Economic Pluralism for the 21st Century

Abstracts

 .  

Click here for easy-to-print Word version

Are the Welfare Costs of the Business Cycle ‘Trivially Small’?

A Critique of Robert Lucas’s Calculus of Hardship

Greg Hannsgen (Levy Economics Institute, Bard College)

Robert Lucas has argued that the welfare costs of the business cycle are extremely small, relative to the benefits of supply-side measures that improve trend growth. Lucas measured the costs of the business cycle by comparing the utility of a representative agent given the historical level of consumption volatility with the same agent’s utility in a situation in which consumption always equaled its mean value. Utility is higher with no business cycle, because of risk aversion. The parameters of the utility function—most crucially, relative risk aversion (RRA)— are thus involved in estimating business-cycle costs. The RRA has been estimated in a number of ways, for example, by using data on insurance purchases and through surveys that ask people about hypothetical gambles. 

This paper will challenge Lucas’s approach by calling into question whether the widely varying estimates of RRA really measure a single, stable entity and suggesting that risk aversion has different ethical implications in different contexts. In particular, risk that people voluntarily take on is arguably more acceptable than risks imposed by society or by an employer. Policymakers make decisions about risk borne by others, a situation that calls for different sorts of reasoning than individual decisions about risk. Furthermore, using some ideas from Amartya Sen, the paper will argue that since people systematically make mistakes when they make decisions about things like insurance purchases or gambling, data on these choices do not always “reveal” how much insurance or gambling truly maximizes welfare—or how costly the cycle is. 

Risk Privatization, Derivatives, and Development:  The Case of Coffee

Sasha C. Breger (University of Denver)

Whereas at earlier times governments took primary responsibility for managing price risk on behalf of coffee farmers, today private risk management arrangements are rising up to fill the voids left by agricultural liberalization.  This process, termed “risk privatization,” has gone hand in hand with a growing advocacy of market-based risk management arrangements, like derivatives markets.  Derivatives markets, however, are not equally accessible to all coffee sector participants.  Small farmers, in particular, are having difficulty managing price risk with derivatives, suggesting that risk privatization is having uneven effects in terms of economic security and welfare.  Considering the ineffectiveness of other private strategies in managing price risk, the inaccessibility of derivatives markets to small farmers portends growing inequalities—among farmers of different size and wealth, and along the coffee commodity chain.  The vulnerability of small coffee farmers to price risk, due to the poverty of private strategies, may well be undermining efforts at poverty alleviation, rural development and the reduction of national and global economic inequalities.   

Economics against Human Rights

Manuel Couret Branco (Universidade de Évora, Portugal)

It is said that economics value individual and economic freedom and from that many hastily conclude that mainstream economics value human rights. The purpose of this paper is to show that on the contrary mainstream economics is fundamentally contradictory with many human rights especially Economic, Social and Cultural Rights. The main reason for this is that mainstream economics and human rights have trouble in communicating, the latter speaking the rights language and the former the needs language. Within the needs language, capability to pay is the key question whereas within the rights language, entitlement is. If in the first case exclusion and inequality are acceptable in the second case the only acceptable situation is the one characterized by inclusion and equality. In other words goods and services can be unequally distributed, rights cannot. For this reason one cannot count on the market alone to ensure economic, social and cultural rights. Therefore, considering the introduction of different logics into the economic equation as unbearable interferences with economic logic, mainstream economics stands against human rights. In order to give a better illustration of this contradiction the particular conflicts between economics and the right to work, the right to water and the right to social security will be presented. The main conclusion of this paper is that in order to favour human rights economics should either suffer a paradigmatic revolution or accept to play a just supporting role in the process of global development.

The Theory of Endogenous Money in the Age of Financial Liberalization

Gokcer Ozgur (Hacettepe University, Ankara)

Korkut Erturk (University of Utah)

Though the theory of Endogenous Supply of Money lends itself to various different interpretations its central proposition is a simple one: non-financial business sector’s need for credit is seen as the driving force behind the process of money creation in the economy. However, the economic role of commercial banks and depository institutions have changed significantly in the era of financial liberalization since the early 1980s, at least in the US. Not only has the importance of traditional bank lending decreased in the overall credit creation process in the economy, but also the relative importance of commercial and industrial loans in banks’ overall asset structure have experienced a steady decline. Thus, the emergence of new financial intermediaries and instruments that have transformed the process of credit creation, along with the growing importance of the credit needs of households in financing non-GDP transactions, need to be incorporated into the theory of endogenous money. The objective of this paper is to examine the way in which the theory might need to be recast if not revised in order to do so.

Theoretical Considerations of the Endogenous Money Hypothesis:

The Turkish Experience

Constantinos Alexiou (University of Sheffield, UK)

This paper aims at exploring the endogenous money hypothesis as this is implied by the Post Keynesian tradition. Turkey serves as the platform on which the undertaken empirical analysis is conducted. The inconclusive cointegration results obtained reflect the turbulent economic environment that Turkey has experienced over the last decades. The causal dimension however, appears to be in line with the Post Keynesian hypothesis. 

