Microeconomic principles and problems: a pluralist introduction , 2nd edition geoffrey schneider boo
Microeconomic Principles and Problems: A Pluralist Introduction , 2nd Edition Geoffrey Schneider
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Microeconomic Theory Basic Principles and Extensions
Microeconomic Principles and Problems ofers a comprehensive introduction to all major perspectives in modern microeconomics, including mainstream and heterodox approaches. By providing multiple views of markets and how they work, readers will be better able to understand and analyze the complex behaviors of consumers, frms, and government ofcials, as well as the likely impact of a variety of economic events and policies.
Most principles textbooks cover only mainstream economics and neglect the rich contextual analysis of heterodox economists. Heterodox material is presented as complementary to mainstream economics: understanding both approaches yields the deepest level of understanding. The book covers standard models, and includes substantial coverage of existing economic realities, featuring case studies and descriptive data. The book includes some coverage of all major heterodox schools of thought. This second edition incorporates new and expanded material on international trade (including disintegration and Brexit), climate issues and perspectives including degrowth, repeated exchanges and games, non-market exchanges, trends in job opportunities, the rising cost of education, the gig economy, social media as an industry, and updated examples and cases. The book’s suite of digital resources has also been revised to ensure examples and activities are relevant to each part of the book.
Written in an engaging style focused on real-world examples, this groundbreaking book brings economics to life. It ofers the most contemporary and complete package for any pluralist microeconomics class.
Geofrey Schneider is a Presidential Professor of Economics at Bucknell University, Pennsylvania. He is Executive Director of the International Confederation of Associations for Pluralism in Economics, a leading heterodox economist, and an award-winning teacher.
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Microeconomic Principles and Problems
A Pluralist Introduction
Second Edition
Geoffrey Schneider
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Title: Microeconomic principles and problems : a pluralist introduction / Geofrey Schneider.
Description: 2nd edition. | Abingdon, Oxon ; New York, NY : Routledge, 2024. | Series: Routledge pluralist introductions to economics | Includes bibliographical references and index.
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I dedicate this book to my spouse and partner for more than 36 years, Lori Schneider. Lori has been at my side throughout all of the ups and downs. She put up with the many hours I spent writing this book. And, she tolerated all of the evenings she had to spend surrounded by economists (!) talking endlessly about the economic system, despite the fact that economics was her least favorite subject as an undergraduate. Without her love and support, none of this would have been possible.
