Adam Smith, Buddhist economics, comparative advantage, flexible production, global economy, just-in-time production, labor, labour, labour theory of value, lean production, marginal productivity theory of distribution, Marxian economics, neoclassical economics, world economy
LUMPENPROLETARIAT—On Friday, 10 APR 2015, one of my favourite thinkers of UMKC’s heterodox economics department, Mr. Sudeep Regmi, delivered a presentation entitled “Microeconomic Aspects of Globalized Production Processes”. It involved a historical overview of how the human production of goods and services, the daily necessaries (and unnecessaries) of life have been produced. Mr. Regmi described how societies have gone from forms of production processes structured around local, regional, and national or nationalistic parameters to anational, multinational, and transnational production processes, wherein the production process occurs scattered around the globe. In the final segment of the presentation, Regmi opened up the discourse to questions and challenges from the UMKC economics students in the audience.
University of Missouri-Kansas City, Department of Economics, Spring 2015
MR. SUDEEP REGMI: “So, this is a talk on economic history and microeconomic perspectives on certain developments, that we’ve seen over the last two centuries, actually. But I’ll be focusing, mostly, on the micro perspective, even though there should not really be a distinction between macro and micro. But, for the purposes of teaching classes, I think, we make a distinction between micro and macro issues.
“So, macro issues would be things, that are concerned with the economy at the general level; whereas micro is concerned with the economic relations between individuals, between individuals and firms, between firms and firms. So, all those economic interactions, that hold within an economy, however you want to define an economy, is generally considered in the microeconomics category.
“So, I’ll be looking at the past four or five decades of changes in the world economy and see if our microeconomic theories [which are dominant today] about economies still hold, or to what extent do they hold.
“So, I’ll first begin with a brief description of the capitalist production process, the topic that is the subject of our inquiry in microeconomics. And, then, I’ll go on to outline this change we have seen from something called a world economy to a global economy. A world economy would be economic relations, that are mostly limited to international trade, international trade flows, and, you know, flow of goods and services, maybe, a little bit.
“There used to be a time, before the First World War, before 1914. But, then, gradually, over the course of 60, 70, 80 years, we have seen the emergence of something called a global economy. But this trend has started long before the First World War period. We can identify a period beginning with Adam Smith’s period, the 1770s. And, so, we can periodise our history in different ways. The one I choose here is based on the development of productive forces, the development of economic inquiry, and, in general, the modifications in the production process, that the capitalist firms have been using. So, I’ll be looking at five periods, beginning with the 1770s and ending with right now.
“Simultaneously, I’ll be looking at the evolution of production processes. One could break down different types of production processes into three kinds. There’s craft production, using very simple machinery. And there is mass production of items, using specialised and standardised methods. And there is something, we have seen in the recent past, in the recent twenty or thirty years called flexible or lean production, that originated mostly in Japan, although their motto was: learn from [Henry] Ford. So, they were learning Fordist methods, but then modifying [them] to the Japanese environment. And, so, they developed this thing called lean production, which subsequently was used by capitalist enterprises in the west.”
MESSINA: “Is that also referred to as just-in-time?”
SUDEEP REGMI: “Yeah.
“And, then, simultaneously, with that excursion into economic history of production processes, I’ll be looking at how firms and corporations have evolved over the past two centuries. So, we’ll be beginning with national economies or national firms and national corporations. And, then, we’ll go on to making a distinction between national and international, multinational and transnational firms, which is what we have right now. (c. 6:15)
“And, then, we’ll be looking at how firms and corporations have, at times, skipped this path and jumped from national to transnational without, necessarily, having to go through all these things. So, this is not a deterministic framework. This is what we have seen. But you could always skip certain phases because some corporations are born globally. They are suddenly transnational at their birth. So, whether we are looking at it in the conventional path or some parallel path that could be followed, or that sometimes has been followed by corporations. That will give us enough background to look at globalised production processes. And, [due to] the lack of time and space, we’ll be looking at two or three selected issues in the global production process, namely, comparative advantage, supply and demand, and productivity of labour[*]. And, then, this will give us a good foundation to launch an inquiry, whether these concepts, as they are, still hold when we try to describe the existing capitalist economies. Then, that will give us an opportunity to ask some open questions, that have not been answered so far.”
[full transcript pending]
[*] For a Marxian economic perspective, consider the Marxist immiseration thesis, which refers to the view that the nature of capitalist production logically requires an ever greater reduction in real wages and worsening of working conditions for the proletariat.
For a Buddhist economic perspective, consider “Buddhist Economics for Business” by Laszlo Zsolnai. Buddhist economics is a spiritual approach to economics, which incorporates Buddhist concepts. For example, the concept of the Middle Way emphasises the need for time to be divided between working towards consumption and meditation. It also seeks to understand the optimal allocation between these two activities through meditation intended to lower one’s desire for consumption and to inculcate a sense of appreciation and satiety with less consumption and the work, which that involves. In conventional economic terms, this means the “marginal productivity of labour utilized in producing consumption goods is equal to the marginal effectiveness of the meditation involved in economizing on consumption without bringing about any change in satisfaction.”
For a neoclassical economic perspective, consider the perspectives of Samuel Mountiford Longfield (1802-1884), who opposed the Marxian approach utilising the labour theory of value.
His most important work in economics was “Lectures on Political Economy”, which was published in 1834. He argued against the labor theory of value and developed a marginal revenue productivity theory of labour and capital distribution. It was unusual for its time and was only rediscovered after 1900; some of his ideas on capital and interest foreshadowed the work of the Austrian School.
His main approaches revolved around the labor theory of value, an analysis of capital and distribution theory (based on a concept of marginal productivity). He applies insofar as the representative of the marginal utility theory avant la lettre.
[last updated 10 APR 2015 15:53 CDT]
[transcript by Messina]