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Methodology and Radical Political Economics

Martin H. Wolfson

October 2007

Presented at

REBELLIOUS MACROECONOMICS:

MARX, KEYNES & CROTTY

A conference in honor of James Crotty

Gordon Hall

418 North Pleasant Street

Amherst, MA 01002

Phone: 413.545.6355

Fax: 413.577.0261

peri@econs.umass.edu

www.peri.umass.edu

Methodology and Radical Political Economics

Martin H. Wolfson Department of Economics and Policy Studies

University of Notre Dame Notre Dame, IN 46556

Prepared for the Conference in honor of Jim Crotty University of Massachusetts at Amherst

October 19-20, 2007

Methodology and Radical Political Economics

by Martin H. Wolfson

1. Introduction

Radical political economics has always encompassed a wide variety of economic theories

and perspectives. In fact, printed in each issue of the Review of Radical Political Economics is

the following statement: "As the journal of the Union for Radical Political Economics, the

Review publishes innovative research in political economy broadly defined as including, but not

confined to, Marxian economics, post-Keynesian economics, Sraffian economics, feminist

economics, and radical institutional economics."

Given the broad purview of radical political economics, the question arises: do the

various theories that make up radical political economics have some methodological coherence,

or are they disjoint B united in their opposition to neoclassical economics, but with theoretical

assumptions, principles and methods, i.e., methodologies, that are incompatible with each other?

The argument of this paper is that there is coherence.1 In particular, there is an emerging

heterodox macroeconomic framework that builds upon the perspectives of Karl Marx, John

Maynard Keynes, and institutionalists like Wesley Clair Mitchell.2

A leader in the development of this framework is James R. Crotty. Throughout his

career, Crotty has investigated, and sought an integration of, Marxian, Keynesian, and

institutionalist perspectives. In particular, Crotty's contributions have been to 1) combine

principles from the three perspectives into an integrated framework, 2) deepen our understanding

of the three perspectives by indicating how they are more complementary than typically

understood, and, 3) extend the basic principles to provide a coherent understanding of the current

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global economy.

In the next section of the paper, key assumptions and principles of the Marxian,

Keynesian, and institutional perspectives, which form the building blocks for the new

framework, will be discussed. In the third section, Crotty's contributions to combining,

deepening, and extending these perspectives into a new framework will be addressed. Finally,

the fourth section concludes with a statement of the new methodological framework.

2. Building Blocks: Marx, Keynes, and Mitchell

Below are the building blocks, or starting points, for the new heterodox macroeconomic

framework. They are basic methodological assumptions and principles from Marx, Keynes, and

Mitchell. They are often taken to be representative of three separate theories, with little or no

convergence.

2.1. Karl Marx

1) Historical Materialism

This basic philosophical perspective of Marx's has been the subject of numerous books,

articles, and treatises. At the risk of oversimplification, I take it to mean two basic concepts.

First, people's "material conditions," especially the social relations of production (the

relationships people enter into in the process of production), have an important influence on the

ideas, culture, religion, politics, and other aspects of the "superstructure" of society. This

materialist point of view should be distinguished from determinism, which claims that the

material conditions determine the superstructure, and from the view that the superstructure has

no effect or influence on the material conditions. An important implication of Marx's materialist

philosophy is that one needs to make a "concrete analysis of concrete conditions," i.e.,

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thoroughly investigate the reality one is trying to explain.

Second, historical analysis is an essential component of the Marxian perspective. One

cannot understand current reality without analyzing the historical forces that have brought the

present into being.

2) Dialectical contradiction

The process that propels history forward is the working out of the contradictory

relationship between two opposing forces. These opposing forces have different interests and

are always in struggle with each other. This perspective has two important and related

implications.

First, the change that results from contradictions is endogenous. It is internal to the

contradictory relationship being analyzed. Second, there is no permanent equilibrium. The two

opposing forces within a contradiction can arrive at a temporary equilibrium, which is best

understood as stabilization at a moment in time. But because the two forces continue to be in

contradiction with one another, struggle will continue that will eventually disrupt that temporary

equilibrium.

