Reconstructing Political Economy: The Great Divide in Economic Thought (Routledge Studies in Contemporary Political Economy)

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This volume offers an original perspective on the questions the great economists have asked and looks at their significance for todays world. Written in a provocative and accessible style, it examines how the diverse traditions of political economy have conceptualised economic issues, events and theory. Going beyond the orthodoxies of mainstream economics it shows the relevance of political economy to the debates on the economic meaning of our times.
Reconstructing Political Economy is a timely and thought-provoking contribution to a political economy for our time. In this light it offers fresh insights into such issues as modern theories of growth, the historic relations between state and market and the significance of globalisation for modern societies.

Reconstructing Political Economy: The Great Divide in Economic Thought (Routledge Studies in Contemporary Political Economy) Review

Tabb has done an excellent job in demonstrating that it is the risk versus uncertainty issue that separates economics into orthodox and heterodox camps.He correctly shows,implicitly,that Adam Smith understood the clear differences between risk(tolerable security-a static,stationary state with little change),where one can calculate the probability of a ship sinking on a particular oceanic trade route or of a house burning down, and uncertainty(a lack of security- a dynamic,nonstationary state with great change ),where such calculation is unreliable, as being the main operational factor constraining the "rational" decision maker.
Interestingly,it is in the works of Benoit Mandelbrot ,with his emphasis on the wild risk of the Cauchy distribution versus the mild risk of the Normal distribution,and Nassim Taleb,with his emphasis on luck,improbable outcomes,and the gigantic impacts of so called "outlier " events(the outliers are only outliers if you believe in the normal distribution) on the economy,that one can find this distinction carried on in a manner that is both rigorous,practical,and applicable to the macroeconomy.There are simply no current heterodox economists who have or will have accomplished what these two thinkers have accomplished .This is due to heterodox economists unfortunate rantings and ravings against any use or application of mathematics/statistics in economics.J M Keynes,like Mandelbrot and Taleb,understood the important role that mathematics and statistics(properly defined , carefully applied,and empirically checked)could play in economics .
Tabb demonstrates that he does not understand what it was that Keynes actually accomplished in the GT.He simply has no clue.Keynes's mathematical analysis in chapters 20 and 21 of the GT culminates on p.306 with Keynes's specification of the expectational elasticities, e and ed subscript ,that solves the risk versus uncertainty(or mild risk versus wild risk) divide that separates the economics profession.e and ed subscript will equal 1 if and only if there is no uncertainty ,only risk.One can then use the standard equation of exchange because there will be no speculative demand for money.Only the transactionn demand for money will be operational.Only risk need be considered.On the other hand ,if e and ed subscript are < 1,then large amounts of money are being used for speculative purposes in an environment of uncertainty.The orthodox claims about " rational " decision making,universally based on the claim that the normal probability distribution's standard deviation can be used to measure risk,break down completely.
Tabb, unfortunately, relies on the Post Keynesian heterodox school's assessment(Chick,O'Donnell,etc.) in order to obtain an evaluation of what it was that he " thinks " Keynes did in the GT.Of course,this is not surprising as economists are still engaged in fierce debates about what Adam Smith did or did not do over 230 years ago.Tabb misses a major explanation for this phenomenon-the vast majority of economists,both orthodox and heterodox,are simply not trained in a scientific or artistic manner.

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