Abstracts
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Are the Welfare Costs of the Business Cycle
‘Trivially Small’?
A
Critique of Robert Lucas’s Calculus of Hardship
Greg
Hannsgen (Levy Economics Institute,
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 (
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 (
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.
Endogenous Money / Monetary Reform
The Theory of Endogenous Money in the
Age of Financial Liberalization
Gokcer Ozgur (
Korkut Erturk (
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 (
This
paper aims at exploring the endogenous money hypothesis as this is implied by
the Post Keynesian tradition.
Evaluating Stephen Zarlenga’s Interpretation of the
Marxist and Keynesian View of Money
Simon Mouatt (
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.
Whither Development?
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
Daniel Gay (
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 (
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.
Gendered Political Economies
The Economics of Domestic Violence: Using Services
as Signals
Susan Bush (
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
Women, War and Peace:
Social
Change in the Context of a Failed Peace Process
Robert L. Reinauer (
The paper examines the continuing
struggle of women in four rural communities in southwestern
Gender Gaps in the Individual Pension System in
Adem Y. Elveren (
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
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.
Economic Policy: Means, Ends, and Politics
Post
Keynesian Economics and Public Policy
Ric Holt (Southern
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
Carlos Eduardo Schonerwald da Silva (
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 (
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 –
Pluralism and Economic Education
The Illusion of Objectivity:
Implications for What and How We Teach Economics
Alison Butler (
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 (
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 (
Pluralism
in Graduate Education in Economics
Ebrahim Hosseini-Nasab (
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.
Heterodox Institutionalisms
Subjectivism, Social Structure, and the Possibility of Socio-Economic
Order:
The Case
of Ludwig Lachmann
Paul Lewis (King’s College,
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
Theories
of the Forest Commons within a Capitalist System
Sirisha C. Naidu (
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
Heterodox Aggregates:
Class,
Institutions, and Cultures in the 21st Century
Anne Mayhew (
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.
Social Structures of Accumulation Revisited
Financialization and Capital Accumulation in the Non-Financial Corporate
Sector:
A
Theoretical and Empirical Investigation of the
Özgür Orhangazi (
Recent research has explored the growing ‘financialization’ process in the
Neoliberalism and Finance Capital:
A Detailed
Empirical Look at the Effects of Two Major Changes in
Rogier Kamerling (
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
Social Structures of Accumulation and the Rate of Capital Accumulation:
A Revised
Understanding of the SSA Theory
David M. Kotz (
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.
Economic Ethnographies
Agency and
the Great Capitalist Restoration
Mary V. Wrenn (
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 (
Using transdisciplinary social theory, we reinterpret the social position
and agency of some people working in rural
Petty-Bourgeois Syndicalists on the Paper
The
Transformation of the
Michael Hillard (
This essay describes the
transformation of
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.
Teaching Economics with System Dynamics
MacroLab:
A Simulation Model and Interactive Learning
Environment for Undergraduate Macroeconomics
I. David Wheat Jr. (
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 (
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.
Socially Embedded Markets and Human Flourishing
The
Welfare State in Light of the Athenian Economy: Karl Polanyi’s Work in
Perspective
Bernardo Stuhlberger Wjuniski (
Ramón García Fernández (
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 (
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,
Brandon Smith (
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.
Alternatives to Capitalist Development
Agricultural/Economic Policy for a New State in the
Horn of
Harwood D. Schaffer (
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 (
Significant aspects of
Given the importance usually attributed to technological transformation in
producing both the successes and failures of
The
Articulation of Class Structures in a Developing Country: A Model
Erik Olsen (
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.
Pluralist Pedagogies
‘I Don’t Care What You Think . . . I Care Only that You Think’:
Using
Alternative Perspectives to Teach the Principles of Economics
Amy Cramer (
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 (
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 (
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, a challenge many pedagogically aware
principles instructors face.
Using simulations to explain
economies is proving highly effective in research, and could be just as
effective for teaching with the added benefit of enhancing the link between the
frontiers of economic knowledge and undergraduate economic education.
This link has been at the heart of our ongoing curricular reform at the
economics department & this paper reports on how games are being incorporated &
tested as part of our: Economics in Historical Perspective.
A Handbook
for Pluralist Economics Education
John Reardon (
The
purpose of this paper is to present an overview of my book,
A Handbook for Pluralist Economics
Education. The book will offer suggestions for pluralist pedagogical
approaches, syllabi and exercises to stimulate critical thinking about today’s
economy. Specifically, the objectives of this book are (1) to increase the
pedagogical influence of pluralist economics and reduce the hegemony of
neoclassical economics; (2) to increase critical thinking in economics; (3) to
increase student interest in economics and economic literacy; (4)
to obtain feedback from others interested in a pluralist
approach; and finally to use this book as a springboard for a series of
pluralist undergraduate texts under the publishing aegis of the University of
Michigan. The book is fifty percent complete and (hopefully) will be finished by
the Conference.
Roundtable:
Pluralism in
Undergraduate Economics:
What Can We Learn From Established Programs?
Chuck
Barone (
Benjamin Balak (
David
Colander (
Ramón
García Fernández (
Tom
Green (
Fadhel
Kaboub (
Philip
Kozel (
Ebrahim
Hosseini-Nasab (
Pluralism and Ontology
Neoclassical Axioms and Ontology:
A Response
to Christian Arnsperger and Yanis Varoufakis’s ‘What is Neoclassical Economics?’
Dennis Badeen (
This paper attempts to assess the arguments made by Christian Arnsperger
and Yanis Varoufakis in their paper “What is Neoclassical Economics?” The
authors contend that critics of neoclassical economics are off the mark if they
rely on the 1950s rendition of the theory. Developments in Neoclassical theory
allow neoclassicists to dodge criticisms. Arnsperger and Varoufakis propose a
meta-axiomatic description of neoclassical economics to solve this problem.
Arnsperger and Varoufakis’s approach to the description of neoclassical
economics is promising. On the one hand, by identifying the meta-axioms, one has
a clearer target for criticism. On the other hand, this approach also enforces
the notion that neoclassical economics is reducible to its axiomatic parts: as
argued by Tjalling Koopmans, the problems encountered by Neoclassical economics
are simply technical problems which, with the addition of newer and better tools
(or corrected axioms), will be solved.
Moving from what is promising in the Arnsperger and Varoufakis’s approach,
this paper contends that ontological questions are of fundamental importance
because all of the axioms identified by Arnsperger and Varoufakis are
underwritten by the tenets of ontological atomism. It is the contention of this
paper that, in addition to reasons given by Arnsperger and Varoufakis, the
employment of this ontology is detrimental to both economic theory and a
pluralist approach to economics. The debate should not simply take place over
neoclassical axioms but should include discussion over the various ontologies
employed by various approaches to economics.
Which
Pluralism?
Romain Kroës (
The present contribution aims at supporting the thesis that the very
existence of pluralism in economic thinking is more than doubtful, because
state-of-the-art theories, whether they be “orthodox” or “heterodox,” share a
common axiomatic base. All acknowledge that capital creates investment. None
integrates the duration and irreversibility of processes. All admit that a
general rise in prices coincides, whether exogenously or endogenously, with the
quantity of money. Finally, all allow that productivity gains, due to human
will, may accrue on the global scale of the economic chain, even to the point of
envisioning the “end of labor.” But no theory has ever demonstrated that these
converging axioms provide an isomorphism of reality.
Returning both to Keynes’ demonstration of the determination order between
saving and investment, and to Marx’s period of production, this paper
establishes that investment precedes increase in capital; additionally, it
measures and integrates process duration as an explanatory variable. Through a
long-term statistical series on a G7 scale, we can see that general price level
changes with no respect to monetary issues. A long-term statistical series
addressing the
Complex Individuals:
The
Individual in Non-Euclidean Space
John B. Davis (
This paper discusses the differences between neoclassical and
evolutionary-complexity-computational views of individuals and their interaction
in terms of their different underlying accounts of space.
The two contrasting accounts of the individual are termed the atomistic
view and the relational views. The
paper begins by distinguishing the field and non-field concepts of space, and
argues that the latter understanding of space implies a relational conception of
the individual, and that the standard atomistic individual conception employs a
Euclidian understanding of space. I
characterize the individual in the relational conception as a complex
individual. The paper then
introduces the evolutionary-complexity-computational approach to individuals
known as agent-based modeling, and critically evaluates one interpretation of
this approach developed by Potts.
The paper then uses an identity analysis to further explain complex individuals,
distinguishing between individual identity and personal identity, tying the
former concept to how individuals are changed by social interaction and the
latter concept to their being self-organizing, reflexive agents.
This overall view of individuals is applied to Mirowski’s ‘markomata’
computational view of markets, and it is argued that together they provide an
understanding of markets and individuals as interlinked and everywhere complex
and diverse. The paper closes with
brief comments about social economic policy towards individuals on this
understanding.
Orthodox Tools, Unorthodox Outcomes
The
Political and Social Economics of Alternative Globalization
Scott Gassler (
One does not have to abandon the neoclassical model in order to critique
the globalization process or recommend an alternative.
The model itself provides more than enough justification for an
alternative view of globalization. I
construct a taxonomy based on Gassler’s notion of political and social
economics. The framework presented
here helps illustrate how both neoclassical and other approaches can contribute
to our understanding of the complexities of the international political economy.
First I review the argument for free trade in the form of the first
fundamental theorem of welfare economics, stressing the underlying assumptions.
Second, using the same framework I construct the neoclassical argument
against free trade and show that it is much stronger than the argument in favor.
I do this by simply describing the cases of market failure which are not
difficult to find at the global level.
Third, I argue that heterodox economics can help to construct an
alternative view of globalization that is better both positively and
normatively. And the neoclassical theory does not stand in its way.
Debunking
the Myth Surrounding Computable General Equilibrium Models
Benjamin Mitra-Kahn (
Computable General Equilibrium (CGE)
Models are one of the most utilized tools for development planning and policy
analysis. However its history remains unexplored, while its method and equations
is the domain of ‘insiders.’ Tracing
its history, it will be shown that the model rhetorically changed from the study
of “deviations from uniformity in the growth process,” to a model “grounded in
Walrasian Equilibrium Theory, with no theoretical innovation.
The historical review will show that
CGE models are not based on General Equilibrium Micro, but rather on Keynesian
Macro. Secondly, it will be proven
logically that Walras has no role in CGE models, by illustrating that Walras’
general equilibrium is not equivalent
or carried through to neoclassical general equilibrium. Further,
neo-Walrasian equilibrium is
mathematically proven to be non-computable, contrary to the computable CGE
model. Finally, this paper
identifies the (relatively) few key variables in CGE models. Explaining how
national accounting and behavioral equations means the investigator must
consciously impose causality on any
CGE model, and then the choice of exogenous variables
defines any results. Ultimately, the
CGE model is a static, fixed output coefficient model, where all causal
structures are one-way, contrary to the modern belief that CGE models are
capable of deterministic dynamic analysis along the lines of general equilibrium
analysis. Further, once the key CGE variables are identified, it is possible to
apply a multiplicity of theoretical approaches within the model, opening the
door for heterodox critique and dialogue within the macro policy language of the
orthodoxy.
Game-Theoretic Indeterminacy, Freedom, and Reason
Kevin Quinn (
Economists have followed Hume in
making reason, in practical affairs, “a slave to the passions.” Kant and Hegel,
though in different ways, have rejected a narrowly instrumental conception of
reason, insisting that reason can be practical, meaning that reason can motivate
us independently of our desires, that it can govern our desires, authorizing
some for example, and not others.
Practical reason, for both, was deeply connected to autonomy: in exercising our
practical reason, in acting on categorical (do x) not just hypothetical (do x if
you want y) imperatives, we exercise our freedom.
The notion of freedom that complements the economists’ conception of
reason, by contrast, is the compatibilist conception of being able to do as one
wants, of being uncoerced. This is quite consistent with determinism: our
preferences clearly are caused. In
the paper, I try to build bridges between these two views by attending to the
phenomenon of indeterminacy in game theory. Purely instrumental reasoners
engaged in strategic interaction in a game with multiple equilibria, when their
rationality is common knowledge, have no idea what to do - and since the outcome
is in fact unpredictable, we are in this situation free in a (weak, admittedly)
incompatibilist sense. Achieving their instrumental goals will now require that
they do something that starts to look like moving into the normative space of
reasons -- to wit, come to some agreement, establish a way of playing and hold
one another to account for failures to conform to the agreed way of playing.
Economic Development and Well-Being
Keeping Up With the Joneses:
The
Importance of Relative Standing to Well-Being
Jeff Bookwalter (
The question of what determines happiness or well-being is finding a place
in recent economic research.
Although Sen popularized the idea that material goods are only a means and not
an end to well-being, this idea extends at least as far back as Aristotle.
In addition, many have argued that people evaluate their own well-being
relative to others. Marx (1847) may
have been the first to articulate this idea by suggesting that a small house is
acceptable when surrounded by others, but “…let there arise next to the little
house a palace, and the little house shrinks to a hut.”
If relative income or achievements matter, the case for economic growth
may be less compelling, particularly in circumstances where growth is only
loosely correlated with other measures of development or well-being.
In addition when relative standing matters, there are negative
externalities to the highest earners, which may have implications for the
desirability of some redistributive tax policies.
This study investigates the influence of a household’s relative position
on their reported subjective well-being (SWB). Using data from
Revealed
Social Preferences for Equality and Growth
David Kiefer (
Using
the Kuznets’ inverted-U-shaped association as a structural constraint, we model
the social tradeoff between changing inequality and changing income. If observed
outcomes for recent decades are taken as constrained political-economic optima,
this model identifies the parameters of a social welfare function. Our
cross-country regression results tentatively suggest that the world is becoming
an anti-egalitarian place.
Growth,
Development, and Quality of Life: Mainstream and Heterodox Approaches
Daphne
Ric Holt (Southern
Local
economic growth and development are major concerns for many policy makers but
receive less attention from the economic profession, which focuses on
macroeconomic growth issues or the economic development of non-industrialized
nations. State and local policy surrounding economic growth and development is
therefore informed heavily, at least in the
This
paper develops an economic analysis of both the sources of local growth and
development and its consequences for quality of life and the standard of living.
It draws on heterodox as well as mainstream economic perspectives. We stress the
need for a better understanding of how economic theories (mainstream and
heterodox) and empirical economic research can contribute to the public policy
debates in state and local government with broader concepts of economic growth
and development that incorporate quality of life and sustainable development
issues.
World
Political Economy
The Modernity of Backwardness
Alan Freeman (
This paper assesses three
classic debates: the Brenner-Wallerstein debate on the transition to feudalism
of 1974, the debate on dependency theory in that exchange, and the early 20th
Century debate on the origins of the European Empires of the late 19th
Century. The paper notes that the
same question recurs in all three debates, namely, why do things which each age
calls ‘backward’ coincide with, and indeed outstrip in extent, the things it
calls ‘modern’? What was responsible for the slave trade? Why is poverty not
history? What leads supposedly liberal nations to construct despotic empires?
Why is every war more barbaric than the last? Where did the Holocaust come from?
Such events call into question such basic enlightenment ideas as progress and
modernity. One answer – without
which ‘underdevelopment’ loses any real meaning – is that backwardness is a
survival, arising from the absence or late arrival of modernity. Another idea is
that backwardness is a product or feature of modernity, something it
brings in its wake or indeed, constructs in order to survive.
I will
address this by the economic mechanisms inherent to capitalism which ‘produce’
backwardness as an outcome of growth and innovation – ignored by both sides in
the 1970s debate. I will argue that both sides neglected the impact of classical
imperialism in shaping the modern world. The question which then arises is:
which bears the greater responsibility for backwardness – the inherent
tendencies of capitalism or its institutional and political framework?