This is not to say that exogenous events cannot play a role in Marxian analysis. But

Marx's concept of dialectical contradiction rules out the neoclassical view of equilibrium as a

permanent end point that can be disrupted only by exogenous "shocks."

3) Class conflict

In Marx's analysis, the fundamental contradiction in capitalist society is between capital

and labor. The historical working out of the contradiction between these two opposing forces is

the key to understanding the dynamics of a capitalist economy.

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Also important are intra-class conflicts, such as those between industrial and financial

capital, among capitalist firms competing with each other, and also among segments of the

working class.

4) Theory of the state

In capitalist society the dominant class, i.e., the capitalist class, has a dominant influence

on the "state," taken to be the apparatus of government broadly conceived: the legislative and

executive branches, the courts, police, military, etc. Many Marxists view the state as a

"contested terrain," in which labor can vie for influence, but in which the capitalist class usually

dominates because of instrumental and structural influences.

Because of its income and wealth, the capitalist class can influence the levers, or

"instruments" of state power. For example, representatives of the capitalist class can be

appointed or elected to positions of power, and their lobbyists can influence decisions.

Also, capitalists hold a central structural position within a capitalist economy. They hire

and fire workers and make decisions about the expansion of production and investment. Even

governments sympathetic to labor are influenced by the powerful role capitalists play in a

capitalist economy.

5) Evolution of economic systems

Marx analyzed a progression of economic systems, from simple commodity production,

slavery, feudalism, to capitalism. He predicted that capitalism would be replaced by socialism.

In the contradiction between capital and labor, labor would become dominant and would change

the institutional structures defining capitalism to those compatible with a socialist system.

Aiding this transition would be the contradiction between the forces of production (such as plant

5

and equipment, technology, and human skills and abilities) and the social relations of production.

Marx thought that capitalist social relations would increasingly become obstacles to further

growth of the forces of production, and would be transformed.

Despite continuing controversies about Marx's prediction of socialism, his theory that

class struggle, and the contradiction between the forces and social relations of production, would

lead to a new institutional structure is a key building block of the new macroeconomic

framework, as discussed below.

2.2. John Maynard Keynes

1) Fundamental uncertainty

Nobel laureate Niels Bohr said Ait is difficult to make predictions, especially about the

future.@ As Keynes stressed, about much of the future, we simply do not know. Note that this is

much different from the neoclassical concept of risk, which enables one to know all possible

future events and establish a probability for each.

2) Financial crises and speculation

Because of fundamental uncertainty, financial markets are subject to crises and

speculation. Herd behavior leads to euphoric booms and sudden panic, when the optimistic

expectations that fueled the boom are not fulfilled.

2.3. Wesley Clair Mitchell

1) Endogenous business cycle

Mitchell, the founder of the National Bureau of Economic Research, was a leading

institutional economist of the early twentieth century. He pioneered quantitative research on the

business cycle. Based on his research, he hypothesized an endogenous business cycle with

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various stages, such as recovery, expansion, crisis, panic, and depression. Mitchell's business

cycle is endogenous in the sense that it traces a process of cumulative change in which one stage

of the cycle is transformed into the next.

2) Institutional methods

Mitchell's methods were both quantitative and institutional. He accumulated data on

hundreds of data series and then analyzed the data inductively to create his theoretical concepts.

He focused on quantitative data. Other institutionalists have used other methods, such as

surveys, participant-observer techniques, pattern models, historical analysis, etc. But like all

institutionalists, he understood that a concrete, detailed investigation of institutional conditions

was a necessary element to the understanding of social reality.

3. Crotty's Contributions

James R. Crotty starts with the basic building blocks from Marx, Keynes, and Mitchell,

but extends them by combining, deepening, and extending the basic theories.

