nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2011‒12‒19
fifteen papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. On two theories of value and distribution By Naqvi, Nadeem
  2. Heterodox Critiques of Corporate Social Responsibility By Jo, Tae-Hee
  3. Making sense of institutional change in China: The cultural dimension of economic growth and modernization By Herrmann-Pillath, Carsten
  4. Naturalizing institutions: Evolutionary principles and application on the case of money By Herrmann-Pillath, Carsten
  5. Manager impartiality? Worker-firm matching and the gender wage gap By Hensvik, Lena
  6. The democratic crisis of capitalism: Reflections on political and economic modernity in Europe By Peter Wagner
  7. Hayek 2.0: Grundlinien einer naturalistischen Theorie wirtschaftlicher Ordnungen By Herrmann-Pillath, Carsten
  8. Public Good Provision in Indian Rural Areas: the Returns to Collective Action by Microfinance Groups By Paolo Casini; Lore Vandewalle
  9. Price Setting in Lithuania: More Evidence from the Survey of Firms By Ernestas Virbickas
  10. Does Household Headship Affect Demand for Hybrid Maize Seed in Kenya? An Exploratory Analysis Based on 2010 Survey Data By Smale, Melinda
  11. Women cotton farmers: Their perceptions and experiences with transgenic varieties: A case study for Colombia By Zambrano, Patricia; Maldonado, Jorge H.; Mendoza, Sandra L.; Ruiz, Lorena; Fonseca, Luz Amparo; Cardona, Iván
  12. Gender in Transition: The Case of North Korea By Stephan Haggard; Marcus Noland;
  13. Gender Regimes and Welfare States in France: A historical perspective By Ai-Thu Dang; Jean-Marie Monnier
  14. Effects of Deregulation and Vertical Unbundling on the Performance of China's Electricity Generation Sector By Gao, Hang; Van Biesebroeck, Johannes
  15. Empirical confirmation of creative destruction from world trade data By Peter Klimek; Ricardo Hausmann; Stefan Thurner

  1. By: Naqvi, Nadeem
    Abstract: This paper compares the theory of value and distribution of Arrow and Debreu [1954] with that of Sraffa [1960]. I consider such versions of the two models that capture their salient features, without aiming at the greatest possible generality, so as to isolate the precise nature of the differences between the two conceptions of the same economic reality, and inter alia, to quarantine both the sources and the entailments of the differences in the two theories that respectively purport to determine the values of commodities and distribution of income in society. Both theories are complete and consistent. Sraffa’s model is based exclusively on factual information, so it achieves less in terms of determining endogenous variables. The Arrow-Debreu is based on counterfactual information regarding additional production scenarios that are unobserved, in addition to the factual information that Sraffa has, so it achieves more by way of determination of endogenous variables. In terms of entailments, in Sraffa's theory there is an insufficiency of determinants in the economic grounds of society, thereby requiring the political component of society to also play an influential role in the joint determination of values and distribution. In the Arrow-Debreu model this determination is made complete solely in the economic sphere of society, rendering this theory purely economic, rather than political-economic, as in Sraffa. Both the information content difference at source, and the purely-economic versus political-economic difference in the entailments of what it takes to determine values and distribution, render the two theories radically different. In addition, (1) the prices in the two theories are different both in terms of definitions and values, and (2) since Sraffa’s model has only one set of numbers on the observed production of commodities by means of commodities and labor for a single year, it is impossible to define constant returns to scale, while in the Arrow-Debreu model, this property is admissible, and possible to define, because their model’s information base is sufficiently larger than Sraffa’s. Further, Sraffa’s theory is invariant to (a) the interpretation of prices – market-clearing, long-period, or whatever, (b) multiplicity of profit rates across industries, instead of a uniform rate of profit, and (c) presence or absence of general aggregate demand functions for commodities, and is (d) more general than the Arrow-Debreu theory because it is based on weaker assumptions, in the sense of a strictly smaller information set, so that it is only to be expected that the Arrow-Debreu theory would be capable of determining more endogenous variables in the model of an economy. (416 words)
    Keywords: theory of value; income distribution; general equilibrium; capital; constant returns to scale; rate of profit
    JEL: E25 D33 E11 D51
    Date: 2011–12–09
  2. By: Jo, Tae-Hee
    Abstract: Corporate social responsibility (CSR) is in vogue in recent times. It has been widely received by socially concerned people in business, academia, and NGOs that CSR would lend support to the improvement in social welfare and the protection of environment. However, the question that whether corporations are socially responsible or corporations should behave responsibly is beside the point from the heterodox economic perspective. The proper question to pose is how corporations manipulate the social by means of CSR. Drawing upon the heterodox theory of the business enterprise along with the social provisioning perspective, I argue that the business corporation has always acted in a socially responsible manner by generating ethical-political-cultural values, norms, and beliefs that legitimize whatever the business corporation does is socially responsible. In this respect, CSR is a market-based means to control the social provisioning process by way of creating an illusionary image of corporations and, thereby, hiding the ruthless acquisitive drive and the exploitation of human beings and nature.