Heterodox Economics and the Theory of Coenoses: The
Next 10-25 Years
Lucy Badalian (Millennium
The
essential nature of pluralism in economics, its scholastic and practical
attractiveness, and even unavoidability, loom large if we consider the wide
variability of real life economic scenarios. Each of the latter, ranging from
the class struggles of the first half of the 20th century to the prosperity of
the postwar consumer society and to the current surge of
outsourcing/privatization with the resulting loss of manufacturing jobs in the
developed world, seems quite unique, and demanded a special approach, from the
New Deal to the Keynesianism to the neo-liberal “tough love.” Today, as the old
recipes stopped working altogether this led to a widespread rethinking of the
known economic theories and the current pluralistic bloom.
In this
article we argue that, inasmuch incompatible the pluralistic approaches may
appear at the first sight, taken together, they present a broad picture, much
bigger than a sum of its parts. We show that the changes within a given era,
despite their seeming arbitrariness, are in no ways chaotic. They present
consecutive stages within a lifecycle of domesticating a large geoclimatic zone,
the economic center of its time. We show that the known historic eras unfolded
in their unique territories, forming their power/social institutes (feeding
chains) in a sequence of steps aimed at maximizing the use of their
zone-specific resources. Each new zone, increasingly more difficult for
domestication than its predecessor, was opened by a leap up the energy
consumption ladder. Historically, this caused a steep growth of population
feeding off a given territory, well before the related technological revolution
and the rise of a zone-specific economy, centered about its main inelastic
resource, such as oil today or coal in the 19th century.
From this viewpoint, historic events
could be seen as a collection of “textbook cases,” complete with tested economic
recipes – history may thus provide a valuable guide of pitfalls and promises of
our future. The twilight time between eras, which we are approaching today, is
charged with poignant uncertainty. Historically, entry into a new zone caused
huge changes and devastation, on the scale of two world wars, while also
creating unseen before riches (the consumer society of the modern US). This is
especially worrisome today – the old recipe of increasing the energy consumption
is in need for new solutions considering the current dire threat of global
warming.
World Money and the End of
Radhika Desai (
The distinctive feature of last two
hegemonies over the world system as conceived by Giovanni Arrighi has been their
command and control of world money.
These observations have implications
for the future of the world system and the order of its money which this article
will explore. In particular, we can legitimately doubt whether the continuation
of the world capitalist system can be seen in terms of the succession of another
hegemon: without some exceptional occurrence, it seems unlikely that any power
will achieve the sort of productive superiority which the
The
Social Constitution of Market Processes
The Social
Construction of Market Value and its Application to Labor Markets
Joshua Frank (SUNY
Surprisingly little attention has been given in economics to a social
constructionist perspective despite the extensive attention it has received in
other social sciences. A general
social constructionist approach to economic market value will be outlined here.
The implications of such an approach and the challenges it presents to
traditional economics are discussed.
A distinction is made between a superficial view of a social construction (such
as the rules and customs of an exchange) and a deeper view of social
constructions as shaping our reality at a subtle and pervasive level.
While critical realism and some other perspectives argue against a pure
social constructionist view of reality, the argument here is not for “pure” but
rather for “deep” social constructionism.
The focus here is also firmly on the application of a social
constructionist perspective to economic markets and its real implications for
market decisions and transactions rather than “theorizing about theorizing.”
In particular, labor market value is used as an example of applying a
social constructionist perspective.
How are managerial decisions made regarding how many employees to hire, which
candidates to hire, and at what pay rate?
How do laborers make their decision to accept or reject these offers?
How does this differ from a neoclassical labor supply curves in approach
and conclusion? What are the policy
implications of a social constructionist approach in this area?
Behavioral
Economics and the Economics of Keynes
Wesley Pech (
This
paper evaluates some of the economic theories developed by Keynes in the light
of recent research in behavioral and experimental economics. We found that many
of the ideas set forth by Keynes in his economic works, especially in The General Theory,
have a defensible behavioral foundation and fit broadly the actual behavior of
economic agents in the real world. As a consequence, we argue that any economic
theory claiming to follow Keynes’s thought can benefit from this interaction,
especially for issues related to judgment under uncertainty.
Why Do Consumers Borrow?
An
Application of the Institutional Theory of Habit Selection
Chris Brown (
If most of what people do is a function of habit, an admissible
explanation of human behavior is not possible without a theory of habit
selection. Habits are established as a resulted of repeated behaviors.
Institutions, by prescribing or reinforcing some behaviors and proscribing
others, shape the structure of habits and give them a social character.
The emergence of a social habit structure amenable to the issue of IOUs
to finance all types of consumption expenditure is a significant development.
This paper seeks to make sense of pervasive changes in household spending and
saving routines by the application of the institutional theory of habit
selection. Consumerism—a habitude wherein the pursuit and maintenance of class
status is a primary driver of
spending—is a cultural adjustment to the cash flow requirements of modern
business enterprise. As privileges of all kinds are restricted by class, worldly
success (partly) depends on the assimilation of consumption routines (in dress,
food and alcohol, travel and leisure pursuits, and so on) that signal class
affiliation. Borrowing to acquire non-necessities or goods of superior quality
is interpreted as a strategy for inclusion in vital social networks.
Distributive Justice
Distributive Justice and Power Theories of Inequality
Eric A. Schutz (
What precisely is the proper role of theories of distributive justice in
thinking about economic inequalities that arise from structures and exercises of
social power? This paper considers several of the most important such
distributive justice theories, including those of Rawls, Nozick, Dworkin and
Sen. Power is essentially the capacity of
some individuals to non-reciprocally affect major aspects of others’ behavior by
altering constraints effective upon them or information available to them in
ways to which they would not, in ideal circumstances, give their consent.
Structures and exercises of power lead to “redistributions” of income and wealth
from those subject to it to those in power positions. Conversely, inequality
undergirds and strengthens positions of power. The most important such
inequalities are those comprehended in the systems of class, race, sex and
international domination.
Distributive justice theories provide important insights into the question
of what is an acceptable economic inequality. In spirit, each of the theories
considered here condemns inequalities due to power, and several of them do so
quite explicitly. Yet that is not the primary aim of these theories -- they
simply are not mainly concerned with power but with defining justice or fairness
in cases that do not involve power. Power
in the sense defined here, on the other hand, is unjust and immoral in itself,
and inequalities that arise from or undergird power are wrong because of that,
not because they would be considered undesirable in “power free” situations. To
that extent, theories of distributive justice are not of much help in thinking
about social power.
Factors of
Production, Productive Factors, and Income Distribution
Hasan Gürak (
The
definitions of concepts like capital, labor, human capital, productive factors,
and production factors are dubious and, require revaluation and elaboration.
Accordingly, widely used analyses of economic relations are also dubious and,
require re-examination and new explanation.
Widely accepted and used definitions in the textbooks and among scholars
are of Neoclassical heritage, which seem to present “a playground for academic
economics” rather than a realistic approach assisting to better understanding of
“actual” economic facts and relations. Therefore, regarding the present global
economic (dis-)order, there seems to be a need for new as well as more realistic
approaches from alternative angles with “new” definitions of “old” concepts, if
and when necessary. The aims of this work
are partly to reconsider and when necessary, to redefine, the conventional” key
concepts such as labor, capital, interest, rent, and accordingly analyze the
distribution of functional income. Thus, the questions to be analyzed in the
following sections are:
§
What
are the factors of production?
§
Is the
term production factor identical with the term productive factor? What is the
difference between them?
§
Which
factors “earn” a share of the income generated? And which factors receive an
“unearned” share?
§
Which
forces influence the functional distribution and redistribution of income among
labor and capital; the ability to generate value or the ownership rights?
Universalizing the
Right to Acquire Capital with the Earnings of Capital:
Binary Economic
Strategies for Empowering Poor and Working People and
Achieving More Sustainable Growth
Robert Ashford (
Binary
Economics offers a conception of economics foundationally distinct from the
economic theories presently employed by government, private enterprise,
charitable institutions, and individuals to formulate and evaluate economic
policy. Foundationally distinct from classical, neoclassical, Keynesian,
post-Keynesian, monetarist, and socialist economics, binary economics
specifically offers a unique explanation for the persistence of poverty and
unutilized productive capacity.
Binary economics holds that (1) labor and capital are “equally fundamental,”
“independent” or “binary” factors of production, (2) technology makes capital
much more productive than labor, (3) growth is most fundamentally the result of
the increasing “productiveness” of capital and the distribution of its
ownership, rather than increasing labor productivity, and (4) the more broadly
capital is acquired with the earnings of capital the faster the economy will
grow. Therefore, binary economists
conclude that universal, individual participation in the right to acquire
capital with the earnings of capital (“the binary property right”) is a
necessary condition for sustainable growth, distributive justice, and a true
democracy. Binary economics reveals a voluntary market-based strategy for
producing much greater and more broadly shared abundance without redistribution.
As an approach to economic policy, binary offers poor and working people
a practical means to acquire capital with the earning of capital and other
advantages not offered by left-wing, right-wing and centrist approaches.
Based on objective standards of (1) reasonable, workable assumptions, (2)
internal consistency, and (3) plausible descriptions, predictions and
prescriptions, binary economics should be taught wherever mainstream approaches
are taught.
Logics and Fallacies of Competition
The Complete Guide to Debunking the Neoclassical
Theory of the Firm
Steve Keen (
The model of perfect competition plays a key role in neoclassical
pedagogy, and explains much of the zealotry with which neoclassical economists
champion their model of competitive capitalism. In Debunking Economics, I
pointed out that an essential assumption of this model, the “horizontal demand
curve for the individual firm,” is a mathematical fallacy. This part of the
book, more than any other, inflamed neoclassical ire. Responding to neoclassical
critiques led to at least six different ways of disproving the Marshallian
model, and two new critiques of the Cournot-Nash game theoretic model of perfect
competition. This paper will present each of these critiques, from the simplest
to the most intricate; the former can be used in introductory heterodox courses,
while the latter would be suitable for advanced students.
A hallmark of neoclassical ideology is that hyper-rational self-interested
behavior is nonetheless compatible with the maximization of community welfare.
The model of perfect competition plays an essential role in this, since only
when the conditions of perfect competition apply is the neoclassical measure of
social welfare maximized: in conditions other than those at which marginal cost
equals price in all markets, there is a deadweight loss of welfare. This is the
classic “invisible hand” of Smith--ignoring for the moment the incompatibility
of Smith’s analysis with neoclassicism.
My analysis establishes that this claim of the compatibility of
hyper-rational self-interest and social welfare is false: the invisible hand
does not exist.
Hammers,
Nails and New Constructions – Orthodoxy or Pluralism: An Institutional View
Frederic B. Jennings, Jr. (Center for
Ecological, Economic, and Ethical Education)
The guiding premise of this paper is that a ruling orthodoxy in academics
is pathological, symptomatic of an institutional failure rising from models
unfit to their realms of use. Substitution assumptions supporting rivalry do not
apply in any complementary setting, which calls for cooperation instead.
Pluralism ought to be normal; that this is not the case suggests some problems
in need of attention. Choices are based on imagined projections, where costs
stay invisible, limned theoretically yet unobserved. ‘If all one has is a
hammer, everything looks like a nail.’ Substitution assumptions say our
relations entail a conflict of interest to be resolved through rivalrous
systems. A network model where rival and common needs are entwined opens a
choice: competition or cooperation, which is more efficient? The notion of
planning horizons shows how longer horizons enhance common over conflicting
needs. Planning horizons serve as an ordinal index of bounded rationality,
extended by complementary learning. If so, the efficiency case for cooperation
is strengthened by inter-horizonal complementarity in a contagious spread of
horizon effects. Applications are
also explored, to show the failure of competition in complementary settings: in
ecology, where integration is needed, not decentralization; in education, where
rigid doctrine discourages learning and novel ideas; in information networks,
which invert the normal linkage of value to scarcity; and in a myopic culture
rising out of competitive frames. Scientific control leads to rigid dogma in
academics at the expense of vision; science should be open as an axiomatic
condition. Pluralism helps to prevent theories unfit to their realms of use. We
need to lay down our hammers and nails and try some new constructions.
Breaking
the Stranglehold
Jim Case (
Most who fear rapid climate change, unchecked population growth, and the
widening gap between rich and poor—people as well as nations—want public policy
to oppose these and other unsustainable trends. Instead, due in large part to
the stranglehold which orthodox, mainstream, neoclassical economic thought
exerts on the global policy process—an unseemly amount of which is driven by
events within the DC beltway—they are forced to stand idly by as public policy
aids and abets such trends.
I submit that a renewed focus on the methods and findings of science,
specifically those of the emerging science of competition, can help to break the
offending stranglehold. A lot was learned about competition during the twentieth
century, and much of the new knowledge either calls into question, or directly
contradicts, essential teachings of mainstream economic theory.
Like my forthcoming book Competition: The Birth of a New Science (Hill & Wang, July 2007), my
talk will focus on the weak points in neoclassical economic theory, some of
which are newly exposed by the emerging science of competition, and propose
various ways of exploiting them. Much remains to be done, both in the science
itself, and in the dissemination of its results.
What
Explains the Dynamism of Capitalism?
Mike Joffe (Wellbeing Health and Economic
Policy Services)
The tendency for at least some capitalist economies to grow is one of
their most characteristic properties, as Marx realized. However, the source of
growth is not well understood, even within heterodox perspectives. The question
can be addressed by historical studies of the origins of capitalism, including
comparative ones, or by examining recent/current capitalist systems, especially
the most dynamic firms or sectors, and conversely the situations where growth
does not occur.
A satisfactory account requires more than just description/correlation; it
needs to explain the essential features that dynamic systems possess that
differentiate them from mere trade (markets). Thus, Pomeranz emphasizes
eighteenth-century
Plenary Session I
Pluralism and Economic Inquiry
The Turn in and Return of Orthodoxy in Recent
Economics
John Davis (
This paper
examines change in the research frontier in economics, and asks whether the
current competition between new research programs may be supplanted by a new
single dominant approach in the future.
The paper discusses whether economics tends to be dominated by a single
approach or reflect a pluralism of approaches, and argues for the former.
It argues that orthodoxy usually emerges from heterodoxy, and interprets
the division between orthodoxy and heterodoxy in terms of a core-periphery
distinction. Regarding recent
economics, the paper maps out two different types of combinations of new
research programs: synchronic and diachronic.
It treats the new research programs as a new kind of heterodoxy, and asks
how a new orthodoxy might arise out of this new heterodoxy and traditional
heterodoxy. It discusses this
question by advancing two scenarios regarding how the two different types of
combinations in the new research programs might consolidate along the lines of
three shared commitments in traditional heterodoxy to form a new orthodoxy in
economics.
Pluralism and Contested Scientific Inquiry:
The Case of Mainstream and Heterodox Economics
Frederic Lee (
Economics is a discipline with contested scientific inquiry; and the two
protagonists are mainstream or neoclassical economics and heterodox economics.
Ignoring the debate over whether mainstream and neoclassical are more or
less the same, the immediate question that arises is whether such a contest
exists. That is, for contested
inquiry to exist, the protagonists must offer incommensurable theoretical
explanations of the economic activities that comprise the provisioning process.
This question is dealt with in the first section of the paper.
In the second section of the paper the
issue of pluralism between the two protagonists is dealt with.
In particular a brief historical overview of the intolerance of the
mainstream towards heterodox economics is delineated followed by a critical
evaluation of the consequences of the intolerance.
