keynes used in his 1931 "Treatise on Money" -- based on Sraffa's criticism of Hayek -- did nothing to make Keynes's "General Theory" correct.

Several decades later, Hayek said "this capital-theory work shows more a barrier to how far we can get in efficient explanation than sets forth precise explanations. All these things I've stressed -- the complexity of the phenomena in general, the unknown character of the data, and so on -- really much more points out limits to our possible knowledge than our contributions that make specific predictions possible." For those interested in a contemporary exposition of what Hayek was attempting to say, I recommend Huerta de Soto's "Money, Bank Credit, and Economic Cycles" (2nd English Ed 2009).

Bottomline: none of the participants of this debate, including Keynes & Sraffa, successfully developed such a theory.

5. Roncaglia's false claim that Sraffa's 'reswitching of techniques' undermines the foundation of Menger's theory of subjective value, Hayek's capital theory, and Austrian Business Cycle Theory. "From the point of view of an individual actor or entrepreneur, once the PROSPECTIVE decision has been made to lengthen production plans (due to a rise in saving), all initial factors (land, labor, and EXISTING CAPITAL GOODS) are subjectively deemed to be 'original means of production' which merely determine the starting point of the production process. It is therefore irrelevant whether or not the new investment process incorporates techniques which, considered individually, may have been profitable at higher rates of interest."

Moreover, as noted in #4 above, the heterogeneous & complementary nature of different capital goods is core to the Austrian conception of capital - unlike the marginalist theories of Gossen, Jevons & Walras. As the much maligned Bohm-Bawerk himself wrote (Pg 105, Vol III, 1921 posthumous edition): "A nation's capital is the sum of heterogeneous concrete capital goods. To aggregate them, one needs a common denominator. This common denominator cannot be found in the number of capital goods... nor their length or width of volume or weight or any other physical unit of measurement... The only measuring rod that does not lead to contradictions... is the value [of these capital goods]." And as Hennings says, "Bohm emphasized ...that capital goods are not completely specific; some at least can be used in different ways, and so facilitate the change from one technique of production to another. But they are specific enough to make any such change a costly and time-consuming process. In spite of this limited (technical) malleability of capital goods there will obviously exist at any moment in time a definite structure of capital goods; for only if the existing capital stock is so structured does capital fulfil its role of synchronizing the production process in the presence of division of labor." Consequently, Pg 459 of Roncaglia's book is as equally absurd as Pg 458 (at least Roncaglia is consistent).

Pgs 571-75 of Huerta de Soto's "Money, Bank Credit, and Economic Cycles" specifically deals w/ this "reswitching controversy" while Pgs 265-508 of Huerta de Soto's book provides an exhaustive & incredibily detailed step-by-step explanation of the effects of credit expansion on the economic system, including a thorough examination of monetary disquilibrium effects on capital. To the extent Sraffa's attack on Hayek (Economic Journal, vol. 42 March 1932) was simple partisan retaliation for Hayek's complete destruction of Keynes's book "Theory of Money" (Economica vol 11 no 33 August 1931; again in November 1931; and yet again in vol 12 no 35 February 1932), nothing Huerta de Soto or anyone else can say would have convinced Sraffa. And this is the sad part about the interwar debate re: business cycle theory, as Robertson and other economists at the time pointed out.

6. The suggestion that Sraffian supply can somehow be reconciled with Keynesian demand - Wow! I believe Keynes's letter to Shaw sums up the stupidity of this notion nicely, indeed!

For all of these reasons, I cannot recommend this book for purchase to the lay reader interested in the evolution of economic ideas in general or the various notions of value in particular. Roncaglia's convoluted Sraffian definition of "value" on pg 16 is yet another reason why. Just as there is no room for individual members of society to influence the methods of production (surplus or not) according to Sraffa's systems operating at the optimum level of production in his book Production of Commodities by Means of Commodities; so too there are no individuals in Rocaglia's definition of "value." The metaphysical and epistemological fact is individual human beings are the ultimate cause and the ultimate end in the economic process NOT arbitrarily aggregated "social classes" and no amount of gibberish to the contrary by Marx, Sraffa (or Roncaglia) will make it so. Consequently, real world economic phenomena can best be explained as resulting from individual action and from the social interaction of individuals.

