Frank Ramsey was in Cambridge at the same time as John Maynard Keynes, Arthur Pigou, and Piero Sraffa, some of the most influential economists of the twentieth century. Ramsey died on 19th’January 1930, six years before The General Theory of Employment, Interest and Money’(1936), ten years after The Economics of Welfare(1920), and around the same time as the central propositions in Production of Commodities by Means of Commodities’(PCMC) was worked out. While an earlier blog post had examined Ramsey’s views on the rate of interest, the present one narrates his intellectual association with Maurice Dobb, Roy Harrod, and Sraffa, and a forthcoming one will focus on his intellectual association with Pigou and Keynes. The present and future posts are primarily based on Cheryl Misak’s new biography of Ramsey (2020, Oxford University Press). This post supplements the observations found in Misak’s Ramseywith those found in the books on Harrod and Sraffa published as part of the Palgrave Macmillan ‘Great Thinkers in Economics’ series by Esteban P’rez Caldentey (2019) and Alessandro Roncaglia (2009) respectively and the book on Dobb by Timothy Shenk (2013) published as part of the ‘Palgrave Studies in the History of Economic Thought’ series.
While Harrod today is probably most well-known for his contributions to growth theory, he made important contributions to the fields of trade cycle theory, imperfect competition, and international economics. While there are 14 references to Harrod in Misak’s Ramsey, there are only eight references to Ramsey in Caldentey’s Harrod’(2019). [If there are two or more mentions of Harrod in a single page, I treat that as one reference.]
Ramsey and Harrod were friends (p. xxxi). Ramsey had known him ‘since 1922, when Harrod spent part of the year at King’s. Frank had taken Harrod under his wing then, introducing him to [G. E.] Moore and others’ (p. 195). After Ramsey was elected a fellow of King’s College, Cambridge in 1924, he renewed his friendship with Harrod, ‘a young left-leaning economics don at Oxford ‘ and they travelled between Oxford and Cambridge for intellectually rich weekends’ (p. 195). Caldentey mentions Harrod experiencing ”tremendous stimuli” after meeting Ramsey in Cambridge as opposed to his ‘frustrating Oxford experience’ (p. 10).
Although Harrod’s paper on the concept of marginal revenue curve was eventually published in the Economic Journal’as ‘Notes on Supply‘ (1930), on Ramsey’s advice, its editor, Keynes, had initially rejected the article in 1928 and had asked for revisions on the treatment of cartels (p. 305). In the meantime, according to Harrod, others had ‘discovered’ his concept and therefore he failed to receive credit for inventing it. Caldentey informs us that Harrod’s initial paper submitted in 1928 was titled ‘Notes on Monopoly and Quasi-competition’ wherein ‘he derived the increment of aggregate demand curve which was later re-baptized, the marginal revenue curve by Joan Robinson’ (p. 18). Moreover, Caldentey notes that in the foreword to the first edition ofThe Economics of Imperfect Competition’(1933), Robinson acknowledges the following individuals for teaching her about the marginal revenue curve: C. H. P. Gifford, P. S. Sloan, and T. O. Yntema (p. 101, n. 30). Also see Caldentey (pp. 18-19, 100-1) for a recounting of the refereeing episode between Ramsey and Harrod, which also makes reference to the three-volume work, The Collected Interwar Papers and Correspondence of Roy Harrod’published by Edward Elgar in 2003 under the editorship of Daniele Besomi.
Dobb’s contributions to Marxist economics are well established. I was introduced to his work during my Master’s in Economics at the University of Hyderabad where we read selected parts from Theories of Value and Distribution Since Adam Smith: Ideology and Economic Theory’(1973). His collaboration with Sraffa in editing and producing The Works and Correspondence of David Ricardo’has also been noteworthy. In Shenk’s Dobb, surprisingly, there is not even a single reference to Ramsey while there are 21 references to Dobb in Misak’s Ramsey.
Dobb was Ramsey’s friend from their undergraduate days (1920-3) at Cambridge (p. 94). They had started their degrees at the same time (p. 79); Ramsey enrolled for mathematics at Trinity College and Dobb for economics at Pembroke College. And during this time, ‘Dobb had considerable influence on Ramsey, both by engaging with him about the kind of socialism that would be best, and by introducing him to workers’ meetings’ (p. 299). While Ramsey was finishing his secondary education at Winchester in 1920, in addition to reading the economics books by Alfred Marshall and Keynes, he also read works by Karl Marx and V. I. Lenin (p. 47). However, according to Misak, it isn’t clear how much they associated with each other after completing their undergraduate studies (p. 87).
In his 1925 doctoral thesis, Dobb tried to bring Marx and Marshall together (p. 300). Shenk points out that Dobb had been trying to synthesize Marx and Marshall even before he started his PhD at the London School of Economics (LSE): ‘Dobb, too, sought to integrate marginalism with classical political economy, but with Marx substituting for Ricardo as the standard-bearer for political economy. ‘ In Dobb’s vision, Marx appears as a theorist of the social, Marshall of the economic’ (p. 36). Dobb’s PhD thesis was published in 1925 as Capitalist Enterprise and Social Progress, and Shenk provides us with its outline: ‘Dobb dedicated the first section to economic theory, the second to economic history, and the third to evaluating contemporary economic practices from the perspective developed over the course of the book’ (p. 38). Since Ramsey ‘was considered (and considered himself) a socialist’ (p. 301), Misak argues that Ramsey’s use of utility theory in his paper on optimal saving needs to be seen in the light of the synthesis Dobb had attempted between Marxism and marginalism (p. 302).