3.1. Combining Mitchell and Marx: Class conflict and the business cycle

Crotty, with co-author Raford Boddy [1974, 1975], viewed Mitchell's endogenous

business cycle through the lens of class conflict. Mitchell, using data from business cycles in the

early twentieth century, observed an increase in labor costs and a decline in labor productivity

towards the end of the business-cycle expansion, with a resultant negative effect on profits and

investment. Boddy and Crotty, analyzing the business cycles of the early post-World War II

period, observed similar trends but interpreted them in the context of Marx's "wage-squeeze"

crisis theory.

In Marx's theory [1967, chapter 25], the wage squeeze is due to a depletion of the

7

industrial reserve army (the unemployed) and thus an increase in the bargaining power of labor.

Boddy and Crotty extend Marx's theory by viewing capital's reaction in the context of

macroeconomic policy and Marx's theory of the state. In the business cycles that Boddy and

Crotty investigated, the Federal Reserve raised interest rates, which slowed economic activity

and helped to replenish the reserve army. It thus intervened on the side of capital to reduce the

power of labor and the wage squeeze on profits.

In addition, in their analysis Boddy and Crotty employed the approach of both Marx and

Mitchell: the institutional investigation of concrete conditions.

3.2. Adding Keynes: Financial crises and speculation

Boddy and Crotty's analysis of the business cycle, carried out in the 1970s, focused

primarily on real variables. As time went on, it became clear that the financial system played a

significant role in the dynamics of the business cycle and needed to be incorporated into the

macroeconomic framework.

Post Keynesians had stressed the neglect by neoclassical economists of Keynes's theory

of fundamental uncertainty. But if the future was unknowable, how could decisions that implied

knowledge of the future be made? By incorporating Keynes's ideas about conventions, herd

behavior, and conditional stability, Crotty [1994] demonstrated how fundamental uncertainty

could be an essential part of a coherent macrotheory and an integral part of business-cycle

analysis.

Those who need to make a decision, but who do not know the future, would fall back on

"conventional wisdom," what most people thought most other people thought. Often the

conventional wisdom was that the future would be like the past. Speculative booms could

8

develop, as financial market participants projected an optimistic scenario far into the future.

Even market professionals would invest because they thought everyone else would be investing.

But because these conventions were not based on any firm knowledge of the future

(which was impossible), they were liable to be quickly rejected at the first sign of trouble.

Financial market participants could quickly head for the exits and initiate a financial crisis.

3.3. Deepening our understanding of Marx: Finance and the business cycle

Most discussions by radical political economists in the 1970s of Marxian crisis theory

considered only real variables. The assumption was that Marx saw crises originating in the real

sector, in the sphere of production. So if one wanted to combine the real and financial sectors of

the economy in a more comprehensive business-cycle theory, it would be necessary to go beyond

Marx by incorporating insights from Keynes.

However, in an insightful analysis in the mid-1980s, Crotty [1985, 1987] argued that the

limitation of Marx's crisis theory to the sphere of production was a misunderstanding of Marx's

methodology. Crotty's argument was that Marx treated production and circulation as a unified

whole and did not give production a logical priority over circulation.

Crotty's interpretation of Marx's argument is that a crisis comes about as a result of the

interaction of both the real and financial sectors. Once money is used as a means of payment (to

repay debts), contractual commitments on debt can escalate over the course of the business-cycle

expansion. Problems with profitability make it difficult to repay these debts. It is the interaction

of profitability problems with the high level debt repayment commitments that causes the crisis.

Thus Crotty's analysis shows that Marx analyzed both the real and financial sectors, and

that a heterodox macroeconomic framework is strengthened by incorporating the analyses of

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both Marx and Keynes on financial crises and instability.

3.4. Extending institutional analysis: Stages of capitalism

The increased attention to financial variables in the 1980s was not a coincidence. More

attention was paid to these variables because financial problems and crises became more

prominent. Radical political economics, and others, devoted increasing attention to changes in

the U.S. and global economies over the course of the post-World War II period. It became clear

that institutional changes had occurred that had led to a qualitatively different stage of

capitalism.