Evaluating Stephen Zarlenga’s Interpretation of the Marxist and Keynesian View of Money

Simon Mouatt (Southampton Solent University, UK)

The mainstream view of money has been subject to critiques from heterodox economists from the post-Keynesian and Marxist traditions yet, the monetary reform movement has been critical of political economists from all traditions for failing to identify the private issue of money as the central problem. This paper reviews some key elements of the mainstream view, and their critics, and evaluates the claims of the monetary reformers. Stephen Zarlenga, for instance, in his historical study of the political economy of money suggests that the (unnecessary) acceptance of the private creation of money precludes the possibility of a state-sanctioned ‘money of account. This notion of state-money, derived from Aristotle, is seen as indispensable for effective monetary reform. The paper then concludes that these ideas have been unfair towards Marx, Smith and Keynes yet serve to illuminate an interesting and important arena for future research.

Questioning Development Orthodoxy

Cameron M. Weber (New School for Social Research)

This paper traces the history and current state of international economic development through its institutions and attempts to reassess these institutions and their processes in a heterodox manner.  There are many stereotypes and clichés to the foreign assistance industry: that it ‘takes from the poor in rich countries and gives to the rich in poor countries;’ that it provides laboratories for economists and other social scientists to apply theories abroad that they would never attempt at home (the most obvious examples of these are population control programs and the privatization of pension funds); and that development creates “brain drain” from indigenous institutions to the very institutions of development itself.  Although a brief summary of the major research programs in development is given, the paper does not attempt to falsify or confirm any of these or other, some perhaps positive, some perhaps normative, research areas and their corresponding policy recommendations.  The purpose of the paper is to question the very nature of development itself through an historical and philosophical re-examination of its institutional constructs.  The Hegelian dialectical method of analysis is applied to the institutions of economic development and is used to ask, “what next and why?”

Modernism, Reflexivity, and the Washington Consensus

Daniel Gay (University of Stirling, UK)

This paper develops a taxonomy of reflexive development practice, suggesting an examination of external values and norms; an assessment of the importance of local context; a recognition that policies can worsen the problems that they try to solve; and the idea that theory and policy should be revised as circumstances change. The taxonomy is developed as a way of addressing the difficulties encountered by the modernist Washington Consensus on the one hand and postmodernism on the other. The discussion draws on the work of the sociologist Pierre Bourdieu, who tries to move the debate further using the concept of reflexivity, combining the objectivism of the outsider with the attention to context of the locally-embedded researcher.

An Exploration of the Concept of Cultural Capital

Quentin Duroy (Denison University)

This paper argues that cultural capital exhibits the characteristics of capital goods. It is suggested that investing/disinvesting in cultural capital will have an impact on socioeconomic well-being. However, it is contended that a careful analysis of the nature of that impact must precede policy implementation. Indeed, on the one hand policies aimed at preserving cultural capital can lead to the perpetuation of the status quo and thus to socioeconomic stagnation; on the other hand sudden changes in cultural capital can create cultural lags that may hinder the development process. Overall, this paper seeks to establish a better understanding of the nature of cultural capital and of its usefulness to economic analysis.

The Economics of Domestic Violence: Using Services as Signals

Susan Bush (American University)

A commonly asked question is: why do battered women stay with or return to their abusers. This essay seeks to answer that question. It especially focuses on the role of domestic violence shelters and other services that a woman might use to support her. Following Tiefenthaler and Farmer (1996), this paper explores the idea that a battered woman uses a domestic violence service in order to signal to her partner that she has reached her violence threshold. If a man believes that she has reached her threshold, he will decrease the amount and/or severity of the violence. Farmer and Tiefenthaler demonstrated that women who have the ability to signal to their partners can be made better off and while they point to other research to support their theory, no paper has been written that directly tests the theory. The purpose of this paper is to do just that. Using a unique data source that asks women in areas of Chicago known for high level of violence (The Chicago Women’s Health Study, 1995-1998), this paper will test what happens to battered women, in terms of incidence of violence, who have reached out for the support of different types of services.

Women, War and Peace:

Social Change in the Context of a Failed Peace Process

Robert L. Reinauer (University of Massachusetts, Amherst)

The paper examines the continuing struggle of women in four rural communities in southwestern Guatemala, a major theater of Guatemala’s thirty-six year civil war. Lack of access to land is understood as one of the principal causes of the conflict and was therefore a key focus of negotiations between the government and the insurgents as well as between the government and refugees. Of the four communities of the present study two are communities of former refugees who were dispersed throughout Chiapas, Mexico during the war, one is a community of former combatants of the insurgent Unidad Revolucionaria Nacional Guatemalteca and the fourth is a community of campesinos/as of the same region, many of whom were displaced during or after the conflict. All received access to credit and land via two distinct land programs, both consequences of the peace process. Part one examines the overall failure of the peace process in addressing the root causes of the insurgency. The second part illuminates the role of women as they participate in new forms of struggle for social and economic change, while seeking to maintain aspects of their traditional indigenous ways of life. The paper explores women’s participation in community and household decision-making and productive activities. I look at the successes and failures of ‘women’s’ development projects and market-assisted land reform, and women’s perceptions of their progress with respect to access to resources and political power. Welfare outcomes are also measured and compared to other communities in the region.

Gender Gaps in the Individual Pension System in Turkey

Adem Y. Elveren (University of Utah)

There is a sizeable literature on social security reforms addressing relative advantages of defined benefit and defined contribution schemes. Gender has been an important analytical category in these analyses, which recognized that due to the gender division of labor, including unpaid family work and informal paid work, women are more likely to be excluded from social protection and have fewer benefits.  For Turkey, on the other hand, there is no enough literature addressing the gender dimension of the social security system in general. We believe that since Turkey introduced private pension scheme as a part of ongoing social security reform, it is important to address the gender gap in this system to pioneer future studies. In this sense, this paper contributes the literature by examining the gender gap in defined contribution schemes in the Turkish social security system. We show the gender gap between men and women in Turkish private pension schemes in a projection.