The third and final section of the paper deals with pluralism and
integration within heterodox economics.
Raising Dissonant Voices: Pluralism and
Economic Heterodoxy
Diana Strassmann (
In seeking to promote a more open economics, heterodox economists face
some of the same demons we see among the mainstream. The tendency to affiliate
with similarly situated people and the preference to talk with those who share
our perspectives afflicts not just the orthodox. Heterodox associations
typically organize conferences and panels with member participants, who by
virtue of their affiliation, are inherently screened to fit within the
conception of the association. Ditto for society journals, which typically
expect some acknowledgment of the core ideas around which the association builds
its identity.
Supportive intellectual communities can nourish ideas and scholars; the
ability to talk with those who share key ideas can refine and give resilience to
our ideas. Yet in seeking the
strength such support gives, heterodox groups must also carefully examine their
own practices and members. Who is
missing and why? How can those who are not yet participants in key economic
debates be enabled to speak and be heard?
How can we better empower those whose ideas we cannot yet fathom and may
not agree with? How can we negotiate between wanting our own ideas to be heard
and our professed desire to empower those whose lives are not yet adequately
represented in economic debates?
Pluralism, Realism, and Heterodoxy
Why Should
I Adopt Pluralism?
Rogier De Langhe (
Heterodox economists have come under suspicion of what Giere (2006) termed
‘strategic pluralism’ (Van Bouwel 2004, Sent 2003, 2006). Stealthily, they might
actually be what Garnett (2006) called ‘paradigm warriors.’ The goal of this
contribution is not so much to judge the accused, but rather to assess the
accusations. They seem to lean heavily on the claim that an advocate of
pluralism should be a pluralist himself. Though this assertion sounds like a
truism, I will argue against it. I maintain that pluralism is a desideratum at
the aggregate level, but inappropriate at the individual level. More
specifically, this contribution clarifies the notion of pluralism by introducing
an often neglected but crucial distinction between different levels at which
pluralism can be situated. Within
this framework, I argue why paradigm warriors and strategic pluralists need not
undermine pluralism but can indeed strengthen it.
Rhetorical Dualism and the
Orthodox/Heterodox Distinction in Economics
Andrew Mearman (University of the West of
This paper extends my own development of Sheila Dow’s work on dualism as a
tendency in thought. Dualism involves the creation of artificial distinctions
between categories or objects, often via the polarization of those things.
Dualism can occur for reasons of necessary abstraction. However, this paper
argues that dualism often derives from rhetorical concerns. For example, dualism
is used to create the impression of division necessary for a contribution to
appear novel or transcendent. The paper therefore in some way synthesizes the
literatures of McCloskey and Dow. Rhetorical dualism has significant negative
effects. For example, it leads to ‘wrong turns’ in debates. Further, rhetorical
dualism can militate against pluralism by dividing debates into camps from which
it is difficult to deviate, thereby preventing the development of pluralism.
This paper argues that such rhetorical dualism is commonplace in economics. As
an example, the paper builds on recent work by
Ontology, Modern Economics, and
Pluralism
Tony Lawson (
In my Reorienting Economics
(Lawson, 2003, Routledge) and elsewhere (e.g. Lawson 2006) I defend a specific
ontological conception and use it to interpret the nature of both the mainstream
and heterodox traditions in economics. Various commentators suggest that my
position in all this is insufficiently pluralist. In this short essay, I hope to
convince otherwise. Specifically I will seek to allay any concern that I defend
a conception in which heterodoxy is somehow discouraged from engaging others, is
necessarily oriented to replacing the mainstream with an undesirably monolithic
paradigm, and/or is encouraging of isolationism.
For I am indeed convinced that a pluralistic orientation is desirable,
not least because it seems essential both to human flourishing in general and to
knowledge advance in particular. But I also believe that such an orientation is
quite consistent with the position I defend.
Mixed
Economies vs. Market Fundamentalism
Political Freedoms and Economic Freedoms:
Was Samuelson Right about Hayek’s
Road to Serfdom?
Andrew Farrant (
When
Hayek’s Road to Serfdom first appeared
in 1944 it was the subject of much controversy and that controversy still
remains today. Hayek on various occasions has claimed that the central message
of RTS has been distorted and
misunderstood. He has described his analysis as a “warning” to countries that
have pursued socialist policies. If they do not mend their ways those countries
that have given up some economic freedoms in pursuit of socialism “inevitably”
will lose their political freedoms as they travel down the road to serfdom. Yet,
scholars as diverse as Lionel Robbins, George Stigler, and Paul Samuelson held a
divergent assessment of Hayek’s work, pointing to the actual record of mixed
economies they deny his claims that reductions of economic freedoms inevitably
lead to a loss of political freedoms. Scholars sympathetic to Hayek’s message
have recently claimed that Robbins et al have misunderstood Hayek. In particular
they point to a letter Hayek wrote to Samuelson complaining about the latter’s
alleged role in shaping the public perception of
RTS. We use the vantage point of this
dispute between Samuelson and Hayek as a way to gain entrée into the debate over
RTS. The Hayek-Samuelson letters
provide a way in which to solve what Hayek meant by the use of the word
“inevitable” which plays a central role in the message of
RTS. We conclude by arguing that of the various possible
interpretations Hayek’s argument fails on a number of grounds and that those who
argue “The Road to Serfdom was meant
to be a warning, not an historical prediction,” are debating with straw men.
Pluralism for Development: The South Korean Experience
Kaan
Berberoglu (
When the end of 20th century is considered together with the “triumph” of
neo-liberal economics ideology which can be mentioned with the “end of the
history” thesis, it witnessed a dominant, exclusive and absolute veracious
hegemony of a system of economic thought. Market fetishism, which came into the
picture with pre-assumption of state being inactive together with allocation of
economic structuring only to private sector disregarded the characteristic of
the state being entrepreneur as well as meant that state’s regulatory notion
would imply intervention in the market and therefore denoted that it should be
removed. At the same time, the
neo-liberal point of view which has also criticized the increased role of the
public sector in the economy in the period 1950-1980, suggested that the state
should withdraw from the economy both in developed and developing countries and
should reduce its control over the economy in 1980s. However, when South Korean
experience is considered, it is noticed that
Austrian Entrepreneurship and Labor Rights Institutions:
A Complementary Relationship?
José Manuel Lasierra (
The apparent contradiction between Austrian economics and the
institutionalists has been put into perspective with the addition of an Austrian
wing within the New Institutional Economics.
We notice a complementary relationship, in two ways, between Austrian
school, based on the role of individuals and the market, and the NIE, based on
the role of institutions on economic behavior and on the creation of efficient
labor markets. On one hand, the idea
of continuous improvement in business management, the idea of Kirznerian
incrementalism in front of Schumpeter´s radical innovations, is now developed in
a complex and interrelated production system where contributions from every
agent to the final output are necessaries and difficult to quantify. In the
environment of the work organization inside the firm, we think that labor
institutions such as union actions, collective bargaining and labor laws can
perform an informational-cognitive function that encourage “alertness” or
Kirznerian entrepreneurship. We question whether labor institutions develop per
se a constraining function over the agent’s free decision-making, which demands
deregulatory labor policies. On the
other hand, we recognize that bounded rationality and uncertainty determine some
models of incomplete labor contract and transaction costs that can produce
problems of equity and efficiency. As the ideology in Douglas North, my
hypothesis is that labor institutions let overcome differences between what has
been done and what has been perceived; they can resolve the conflict of the
distribution of benefits; they can reduce transaction costs and contribute to
create productive organizations which are more efficient in the global economy.
Trade, Development, and Public Health: Feminist Perspectives
Is White the New Blue? The Impact of
Trade in Services on Women
Ebru Kongar (
Globalization of manufacturing production has brought about a new
international division of labor that involved the growth of manufacturing
sectors in the global South and service sectors in the global North. These
developments had profound implications for the gendered division of labor in
these economies where women’s share in employment increased. This “feminization
of labor” has motivated a “win–win” argument regarding the effects on women of
global economic restructuring. However, a closer scrutiny of these trends from a
feminist perspective revealed that women in the South have been weak–winners at
best, as employment opportunities for them came in low–wage categories, and in
the North, low-wage women in production occupations experienced disproportionate
job losses. Since the early–1990s, globalization has broadened to include
services and the mainstream “win–win” argument regarding its impact on women is
back. Our paper contributes to the growing feminist literature on the gendered
outcomes of services trade. Using data from the 2000 Decennial Census of
Population Public Use Micro Sample files, we identify the
The
Feminist Critique of Neoclassical Development Economics:
The Gender Implications of Structural
Adjustment Policies
Rosemary Russo (
While neoclassical and liberal paradigms have been frequently used as
guides for development projects, alternative feminist based viewpoints stressing
the value and importance of issues such as gender equality, reproductive rights,
household labor, and child rearing are becoming more important frameworks to use
in development studies. Stemming
from this, the possibility arises of creating a more complex understanding of
how recently implemented structural adjustment policies in the developing world
are truly affecting each country’s population.
This paper attempts to synthesize empirical findings of the effects
structural adjustment policies have had in the past two decades through a
feminist perspective, thereby including additional, and previously ignored
factors, such as the effects on unpaid labor, healthcare, resource control, and
education. Through this analysis,
the feminist perspective can be seen as both a valid and imperative alternative
to understanding development during the current period of globalization.
Bias,
Not Error:
Assessments of the Economic Impact of
HIV/AIDS in Sub-Saharan
Deborah Johnston (
Neo-classical economists struggle to understand the impact of HIV/AIDS,
with macro-economic models seemingly unable to capture the way in which the
pandemic will affect economic life. The predicted impacts of HIV/AIDS on
sub-Saharan
The paper shows that women’s reproductive activities remain excluded from
models of the national economy, while women’s productive work is often poorly
understood. The importance of the
exclusion of women’s productive and reproductive activities is partly
illustrated by the significantly large impacts generated by models that focus on
the relationship between HIV/AIDS and poor educational outcomes for children.
However, the impacts on children’s education are complex, and oversight for
education forms only part of the caring responsibilities of women. Higher
illness and death of adult women is likely to have a wider range of serious
economic impacts – and this is illustrated by the results of micro-level
surveys. The paper ends by drawing a
series of conclusions for methodology.
Transformative Trends in the Global Economy
Deindustrialization and Migration under Neoliberalism:
Is the Diasporic Economy a Solution
for Latin America and the
Keith Nurse (University of the
Over
the last two decades or more the Latin American and
The
goal of this paper is to examine the emigration and development nexus in
relation to shifts in the techno-economic paradigm and global economic
restructuring. The paper concludes by asking whether migration and
diasporization can do for the LAC region what it did for some “now” developed
economies?
Rethinking the Boundaries of International
Economic Interaction:
South-South Cooperation and Economic Development
Omar
Dahi (
The last decade has witnessed a substantial increase in intra-regional as
well as inter-regional economic and political cooperation among the countries of
the South. In this paper, I explore whether the increase in South-South
interaction holds the promise of an alternative economic model, is best thought
of as unity in the face of Northern hegemony, or is too heterogeneous to be
captured by one title. Focusing on static gains from trade, mainstream trade
theory (and empirics) has traditionally ignored South-South trade or criticized
it as ‘protectionism by another name.’ More recently, organizations such as the
WTO have been advocating South-South liberalization as a stepping-stone towards
multilateral liberalization. After examining the origins and trajectory of
modern South-South relations, recent trade agreements and patterns of trade and
investment, the paper has two mains conclusions. I propose that South-South
regional integration is more likely to be mutually beneficial among countries
with similar levels of development. Second, while South-South cooperation is not
a panacea for the problems facing developing countries today, it nevertheless
creates a political and economic space for alternatives.
Capitalism, Socialism, and
Minqi Li (
There has been much talk about the recent economic rise of
Ecological Economics
Wealth, Well-Being, and Values: The Contribution
of Heterodox Economics to a (Real)
Transdisciplinary Dialogue within Ecological Economics
Ali
Douai (Université Montesquieu
This paper starts with a short
overview of the main (linked) themes of ecological economics which nourish some
discussion on its characteristics and on the direction it should be develop: (i)
the nature of the value for humans of ecological resources; (ii) the
understanding and the modeling of the consumer behavior and more largely of the
human actor; (iii) the design of macro-indicators that might be used as
alternatives to GDP and that might cut short the growth/sustainable development
debate. Its purpose is to provide some theoretical landmarks coming from
heterodox economics which, firstly, reinforce the claims for the
emergence of new ways of thinking about these themes and, secondly, allow the
delimitation of a coherent framework in which a real transdiscplinary dialogue
could bloom. It is argued that key insights can be drawn from Marxian and
Keynesian schemes of thought, but also from some ones of their actualities
(contemporary approaches of well-being; Post-Keynesian economics) at both micro
and macro-level. Those insights relate to: (i) the nature of the value of
ecological resources and its conflict relationships with the capitalist’s law of
(economic) ‘Value’; (ii) the scope of individual and societal wealth in
connection with the human actor and its motivations (values); (iii) the
ontological approach of environmental problems.
Money and the Environment: A
Heterodox Perspective
Micheal Carr (
Recent insights regarding resource limitations and environmental
degradation, together with the findings of comprehensive indicators of economic
welfare, suggest that exponential economic growth may no longer be the
appropriate goal for macroeconomic policy. Despite unprecedented technological
change and R&D investment, resource use rates continue to rise to unsustainable
levels. This situation creates a policy dilemma that leaves us with the
undesirable options of either attempting to maintain economic growth at the risk
of irreparable long-term damage to ecological capacity, or creating an economic
crisis in the short term. Because of its naturalistic ontology and narrow
epistemological perspective, neoclassical economics is unable to effectively
recognize and address this policy dilemma. In this paper, a heterodox monetary
approach is adopted, drawing on economic history, post- Keynesian,
institutionalist, chartalist, and circuitist theory, to determine the
relationship between the current institutional arrangements surrounding money
and the environmental impacts of the economy. Money will be explored as an
accounting device of credit/debt relationships that has different
characteristics and properties that have become naturalized and
institutionalized over time. The current institutional arrangements surrounding
money are found to be causal relations that create systemic patterns of economic
activity that are damaging to the environment. Money is therefore seen as an
‘environmental relation.’
Energy
Markets:
An
Overview of the Construction of Energy Markets and an
Assessment of Their Results and Their
Future
Ken Zimmerman (
Energy access and use restructuring has been underway for over two decades
in much of the Western world under the guidance of economists and policy makers
guided by the principles and theories provided by these economists.
So called energy markets are seen everywhere today – in oil, natural gas,
electricity, at all levels from the just being born EU “liberalized” energy
market, to worldwide “futures” markets, to the small customer purchasing
electricity in
A Veblenian Perspective on Peak Oil
Lisi Krall (SUNY
The standard neoclassical model of
the depletion of nonrenewable resources offers a picture of optimal and
efficient depletion paths. According
to the model, if markets are functioning perfectly, market prices will increase
over time as conditions of absolute scarcity become progressively more acute.
The policy prescription of such an approach is obvious.
Nothing needs to be done, since the gradual increase in the price of the
nonrenewable resource (like oil) will itself provide for a smooth transition
into a renewable substitute. Many
economists have acknowledged the possibility of market failure in such an
analysis. For example, imperfect
information (i.e., not knowing future demand and supply) will lead to
inefficient market allocations and pricing over time.
Nonetheless it is important to consider that prices may not reflect
scarcity, not because of market failure, but rather because of success in the
market. This analysis takes Veblen’s
distinction between business and industry and applies it to the oil industry to
demonstrate that market prices are unlikely to signal absolute scarcity in a
timely way. That is to say absolute
scarcity may be ignored by the ‘vested interests’ for business purposes. Thus
from a policy perspective it is essential for government policy to be proactive
in facilitating the transition of the economy toward greater thermodynamic
efficiency.