I applaud Roncaglia for clearly differentiating Menger from the other two marginalists, Jevons & Walras. Most American economists & writers inappropriately lump all three together & gloss over their very different methods & formulations of subjective value. However, I'm critical of Roncaglia because he then says Sraffa successfully refutes all three; Menger, Jevons & Walras which is simply not true. In other words, I'm critical of Roncaglia because he is wrong NOT because he's heterodox; my comments here are equally heterodox relative to contemporary American academic economics in the Paul Krugman / Brad DeLong sense of "mainstream" thinking.

As the old (sad but true) joke goes: "Where five economists are gathered together there will be six opinions, and two of them will be held by Keynes." I believe Roncaglia could have done a much better job to more accurately describe these different opinions. For a history of economic thought, choose Schumpeter's History of Economic Analysis (despite its warts & Roncaglia's 'misleading" & "largely useless" criticism of it on Pg ix) or even Robbins.
The author essentially evaluates all of economic history by using Sraffa's Production of Commodities by Means of Commodities as the litmus test.The author certainly has a point . Sraffa's approach would be preferable to the present,mainstream, standard ,neoclassical model based on the rational economic man of Benthamite Utilitarianism.This model is represented in the present day by Subjective Expected Utility( SEU )theory. SEU theory is a marriage of the Ramsey,De Finetti,and Savage subjectivist,Bayesian approach to probability ,that Keynes proved was a special case in his 1921 A Treatise on Probabiity,with the Morgenstern- von Neumann utility-game theory approach.

However,this is not the relevant choice.He completely overlooks Keynes's contribution in the General Theory.Instead ,he concentrates on the strange ,bizarre claim, made by a self admitted mathematical illiterate, Dennis Robertson ,about Chapter 3 of the GT being the core of Keynes's contribution.This myth was apparantly accepted by Richard Kahn,Austin Robinson,and Joan Robinson and passed down to a host of other economists like Sydney Weintraub,E Roy Weintraub,Paul Davidson ,Jan Kregel,G Harcourt,V Chick ,S Dow,A Leijonhufvud,Robert Clower,Robert Solow and a cast of supporting economists that stretches into the thousands.The author ,unfortunately,has absolutely no idea about what J M Keynes is doing in chapters 19,20,and 21 of the General Theory.This is most clearly brought out in the author's discussion of Keynes's theory of effective demand,which involves Keynes's aggregate supply curve and/or employment function.THe discussion of the aggregate supply function is an intellectual mess.

In his last chapter,the author appears to believe that the future of economic analysis will eventually turn out to be some kind of Sraffa based theory.THe problem here is that it is not possible to integrate Sraffa and Keynes because Sraffa essentially rejects the foundation of Keynes's theoretical construct,liquidity preference,since it is based on uncertainty.Neither Sraffa nor the present author have any idea about the connections that exist between Keynes's analysis in chapter 21 and Section 4 of chapter 15 of the GT and the A Treatise on Probability.
This book is exceptional. It explains economic theories, methodologies and concepts within a very clear view of their theoretical and socio-cultural contexts. It is also a very consequent and robust work from the epistemological point of view. A must have for everyone, and specially for most economists, who adopt this or that theory, concept or model without any notion of consequences
Hilarious Kangaroo
This book could EASILY be condensed to at least 1/4 of what is in it. Used this for my graduate history of economic thought course, and it is difficult to navigate, organization within the chapters are difficult to get through, and spends a lot of time simply restating what he already stated, but in different words. It practically vomited a thesaurus and added some names of economists and econ terms.

I am a fast reader and learner, with nearly a 4.0. This book gave me the worst time. If you must read it, have a dictionary ready, and be prepared to spend a long time on each chapter reading and rereading trying to understand what he is saying. It took me 1-2 hours per chapter, at LEAST... and I still didn't get everything.
Simply the better book in history of the economic thought. Advised to anyone it wants to know the evolution of the neoclassic thought and the sraffian critic. Warning: the approach is heterodox.
Read the other reviews because even after taking an entire course utilizing this book and getting fine marks in the class, I feel I have little better understanding of most of what was purportedly explained by Roncaglia. If you are interested in why Pierro Sraffa and why every other economist is wrong based on his critiques this book may be for you, but if you are that person you probably are Roncaglia. Good luck, and seriously, drop the class.