Abstract
During the last decade of his life, in the 1960s, Ragnar Frisch dedicated himself almost exclusively to developing a methodology of economic planning that he considered ‘correct’, and to contesting other methods he considered fallacious.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Because they were the result of papers and lectures developed by Frisch on different occasions for conferences and meetings which he attended.
- 2.
The Institute of Economics of Oslo University, of which Frisch was the creator and director since its foundation (1932), was also the laboratory where Frisch elaborated unceasingly his scientific activity and published most of his work (which is the subject of this book) up to his retirement (1965). (More information in J.C. Andvig and T. Thonstad, 1998).
After Frisch retired at the end of 1966, the institute merged with other entities at the university and became the Department of Economics (in the reorganisation of Oslo University). Thus also the previous production of the Frischian Memoranda of the Institute took the official name Memo of Department of Economics of the University of Oslo (DE-UO Memo), even if most of his writings were published as Memoranda of the old Institute of Economics. (Even the most careful and complete Bibliographical Monument to the entire work of Frisch, by Kảre N. Edvarsen (Ragnar Frisch: An Annotated Bibliography. Oslo: Department of Economics, University of Oslo, 2001) has adopted this method of citing the older Memoranda as ‘DE-UO Memo’, and I have followed this device for quoting in this book the Memoranda not selected for the Long and Bjerkholt selections).
In this Memorandum series, which started in May 1947, Frisch published his new writings. His accurate and faithful bibliographer (Kare N. Edvarsen, Ragnar Frisch, An annotated bibliography: Report, 2001) writes: ‘Memorandum is the name chosen for working paper from the DE-UO abbreviated to Memo from DE-UO.’ She also adds interesting information. The Memoranda are—with very few exceptions—written either in English or in Norwegian.
- 3.
Ragnar Frisch, Economic planning studies, Frank Long editor, (Amsterdam: D. Reidel, 1976).
- 4.
Foundations of Modern Econometrics. The Selected Essays of Ragnar Frisch (in two volumes) edited by Olav Bjerkholt. (Aldershot, Edward Elgar Publ. 1995). This last collection contains—obviously—not only the writings on economic planning, but also many of Frisch’s essays in other fields of interest to the scholars of economic planning.
- 5.
For practical reasons I have chosen to quote the numerous passages of Frisch included in this book with the year of the original writing (if known), often in the Memo-DE-UO, or other publications; but also with the page of reference in the selections of Frank Long, or of Olav Bjerkholt if not already drawn from Long’s selections. All other works not published in either of the two selections will be quoted with reference to the page of their single pertinent original edition.
I have avoided referencing the text of other occasional papers which I have read and studied, many of which came into my possession in the 1960s after they were passed to me by Frisch himself, which whom I enjoyed stimulating and unforgettable relations from 1963 (see Appendix at the end of the Vol. I), and in the form of Memoranda of the DE-UO, or various reprints, all of which texts are very difficult to find today.
- 6.
Two rare exceptions to the lack of attention to the writing on economic planning and their meaning have been:
-
1.
A review article was published in 1977 in the Journal of Comparative Economics (vol. 1, 195–212) by Edward Ames & Egon Neuberger: ‘Frisch and Tinbergen on economic planning: A review article’. According to these authors, ‘the Frisch-Tinbergen’s model of central economic planning represents “the first important non-Soviet planning model”. This model—they argue—assumes premiers to have non-preference over instruments or models and that planning agencies have neither internal structure nor operating responsibilities. They note that the constrained optimisation model makes the central planner a staff adviser to the premier, in order to explore the premier’s preference ordering and recommend instruments that maximise the premier’s utility, given the constraints within an econometric model. The paper explores the consequences of removing such limiting assumptions, utilising the results of more recent contributions to the theory of economic systems.’
Ames & Neuberger, however, seem to neglect, by means of a sort of underevaluation, that the technical proposal elaborated by the entire work of Frisch & Tinbergen could expand in its implementation phase to the entire ‘planning society’, at every level, not only the ‘premier’ level; improving at any level the quality of the democratic decisional process, and the quality of the planning negotiations between opposed interests groups; and contrasting thus the actual incapability of political and associative world to follow rational and consistent decision-making procedures.
-
2.
Furthermore, there is the editor himself of the economic planning studies, Frank Long, who published an essay in the American Journal of Economics and Sociology (Vol. 38, 141–53), entitled ‘Ragnar Frisch: econometrics and the political economy of planning’. In this paper, Long points out how Frisch’s approach involves an interactive machinery which consists of participating politicians and technical experts. He also discusses the formalisation of society, emphasising briefly some behavioural shortcomings.
With respect to the absence of the Frisch-Tinbergen heritage, of course, any information different in respect to the limitedness of my sources would be very welcome (francoarchibugi@gmail.com).
-
1.
- 7.
