by Anwar Shaikh
- Takes a unique approach in developing an economic model of modern capitalism without any reliance on conventional assumptions of either perfect or imperfect competition
- Reconciles macro and micro aspects of growth, making this work extremely relevant to current growth theory
- Critiques mainstream neoclassical economics and offers an alternative framework for understanding modern economies
Neoclassical economical theory uses aspects of perfect functioning of markets as part of its basic assumptions and introduces imperfections as analysis proceeds forward. Many types of heterodox economics insist on dealing with imperfect competition but project backwards to a previous perfect state.
In Capitalism, Anwar Shaikh demonstrates that most of the central propositions of economic analysis can be derived without any reference to hyperrationality, optimization, perfect competition, perfect information, representative agents or so-called rational expectations. These include the laws of demand and supply, the determination of wage and profit rates, technological change, relative prices, interest rates, bond and equity prices, exchange rates, terms and balance of trade, growth, unemployment, inflation, and long booms culminating in recurrent general crises.
In every case, Shaikh's theory is applied to modern empirical patterns and contrasted with neoclassical, Keynesian, and Post Keynesian approaches to the same issues. The object of analysis is the economics of capitalism, and economic thought on the subject is addressed in that light. This is how the classical economists, as well as Keynes and Kalecki, approached the issue. Anyone interested in capitalism and economics in general can gain a wealth of knowledge from this ground-breaking text.
Publisher: Oxford University Press
Heikki Patomaki on Journal of Critical Realism wrote:
"At 1,000 pages, it is a weighty tome and the content is even heavier. It covers a lot of economic territory. It has many strengths. Shaikh analyzes virtually every stream of economic thought covering the topics he has selected. He not only presents his classical approach, but in every chapter summarizes virtually all of the pertinent material from various schools of economic thought. Additionally, each chapter ends with a detailed empirical review pertaining to that chapter. [...] Shaikh has a long history of being identified with Marx and as a Marxist. In this book, Shaikh eschews his Marxist credentials and takes on the garb of a classical economist in the tradition of Smith, Ricardo and — according to him — Marx. [...] The classicals referred to themselves as political economists. Shaikh mentions concerns such as working-class economic struggle, under-employment, poverty and the like, but develops only the economic aspects of the classical tradition. I would argue that these are inseparable from the political realities of each age, whether in Marx’s time or the present. [...]The book is opaque beyond the obvious technical detail. The writing is quite difficult to follow and is very repetitive. Further, there are a lot of typographical errors."
Bill Jefferies on Marx & Philosophy Review of Books wrote:
"Shaik’s Capitalism is a great book to which I will be returning time and time again. In its attempt to achieve its objective – to provide a radical alternative framework for understanding modern economies – it provides a rich source of elaborate discussions on economic theory. Although classical political economy provides the book with its overall framework, it systematically covers both orthodox and post-Keynesian heterodox economic theory. [...] A major aspect of Shaikh’s path-breaking project is his partial return to the classical tradition of: Adam Smith (real Smith rather than the ideologicized image of him); David Ricardo; and Karl Marx. The classical tradition forms the basis of a number of Shaikh’s theoretical ideas, which are in turn grounded on systematic empirical evidence. [...] A key question for Shaikh is: how is it that the capitalist system, whose institutions, regulations and political structures have changed so significantly over the course of its evolution, remains capable of exhibiting certain recurrent economic patterns? [...] Shaikh’s partial return to the ideas of classical political economy can be read in at least two different ways. In the first reading, Shaikh is a radical Marxian thinker who argues that capitalism is a system in which certain laws prevail. [...] The main idea would be to change the system as a whole, with all its deep structures. [...] In the second reading, Shaikh is a post-Marxian thinker who has reached a rather pessimist conclusion. There is indeed historical capitalism with its laws, but there is no alternative. We have to live in capitalism and accept its limits and constraints as long as we can see into the future. [...] Although Shaik’s book is a very useful handbook covering an ambitious variety of topics, most of which I have not even touched in this review, my overall conclusion is nonetheless that Capitalism does not provide a new foundation for economic theory. That would require problematizing and reconstructing the methodology and ontology of political economy at a deeper level. Shaikh remains committed to about half of Bhaskar’s (2016, 196) eight characteristics of the ‘discourse of modernity’. More freedom is needed."