1.3
1.4 Economic methodology: How to “do” economics
1.5 Methodology in microeconomics: Amazon.com and consumer behavior
1.6 The scientifc method in economics: How scientifc can economics be?
2.1
2.2
2.3 The specialization of resources
2.4 Shifts in the production possibilities curve
2.5 Capital goods, consumer goods, and economic growth
2.6 A political economy critique of scarcity and choice in mainstream economics
2.7 Institutional analysis: A political economy approach to the study of resource allocation
2.8 Conclusion
3 The evolution of pre-capitalist economic systems: From communal societies to empires, feudalism, and mercantilism
3.0 Chapter 3 learning goals
3.1 Traditional economies: Ancient hunter-gatherer societies
3.2 Agriculture and the establishment of cities, social classes, and slave-based empires
3.3 The economic system of the Roman Empire
3.4 Feudalism and the manor economy in Western Europe
3.5 The forces behind the decline of feudalism and the rise of markets
3.6 Mercantilism and the uneasy beginnings of capitalism
3.7 Conclusion
4 Adam Smith and the rise of capitalism: The era of laissez-faire
4.0 Chapter 4 learning goals
4.1 The Industrial Revolution and capitalism in England
4.2 Adam Smith, laissez-faire capitalism, and Smith’s critique of mercantilism
4.3 Smith’s idealized picture of a capitalist system
4.4 From supporting the poor to laissez-faire capitalism
4.5 The rise of the factory and the double movement
4.6 Conclusion
5 Karl Marx and the dark ages of capitalism: Historical materialism, surplus value, and the exploitation of labor
5.0 Chapter 5 learning goals
5.1 Infant industry protection and the spread of capitalism in Europe and the United States
5.2 The conditions of workers under capitalism in the 1800s
5.3 Karl Marx, historical materialism, and class confict 92
5.4 Surplus value and the exploitation of labor 96
5.5 Marx on competition, globalization, concentration, and commodifcation 99
5.6 Crisis and revolution 104
5.7 Conclusion 106
6 Thorstein Veblen and monopoly capitalism: The rise of manufacturing and the fall of laissez-faire 108
6.0 Chapter 6 learning goals 109
6.1 The development of monopoly capitalism in the United States 109
6.2 Race, ethnicity, class, and gender in the United States 112
6.3 The Age of Imperialism
6.4 The rise of neoclassical economics 114
6.5 Veblen on evolution and institutions
6.6 Veblen on culture, pecuniary emulation, and conspicuous consumption 118
6.7 Making money vs. making goods 121
6.8 The manufacturing boom and the roaring twenties 124
6.9 The Great Depression and the fall of laissez-faire 126
6.10 Conclusion 128
7 Keynes and mixed market capitalism: How to save capitalism from itself 131
7.0 Chapter 7 learning goals
7.1 Neoclassical economics and the ideology of laissez-faire
7.2 The macroeconomic revolution of John Maynard Keynes 135
7.3 Macroeconomic stabilization policy 140
7.4 The New Deal and the rise of the mixed economy 142
7.5 Hayek’s critique of government intervention 147
7.6 The mixed economy and the golden age of U.S. capitalism, 1945–1973 151
7.7 The era of neoliberalism and globalization, 1974–2020 152
7.8 Conclusion: The mixed economy of the United States and other developed economies 155
8 Modern economic systems: Market-dominated, social market, and state-dominated economies 158
8.0 Chapter 8 learning goals 159
8.1 Comparing market-dominated economies and social market economies 159
8.2 The U.S. model of a market-dominated economy 163
8.3 The Nordic model of a social market economy 166
9
8.4
11.2
11.3
11.4 The mainstream model of supply decisions: Deriving the supply curve
and
12 Different types of market structures: How market outcomes are affected by market structures
12.0 Chapter 12 learning goals
12.1 Perfect competition
12.2
12.3
12.4
12.6
12.7
13 Theories of frm behavior: Short-run and long-run costs of production
13.0 Chapter 13 learning goals
13.1 The mainstream model of short-run costs of production
13.2 A specifc example of a frm’s hypothetical short-run costs
13.3 The mainstream model of proft maximization
13.4 The mainstream model of a frm’s long-run costs of production
13.5 Political economy theory of the frm
13.6 Conclusion
14 Perfect competition and competitive markets: The perfect, Smithian market structure
14.0 Chapter 14 learning goals
14.1 The characteristics of a perfectly competitive market
14.2 The mainstream model of the perfectly competitive frm in the short run
14.3 The mainstream model of the perfectly competitive frm in the long run
14.4 An application of supply, demand, and perfect competition
14.5 Perfect competition, public policy, and the political economy view
15 Monopoly and monopoly power: Natural and non-natural monopolies and how the government regulates them
15.0 Chapter 15 learning goals
15.1 Monopoly characteristics
15.2 Demand and marginal revenue curves for a monopoly
15.3 Proft maximization in a monopoly in the short run
15.4 Regulating natural monopolies in the long run
15.5 The debate over monopolies: Rivalrous competition vs. monopoly capital
15.6
16 Monopolistic competition: The market for local services and other easy-to-enter industries with unique products
16.0 Chapter 16 learning goals
16.1 The characteristics of a monopolistically competitive market
16.2 Short-run proft maximization in monopolistic
16.3
16.5
17 Oligopoly and strategic behavior: The nature of large frm competition and an introduction to game theory
17.0
The kinked demand curve model of an oligopolistic industry
18 Corporations and their role in society: The good and bad side of limited liability corporations
18.0 Chapter 18 learning goals
18.1 The three types of frms: Sole proprietorships, partnerships, and corporations
18.2 Key aspects of the modern limited liability corporation
18.3 If corporations are people, what kind of people are they?
18.4 Are corporations psychopaths? 448
18.5 The good side of large corporations 449
18.6 Conclusion
19 Market failure and government failure: The primary role for government in microeconomic markets 457
19.0 Chapter 19 learning goals 458
19.1 Market failure 1: Imperfect information about unsafe products 459
19.2 Market failure 2: Unequal bargaining power in the labor market 461
19.3 Market failure 3: Monopoly power and insufcient competition 462
19.4 Market failure 4: Negative and positive externalities 464
19.5 Market failure 5: Failure to preserve common resources and the environment 471
19.6 Market failure 6: Inadequate supply of public goods 474
19.7 Market failure 7: Increasing costs of essential services 476
19.8 Market failure 8: Fostering of inequality and poverty 478
19.9 Government failure 485
19.10 Conclusion 486
20 The economics of the environment and climate change: A key issue of our time 490
20.0 Chapter 20 learning goals 491
20.1 Ecological economics 492
20.2 Environmental and natural resource economics 494
20.3 The scientifc consensus on climate change 498
20.4 The economic consequences of climate change 501
20.5 Mainstream, market-based solutions to climate change 503
20.6 Political economy solutions to climate change 507
20.7 Conclusion 510
21 Public goods and services: Do we have the right balance of public and private goods and services? 514
21.0 Chapter 21 learning goals 515
21.1 Public and quasi-public goods 515
21.2 Determining the optimal balance of public and private goods 520
21.3 How best to provide public goods
21.4 Galbraith and the theory of social balance
21.5 Health care and health insurance
21.6 Health care systems
21.7 Education, knowledge, innovation, and economic development
22 Working for a living: The labor market and the forces that affect your working life
22.0 Chapter 22 learning goals
22.1 Labor market trends
22.2 The political economy of labor: Workers, employers, and confict
22.3 Motivating labor: Sticks and carrots
22.4 Power dynamics between employers and workers
22.5 The mainstream neoclassical model of the competitive labor market
22.6 Applications of the supply and demand for labor 567
22.7 The economics of the minimum wage 568
22.8 Marginal revenue product and income determination in mainstream economics 574
22.9 The mainstream economics model of labor in noncompetitive markets 576
22.10
23.0
23.1 Income and wealth inequality in the United States and other developed countries
23.2 Social class and the political economy of inequality
23.3 Additional factors driving class inequality in the modern world 597
23.4 Why we should care about class inequality, and what we can do to address it 599
23.5 Race and inequality 602
23.6
23.7 Economic analysis of inequality: Feminist and stratification economics 611
23.8 Sexual orientation-based discrimination 612
23.9 Conclusion 614
24 International microeconomics: Trade, protectionism, and exchange rates 621
24.0 Chapter 24 learning goals 622
24.1 Trade and the theory of comparative advantage 622
24.2 Problems with the theory of comparative advantage 627
24.3 Political economy views on trade and competitiveness 632
24.4 Protectionism: Using tariff and non-tariff barriers to protect industries 635
24.5 Exchange rates and the foreign exchange market 638
24.6 The determinants of shifts in supply and demand in foreign exchange markets 641
24.7 Exchange rates, trade, and microeconomic markets 646
24.8 Conclusion 647
1.1
1.3
1.4
1.5
2.1
2.2
2.3
2.4
2.5
2.7
2.8
2.9
3.1
3.2
4.1
4.2
5.3
5.4 Murad smoking Santa, December 1915 103
6.1 Thorstein Veblen (1857–1929) 116
6.2 Increases in manufacturing production, 1899–1929 124
6.3 Income share of the top 1% in the United States, 1913–2018 125
7.1 The circular fow model of the economy, with savings and investment 135
7.2 J.M. Keynes (1883–1946) 136
7.3 Economic instability in the U.S. economy: Real GDP growth per capita, 1890–2022 155
8.1 A table showing key data on selected MDEs and SMEs 161
8.2 OECD Better Life and U.N. Human Development Rankings, 2022 162
8.3 Hourly compensation costs in manufacturing, 2021 171
9.1 The price of a barrel of crude oil, Jan. 1998–Jan. 2023 184
9.2 The ten largest pizza companies in 2020 194
9.3 A graph of the supply and demand model for pizzas 196
9.4 Prices adjust to eliminate surpluses or shortages 197
9.5 The quantity of pizza demanded per month at each price 199
