Joan Robinson Changed the Way We Think About Capitalism

Joan Robinson established herself as one of the world’s leading economists in a deeply sexist field. Drawing on the work of Karl Marx and John Maynard Keynes alike, she left us with a vital legacy for the critical study of capitalism.

Economist Joan Robinson (1903–1983) was an early disciple of John Maynard Keynes. (Public Domain)

Joan Robinson was one of the most remarkable figures in the world of economics during the twentieth century. She fought to establish herself in a profoundly sexist British university culture and rose to the summit of her field. An early disciple of John Maynard Keynes, she also engaged sympathetically with the economic theories of Karl Marx and Rosa Luxemburg at a time when academic economists largely ignored such figures. In a world where the ideas of Keynes and Marx still dominate critical approaches to capitalism, Robinson’s creative and heterodox thinking has much to offer us.

Breaking the Mold

Joan Violet Robinson was born in Camberley, Surrey, on October 31, 1903, into an upper-class English family. Her father was a major-general in the British Army, and her maternal grandfather had been a professor of surgery at Cambridge University. She was educated at St Paul’s Girls’ School in London and at Girton College, Cambridge, where she studied economics, graduating with an upper second-class degree in 1925 — although she only received the actual degree in 1948, when the university recognized female graduates for the first time.

In 1926, she married the economist E. A. G. (Austin) Robinson, with whom she had two daughters. She accompanied him to India soon after the marriage, where he was employed as tutor to the son of a maharajah. On their return to Cambridge in 1929, Austin was appointed to a university lectureship in economics and soon became a college fellow.

However, the institution’s deep-rooted sexism made Joan’s career a much less straightforward affair. She “developed an informal relationship with the Faculty of Economics and Politics,” as Prue Kerr noted, “attending some lectures and taking some college supervisions.” (“Supervisions” were one-on-one tutorials.) In 1931 — “albeit with some controversy,” in the words of Kerr — the university allowed her to give occasional lectures.

Three years later, she was appointed assistant lecturer in the faculty (albeit for one year only); by 1937, she had a permanent position as lecturer. Promoted to Reader in 1949, Robinson finally became a professor in 1965, the same year her husband retired. By this time, she was in her sixties and had established a well-earned reputation as probably the world’s finest female academic economist.

Robinson’s retirement in 1971 was entirely pro forma. She continued to undertake research and to publish almost up to her death on August 3, 1983, three months short of her eightieth birthday.

The Economics of Imperfect Competition

Robinson learned her economics from Alfred Marshall’s Principles, as interpreted by his disciples A. C. Pigou, John Maynard Keynes, and Dennis Robertson. She was part of a very talented cohort of young theorists who reacted against the Marshallian tradition to a greater or lesser extent, which included Piero Sraffa (1898–1983) and Richard Kahn (1905–1989).

However, Keynes was by far the biggest influence on her career as a whole. Keynes himself was in the process of challenging many aspects of Marshall’s thought. Robinson devoted much of her academic work over five decades to a critical examination of Keynes’s macroeconomics and a sustained effort to extend his short-run theorizing to the long run.

Robinson belonged to the last generation of academic economists who regarded the publication of a book as being no less valuable than the appearance of their articles in scholarly journals (a recipe for career death in 2022!). Her first major book, The Economics of Imperfect Competition (1933), was concerned with microeconomics rather than Keynesian macroeconomics (or any other variant). It was also more or less her last engagement with neoclassical economic theory, according to which profit-maximizing firms applied marginalist principles to maximize their profits.

I have always been especially impressed by the later chapters of The Economics of Imperfect Competition. Robinson set out a clear and convincing analysis of the role played by monopsony power in the market for labor, and was not at all restrained in her use of the term “exploitation.” Her diagrams were well explained, with their significance set out very clearly by the author.

She explained the implications of her theory for the pay differential between men and women in a chapter entitled “Monopsonistic exploitation of labor,” which included some elaborate diagrams. Although she did not use the term, Robinson was presenting here an early and authoritative version of the neoclassical theory of discrimination in the labor market, which hinged on the different labor supply elasticities of men and women.

Robinson did not extend the scope of this analysis to racial discrimination — unsurprisingly, since she was writing some fifteen years before the onset of mass immigration of black workers from Britain’s West Indian colonies. But the analysis is very clearly applicable to racial pay differences as well.

In her preface to the second edition of the book, Robinson was strongly self-critical. However, she exempted the chapters on labor market monopsony: Robinson felt that she had “succeeded in proving within the framework of the orthodox theory, that it is not true that wages are normally equal to the value of the marginal product of labour,” which she considered to be the main point.