G.C. Harcourt on Contributions to Political Economy wrote:
"Capitalism is Anwar Shaikh’s magnus opus. It is to be compared with the very greatest works of political economy, not least Marx’s Capital, at least according to the comments on the flyleaf. Shaikh’s argument, developed and applied as an analysis of the major advanced Western economies, is that a 'classical' method of analysis can be distilled from the works of Smith, Ricardo, Marx and critically, Sraffa. This classical theory is able to better explain and interpret the world than any of the contemporary rival theories, stretching from neo-classical orthodoxy to other heterodox rivals, including radical Keynesianism. This is not, then, a work of Marxian political economy, narrowly defined. Shaikh effectively abandons the labour theory of value in favour of a slightly modified version of Sraffa’s physical price theory (22). The rationale behind this is not really explained or discussed, rather it is implied that Sraffa’s theory is not only compatible with, but best defines the 'classical' tradition. This is moot, to put it mildly. This theoretical limitation is combined with an empirical one. The transition of the centrally planned economies to the market, the defining event of globalisation, is barely referred to. China hardly features. By only examining half of world capitalism, the empirical architecture of Shaikh’s argument is compromised. [...] Shaikh’s intimate knowledge of the vagaries of virtually every economic theorist, is the defining feature of the work, most of which is taken up with explaining the ins and outs of various economists and exposing their mistakes when judged against Shaikh’s classical framework. [...] Shaikh’s book is a most definitely a major work from the heterodox school of political economy. However, his abandonment of Marx’s value theory has very serious consequences for the logical thread of his argument. His limitation of the empirical work to the advanced Western economies is one sided, and occasionally mistaken. This is an interesting book then, but is it really the next Capital?"
"Because of his great technical skills and his many years of theoretical and empirical work, his creation of empirical measures to back up important theoretical concepts is always ingenious and usually satisfying. [...] Shaikh discusses Thomas Piketty’s Capitalism in the Twenty-first Century (2014) towards the end of his book, see pp. 756–59. I think that the two volumes may be regarded as complements. Piketty’s book is flawed mainly because, in order to communicate with the mainstream, his principal analytical structure is the neoclassical aggregate production function. This cannot catch the real-world happenings he is trying to illuminate, nor necessarily provide inferences which match his empirical findings. But his painstaking gathering and careful clarification of data, and his humane policy recommendations, place him squarely amongst the good guys. Shaikh’s analytical structures are much deeper and more relevant for an understanding of the complex organisms that are ancient and modern capitalism. Moreover, Shaikh’s inferences overwhelmingly make a better job of matching what is observed than do those from the other major competing approaches. So, altogether, Shaikh’s Capitalism can take its place alongside Marx’s‘ Capital as the most comprehensive, many-dimensional interpretation and explanation of the fundamental happenings of their respective ages."
The Book in 30 Lectures by Shaikh
See an overview of all lectures that are available
About Anwar Shaikh
According to Wikipedia "Anwar M. Shaikh (born 1945) is a Pakistani American heterodox economist in the tradition of classical political economy. He is Professor of Economics in the Graduate Faculty of Social and Political Science at The New School for Social Research in New York City, where he has taught since 1972. Carrying on teaching and research that originated in the context of New Left social movements, Shaikh's political economy has focused on the laws of motion and empirical patterns of industrialized capitalism, based on a theory of competition independent of neoclassical economics. In specific fields, he has written on the labor theory of value, production functions, international trade, neoliberalism, the welfare state, economic growth, inflation, the falling rate of profit, long waves, inequality on the world scale, and past and current global economic crises."
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Table of Contents of Capitalism
Part I. Foundations of the Analysis
- Turbulent Trends and Hidden Structures
- Microfoundations and Macro Patterns
- Production and Costs
- Exchange, Money, and Price
- Capital and Profit
Part II. Real Competition
- The Theory of Real Competition
- Debates on Perfect and Imperfect Competition
- Competition and Interindustrial Relative Prices
- Competition, Finance, and Interest Rates
- International Competition and the Theory of Exchange Rates
Part III. Turbulent Macrodynamics
- The Rise and Fall of Modern Macroeconomic
- Classical Macrodynamics
- The Theory of Wages and Unemployment
- Modern Money and Inflation
- Growth, Cycles, and Crises
- Summary and Conclusions