I base my assertion on the (cited) highly valued and very accurate universal bibliography of Ragnar Frisch (including a vast list of writings related to Frisch’s authorship), produced by Kảre N. Edvardsen (2001).
- 8.
Which Frisch had been not able to attend the ceremony due to health reasons. It was published in A. Lindbeck, ed. (1992).
- 9.
The first is an analysis by Petter J. Bjerve, disciple and collaborator of Frisch at the Norwegian Central Institute of Statistics, on the ‘influence of Frisch on the Norwegian macroeconomic policy’, with an interesting illustration of his day-to-day participation in the political events of his country, supported by ample documentation, even with writings from newspapers and press in the Norwegian language, unavailable otherwise to an international reader.
The second, by A.J. Hughes Hallet, of the University of Glasgow, is a case study, also interesting, about how macro-economic planning ‘à la Frisch’ would have been useful in three examples of the application of the European Monetary Union project (however, the study gives little space to the deepening of the Frischian method and its epistemological meaning).
The third is a recalling of Edmond Malinvaud (a well-known French economist from the INSEE) of the scientific and political climax of the ‘movement’ for planning (so he calls it) which pervaded Europe in the first two to three decades after the Second World War. In this essay one thinks back over the moment Frisch disagreed even with the most current planning methods. Malinvaud develops a delicate examination of the major points of Frisch’s methodological position, highlighting the critical value, such as the lack of logic in the ‘growth models’ (which were dominant on the scene) if used for decisional purposes, the importance of the decisional in econometric modelling, and the insufficiency of aggregations in macro-economics. But he doesn’t comprehend especially well his critical and innovative points in the direction of the desired scenario’s ‘optimisation’, and in the direction of distinction between selection and implementation. Malinvaud develops his own positive final assessment on the work of Frisch without perceiving in all its importance the technical and methodological meaning of the ‘programming approach’ in respect to the general question about economics as a science. We will come back to these aspects in the next chapter, because they are the main objectives of this book. Here I limit myself to saying that even in this recalling of Malinvaud it is difficult to perceive the epistemological overturning of the economic analysis which I tend, on the contrary, to emphasise; and perhaps this comes from the fact that in Malinvaud’s essay, I feel an absence of knowledge of all the writings of Frisch in the last period of his life (republished posthumously by F. Long, and a good number also by O. Bjerkholt).
- 10.
Here I would also like to present a personal and very meaningful testimony, for the benefit of the future biographer of Ragnar Frisch and/or the historian of economic thought, that corresponds in more than one respect with other direct personal feelings. Leif Johansen, another illustrious Norwegian economist, disciple and later colleague of Frisch in the same Institute of Economics where Frisch spent a good deal of his scholarly life (as did Johansen, who died prematurely in 1982), told me (on the occasion of my visit to Oslo in 1979, some years after Frisch’s death) about a bitter and witty remark Frisch made to him (I do not know on what occasion, after receiving notice of his Nobel Prize), which sounded something like this: ‘I suspect I have been honoured with the Nobel Prize more for my historical contributions to the development of econometrics and for other outcomes that I now consider marginal, than for the progress I have sparked in economic planning methods, that I consider the best outcome of my scholarship.’ This suspicion expressed by Frisch (and indirectly reported) is confirmed also by the presentation of the Frischian works during the Nobel Prize awards ceremony, a presentation made by Erik Lundberg and published in Nobel Lectures in Economic Sciences, 1969–1980 (1992), which are mentioned among the motivations of the choices of the Frischian contributions ‘for having developed and applied dynamic models for the analysis of economic processes’. However, what is not mentioned are his most recent contributions to economic planning methods. To be honest, we must also recall that these last contributions, as said above, had not yet been published, except in uncommon and somewhat ambiguous editions, and for this reason are still largely unknown to the larger public of economists; however, those who were informed about them knew them very well as Memoranda of the Institute of Economics of the University of Oslo. And their lack of mention by the Swedish scholar Lundberg in 1969 is a little surprising.
- 11.
- 12.
Academic testimony on Frisch’s role in the foundation of the Econometric Society has been remembered on the occasion of his death and other ‘celebrations’. See, for instance: Samuelson, (1947), Tinbergen (1974), Johansen (1974), in the first case; Bjerkholt (1995, 1998) and Chipman (1998) in the second case.
- 13.
The Italian mathematician Bruno de Finetti, who attended the first Congress of the Econometric Society (Rome 1965) and was an enthusiast of the Frisch expression, translated Frisch’s sarcastic expression (‘playometrics’) into Italian as ‘Baloccometria’ in a witty paper on the Congress: ‘Econometristi allo spettroscopio’ [Econometricians at the spectroscope] (see de Finetti, 1969, pp. 174–88).
- 14.
Eltis, Scott and Wolfe, eds, Induction: Growth and Trade. Essays in Honour of Sir Roy Harrod (Clarendon Press, Oxford 1970).
- 15.
Criticism that we will examine in the following chapters of Vol. I.