A more charitable overall assessment of the book than her own might be that The Economics of Imperfect Competition demonstrated her great powers of reasoning and explanation. Robinson would soon put those powers to use in a very different context, as a convinced critic of neoclassical (“mainstream,” “orthodox”) economic theory.

First Reactions to Keynes

In the early 1930s, Robinson was one of the young Cambridge economists who discussed with Keynes the novel macroeconomic ideas that would soon form the basis of his work The General Theory of Employment, Interest and Money. Keynes himself was notoriously inconsistent in his own characterization of the new theory: he claimed to have revolutionized economics but also described the political implications of his book as “moderately conservative.”

Robinson took these questions very seriously indeed. In what she always referred to as her “1935 essays” — which were published two years later as her Essays in the Theory of Employment — she revealed her own distinctive and unorthodox approach to some of the most important questions that Keynes raised in the General Theory, with particular reference to the labor market, inflation, macroeconomic policy, and the methodology of economic theory. We can see the Essays as the very first text in what would much later become known as post-Keynesian economics.

This was most apparent in Robinson’s discussion of the labor market, which hinged on an explicit wage-push theory of inflation, since “a constant upward pressure upon money wages is exercised by workers (the more strongly the better they are organised) and a constant downward pressure by employers, the level of wages moving up or down as one or the other party gains an advantage.” She came very close to anticipating the Phillips curve, according to which there is an inverse relationship between unemployment rates and wage increases in an economy, noting that “the existence of unemployment weakens the position of the Trade Unions by reducing their financial resources and awakening the fear of competition from non-union labour.”

This led Robinson to redefine full employment, rejecting Keynes’s convoluted discussion in the General Theory in favor of a much simpler definition: “the point of full employment” was simply “the point at which every impediment on the side of labour to a rise in money wages finally gives way.” There were important policy implications to this argument. If the level of money wages determined the price level — which set the rate of interest via the transactions demand for money — and hence determined investment, effective demand, and employment, then trade unions had considerable economic power:

The control of policy is, in a certain sense, divided between the Trade Unions and the monetary authorities, for, with given monetary conditions the level of the rate of interest is largely determined by the level of money wages. A sufficient rise in money wages will always lead to a rise in the rate of interest and so check an increase in employment.

This was sufficient, Robinson maintained, to discredit the quantity theory of money (later revived by monetarist economists such as Milton Friedman). It also posed real difficulties for any government committed to the goal of full employment, since without central control over money wage increases, there was a real risk that high levels of employment would induce accelerating inflation.

In the Essays, Robinson was already using what would come to be her own characteristic analytical method, comparing two different economies (which she referred to as “Alpha” and “Beta”) without claiming to be telling a story of changes in historical time. Twenty years later, this would be a prominent feature of her major text The Accumulation of Capital.

Keynes and Marx

In the protracted aftermath of the Great Depression, with Adolf Hitler’s rise to power casting doubt on the commitment of many capitalists to bourgeois democracy, it is not surprising that academic interest in Karl Marx’s political economy grew rapidly in the mid- to late 1930s. Joan Robinson read widely in the Marxian and neo-Marxian literature before publishing an article on Marx’s theory of unemployment in 1941, and a brief but incisive book titled An Essay on Marxian Economics the following year.

Robinson drew heavily on the work of the émigré Polish economist Michał Kalecki. Kalecki had used elements from both Marx and Keynes to develop a persuasive body of macroeconomic theory that stressed both the inherent instability and the fundamental class nature of capitalist society.

In her Essay, Robinson cited Kalecki in several places, and compared his argument that it was “the level of effective demand which regulates the total of profits” with Marx’s unconvincing emphasis on very different factors that restricted profits. She was also strongly critical of Marx on other grounds, repudiating the Hegelian elements in his thinking and attacking the labor theory of value as a source of awkwardness and obscurity in his exposition: “None of the important ideas which he expresses in terms of the concept of value cannot be better expressed without it.”

However, Robinson’s overall verdict on his analysis in the three volumes of Capital was positive:

Marx was mainly concerned with long-run dynamic analysis, and this field is still largely untilled. Orthodox academic analysis, bound up with the concept of equilibrium, makes little contribution to it, and the modern theory has not yet gone much beyond the confines of the short period. Changes over the long run in real wages and in the rate of profit, the progress of capital accumulation, the growth and decay of monopoly and the large-scale reactions of changes in technique upon the class structure of society all belong to this field.

She also noted that Marx’s distinction between the production and the realization of surplus value did allow him to provide the elements of a theory of effective demand.

