Yanis Varoufakis Publishes Some of My Ramblings on the State of Ireland

ranting man

Yanis emailed me for my thoughts on Ireland’s recent return to the bond market. He has published his own analysis with mine thrown in at the end here.

Note the Freudian slip wherein I misspell ‘Fianna Fail’, who are the former center-right party of governance that are now trying to re-brand themselves as center-left, as ‘Fine Fael’ which looks remarkably like the spelling of the present governing party, Fine Gael. It doesn’t take a psychoanalyst to figure out what that slip is all about.

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About pilkingtonphil

Philip Pilkington is a London-based economist and member of the Political Economy Research Group (PERG) at Kingston University. You can follow him on Twitter at @pilkingtonphil.
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4 Responses to Yanis Varoufakis Publishes Some of My Ramblings on the State of Ireland

  1. Lord Keynes says:

    This is off topic, but do you have any thoughts on the attempts of neoclassicals to try and make mark-up pricing consistent with neoclassical theory?

    That is, this idea that mark-up pricing – on the basis of average unit costs and profit mark-up – has the same outcome as if a firm deliberately and consciously were to equate marginal cost and marginal revenue? (as in Langlois, Catherine. 1989. “Markup Pricing versus Marginalism: A Controversy Revisited,” Journal of Post Keynesian Economics 12.1: 127–151).

    Basically the argument that is put to me is that if marginal cost and average cost are the same or tend to coincide given the shape of a marginal cost curve, then a neoclassical profit-maximizing firm will use average cost as a proxy for a profit-maximizing mark-up.

    • I’m really not familiar with the debate, to be honest. My initial impression would be that is misunderstanding the nature of the problem. MR=MC means that profits tend toward zero. Granted that the marginalists then assume some sort of “fair profit” on top of this, but the thrust of the argument leads to the conclusion that non-competitive profits will dissolve.

      Mark-up pricing theory refutes this. It shows that profits come from a mark-up on costs. This gives a certain stability to profits (and prices) that seems evaded in the marginalist framework.

      Generally my experience is that marginalism can bend itself into pretzels to get similar results as PK theory, but it is rarely convincing.

      You should send Fred Lee an email and ask him about this. I’m sure he could give you an answer.

      http://cas.umkc.edu/econ/economics/faculty/Lee/

  2. Lord Keynes says:

    This is excellent, thank you very much. I am hesitant to email Lee since I do not know him. Do you perhaps know him?

    if so, and if it is not a terrible imposition, but perhaps you could ask for me? But anyway, this answer is very useful.

    • I don’t know him but I emailed him on something once. He’s always happy to talk about his work. Just tell him what blog you’re from and ask him about it. Lee likes getting his stuff out there. I’m sure you could even ask to quote him on your blog.

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