- 16.
In the Frisch speech, the scientific presuppositions and foundations of a good deal of the papers published by the journal Econometrica have been decisively contested. In the journal (of which Frisch had been the first editor-in-chief from 1933 to 1955), he would not publish so much. The last publication of his writing was in 1964: Dynamic Utility (vol. 32, pp. 418–24); and the penultimate was in 1961: A re-consideration of Domar’s Theory of Economic Growth (vol. 29, pp. 406–13. Yet in that period (1960–64) Frisch developed the most important writing of his vision of economic planning, in the series of the DE-UO’s Memoranda. The complete list of Memoranda is in the annotated Bibliography by Kare Edvardsen (2001), already cited.
- 17.
Let me indulge in some personal memories and testimony which may be of some interest—in order to imagine what kind of objection Frisch would have regarding the direction taken by ‘official’ econometrics. During the three or four days of the congress, he did not attend the different tracks of the congress. In reality, it was clear that his relationship with the Econometric Society was not good, even on a personal level. As an occasional witness (in my role as General Secretary of the Congress, essentially engaged in organisational duties), I noted the lack of warmth from Frisch. This lack of warmth was in a certain way reciprocated by the group of scholars from Harvard, already consolidated as the leadership of the society (steered by Modigliani, Houttaker and Solow, all from Harvard and MIT), who were the promoters of the congress (and who had chosen Rome, and me personally as logistics organiser). In those days, Frisch was more interested in visiting my Centre, and me and my colleagues personally, than the congress. This was a great hindrance to me, since I had to accomplish my managerial tasks for the congress (which I had accepted as an honour) and had little time available.
I could not omit from my memory the very interesting talks that I had had with Frisch in Rome two years earlier on the occasion of the PSA Conference, when I had the occasion to meet him for the first time, and felt we were on the same wavelength; these talks signaled for me a radical turning point in my personal concept and method in economics. As I will tell in the Appendix to Vol. I, I made every effort to keep in contact with him and he reciprocated very generously. At that time—between 1963 and 1965—I was trying to build the Planning Studies Centre in Italy with a group of respectable econometricians (including Camillo Righi and Vera Cao-Pinna, all followers of Wassily Leontief), integrated with other colleagues from other disciplines, as an effort to implement research oriented toward a ‘unified approach to planning’ (solicited by the UN’s ECOSOC ). (For more information visit the website of the Centre: www.planningstudies.org.) In those years we were putting ourselves in the position—in the midst of several obstacles and adversities—to support the first effort of economic programming by the Italian government. In effect, I was enthusiastic about giving attention to the scientific approaches of Frisch and it was much more important for me to hold a dialogue with him, rather than to attend the numerous presentations at the congress. Thus, it has been natural to benefit from the World Congress of the 1965 in Rome, in order to reaffirm some aspects of planning methodology, this time much more prepared by me having read abundant Frisch’s writing received from him personally during the past two years; and discussing also the distance between his views and the practices of planning scattered at that time among almost all European Western governments. (I was able to skip a tour of the Villa d’Este at Tivoli, organised by myself for the attendees but where my presence was not obligatory, and spend an entire day with him, as described in the Appendix to Vol. I.)
At that time, my acquaintance, and (I hope) even friendship, with Frisch, having matured for a few years, existed on the basis of very different scientific and cultural paths (my background was mostly in philosophical studies); but these paths were surprisingly convergent from an epistemological point of view.
- 18.
The reference is to the well-known book of Norbert. Wiener, God & Golem Inc.: A Comment on Certain Points Where Cybernetics Impinges on Religion, MIT Press Boston, (1964):
The use of mathematical formulae—Frisch notes in this occasion—had accompanied the development of natural sciences and become the mode in the all social sciences. Just as primitive people adopt the Western modes of de-nationalized clothing and of parliamentarism out of a vague feeling that these magic rites and vestments will at once put them abreast of modern culture and technique, so the economists have developed the habit of dressing up their rather imprecise ideas in the language of the infinitesimal calculus.… Difficult as it is to collect good physical data, it is far more difficult to collect long runs or economic or social data so that the whole of the run shall have uniform significance.
This does not mean however that ideas of cybernetics—insist Frisch—are nor applicable to sociology and economics. It means rather that these ideas should be tested in engineering and in biology before they are applied to so formless a field.
These difficulties [those evocated by Wiener], of course, have been and are quite familiar to those working in econometrics. Therefore they try, whenever possible, to rely on engineering data instead of statistical time series. The difficulties are familiar to them in principle, but I am sorry to say that some econometricians have often been liable to forget these basic principles in practice and, therefore, have not been critical enough when they apply their techniques and mathematical analysis. This remark is particularly important when it is a question of drawing conclusions about the economic policy to be followed in a concrete situation.
- 19.
It is a pity that it wasn’t included in the cited collection of writings of which Olav Bjerkholt (1995) has been an invaluable editor (it was available also as Memo-DE-UO).
