Maggs Bros.

‘The heart of Morishima’s book Ricardo’s Economics (1989) is in the final section entitled ‘Three Paradigms Compared’. Say’s Law is at issue. Ricardo established Say’s Law as a dominant mode of theorizing. Usual departures from Say’s Law involve a non-trivial role for money and/or a growth process via an active investment function. Ricardo had neither and so could sub-scribe to Say’s Law. Marx had both but his investment function was very restrictive and made nouse of money or credit. Walras had money towards the end of Elements but his growth theory lacked an investment function which led the way for savings to adjust to investment. Keynes of course had money and investment functions, but he did not spell out the microfoundations. Growth is not sufficient to justify a violation of Say’s Laws; money or an investment function which has a role for entrepreneurs to respond to uncertainty is required.’

‘In Ricardo’s Economics a model is set up in which excess demand and supply for labour and capital are modelled in a simple diagram (1989,fig. 6, p. 218). Here, around an equilibrium point, zones of excess supply and demand for the two factors are mapped out. Morishima’s axes are the real wage and the output capital ratio. Within the same general model all the three paradigms are embedded. Again, the investment function turns out to be the crucial relationship for the Anti-Say’s Law result that Keynes established.’ (New Palgrave).