These qualitatively different stages of capitalism were characterized by changes in how

the macroeconomy operated and how macrotheory was to be interpreted (more on that below).

Thus radical political economists had to adopt an institutional methodology if they were to

comprehend the changes in the economy and adopt a relevant macrotheory.

A number of theories of stages of capitalism exist. Baran and Sweezy's Monopoly

Capital [1966] is one; the social structure of accumulation theory by David Gordon and his co-

authors [Gordon, Edwards, and Reich; 1982] is another. But Crotty [2002] is a leader in

analyzing the post-World War II stages of capitalism as a transition from a "Golden Age" to a

stage characterized as "Global Neoliberalism."

3.5. Deepening our understanding of Keynes: Keynes's institutional methodology

Neoclassical economics views Keynes's General Theory [1936] as a timeless analysis of

capitalism as an economic system. Even some radical political economists view it in this way.

But, as Crotty [1990] demonstrates, Keynes's analysis in the General Theory applied only to the

specific institutional structures that existed in early twentieth-century capitalism. Keynes

10

thought that the different institutional conditions of the nineteenth century constituted a different

stage of capitalism with different economic characteristics.

Keynes, according to Crotty, saw a "heroic" entrepreneur in the nineteenth century, one

who viewed investing as a way of life and plowed back the firm's profits into investment without

regard to cost-benefit analysis. Accompanying the heroic entrepreneur was the Victorian rentier

class that was content to put its savings into long-term bonds and preferred stock (not common

stock) for long-term income rather than short-term capital gains. Under these conditions, long-

term real investment was encouraged.

In contrast, in the twentieth century institutional conditions were significantly different.

Inflation following World War I undermined the rentier class, firms began to rely much more on

external equity financing, and owners became increasingly distinct from managers. Under these

conditions, the speculation and instability of investment described by Keynes in the General

Theory became the norm.

The important points to note, at this point, are the centrality of institutional analysis to the

emergent heterodox macroeconomic framework, and the ease with which Keynes's analysis falls

within the institutionalist perspective.

3.6. Extending institutional analysis: Macrotheory differs across stages of capitalism

The significance of stages of capitalism for a heterodox macroeconomic framework is

that the behavior of economic actors and the nature of macro policy differ across different stages,

and thus the relevant macrotheory does as well. In a series of articles, Crotty has systematically

investigated this process. In particular, he has explored the behavior of industrial and financial

corporations, the nature of macro policy, and the characteristics of economic and financial crises.

11

1) The behavior of industrial and financial corporations

Crotty [1993] cites Marx's distinction between "fraternal" and "fratricidal" modes of

competition. Under these two modes of competition, investment behavior by industrial

corporations differs. Fraternal competition leads to "corespective" behavior and investment that

is primarily capital widening (expanding the scale of investment incorporating current

technology). In contrast, fratricidal competition leads to "coercive" investment that emphasizes

capital deepening (investment incorporating new technology that has the potential to undermine

the value of the existing capital stock).

Crotty applies this analysis to the corespective Golden Age and the competitive

neoliberal era. He describes some additional characteristics of corporate behavior under

neoliberalism: "Disrupting organizational structure and routine, firing workers, slashing wages,

closing (or slaughtering) nonamortized plants, attacking unions, taking on debt levels previously

considered to be intolerably dangerous" [Crotty, 1993: 19]. He notes that these behaviors are

risky tactics. They did not characterize corporate behavior during the corespective Golden Age;

they are adopted in the neoliberal era only because of the pressure of fratricidal competition.

The changed corporate behavior has important implications for the global economy.

Crotty [2000, 2003a] concludes that this behavior (coercive investment, attacking labor, etc.)

under neoliberalism has led to both chronic excess aggregate supply and chronically inadequate

global aggregate demand. This inability of aggregate demand and supply to equilibrate, an

impossibility in neoclassical analysis, is explained by Crotty [2000: 367] as the interaction of

demand and supply effects in a vicious cycle: "The more competitive pressures develop, the

more they force firms to cut wages, smash unions, substitute low for high wage labor, and

12

pressure governments to cut spending and generate budget surpluses. But these actions constrain

global aggregate demand even more tightly, creating yet stronger competitive intensity."