Marxian Economics
Money,
Demand, and Value:
How Changes in Demand Affect the
Monetary Expression of Labor-Time in Marx
David Kristjanson-Gural (
The monetary expression of labor-time serves to link money and labor-time
as related but distinct measures of commodity values.
This paper examines the effects of changes in aggregate demand on the
monetary expression of labor-time in a commodity money economy and explores the
implications of this analysis for the case of non-commodity money.
This research is intended to provide a basis for integrating monetary
analysis into a Marxian theory of cycles and crises by showing how changes in
demand in the short run may affect prices and profitability, in part, via
changes in the monetary expression of labor-time.
The Truthiness of Veneziani’s
Critique of Marx and the TSSI
Andrew Kliman (
Proponents of the temporal
single-system interpretation (TSSI) have disproved the alleged proofs of
internal inconsistency in Marx’s value theory. Roberto Veneziani’s 2004
essay, “The Temporal Single-System Interpretation of Marx’s Economics: A
critical evaluation” Metroeconomica
55: 1, pp. 96-114), is part of an effort by critics to avoid conceding the
validity of these refutations. This paper is a response to his essay.
I will argue that Veneziani’s paper is a model of truthiness. He
gives the impression of having uncovered fatal errors in the TSSI refutations,
yet acknowledges in passing that the TSSI deduces Marx’s disputed conclusions
from his premises. This would not be possible if Marx’s arguments were
internally inconsistent. Hence, Veneziani tacitly concedes that the
alleged proofs of inconsistency have been disproved.
He also gives the impression of refuting TSSI demonstrations that
simultaneist interpretations imply that there can be surplus labor without
profit. However, he actually concedes––grudgingly and fleetingly––the
validity of these demonstrations. The paper will also show that
Veneziani’s other main claims, however truthy, are false. In particular, I
shall respond to his critique of TSSI demonstrations that labor-saving
technological change can lower the rate of profit. Veneziani seems to
prove that these demonstrations hold true only in extremely implausible
circumstances, but none of his arguments holds water.
The paper will also criticize the use of truthiness as a scholarly norm,
particularly as practiced by Veneziani and other critics of Marx and the TSSI.
Against Labor Fetishism: What Can
Marx Teach Us Today?
Faruk Eray Duzenli (
Labor, in Marxian accounts, often appears as the universal ontological
ground of social life—the founding moment of social being/Reality. Everything
comes into being or is transformed into a new reality through labor; it is the
substance and creator of Being/Existence. It is construed as the essential and
distinctive, if not the only, quality of being human: defined as purposeful
productive activity through which objects provided by nature are shaped in
accordance with a conscious plan for the satisfaction of needs/desires, labor
distinguishes human beings from animals, or nature in general, giving them their
unique character. These accounts,
finding textual evidence not only in Marx’s early, “humanist,” texts, but also
in his “mature” writings, end up fetishizing labor in a manner not so much
different than Hegelian speculative philosophy he persistently criticized.
Moving beyond naïve renditions that merely equate it with the “reification” of
social relations and “false consciousness,” I contend fetishism involves a
speculative inversion: conceiving a quality that arises as an effect of a
network of relations as the inherent, natural and essential characteristic of an
element of this network (Žižek 1989). Despite occasional slips, Marx carefully
avoids this fetishistic inversion by situating labor within the context of a
particular society. This implies neither quality—creator of use-values or the
producer of values—should be read as labor’s innate or essential attribute;
rather, labor acquires these characteristics within Marx’s discourse as he
analyzes class relations that prevail in a capitalist society.
Accounting for Economic Growth
Foreign
Direct Investment, Accelerated Growth, and Economic Development in
Gabila Fohtung
(University of the
The South African government has set for itself an objective of halving
poverty and unemployment by 2014. The rate of growth needed to achieve its
socio-economic and developmental objectives has been predicted to be around 5
percent on average between 2004 and 2014. This paper assesses the contribution
of foreign direct investment (FDI) to South Africa’s economic development
through its impact on economic growth for the period 1985-2005.The importance of
FDI hinges on the fact that it provides capital needed for investment, creates
employment, comes with managerial skills and technology and therefore
accelerates the pace of growth and development (Asiedu, 2001:2).
The long term relationship between
foreign direct investment and economic growth is examined by running an Ordinary
Least Squares (OLS) and a two-staged least squares regression on an augmented
Solow production function, using secondary data within a growth accounting
framework. The results show that there is
a positive and significant relationship between changes in FDI inflows and the
growth in GDP. Lessons are drawn from other emerging economies like china,
Alternative Measures of Korean
Unemployment since the 1990s
Hee-Young Shin (New School for Social Research)
The
goal of this paper is to examine whether there are more comprehensive measures
of unemployment rates than the government’s official measurement.
For this aim, this paper traced (1) historical developments of
international standards concerning the measurement of (un-)employment rates
proposed by the ILO, and (2) a series of alternative measurements proposed by
the U.S BLS. The research result
based on empirical data for Korea since 1990s shows that a series of alternative
unemployment measurements and labor underutilization frameworks are superior to
the single official unemployment rate in analyzing actual labor market
conditions; the official unemployment rate alone misleads a wide range of
visible and invisible unemployment and the existence of the ‘time-related,’
‘income-related’ underemployed workers.
State Investment in Agricultural Productivity as
an Alternative Engine of Growth:
A
Turkish Case – The Southeast Anatolian Project
Cihan
Bozkus (
According to Kaldor’s Laws of Economic Development, industry is the main
engine of economic growth. My main question is, for less developed regions of
the world, can mass state investments for developmentalist projects be an
alternative way for development.
Southeast Anatolia is one of the least developed regions of
Economic Pluralism and Neoclassical Economics:
Explaining Economic and Social
Reality in the Eastern Region of
John Hall (
This paper explores shortcomings associated with employing a marginalist
method for explaining economic and social reality.
Our thesis is that a poor and blinded choice of economic method can
indeed lead to blatant explanatory failures.
In this paper we probe into the economic method based on marginalism
found in selected contributions of Robert Barro and Xavier Sala-i-Martin, what
stands at the core of their ‘convergence hypothesis.’
We then consider explanatory failures that arise in their implementation
of marginalism in predicting the time line for per capita income convergence
between the eastern and western regions of the Federal Republic of Germany.
Economics in the Human Conversation
Human
Nature and Continuing Human Existence
Perry
Bezanis (Condition.org)
Because of evolutionary origin as ‘a warm-blooded, primitively
cerebrating vertebrate,’ man cannot have ‘divined’ the eventual evolution of his
uniquely human ‘deliberative capability’ and its consequences.
What has developed consequently – ‘evolved’ – is that man has learned how
to ‘facilitate’ his existence -with what we call ‘technological advances,’
before discovering the consequences of such ‘facilitation out of
ignorance’ – that, in particular, he
would some day, and inevitably, come
to regret how he had lessened the duration and worsened the very nature of his
existence on earth through war, waste and the corruption of
‘pre-sapiens natural dynamics’:
overpopulation, pollution, global warming and loss of biodiversity – human
existence, ‘the quality of life.’
Economics has evolved out of fundamentally natural mechanisms of
human diasporation and eventual trade. For the greater part of history, these
mechanisms were more or less satisfactory in the sense that it was not
intellectually yet possible to foresee
problematic consequences arising from underlying physiological dynamics.
Economics and economic theory, in this respect, have evolved as less concerned
with consequences than with ‘abstract market properties’ and ‘economic growth.’
Critically missing there then is any reference to man’s
expressly physiological nature –and to that aforementioned
‘deliberative capability’ in particular - the inevitability, in other words, of
his increasingly deliberated and ‘scientifically
meliorated’ influence on what is a closed-earth system in favor of life-form
best longevity. There is a ‘mantra’
to this, and it is: least population of
least resource/environment corruption.
A MEESA Response to ICAPE: Revisiting
the Direction of Heterodoxy
Roger Elletson (
This paper/brief introduces this
Conference, the Academy, and the world to the new
General Theory that completes the task
commenced by John Maynard Keynes and the paradigmist agenda.
MEESA is an acronym for the Mammonization of Economics and the
Epistemological Subjugation of the Academy.
It symbolizes a new analytical methodology central to which are the
indispensable conceptions of mammonism, the jurisprudence of usury, and the
recognition of money as a medium of power — a medium of allocation,
appropriation, and control — rather than a medium of exchange.
MEESA exposes the epistemological subjugation of the Academy under
philosophical mammonism and the conceptual incarceration of the Exchange
Paradigm of Money.
In the context of Robert Garnett
Jr.’s essay, “Whither Heterodoxy?,” this brief introduces the Forensic
Scholastic Method that brings courtroom analytical skills and evidentiary
insights to the Academy and acts as a transitional step toward the
Parapometrics® methodology — the science of power — that encompasses the
developments of organic and mammonic jurisprudence and epistemology, and enables
the formulation of geomammonics to supplant the anachronism of geopolitics.
It shows how the transition from the exchange to the power paradigm of
monetary understanding renders economic reality conceptually accessible and
paradigmatically soluble, and shows how these developments have resolved the
crisis of economics and the mythologies of neoclassicism.
It introduces the Academy to the Keynesian conception of pluralism that
recognizes that when pluralism and paradigmism are correctly conceived they are
symbiotically rather than adversarially related, and it suggests that ICAPE and
heterodoxy formally embrace this reality.
Selected Interdisciplinary Inputs
into a More Expansive Economic Analysis
W. Robert Brazelton (
The paper will deal with inputs from various fields of the social sciences
which will deal with research involving professional psychologists, sociologists
in terms of economic theory and its assumptions; and in terms of specific
theories in their own fields relating to our economic theories and assumptions
in terms of analysis and policy. The
paper will also deal with specific parts of economic analysis outside the major
areas of orthodox analysis such as behavioral economics, experimental economics,
socio-economics, institutional/evolutionary economics, post Keynesian economics,
et al.
After the above, an integration will be made into a more pluralistic,
interdisciplinary approach to economics in terms of analysis/policy.
In order to keep the paper from going into all different directions at
once, the paper will then assume for the sake of analysis that the
socio-economic system is at a “crisis” at which time the various analysis
discussed above become relevant. Thus, what economic analysis discussed above
becomes relevant; and what sociological and psychological analysis become
relevant such as, for example, sociological “spread effects”? Thus, it is the
belief herein that Economics is at the assumed point of “crisis” and calls for a
more pluralistic, interdisciplinary analysis including areas of study both
within economics and form outside fields such a sociology and psychology to
better understand the total realities of the economic situation in terms of
analysis and policy.
Rethinking the Economics of the Environment:
Why a
Heterodox Approach Matters
E1: Saturday, 10:30-12:00
Debunking Free Market Environmentalism
Kristen
A. Sheeran (St. Mary’s
There
has been a discernible shift in the discourse amongst policy makers as relates
to the environment. What was the mainstream economic view of environmental
problems as driven by market failure, with its corollary recommendations for
correcting market failures through policy intervention, is rapidly giving way to
an ultra-conservative, ideologically driven approach to environmental problems
known Free Market Environmentalism. Free Market Environmentalism views
privatization- the removal of natural resources and the environment from the
public realm - as the solution to environmental problems and views government
policy as the cause of environmental problems, not the corrective. For heterodox
economists who have long argued the limitations of mainstream environmental
economic analysis, the growing influence of Free Market Environmentalism is
particularly troubling. Rather than
focusing energies on shifting the discourse on environmental policy in
progressive directions, many heterodox economists have had to retreat to defend
what has long been established - market failure as the origin for environmental
problems. Debunking free market environmentalism, therefore, is critical to
developing a new progressive economics of the environment.
Managing Scientific Uncertainty and Ethical
Controversy in Climate Analysis:
Catastrophic Impacts, Distributive Justice, and Risk Aversion in the Stern
Review
Paul
Baer (EcoEquity)
The
importance of scientific uncertainty and ethical judgments in the economic
analysis of climate change policy is widely recognized, and a variety of methods
have been used by economists to address the underlying issues. In particular,
the widely publicized Stern Review of the economics of climate change attempted
to base its recommendations on a sophisticated treatment of uncertainty, equity
and risk. However, I suggest that in practice the methods Stern used are not
adequately robust to justify the policy conclusions he draws, particularly his
conclusion that it is not economically warranted to seek to stabilize global
temperature below a 2ºC increase above pre-industrial. I show further how
equally reasonable assumptions, in the same basic framework, would lead to very
different conclusions, and suggest ways in which the key controversies might be
addressed through a combination of familiar and novel approaches.
Economic Theory for a Warming World
Frank
Ackerman (Global Development and Environment Institute and Center for the
Applied Study of Economics and the Environment)
Climate
change poses the ultimate challenge for public policy; formulation of adequate
responses will require new approaches to economic theory. Three critical
features of the climate problem call for new theoretical departures: the
unsustainability of the status quo; the importance of multi-century causal
relationships; and the impossibility of precise calculation of expected harms.
The
unsustainability of the status quo is difficult to comprehend within a framework
that assumes the optimality of market equilibrium. In a world with a changing
climate, we are not close to a desirable equilibrium; and incremental movement
toward free market equilibrium is not necessarily helpful.
Multi-century causal relationships raise the well-known paradoxes of
discounting: conventional approaches suggest that the far future doesn’t matter,
and that almost nothing should be done to provide a sustainable world for our
descendants. Common sense and non-economic discourse require a better answer; if
it involves discounting, the discount rate must not only decline over time, but
must also start at a relatively low rate.
The impossibility of precise calculation of harms challenges the
conventional understanding of externalities. Harms caused by climate change are
not separable into individual externalities, due to joint causation; nor are
they predictable in detail, due to increasing variance of weather outcomes and
chaotic dynamics; nor are they monetizable, since the way of life and natural
existence that are at stake are literally priceless.
Solutions require a reinvigorated approach to public goods and the public
sector, expanding a conversation about collective values that has lately been
confined to military and security questions; recognition of the path-dependent
nature of development, and strategic choice of preferable paths; and adoption of
a precautionary approach to protection of human life and nature.
Markets and Community
Hayek and Lefebvre on Market Space
and Extra-Catallactic Relationships
Virgil Storr (
Austrian economics and Marxian economics should be irreconcilably at odds.
The Austrians have put forth the strongest arguments against socialism,
pointing to the calculation, knowledge and incentive problems that a socialist
state would have to overcome. And,
the Marxists have consistently highlighted the inevitable, negative side effects
of an unrestrained, chaotic market; alienation and exploitation chief among
them. Surprisingly, Sciabarra,
Burczak and others have discovered a number of similarities between Austrian and
Marxian economic analyses. Both
schools, for instance, share a dialectic approach to social inquiry and
emphasize that context matters.
By focusing on the work of F.A. Hayek and Henri Lefebvre this paper will
explore additional similarities between the two camps.
Both have stressed that the market is a social space (in the language of
Lefebvre) or a spontaneous order (in the language of Hayek) that is produced by
the interactions of individuals competing and cooperating with each other and is
also the site of those interactions.
Both have also paid little attention to the extra-catallactic relationships that
can develop in markets. Conversations that express more than bid-ask,
conversations that aren’t just bartering and negotiations, conversations between
market participants that are concerned with more than making a deal do occur in
markets. Indeed, a number of
meaningful social relationships are buttressed by markets and would not exist if
markets did not exist.
