R. C. O. Matthews

Robert (R.C.O.) Charles Oliver Matthews (16 June 1927 – 19 June 2010) was an Scottish economist, Professor of Political Economy at Oxford University and later Cambridge University, and chess problemist.

Quotes

• [Neoinstitutional Economics...] theory has made an indispensable contribution in recent times to advances of understanding in this area. But it seems to me that in the economics of institutions theory is now outstripping empirical research to an excessive extent. No doubt the same could be said of other fields in economics, but there is a particular point about this one. Theoretical modelling may or may not be more difficult in this field than in others, but empirical work is confronted by a special difficulty. Because economic institutions are complex, they do not lend themselves easily to quantitative measurement. Even in the respects in which they do, the data very often are not routinely collected by national statistical offices. As a result, the statistical approach which has become the bread and butter of applied economics is not straightforwardly applicable. Examples of it do exist, the literature on the economics of slavery being perhaps the most fully developed - not surprisingly because slavery is an institution that is sharply defined. But to a large extent the empirical literature has consisted of case-studies which are interesting but not necessarily representative, together with a certain amount on legal court cases, which are almost certainly not representative. Is this the best we can do? There is a challenge here on the empirical side to economists to see what is the best way forward.
• R. C. O. Matthews (1986), "Presidential Address to the Royal Economic Society." as cited in Eggertsson (1990; 31-32)

"The Economics of Institutions and the Sources of Growth." 1986

R. C. O. Matthews, (1986). "The Economics of Institutions and the Sources of Growth." Economic Journal 96 (December): 903-910;

• "The chief fault in English economists at the beginning of the [nineteenth] century was... that they did not see how liable to change are the habits and institutions of industry." Thus Marshall in his inaugural lecture as Professor of Political Economy in Cambridge, referring to Ricardo (Marshall 1885, p. 155). In the circumstances of that occasion, the remark may have been intended in some part as an olive branch, because the only other serious contender for the Chair had been the High Tory economic historian William Cunningham, Archdeacon of Ely, famous as an anti-theoretical institutionalist and famous also as a polemicist - he was the clergyman who once told his congregation that for him the bliss of Heaven would be incomplete if it lacked the pleasures of controversy.
  • p. 903

• The fundamental idea of transaction costs is that they consist of the cost of arranging a contract ex ante and monitoring and enforcing it ex post, as opposed to production costs, which are the costs of executing a contract.
  • p. 904; as cited in Eggertsson (1990; 14)

Quotes about R. C. O. Matthews

• Matthews described himself as writing economic history in the style of an economist. Sceptical of conventional economic models of "rational individualistic utility maximisation", his interests moved toward the institutional and psychological underpinnings of economic behaviour.

His most cited and admired article, however, was a 1968 paper in the Economic Journal on why Britain had had full employment since the war. In this he argued that far from injecting demand into the system, governments in the so-called "Golden Age of Keynesianism" had persistently run large current account surpluses, instead of the budget deficits that would have been the expected manifestation of a Keynesian stimulus. From this he inferred that fiscal policy had been not only deflationary, but strongly so in the post-war period, therefore something other than Keynesian fiscal policy must have been responsible. The answer, he felt, lay in demand arising out of wartime destruction and an unusually prolonged private sector investment boom.

Professor Robin Matthews Obituary on The Telegraph online, 13 July 2010.