Our results show that women are disadvantaged from the outset, receiving a lower wage than men, and therefore contributing less to their private pension scheme than men, on the whole.  This discrimination is worsened when we account for the fact that women work fewer full-time years than men.  When the pension is annualized, the yearly pension for women, adjusted based on the different longevities of men and women, is between about half and two-thirds that of men.

Post Keynesian Economics and Public Policy

Ric Holt (Southern Oregon University)

The attitude towards public policy held by most neoclassical economists is that it should be limited and focus primarily on market failures which are in the realm of microeconomics. This attitude about public policy over the decades have led economists to focus more on theory, or explaining how the economy works, and less on policy issues, or how to improve the lives of ordinary citizens. In the process of focusing on theory, the main purpose of economics has been lost we believe —formulating public policies to improve the well-being of the ordinary people in a nation -- A primary message of Keynes.

Participatory Budgeting and Fiscal Federalism in Brazil

Carlos Eduardo Schonerwald da Silva (University of Utah)

This paper analyzes the adoption of Participatory Budgeting, referred as PB, starting in the late 1980s, and its rapid expansion in the late 1990s. PB is an institutional innovation in which citizens and civil society organizations participate on the elaboration of the municipal fiscal policy. It is mostly implemented in large and well-off municipalities governed by a left of center party, in particular, the Workers Party. There is also some indication that PB is more likely to be adopted by cities where there is a well-established history of civil society organization. Another important result is that leftist parties implement the PB and the right-of-center parties maintain it when they win the election. Probably it happens due to the high political cost to end the process. The political will of the new administrations is crucial for the continuity of the experience because citizens will not engage in a process whose decisions are not carried out. The paper contrasts the movement towards federalism and decentralization in spending decisions that PB demonstrates, with the increasing centralization of revenues at the federal government level, and the restrictions imposed by the Fiscal Responsibility Law. It is argued fiscal federalism would provide a more coherent framework for fiscal policy, and would allow eliminating some of the distortions of the current Brazilian arrangements.

Capital Controls and Financial Liberalization:

Stripping the Political Bias in Light of Recent Experience and the Contributions of Keynes and Others

Andre Modenesi (Federal University, Rio de Janeiro)

To label as leftist authors who defend capital controls is a misconception. Such labeling uses the Borsa economicist criterion, which reduces the dichotomy between Right and Left to a distinction between economic liberalism and interventionism. Yet, under the Borsa criterion, those authors cannot be called left-wing. The interventionism underlying the defense of capital controls, as pioneered by Keynes and developed by Tobin, Stiglitz and Rodrik, is not the product of ideological conviction favoring the indiscriminate interference of the State in the economy. To call capital controls a practice typical of left-wing governments is also a misinterpretation. Among the countries using severe kinds of capital controls after the 1990’s – Chile, China, India, Malaysia and Thailand – only the Chinese may be called leftist. The other countries’ political panorama is more complex than may suppose those who believe in a simple and direct relationship between capital controls and the political thought of governments practicing them. The discussion should be stripped of its political bias: capital controls are not inherent to the ideology of their defenders and to the political leanings of the governments that adopt them.

The Illusion of Objectivity:

Implications for What and How We Teach Economics

Alison Butler (Willamette University)

Economists make a clear distinction between the idea of positive economics, defined as the study of what is, and normative economics, what should be.  Students are taught that economic analysis is positive analysis and that it provides factual information for people to use when making normative decisions.  The fallacy of this approach is that it ignores the reality of how economics is taught and, more importantly, the bias that exists in the foundational assumptions embedded in economic models.  In this paper, I examine the pedagogical implications of one of the significant challenges to neoclassical economics: the fallacy of objectivity in economics.  Challenging the reliance on objectivity allows for a deeper understanding of the assumptions embedded in traditional economic theory.  By opening up even the fundamental assumptions for examination we can teach students to develop their critical thinking skills beyond the existing paradigm. Thomas Kuhn argued that academia is designed to teach the student to think critically but within the existing paradigm, an inherent contradiction.  Only by teaching a new generation of students to challenge the existing paradigm can we hope to create a more inclusive economics in the future.  In addition, by explicitly challenging assumptions that may not represent the experiences of the increasingly diverse college students, this approach helps creates a more inclusive classroom.  The paper concludes with some practical suggestions on incorporating this approach into actual teaching strategies for a macroeconomics class. 

Teaching Economic Pluralism:

Adding Value to Students, Economies, and Societies

Rod O’Donnell (Macquarie University, Sydney)

This paper outlines an approach to teaching courses on economic pluralism that is relevant to both pluralist and non-pluralist degree programs.  The approach has the capacity to deliver greater benefits to students, economies and societies than orthodox courses.  Pluralism creates an exciting intellectual environment that merits dissemination through teaching as well as research.  Properly educated graduates should know something about the current state of their discipline as a whole, which implies exposure to at least a reasonable sample of the alternative contemporary schools of thought now available.  By their nature, well-designed pluralist courses are intellectually stimulating to students, but they can be made even more stimulating and beneficial by incorporating additional activities that fit naturally with pluralist pedagogy.  These activities fall under the two headings of instructive fun and skills formation, and include debates, games, presentations, and competitions.  The approach is illustrated using a course entitled ‘Contending Perspectives in Contemporary Economics’ taught in an Australian university. 