    Keywords: Corporate social responsibility; social provisioning process; the business enterprise; social welfare
    JEL: D21 B50 D60 G30
    Date: 2011–12–12
  3. By: Herrmann-Pillath, Carsten
    Abstract: Building on a new model of institutions proposed by Aoki and the systemic approach to economic civilizations outlined by Kuran, this paper attempts an analysis of the cultural foundations of recent Chinese economic development. I argue that the cultural impact needs to be conceived as a creative process that involves linguistic entities and other public social items in order to provide integrative meaning to economic interactions and identities to different agents involved. I focus on three phenomena that stand at the center of economic culture in China, networks, localism and modernism. I eschew the standard dualism of individualism vs. collectivism in favour of a more detailed view on the self in social relationships. The Chinese pattern of social relations, guanxi, is also a constituent of localism, i.e. a peculiar arrangement and resulting dynamics of central-local interactions in governing the economy. Localism is balanced by culturalist controls of the center, which in contemporary China builds on the worldview of modernism. Thus, economic modernization is a cultural phenomenon on its own sake. I summarize these interactions in a process analysis based on Aoki's framework. --
    Keywords: Aoki,culture and the economy,emics/etics,guanxi,relational collectivism,central/local government relations,culturalism,population quality,consumerism
    JEL: B52 P2 Z1
    Date: 2011
  4. By: Herrmann-Pillath, Carsten
    Abstract: In recent extensions of the Darwinian paradigm into economics, the replicator-interactor duality looms large. I propose a strictly naturalistic approach to this duality in the context of the theory of institutions, which means that its use is seen as being always and necessarily dependent on identifying a physical realization. I introduce a general framework for the analysis of institutions, which synthesizes Searle's and Aoki's theories, especially with regard to the role of public representations (signs) in the coordination of actions, and the function of cognitive processes that underly rule-following as a behavioral disposition. This allows to conceive institutions as causal circuits that connect the population-level dynamics of interactions with cognitive phenomena on the individual level. Those cognitive phenomena ultimately root in neuronal structures. So, I draw on a critical restatement of the concept of the meme by Aunger to propose a new conceptualization of the replicator in the context of institutions, namely, the replicator is a causal conjunction between signs and neuronal structures which undergirds the dispositions that generate rule-following actions. Signs, in turn, are outcomes of population-level interactions. I apply this framework on the case of money, analyzing the emotions that go along with the use of money, and presenting a stylized account of the emergence of money in terms of the naturalized Searle-Aoki model. In this view, money is a neuronally anchored metaphor for emotions relating with social exchange and reciprocity. Money as a meme is physically realized in a replicator which is a causal conjunction of money artefacts and money emotions. --
    Keywords: Generalized Darwinism,institutions,replicator/interactor,Searle,Aoki,naturalism,memes,emotions,money
    JEL: B52 D02 D87 E40 Z1
    Date: 2011
  5. By: Hensvik, Lena (IFAU - Institute for Labour Market Policy Evaluation)
    Abstract: This paper examines whether women benefit from working under female management using Swedish matched employer-employee panel data. I account for unobserved heterogeneity among both workers and firms potentially correlated with manager gender. The results show a substantial negative and statistically significant correlation between the proportion of female managers and the establishment’s gender wage gap. However, estimates that account for sorting on unobserved worker skills do not support that that managers favor same-sex workers in wage setting. Additional results show female-led organizations recruit more non-managerial, high-wage women but this is primarily due to (unobserved) firm attributes rather than gender-specific management practices.
