[OPE-L:6266] Re: What do you teach in your micro and IO classes?

Gerald Levy (glevy@pratt.edu)
Fri, 13 Mar 1998 13:05:01 -0500 (est)

To begin with, I'd like to thank Mike W, David, Terry, Ajit, and Ian for
sharing their thoughts on this topic.

My first general comment by way of a response is to note that all of you
talked about how to teach micro, but none of you tackled the question of
how to teach industrial organization (IO). This could be because you
may not be teaching IO.

Your responses also seemed to indicate that your micro classes presented
and critiqued general equilibrium theory. This, I guess, follows the
normal presentation of micro in marginalist textbooks. But, what is the
relation between Walrasian theory, the Marshallian theory of the firm, and
(neo) neo-classical theories of industrial organization?

It seems to me that there is a very "unhappy marriage" between these
theories and disciplines. Although there is a branch of thought in IO
that attempts to re-cast IO in terms of neo-classical price theory, I
would say that the large tradition in mainstream IO is a
"neoclassical-institutionalist" perspective. I.e. there is a fundamental
disjuncture between NC price theory and NC IO theory. Perhaps one reason
for this divide is that as they investigate more concrete business-related
subjects, they realize that the Walrasian framework provides a very poor
basis for the analysis of these subjects.

Relatedly, what is the relation between g.e. theory and contemporary
mainstream theories regarding the multinational corporation (e.g. by
Dunning)? I think that's another very "unhappy marriage".

But how much better is Marxian analysis at analysing topics in industrial
organization? I, for instance, know of no Marxian (or even radical) IO
text. Part of the reason for this might be that not many Marxists are
working in the area of IO. Another reason might be that their analysis
hasn't generally dealt with these more concrete topics or attempted to
systematically relate those topics to the more abstract parts of the
theory. In that sense there might be a divide among Marxists that is
similar to the one referred to above among the neo-neoclassicals.

Of course, topics in IO have certainly been of interest to some Marxists.
One might even say that an attempt to come to terms with the changing
nature of competition under capitalism was a major premise of
Kalecki/Steindl & Baran/Sweezy theories. Sweezy, for instance (as quoted
by Foster) argued that the "stagnation of Marxian social science" was
largely a consequence of the "fact" that "the Marxian analysis of
capitalism still rests in the final analysis on the assumption of a
competitive economy" (Foster, p. 51).

There also seems to be a major concern among followers of the "social
structure of accumulation" school (hi Terry) about advancing an
_alternative_ micro and IO theory to nc theory. This alternative (see
Bowles/Edwards) seems to be largely based on an extension of the idea of
a "dual economy". How does this micro and IO theory, though, relate to
topics like ... value?

Willi Semmler is the only Marxist that I know of that attempted to review
a significant part of IO literature. His goal, in large part, was to see
whether the Marxian theories of production prices could be reconciled with
empirical studies on industrial and corporate pricing. I'm sure that he
would be the first one to acknowledge that more intellectual energy needs
to be put into examing questions related to understanding the forms in
which competition has changed.

Any thoughts on these issues?

Turning to other questions, David wrote:

> I think Marxists in economics depts. have a responsibility to teach
> standard theory. Students in our sections will need the analytical
> techniques, and should not be placed at a disadvantage in the electives by
> having not learned the core models (you all know what this is: indifference
> curves, revenue, product and cost curves, etc.) and quantitative methods.

I think the above make sense within the context of many economics
departments. At a smaller school, though, where economics may be taught
within the context of a social science department, I think that the above
rationale is frequently inapplicable. I.e. in many cases the eco classes
are taught as terminal classes and there may be no expectation when you
take an elective that you have already taken an intro class.

> In
> fact, to avoid the trap of charges of incompetence, etc., Marxists should be
> especially sharp in presenting and teaching these materials.

OK, this is often a practical reality that we have to deal with, but let's
not make a virtue out of a necessity.

> Mainstream theory is
> elaborated to address problems at some levels of reality; otherwise, it would
> not be able to play its ideological and reproductive roles. I do not
> for a minute assume that some sort of "division of labor" is possible, in
> which neoclassical economics supplies the "right" answers to certain
> questions while Marxist economics supplies the "right" answers to others, and
> the two can be neatly grafted together. However, we do not have a well
> worked out view of, for example, short-run price dynamics, within a Marxist
> framework that is distinct from the conventional one.

Since you are taking about micro here, consider the topic of perfect
competition which subjects such as S&D and consumer sovereignty assume.
What is the non-ideological function of assuming perfect competition?

As for understanding price dynamics, micro courses usually emphasize price
determination assuming perfect competition (or a pure monopoly). Although
there is some discussion of monopolistic competition and oligopolies in
many micro classes, there is little attention paid to the relation between
a world where pure competition rules and one where oligopolies are the

I agree that we don't really have a well-developed Marxist framework for
thinking about short-run price dynamics. The neo-classicals don't have a
very good one either. Although Marx's theory wasn't designed to focus in
on such questions, the question remains: how do we conceptualize these
questions in a manner separate from mainstream theory and in a manner
consistent with Marxist analysis?

> -- something like the
> academic counterpart of Wilfred Burchett's portrayal of the strategy of the
> NLF in South Vietnam, "living integrated with the enemy" -- seems the best
> way to go.

I don't think I like that analogy.

In solidarity, Jerry

PS: The best intro radical critique of micro that I have seen is in a long
since out-of-print book by Frank Stillwell.


Bowles, Samuel and Edwards, Richard _Understanding Capitalism:
Competition, Command, and Change in the U.S. Economy_, 2nd ed.,
HarperCollins College Publishers, 1993

Dunning, John H. _International Production and the Multinational
Enterprise_, London, George Allen & Unwin, 1981

Foster, John Bellamy _The Theory of Monopoly Capitalism: An Elaboration of
Marxian Political Economy_, NY, Monthly Review Press, 1986

Semmler, Willi _Competition, Monopoly, and Differential Profit Rates_, NY,
Columbia University Press, 1984

Steindl, Josef _Maturity and Stagnation in American Capitalism_, NY,
Monthly Review Press, 1976 (originally published in 1952)

Stilwell, Frank J.B. _Normative Economics: An introduction to
microeconomic theory and radical critiques_, Pergamon Press, 1975