Interestingly, its Lefebvre’s spatial theory rather than Hayek’s spontaneous
order approach that most readily accommodates a discussion of this additional
benefit of markets (beyond efficiency and coordination).
Gifts
and Markets:
A Pluralist Perspective
Ioana Negru (
There is an increasing debate about the nature and significance of
pluralism within economic analysis.
The pluralism debate is currently centered on a variety of dimensions, i.e.
pluralism of methods, theoretical pluralism, ontological pluralism, etc.
The aim of this paper is to relocate the debate regarding pluralism in
the context of discussing the apparent incompatibility of gifts and markets. We
commence with a focus upon the development of markets through a consideration of
the linear market development model advanced by the likes of Hicks and Polanyi.
This accepted position within economic analysis argues that markets are the
natural evolutionary successor of gift-based economies. By looking at markets as
institutions, it is possible to connect our thinking about them with other
institutions which are observed in contemporary economies, such as gift. Thus,
we argue in this paper against the conventional position within economics that
markets and gifts are incompatible, and that gift and gift-giving can only exist
outside the market system. Although
the nature of gift has changed over time, the presence of altruism and other
residues of gift giving within transition economies are advanced as evidence of
the possible coexistence of markets and gift within the same economic system. A
linear model of development which emphasizes an organic process of replacement
of a gift economy with a market system will be challenged.
Communities and Commodities
Philip Kozel (
For many Marxists, and leftist
critics in general, market activity is fundamentally inculpated with capitalism
and as such, social movements predicated upon market activity are written off as
utopian. I disagree on two counts. First, I reject the conflation of market
activity with capitalism and argue what market activity means really depends
upon the context within which it takes place. Many different types of market
activity are possible, some with social impacts we may embrace or conversely,
deplore. Secondly, I see LETS (Local Exchange Trading Systems) and local
currency movements actively promoting practical, and by their widespread and
growing popularity, compelling, ‘anticapitalist’ economies predicated on
communal solidarity and need fulfillment in the present day. This paper explores
the ethical and practical dimensions of LETS and Local Currency movements.
Finance Capital and Economic Growth
Financial Anarchy, Capital Flow Volatility, and Fixed Investment in Developing
Countries:
Asymmetric Effects of Capital Flows
Revisited
Firat Demir (
The revival of international capital flows together with domestic economic
reform programs along the “Washington Consensus” during the 1990s led to a
strong shift of mood among economists regarding the long-term outlook of the
so-called Emerging Markets. Nevertheless, after more than a decade of financial
liberalization experience some serious questions remain over the capacity of
capital flows in achieving the initial policy projections. In addition to unmet
expectations, there is a growing debate over the direct role of such flows in
generating consecutive financial crises during the course of 1990s and early
2000s. On the other hand, apart from
a few empirical studies at the macroeconomic level, there is a lack of analysis
of the effects of capital flow volatility on domestic investment performance of
developing countries. What we suggest is that financial liberalization not only
failed to realize its initial policy objectives such as capital market deepening
but also created a volatile macroeconomic environment. As a result, increasing
volatility of capital flows has become a major destabilizing force for
investment growth in developing countries.
Using bi-annual micro-level panel data for
Speculation, Liquidity Preference and
Monetary Circulation
Korkut Erturk (
The paper gives an overview of the dynamic interaction of industrial and
financial circulation, focusing specifically on the macroeconomic effects of
asset market speculation in the context of the latter. Much of the emphasis in
this discussion is on some of Keynes’ arguments in his
Treatise which had been eclipsed by his much better known
GT. The formulation of his ‘liquidity
preference’ argument into a theory of the interest rate in this later work and
the sharp exchanges with some of his critics on the loanable funds theory made
it harder to appreciate the degree of continuity in his thought with the
tradition of monetary analysis that emanates from Wicksell, of which the
Treatise was a part. As he (and his
followers) became embroiled in debates with mainstream economists in the
aftermath of the GT, many of his
insights in the Treatise were lost or
abandoned because they no longer fit easily in the truncated theoretical
structure he adopted in his latter work. For later economists, this has made it
harder to appreciate, let alone pursue, Keynes’ early insights. This paper errs,
if at all, on the other side as it highlights these early insights at the
expense of Keynes’ formulation of his views in the
GT.
Concentration, Finance, and Growth
Rohit (Political Economy Research Institute,
This paper is an attempt to analyze some stylized facts in the last two
and a half decades for the
Socialism and Human Development
Rethinking Poverty beyond the World Bank:
Class and Ethical Dimensions of
Poverty Eradication
Stephen Cullenberg (
A Study
of Interest- and Community-Based Cooperatives, with
Special Reference to
Enrico Luzzati (
Given the weakness of state and of private entrepreneurship in
The Dialectical Relation of Human
Development and Socialist Transformation
Al Campbell (
A small but growing literature (Devine, Hahnel and Albert, Cockshott and
Cottrell, Laibman,
Pluralist Post Keynesianism
E5: Saturday, 10:30-12:00
Towards an Anthropogenic Approach to
Households in a Monetary Theory of Production
Zdravka Todorova (
The paper extends Alfred Eichner’s anthropogenic approach to labor to
household relations within a monetary theory of production by combining Post
Keynesian, Institutionalist and gender analysis. While the anthropogenic
approach acknowledges money as a necessary motive for engaging in paid
employment it does not disassociate human relations from the production process.
The emphasis of this approach on active human agents with multifaceted goals,
including enhancement of social ties, as well as establishment of social
distances, provides outlets for incorporating notions of femininity and
masculinity, as well as ideological notions of hierarchy that are embraced by
household members, into monetary production process. Thus, household relations
are treated as important part of monetary theory of production since workers are
socialized within household relations where neither money, nor gender is
neutral. An anthropogenic approach to households within a monetary theory of
production is a step towards a framework of capitalist provisioning that
integrates monetary and gender hierarchies and offers non-conflationary
micro-macro economic theorizing.
A Proposed Methodological Synthesis
of Post Keynesian and Institutional Economics
Linwood Tauheed (
The
phenomenon of high performing-low socioeconomic African American students casts
doubt on a simplistic causal relationship between socioeconomic status and
achievement, and compels us to look for a more holistic explanation.
Here we develop a System Dynamics model of the classroom Teacher/Student
transaction, and estimate the effect of student Structural factors (race and
class) within Teacher Cultural context (teacher expectations).
The model is calibrated using data from the Early Childhood Longitudinal
Study - Kindergarten sample.
Simulation results find that student’s race and class, cast as Cultural
variables affecting teacher expectations in interrelationship with the child’s
Agential cognitive processes, can explain the Structure of African
American/White differences in educational outcomes.
The Theory of the Firm:
A
Comparative Analysis between the Labor Theory of Value and the Post Keynesian
Theory
Gustavo
Vargas Sánchez (Autonomous National
The
goal of this paper is to show that labor theory of value and Post Keynesian
theory reach to the similar conclusion about the firm: The firm is a dynamic and
complex economics’ phenomenon that evolves and grows permanently.
In order to get to that objective, we first must answer the following
questions: Is it possible to obtain from the labor theory of value (LTV) a
microeconomics explanation of the firm supply? Can we build a microeconomics
firm theory starting from LTV? If
this is possible, we will be able to elaborate a comparative analysis between
this new explanation and the Post Keynesian microeconomics theory.
We will try to show that our answer is affirmative, and in this paper we
show – in theoretical terms – that a supply theory derived from the concept
labor-value, and clearly different in many aspects from the Post Keynesian
framework. Yet both theories reach
the same conclusion: firms are dynamic and evolve into mega corporations:
multi-nationals and transnational enterprises. Both theories conclude that in
the evolutionist process the market is not the heart of the capitalist economy
as it is stated by the traditional micro theory. But to the Post Keynesians,
that role is played by the firm, while for Marxists it is the dynamic relation
between the firms and market.
Opening up the Economy, But to What Ends?
Open and Closed Systems and the
Vinca Bigo (
In recent years a group of researchers at Cambridge (UK) have
(re)introduced conceptions of open and closed systems into economics.
In doing so they have employed these categories in ways that, in my
assessment, both facilitate a significant critique of current disciplinary
practices, and also point to more fruitful ways of proceeding, particularly for
heterodox economics. I will defend the
Dreaming About ‘Good’ Economics:
Possible?
Hande Togrul (
This study has two objectives. First, we present the distinctive way in
which feminist scholars have sought to bring multidisciplinary methods and
methodologies into the field of economics. Such effort immediately requires a
start from the redefinition of economics as a field that explores social
provisioning. Feminist economists
have been studying intricate relations between factors of production: namely
capital, labor, land, technology and their connection to reproduction and vice
versa. In other words, linking paid and unpaid labor has been a major task. Such
endeavor questions economic theory to its core, and therefore requires tools
that are not traditionally used in mainstream economic discipline.
When we look at manifestations of feminist theory in other social sciences
such as in sociologically, anthropology and political science, we observe the
growing dominance of the ‘economistic’ approach in these fields. This
development feeds into the vicious cycle particularly at the methodological
level. We have to redefine economics. Second objective of this study is to raise
attention to the methodological bottleneck and how it is organically connected
to use of method. We need to find ways to capture socio-economic and political
reality. We conclude arguing that along with the research done at the empirical
or theoretical levels, there is a need to extend the field employing more
research on methodological concerns and its manifestation in choice of method.
Unless our approach is fed by the developments in feminist theory as its
groundwork, we would only be able to alleviate rather than eradicate the
limitations to accomplish our premises. We propose exploration and use of
‘interpretive approach’ in economics discipline in general and feminist economic
approaches in particular.
Critical Realism, Marxism, and the
Critique of Neoclassical Economics
Brian O’Boyle (National
Terrence McDonough (National
Critical Realism has spawned two quite distinct traditions: one associated
with Bhaskar himself and the other a
Unmeasured Contributors to Economic Growth
Total
Factor Productivity, Income Distribution, and Growth Accounting in
A Methodological Critique
Yongbok Jeon (
Research on technical progress as one of the key growth resources in
To demonstrate these themes effectively, this paper will take two steps.
The first step mathematically shows that all relations of variables for inputs,
distribution and output, which are utilized to calculate index numbers for the
TFP, are simply the result of a (macro) accounting identity. Second,
re-examining a standard growth accounting exercise for the Chinese economy, I
will show why they work, demonstrating that the derived results must be so, not
because of any kind of imaginable economic law of motion, but because of the law
of algebra a la Shaikh. The whole demonstration would imply a serious and
immediate call for an alternative approach to technical progress and economic
growth which can replace unreliable neo-classical faith.
Intangible Capital, Economic Growth,
and Governmental Policy
John Tomer (
“In modern business practice, capital is distinguished into two . . . categories of assets, tangible and intangible” (Thorstein Veblen 1919).
Economists by and large have been very reluctant to follow up on Veblen’s
early insight and to explore the intangible factors that contribute to economic
growth. But whenever economists have
embarked on such exploration, the results have been important and illuminating.
For example, in the early 1960s a great deal of economic research began
to be focused on investment in standard human capital.
In the 1990s, the attention of many social scientists turned to social
capital. More recently, some social
scientists are investigating noncognitive human capital or personal capital.
No doubt still other intangible forms of capital will be recognized as
contributors to economic growth. So
it is important to study intangible capital in all its manifestations.
After defining intangible capital, the paper first focuses on explaining
how the different components of intangible capital contribute to economic
growth. Second, the paper surveys
the empirical literature on the intangible factors contributing to economic
growth. These findings have
important implications for government policy.
Is there a case for government encouragement of the more intangible forms
of investment? Would such
encouragement be justified as a way to enhance the competitiveness of a nation’s
economy?
An Alternative Growth Model
Hasan Gürak (
It is the intention of this work to
present an “alternative” long-run growth model based on a key concept named
“qualifications of labor(-er).” We shall encounter this concept, qualifications
of labor(-er), in every aspect and degree of the investigation of long-run
growth analysis. To put it more properly,
given the gifts of nature, the “creative mental labor” appears to be the sole
and everlasting genesis of all long-run economic growth. Technological advances,
which are the indispensable ingredients of all long-run growth, are, in fact,
the products of “creative mental labor.” Efficient use of the technologies is
also a rather essential factor.
Starting Points for Reconstructing Standard Economic Theory
Methodological Problems in
Neoclassical Treatments of Space
Tamás Dusek (
In recent years there has been an increasing interest in mainstream
economics in relation to the importance of spatial aspects of economics. Models
in macroeconomics and international economics, which are based on ignorance of
the costs of spatial interactions, are under permanent critique. However, I try
to show that the typical neoclassical treatment of space is inadequate from the
spatial problems’ point of view, because it is based on an inadequate view of
space, on the network of one point economies. Most parts of criticism concerning
dimensionless aggregated one-point-economy are valid to the network of
one-point-economies. In the adequate analysis of spatial phenomenon one has to
think about regions as overlapping entities and to use zoning-system-independent
continuous space view, which is built by individual locations and individual
actions and movements. Beside the
problems of the treatment of space, there are other methodological problems of
model building as well. Firstly, the neoclassical approach is based on a
restricted meaning of economics, namely on a method oriented approach to
economics which limits our methods in reasoning of economics. Secondly, there
are many (both epistemological and practical) problems with its modeling
techniques. Thirdly, it disregards or misinterprets the former researches in the
spatial aspects of economy. Fourthly, it does not deal with the institutional,
social, cultural, legal factors.
The paper demonstrates some concrete problems and negative practical
consequences of the two most popular research movements in neoclassical
economics concerning space, namely the models of New Economic Geography and the
“convergence approach” of the temporal change of spatial income differences.
The
Importance of Heterogeneity in Economic Theory
Michael
Joffe (Wellbeing Health and Policy Services,
Many
major theoretical traditions have relied on the assumption of homogeneity. In
classical economics, including Marx, homogeneous labor is a prominent example.
Neoclassical theory routinely considers (for example) a set of identical firms.
On the other hand, the more empirical perspectives that focus on history and
institutions tend to emphasize specificity. The
clearest case is on the production side. The outcome of competition between
firms depends on their differences, e.g. in cost structure or innovative
performance. Subsequent developments may increase these, in a positive feedback
loop, resulting in further heterogeneity in the market. This is the heart of the
struggle for competitive advantage, which is rendered invisible by the prevalent
neoclassical approach, and not sufficiently clear in heterodox theories.
Heterogeneity is almost as important in
consumption. Different sections of society have highly unequal buying power,
with far-reaching consequences for types of goods consumed/produced and for
their distribution. In Sen’s classic description of famines, starvation depended
not on aggregate food availability but rather on “entitlements” to buy or grow
food. The analysis of that extreme case can readily be extended, e.g. to the
property market. This has implications for use of “willingness-to-pay,” and for
market solutions to problems such as climate change.
Heterogeneity needs a central place in
theory. Its absence leads to problems with aggregation, and thus with
understanding the micro-macro relationship. It also renders an issue such as
poorer people’s higher utility per dollar theoretically invisible, making it
necessary to introduce it from outside as an ethical position.
Post
Keynesian Microfoundations
Reinterpreting the Microeconomic
Foundations for Understanding Labor Market Outcomes
Ingrid Rima (
In spite of high aggregate demand,
The objective of this paper is to develop a theoretical model consistent
with this factual anomaly that goes beyond the usual microeconomic
interpretation of labor market outcomes. The latter, as is well known, relies on
a marginal productivity perspective of the demand for labor, coupled with a
disutility perspective of the supply of labor effort, In rejecting that the
“demand for labor” is a useful perspective, it will be argued that the role of
business firms is not to demand labor, but to make employment offers in order to
realize business proceeds. Business firms aspire to realize net proceeds from
financial investments, by generating outputs that are realized as proceeds. It
will be demonstrated that Proceeds-Employment-Offer functions are the vehicle
for realizing this objective. Thus, Keynes’ aggregate demand construct retains
its central importance for explaining commodity market outcomes. However, to
explain labor market outcomes, which are our concern here, a
Proceeds-Employment-Offer function is joined to the Actual Proceeds Function to
determine the economy’s level of employment and its sectoral allocation between
its price-making and price-taking sectors.