    Keywords: Gender wage gap; managers; worker sorting
    JEL: J24 J31 J53
    Date: 2011–11–30
  6. By: Peter Wagner
    Abstract: Are 'modern societies' necessarily democratic societies and capitalist (or: market) societies? This is what most of the social sciences of the post-Second World War period have assumed, while only some strands of critical, often Marx-inspired approaches contested this connection. This essay briefly reconsiders the link between democracy and capitalism both in theoretical and historical terms to then advance a hypothesis about the current constellation of political and economic modernity which seems to be marked by a paradox. On the one hand, both democracy, apparently spreading through 'waves of democratization', and capitalism, as the outcome of economic globalization, seem to be without alternative. On the other hand, current capitalism is highly crisis-ridden and democracy, at least in Europe, witnesses strong signs of disaffection. In this light, the essay proposes to see the current constellation as the outcome of a democratic crisis of capitalism during the 1970s. The reasoning proceeds in five steps. First, we will reconsider theories that have assumed that there is a strong conceptual connection between democracy and capitalism. Secondly, we will briefly review the history of the relation between modern capitalism and modern democracy from their beginnings until the 1970s to refine the ideas about such conceptual link. These two steps, thirdly, will allow for an interim conclusion to understand the double crisis of the 1970s, of both capitalism and democracy, an understanding that opens the path to two observations – the fourth and fifth steps – on the current condition of global capitalism and the alleged global movement of democratisation. First, the developments of the past four decades can be seen as a transformation of capitalism in reaction to democratic demands. Extrapolating from this insight, second, one may ask whether there is not a basic tension between economic and political modernity, given the evident difficulty of keeping political citizenship connected to socio-economic citizenship.
    Date: 2011–12
  7. By: Herrmann-Pillath, Carsten
    Abstract: Combining different new approaches to human behavior in neuroeconomics, the cognitive sciences and institutional economics, this paper sketches the fundamentals of a naturalistic theory of economic order. In this endeavour, the argument follows the track laid down by Hayek's comprehensive thinking about institutions and the economy, but provides new and more detailed causal accounts of the central mechanisms that link institutions and neurocognitive patterns. Based on an analytical framework to substantive institutions that has been recently proposed by Aoki, I present Hayek's theory of culture in terms of modern conceptions of performativity and distributed cognition. As a result, I introduce the concept of institutionally guided behavioral patterns, which is a modern restatement of concepts such as Veblen's habits of thought. This approach is applied on the institution of money, analyzing its emergence as a cognitive novelty that activates universal neuronal embodiments of the human penchant for social exchange and reciprocity. Against this background I argue that the naturalistic approach to economic order favours a perspective on economic policy that emphasizes cultural aspects, in particular, the formation of individual identities in different societal groups that create ethical commitments. Again, this argument is based on recent insights of the brain sciences and intends to offer an alternative to the recent proposals of a Libertarian Paternalism that have also taken insights from behavioral economics and neuroeconomics as a starting point. I show that my line of thinking can be traced back to Adam Smith, as far as the conjunction of his views in the Theory of Moral Sentiment and the Wealth of Nations is concerned. --
    Keywords: Hayek,brain and mind,culture and institutions,Aoki,language,money,dual selves,identity,Adam Smith
    JEL: B41 B52 D02 D87 P0
    Date: 2011
  8. By: Paolo Casini (LICOS, K.U.Leuven); Lore Vandewalle (Center for Research in the Economics of Development, University of Namur)
    Abstract: Self-Help Groups (SHGs) are the most common form of microfinance in India. We study the impact of collective actions undertaken by these groups, composed of women only, on the variety of public goods the elected local authorities deal with. We provide a simple model that suggests two hypotheses that we test and confirm using first hand data. The rst hypothesis states that local authorities provide a larger variety of public goods when SHGs undertake collective actions, compared to a situation with exclusive provision by the local authority. The second hypothesis states that local authorities begin or increase the provision of public goods preferred by SHGs and that these might include goods that exert a negative externality on other villagers. We provide evidence of an important non-financial benefit of microfinance: it provides a platform that allows socially disadvantaged women to meet regularly and discuss problems. When they undertake collective actions to solve those problems, these are recognized by the local authorities. Problems that are closer to the needs of women seem to find their way into the political agenda.