Deregulated financial markets in the neoliberal era have also been subject to increased

competitive pressures. This has led them to become increasingly speculative and to take on

increasing risk, a process that thus far has enabled financial corporations to report increased

profits [Crotty, 2007].

However, financial markets have put additional pressure on nonfinancial corporations.

Crotty [2003b] analyzes the shift in financial markets from "patient" finance to impatient

financial markets. He points out that financial markets under neoliberalism have forced a

portfolio conception onto nonfinancial corporate behavior: corporate assets must continually be

restructured to maximize the corporation's stock price. Moreover, the pay structure of corporate

management has shifted: instead of being rewarded according to the long-term success of the

firm, corporate manager compensation is now much more firmly tied to the corporate short-term

stock price.

This has led to what Crotty [2003b: 271] calls the "'neoliberal paradox': financial markets

demand that corporations achieve ever higher profits, while product markets make this result

impossible to achieve." He concludes that this impossible situation led to the increase in

financial accounting fraud that was observed in the late 1990s.

2) The nature of macro policy

The change from the Golden Age to the neoliberal stages of capitalism has had

implications for the nature of macroeconomic policies. Crotty [2003a] describes a number of

changes in macro policy under neoliberalism, all of which have contributed to the problem of

13

chronically inadequate aggregate demand growth.

Monetary policy has become decidedly more oriented to an anti-inflation stance. The

deregulation of financial markets has enabled financial corporations to use capital flight to

punish countries that do not adopt the corporations' preferred high interest-rate, low-inflation

monetary policies.

Fiscal policy has also become increasingly restrictive. Crotty notes that large cuts in the

social safety net and an aversion to fiscal deficits have characterized fiscal policy under

neoliberalism.

Restrictive monetary and fiscal policies have been enforced on many countries by the

International Monetary Fund's austerity policies. Crotty estimates that 40% of the world's

population, living in 55 countries, has been subject to such policies. Also, financial deregulation

and liberalization, and the IMF's dominant role, have forced many countries to abandon policies

that regulated the macroeconomy, such as capital controls and state regulation of credit

allocation.

3) The character of economic and financial crises

In a series of articles on the Asian financial crisis (such as Crotty and Dymski, 1998),

Crotty and his co-authors explain the connection between increasing international financial

crises and the neoliberal model. The defining elements of the neoliberal model B deregulation,

privatization, and liberalization B have led to heightened capital mobility, widespread

speculation, and increasing financial crises.

It is perhaps no accident that we observe both increasing financial crises and chronically

inadequate aggregate demand in the neoliberal era. Both likely can be linked to some of the

14

corporate behavior discussed earlier: firing workers, slashing wages, and attacking unions.

These strategies, along with tax cuts that favor the wealthy, and a whole host of government and

corporate policies, have dramatically increased income and wealth inequality. And has John

Kenneth Galbraith [1988: xiv] so colorfully reminds us, "what well-rewarded people regularly

do with extra cash" is to "sluice funds into the stock market" and other financial investments.

Falling wages and weakened unions, along with increasing inequality and financial

capital mobility, have resulted in chronic underconsumption problems and increasing financial

speculation and financial crises. The conditions that led to the wage-squeeze economic crises in

the Golden Age have changed, and so have the nature of economic and financial crises in the

neoliberal era.3 Although Crotty has not yet revisited this issue in the context of his 1970s

papers with Raford Boddy, it may well be on his agenda.

3.7. Extending Marx: Historical change in the capitalist global economy

The idea of stages of capitalism obviously raises the issue: how does one stage of

capitalism transform into the next? What is the process of historical change?

Here is where Marx's concepts of class struggle and contradiction between the forces of

production and the social relations of production come into play. Crotty [2002] shows that a

similar analysis can be used to analyze the transition from the Golden Age to neoliberalism.

