Questions for Review with Answers
Chapter 7. History of Economic Thought III.
The Critics of Mainstream Economics
I. An Outline of the Major Traditional Critical Schools of Economic Thought
Chapter 7 – Question 1
Summarise Max Weber's theory on the linkage between capitalism and Protestantism.
* Max Weber stated that there is a linkage between Protestantism and economic success in capitalist economists. He ascribed it to the belief held by some Protestant denominations that worldly success is a sign of God's grace. Where this combines with an ascetic lifestyle, it almost automatically leads to riches.
Chapter 7 ― Question 2
What is the radical issue in Catholic social economics?
* The precedence of labour over capital.
Chapter 7 ― Question 3
What are the major concerns of social economics?
* Important subjects of social economics are a redefinition of well-being that goes beyond material well-being and the relevance of ethics for economics. Social economics is strictly non-mathematical and anti-neo-classical.
Chapter 7 – Question 4
Summarise the view of Post Keynesians economists in the famous capital debate.
* They challenged the mainstream view that returns to capital are part of the distribution of incomes. Instead, they asserted that returns to capital are the result of a prior distribution of incomes which enables the capital owners to buy capital. The Post Keynesian view can best be summarised by Ms Robinson's famous sentence "Owning capital is not a productive activity."
Chapter 7 – Question 5
What is the major point of dissent that separates RPE from mainstream economics?
* The major point of dissent is, of course, its partly Marxist approach, in particular its views that economic relations are political as they involve power, that the structures of capitalist economies are a historically contingent phenomenon, and that these structures do not necessarily generate efficient results.
II. The Institutionalists
Chapter 7 – Question 6
List the theories of Thorstein Veblen and John K. Galbraith that you have encountered in this section.
* The most famous theories advanced by Thorstein Veblen include (1) conspicuous consumption, which means that things are bought to impress other people, (2) the dichotomy between useful industrial activities and predatory pecuniary activities, and (3) the dichotomy between man's inborn wish to do useful and meaningful work and the waste of this resource by the merely pecuniary motives of employers.
John Kenneth Galbraith is famous for his theory on the dichotomy between private affluence and public squalor and for his early disclosure of the power wielded by large corporations and the dichotomy between them and the small economic-model firm.
III. More Recent Critical Schools
Chapter 7 – Question 7
What is the difference between ecological and environmental economics?
* Ecological economics views nature as an inherent value; environmental economics views it as instrumental for man.
Chapter 7 – Question 8
Define the term sustainability.
* Sustainability stands for meeting our needs without making it impossible for future generations to meet theirs.
Chapter 7 – Question 9
Describe the potential conflict between liberalism and communitarianism.
* Liberalism is ultimately a psychological laissez-faire approach. Anything goes as long as the rights of other people are not violated. Communitarians believe that man is by nature a social being, that rights come with obligations, that human relations are reciprocal, that people in misery should be given help, but can, in exchange, be expected to behave in desirable ways.
Chapter 8 – Question 10
Summarise the major concerns of feminist economists.
* Their two central concerns are the bad economic positions of women and the male nature of mainstream economic thinking.
IV. Forums for Heterodox Economists
Chapter 7 – Question 11
Define the term heterodox economics.
* Heterodox economics means non-neo-classical economics. It comprises all critical economic schools and emphasises the necessity of pluralism.
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