9.6 Demand curves for Kate, Juan, Bo, and the market 200
9.7 A shift in demand to the right (increase in demand) 202
9.8 A shift in demand to the left (decrease in demand) 203
9.9 Decreased natural gas prices cause a decrease in demand for a substitute (oil) 205
9.10 A table showing the quantity of pizza supplied per month at each price 208
9.11 Supply curves for Pizza Hut, Domino’s, and the market for pizzas
9.12 Equilibrium where Q S = QD
9.13 A shift in supply to the left (decrease in supply)
9.14 A shift in supply to the right (an increase in supply)
10.1 Movements along and shifts in supply and demand curves
10.2 Efect of an increase in wages on the market for Big Macs
10.3 Efect of an increase in advertising on the U.S. market for Apple Macintosh (Mac) computers
10.4 Elastic and inelastic demand curves
10.5 Efect of rent control on the market for two-bedroom apartments in NYC
10.6 The efect of a price foor on the corn market
10.7 Efect of a $1 subsidy on the U.S. market for corn
10.8 The efect of a $3 excise tax on the U.S. market for cigarettes
10.9 Consumer and producer surplus before and after an excise tax
10.10 A price inelastic demand curve for gasoline
10.11 A price elastic demand curve for Coca-Cola
11.1 Specialization, diminishing returns, and frm costs for Mercado Burrito
11.2 Production function (TPL) and marginal product of labor (MPL) for Mercado Burrito
11.6 Most proftable U.S. companies in 2022
11.8
12.1
12.2 Concentration ratios for various U.S. manufacturing industries, 2017
12.3 Desktop search engine market share, January 2023
12.4
13.4
13.5 AFC always falls as Q
13.6
13.7 A table of short-run costs for a typical lawn mowing frm (per week)
13.8 Marginal cost, average variable cost, average total cost for a lawn mowing frm
13.9 Total cost, total variable cost, and total fxed cost
13.10 A table showing proft maximization for a lawn mowing frm
13.11 Deriving the long-run average total cost (LRATC) curve
13.12 Long-run average total cost curves for diferent industries
13.13 A table of short-run costs of production in mainstream economics theory of the frm
13.14 Twenty strategies to maximize profts according to the political economy theory of the frm
13.15 Table for Question 6
14.1 The frm’s demand curve is the market price in perfect competition
14.2 Cost and revenue information, Donny’s Corn Farm, short run
14.3 A graph of Donny’s Corn Farm in the short run
14.4 A perfectly competitive frm earning a normal proft
14.5 A perfectly competitive frm experiencing economic loss
14.6 Possible short-run cases
14.7 Possible long-run cases in perfect competition
14.8 The global market for wheat in 2002, 2012, and 2018
14.9 The U.S. market for milk in 2018
14.10 The U.S. peanut market in 2017
14.11 A table with frm data for Question 5
14.12 A table with frm data for Question 7
15.1 A table of a monopolist’s D, MR
15.2 Demand, marginal revenue for a monopolist 366
15.3 Continuous demand and marginal revenue curves and equations 367
15.4 A table displaying cost and revenue information for a monopolist 368
15.5 A graph of a monopolist earning an economic proft 369
15.6 Graphs of a monopolist earning (a) a normal proft and (b) an economic loss
15.7 Monopoly vs. perfect competition 371
15.8 Long-run average total cost curves, non-natural and natural monopoly 372
15.9 Standard Oil’s stranglehold on the U.S. economy
15.10 A table with the long-run cost and revenue data for Comcast internet service
15.11 Regulating a natural monopoly
15.12 A table showing cost and revenue data for Citizens’ Electric Co
15.13 A table with cost and revenue information for LTC
16.1 A table displaying a frm in monopolistic competition
16.2 A monopolistically competitive frm earning a normal proft 391
16.3 Economic proft, entry of frms in the long run in monopolistic competition 393
16.4 Economic loss and the exit of frms in the long run in monopolistic competition 394
16.5 McDonald’s in Milan, Italy
16.6 A table showing cost and revenue data for Café Latte
17.1 The kinked demand curve model of oligopoly 412
17.2 The kinked demand curve model of oligopoly with MR and MC 414
17.3 A payof matrix showing the Prisoner’s Dilemma game 421
17.4 A payof matrix showing the diamond cartel game 421
17.5 A payof matrix for a comparative advantage (invisible hand) game
17.6 A payof matrix displaying a dominant player game
17.7 A payof matrix game with no dominant strategies
17.8 A decision tree for a repeated game
17.9 A payof matrix for use with Question 6
17.10 A payof matrix for use with Question 7 428
18.1 Types of U.S. frms by number and sales revenue, 2015 432
19.1 The efect of a negative externality on the market for electricity
19.2 A positive externality for fu vaccinations
19.3 The four types of goods based on excludability and rivalrousness 475
19.4 Price increases of services vs. goods, 2000–2022 478
19.5 Changes in U.S. family income shares from 1950–1970 and 1970–2021 479
19.6 U.S. household income growth, 1947–1973 and 1973–2021 480
19.7 People below the poverty line in the United States 482
19.8 U.S. marginal tax rates, 2023 484
20.1 The socially efcient amount of pollution 495
20.2 Carbon dioxide emissions (black) and global average temperatures (blue), 1920–2021 498
20.3 Carbon dioxide emissions (metric tons per capita) in 2000 and 2019 499
20.4 Acres burned annually by wildfres in the U.S., 1974–2022 501
20.5 Determining the socially efcient amount of pollution 512
21.1 Optimal quantity of a public good in mainstream economics 521
21.2 Health insurance coverage of Americans (in thousands), 2021 529
21.3 Total public (blue) and private (grey) health expenditures per capita, 2019 530
21.4 Health performance scores of 11 high-income countries, 2021 531
21.5 A table of health care indicators, 2020 (or most recent year) 532
21.6 Health care expenditures as a percent of GDP, 1992–2020 534
21.7 Government expenditure on education as a percent of GDP, 2020 537
21.8 Expenditure on higher education per student, 2018 538
21.9 MC, MPB, and MSB 540
22.1 Projected annual rate of change (%) in industry employment, 2021–2031 548
22.2 The division of the workday 550
22.3 Exploitation ratios of U.S. companies, 2021 551
22.4 Workers’ and owners’ share of U.S. national income, 1970–2021 552
22.5 Wages and the division of the workday in the political economy model 559
22.6 Wages and profts with a longer day in the political economy model 560
22.7 Average annual hours worked in 2021 in OECD countries 561
22.8 A backward-bending supply of labor 562
22.9 A minimum wage causes a surplus of labor 564
22.10 An increase in the demand for labor 566
22.11 A higher minimum wage and a decrease in demand for labor in 2009 568
22.12 Table showing the U.S. minimum wage in current and constant dollars 569
22.13 The real value of the U.S. minimum wage, 1940–2022 570
22.14 Real minimum wages of developed countries in 2021 571
22.15 U.S. labor market elasticities and the minimum wage 572
22.16 A table of the demand for labor (MRPL) in a perfectly competitive market 574
22.17 Equilibrium in the frm’s labor market 576
22.18 A table of the labor market for a monopolistic monopsony 577
22.19 Optimal quantity of labor hours in a monopsony 578
22.20 A table of output and price information for a hypothetical frm 581
23.1 Income share of the top 10%, U.S., U.K., Denmark, Australia, Sweden, France, 1980–2021 585
23.2 Changes in the U.S. distribution of income since 1950 585
23.3 Family income ranges for the United States, 2021 586
23.4 Lorenze curve for the United States, 2021 586
23.5 The U.S. Lorenz curve in 1970, 1990, and 2021 587
23.6 Gini coefcients before and after taxes and transfers 588
23.7 Median net worth of families in the United States, 2019 589
23.8 Percentage of assets & debts held by U.S. families, 2020 590
23.9 Share of national wealth held by top 1%, top 10%, and bottom 40%, various countries, 2019 590
23.10 The Great Gatsby curve: Inequality (Gini) and intergenerational mobility, 2018 594
23.11 Number of generations to approach the mean income 595
23.12 The likelihood of the poor making it to the top, selected countries 596
23.13 Increases in U.S. workers’ productivity & real hourly compensation, 1948–2021 598
23.14 U.S. median Black and Hispanic family income as a % of median white family income 603
23.15 U.S. median household net worth by race/ethnicity, 1983–2019 604
23.16 Median female worker income as a % of median male worker income 607
23.17 Occupational segregation, 1983 and 2022 607
23.18 The Economist ’s 2022 glass-ceiling index 610
24.1 Production possibilities curves for the U.S. and Mexico 624
24.2 Consumption possibilities curves for the U.S. and Mexico 626
24.3 The efect of a 100% tarif 637
24.4 The foreign exchange market for U.S. dollars 639
24.5 U.S. assets become more attractive 641
24.6 An increase in incomes in Europe 644
24.7 Interest rates in the euro area increase 644
24.8 PPCs for the U.S. and Kuwait 649
24.9 PPCs for Japan and the U.S. 649
Preface
In 2008, the housing bubble and fnancial crisis confounded mainstream economists. Only a few of them predicted the meltdown was coming, and most were caught completely by surprise.
Interestingly, large numbers of political economists who were not part of the mainstream, including this author, spotted the real estate bubble, anticipated the fnancial crisis, and advised their friends and colleagues to pull their money out of fnancial markets prior to the collapse. What did political economists know that mainstream economists did not?
First, political economists drew on the lessons of economic history. There are numerous examples demonstrating that the deregulation of fnancial markets encourages speculative behavior, which can lead to spectacular booms and equally spectacular busts. The Great Depression of the 1930s, the Savings and Loan Crisis of the 1980s, and the Asian Financial Crisis of the 1990s all featured deregulated lenders taking incredible risks with other people’s money. Similarly, the deregulation of fnancial markets in the 1980s and 1990s paved the way for the Great Financial Crisis of 2007–2009, which sparked the Great Recession. Studying the evolution of economic systems is particularly helpful in predicting when conditions are ripe for the next crisis.