- 20.
This had a personal effect on me. In fact, in that period, I too was suffering a kind of loneliness among the closed circles of Italian economists whom I encountered. Perhaps this was due to the weight of my philosophical background—they had a different understanding (which was not any different, on the other hand, from the sociological or city planning circles) because of their rooted positivist approach. The encounter with Frisch was, indeed, a true ‘revelation as that of Damask’.
- 21.
From 29 August to 7 September 1965, and with the cooperation of the Planning Studies Centre.
- 22.
Published successively in English by Bruno de Finetti in the proceedings of the conference, and in Italian by an Italian journal, Rassegna economica (vol. 30, 1966, pp. 5–42). It is a pity that it was not published in English in Frank Long’s or Olav Bjerkholt’s collections of general works by Frisch. I will use ample abstracts of it in several chapters in Vols. II and III.
- 23.
The others were ‘Marxism’s’ ‘theologists’.
- 24.
It had been created by me (returning from a brief stay in Europe, where I was working within the nascent European Community, in Luxembourg and Strasbourg, with CECA, and later in Brussels with CEE) with a mixed team of economists, sociologists, urban planners, system engineers and jurists, who were declaring their wish to experiment with a ‘unified approach to planning’. (As the UN was requesting, by means of many deliberations of the General Assembly, of the ECOSOC and of many of its agencies. A dossier on its activities is available on the PSC website at www.planningstudies.org.)
- 25.
As proof of this assertion, it is sufficient to note the tone and arguments of many objections to his interventions by numerous colleagues of the Econometricians Gotha invited to Rome in 1963 to the Semaine d’étude (already recalled) of the PAS (See: Pontificia Accademia Scientiarum, publ. 1965).
- 26.
This expression had been used by Frisch since 1961. See for instance a conference (first published in the journal Staatsoekonomisk Tidsskrift, 1961, n. 3/3) and later republished in the writings collected by F. Long in the (repeatedly quoted) posthumous book of 1976 (page 180).
- 27.
These lectures, prepared and presented in English for the seminar (1965), were published by Bruno de Finetti in a kind of proceedings of the seminar (Cremonese, as publisher), and were later translated and published in Italian in the journal Rassegna economica (in 1966). It exists as a Memorandum in English of the DE-UO, which I have yet to obtain a copy of. The Frisch text reproduced here must be considered one effort by Frisch to set out again in a reordered manner the proceedings of the seminar (put at my disposal by Frisch himself).
- 28.
In: Bruno de Finetti, ed. Mathematical Optimization in Economics, Edizioni Cremonese (dec. 1966, pp. 223–64).
- 29.
See the source at p. 91 of the Annotated Bibliography of Frisch, edited by Kare N. Edvarson (2001). In 1964 I made a trip to Great Britain, where I made contact with the NED Office, analysing the document (‘Green Book’) of the projection for the British economy (1964–68) that year was published as a result of the work of the NEDC itself. Later I visited Cambridge University’s Department for Applied Economics and its director, Richard Stone, who had contributed a vast amount of well-known research in support of the NEDC on a programme of growth in Great Britain (A Programme for Growth). But I recognised that it was an approach that had little to do with a correct programming approach, and I shared quietly the arguments that Frisch had long made in favour of a ‘true programming approach’ (popularising, as much as possible, the Oslo model). But in Italy—where the plan was proceeding in the same was as in Britain—I found a cultural disposition to understand the methodological inadequateness much lower than that encounter by Frisch on the international level.
- 30.
In France, the Commissariat au Plan still survives without honour and glory, distancing itself from active, economic policy and abandoned by its better experts, who are in search of more ‘realistic’ political careers. In Holland, more or less the same has become of the Central Planning Bureau, a jewel of quantitative economic policy—thanks to Tinbergen, its first director.
In Great Britain, the ‘Naddy’ (National Economic Development Council ) and its search for long-term macro-economic planning has been rapidly and consistently eliminated under the joint action of a radical left, a conservative right and a hostile bureaucracy. The same is true in Italy: public agencies and labels endure with little correspondence to contents or practice, and many people escape—in academia and in politics (peculiarly interwoven in this country)—from discredited and flouted involvement in ‘economic programming’, in the name of ‘theorised’ political opportunism (called polity), which is sometimes truly unpleasant.
- 31.
Nor has the complete republishing of Frisch’s writings (1995) edited by O. Bjerkholt seemed to—at least for now—rekindle interest in this important author.
- 32.
Archibug i (1992).
- 33.
I will deal with this in Vol. II, Chap. 3.
- 34.
Signals in this direction are coming from the intense international academic activity in the field of ‘planning schools’, organised in regional and global associations (such as AESOP and others). But people have the impression that this activity plays more on the stage of interdisciplinarity, and maybe of transdisciplinarity, but still not on that of meta-disciplinarity.