Post Keynesian Theory of Dynamic
Market Competition
Tuna Baskoy (
Market competition is central to any economic theory, but it is still a
contested concept in Post Keynesian economics. Some claim that there is no
widely-accepted theory of market competition in the Post Keynesian economic
tradition. Others argue that Post Keynesians synthesize different approaches to
competition. The main contention in this presentation is that Post Keynesian
economics provides all necessary philosophical and analytical tools to build a
very rigorous, coherent, and sophisticated theory of what I would call dynamic
market competition (DMC), but it has yet to be developed. Analytical distinction
made by Alfred Eichner between non-oligopolistic and oligopolistic markets on
the one hand, and Walrasian, Marshallian, Chamberlinian competitive markets, on
the other hand, serves as the main building blocks for DMC. Finally, Nina
Shapiro’s analysis of working dynamics as well as consequences of market
competition in Marshallian markets offers a dynamic link between competitive
markets and oligopolistic markets.
The first section clarifies the philosophical foundations of Post Keynesian
economics and its methodology, the second section utilizes analytical
distinctions advanced by Eichner such as Walrasian, Marshallian, and
Chamberlinian markets to explain the nature of market competition in competitive
markets. The third part elaborates on market competition in transitional
markets, as advanced by Nina Shapiro, to establish the linkage between
competitive and oligopolistic markets, before elaborating on the nature of
market competition in oligopolistic markets in the fourth section. The last
section evaluates the reverberations of the findings.
Evolutionary Keynesianism:
The Institutionalist-Post Keynesian
Approach to Macroeconomics
Chris Niggle (
This paper attempts to adumbrate an
informal macroeconomic model of cycles and growth synthesizing the work
published by authors working within the Institutionalist and Post Keynesian
traditions. This “Evolutionary
Keynesian” approach to theory and policy is compared and contrasted with New
Keynesian models of business cycles, monetary economics and stabilization
policy, and with New Endogenous Growth theory.
The New Keynesian and New Endogenous Growth theory models are portrayed
as forming the basis for the “new consensus” macroeconomic models which have
come to dominate the neo-liberal approach to policy over the past decade.
The paper argues that the Evolutionary Keynesian approach is superior as
a guide to policy making.
Author Meets Critics:
Socialism after Hayek, Theodore A. Burczak
F2: Saturday, 1:00-2:30
Emily Chamlee-Wright (
Erik Olsen (
Kevin Quinn (
Virgil Storr (
Ted Burczak (
Beyond Economic Man?
Evolutionary Schemas for a Unified
Socio-Economic Science
Roger McCain (
While theories of social evolution are nothing new, recent developments
have stimulated new interest in evolution (Hodgson, 2002) or evolutionary game
theory (Gintis 2006, Beinhocker 2006) as the ontology for economics and,
perhaps, as a unifying basis for a wider range of thought. Hodgson and
Beinhocker adopt “Universal Darwinism,” so that for them “evolution” refers to
an algorithm or formal model that involves distinct populations of at least two
distinct kinds of entities, “interactors” and “replicators.”
McCain (2006) recently proposed a framework of this type tied more
closely to Evolutionarily Stable Strategies (ESS) models. In McCain, pure
strategies are the “interactors,” while heuristic rules as conceived in
artificial intelligence and bounded rationality theory are the replicators. This
essay reviews the recent contributions and controversy, summarizes McCain’s
proposal, and explores the potential of these ideas as unifying principles.
As Gintis notes, the social sciences differ from the natural sciences in
that the social sciences lack any common, coherent basis; and this should be
recognized as a deficiency of the social sciences. Gintis focuses especially on
economics and sociology. Accordingly, Gintis stresses the evolution of norms and
values. However, Gintis regards norms and values as preferences, and adopts a
modified rational-action theory. Arguing that this is a wrong step, this paper
suggests that norms are best understood in terms of rules of thumb, and
illustrates how this may be done with examples of a public goods game and the
“ultimatum game.”
The Taming of the Economic Individual
Tai Young-Taft (New School for Social Research)
In The Taming of Chance, Ian
Hacking argues that over the course of the evolution of probabilistic analysis
probability as a social practice has become such a part of society that it has
become integral to it. I argue that
the practice of contemporary probability theory has historical roots in
analysis, and that the practice of analysis has come to inform probability
theory, and its concomitant knowledge scheme – as the beacon of scientific
knowledge. Economics, as an
exemplary form of social-scientific knowledge, serves as an important testing
ground for understanding the movement of the evolution of functional analysis
into probabilistic analysis, and its implication for its use in a social
setting. This paper sketches the
principles of functional analysis, by way of
Late
Neoclassical Economics:
Restoration of Theoretical Humanism
in Contemporary Mainstream Economics
Yahya Mete Madra (
This paper argues that there is no clear
break between contemporary mainstream
economics and neoclassical economics.
Contemporary mainstream economics consists of an heterogeneity of
approaches that include, among others, new institutional economics, new
information economics, social choice theory, behavioral economics, and
evolutionary game theory. These
seemingly disparate approaches constitute a unified discursive formation
articulated around a theoretical
problematic that they share not only
with one another but also with neoclassical economics:
Each approach aims to specify the conditions of existence of a
harmonious and contradiction-free social order (e.g., the notion of
equilibrium and its normative implications)
and in doing so each, explicitly or implicitly, refers back to a notion of
subject as a self-identical and self-identifiable unity (e.g., rational
actor). In this sense, contemporary
mainstream economics is an accumulated outcome of the various responses to a
number of potentially damaging theoretical criticisms as well as empirical
controversies that haunted neoclassical economics throughout the twentieth
century. Against those who isolate
the Sonnenschein-Debreu-Mantel results of the 1970s as a unique moment in the
history of neoclassical economics, it is necessary to highlight how each
contemporary mainstream approach takes a shortcoming of neoclassical economics
as its entry point, how each approach continues to deploy or refer to a number
of neoclassical concepts (opportunity cost, scarcity, Pareto efficiency,
rationality, and equilibrium), and how each approach aims to contain a problem
of theoretical humanism in neoclassical economics in order to keep intact or
restore its constitutive theoretical humanist presuppositions.
Inequality and Structural Change
Pay Inequality in
Laura Spagnolo (
This paper analyzes the evolution of pay inequality in
Labor Market Structure and the
Macroeconomic Dimension of Inequality
Olivier G. Giovannoni (
The present paper proposes to analyze the relationship between inequality
and macroeconomic aggregates as suggested in Galbraith & Garza Cantu (2001). In
that volume, the authors find that, for the period 1947-1998 and in the
European Wage Structure, 1980-2005:
How Much Flexibility Do We Have?
Deepshikha Roychowdhury (
High unemployment has been a problem in
The
Changing Geography of American Inequality:
From IT Bust to Big Government Boom
Travis Hale (
The geographical aspect of income
distribution is a significant, but often overlooked, dimension of American
economic evolution. Just as the
incomes of individuals vary over time, so do the incomes of states and counties.
The patterns of these differences can reveal the macroeconomic sources of
inequality. In this paper, we use
Theil’s T statistic of income inequality to note the aggregate changes in
geographical income dispersion across counties from 1969 to 2004.
Concentrating on the later years of this period, we isolate the counties
most responsible for widening or narrowing the cross-county distribution of
incomes. We find that broad,
macro-level factors – the information technology boom and bust in the in the mid
to late 1990’s and, perhaps, a new era of big government after 2001 – correspond
to changing patterns in the geographical distribution of American incomes.
Critical Perspectives on
[Re]producing the Foot Soldiers of
Capitalism
Kenneth N. Ehrensal (
This paper argues that undergraduate business ‘education’ represents a
form of schooling whose purpose is to produce and reproduce individuals with the
‘proper’ internalized beliefs and ideology to act as technocrats and low level
managers in capitalist organizations.
This paper draws upon an academic year long ethnographic study of three
‘Introduction to Management’ classrooms, as well as interviews with students and
faculty at an AACSB accredited business school of a large, public university.
Utilizing a conceptual framework from Bourdieu’s work on education, I
will examine discuss how lectures and textbooks shape a worldview of student and
what these undergraduates are really learning.
Through and Past the ‘Values’ of
Management
Sarah Stookey (
This paper builds on observations
from my years of being a doctoral student and teacher of management.
Trained primarily in the liberal arts, the Sandinista Revolution (having
spent nine years in Nicaragua) and the UC Riverside economics department, I came
to the study of management in order to learn the “nuts and bolts” of accounting
and finance in order to community-based finance.
What I found, and what kept me in the academic field, was a discourse of
social and economic organization that is both enormously influential and
intellectually extremely fragile. I
spent seven years being taught – and contesting – this discourse.
During most of those years I was also teaching a course of “business and
its environment.” The paper begins
by describing the key values of management discourse and how they are promoted
in business schools. I go on to
explain the ways I have found to teach “through and past” these values: using
primary texts and calls for critical thinking to help business students see and
evaluate the assumptions underlying fundamental constructs such as the moral
basis of profit and wage differentials, the meaning of work, the logic of
markets, etc. The challenges – and
gratification - of working in business schools and with these students are
summarized.
Hegemonic Ideas in Historical Perspective
Guinness is Good for You (and So Is
Gosset): The Economic Origins of Student’s t
Stephen Ziliak (
“Student’s” methods changed the character of economics and some other sciences
after 1908, and especially after the first edition of Ronald A. Fisher’s
Statistical Methods for Research Workers (1925).
A century later, the scientific character of “Student”—a.k.a. William
Sealy Gosset (1876-1937) himself—remains a mystery to most economists.
The meaning and intent of “Student’s”
t is explored with novel historical
evidence. It is found that good old
“Student” himself, the anonymous brewer of Guinness beer, invented and then
advocated an economic approach to the logic of uncertainty.
Yet in daily usage of “Student’s” t
a majority of economists ignore his economic logic.
Instead we follow the uneconomic logic of Fisher and Harold Hotelling,
and unwittingly violate the Generalized Axioms of Revealed Preference (GARP).
Increased attention to “Student’s” economic approach—partially reinvented
by Wald and Savage and Zellner and some others—is here suggested.
The
Political Economy of Demographic Management:
Power and Population in 17th
Century British Economic Thought
Carlos Eduardo Suprinyak (Universidade Federal de Minas
In his lectures on “governmentality,” Michel Foucault argued that the
early modern period was characterized, in the field of political philosophy, by
a change in the object of political power: the control exerted over territories
(i.e., physical extensions of dominion) was gradually replaced by a notion of
power exerted over populations. In the present paper, we try to link this idea
to the development of seventeenth-century British economic thought. In that body
of literature, notions of population management of some sort are constantly
present, beginning with early-seventeenth century pamphleteers like Thomas Mun
and Edward Misselden and developing along the subsequent decades in a close
relationship with some fundamental aspects of the economic doctrines of the
period, as for example the “political arithmetic” envisaged by William Petty.
The apex of such development is to be found in the extensive use made by Charles
Davenant, in the last decade of the century, of the demographic statistics
compiled by Gregory King. Moreover, we try to expose the connection between
these demographic concerns and some key analytical concepts adopted by authors
of the period, such as the distinction between “natural” and “artificial
riches,” in an effort to show that those concerns were not simple subsidiaries
to some military imperative of large numbers, but were instead a direct
corollary to a widespread notion of labor as a creative force that would evolve
into what E. A. J. Johnson has called a “foreign-paid incomes balance” doctrine
– and to which we can trace back the rudimentary origins of a labor theory of
value.
Historical Background of Rationality:
Decision-Making Insights during the
Enlightenment
David Vazquez-Guzman (
It has been necessary to trace some of the roots of the concepts of
decision-making, such as rationality in economics, because those have been
affected by many influences along the course of the history, due particularly to
the development of philosophy. The critique of Sen (2002), among others, to the
traditional economic theory and its narrow view of the economic agent, has been
reviving the understanding of authors, like Smith in his original context, and
their understanding about how decisions are made. Previous to scientific
research in economics, those postulates suffered the struggle between
philosophy, ethics and religion. The schisms in Occidental religion in the first
millennium played a role in the way that not only religion, but science and
philosophy developed later. That secularization derived alternative explanations
for the concept of the self and its motivations for its actions, using mostly
the Greek tradition. With this background, the study of logic was conducted as
an important part of the research agenda, mainly by two sides: British
Empiricism and Continental Rationalism, both known as the period of the
Enlightenment. I argue that the former was responsible for the ‘ethically’
selfish and ‘empirical’ agent, while the latter for the ‘logical’ and
‘reasonable’ agent. Important philosophers, like Descartes or Hume, privileged
the use of mathematical sciences to express this process more accurately. The
Cartesian method is the root (and the source of “indubitable certainty”) of the
developing of mathematical representations of rationality, like maximizing
behavior or the internal consistency of choice. All of this will help us to
explain the modern linguistic concept of rationality, which nowadays has many
focuses.
Four
Horsemen of the Apocalypse:
Marx, Weber, Schumpeter, and Polanyi
Hüseyin Özel (
This paper is an attempt at
developing an analytical framework that could be helpful to understand unstable
character of the capitalist society, by drawing upon the work of four important
thinkers: Marx, Weber, Schumpeter, and Polanyi. It is argued that all four share
a similar vision towards capitalism. Whereas Marx and Schumpeter find the source
of instability in competition and capital accumulation processes, Weber and
Polanyi see the basic problem as the tensions within the institutional structure
of the capitalist society. Therefore, Marx (with the analyses of accumulation
and fetishism), Weber (with the notion of the “iron cage”), Schumpeter (with the
notion of the “creative destruction”), and Polanyi (with his idea of the “double
movement”) are all indispensable in the development of the thesis that the
working of capitalism undermines its own institutional structure, and thus make
the reproduction of the capitalist society a contradictory process.
The paper advances three theses in
regard of these thinkers: first, being various representatives of the German
“expressivist” tradition, these thinkers conceive human history as displaying
two antinomical tendencies at once; namely, human self expression through
creative action vs. the loss of freedom due to increasing rationalization,
alienation, and domination; second, capitalism should be seen as a big step
forward towards more rationalization and therefore the loss of freedom, even if
it creates the preconditions of the self-realization of the “species-being”; and
third, they all believe that the very success of capitalism is the basic cause
of its failure.
Labor
Market Complexities
Explaining Labor Markets in the Popular Arts:
Superstar Phenomenon or
Recommendation Markets?
Joshua Frank (SUNY
Labor markets in the popular arts are unusual in that there are
lottery-like payoffs with quality differences between winners and losers being
arguably low or even nonexistent.
Various forms of the “superstar” phenomenon have provided possible explanations
for the distribution of market payoffs in the arts relative to the distribution
of quality. These explanations focus
on virtually costless reproduction of certain products causing very minor
quality/talent differences to lead to vast differences in compensation,
“consumption capital” with people benefiting from discussing a specific art
product with others who have “consumed” it, and on information cascades that may
have little or nothing to do with quality.
All of these explanations are based on a neoclassical economic framework,
and two of these three are consistent with perfectly competitive markets.
A new approach and explanation is proposed here that is arguably more
realistic and more consistent with observed popular arts labor market behavior.
The approach is social rather than atomistic and is both institutional
and behavioral in perspective.