Ramsey’s view of the use of mathematics in economics was similar in spirit to that of Dobb (and Keynes): ‘Like Dobb, he thought that one ignores mathematics at one’s peril, for the mathematics has to be right in order for progress in the real world to be made. And some real-world issues are going to be solvable by doing the maths’witness Ramsey’s response to the Douglas Proposals. But he did not think that the mathematician could step in and solve all problems. He agreed with Keynes that we mustn’t be so taken with the precision of mathematics that we erase the outlines of the very thing we are examining. As Ramsey so often put it, one mustn’t be woolly, but one mustn’t be scholastic either’ (p. 326).
Sraffa has made significant contributions to price theory and capital theory and deserves high praise for his editorship of the collected works and correspondence of Ricardo. I have written on Sraffa earlier.’ While there are only two references to Ramsey in Roncaglia’s Sraffa, there are 18 references to Sraffa in Misak’s Ramsey. Given this scant attention to Ramsey in Roncaglia’s Sraffa, I make use of Heinz Kurz and Neri Salvadori’s essay ‘Sraffa and the Mathematicians: Frank Ramsey and Alister Watson’ first published in 2000 in Piero Sraffa’s Political Economy: A Centenary Estimate, a volume edited by Terenzio Cozzi and Roberto Marchionatti (as republished in Classical Economics and Modern Theory: Studies in Long-Period Analysis, an edited volume by Kurz and Salvadori in 2003).
As Sraffa writes in the preface to his 1960 classic, ‘the central propositions had taken shape in the late 1920’s’ (p. vi). In the following paragraphs, he expresses his gratitude to Ramsey (along with Alister Watson) for ‘invaluable mathematical help’at different periods’, and his greatest debt is reserved for A. S. Besicovitch. Kurz and Salvadori examine Sraffa’s diaries to identify the number of his meetings with Ramsey; according to the dairy entries, they met twice in 1928 (28 June and 11 November) and thrice in 1929 (10 May, 30 May, and 29 November) (p. 190).
The main outcome of their first meeting is capably captured by the following excerpt from Kurz and Salvadori: ‘At first Sraffa appears not to have explicitly distinguished between the quantity and the price or value of a commodity, a fact to which Ramsey immediately seems to have objected. Sraffa then appears to have introduced the distinction during the conversation with Ramsey’. Ramsey then reformulated the system first by putting the system of homogeneous linear equations in its canonical form, then by setting the determinant of coefficients equal to zero in order to get a non-trivial solution’ (p. 197). The key aspects of this meeting are not as ably captured in Misak and it is also incorrectly stated that Sraffa’s famous work related to ‘the determination of prices and’outputs’ (p. 305; emphasis added) whereas the size and composition of output is a given in PCMC.
Ramsey died in the middle of writing his book on truth and probability. Misak draws attention to the fact that after his death the philosopher R. B. Braithwaite published some of Ramsey’s essays in 1931 under the title The Foundations of Mathematics and Other Logical Essays’(p. 273). According to Misak, John von Neumann and Oskar Morgenstern had reached very similar conclusions in their 1944 Theory of Games and Economic Behaviour’(p. 274). And Misak further notes that, the similarity was so striking that John Hicks went to the extent of writing to Sraffa on 3rd’September 1960 asking if Ramsey’s ideas were transmitted to von Neumann through him (and his ‘mathematical friends’) but Sraffa didn’t reply (p. 274; although a draft of Sraffa’s response is available, it is not clear whether he actually sent it to Hicks). However, after consulting the letter (available here), it is clear that Hicks is actually asking Sraffa how von Neumann arrived at a similar theoretical outlook as Sraffa; and it is not about the similarities between Ramsey and von Neumann as Misak claims.
ON VALUE THEORY
This blog post ends with some critical observations on Ramsey’s engagement with value theory. According to Misak, Ramsey ‘blended neo-classical economics and socialism’ (p. 303). Despite his ‘scepticism about the utility theory of value’, as Misak notes, ‘his two famous papers were written in the neo-classical framework of individuals maximizing utility’ (p. 302). The two important pieces of evidence Misak provides for the former are given in the following excerpt: ‘In his 1924 Apostles paper, he castigated Mill for putting all his eggs in the utilitarian basket. During 1927’28, when his two important papers in economics were written, he was also working on a book in which he hoped to carve out a subtle, naturalist theory of value’ (p. 302). Since this book was not completed, it is difficult to state whether Ramsey would have stood closer to the neoclassical or the classical theory of value. However, Sraffa’s position on the marginalist (or neoclassical) value theory is clear: it is futile. Therefore, unlike Misak, who writes that ‘It’s clear that Ramsey,’like’Dobb and Sraffa, had a complex, pluralistic, view of value’ (p. 302; emphasis added), I would be very reluctant to conjecture a similarity between Ramsey and Sraffa on the question of value theory.