The Revival of Classical Political Economy and the Cambridge Tradition: From Scarcity Theory to Surplus Theory

Abstract

Hilary Putnam and Vivian Walsh argue that Amartya Sen's contribution can, like the writings of Piero Sraffa, be best interpreted as a revival of classical political economy, in which Sen brings back into economics a richer conception of the human agent, and a moral dimension. Sen criticises the conception of rationality that underpins mainstream microeconomic theory, and suggests an alternative framework that can accommodate a variety of motivations, including moral motivations, as will be argued here. Furthermore, the work of Sen, and other authors of the Cambridge tradition who also devoted much time to the revival of classical political economy, are complementary in many respects, and provide the basic tools for an alternative economic theory, which is centred on the economic, social and ethical analysis of the production and distribution of the economic surplus, and not on the modelling of the activity of optimising agents in a context of scarcity. While the notion of scarcity is very important for the analysis of poverty and deprivation that Sen undertakes, the central issue to address, in order to explain the causal mechanisms behind scarcity, poverty and deprivation, concerns the study of the production and distribution of the economic surplus.

Acknowledgment

For most helpful comments the author is grateful to Geoffrey Harcourt, Tony Lawson, Vivian Walsh and the referees of this journal.

Notes

¹These regularities are analysed by checking whether observed behaviour conforms to certain axioms of ‘internal consistency’ of the choice function, such as the weak axiom of revealed preference, the strong axiom of revealed preference, basic contraction consistency, basic expansion consistency or binariness of choice.

²Note that the latter case, when there is an optimal set as opposed to a unique optimum, is seldom considered. This is because the possibility of indifferent preference relations (which leads preference orderings to be represented by quasi-concave utility functions, and may lead to the emergence of an optimal set, as opposed to an unique optimum), albeit a theoretical possibility in the analytical framework of mainstream microeconomics, is rarely considered in most models, precisely in order to enable the model to predict which option will be chosen, that is, to ensure that a unique optimum exists.

³Walsh (2000) and George (2007) have noted a connection between Sen's notion of reasoned scrutiny and his account of meta-preferences—orderings that are defined over a set of preferences, rather than over a set of options, and thus denote which preferences we would, at a meta-level, prefer to have. In fact, some conflicts between competing motivations and corresponding orderings can be resolved through the exercise of reasoned scrutiny and meta-preferences. But even meta-rankings may be incomplete, and hence the exercise of reasoned scrutiny does not necessarily lead to predictable behaviour (Sen, 2002, p. 617).

⁴On the role of common sense in the Cambridge tradition, particularly with respect to the interplay between philosophy and economics that characterises this tradition, see Coates (1996).

⁵The interaction between Sen's capability approach and the Cambridge Keynesian–Sraffian framework deserves further development, not least because the mutual consistency of the economics of Keynes and Sraffa is a highly contentious issue (see Harcourt, 1981; Lawson, 1994; Martins, 2009).