Second, political economists drew on the economic ideas of Keynes, Marx, Veblen, and Minsky, among others—economists who studied the roots of economic crises carefully and had much to say on the topic. Meanwhile, many mainstream economists were utilizing mathematical models that assumed markets would always be rational and efcient, and could never experience a crisis. These models can be very accurate during periods when markets are stable and operating in the expected way—when the assumptions of the models hold. But the models no longer work once the assumptions are violated.
Thus, the analysis of the evolution of economic systems and a broader knowledge of economic ideas could have saved the profession from the
embarrassment it sufered in 2008. Even more surprising, perhaps, is the fact that most mainstream principles of economics texts still ignore economic history and some of the major economists whose ideas were most useful in predicting the housing bubble and the fnancial crisis. This book seeks to remedy those omissions.
More specifcally, most current principles of microeconomics textbooks cover only mainstream economics, ignoring the rich ideas of the heterodox schools of thought. They also tend to lack material on the great economists, so readers usually leave the introductory course without learning in depth about who Adam Smith, Karl Marx, Thorstein Veblen, Joseph Schumpeter, John Maynard Keynes, and Friedrich Hayek were and why their ideas are important.
This book also includes extensive historical analysis that is crucial to understanding trends and patterns that can help us predict the future. In addition, this book contains abstract models as well as extensive descriptions of existing economic realities that sometimes depart from the picture painted by the models.
To provide the most comprehensive picture possible, the book includes explicit coverage of the major heterodox schools of thought. This allows the reader to choose which ideas they fnd most compelling in explaining modern economic realities.
This book is intended to give you a broader background that will help save you from the tunnel vision that has infected mainstream economics in recent decades. By understanding the evolution of economic systems and the ideas of the great economists, you will be better prepared to confront the complex realities of the modern world. By understanding multiple views of markets and how they work, you will gain a more sophisticated understanding of the functioning of a market economy. This will help you better understand the real-world behavior of frms, consumers, and government ofcials.
As you approach this material, it is important to keep an open mind. All of the major economists you will read about in this book were brilliant, and their ideas are worth studying. Each of them has devoted followers among modern economists. Your task is to consider all of these ideas and then, observing the world around you, decide which ideas make the most sense in understanding our modern economic system.
You may fnd, as the author has, that the various approaches to economics are complementary. Each perspective ofers something important and distinctive. For example, mainstream models are excellent at predicting consumer behavior when consumers are rational and well-informed. On the other hand, political economists and behavioral economists ofer key insights regarding the often-irrational behaviors that consumers engage in, such as purchasing items for their display value (clothing with a brand logo on it) rather than their use value (how warm the clothing is). This means that the pluralist
approach adopted in this book will give you a comprehensive understanding of the multifaceted and complex aspects of human economic behavior.
NEW IN THE SECOND EDITION
This second edition of the book contains updated data and examples from the previous edition. Furthermore, there are numerous additions designed to make the book more engaging and topical. There are also additional examples from European economies to further broaden and internationalize the book’s content. Notable additions include the following:
• Chapter 9 has a new section on non-market exchange.
• Chapter 13 has an expanded section on the political economy theory of the frm and the key role of the proft rate in driving the dynamics of the economic system.
• Chapter 14 contains a new section on the political economy analysis of competitive markets.
• Chapter 16 adds a new section on the political economy approach to monopolistic competition, and a case study on franchising and its infusion of monopoly power into the restaurant market.
• Chapter 17 includes a new box on oligopolistic price fxing and infation, and a section on repeated games and how the insights of game theory change when games are repeated.
• Chapter 18 adds new case studies of corporate misbehavior, including Wirecard’s fnancial fraud in Europe, Boeing 737 MAX plane crashes, and Facebook’s promotion of disinformation and hate speech.
• Chapter 20 has a new section on the degrowth perspective on environmental issues.
• Chapter 22 has updated and expanded information on exploitation ratios at major corporations and new material on the gig economy.
• Chapter 23 adds a section on productivity and wage trends in the European Union, a box on the glass-ceiling index, and a section on sexual orientation-based discrimination.
• Chapter 24 has a new section on political economy views on trade and competitiveness.
Acknowledgments
I would like to thank all of the research assistants who helped with the writing of this book. Those research assistants include Kailyn Angelo, Nghia (TN) Doan, James Elmendorf, Colin Randles, Kathryn Tomasi, Katelyn Schneider, Julia Tambaro, Andrew Dunleavy, Spandan Marasini, and many others.
I would also like to thank my mentors who stimulated my interest in a broad-based, pluralist approach to economics. In graduate school, William (Sandy) Darity and Vincent Tarascio taught pluralistically, embodying the values that I came to embrace. My colleagues at Bucknell University also provided a rich, engaging environment where our regular discussions of how to develop a pluralist course and curriculum were invigorating. My regular collaborators on writing projects were particularly instrumental in developing a pluralist approach, including Charles Sackrey, Janet Knoedler, Jean Shackelford, Berhanu Nega, Erdogan Bakir, and Steve Stamos. I am also deeply indebted to a number of economists whose ideas I draw on heavily in this book. In particular, Karl Polanyi’s masterwork The Great Transformation looms large.
A thanks is also due to the staf at Routledge and to editor Andy Humphries, who made this project possible. And, thanks to the many colleagues who ofered feedback on the book at various stages, including Nathan Sivers Boyce, Barbara Hopkins, Paula Cole, Zdravka Todorova, Erdogan Bakir, Jacob Powell, Stephan Lefebvre and Xiao Jiang.
PART I Economics A pluralist defnition
Part I explores several diferent defnitions of what economics is and the different ways in which economists practice the social science of economics (economic methodology).
Chapter 1 begins by describing why economic policy matters to the country and to every person. It begins by describing the debate over whether or not politicians should balance their budgets every year given the regular occurrence of recessions in the economy (downturns in which unemployment increases and business activity decreases). The chapter then ofers four different defnitions of economics: One ofered by mainstream economists (who tend to advocate a capitalist market system with limited government intervention), one preferred by economists practicing progressive political economy (PPE—which includes institutionalist, social, post-Keynesian, and feminist economists who believe capitalism can and should be reformed), another from economists who engage in radical political economy (RPE—Marxists and others who believe capitalism is fatally fawed and should be replaced), and a broad defnition of pluralistic economics that synthesizes the other defnitions.
The chapter then takes up methodology, or how economists attempt to “do” economics. This will give you an idea of what it means to be an economist from the various perspectives—the kind of things you study, what you look for, and how you construct knowledge about the economy. The chapter then goes through a series of short examples so that you can see diferent types of economic analysis in action when economists study consumer behavior, labor markets, and the business cycle. The chapter concludes by briefy laying out the diferent schools of economics that will be discussed in the book.
Chapter 2 takes up a simple mainstream economics concept, opportunity costs, and a simple economic model, the production possibilities curve (PPC).
The PPC model is applied to several economic issues, including a treatment of defense spending and its impact on economic growth. The chapter concludes with a section on the potential limitations of economic models in capturing economic reality, building on the work of PPE and RPE economists.
As you read through the material on various economic perspectives, we encourage you to embrace the pluralist approach. Try to determine the unique contributions of each perspective, along with the strengths and weaknesses. This will allow you to assemble a broad-based, sophisticated understanding of economics.
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of altering even their features on occasions, and this man has 'deserter' written all over his ugly countenance."
"Well! And what has he told you?"
"That he will deliver to us the leader of the gang who broke into Monsieur de Kerblay's house the other night."