- 35.
Vol. III, Chap. 2 (concerning the spatial dimension of planning) will address the important contributions of ‘regional science’ and its experts to the building of the ‘spatial dimension’, and how its future function must be necessarily related to economic theories through the programming approach elaborated in this book. On this subject Frisch himself gave direct indications outlining an integrated approach to regional programming.
- 36.
This contribution (especially that by Andreas Faludi and others) will be recorded in Vol. II, Chap. 3 (‘The decision-centred analysis’). A more organic examination of the possible relations between the ‘theory of planning’, as developed in the ambit of spatial and urban planning, and the ‘science of planning’, as postulated in the approach fully integrated and unified with the other social sciences or disciplines, is argued in another of my books: Planning theory: from political debate to the methodological reconstruction (Springer, 2008).
- 37.
See, as an example, the essay project launched by Omar Benli and the Institute for High Performance Planners (California State University Foundation, Long Beach) on the ‘Current State of Methods and Processes of Planning: How Plans Are Made’. We must not forget the work of the journal Socio-economic Planning Science (Elsevier). This journal has placed itself outside the ambit of the approach of Frisch, although he was involved in its foundation (1968) as a member of the editorial board (and I was also called by him to share in this venture).
- 38.
See also the contributions of James Galbraith (son of John K. Galbraith) for an imperative planning policy (James K. Galbraith 2008).
- 39.
A large group of well-known econometricians had been invited, including Ragnar Frisch, Maurice Allais, Robert Dorfman, Franklin M. Fisher, Trygve Haavelmo, Walter Isard, Gale Johnson, Tjalling Ch. Koopmans, Wassily Leontief, P.C. Malhanobis, Edmond Malinvaud, Micho Morishima, Erich Schneider, Richard Stone, Henri Theil, Jan Tinbergen and Herman Wold. I think the initiative was taken by scholars of the Catholic University of Milan, including Marcello Boldrini, statistician, and Luigi Pasinetti, economist, along with a group of younger economists of that university. All those invited released a paper that, in conjunction with the discussions, was published in two mighty volumes by the PAS in the 1965.
I consider it important to quote here the whole intervention by Ragnar Frisch at this seminar. There are many editions of this intervention but I prefer the main text published by the Pontifical Academy of Science one year later (1964) in an Opera in two volumes, including all reporting of the invited economists, with free access (PAS, Rome, 1965).
- 40.
Here it is significant that Frisch sees the ‘econometrician’ as somebody that unifies the integrated roles of the ‘economist’ and of ‘social engineering’. In a ‘post-economic’ vision—which this book aspires to introduce—this new figure (which absorbs those who leave the traditional ‘determinist’ disciplines) could be called a ‘programme analyst’ or ‘socio-economic planner’, or even a ‘planologist’ (from planology). But the nomenclature issues are of little importance at the moment.
- 41.
Here Frisch describes the three groups:
The first direction, one characterized by a very mild deviation from the traditional market type of economy, consists of admitting only monetary and fiscal instruments in the attempt at steering the economy. The human behaviour patterns at the various levels of society are such that, in this mildest form of attempt to steer the economy in a desirable direction, one faces a fundamental choice between inflation accompanied by fairly full employment or a reasonably stable price level accompanied by less than full employment of labour and other resources. A precise description of the situation would, of course, necessitate specifications of a number of details, but the choice I have mentioned indicates the essence of the matter. (This choice is strikingly illustrated by Frisch, in Selection and implementation, 1965, presented in: ‘Seminaire d’etudes, etc.’ vol. 2, PAS, (no copyrights) Roma, pp. 1195–204)
- 42.
We ought to acknowledge also that the seafaring metaphor could work even if users of the boat are not consulted about the destination of travel and route (totalitarian regime) and the pilot acts of his own free will (political dictatorship). Effectively the route would always be necessary (unless the pilot autocrat would accept going adrift, just to maintain his power without consensus).
- 43.
It is on this logical crux that Frisch’s entire concept is developed. Thus on the similar logical crux is developed the critical analysis made by Wassily Leontief (1970) (which we will examine in a more extended way in Vol. I, Chap. 8) against economic theorising in the traditional sense, in a way that tries to intervene in reality, resorting to empirical (statistical) means, as a way to support policies, without a programming approach or deliberate and targeted information.
- 44.
In 1979, engaged in a didactic exposition of the planning general process, I too tried to establish a sharp division between the two ‘phases’ of the process; however, I named them differently, as the plan formation and the plan implementation. The first was subdivided into two ‘moments’: elaboration and bargaining; the second was subdivided into three moments: specification, control and revision. (See: Principles of Regional Planning, 2 vol. Milan 1979, p. 48 and foll.). I also described there the construction of the ‘programme structure’ and a wider set of arguments.
- 45.