Although the Golden Age constituted a settled institutional structure, the ongoing

contradictions of a capitalist society (between capital and labor, between industrial and financial

capital, among capitalist firms, etc.) changed the economic environment. Crotty [2002]

discusses rising inflation, increased trade competition, balance of payments deficits, etc. These

changes in the economic environment put pressure on the existing institutional structure of the

15

Golden Age, such as the Bretton Woods monetary system. Eventually the old institutions could

no longer function. A crisis ensued, and the old institutions were dismantled.

What would be the new institutional structure to be created? Crotty [2002] explains that

the new institutional structure, neoliberalism, was not inevitable. Neoliberal institutions were

created because they were the deliberate choice of "elites" (capital) and because the capitalist

class had the power to enforce its choice. Here the basic concepts of Marx are extended to apply

to the historical change that transforms one stage of capitalism into another.

4. Methodology and Radical Political Economics

What, then, are the methodological principles that constitute the emergent heterodox

macroeconomic framework? Below is a summary of the main points that emerge from the

review of Crotty's contributions.

4.1. Contradictions, class conflict, endogenous change, and the business cycle

The working out of the main contradictions of capitalism, particularly the class conflict

between capital and labor, provide the impetus for endogenous change in the capitalist economy.

In particular, class conflict (and intra-class contradictions) strongly influence the dynamics of

the business cycle.

4.2. Fundamental uncertainty, financial crises, and speculation

Macroeconomic activity takes place under conditions of fundamental uncertainty.

Speculation and financial crises are an outcome of decision-making under fundamental

uncertainty and the interaction of real and financial developments.

4.3. Institutional conditions and stages of capitalism

The macroeconomy behaves differently under different institutional conditions, in

16

particular the different institutional conditions that characterize different stages of capitalism.

The behavior of industrial and financial corporations, macroeconomic policy, even the dynamics

of the business cycle and the nature of economic and financial crises, have changed as the

institutional conditions of the Golden Age were replaced by those of neoliberalism.

4.4. Historical change and possibilities for the future

Historical change takes place as economic changes, driven by the contradictions of

capitalism, erode, or come up against, the institutional structure. A crisis takes place as the old

institutional structure is swept away. The new institutional structure that takes its place, whether

a new stage of capitalism or a new economic system, depends on the relative balance of power

between the economic classes.

The emergent heterodox macroeconomic framework depends on an integration of

principles from Marx, Keynes, and institutionalists like Mitchell. To that new framework, Jim

Crotty's contribution is significant. His analysis is leading the way forward to a new

methodology for radical political economics.

References

Baran, Paul A., and Paul S. Sweezy. 1966. Monopoly Capital. New York: Monthly Review

Press.

Boddy, Raford, and James R. Crotty. 1974. "Class Conflict, Keynesian Policies, and the

Business Cycle," Monthly Review, 26 (5), pp. 1-17.

______. 1975. "Class Conflict and Macropolicy: The Political Business Cycle," Review of

Radical Political Economics, 7 (1), pp. 1-19.

Crotty, James R. 1985. "The Centrality of Money, Credit and Financial Intermediation in Marx's

Crisis Theory." In S. Resnick and R. Wolff, eds., Rethinking Marxism: Essays in Honor

of Harry Magdoff and Paul Sweezy. New York: Autonomedia, pp. 45-82.

______. 1987. "The Role of Money and Finance in Marx's Crisis Theory." In R. Cherry, et. al.,

eds., The Imperiled Economy, Volume 1. New York: Union for Radical Political

Economics.

______. 1990. "Keynes on the Stages of Development of the Capitalist Economy: The

Institutionalist Foundation of Keynes's Methodology." Journal of Economic Issues, 24

(3), pp. 761-80.

______. 1993. "Rethinking Marxian Investment Theory: Keynes-Minsky Instability,

Competitive Regime Shifts and Coerced Investment," Review of Radical Political

Economics, 25(1), pp. 1-26.