"On conditions, of course."
"Of course,"
"Immunity for himself?"
"Yes."
"And a reward?"
"Yes."
"You did not agree to that, I hope," said the Man in Grey sternly.
M. Lefèvre hummed and hawed.
"There must be no question of bribing these men to betray one another," resumed the secret agent firmly, "or you'll be falling into one baited trap after another."
"But there's Monsieur de Kerblay's offer of a reward for the recovery of the ring, and in this case——" protested Lefèvre sullenly.
"In no case," broke in the Man in Grey.
"Then what shall I do with the man?"
"Promise him a free pardon for himself and permission to rejoin his regiment if his information proves to be correct. Keep him in the policecells, and come and report to me directly you have extracted from him all he knows, or is willing to tell."
The chief commissary of police was well aware that when the Minister's secret agent assumed that quiet air of authority, neither argument nor resistance was advisable. He muttered something between his teeth, but receiving no further response from the Man in Grey he turned abruptly on his heel and stalked out of the room, murmuring inaudible things about "officiousness" and "incompetence."
II
The man who had presented himself that morning at the commissariat of police offering valuable information as to the whereabouts of the leaders of his own gang, appeared as the regular type of the unkempt, out-at-elbows, down-at-heels, unwashed Chouan who had of a truth become the pest and terror of the countryside. He wore a long shaggy beard, his hair was matted and tousled, his blouse and breeches were in rags, and his bare feet were thrust into a pair of heavy leather shoes. During his brief sojourn in the army, or in the course of his subsequent lawless life, he had lost one eye, and the terrible gash across that part of his face gave his countenance a peculiarly sinister expression.
He stood before the commissary of police, twirling a woollen cap between his grimy fingers, taciturn, sullen and defiant.
"I'll say nothing," he repeated for the third time, "unless I am paid to speak."
"You are amenable to the law, my man," said the chief commissary dryly. "You'll be shot, unless you choose to earn a free pardon for yourself by making a frank confession of your misdeeds."
"And what's a free pardon to me," retorted the Chouan roughly, "if I am to starve on it?"
"You will be allowed to at once rejoin your regiment."
"Bah!"
The man spat on the ground, by way of expressing his contempt at the prospect.
"I'd as lief be shot at once," he declared emphatically.
M. Lefèvre could have torn his scanty hair with rage. He was furious with the Chouan and his obstinacy, and furious with that tiresome man in the grey coat who lorded it over every official in the district, and assumed an authority which he ought never to have been allowed to wield.
The one-eyed Chouan was taken back to the police-cells, and M. Lefèvre gave himself over to his gloomy meditations. Success and a goodly amount of credit—not to mention the five thousand francs' reward for the recovery of the ring—appeared just within his reach. A couple of thousand francs out of the municipal funds to that wretched informer, and the chiefs of one of the most desperate gangs of Chouans would fall into M. Lefèvre's hands, together with no small measure of glory for the brilliant capture. It was positively maddening!
It was not till late in the afternoon that the worthy commissary had an inspiration—such a grand one that he smacked his high forehead, marvelling it had not come to him before. What were two thousand francs out of his own pocket beside the meed of praise which would fall to his share, if he succeeded in laying one or two of those Chouan leaders by the heels? He need not touch the municipal funds. He had a couple of thousand francs put by and more; and, surely, that sum would be a sound investment for future advancement and the recognition of his services on the part of the Minister himself, in addition to which there would be his share in M. de Kerblay's reward.
So M. Lefèvre sent for the one-eyed Chouan and once more interrogated him, cajoling and threatening alternately, with a view to obtaining gratis the information which the man was only prepared to sell.
"I'll say nothing," reiterated the Chouan obstinately, "unless I am paid to speak."
"Well! What will you take?" said the commissary at last.
"Five thousand francs," replied the man glibly.
"I'll give you one," rejoined M. Lefèvre. "But mind," he added with uncompromising severity, "you remain here in the cells as hostage for your own good faith. If you lie to me, you will be shot—summarily and without trial."
"Give me three thousand and I'll speak," said the Chouan.
"Two thousand," rejoined the commissary, "and that is my last word."
For a second or two the man appeared to hesitate; with his one eye he tried to fathom the strength of M. le Commissaire's determination. Then he said abruptly:
"Very well, I'll take two thousand francs. Give me the money now and I'll speak."
Without another superfluous word M. Lefèvre counted out twenty onehundred franc notes, and gave them into the Chouan's grimy hand. He thought it best to appear open-handed and to pay cash down; the man would be taken straight back to the cells presently, and if he played a double game he would anyhow forfeit the money together with his life.
"Now," said Lefèvre as soon as the man had thrust the notes into the pocket of his breeches, "tell me who is your chief, and where a posse of my police can lay hands upon him."
"The chief of my gang," rejoined the Chouan, "is called 'the Spaniard' amongst us; his real name is Carrera and he comes from Madrid. We don't often see him, but it was he who led the expedition to the house of Monsieur de Kerblay."
"What is he like?"
"A short man with dark, swarthy skin, small features, keen, jet-black eyes, no lashes, and very little eyebrow, a shock of coal-black hair and a
square black beard and moustache; he speaks French with a Spanish accent."
"Very good! Now tell me where we can find him."
"At Chéron's farm on the Chartres road between la Mesle and Montagne. You know it?"
"I know the farm. I don't know Chéron. Well?"
"The Spaniard has arranged to meet a man there—a German Jew—while Chéron himself is away from home. The idea is to dispose of the ring."
"I understand. When is the meeting to take place?"
"To-night! It is market day at Chartres and Chéron will be absent two days. It was all arranged yesterday. The Spaniard and his gang will sleep at the farm; the following morning they will leave for Paris, en route some of them, so 'tis said, for Spain."
"And the farmer—Chéron? What has he to do with it all?"
"Nothing," replied the Chouan curtly. "He is just a fool. His house stands isolated in a lonely part of the country, and his two farm hands are stupid louts. So, whenever the Spaniard wants to meet any of his accomplices privately, he selects a day when Chéron is from home, and makes use of the farm for his own schemes."
"You owe him a grudge, I suppose," sneered Lefèvre, who had taken rapid notes of all the man had told him.
"No," replied the Chouan slowly, "but those of us who helped to work the coup at Monsieur de Kerblay's the other night, were each to receive twenty francs as our share of the spoils. It was not enough!"
The commissary of police nodded complacently. He was vastly satisfied with the morning's work. He had before now heard vague hints about this Spaniard, one of those mysterious and redoubtable Chouan leaders, who had given the police of the entire province no end of trouble and grave
cause for uneasiness. Now by his—Lefèvre's—own astuteness he stood not only to lay the villain by the heels and earn commendation for his zeal from the Minister himself, but, if this one-eyed scoundrel spoke the truth, also to capture some of his more prominent accomplices, not to mention the ring and M. de Kerblay's generous reward.
Incidentally he also stood to put a spoke in the wheel of that overmasterful and interfering man in the grey coat, which would be a triumph not by any means to be depreciated.
So the Chouan was taken back to the cells and the chief commissary of police was left free to make his arrangements for the night's expedition, without referring the matter to the accredited agent of His Majesty's Police.
III
Lefèvre knew that he was taking a grave risk when, shortly after eight o'clock on that same evening, he ordered a squadron of his police to follow him to Chéron's farm on the Chartres road. At the last moment he even had a few misgivings as to the wisdom of his action. If the expedition did not meet with the measure of success which he anticipated, and the accredited agent of the Minister came to hear of it, something exceedingly unpleasant to the over-zealous commissary might be the result. However, after a few very brief moments of this unworthy hesitation, M. Lefèvre chid himself for his cowardice and started on his way.
