Richard Goodwin: A Short Appreciation

Abstract

Richard Goodwin, a self-confessed 'lifelong though wayward Marxist' (1983), was interested throughout his active academic career, spanning some fifty years, in the problem of the dynamics of a capitalist economy. Though he had no formal training as a mathematician, he was acknowledged by Le Corbellier to have contributed to the theory of oscillations, and was thus well equipped to model such dynamics. His work was based upon the premise that capitalism can only be properly understood as a non-linear system, and its overall theme is perhaps best summarised by a remark in one of his latest papers: 'Capitalism is almost always to be found in non-steady state, the explanation being that it is a game played simultaneously by millions of players who cannot possibly have the information necessary to play it well, let alone optimally. The result is a system that bifurcates back and forth between a stable and an unstable state: a growth equilibrium state that is unstable is of purely theoretical interest, since it is the one place the system will never remain'. (Goodwin (1987) p. 158). Such a view accords closely with that expressed by Hayek, who wrote in his famous article on the trade cycle (1935) that 'it is ... [not] clear that we can apply the [economic] concept of equilibrium to the actions of a great number of persons, whose successive responses to the actions of their fellow-beings necessarily takes place in time, and which can be represented as a timeless equilibrium relationship only by means of unrealistic special assumptions'. Hayek, of course, lacked the mathematical ability of Goodwin to attempt to translate his insights into a formal model. But the insight of both Goodwin and Hayek, namely that the analysis of the macro-dynamics of capitalism required an approach which was fundamentally different to that of convention, set them apart from the economic mainstream. In esssence, both men saw capitalism as what we now call, following the nonlinear scientific revolution of the closing decades of this century, a selforganising system. The complex interaction of individual agents implies, for example, that government intervention is not needed to revive the economy in a depression. The natural rhythms of the system itself ensure that a recovery takes place. But in stark contrast to the model of orthodox economics, there is no guarantee that markets clear in this model, and the average rate of unemployment, for example, during the course of the economic cycle could be either high or low. Goodwin's views set him somewhat apart from Keynes's immediate disciples, with whom one might have imagined would have existed more common cause, though he personally admired his Cambridge colleagues, especially Joan Robinson and Richard Kahn. But, in a number of ways, Goodwin's work was