Popular arts labor markets can be characterized as “relationship markets.”
That is, success in these markets depends to a large degree on social
connections, and relationships are highly valuable currency.
This unusual yet pervasive characteristic of these markets has generally
been ignored by economists. It is
argued that this feature is closely tied to the other idiosyncrasies of popular
arts markets. Both the implications
of relationship-based markets and the reason relationships have evolved to
become so important in the popular arts are explored.
Working Semi-Formally: Mexican
Immigrants in an Urban Labor Market
Mary C. King (
Leopoldo Rodriguez (
This paper describes and analyzes the labor market experiences of Mexican
immigrant workers in a city that is a relatively new destination for such
workers. Based on interview data
with 80 immigrant workers, both documented and undocumented, this study
investigates the relative importance of various labor market “assets,” including
education, class background, English language fluency, social networks, sex,
indigenous origin, legal status and experience in the
Collective Bargaining:
An Institution of Labor Market
Rigidity or Flexibility?
Ipek Ilkkaracan (
Orthodox thinking in economics suggests that labor unions and collective
bargaining practices act as institutions of labor market rigidity leading to
wage rates higher than the market clearing level and hence cause unemployment.
Recent experiences of
We apply both a quantitative and a qualitative method to explore the role
of collective bargaining in wage setting with particular focus on the period
1993-2005 characterized by periodic economic crises. Using panel data from the
manufacturing industry at the two-digit sector level, we conduct wage regression
including a series of demand and productivity variables as well as the
institutional variables of sectoral rates of collective bargaining and
unionization to explore the effects of collective bargaining on wage
flexibility. The econometric findings are also supported by a detailed
examination of qualitative data on collective bargaining agreements in the pre-
and post- crises periods. The findings
indicate that collective bargaining practices play a double role in the wage
determination process depending on the economic conjecture. Collective
bargaining has the potential to act as a mechanism of wage restraint in times of
economic contraction and crisis as labor unions become willing to compromise
wages in return for stability of employment.
In times of economic expansion, however, collective bargaining enables
the acquisition of a larger share of value-added by enhancing the bargaining
power of workers. Hence, rather than the
orthodox view that defines the role of economic institutions as universally
rigid, the findings of the paper underlines the need for detailed evaluation of
each case specific to the social, economic and political context; and dependent
on the historical set of circumstances.
Yesterday’s Radicals = Today’s Leading Edge?
Robert Solow and Radical Economics
Edward McPhail (
In this paper we assess Robert Solow’s critique of radical economics
(1970). Solow advanced three major
claims. First, Radical economics was
not a paradigm in the Kuhnian sense.
Second, it did not provide a framework for doing normal science.
Third, radicals were uninterested in testing their own claims, whatever
they may be. Solow’s conclusion was
that radical economics was mere ideology parading as science.
If heterodox economists had taken Solow’s indictment to heart radical
political economy could well have been still born.
Fortunately radicals did not listen.
Solow’s indictment of radical economics is answered today in spades.
To assess Solow’s claims we trace the evolution of the research program
of Samuel Bowles and Herbert Gintis.
We argue that Bowles’s and Gintis’s research program has played a leading role
in the current revolution in economics.
Evolutionary game theory combined with experimental economics as well as
advances in behavioral economics provide a solid foundation for the aspirations
of the left. Today these advances
inform the indictment that is made against the very Walrasian economics that
Solow defended. How the tables have
turned.
How the
Economics Profession Really Works:
Heterodox Economics through
Mainstream Eyes
David Colander (
Heterodox economists often argue that mainstream economics is
anti-pluralistic, closed minded, and ideologically biased. Such criticisms of
mainstream economics generally fall on deaf ears. The first part of the paper
explores the question why that is the case; it suggests that it is primarily a
failure to communicate, not a difference in vision or in views of the need to be
pluralistic. This part of the paper explores the way the economics profession
really works, and agues that the profession is best thought of as an evolving
complex system in which agents focus on institutionally determined goals that
often have little connection to the broader issues that heterodox economists
often discuss. It argues that the mainstream economists are not trying to put
heterodox economists down, because, for the most part mainstream economists
hardly are aware that heterodox economists exist.
The second part of the paper considers some strategies for heterodox
economists who want to change the way mainstream economics is done. It argues
that any strategy to change the profession must be based on an understanding of
the way the profession actually works, and that the first step in developing an
effective strategy is to stop thinking of the debate as one between heterodoxy
and orthodoxy. It suggests that non-mainstream research would be more effective
at bringing about change if it focused less on methodology and pointing out
problems with the mainstream profession, and more on doing economics, and on
studying proposals for changing the current institutional structure. The final
part of the paper considers some specific recommendations for heterodox research
to further its pluralistic goals.
The
Changing Face of Economics:
The Role of Heterodox Economics in
Changing the Direction of Mainstream Economics Today
Ric Holt (Southern
This paper argues that economics is currently undergoing a fundamental
shift in its method, away from neoclassical economics and into something new.
Although that something new has not been fully developed, it is beginning to
take form and is centered on dynamics, recursive methods and complexity theory.
The foundation of this change is coming from economists who are doing cutting
edge work and influencing mainstream economics. These economists are defining
and laying the theoretical groundwork for the fundamental shift that is
occurring in the economics profession. Much of this work is being done by
heterodox economists. The primary focus of this paper is to explain how
heterodox economics is influencing the direction of mainstream economics today.
E.K.
Hunt’s Contributions to Economic Pluralism
Marx, Alienation and Academia
Ferda Dönmez Atbaşı (
It is natural to expect that individuals take themselves as the origin of
the products of their labor. The relationship with the rest of the world and the
products of their labor is expected to derive from their living practice as
well. However, as beautifully pictured in K. Hunt’s words “The most fundamental
evil of capitalism was not the material deprivation of workers. Rather, it was
to be found in the fact that capitalism systematically prevented individuals
from achieving their potential as human beings. It …thwarted the development of
their biological, emotional, aesthetic, and intellectual potential.” We argue
that an academician who is expected to ‘produce’ knowledge is not different from
any other laborer concerning the link between himself/herself and his/her
product. Accordingly, our aim here is to explore the nature of the relationship
between the academician and his/her product in a capitalist world. We are going
to analyze how the capitalist relations of production shape the science laborer
and his/her product and become a hegemonic power over him/her.
The starting point of our analysis is Marx’s idea of alienation which
basically means the conflict between things which are properly in harmony.
Hence, we hypothesize a prototype academician who is ‘producing’ in economics
(since the author of this article is an economist) at first and then, we will
explore how the product of the individual economist becomes independent of
him/her and start shaping and distorting his/her expectations. We are going to
elaborate Hunt’s interpretation of the concept by means of three specific
alienation paths, namely, methodological alienation, alienation to one’s own
product and eventually alienation to himself/herself.
A
Bridge over Troubled Waters?
Radical Institutionalism and
“Anti-Essentialist”
Hüseyin Özel (
This paper is a critique of the claim that only an “anti-essentialist”
Marxism can offer a link between Marxism and “radical” institutionalism. It is
argued that E.K. Hunt’s interpretation of Marx is a better candidate to build
such a conceptual bridge. Anti-essentialist Marxism cannot be defended from a
philosophical and a social-theoretical point of view for three reasons: First,
its anti-rationalism causes it to be confined only within the empirical realm
for it forgets Marx’s dictum that “all science would be superfluous if
appearances directly coincided with the essences.” Second, its anti-humanism,
coupled with the Althusserian claim that “history has no subject,” causes it to
overlook the importance of a Marxian ethics that is based on the notion of human
essence and freedom. And last, but not least, it offers a deficient social
theory for it cannot consider the fact that institutions are in part
“expressions” of human nature, or in Polanyi’s words, they are “embodiments of
human meaning and purpose.” That is to say, anti-essentialist Marxism offers a
positivistic social theory that overlooks the inherent hermeneutical element in
human praxis and therefore in society. Hunt’s interpretation of Marx, by
contrast, offers an alternative to “anti-essentialism” without relapsing into
reductionism, determinism, anti-rationalist epistemology, positivistic social
theory and anti-humanism. Hunt also shows that Marxism and institutionalism
share a similar conception of human nature, a similar ethical position that
focuses on the realization of human potential as a normative goal, and a similar
social-theoretical position focusing on institutional reproduction and change.
Ethics
in the Absence of a Theory of Value:
A Radical Critique of Sen’s
Capabilities Approach
Justin Elardo (
Utility represents the foundational assumption of neoclassical economics.
A close inspection of the utility theory of value, however, exposes
endemic ethical constraints, particularly when examined from a social welfare
perspective. E.K. Hunt has provided
one such close examination. Hunt has
regularly exposed the limitations of utilitarian philosophy, repeatedly
demonstrating how the subjective characteristics of utilitarianism preclude the
theorist from having a social welfare mechanism for evaluating interpersonal
comparisons and thus necessitating the neoclassical Pareto criterion.
Similar to Hunt, Amartya Sen is also keenly aware of this conundrum.
To his credit, while seeking an alternative to Pareto optimality, Sen has
recognized the limits of utility and has chosen its abandonment.
In turn Sen has proposed replacing the Pareto criterion with the
capabilities approach. Sen’s
solution, however, may be tainted.
As Hunt explains, utility transcends metaphysics.
A theory of value represents the necessary component of any economic
theorist’s “pre-analytic vision,” with utility being central to the neoclassical
framework. As such, while ethically
constrained, utility cannot simply be removed from the “pre-analytic vision”
without being replaced by an alternative theory of value.
Sen, by abandoning utility, appears to have established a new social
welfare approach absent a theory of value.
As a result, Sen’s position, while commendable, may have a significant
philosophically weakness.
Author Meets Critics:
Reclaiming Marx’s “Capital”: A
Refutation of the Myth of Inconsistency
Andrew Kliman,
Alan Freeman (
Bruce Roberts (
Erik Olsen (
Hans Ehrbar (
Mat Forstater (
Andrew Kliman (
Economic Knowledge, Reframed
Implications of Framing Effects for the Future of Economics:
Cognition,
Social Norms, and Ideology
Ozan Isler (
The neoclassical conception of
homo economicus is becoming less
satisfactory to economists as an assumption. In response, the recent
“behavioral” approach to economics is trying to conceive a more realistic view
of the “economic man” by crossing disciplinary boundaries, by relying on new
empirical evidence from laboratory and field research and by introducing notions
such as “framing effects” that stand in stark contrast to the once hegemonic
expected utility theory. The implications of the ubiquity of framing are immense
both for the past and the future of economics.
The former view of decision-making as a mere cognitive optimization
process now seems absolute, whereas future efforts to study economic behavior as
also an “ideological” phenomenon are warranted. While
trying to argue for the statements above, the immediate purpose of the paper is
more modest. Initially, various important framing effects are listed and
described. I then propose a particular categorization of such effects where
cognitive, discursive (ideological) and norm-based frames are distinguished.
Noting the heterogeneity and even the conflicting nature of the literature on
framing, a “natural” need for a plurality of approaches in terms of method and
philosophy is argued for. I also show discursive framing effects to be the least
explored and perhaps the most problematic for mainstream economics.
Media Representations of Economic News:
Coverage
of Lay-Offs and Business Closures as Cultural ‘Meme’
Martha Starr (
Although it is claimed that the media are pro-business in their coverage
of economic news, news stories also regularly explore the ‘dark side’ of
capitalism, in which pressures of global competition result in job losses that
create substantial hardships for middle-class people. This paper first reviews
existing theoretical explanations for popularly-oriented representations of
economic structures and processes, including those of Gramsci and Althusser. It
then goes on to argue that recurrent economic representations are fruitfully
viewed as cultural ‘memes’ –- ways of viewing the world that spread and thrive
because of their ‘fitness value’ to outlets that propagate them, given the
environment within which they operate. This framework is then used to analyze
the television-news coverage of lay-offs and business closures. It is argued
that the ‘dark side’ narrative commonly used to relate news stories about
lay-offs and business closures enhances the fitness value of media outlets and
their corporate advertisers –- where the value rests especially in framing
people’s fluctuating worth in the market economy as a regrettable, but also
necessary concomitant to its manifold benefits.
Economic
History as Literature
Dan Nuckols (
This paper will argue that one should consider the possibility that
“written economic history” is a distinct literary genre, and asks (as does the
historian Victor Wickberg) what the blurring of the boundaries between history
and fiction in the past thirty years portends for history as both an artistic
form and a mode of inquiry into the past.
A concern with language by historians (the so-called “linguistic turn” in
the study of the past that has taken place in recent years) has led to the
reconsideration of history itself as not simply a factual report of past events,
but as having literary meaning and structure.
This essay will argue that one should examine the concern with narrative
in historical writing, the use of various literary tropes, the role of plot,
character and event, the genre conventions that structure historical writing,
and the increasingly permeable boundary between history and the novel.
Power, Profit, and Capitalist Competition
Capital
Gains:
A Neglected Area of Political Economy
Mehrene Larudee (
No one ever got rich by earning the average rate of profit; for if one
person could, everyone could. Yet both orthodox and heterodox economists have
focused mainly on the average rate of profit, not on how some firms earn
exceptional rates of profit, or on how some individuals garner exceptional
capital gains or economic rents. Ironically, business schools do pay attention
to this topic – to valuation of assets and to entrepreneurs who manage to get
exceptional rates of profit (or economic rent). Yet Marx’s concept of the
concentration of capital appears to refer not just to concentration within an
industry by the standard Herfindahl indicator, but also to concentration in the
size distribution of income and wealth. Even so, Marxists have done very little
analysis of how an individual becomes super-rich, even though it is here that a
rich vein of political economic analysis lays waiting to be explored. Exceptions
are Farjoun and Machover, who studied the distribution of profit rates around
the average, and Nitzan and Bichler, who analyze what happens when large oil
firms’ profit rates deviate from average profit rates. This paper offers
suggestions for how research on capital gains and manipulation of asset values
might proceed, including a classification of different ways in which power is
used to create or enhance asset values. Examples are drawn from several sectors
of the economy.
Power Relationships among Competitors
Michael Joffe (Wellbeing
Health and Policy Services,
The
concept of power is used in restricted ways in different traditions in
economics. Neoclassical theory only recognizes market power, in situations like
monopoly, which itself is assumed rather than explained. The Marxist tradition
emphasizes command relations between different class positions. While this is
important, it underplays the relationship between competitors which is the
motivating force of capitalism, and can be analyzed as one of power, or to be
more precise, of relative strength. This is not a prominent feature of the other
major theoretical traditions either.
The
major issues are the source and the consequences of superior strength. One
source of company strength is the ability to lower costs. This is often
dismissed (not only in neoclassical accounts) as unimportant because firms tend
to share the same technology – but this does not guarantee an identical cost
structure, as the management literature clearly recognizes, leaving space for
cost-cutting – thus giving the lower-cost firm a price-setting initiative. The
other main source is new products and temporary monopoly, as well recognized
e.g., in the Schumpeterian tradition. The
immediate result is variable mark-up, the essence of unequal strength between
competitors, which can be expressed as unit profit. This can be modeled
mathematically. Arithmetically it is a difference, and therefore highly
sensitive to change in one of its determinants, partly explaining the volatility
of capitalism. The longer-term consequence is ascendancy of some firms at the
expense of others, i.e. this perspective is able to explain (rather than assume)
the development of market structure.