The extent and complexity of the literature that has been produced on the ‘crisis of economics’ would justify a new academic discipline, a kind of ‘crisis-ology’ of economics (like an argument held around the bed of a mortally ill person about if and when he/she will die). It is far from my intention to enter into this argument, but I have tried to update myself on the tenor of such literature (when I developed my position ‘beyond Myrdal’, on the advancement of this question).
Among the literature I reviewed on the theme, three papers published in the Economic Journal in 1972 were particularly impressive:
-
Edmund H. Phelps The Underdevelopment of Economics (in ‘Economic Journal’, March 1972).
-
G.D.N. Worswick, Is Progress in Economic Science possible? (ibidem, march 1972).
-
Nicholas Kaldor, Irrelevance of Equilibrium Economics, (ibidem, December 1972.
Moreover, a series of more recent anthologies have helped me to go over the frustrations, which the positivist economics, as critical reflection on the truth or false (episteme), gave me about the progresses of the discipline. They are coming from different roads:
-
Daniel Bell e Irving Kristol, editors, The Crisis in Economic Theory (1981, not the most recent, but very stimulating);
-
Andrea Salanti e Ernesto Screpanti, editors, Pluralism in Economics; new perspectives in History and Methodology (1997);
-
M. Archer, R. Bhashar, A. Collier, T. Lawson e A. Norrie, editors, Critical realism; essential Readings, 1999);
-
Robert H. Nelson, editor, Economics as religion: from Samuelson to Chicago and beyond (2001);
-
Paul Bourgine e Jean-Pierre Nadal, editors, Cognitive Economics; an interdisciplinary approach (2004);
-
Edward Fullbrook, editor, A guide to what’s wrong with Economics (2004).
However, I must confess that, perhaps due to my age, or the superficiality of my reading, or my innate criticism, despite providing many hours of pleasant reading of a kaleidoscope of arguments against the current arguments of economic theory, these works have not changed or updated (as I had hoped) my own ‘paradigms’ acquired from the previous authors (such as Myrdal, Frisch, Leontief, Tinbergen and others) and I feel it necessary to visit them again.
Above all, I did not find that this vision overturned my approach from positivist to programmatic, and from that merely instrumental vision of mathematics and decisional modelling, that Frisch gave me, pushing me to make a jump over the eternal antinomies (realism vs nonrealism, certainty vs uncertainty, rationalism vs un-rationalism or irrationalism, knowledge of plausibility – falsification; and so on), translating these antinomies from the positivist approach into a programmatic one; and orienting the economics more toward a problem of ‘feasibility’, rather than of ‘verity’ plausibility.
I will return to these relative disappointments and their justifications—with regard to the needs of political and collective choices—in Vol. III, after having explored further, in the remaining chapters of Vol. I and Vol. II, the message, the vision, the method and the techniques elaborated by Ragnar Frisch—the central theme of this book.
-
- 46.
To the point of distinguishing the ‘intelligence’ and the ‘wisdom’, remembering the case of Evariste Galois (1811–1832), one of the ‘greatest mathematical geniuses that ever lived’ (‘His theory of transformation groups laid for instance completely bare the nature of roots of algebraic equations’) that was also ‘a striking example of lack of wisdom’. According to the tale of Frisch, ‘in a clash with political opponents’, where also a girl was involved, in his own words an infamous prostitute, he accepted a duel with pistols. He was not a good shot and knew for certain that he would be killed in the duel. Therefore, he spent the night before the duel writing down at desperate speed his mathematical testament. Here we find a brilliant exposé of his main mathematical ideas. The next day he was shot, and died the following day at the age of 21.
- 47.
Frisch (1970a), in F. Long ed., 1976, p. 2. We can recall, for curiosity, that the Frisch family were active in the goldsmith business.
- 48.
On the Frischian concept of ‘breakthrough’, see par. 1.1 of Chap. 7.
- 49.
The reference is to the first pages of the first paragraph of the paper presented to the Nobel celebration in 1969. The title of the paragraph was: The lures of unsolvable problems’.
- 50.
Even if, for his entire life as a scholar, he was involved with the construction of models, he ‘theorised’ even more clearly the distinction between descriptive and decisional models in the 1960s. He gave this distinction in an explicitly systematic and organic form only in 1960s with his Nobel Prize lecture, exhibiting the table, which is reproduced in this book in Fig. 7.1 of Vol. I.
Perhaps it is suitable to recall the milestones on Frisch’s path to decisional modelling.