Since his interview with the one-eyed Chouan he had been over to the farm in order to get a thorough knowledge of the topography of the buildings and of their surroundings. Disguised as a labourer he had hung about the neighbourhood, in the wet and cold until he felt quite sure that he could find his way anywhere around the place in the dark.
The farm stood a couple of kilomètres or so from the road, on the bank of a tiny tributary of the Mayenne, surrounded by weeping willows, now stripped of their leaves, and flanked by a couple of tumble-down heather-
thatched sheds. It was a square building, devoid of any outstanding architectural features, and looking inexpressibly lonely and forlorn. There was not another human habitation in sight, and the wooded heights which dominated the valley appeared to shut the inhabitants of the little farm away from the rest of mankind. As he looked at the vast and mournful solitude around, Lefèvre easily recognised how an astute leader, such as the Spaniard appeared to be, would choose it as headquarters for his schemes. Whenever the house itself became unsafe the thicket of willow and chestnut close by, and the dense undergrowth on the heights above, would afford perfect shelter for fugitive marauders.
It was close on ten o'clock of an exceptionally dark night when the posse of police, under the command of the chief commissary, dismounted at the "Grand Duc," a small wayside inn on the Chartres road, and, having stabled their horses, started on foot across country at the heels of their chief. The earth was sodden with recent rains and the little troop moved along in silence, their feet, encased in shoes of soft leather, making no sound as they stealthily advanced.
The little rivulet wound its sluggish course between flat banks bordered by waste land on either side. Far ahead a tiny light gleamed intermittently, like a will-o'-the-wisp, as intervening groups of trees alternately screened it and displayed it to view.
After half an hour of heavy walking the commissary called a halt. The massive block of the farmhouse stood out like a dense and dark mass in the midst of the surrounding gloom. M. Lefèvre called softly to his sergeant.
"Steal along, Hippolyte," he whispered, "under cover of those willow trees, and when you hear me give the first command to open, surround the house so that the rascals cannot escape either by the door or the windows."
Silently and noiselessly these orders were executed; whilst the commissary himself stole up to the house. He came to a halt before the front door and paused a moment, peering anxiously round about him and listening for any sound which might come from within. The house appeared dark and deserted; only from one of the windows on the ground floor a feeble light filtered through the chinks of an ill-fitting shutter, and a
mingled murmur of voices seemed to travel thence intermittently. But of this the eager watcher could not be sure. The north-westerly wind, soughing through the bare branches of the trees behind him, also caused the shutters to creak on their hinges and effectually confused every other sound.
The chief commissary then rapped vigorously against the door with the hilt of his sword.
"Open!" he called peremptorily, "in the name of the law!"
Already he could hear the sergeant and his men stealing out from under the trees; but from the stronghold of the Chouans there came no answer to his summons; absolute silence reigned inside the farmhouse; the dismal creaking of a half-broken shutter and the murmur of the wind in the leafless willows alone roused the dormant echoes of the old walls.
Lefèvre rapped once more against the massive panels.
"Open!" he called again, "in the name of the law!"
The men following their sergeant had now reached the open. In an instant, from somewhere in the gloom behind them, there came the report of two musket shots in rapid succession. Someone was hit, for there was the sound of a groan and a curse; but in the darkness it was impossible to see who it was.
The men halted irresolute.
"Run to the back of the house, some of you!" commanded the commissary, "and in Heaven's name do not allow a single ruffian to escape."
The men obeyed as quickly as the darkness would allow, and again two musket shots rang out from among the trees; this time the sergeant fell forward on his face.
"Corporal Crosnier, are you there?" cried Commissary Lefèvre.
"Present, my commandant!" was the quick reply.
"Take Jean Marie and Dominique and two or three others with you, and put up the game that is lurking under those willows."
Crosnier obeyed; he called half a dozen men to him and marched them up towards the thicket. The cowering enemy lay low; only from time to time shots rang out simultaneously out of the darkness. Sometimes they made a hit, but not often—one or two of the men received a stray bullet in their shoulder or their leg—a random shot which came from out of the gloom and to which they could not reply, for it was impossible to see whence it had come. Presently even that intermittent fire ceased. It seemed as if the thicket had finally swallowed up the lurking quarry.
In the meantime Lefèvre had ordered two or three of his picked men to use the butt-end of their muskets against the door.
"Batter it in, my men," he commanded, "and arrest everyone you find inside the house."
Strangely enough, considering the usually desperate tactics of these Chouan gangs when brought to bay, no resistance was offered from the interior of their stronghold. Whether the rascals were short of ammunition and were saving it for a hand-to-hand fight later, or whether they were preparing some bold coup, it was impossible to say. Certain it is that the vigorous attacks against the front door were met by absolute silence—so absolute, indeed, as vaguely to disconcert the commissary of police.
Still the men continued to pound away with their muskets against the panels of the door; but the latter was extraordinarily massive in comparison with the want of solidity of the rest of the house. It resisted every onslaught for some time, until at last it fell in with a terrific crash, and Lefèvre, leaving half a dozen men on guard outside, took another half-dozen with him and entered.
He had picked his men from among those whom he knew to be most intrepid, for he had expected a desperate resistance on the part of the Chouans; he was prepared to be greeted with a volley of musket-fire as he and his men crossed the threshold; he was prepared for a hand-to-hand fight across that battered door. In fact, M. Lefèvre, chief commissary of police,
had been prepared for everything excepting the death-like stillness which he encountered by way of welcome.
Darkness and silence held undisputed sway everywhere. The men, with dark lanterns fixed to their belts and holding loaded muskets in their hands, paused for one moment irresolute. Then they started to make a thorough search of the place; first the ground floor, then the entrance hall and staircase, then the cellars. They explored every nook and cranny where human quarry might find shelter, but there was not a sign, hardly a trace of any Chouans, save in one small room on the ground floor which certainly appeared as if it had been recently occupied; the chairs had been hastily pushed aside, on the centre table were half a dozen mugs and two or three jugs, one of which was still half filled with wine, a handful of ashes smouldered in the hearth, and the lamp which hung from the ceiling above was alight. But for this, Lefèvre might have thought that he must have been dreaming when he stood by the front door and saw the narrow stream of light through the chink of a shutter.
Indeed, there was something unspeakably dreary and desolate in this dark and empty house, in which undoubtedly a gang of malefactors had lately held revel; and when the men went upstairs in order to explore the floor above, they were, every one of them, conscious of the quick sense of unreasoning terror when a weird and intermittent sound suddenly reached their ear.
The sound came from over their heads—it was like a wail, and was piteous and disconcerting in the extreme.
"Like someone groaning," said one of the men in a hoarse whisper.
Soon their momentary feeling of dread passed away, and two or three of the men had already scaled the narrow, ladder-like stairs which led to a loft that ran the whole length and breadth of the house under the sloping roof.
But here an extraordinary sight met their gaze. Huddled up against a large supporting beam were an old man, a woman and two young girls. They had been tied together by ropes to the beam. Each of the unfortunates was in acute distress or bodily pain. The atmosphere of the place was both
stuffy and bitterly cold. Incessant moaning came from the woman, sobbing from the girls; the man appeared stunned and dazed. When the light from one of the dark lanterns fell upon him, he blinked his eyes and gazed vacantly on the men who were already busy with the ropes, freeing him and the woman from their bonds.