Business organizations have long called for graduates with desired skill sets.  It deserves noting, however, that most of these skills provide benefits of equal magnitude to non-business interests and society generally.  Aside from discipline-specific knowledge, the sought-for skills include awareness of holistic standpoints, appreciation of different viewpoints, abstract thinking, creativity, innovation, communication skills, interpersonal skills, independent thinking, teamwork and leadership.  The paper argues that because of certain natural advantages possessed by pluralism, well-designed pluralist courses are in a far better position than orthodox courses to contribute to these important elements of human capital formation.

Pluralism as Academic Freedom:

A Liberal Arts Revision of Undergraduate Economic Education

Rob Garnett (Texas Christian University)

Academic freedom is a hallmark of U.S. higher education.  As defined by the U.S. Supreme Court and the American Association of University Professors, academic freedom refers to the shared right of faculty and students to practice “free inquiry and free speech within the academic community,” including “the freedom to teach and learn” and “an environment conducive to the civil exchange of ideas.”  These venerable phrases define academic freedom as a mix of negative and positive freedoms: freedom from improper coercion or indoctrination as well as the freedom to exercise critical thought and independent judgment in reaching one’s own conclusions as a scholar or student. 

This paper re-examines the goals and practices of undergraduate economic education from the standpoint of academic freedom.  I argue that standard economics courses and curricula undermine students’ academic freedom by presenting economic thinking as a singular dogma and by failing to provide adequate means and opportunities for students to compare, assess, and synthesize different ways of “thinking like an economist.”  Drawing from learning theory and from recent studies by economic educators, I hypothesize a causal link between students’ academic freedom and the numbers and types of students who choose to major in economics, as well as the levels and types of learning they achieve within the major.  I also suggest modest steps whereby departments and individual faculty can enhance students’ academic freedom by foregrounding the intellectual choices – arising from complexities, uncertainties, and value judgments – the inevitably shape economic analysis and policy. 

Pluralism in Graduate Education in Economics

Ebrahim Hosseini-Nasab (Tarbiat Modares University, Tehran)

Graduate education in economics involves faculty, students, curriculum, materials, methods, research and motives. At present time, all these elements seem to be constrained, each in its own way, by a sort of inflexible orthodoxy that dictates a special view in faculty hiring and promotions, student performance, curriculum development, textbook choice, research funding and publication, teaching and research methods, and incentive provision. On the other hand, a number of students and faculty in US, France, and in other countries are becoming more intensely critical of this type of a view and aspire to see it modified in a spirit that is more in line with a sort of pluralism that would be more supportive of diverse perspectives and methods. In sympathy with these, this paper is intended to show that the prevailing view seriously undermines educational quality in economics and that disciplined pluralism can offer to come to the rescue. Disciplined pluralism in economic education will evolve when revisions are made in economic curriculum, teaching materials and methods, faculty hiring and promotions and incentive provision and funding to open up new spaces for multiplicity of criteria and approaches. Furthermore, it will be argued, that disciplined pluralism in economic education would improve the quality of education by allowing more diversity in economic standards, materials, methods and incentive provisions.

Subjectivism, Social Structure, and the Possibility of Socio-Economic Order:

The Case of Ludwig Lachmann

Paul Lewis (King’s College, London)

This paper addresses the challenge of attempting to advance a strong and consistently subjectivist view of economic agency without at the same time undermining the possibility of providing a coherent account of social institutions and socio-economic order.  The argument is presented as a case study and development of the ideas of Ludwig Lachmann, a prominent and self-confessed ‘radical subjectivist’ member of the modern Austrian School, who was both aware of the challenge and sought to address it.  Two significant tensions are revealed in Lachmann’s account, and it is shown how, drawing on recent contributions to realist social theory, these tensions may be resolved.  

Theories of the Forest Commons within a Capitalist System

Sirisha C. Naidu (Wright State University)

Literature on the commons has come a long way from Hardin’s alarmist predictions of an inevitable tragedy. It presently relies on notions of community, social institutions and collective action to solve local and even global environmental problems. New institutional economics has especially played a significant role in the development of thought with respect to the commons, emphasizing the role of property rights, and other formal and informal institutions. These institutions, i.e., norms and rules, are expected to govern access to natural resources and the environment, and hence result in efficient outcomes. However, in the Marxian framework, norms and rules may be viewed as institutions consistent with the interests of the dominant classes. In other words, social institutions may reflect an allocation of natural wealth favoring the dominant classes or those in control of the state. Analysis of environmental issues in the Marxian tradition has been sparse, but recently there has been a growing interest in the issue. This paper reviews and critically analyzes the New Institutional and Marxian schools of thought, and discusses their contributions to the study of environmental sustainability and distributional issues. It discusses the case of commonly managed forests in India to demonstrate that unequal social relations are not only detrimental to environmental outcomes but also to the well-being of the subjugated classes. The paper therefore, argues for a shift away from the current (almost) exclusive emphasis on efficiency and conservation outcomes toward a political ecology that accounts for ecological distributional conflicts.