______. 1994. "Are Keynesian Uncertainty and Macrotheory Incompatible? Conventional

Decision Making, Institutional Structures and Conditional Stability in Keynesian

Macromodels." In G. Dymski and R. Pollin, eds., New Perspectives in Monetary

Macroeconomics: Explorations in the Tradition of Hyman Minsky. Ann Arbor: Univ. of

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Michigan Press, pp. 105-142.

______. 2000. "Structural Contradictions of the Global Neoliberal Regime." Review of Radical

Political Economics, 32 (3), pp. 361-68.

______. 2002. "Trading State-Led Prosperity for Market-Led Stagnation: From the Golden Age

to Global Neoliberalism." In G. Dymski and D. Isenberg, eds., Seeking Shelter on the

Pacific Rim: Financial Globalization, Social Change, and the Housing Market. Armonk,

NY: M.E. Sharpe, Inc., pp. 21-41.

______. 2003a. "Structural Contradictions of Current Capitalism: A Keynes-Marx-Schumpeter

Analysis." In J. Ghosh and C.P. Chandrashekar, eds., Work and Well-Being in the Age of

Finance. New Delhi: Tulika Books, pp. 24-51.

______. 2003b. "The Neoliberal Paradox: The Impact of Destructive Product Market

Competition and Impatient Finance on Nonfinancial Corporations in the Neoliberal Era."

Review of Radical Political Economics 35 (3), pp. 271-79.

______. 2007. "If Financial Market Competition is so Intense, Why are Financial Firm Profits so

High? Reflections on the Current 'Golden Age' of Finance." A paper prepared for a

conference on "Financialization: in retrospect and prospect," sponsored by the IWGF,

University of Manchester, London, February 12-13.

______ and Gary Dymski. 1998. "Can the Global Neoliberal Regime Survive Victory in Asia?

The Political Economy of the Asian Crisis." International Papers in Political Economy, 5

(2), pp. 1-47.

Galbraith, John Kenneth. 1988. The Great Crash: 1929. Boston: Houghton Mifflin Co.

Gordon, David M., Richard Edwards, and Michael Reich. 1982. Segmented Work: Divided

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Workers. New York: Cambridge University Press.

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York: Harcourt, Brace, and World.

Kotz, David M. 2007. "Crisis Tendencies in Two Regimes: A Comparison of Regulated and

Neoliberal Capitalism in the U.S." A paper presented at a panel on "Reconstituted Social

Structures of Accumulation: Macroeconomics, Profits, Finance, and Performance" at the

Union for Radical Political Economics sessions at the Allied Social Science Associations

annual conference in Chicago, January 6, 2007.

Marx, Karl. 1967. Capital, Volume 1. New York: International Publishers.

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and Kenneth P. Jameson, eds., Crossing the Mainstream: Methodological and Ethical

Issues in Economics. Notre Dame, IN: University of Notre Dame Press, pp. 332-352.

______. 2003. "Neoliberalism and the Social Structure of Accumulation." Review of Radical

Political Economics 35 (3), pp. 255-262.

Notes

1.This paper concentrates on methodological assumptions and principles. For a discussion of institutional methods, see Wolfson [2001].

2.Two characteristics of this framework should be mentioned. First, it does not reduce all theories within radical political economics to a common set of assumptions. Although there are various theories within neoclassical economics, such as New Keynesian economics or new classical macroeconomics, all of these theories are based on the same basic assumptions of individual rational agents maximizing under constraints. The framework discussed here does not claim that all theories within radical political economics are derived from the same assumption set. Rather, it claims that there are important aspects of various theories that can be combined in a coherent way to create a framework with greater explanatory power.

Second, the framework does not encompass all of radical political economics. For example, important aspects of gender and race emphasized by radical political economists are not included. Nonetheless, the framework is an important step in the development of an integrated radical political economic analysis that can function as an alternative to neoclassical economics.

3.For more on this issue, see Wolfson [2003] and Kotz [2007].