They all appeared in the last stage of exhaustion and clung to one another for support and warmth, when Lefèvre with kindly authority ordered them to move. Fortunately one of the men recollected the jug of wine which had been left in the room on the ground floor. He ran to fetch it, and returned very soon jug and glasses in hand. In the meanwhile Lefèvre had remained staring at the wretched people and trying to extract a few words of explanation from them.
So far he had only been able to elicit the information that four members of the farmer Chéron's family, his father, his wife and his two daughters stood before him in this pitiable plight. It was only after they had drunk a little wine that they were able to speak coherently. In short, jerky sentences and with teeth still chattering with cold and terror, the old man tried to reply to the commissary's questions.
"How in the world came you to be up here," M. Lefèvre asked, "tied like cattle to a beam in your son's house?"
"My son is away at Chartres, Monsieur le Commissaire," replied the old man; "he won't return till to-morrow. We should have perished of hunger and cold if you had not come to our rescue."
"But where are those blackguardly Chouans? And who in the devil's name fired on us from under your trees?"
"Those execrable Chouans took possession of my son's house this morning, Monsieur le Commissaire, soon after his departure," answered the old man dolefully. "They seized me and my daughter-in-law and my two grandchildren, forced us to give up the little bit of money which my son had left for our use, stole food from the larder and wine from the cellar; and when we protested they dragged us up here—as you say—like cattle, tied us to a beam and left us to perish unless my son should chance to come home."
Lefèvre would have liked to say that twenty-four hours spent in a draughty loft does not necessarily mean starvation, but on the whole he refrained from badgering the poor people, who had suffered quite enough, with further expostulation.
"But what has happened to the Chouans?" he reiterated with a hearty curse.
"Gone, Monsieur le Commissaire," here interposed the woman woefully. "Gone! They caroused all day, and left about a couple of hours ago; since then the house has been as silent as the grave."
Lefèvre said nothing very coherent for the moment; he was mentally embracing the Chouans, the lying informer and his own folly in one comprehensive curse.
"But my men were fired on from behind the trees," he urged feebly after a while.
"I heard the firing, too, Monsieur le Commissaire," rejoined the old man. "It terrified us, for the Chouans had threatened to shoot us all if they were attacked by the police; and these two young girls—think of it, Monsieur le Commissaire—at the mercy of those brutes. I suppose," he added with a shudder, "that while the leaders of the gang made good their escape, they left a couple of men behind to cover their retreat."
Nothing more could be got out of these poor people. They had been set upon quite early in the day by the Chouans, and knew little or nothing of what had gone on in the house while they were prisoners in the loft. They did not know how many of the ruffians there were—six or eight they thought. The chief was a man with swarthy skin and a long black beard, who spoke French with a strange foreign accent.
The commissary of police went nearly mad with rage. He set his best men to search the farm-house through and through, in the hope that some of the rascals might still be lurking about the place. But the men ransacked the house in vain. They found neither trap-door nor secret panel, nor slinking
quarry, and after a couple of hours' hunt were forced to own themselves defeated.
IV
M. Lefèvre returned to Alençon with his posse of police in the small hours of the morning. He dismissed the men at the commissariat, and sought his own lodgings in the Rue Notre Dame, his mind a prey to the bitterest feeling of disappointment—not unmixed with misgivings at thought of M. le Ministre's agent, should he get wind of the miscarriage.
To his terror and amazement, no sooner had he entered the house than the concierge came out of his lodge to tell him that a gentleman was upstairs in his rooms, waiting for him.
"Who is it?" he asked sharply. "You have no right to admit anyone to my rooms at this hour of the night."
"I could not help myself," retorted the concierge sullenly. "He exhibited some sort of order from the Ministry of Police, and was so high-handed and peremptory that I dared not refuse."
Filled with vague apprehension M. Lefèvre ran quickly up to his rooms. He was greeted in the ante-chamber by the Man in Grey.
"I was unfortunately too late to catch you before you started," said the latter as soon as Lefèvre had closed the door. He spoke in his even monotone—his face was calm and expressionless, but there was something about his attitude which jarred unpleasantly on the commissary's nerves.
"I—that is——" he stammered, despite his stern effort to appear confident and at his ease.
"You have disobeyed the Minister's orders," interposed the secret agent quietly. "But there is no time now to discuss your conduct. The blunder
which you have just committed is mayhap beyond repair; in which case ——"
He broke off abruptly and M. Lefèvre felt a cold shiver running down his spine.
"There was no time to consult you——" he began.
"I said that I would not discuss that," interposed the Man in Grey quietly. "Tell me where you have been."
"To Chéron's farm on the Chartres road," replied the commissary sullenly.
"The informer gave you directions?"
"Yes."
"That you would find his leader there?"
"Yes, the man whom they call 'the Spaniard,' and some of his accomplices. The informer——"
"The informer escaped from the cells during your absence this evening," said the Man in Grey curtly.
"Malediction!"
"Do not curse, my good man," advised the other dryly. "The rascal's escape may be the means of retrieving your blunder, since it gave me the knowledge of the whole affair."
"But how did it happen?"
"Surveillance slackened while you went off on your wild-goose chase. Your prisoner used some of the money wherewith you had bribed him— against my express command, remember—to bribe his warder in his turn. Your sergeant-in-charge came to me in his distress when he found that his bird had flown."
Lefèvre had no longer the strength to argue or even to curse. He hung his head in silent dejection.
"I sent for you," continued the Man in Grey mercilessly. "When I found that you had gone no one knew whither, and that you had taken a posse of your men with you, I guessed the whole extent of your damnable blunder. I have waited here for you ever since.
"What can I do now?" murmured Lefèvre gloomily.
"Collect ten or twelve of the men whom you can most confidently trust, and then pick me up at my lodgings in the Rue de France. We'll go back to Chéron's farm—together."
"But there is no one there," said Lefèvre with a dejected sigh, "only Chéron's father, his wife and two daughters."
"I know that well enough, you fool," exclaimed the Man in Grey, departing for the first time from his habitual calm, and starting to pace up and down the narrow room like a caged and fretting animal; "and that every proof against the villains who robbed Monsieur de Kerblay has no doubt vanished whilst you were getting the wrong sow by the ear. To bring the crime home to them now will be very difficult. 'Tis red-handed we ought to have caught them, with the Jew there and the ring and the Spaniard bargaining, whereas now——"
Suddenly he paused and stood quite still; the anger and impatience died out of his face, leaving it pale and expressionless as was its wont; only to Lefèvre who was watching him with keen anxiety it seemed as if for one fraction of a second a curious glitter had lit up his colourless eyes.
"In Heaven's name!" he resumed impatiently after a while, "let us get to horse, or I may be tempted to tell you what I think of your folly."
The commissary, trounced like a recalcitrant schoolboy and not a little terrified at the consequences of his blunder, was only too ready to obey. Within half an hour he was in the saddle. He had Corporal Crosnier with
him and half a dozen picked men, and together they went to the Rue de France where the Minister's agent was waiting for them.
VIt was close upon five o'clock of a raw, damp morning when the little party drew rein once more at the wayside inn on the Chartres road. The men appeared tired out and were grateful for the hot coffee which a sleepy ostler hastily prepared for them; but the Man in Grey seemed indefatigable. Wrapped to the chin in a long, dark mantle, he had ridden the whole way by the side of the commissary, plying him with questions the while. Bit by bit he had extracted from him the full history of the futile expedition, the description of the house, its situation and structure, and of the members of the Chéron family. Now, whilst sipping his coffee, he made Lefèvre give him final and minute directions how to reach the farm-house.