Competition as Gravitation: Evidence from the
Julian
Wells (
This paper uses a large set of UK
company accounts data to critique the methodology used in Glick (1985) to test
for ‘gravitation’ of profit rates, on the following grounds:
§
the
preferred definition of the profit rate is not appropriate to the notion of the
competitive process to be tested
§
the
tests are confined to manufacturing alone rather than to the economy as a whole
§
the
data is at too high a level of aggregation to accord with the notion of
‘industry’ used in the work
§
the
choice of measure of gravitation can be questioned
§
the
full implications of the hypothesis are not tested
§
no
attention is paid to the shape of profit rate distributions, only to their
dispersion.
The dataset is used to compute
industry profit rates at four different levels of aggregation for a total of 12
different profit rate measures – four measures tested by Glick, four measures
discussed in Gillman (1956), and four standard accounting ratios. We show that
once aggregation effects are taken into account, only measures Gillman describes
as ‘traditional Marxist’ ones avoid counter-intuitive results when gravitation
is tested for in the economy as a whole, rather than in manufacturing alone.
Pluralism among and within Schools of Economic Thought
Is Commitment to Kuhn’s Incommensurability Thesis
a Good Basis for
Constructing a Pluralist Approach to Economics?
Gustavo
Marqués (
In this paper I will compare two philosophical positions: the Millian
Fallibilism and the Kuhnean notion of incommensurability, in order to show that
they give raise to two different kinds of pluralism. Particularly, I assert that
taking incommensurability seriously generates what might be called an autistic
pluralism, while holding Millian philosophy, instead, promotes a more tolerant
pluralism, more in line with the spirit of heterodox economics. Kuhn’s
philosophy deserves consideration because it is the main foundation of the
Babylonian mode of thought (and the so called “modified pluralism”), which
influences the work of many post-Keynesian economists. They hold this mode of
thinking because -unlike “Formalism,” which is taken to be the method of
mainstream economics- they think it
allows diversity of visions and paves the way to a new economics out of the
contributions of many different economic views. I will show they are misguided:
contrary to their expectations there exist an important connection between the
commitment to incommensurability (taken either in its strong or some weaker
version) and the kind of auto-centered research that in an early paper Kuhn
labeled “convergent thinking.” A compromise with Kuhnean incommensurability
thesis cannot help to reach this sort of open-minded attitude that most
post-Keynesians want to instill into the different groups of economists. Mill’s
pluralism, instead, is better suited to become the foundation of what might be
called Post-Autistic Pluralism.
Is Convergence among Heterodox
Schools Possible, Meaningful and/or Desirable?
William Waller (
I will revisit some of my earlier articles on feminism and
institutionalism; analyze a recent article on the compatibility and desirability
of convergence among new, old, and original institutional economics; and address
a comment on my earlier effort “that convergence is the equivalent of erasure”
by a feminist economist. All of this
is directed at answering the questions in the title.
On Homogeneity and Pluralism within
Economic Schools Of Thought
Ioana Negru (
In defining the nature of academic disciplines, a conventional approach to
demarcating subject boundaries is to group theoretical frameworks and approaches
into categories or schools of thought, i.e. academic entities which have a
certain degree of coherency in terms of their theoretical or methodological
approach. By coherency we mean both
homogeneity and the internal logic of a system of thought. Within the discipline
of economic analysis, the existence of alternative schools of thought (e.g.
neoclassical, institutional, etc.) is readily accepted despite the absence of
any clear framework or criteria for defining the nature and members of each
school. Whereas some schools of
thought may fit the ‘coherency’ criteria, many of the economic studies that fall
under the umbrella of the Austrian school are characterised by their differences
as much as their similarities. The aim of this paper is to explore the defining
characteristics of schools of thought, with Austrian economics chosen to
illustrate some of the themes we raise.
We argue it is not always possible to separate debates over pluralism
between schools from controversy over pluralism within schools.
The pluralism that characterizes the Austrian school leads the discussion
on to explore the nature of pluralism and the levels at which plurality can be
applied and analysed in relation to economics.
Economic Analysis with System Dynamics
A Microdynamic Analysis of a Common
Resource Problem
Oleg Pavlov (Worcester Polytechnic Institute)
The growth of unsolicited commercial e-mail (also known as spam) imposes
significant costs on organizations and causes considerable aggravation on the
part of e-mail recipients. This paper contributes to the understanding of the
spam phenomenon by drawing on the microeconomic and institutional frameworks,
which are supplemented by computer modeling and simulations in the system
dynamics tradition. Adapting the tragedy of the commons metaphor to e-mail, this
paper identifies a causal structure that drives the direct electronic marketing
industry. The recognition of players and rules which are relevant to the spam
industry makes it possible to elucidate the impact of various regulatory,
economic and technical solutions aimed at curbing spam. For instance, our
analysis explains why filtering has failed to reduce the global production of
unwanted commercial e-mail. This paper advances understanding of the commons,
the economics of spam, and provides practical recommendations for policymakers.
Race, Class, and Culture-Influenced
Nonlinearities in the Interpretation of Cognitive Skill Growth
Linwood Tauheed (
The
phenomenon of high performing-low socioeconomic African American students casts
doubt on a simplistic causal relationship between socioeconomic status and
achievement, and compels us to look for a more holistic explanation.
Here we develop a System Dynamics model of the classroom Teacher/Student
transaction, and estimate the effect of student Structural factors (race and
class) within Teacher Cultural context (teacher expectations).
The model is calibrated using data from the Early Childhood Longitudinal
Study - Kindergarten sample.
Simulation results find that student’s race and class, cast as Cultural
variables affecting teacher expectations in interrelationship with the child’s
Agential cognitive processes, can explain the Structure of African
American/White differences in educational outcomes.
How
Prisons Increase Crime
Geert
Dhondt (
Rehabilitation, Incapacitation and Deterrence.
These terms are justifications given for the existence of prisons.
They are seen as the mechanisms as to how prisons decrease crime.
Levitt argues that mass incarceration is roughly socially optimal by
examining the effect of overcrowding litigation.
Levitt captures the marginal release of prisoners and shows how this
increases crime rates. In this
paper, I argue and econometrically demonstrate that there is a differential
effect on crime rates of the marginal release of prisoners versus the marginal
addition of prisoners. More generally, I discuss how incarceration can increase
crime rates. First, I provide a critique of the individualistic ideology
underlying the mechanisms used to justify the existence of prisons. Second, I
look at the outcomes of mass incarceration on certain communities and how these
outcomes create conditions which increase crime.
Third, I present empirical research showing the effects of incarceration
on crime.
Bounded Rationality and the Intersubjectivity of Business Investment
Herbert
Simon Revisited:
Bounded Rationality, Coordination,
and Social Representations
Rouslan Koumakhov (
The paper attempts to reconstruct Herbert Simon’s paradigm from the
conventionalist point of view, which associates economic research with the
insights from other social sciences, especially philosophy, psychology and
sociology. The paper aims to demonstrate that Simon’s assumption of bounded
rationality strongly implies the social issues of coordination that are related
to shared models of reality, in particular in the structured settings like
formal organizations. These models are viewed as common systems of
interpretations, which shape and guide social representations. In this respect,
Simon anticipated the heterodox approach developed by the
The
Firm and the ‘Pharos’:
A Bounded Rationality Approach to the
Firm’s Investment Decision Process
Alexandra Strommer de Farias Godoi (Escola de Administração de Empresas de
Despite its essentiality to the
economic process, the dynamics of the investment decision by firms has been
neglected by mainstream microeconomics and its restrictive understanding of
“rationality.” Traditional choice theory assumes that all possible alternatives
of action are transparent to decision-makers at all moments, and that their
consequences can be perfectly estimated and easily compared with each other.
Based on the influential work of Herbert Simon and on subsequent advances
of cognitive psychology, as well as on case studies in which the decision
processes of eight Brazilian firms of different sizes and industries were
analyzed, we propose an heterodox approach for the practical understanding of
the decision processes of firms, based on the central idea of the construction
of a representation of reality. This
representation is subject not only to cognitive limitations related to
difficulties in collecting and processing information (bounded
rationality), but also to the conditioning of possibilities of action truly
available to entrepreneurs to past choices, through a net of synergies and
smaller decisions, the consequences of which cannot be forecasted precisely
along a large scope of dimensions (bounded
liberty, an original concept introduced by this work). Issues like
allocating the entrepreneur’s time along multiple decisions with different
degrees of complexity, relevance and urgency, or the need to establish an
algorithm for the search and valuation of alternatives that are ignored a priori
and whose characteristics cannot be fully acknowledged – topics that are made
opaque by mainstream rationality hypothesis – resurge here, offering abundant
possibilities for future economic research.
Self-Organized Criticality,
Innovation Waves, and Investment
Massimo Ricottilli (
Investment is a crucial part of aggregate effective demand but it is also quite
problematic to model. Nevertheless, the long term behavior of a modern economy
owes much to the intensity with which firms are inclined to set up new
productive capacity. That technical change, especially the strain that draws
inspiration form the Schumpeterian tradition, is a powerful engine of growth is
now widely recognized by economic theory. In this context, it is increasingly
argued that waves of sustained investment are in fact driven by opportunities
generated by technological innovations. This paper attempts to address this
issue by investigating a model which places innovation waves at the root of
investment demand. The first section deals with firms’ learning, searching and
interaction, and with the self-organising process of knowledge diffusion that
ultimately leads to technological upgrading. Search is local and takes place in
a network of knowledge specific relationships. Innovation is the result of a
twofold activity aimed, on the one hand, at perusing an attainable cognitive
neighborhood for valuable information and, on the other, to autonomously carry
out research and development. The second part of the paper investigates the
allocation of human technological capabilities between these two tasks and to
determine the incentive to engage in this costly expenditure. Finally, the third
part explores the emergence of investment effective demand. In keeping with the
Schumpeterian assertion, investment in technologically upgraded capacity while
generating new effective demand and lending strength to an upswing also conjures
up creative destruction.
Plenary Session II
Economics for the Common Good
Gar
Alperovitz (
The
idea that there might be an American system “beyond capitalism,” though
theoretically obviously possible, is in fact extremely difficult for most people
to conceive. At one level there are very real questions about how to structure
an effective form of social ownership which would not violate democratic
principles. An equally large obstacle to thinking seriously about an America
beyond capitalism, has been an inability to develop an analysis of how,
specifically, we might move from where we are to where we might one day like to
be. Related to this has been a lack of concrete examples which demonstrate the
feasibility of various a forms of social ownership. A striking feature of our
era of history is the development of a range of new theories of how a democratic
form of socialism might be organized. Just below the radar of most media
attention there are also literally thousands of practical new economic efforts.
These include 10,000 employee-owned firms; co-ops involving 120 million members;
numerous state public investment (and ownership) efforts; increasing numbers of
neighborhood and municipal forms of social ownership. Both the theories and the
steadily expanding practical efforts are necessary elements in the development
of a longer term political possibility. Moreover, despite temporary upswings of
hope, many negative and long-standing distributional, environmental, and
economic trends point towards growing national difficulties. As in the painful
periods before the Progressive era and before the New Deal, developments at the
state and local level may well help pave the way—and provide models
for—subsequent longer term national change.
Coming
Changes in Climate, the Macro Economy, and Macroeconomics
Neva
Goodwin (
This
paper assumes, but does not re-state, the scientific evidence that
business-as-usual economic activities are leading to dangerous changes in the
Earth’s climate. It distinguishes
between the mitigation activities which can reduce the extent of expected
climate change, and adaptation activities which will be needed in response to
climate-related events that can not, or will not, be prevented.
Mitigation activities must not only bring about rapid reduction in
emissions of greenhouse gasses; they must also create social resilience, to
enable people to minimize the suffering from climate-related emergencies.
Social resilience requires poverty alleviation, widely available
education, robust social systems for emergency health and other relief
responses, and reduction in large inequalities of access to power and resources.
As economies make the necessary transitions – from business-as-usual,
to a focus on climate change mitigation, to
adaptation – a number of systemic changes will be required.
It will be
necessary to create institutional and regulatory structures, as well as
financial and cultural incentives, that will align the goals of corporations
with the common good. This is
part of the larger shift that will need to be made in the goals of the economy
and of macroeconomic theory: from growth to well-being.
From Competition and Greed to Equitable
Cooperation:
What Do
Heterodox Economists Have to Offer?
Robin
Hahnel (
After
three decades of defeats, the progressive economic movement is worse off at the
beginning of the 21st century than it was at the beginning of the 20th century.
Moreover, we often contributed to our own defeats. I will argue that
participants need a better understanding of the nature of the epic struggle we
are engaged in between the economics of competition and greed and the economics
of equitable cooperation, and heterodox economists need to be more realistic
about what we can contribute.
The
Next Economics, After Modernism
Science, Ideology, and Development:
Is There a ‘Sustainability
Economics’?
Peter Söderbaum (
The reasons why we as scholars prefer one paradigm to another are not only
scientific but also ideological. It is suggested that pluralism should be
discussed at the levels of theory of science, paradigms in economics and
ideological orientations. Neoclassical economics is closely connected with
logical positivism as a theory of science and is close to Neo-liberalism as an
ideological orientation. Specific ideas of institutional arrangements follow
from these perspectives. Alternatives to the mainstream have similarly to be
articulated and discussed at all three levels to open the door for an
alternative set of institutional arrangements.
Exclusive reliance on economic growth in GDP-terms and on monetary profits
exemplifies an ideological orientation. When faced with new challenges such as
Sustainable Development and Corporate Social Responsibility, the shortcomings of
the neoclassical paradigm become accentuated. Alternative ideas to those of
Economic Man, profit-maximizing firms and markets in terms of supply and demand
are needed. A political economics approach to an understanding of individuals
and organizations as actors in markets and institutional change processes is
proposed.
Perestroika and Progress:
The Post-Autistic Movement in Context
Lisa Morrison (Eastern
Some of the most potent criticisms of mainstream economics and its
methodology have come from outside the economics profession. While much
attention has been directed to the French student movement in favor of a
Post-autistic economics, the Political Science revolt against the creeping
imperialism of rational choice models has also had explicit results. This paper
seeks to explore the connections between these two movements.
Focusing on the similarities between these two movements, and expanding
the intellectual debate beyond economics allows us to see the context of the
modern methodological dispute.
Secondly, focusing attention on the intellectual traditions threatened by
neoclassical advance in other disciplines – political science, sociology,
anthropology – will allow the introduction of key alternative conceptions of
human behavior and social organization that have long existed outside the
traditional economics discipline. In
particular, our paper will argue the model of human behavior and interaction
that economists are now groping toward is remarkably similar to the older
literature in economic anthropology. This older literature also provides us with
an explanation for the continued dominance of neoclassical economics.
The recognition and utilization of post-autistic Sister movements, such
as the newfound vigor of economic sociology, will hopefully allow the creation
of a more humane, and less-autistic, economic science for the 21st century.
A Humanistic Science of the Economy
Deirdre McCloskey (
My love for economics is not I hope
in question. I’ve practiced since
1964 its core disciplines, “price theory” Chicago-style (if not always with
Practicing Pluralism
Catechism versus Pluralism:
The Heterodox Response to the National
Undergraduate Curriculum Proposed by the
Alan
Freeman (
This
paper was submitted collectively by the Association for Heterodox Economics, as
a result of a consultation request issued by the QAA (Quality Assurance
Authority) for responses to the ‘benchmark’ statement for the subject of
economics. The benchmark statement seeks to define what will in future be
considered the prescriptive standard for economics undergraduate teaching in the
Pluralism and Contested Knowledge:
Marxian
Economics and Working Class Education in
Fred
Lee (
Beginning in the 1870s, classical political economy came under increasing criticism from adherents to the heterodox historical political economy school and the emerging neoclassical school. Moreover, the rise of interest in socialism and land nationalization by the working class and accompanying interest in Mar