We could find these elements, Robinson argued, in the underconsumptionist component of Marx’s thought, itself closely related to his treatment of disproportionality between departments I (means of production) and II (articles of consumption), and hence also between investment and consumption expenditure. In a crisis, she observed,

the workers cannot consume, and the capitalists will not. The consumer-goods industries therefore present a narrow field for investment, and the capital-goods industries in turn suffer from restricted demand. Here at last Say’s Law is overthrown, and Marx appears to foreshadow the modern theory of effective demand.

The final sentence of the Essay has often been cited, and with good reason:

Marx, however imperfectly he worked out the details, set himself the task of discovering the law of motion of capitalism, and if there is any hope of progress in economics at all, it must be in using academic methods to solve the problems posed by Marx.

Robinson did not significantly revise this assessment in the long preface that she wrote for the second edition of the book, published in 1966.

The Accumulation of Capital

Her own book-length attempt to solve these problems appeared fourteen years later. It borrowed its title from Rosa Luxemburg’s classic text, The Accumulation of Capital, which Robinson had praised in the Essay on Marxian Economics and (at much greater length) in her introduction to the English translation of Luxemburg’s book. Strangely though, there was only one reference to Luxemburg in Robinson’s own book.

I have found close study of Robinson’s Accumulation of Capital to be a rewarding experience but also a difficult task. It is a very long book, standing at 425 pages in the definitive 1965 second edition, with an additional seven-page mathematical appendix by David Champernowne and Richard Kahn. Robinson seems to have intended the book to be the culmination of a quarter century of theoretical work, in much the same way that the General Theory had been for Keynes: both economists were fifty-three years old when their respective masterpieces appeared.

Robinson divided the work into eight sections, which she titled Book I, Book II and so on, followed by ten “notes on various topics” and, finally, fifteen pages of diagrams. In Book I, Robinson provided a general introduction to the subject matter of economics. This contained some real problems, beginning with the very uneven level of difficulty of the analysis within the six chapters, compounded by Robinson’s refusal to provide diagrammatic illustrations (or numerical examples) of the elementary Keynesian theory of saving and investment that she set out. She also offered no empirical evidence or discussion of any relevant historical examples.

The core of her argument came in Book II, which suffered from many of the problems already apparent in Book I. In this section, she first set out her theoretical analysis of accumulation with only one technique of production, and then moved on to discuss the complications posed by technical progress, the choice of technique, and the measurement of capital. This time Robinson did provide numerical examples (albeit sometimes only in footnotes). She continued by discussing the measurement of capital, the technical frontier in a “golden age” in which there were no internal contradictions within the capitalist system, and the distinction between neutral and biased technical progress.

At one point, Robinson touched on the possibility of what she termed a “perverse relationship” between the wage rate and the degree of mechanization, in which higher real wages induced the introduction of a lower, rather than a higher, capital-labor ratio. She acknowledged in a footnote that her Cambridge colleague Ruth Cohen had pointed this out to her. Indeed, it was later dubbed the “Ruth Cohen curiosum.”

Robinson did not take this point very seriously. Within a decade, however, the outcome of the Cambridge controversies in the theory of capital would demonstrate the profound implications of what came to be known as “reswitching” and “capital reversal.” It threw the entire neoclassical theory of income distribution into doubt, opening the way for alternative theoretical approaches more acceptable to post-Keynesians, involving, for example, the significance of social power relations and class differences in the propensity to save. In political terms, it subverted the idea of harmonious relations that were implicit in neoclassical distribution theory and suggested a strong role for the economic analysis of social conflict.

With one exception, the remaining six sections extended and qualified the arguments of Book II without adding anything of great significance. The exception came in Book IV, where Robinson made an important early contribution to what later become the extensive post-Keynesian literature on endogenous money.

Her very odd five-line conclusion deserves to be quoted in full:

The reader must draw his conclusions for himself. On parting I only beg him to glance back to Chapter 2 and recall that the outputs that we have been discussing all this time are outputs of saleable goods; they are not co-extensive with economic wealth, let alone with the basis of human welfare.

This strange conclusion represents an admission of defeat, I think. The Accumulation of Capital was a noble failure, and Robinson knew it before she had finished writing the book.

The Final Twenty-Five Years

Joan Robinson continued to argue, write, and publish on these questions for some years, with a series of articles and three books: Exercises in Economic Analysis, Essays in the Theory of Economic Growth, and Economic Heresies. The last of these works also dealt with a much broader range of issues, including the capital controversies and the methodological questions in which she had already shown some interest.

By December 1971, when she was invited to give the prestigious Richard T. Ely Lecture to the annual meeting of the American Economic Association, her interests had shifted to the failure of mainstream economics to deal adequately with the problems posed by global poverty and environmental pollution, and she made no direct reference to her earlier work on capital accumulation. The legacy of Joan Robinson is a deep and enduring one, although The Accumulation of Capital is not central to it.