Heterodox Aggregates:

Class, Institutions, and Cultures in the 21^st Century

Anne Mayhew (University of Tennessee, Knoxville)

A defining characteristic of most heterodox traditions is an analytic focus on conglomerations of individuals, whether in the form of class, cultures, or other aggregates.  Economic trends and events are explained as consequences of group interaction.  This is in marked contrast to those who work in the deductivist neoclassical tradition, where the individual is taken as both the starting point and the necessary final point of explanation if analysis is to have the “microfoundations” necessary, it is argued, for economics to be “scientific.”

In this paper I will explore the meaning of two overlapping developments for inductivist and empirical heterodox analysis of aggregate economic behavior.  The first of these developments is the effort of Douglass North in Understanding the Process of Economic Change (2005) and Avner Greif in Institutions and the Path to the Modern Economy (2006) to ground institutional (and cultural) analysis in some combination of experimental economics and game theory.  The second development is that manifested in Amartya Sen’s Identity and Violence and in Eric Jones’ Cultures Merging.  In both of these works by eminent economists, “culture” is important but the choice of cultural traits and institutional patterns is given pride of place in the current kaleidoscopically changing world of global markets and information.  Both of these developments represent important challenges to heterodox economists.  In this paper I will evaluate those challenges, compare them to like developments in other areas of social science, and suggest some areas of common ground that hold promise for further exploration.

Financialization and Capital Accumulation in the Non-Financial Corporate Sector:

A Theoretical and Empirical Investigation of the U.S. Economy, 1973-2003

Özgür Orhangazi (Roosevelt University)

Recent research has explored the growing ‘financialization’ process in the U.S. and other advanced economies. The term is a catch-all phrase used to denote important changes in the structure of non-financial corporations’ balance sheets, including the growth of income from financial subsidiaries and investment as well as growth in the transfer of earnings to financial markets in the forms of interest payments, dividend payments and stock buybacks. This paper seeks to empirically explore the relationship between financialization in the U.S economy and real investment at the firm level. Using data from a sample of non-financial corporations from 1973 to 2003, I find a negative relationship between real investment and financialization. First, increased financial investment and increased financial profit opportunities may have crowded out real investment by changing the incentives of firm managers and directing funds away from real investment. Second, increased payments to the financial markets may have impeded real investment by decreasing available internal funds, shortening the planning horizons of the firm management, and increasing uncertainty. These two channels can help explain the negative relationship I find between investment and financialization.

Neoliberalism and Finance Capital:

A Detailed Empirical Look at the Effects of Two Major Changes in U.S. Banking Laws

Rogier Kamerling (University of Utah)

Many people working in a general Institutionalist framework (see for example, the series of works by Lazonick and O’Sullivan), or more specifically an SSA (Social Structure of Accumulation) framework (see for example, the series of works by Kotz), argue that rise to dominance of neoliberalism has included as one of its main aspects radical changes in the functioning of finance compared to its functioning prior to neoliberalism.  This work is a very narrowly focused case study intended to investigate that claim empirically.  Specifically, it looks at the United States, the birthplace and still main champion in the world of neoliberalism.  It considers two major legal changes, in the 1980s and 1990s, to the banking structure which had been in place since the 1930s.  The question addressed is: what changes can we see empirically in flows and behavior of finance associated with these institutional changes that the advocates of neoliberalism felt were so important, and what did those changes mean for finance capital and capitalism in general in the United States?

Social Structures of Accumulation and the Rate of Capital Accumulation:

A Revised Understanding of the SSA Theory

David M. Kotz (University of Massachusetts, Amherst)

The key insight of the social structure of accumulation theory is that capitalism requires a relatively durable set of integrated institutions, or institutional structure, to operate smoothly, but over long periods of time such an institutional structure decays and collapses, to be replaced eventually by a new one. Such an institutional structure is called a “social structure of accumulation (SSA).”  During its lifetime an SSA facilitates the circuit of capital and the production and appropriation of surplus value, as the early SSA literature noted.  The SSA theory also asserted that SSAs are directed at promoting rapid capital accumulation. This was linked to the idea that this theory can explain long swings in capital accumulation. Indeed, the role of institutions in promoting rapid accumulation became a defining feature of the SSA theory. 

This paper argues that the development of SSAs in capitalism is not directed at promoting rapid capital accumulation. Each successive institutional structure of capitalism facilitates the circuit of capital and the production and appropriation of surplus value. However, such institutional structures do not necessarily promote a high rate of accumulation compared to some “normal” rate.  This revision of the SSA theory resolves a problem that has stood in the way of applying it to contemporary neoliberalism. Neoliberal institutions have been predominant in the global capitalist system since around 1980, but they have not promoted rapid capital accumulation. This revised concept of an SSA resolves the fruitless debate over whether neoliberalism can be considered an SSA.

Agency and the Great Capitalist Restoration

Mary V. Wrenn (Weber State University)

With the advance of the Great Capitalist Restoration in the post World War II era, it is useful to examine the exercise of agency within the context of neoliberalism. The persistent intensification of the market setting required by the neoliberal project in turn requires institutions and mental models that are not only complementary, but also interactively reinforcing.  Since an individual’s agency is the product of her mental models, it therefore stands to reason that agency within the setting of the neoliberal Great Capitalist Restoration must bear certain ethnographic markers necessary to sustain the system.  This paper seeks to examine the development, the character, and the exercise of agency within the context of the neoliberal Great Capitalist Restoration.