The first of the DE-UO Memoranda of 1953 is titled ‘From national accounts to macroeconomic decision model’. From here followed the DE-UO for the construction of the ‘Oslo Models’ as premise and instrument of the political preferences formalisation as an appropriate methodology of planning. In a Memorandum of 1956 (N.16, October) Frisch illustrated the ‘Main features of the Oslo Median Model’. In the Memorandum (always in the 1956, N.17) there are some ‘Supplementary remarks on the Oslo Median Model’. In another Memorandum of 1956 (N. 18, November) Frisch develops an ‘Introduction to the Oslo Median Model’ in which he makes precise the meaning of the work to which he would then dedicate himself. In 1957, Frisch wrote the Memorandum N.19 (giugno): ‘Oslo Decision Models. A summary of work done on the submodel, the median model and model of similar types, as well as a draft of the REFI model’, where he describes the set of decisional models as seen from the viewpoint of a unitary methodology. We will return to this literature, which found echoes in Frisch’s later writings, in Vol. III, especially Chaps. 1 and 2.
This is the reason why the Table reproduced by Frisch only at the end of a long period of work at the Institute of Economics of the University of Oslo (DE-UO), and published only in his paper for the Nobel Prize (and which I reproduce in the Exhibit I-4.1), was intended as the conclusion of research that had passed through all stages of modelling, from the descriptive to the decisional one.
The Table was built after he perceived and described in a systematic way the substance of the programming approach; its layout encompasses all the principles of econometric modelling—it still belongs in a certain sense to a ‘way of seeing “pre-Programming approach”’ as he called it. But the fact that in the lecture of 1969 he placed this Table in the exhibition of the ‘transition toward economic planning at a national level’ and in the exhibition of the instruments to activate cooperation between political decision-makers and econometricians in order to formulate the political preference function (which he considered to be his most original contribution to the economic science) indicates that he felt that he still had not found a way to illustrate well the difference between descriptive and decisional models.
This was for Frisch a crucial point to give substance to the programming approach, for which he often argued the need and of which he outlined the principal aspects.
- 51.
Oxymoron: a rhetorical word to which I would like to give a personal definition as an expression of a concept; a mixture of contrasting meaning which finds its acumen exactly in apparent banality (from the Greek oxus (acute) and moros (silly)).
- 52.
It is very symptomatic that these couplets become as such in Frisch only later, in the Nobel Prize lecture of 1969. In effect the second part of the couplet—‘and, at its turn, the theory influenced the observational techniques’—is added here to an expression, the first part of the couplet, that he has used often.
- 53.
Frisch adds: ‘Of course, there had been forerunners for such a combination of economic theory, mathematics and statistics even earlier. It was represented by such men as Johan Heinrich von Thunen (1783–1850), Augustin Cournot (1801–1877), A.J. Dupuit (1804–1866) and Hermann Heinrich Gossen (1810–1858). But from the first part of the 20th century the movement came in for full.’ [Frisch, ibidem page 11].
- 54.
On the other hand, it was not necessary to wait for the ‘breakthrough’ in economics to obtain this kind of logical verifiability. Already for a long time economists had adopted mathematical language for a ‘rigorous’ development of its concepts. Pay attention to this word! Many times this rigorousness is obtained through the cost (or damage) of simplification and approximation. This means that it only apparently provides rigour (for more on this, see Myrdal’s arguments, as well as Vol. I, Chap. 1 of this book).
- 55.
All in all, this was the substance of rather drastic criticism, addressed since 1939, by Keynes to a Report presented by Tinbergen to the Ligue of Nations, about the ‘statistical verification of the theories of economic cycles. (To that debate, at that epoque, took part, Tinbergen (with his responses and) and, among others, Frisch and Friedman; but on the argument came back along the time the contributions of Samuelson, Klein, Stone, Haavelmo, Koopmans, and others, becoming a classic case of controversies on the methodology of econometrics. On the debate itself, see Hendry e Morgan, eds (1995); Garrone e Marchionatti (2004)).
- 56.
- 57.
Frisch refers to what he expressed in a speech at the first World Congress of the Econometric Society, already described in Sect. 3.1 of this chapter.
- 58.
It is such a pity—and also meaningful—that this paper, of which the essential part was reproduced in his speech at the congress, had not been published in the official journal of the society, Econometrica, which was already in the hands of a group of American economists who were not so generous with regards to Frisch. And it is a pity that this paper was not included posthumously in the volume edited by Frank Long, which collected the final and most mature essays by Frisch which are examined above, nor was it republished in 1995, in the two volumes edited 22 years after the death of Frisch by Olav Bjerkholt, who sought to improve the knowledge of and access to Frisch’s works among the greater public.
- 59.
Republished by Leontief in: ‘Theoretical assumptions and non-observed facts’, republished, in its turn, in Essays in Economics, vol. 2 Theories, Facts, and Policies’ 1977 p. 24.
- 60.
And he adds a slightly poisonous phrase concerning the extreme lovers of mathematical language:
Much is being made of the widespread, nearly mandatory use by modem economic theorists of mathematics. To the extent to which the economic phenomena possess observable quantitative dimensions, this is indisputably a major forward step. Unfortunately, anyone capable of learning elementary, or preferably advanced calculus and algebra, and acquiring acquaintance with the specialized terminology of economics can set himself up as a theorist. Uncritical enthusiasm for mathematical formulation tends often to conceal the ephemeral substantive content of the argument behind the formidable front of algebraic signs. [Leontief, ibidem, above cited, p. 25] This consideration of Wassily Leontief should be adequately impressed in front of every writing of the young, and less young, economist, that had tried—and will try to express their ephemeral substantive arguments and logic contents behind that formidable front of algebraic sign.
