Wages and employment are too low in a monopsony. Furthermore, a minimum wage or a subsidy may raise employment up to its first-best level. First, we analyze whether these important predictions still hold if workers compare their income to that of a reference group. Second, we show that the...

Adam Smith proposed three contradictory theories of the British Empire in the Wealth of Nations. The first view holds that the empire was created for merchants eager to monopolize the colonial trade. Smith concludes that “Great Britain derives nothing but loss” from the colonies. In the...

The two Cambridge controversy have marked a milestone in economic thinking. By their demonstration neo-Ricardian and post-Keynesian seemed to have proven the impossibility of defining the notion of Capital and, moreover, of being able to aggregate heterogeneous Capital. It is not so.By reasoning...

The economic theory of the second best has been an analytical staple of welfare economics and policy analysis since Lipsey and Lancaster (1956) set forth the idea. That theory challenged the then standard claim that removing violations of the necessary conditions for a competitive equilibrium...

The American historical profession has in recent years witnessed a significant revival of two subfields that were once thought to be nearly dead. Both intellectual history and what is often referred to today as the history of capitalism are flourishing. In some cases, the two fields have...