Social Theory and Strategies in Rural Indian Labor Relations

Wendy Olsen (University of Manchester, UK)

Using transdisciplinary social theory, we reinterpret the social position and agency of some people working in rural India.  We transcend the classic polarity between choice-oriented economic theory and constraint-focused Marxist theory by focusing on strategies of agents in the rural laboring ‘field.’ An appropriate theory of strategies of rural laboring draws upon the sociology of the habitus (Pierre Bourdieu), the role of deliberation in working out household strategies (drawing upon Jurgen Habermas and Naila Kabeer), issues of status and power (Bev Skeggs and Bourdieu), and the sense of capability that arises from an agent’s locatedness.  We portray workers’ agency as conditioned both by their prior habits and by social norms, but also as subject to important strategic decisions.  We explore how workers try to enhance their bargaining power.  We also examine the emotional and imaginative aspects of strategies which bridge different fields or ‘spheres’ (Elizabeth Anderson) of activity.  The data we use includes interviews in Telugu language and two surveys, dated 1994 and 2006.  We interpret the dataset firstly on a case-wise basis and secondly theme-wise.  In the interpretation of these data we notice both first-order and second-order motives for working in particular ways. A first-order strategy is an orientation toward future decisions and actions. A second-order motive is a moral engagement in which the agent reflects upon their strategies in different fields, thus influencing their first-order choice of practices.  The transdisciplinary theory offered here incorporates a clear set of ontological assumptions. By conducting an empirical enquiry, a more substantive theory was generated for the local area in Andhra Pradesh, India.

Petty-Bourgeois Syndicalists on the Paper Plantation?

The Transformation of the Maine North Woods, 1940-2000

Michael Hillard (University of Southern Maine)

This essay describes the transformation of Maine loggers’ labor practices and the labor process during the post-World War II era.  We describe the complex microeconomic underpinnings of a system that emerged after World War II, and show how a multidimensional crisis in this system developed during the 1960s and 1970s. This crisis had, on the one hand, a variety of economic and natural sources; at the same time, the emergence of an unlikely labor movement among woodcutters deepened the crisis and accelerated a transformation of the woodcutting system.   The core of this essay is an analysis of this movement and the struggle it precipitated.

The fallout of this struggle was a watershed period in which partial unionization and a restriction of labor supply dovetailed with an accelerated mechanization drive by paper companies.  During the 1970s and 1980s, paper companies adopted “high road” employment practices – improving pay and benefits dramatically, and, most notably, investing heavily in mechanized equipment that dramatically improved the safety and comfort of workers.  This momentary embrace of the high road was unprecedented, and was a direct result of the multiple dimensions of the crisis in the postwar system.  We describe how paper companies then deliberately created the conditions that allowed them to return to the most favorable (for them) low road labor practices of the previous system, but under new conditions that eliminated many of the problems of that system.  The paper companies’ ability to construct a favorable new regime was premised on the failure of the loggers’ labor movement to persist beyond the 1970s.

MacroLab:

A Simulation Model and Interactive Learning Environment for Undergraduate Macroeconomics

I. David Wheat Jr. (University of Bergen, Norway)

This paper describes a system dynamics-based macroeconomics course that uses feedback loop diagrams and computer simulation to teach dynamics to undergraduates. The primary teaching strategy is to enable students to visualize how the major reinforcing loop in an economy is regulated over time by key counteracting loops involving prices, wages, interest rates, and exchange rates. Students use simple word-and-arrow diagrams to show ceteris paribus causal relationships between two variables, and each two-variable link is then added to other links to form feedback loop diagrams in a guided process of constructing a dynamic model of the US economy. The set of feedback loop diagrams corresponds to an underlying stock-and-flow computer simulation model and interactive learning environment called MacroLab, which students “test drive” under various structural and parameter assumptions and compare with standard textbook theories of macroeconomic structure and behavior. The paper also summarizes research suggesting that, when compared to graphical comparative statics, feedback loops are preferred by students and are more effective in conveying a sense of dynamics.

A Simple Approach to Modeling Endogenous Money

Steve Keen (University of Western Sydney, Australia)

One of the main dividing lines between neoclassical and heterodox economists is the model of money, with the former treating money as exogenous and a commodity, while the latter treat it as endogenous and a non-commodity. However, neoclassicals have mathematical models of their analysis of money, whereas heterodox economists do not. In this paper I present a basic model of endogenous money, together with a “double-entry book-keeping” mode of developing dynamic disequilibrium models, which can be understood and applied without needing advanced mathematical training.

A Graduate Course in Macroeconomic Dynamics

Michael J. Radzicki (Worcester Polytechnic Institute)

The purpose of this paper is to describe a graduate course in macroeconomic dynamics that is presented from a system dynamics perspective. The course presents a collection of well-known economic models, from Adam Smith to the present day Post Keynesian and institutional economists, translated into a system dynamics format. These models include written (non-mathematical) models, static models, difference equation models, and differential equation models. Whenever possible, the notation and nomenclature of the models has been kept the same so that the student can clearly see the evolution of the ideas of some of the great economic thinkers from the last three centuries. The course concludes with an overview of a Post Keynesian-Institutionalist-System Dynamics “core” model, which is an example of how a “proper” system dynamics macroeconomics model (i.e., one that follows the original system dynamics paradigm) is created from scratch.