Bibliographical References of Chapter 3 (Vol. I)
Archibugi, F. (1992). ‘The resetting of planning studies’, in: A. Kuklinski, ed., Society, Science, Government, Warsaw: KBN.
Bjerkholt, Olav, ed, (1995). Foundations of Modern Econometrics. The Selected Essays of Ragnar Frisch, 2 Vol. Aldershot UK, Edward Elgar.
Bjerkholt, Olav. (1998). ‘Interaction between Model Builders and Policy Makers in the Norwegian Tradition’. Economic Modeling, Elsevier. 15 (3) 317–339.
Chipman John, S. (1998). ‘The contributions of Ragnar Frisch to Economics and Econometrics’. In: S. Strom. Ed. Econometrics and Economic Theory in the 20th Century. Cambridge, Cambridge University Press.
Edvardsen Kare, N. (2001). Ragnar Frisch: An Annotated Bibliography, Department of Economics, University of Oslo, DE-UO.
Frisch, R. (1963). ‘An Implementation System for Optimal National Economic Planning without Detailed Quantity Fixation from a Central Authority, Part 1, Prolegomena’, Memorandum, DE-UO, Sept 1963. Second preliminary printing. [Republished. in: Economic Planning Studies, F. Long ed (see) (1976) pp. 129–174].
Frisch, R. (1965). ‘General Outlook on a method of advanced and democratic macroeconomic planning’, (paper presented at CIME Study Week, L’Aquila, 29 Agosto–7 Settembre 1965). In: de Finetti ed., Mathematical Optimization in Economics, Roma: Cremonese Edizioni 1966.
Frisch, R. (1969). ‘From Utopian Theory to Practical Applications: The Case of Econometrics’, in: Nobel Memorial Lecture, in: (Nobel Lectures, Economic Sciences, 1969–1980, Assar Lindbeck ed.) Singapore, World Scientific, 1992 [Republished also in: Frisch R., F. Long, ed. 1976, pp. 1–39].
Frisch, R. (1970a). ‘Econometrics in the World of Today’, in: Eltis, Scott and Wolfe, eds, Induction: Growth and Trade. In honour of Sir Roy Harrod Oxford, Clarendon Press (1970).
Frisch, R. (1970b). ‘Cooperation between Politicians and Econometricians of the Formalization of Political Preferences. A Background Paper (Preliminary version) (mimeo). Oct 1970. (Republished in: Frisch. R., Economic Planning Studies, F. Long, ed., (1976). (pp. 41–86).
Frisch, R. (1995). Foundations of Modern Econometrics: The Selected Essays of Ragnar Frisch. Bjerkholt, O. (Ed.). Alderschot: Edward Elgar Pub.
Galbraith James, K. (2008). The Predator State: How conservatives abandoned the free market and why liberals should too. New York, Free Press.
Garrone, G. and Marchionatti, R. (2004). Keynes on econometric method. A reassessment of his debate with Tinbergen and other econometricians, 1938–1943. Dipartimento di Economia “S. Cognetti de Martiis”. (CESMEP): University of Turin.
Hendry David, F. and Morgan Mary S., ed. (1995). The Foundations of Econometric Analysis. Cambridge: Cambridge University Press.
Johansen, L. (1974). Establishing Preference Function for Macroeconomic Decision Models. Some Observations on Ragnar’s Frisch’s contributions.
Leontief, W. (1970). Theoretical assumptions and non-observed facts, (presidential address to the 83rd meeting of the AEA, Detroit, Michigan) in ‘The American Economic Review’, vol. 61, 1971, (rep. in W. Leontief, Essays in Economics, etc. Vol. 2, (see ref.). 1977.
Lindbeck, Assar, ed., Nobel Lectures, Economic Sciences 1969–1980, World Scientific Publ, Singapore, 1992, p. 153.
Long, Frank. (1976), ed., Ragnar Frisch Economic Planning Studies Reidel Publishing Company, Dordrecht.
Samuelson, P. Foundations of Economic Analysis, 1947
Tinbergen, Jan, Prospects for the Reduction in Income Inequalities, 1974, Marois.
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2019 The Author(s)
About this chapter
Cite this chapter
Archibugi, F. (2019). Planning and Planning Theory: The Difficult Legacy of Ragnar Frisch. In: The Programming Approach and the Demise of Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-78057-3_3
Download citation
DOI: https://doi.org/10.1007/978-3-319-78057-3_3
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-319-78056-6
Online ISBN: 978-3-319-78057-3
eBook Packages: Economics and FinanceEconomics and Finance (R0)