Journal of Economic Literature
Vol. 33, No. 3, September 1995
Contents
Real Wages and the Business Cycle
Katharine G. Abraham and John C. Haltiwanger 1215
Cross-subsidization, Incentives, and Outcomes in
Professional Team Sports Leagues
Rodney Fort and James Quirk 1265
Diagnosing McCloskey
Uskali Maki 1300
Modern Epistemology against Analytic Philosophy:
A Reply
Donald N. McCloskey 1319
Book Reviews
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Real Wages and the Business Cycle
Katharine G. Abraham and John C. Haltiwanger
The objectives of this review are threefold: (1) to characterize the
empirical literature on the cyclical behavior of real wages; (2) to identify
the sources of the differences in results across studies; and (3) to enumerate
key factors that determine the cyclicality of real wages. Given a host
of measurement and methodological issues, drawing firm conclusions is
difficult, but several generalizations can be made. The estimated cyclicality
of real wages depends crucially on the time period of analysis and the
choice of whether to examine the production or the consumption wage. Composition
effects play an important but complicated role as well.
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Cross-subsidization, Incentives, and Outcomes in Professional Team Sports
Leagues
Rodney Fort and James Quirk
Professional team sports leagues provide insight into the problems facing
the management of functioning cartels. This paper provides an analysis
of the incentives and outcomes inherent in the management of professional
team sports cartels. Except for revenue sharing and salary caps, league
cartel management outcomes are consistent with league-wide revenue maximization
and have no impact on competitive balance. However, there are predictable
impacts on the profitability of strong- and weak-drawing teams within
the league. While providing an analytical review of the literature, the
work here also yields new results concerning salary caps, local TV revenue
sharing, and the behavior of cartel managers in the face of rival leagues.
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Diagnosing McCloskey
Uskali Maki
The diagnosis focuses on McCloskey's concept of rhetoric (persuasion
of one's audience in a morally purified conversation), his theory of truth
(constrained coherence), and his conception of the social organization
of economics (morally self-regulated marketplace of ideas). His theory
of truth appears as an "elite theory" (beliefs of the elite of the profession
as the constraint) and an "angel theory" (ethics of speech as the constraint).
These notions cannot accommodate McCloskey's own assessments of current
economics. It is suggested that elites and angels be dropped from the
concepts of rhetoric and truth, and a distinction be made between truth
and plausibility.
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Modern Epistemology against Analytic Philosophy: A Reply
Donald N. McCloskey
Uskali Maki read three books by McCloskey on the "rhetoric of economics"
with sympathy. But he wants McCloskey to choose between a coherence and
a correspondence theory of truth. McCloskey notes in reply that modern
epistemology - by contrast with the analytic philosophy circa 1955 that
many philosophers of economics espouse - rejects the choice. Modern epistemology
would say that economic scientists argue in many legitimate ways, governed
by ethics. In brief, as Maki agrees, economics has a rhetoric. Rhetoric
is a better guide than 1955-style analytic philosophy.
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