The Welfare State in Light of the Athenian Economy: Karl Polanyi’s Work in Perspective

Bernardo Stuhlberger Wjuniski (São Paulo School of Economics)

Ramón García Fernández (São Paulo School of Economics)

Karl Polanyi was one of the most influential social scientists of the 20th century. One of his main concerns was the relationship between the markets and the society as a whole; to discuss it, he introduced the concept of “embeddedness,” fundamental for his study of the causes and consequences of the Industrial Revolution. Another important part of his legacy is the study of the economic history of what he called “ancient societies,” especially of Classical Greece. Polanyi used these studies to compare the ancient societies with his own times, in an effort to understand them all.

This paper aims to relate Polanyi’s work on the Athenian society with his studies about the modern times, showing that it is possible to make a clear analogy between the Athenian state and economy with the Modern Welfare State.  First, we present the most important points of Polanyi’s study of the early Athenian economy; mainly, we focus on the coexistence of a kind of state planning and a market. Second, we show how this relates to the whole Polanyian legacy, with its emphasis in the comparison of different societies and times.  Third, we characterize briefly the contemporary Welfare State, as to make an analogy between these two forms of economic organization.  We conclude by underlining the relevance of this analogy suggested by Polanyi to understand the societies of our days.

Relative Capitalism

James E. Sawyer (Seattle University and L’Université du Littoral Côte d’Opale, Dunkerque)

Across two centuries, the preeminent metacultural frame of doctrinal capitalism has asserted that the pursuit of self-interested action articulates universally with the attainment of the common good when executed through the institutions of private property and minimally regulated markets.  For pre-industrial or classical societies, the central problem within this frame pertained (and continues to pertain) to wealth creation, and for industrial or neoclassical societies, the central problem pertained (and continues to pertain) to the explanation of cost or value.  However, the pursuit of self-interested action may not align uniformly with the attainment of the common good in wealthy, post-industrial societies.  This is because the very nature of the common good is likely to be heterogeneously perceived and therefore unlikely of universal discovery through market transactions.  Thus, the pursuit of self-interested action may deliver little more than public “bads” and little or no public “goods.”  To overcome this deficiency, it may be necessary to discover the common good “relatively,” through political institutions rather than through market transactions.  With the common good thus specified, it becomes possible to specify the (relative) nature of what capital is, and also what it is not.  Capital facilitates the attainment of the common good, by definition.  Rent-seeking behaviors, on the other hand, do not.  Thus, these may be curtailed through the imposition of government-administered taxes and also through the regulation of nonproductive, rent-seeking activities.

Life, Liberty, and the Pursuit of Happiness in the Post Cold War World

Brandon Smith (Texas Christian University)

The pursuit of freedom has taken many forms over time, most inspired by the belief that greater liberty fosters a richer and more fulfilling human experience.  But conceptions of liberty are as diverse as the many societies that claim to seek it.  As a result, theorists have stressed varying components of freedom and offered a correspondingly broad array of prescriptions for maximizing human wellbeing.  Until recently, the merits of these competing schools have been immeasurable.  However, the advent of self-reported life satisfaction surveys coupled with quantitative measures of human freedom such as the Heritage Foundation/Wall Street Journal Economic Freedom Index and the United Nation’s Human Development Index provide an opportunity to identify those elements of liberty that are overemphasized and those that are underemphasized by scoring the strength of their relationship with national tallies of life satisfaction.  By tracking the empirical connections between life satisfaction and liberty (defined both positively and negatively), I will show that a holistic approach committed to advancing the totality of human choices ultimately encourages the greatest contentment across nations.

Agricultural/Economic Policy for a New State in the Horn of Africa

Harwood D. Schaffer (University of Tennessee)

For more than thirty years, Oromo nationalists have been engaged in a struggle to liberate Oromia, the largest conquered nation within the Ethiopian Empire, from a succession of minority dominated governments and create a multinational democratic state in the Horn of Africa. As the liberation movement matures, one of the crucial tasks is the formulation of an agricultural/economic policy that will meet the needs of a nation in which nearly 80 percent of the population is engaged in subsistence agricultural production.

This paper examines the current agricultural conditions in Oromia: coffee prices that have fallen since the early 1980s, the lack of infrastructure, state ownership of the land, a rapidly increasing population and decreasing farm plot size, and crop yields that are well below world averages. The neo-liberal solution to these circumstances includes the privatization of land ownership, the development of an export-oriented agriculture to supply fruits, flowers, and vegetables for the European market, the importation of foodstuffs to reduce the level of malnutrition, and the elimination of tariffs.  Ignored in these recommendations are the economic characteristics of crop production—the low price elasticity of both supply and demand and the fixity of resources—as well as Oromo traditions which are based on a respect for the essential interconnectedness of creation and the maintenance of a balance between community ownership of land and individual responsibility. This paper identifies agricultural/economic policy elements that are consistent with Oromo traditions and values simultaneously taking into account the economic characteristics of crop production.

Poverty in Plenty: 

Class and the Industry of Agriculture

Elizabeth Ramey (University of Massachusetts, Amherst)

Significant aspects of U.S. capitalism and society have been and are shaped by U.S. agriculture and its related industries.  The so-called “industrial agriculture complex” has become the focus of intense debate over the past few decades.  Its proponents hail it as the most “efficient” system of food production in the world, and press for its worldwide export and adoption as one of the keys to eradicating poverty, hunger, and underdevelopment.  Critics decry the unintended and negative impacts of this system of “factory” farming on the health of humans, animals, the environment, and rural communities. 

