This is an article that probably should have been published on March 8th. I recently read an article in the Economist entitled “Economics is uncovering its gender problem” that intended to express a quite often encountered reality: women participation in labor force is overshadowed. Economics is not the exception, and that is the reason why I decided to make a little tribute to two women economists that I consider remarkable and are worth being in the heart of economic science.
The two Cambridge
The twentieth century was characterized by a lot of political conflicts, from the Great War to the Soviet Union dissolution; and it was not less convulsive for economic history. The great depression opened new paths in economic thinking whose protagonist was John Maynard Keynes. Every single economic student has heard about the General Theory of Employment, Interest and Money which is perhaps the theoretical base for any policy decision involving economics.
After Keynes, the University of Cambridge became the cradle of a new economic school though: the so-called “post-Keynesians” who built their thinking in the General Theory. At the same time, the other Cambridge, the one located in Massachusetts, also housed a good number of thinkers, including Robert Solow (Nobel Prize Winner 1987) and Paul Samuelsson (Nobel Prize Winner of 1970): the “neoclassical”. The conflict between the two schools was regarded the ways in which a model could ultimately explain economic growth.
Although the debate was quite theoretical and a lot of well-known economist were involved in it, there is an important one that is often left out and that nonetheless played a central role. Joan Robinson was a British post-Keynesian who belonged to the Cambridge Circus (a group of young economists who were closely associated with Keynes) and made important contributions in a lot of different fields. In 1933 she published her book The Economics of Imperfect Competition, the very same year that Edward Chamberlin published The Theory of Monopolistic Competition. Hence, we might consider them both as the parents of the modern study of imperfect competition. However, you guess it, Chamberlin is the one that is usually mentioned in the textbooks. Experimental economists use variations of the auction experiments made by Chamberlin to understand market behavior (both under perfect and imperfect competition).
Moreover, Robinson is the one who coined the term “monopsony” to refer to those markets with one demander and several suppliers. She used it to explain differences in labor market conditions between men and women that were equal in everything but their gender. As a student of economics, I never heard of her and did not either study any monopsony model during my microeconomic courses, perhaps one that we could have named as well the “Robinsonian” model.
Besides being unfair, an important contribution has been taken away from economic knowledge. It is clear that Joan Robinson deserves to be part of History of Economic Though and even, of Microeconomic theory courses. When I think about her, I think about an influential speech she gave in India in 1960 about teaching economics:
“Most students, of course, approach their studies merely with tile aim of passing an examination and acquiring a degree […] The exam-passers learn the trick of saying what is expected; of not asking themselves what is meant by what they are saying […] of repeating the particular formula which sounds as though it was relevant to each particular question. In India, especially, where the ancient belief in the power of words as such is still strong, this comes quite naturally. The exam-passer who does well becomes in due course an examiner and by then he has quite lost any doubts he may once have had to stifle. He has come to believe that this kind of thing really is education. And so the system feeds on itself.”
Common resources: private optima vs social optima
Story: there are ten farmers, each one with a certain number of cows, say 10. There is a given land, that does not belong to any farmer in particular, that is suitable for pasture. Let’s say that one of the farmers has decided to take all his cows to the land. After seeing this, a second farmer decides to do the same. Assuming that the land is big enough, there should be room for everybody, even the 10 farmers with their 10 cows; so everyone later on decide to go. When this situation occurs every single day, after a given amount of time the grass stops growing properly and does not have the chance to grow back. At the end the land becomes useless for the farmers to keep taking the cows.
This situation is called the “Tragedy of the Commons”, first proposed by Garret Hardin in 1968. In brief, this situation implies that individuals acting rationally and independently will deplete shared resources, even though this is not the best for the group. Although there is a great deal of economists that have participated in building theories on how to solve this problem and how to incentivize better social outcomes in similar situations, there is one name that undoubtedly should be mentioned: Elinor Ostrom; thanks to her contributions into this field she managed to be the first woman to win a Nobel Prize in Economics (in 2009 with Oliver Williamson).
Although she is not per se an economist (she is more into political sciences) her contributions are in the heart of many economic applications: in behavioral economics, political economics and public economics, just to name a few. She died in 2012 but will be remembered for sure as a brilliant figure who helped to include more women into economic books. Unlike Joan Robinson, Elinor Ostrom’s name does appear in lectures slides and textbook examples and is often cited when talking about the Tragedy of the Commons. She appears as a co-author in an interesting article published in 1990 in the Journal of Environmental Economics and Management entitled “Rent Dissipation in a Limited-Access Common-Pool Resource: Experimental Evidence” and that is frequently used as teaching material.