Ten minutes later he started on his way—alone and on foot.
"Follow me in about five minutes," were his last commands to the commissary. "Then lie low under the trees. When you hear a pistol shot from inside the house rush in and seize every man, woman, or child whom you find; if you meet with any resistance order your men to use their muskets. Leave the Corporal with a strong guard outside the house, both back and front, and bid him shoot on sight anyone who attempts to escape."
After he had walked on through the darkness for a couple of mètres or so, he threw off his mantle and hat and kicked off his shoes. The commissary of police, had he been near him now, would of a truth have been staggered at his appearance. He wore a pair of ragged breeches and a stained and tattered blouse; his hair was unkempt, and his feet and legs were bare to the knees.
"Now for a little bit of luck," he murmured as he started to run. His bare feet squelched through the wet earth and spattered him with mud from head to foot, and as he ran the perspiration streamed down his face and mingled
with the grime. Indeed, it seemed as if he took a special delight in tiring himself out, in getting breathless and hot, and by his active exercise making himself look even dirtier and more disreputable than he had been before.
When he reached the river side and the row of willow trees, he halted; the house, he knew, must be quite close now on the right, and as he peered into the darkness he perceived a tiny streak of light glimmering feebly through the gloom some way off. Throwing himself flat upon his stomach, he bent his ear to the ground; it was attuned to the slightest sound, like that of the Indian trackers, and he heard at a distance of four hundred mètres behind him the measured tramp of Lefèvre's men. Then he rose to his feet and, stealthily as a cat, crept up to the house.
The slender streak of light guided him and, as he drew nearer, he heard a confused murmur of voices raised in merriment. The occupants of the house were apparently astir; the light came through a half-open shutter on the ground floor as did the sound of the voices, through which presently there rang a loud and prolonged peal of laughter. The secret agent drew a deep sigh of satisfaction; the birds—thank goodness—had not yet flown. Noiselessly he approached the front door, the battered and broken appearance of which bore testimony to Lefèvre's zeal.
A bright patch of light striking through an open door on the right illumined a portion of the narrow hall beyond, leaving the rest in complete darkness. The Man in Grey stepped furtively over the threshold. Immediately he was challenged: "Who goes there?" and he felt rather than saw a gun levelled at his head.
"A friend," he murmured timidly.
At the instant the challenge had resounded through the house the light in the inner room on the right was suddenly extinguished; deathly silence had succeeded the debauch.
"What's your business?" queried a muffled voice peremptorily.
Before the Man in Grey could reply there was a commotion in the inner room as of chairs hastily thrust aside, and presently another voice—one
both gruff and commanding—called out: "What is it, Pierre?"
A dark lantern was flashed about, its light fell full on the miserable apparition of the Man in Grey.
"What do you want?" queried the commanding voice out of the partial gloom. "Speak, or I fire!"
"A friend!" reiterated the Man in Grey timidly.
"Your name?"
"Nicaise, sir, from Mauger's farm on the Mayenne road. I was asleep under a haystack, when a stranger comes to me and shakes me roughly by the shoulder. 'Run,' he says to me, 'to Chéron's up by the Chartres road. Run as fast as your legs will take you. Walk in boldly; the door is open. You will find company inside the farm. Tell them the police are coming back in force. Someone will give you a silver franc for your pains if you get there in time.' So I took to my heels and ran."
While he spoke another man and a woman had entered. Their vague forms were faintly discernible through the darkness; the light from the lantern still struck full on the Man in Grey, who looked the picture of woebegone imbecility.
From the group in the doorway there came a murmur: "The police!"
"A stranger, you say?" queried the man with the commanding voice. "What was he like?"
"I could not say," replied the secret agent humbly. "It was very dark. But he said I should get a silver franc for my pains, and I am a poor man. I thought at first it was a hoax, but when I crossed the meadow just now I saw a lot of men in hiding under the willow trees."
"Malediction!" muttered the man, as he turned, undecided, towards his companions. "Oh, that I had that one-eyed traitor in my power!" he added with a savage oath.
"Did you speak to the men of the police?" asked a woman's voice out of the darkness.
"No, madame," replied the secret agent. "They did not see me. I was crawling on my hands and knees. But they are all round the house, and I heard one man calling to the sergeant and giving him orders to watch the doors and windows lest anyone tried to escape."
The group in the doorway was silent; the man who had been on guard appeared to have joined them, and they all went back into the room and held a hurried consultation.
"There is nothing for it," said one man, "but to resume our former roles as members of the Chéron family, and to do it as naturally as before."
"They suspect us now," said another, "or they would not be here again so soon."
"Even so; but if we play our parts well they can only take us back to the commissariat and question us; they must release us in the end; they have no proof."
In the meanwhile someone had relighted the lamp. There appeared to be a good deal of scurrying and scrambling inside the room; the Man in Grey tiptoed up to the doorway to see what was going on. Evidently, disguises which had hastily been put aside had been resumed; the group stood before him now just as Lefèvre had originally described them: the old man, the woman, the two young girls; the latter were striding about the room and holding their skirts up clumsily with both hands, as men are wont to do when they don women's clothes; the old man, on whom grey locks and well-stencilled wrinkles were the only signs of age, was hastily putting these to rights before a mirror on the wall.
But it was the woman's doings which compelled the attention of the Man in Grey. She was standing on a chair with her back to him, intent on manipulating something up the huge open chimney.
"It will be quite safe there," she said.
She appeared to be closing some heavy iron door which fell in its place with a snap. Then she turned to her companions and slowly descended from the chair. "When the present storm has blown over," she said, "we'll come and fetch it. Chéron will never guess; at any rate, we are sure the police cannot discover this most excellent hiding-place."
She was a short, square-built woman, with a dark, almost swarthy skin, keen jet-black eyes which appeared peculiarly hard and glittering owing to the absence of lashes, a firm, thin-lipped mouth, square chin, and low forehead crowned by a shock of thick, black hair cut short like a boy's. The secret agent kept his eyes fixed upon her while she spoke to her friends. He noted the head so full of character, and the strength and determination expressed in every line of the face; he marvelled why the features— especially those glittering jet-black eyes—appeared familiar, as something he had known and heard of before. And, suddenly, it all came to him in a flash; he remembered the informer's description of the leader named "the Spaniard": a dark, swarthy skin, jet-black hair, keen dark eyes with no lashes to soften their glitter, the beard, the man's attire, the foreign accent. Soh! these marauding Chouans slipped in and out of their disguises and changed even their sex outwardly as easily as men change their coats; whilst the very identity of their leader was more often unknown to them than known.
As the secret agent's practised glance took in during these few seconds the whole personality of the woman before him, he knew that his surmises —based on intuition and on reasoning—were correct. It was the Spaniard who stood before him now, but the Spaniard was a woman. And as he gazed on her, half in pity because of her sex, and half in admiration for her intrepidity, she turned, and their glances met. She looked at him across the narrow room, and each knew that the other had guessed.
The woman never flinched; she held the agent's glance and did not utter either word or cry whilst with a slow, deliberate movement, she drew a pistol from beneath her kerchief. But he, as quick and resourceful, had instantly stepped back into the hall. He seized the door, and, with a loud bang, closed it to between himself and the Chouans. Then, with lightning rapidity, he pushed the heavy bolt home.