Given the importance usually attributed to technological transformation in producing both the successes and failures of U.S. agriculture, the inability of the neoclassical theoretical apparatus to adequately address questions regarding the sources, trajectory, and dissemination of technological change is striking.  The aim of this paper is to address this lacuna by developing a Marxian class analysis of technological change in U.S. agricultural enterprises.  As such, the analysis focuses on the complex, contradictory, and historically contingent relationship between the organization of surplus and technological development in farm and farm-related enterprises.  Consequently, this paper seeks to recast the successes and failures of U.S. agriculture in terms of class structures and exploitation, thereby generating a unique platform from which to evaluate the consequences of industrial agriculture, as well as to shift the terrain of policy debate.

The Articulation of Class Structures in a Developing Country: A Model

Erik Olsen (University of Missouri, Kansas City)

In the 1970s and 1980s the issue of the “articulation of modes of production” in a developing economy elicited a large and active literature from Marxian development theorists. Central to this literature was the question of whether the development of the capitalist sector of an economy necessarily and inevitably usurped non-capitalist sectors of the economy and pushed them to extinction.  This question was typically tied up in theories of imperialism and, hence, has important implications for that issue as well.  This discussion came to an end not because the parties involved came to a satisfactory resolution, but rather because they drew-out their respective positions to their theoretical conclusion without finding a satisfactory resolution.  This paper offers new thinking on this issue.  In it I present a two-sector model (capitalist and non-capitalist) of a developing economy in order to establish the conditions under which two different class structures will grow, stagnate, or decline when they enter into exchange relations with one another.  I find that there is no a priori reason why the capitalist sector of a developing economy should necessarily thrive at the expense of the non-capitalist sector, and instead find that which sector thrives and develops must be explained with reference to issues other than purely economic ones.  The model I present is heavily influenced by Oscar Lange’s path-breaking dynamic multi-sector models, which have yet to receive the attention they deserve, and one of the motivations of this paper is to bring attention to overlooked aspect of Lange’s work.

‘I Don’t Care What You Think . . . I Care Only that You Think’:

Using Alternative Perspectives to Teach the Principles of Economics

Amy Cramer (University of Arizona and Pima Community College)

This presentation is more of a demonstration than a talk.  As a principles of economics professor, the purpose of my class is to create educated voters.  As such, I organize both my large lecture and small lecture classes around a set of 11 “Voting” Issues.  On the first day of class, I have students “vote” along Radical, Liberal, and Conservative continuums (with very little information, I tell them to just guess, as so many voters in real life do.)  After developing the components of the theories which relate to the individual topic, I then revisit each issue with a slide show I have written of the three perspectives on the issue in question, including political cartoons, clips, text, graphs, etc. I then have students re-vote on the issues, and compare their educated position to their initial position.  By the end of the semester, each student is exposed to three perspectives on 11 issues, and, I believe, is encouraged to become a much more educated participant of our society.  This demonstration will include the Voting Issues Sheet, as well as an actual example of one of the issues as presented in class. 

Would ‘Regress’ Constitute ‘Progress’ in Economics? 

Some Suggestions for Invigorating the Micro Textbook

Stephan Boehm (University of Graz, Austria)

The premise is: The products of the (microeconomic) textbooks industry look increasingly stale. While the layout of  textbooks is getting ever more fanciful, bright, and colorful, the ancillary material provided for both student and teacher is mouth watering or repellent (depending on one’s view), their contents is becoming ever more predictable. Increasing McDonaldization does not seem to leave much room for product differentiation.

If progress in economics is primarily construed as tool-driven, aiming at predictive power, applying the basic tools to an ever expanding range of problems, it is not at all surprising that the textbooks should converge on a common set of “problems” hardly whetting the students’ appetite for more. If progress in economics is understood, however, as idea-driven, meant to provide illumination of, and insight into, real-world processes, the standard textbook leaves much to be desired.  Taking up the late Peter Bauer’s indictment of economics, one is reminded of an inversion of the familiar story of the emperor’s new clothes: there are new clothes, and at times they are even haute couture, but all too often there is no emperor within. Contemporary economics as reflected in the textbooks, Bauer’s rant goes on, is afflicted both by ignorance of its own past and neglect of the time dimension of cultural and social phenomena.  Among remedies to rectify the situation I propose a two-pronged strategy: (i) turning to unjustly neglected contributions of the recent and not so recent past (as partly revived in various heterodox traditions) and (ii) taking inspiration from other academic fields such as history, anthropology, and evolutionary biology.

Computer Games and Teaching Economics in Historical Perspective

Benjamin Balak (Rollins College)

Zoologist, psychologists, educators, and most everybody else know that playing games is at the heart of learning.  The IT revolution has sprouted a large gaming industry predicted to soon overtake all other media in sheer economic size.  Much of their product has limited educational merit but it is increasingly possible to harness the market-driven multi-million dollar technology developed for these commercial titles to specific pedagogical goals and thus generate beneficial educational externalities.  The gaming industry has developed sophisticated simulations to drive the economic environment underlying their games because the user’s satisfaction depends on the ability of the simulation to provide a realistic experience.  Of particular interest to ICAPE members would be that using such games enhances students’ appreciation of economic pluralism precisely because it is needed to analyze world history and its game-world simulacra effectively.  Students are thus motivated to explore heterodox ideas in order to understand & thus succeed in the gaming simulation in which they are immersed.  Furthermore, using games allows a high degree of experiential/active learning with little sacrifice of content