Athanasios Asimakopulos

Biography

Asimakopulos was born in Montreal in 1930. He was educated at McGill University earning a B.A. in 1951 and an M.A. in 1953. In September 1953 Tom went to Cambridge; his research topic was a three-commodity, three-country study in international trade theory entitled Productivity Changes, the Trade Balance and the Terms of Trade. With his classmate Keith Frearson, the Australian economist, Tom went to Joan Robinson's lectures on what would become The Accumulation of Capital – Robinson's magnum opus, which sought to extend Keynes's theory to account for long-run issues of growth and capital accumulation. Initially Asimakopulos was irritated by Robinson's criticisms of the orthodox theories of value and distribution and neoclassical methodology on which he had been brought up. Asimakopulos also went regularly to research students's seminars run by Piero Sraffa, Robin Marris, and Nicholas Kaldor.

Asimakopulos was a Lecturer in Economics and Political Science from 1956 to 1957 at McGill. From 1957 to 1959 he worked as an Assistant Professor at the Royal Military College. In 1959 he returned to McGill and became an assistant professor, working close to J.C. Weldon. Promoted to the position of associate professor in 1963, he became a full professor in 1966. In 1988 he was appointed "William Dow Professor of Political Economy" on Weldon's vacancy. He served as Chairman of the Department of Economics from 1974 to 1978. Teaching was his top priority; Asimakopulos loved teaching the microeconomics course to the Honours Students at McGill. Even though he had an assistant, Asimakopulos made sure that, from time to time, he gave tutorials himself, on which he would emphasize, ad nauseam the importance of the assumptions of the analysis and its implications on the results of the theoretical model studied. He wrote extensively on the work of such economic theorists as J. M. Keynes, Joan Robinson, and Michał Kalecki. He was active in many professional associations and organizations. He held numerous fellowships and was a Visiting Professor and a Fellow at universities in the United States, England and Australia. From 1976 to 1990 he was a Fellow of the Royal Society of Canada.

Athanasios Asimakopulos died of leukemia in 1990.

Contributions to economic theory

Asimakopulos was a Post Keynesian / "Kaleckian" scholar, who elaborated upon Michał Kalecki's theories. Asimakopulos wrote mainly around and on Keynesian themes and on growth, distribution and technical progress (the latter often with Weldon). Over time Kalecki's contributions came to be a major influence and interest; Tom came back to Kalecki, influenced by Joan Robinson. Kalecki stresses on determinants of income distribution, determinants of economic activity, determinants of profits, long-run growth, prospects of economy, or impact of imperfect competition on growth of income has been an important inspiration to many economists we call Post Keynesians, including Asimakopulos.

An advantage of theories that originate from Kalecki is that they are closer to what can be called "normal" theories. Kalecki's papers are acceptably formalized and not as extensively open to various interpretations as Keynes' General Theory.

When Post Keynesians treat production side of the economy in their models, they usually inhabit their models with firms, which operate within neither perfectly competitive environment, nor within perfect monopoly setting. Post Keynesian firms usually set their prices as mark-ups above their prime costs. Profits of those firms usually, along with "animal spirits and expectations", have pronounced impact on investment decisions and therefore determine profits in the future. This double-sided relationship between profits and investment is clearly in spirit of Asimakopulos (1971) The most succinct definition of post-Keynesian economics comes from Joan Robinson:

Post Keynesianism

The principal concern of Post Keynesians is to have a more complex and realistic aggregate supply and demand framework that includes mark-up pricing, the trend to monopoly, the workings of endogenous money and credit, circular and cumulative causation, and a pragmatic guide to policy. The workings of uncertainty lead to an unstable capitalistic system that requires the making of agreements and accords to promote stability. At the global level, it requires a fairer distribution of power such that the onus is on nations with trade surpluses to adjust their policies. More than anything, Post Keynesians eschew the quantity theory of money, since money and credit are seen to affect output and employment in both the short and long term. Indeed, like the institutionalists and Marxists, they see the capitalist economy as a monetary system of production, where money and creative financing are essential aspects of its functioning. John Maynard Keynes, Richard Kahn, Richard Goodwin, Nicholas Kaldor, Luigi Pasinetti, Joan Robinson and Piero Sraffa all started initially within the mainstream Economics of their time. They all moved well and truly outside it, attempting to create either a revolutionary alternative or to rehabilitate the classical Marxian tradition, in most cases in the light of the Keynesian revolution. The one exception is Michał Kalecki, whose personal history and independent mind combined to place him virtually always outside the mainstream.

Asimakopulos however viewed himself as a mainstream economist. He even declined an invitation to be included in the first edition of Philip Arestis and Malcolm Sawyer's A Biographical Dictionary of Dissenting Economists, because he regarded his views and contributions as belonging fully within the tradition of economics proper, not in a dissenting stream (he was included in the second edition).

Asimakopulos' critique of Keynes' Marginal Efficiency of Investment

In his General Theory, John Maynard Keynes proposed an investment function of the sort < I = I0 + I(r) > where the relationship between investment and interest rate was of a rather naive form. Firms were presumed to "rank" various investment projects depending on their "internal rate of return" (or "marginal efficiency of investment") and thereafter, faced with a given rate of interest, chose those projects whose internal rate of return exceeded the rate of interest. With an infinite number of projects available, this amounted to arguing that firms would invest until their marginal efficiency of investment was equal to the rate of interest, i.e. < MEI = r >.

Asimakopulos (1971, 1991), Piero Garegnani (1978) and several Post Keynesians offered a troublesome critique to Keynes' original formulation. Asimakopulos et al. questioned the very possibility of a downward-sloping Marginal Efficiency of Investment (MEI) function in the presence of unemployment. In particular, we can note that Keynes's multiplier story implies that if investment is undertaken then, by the multiplier, aggregate demand and output rises. But if the marginal efficiency of investment function is dependent on expected future returns, then should not the increased income and thus aggregate demand from the multiplier imply higher future returns? If so, then the MEI function ought to shift outwards to the right. This, in turn, implies that investment ought to increase which leads to another increase in aggregate demand and thus the MEI curve shifts out again, raising investment, etc.

As a result, it is easy to conceive that, in situations of unemployment where the multiplier works its magic, investment is actually indeterminate – or rather, an ever-shifting MEI curve could imply that all investment projects will be eventually undertaken and not merely those that are profitable at the given rate of interest since the profitability of projects is itself a function of aggregate demand and thus endogenous to the problem.