    Date: 2011–12
  9. By: Ernestas Virbickas (Bank of Lithuania)
    Abstract: The paper examines price setting in Lithuania based on ad hoc survey of the Bank of Lithuania “On Price and Wage Setting”. The study extends the survey data analysis presented in Virbickas (2009). The paper points to the incidence of both the time-dependent and the state-dependent price reviewing policies used by the investigated firms, though the price reviewing practices appear to be somewhat tilted to the state-dependent pricing. Analysis provides evidence on the reasons for upward and downward stickiness of prices. Delayed price adjustment is found to be mostly related to the price adjustment stage rather than the price reviewing stage. The most momentous explanations for not adjusting prices upwards or downwards rest on the cost-based pricing and the explicit contracts. The study finds an asymmetric influence of some of the price factors. In particular, the cost factors are found to be decisive in invoking the price increase rather than the price decrease.
    Keywords: price review, price adjustment, price stickiness
    JEL: D40 E30
    Date: 2011–12–14
  10. By: Smale, Melinda
    Abstract: Women are central to food production and maize is a dominant food staple in Sub-Saharan Africa, but published gender analyses of hybrid seed use in Sub-Saharan Africa are uncommon. Building on previous work, this paper tests the effects of headship definitions on hybrid seed use and explores the variation between male- and female-headed households and among female-headed households in Kenya. Analysis is based on survey data collected by Tegemeo Institute of Egerton College during the 2009-10 cropping season.
    Keywords: maize, seed, Kenya, household headship, Agricultural and Food Policy, Consumer/Household Economics, Crop Production/Industries, Food Security and Poverty,
    Date: 2011
  11. By: Zambrano, Patricia; Maldonado, Jorge H.; Mendoza, Sandra L.; Ruiz, Lorena; Fonseca, Luz Amparo; Cardona, Iván
    Abstract: This paper explores gender differences in cotton cultivation and looks into the perceptions and experiences of women and men with transgenic varieties. With few exceptions, researchers in the area of impact evaluation of crop biotechnology have only marginally included gender considerations in their work. This exploratory pilot study was developed in order to incorporate gender into our quantitative evaluation work. This study used a participatory and descriptive approach that allowed us to listen to women and men farmers' perceptions and insights. The project was conducted in the main cotton-producing regions of Colombia where a handful of transgenic varieties have been in the market for the past six years.
    Keywords: crop biotechnology, Genetically modified crops, Genetic engineering, Cotton, Gender,
    Date: 2011
  12. By: Stephan Haggard (University of California, San Diego); Marcus Noland (East-West Center & Peterson Institute of International Economics);
    Abstract: This paper uses a survey of 300 North Korean refugees to examine the experience of women in North Korea’s fitful economic transition. Like other socialist states, North Korea has maintained a de jure commitment to women's rights. However, we find that women have been disproportionately shed from state-affiliated employment and thrust into a market environment characterized by weak institutions and corruption. As a result, the state and its affiliated institutions are increasingly populated by males, and the market, particularly in its retail aspects, is dominated by women. Among the most recent cohort of refugees to leave North Korea, more than one-third of male respondents indicate that criminality and corruption is the best way to make money, and 95 percent of female traders report paying bribes to avoid the penal system. In short, the increasingly male-dominated state preys on the increasingly female-dominated market. These results paint a picture of a vulnerable group that has been disadvantaged in North Korea's transition. Energies are directed toward survival, mass civil disobedience is reactive, and as a group, this population appears to lack the tools or social capital to act collectively to improve their status.
    JEL: F
    Date: 2011–12
  13. By: Ai-Thu Dang; Jean-Marie Monnier
    Abstract: This paper has a twofold aim. First, we will analyze the system of family benefits in relation with the income tax system in France through the adoption of a historical and gender perspective. While typologies of welfare states frequently neglect taxation, in our view, one must take family taxation into account because it provides incentives and disincentives for paid income. Moreover, in the case of France, a close relationship exists between family benefits and taxation on income, one that stems from certain discussions—discussions led to the birth of the French system.Second, we will demonstrate how and to what extent France has moved away from the male-breadwinner model. However, any decline of the malebreadwinner model does not, in turn, indicate a corresponding shift toward a dual caregiver model. Indeed, the current French model has ambiguous effects on gender relations.
    Keywords: gender regimes, gender relations, unpaid work, French policy reform
    JEL: J16 J18 J21
    Date: 2011
  14. By: Gao, Hang; Van Biesebroeck, Johannes
    Abstract: We study whether the 2002 deregulation and vertical unbundling of the Chinese electricity sector has boosted productivity in the generation segment of the industry. Controlling explicitly for sources of price-heterogeneity across firms and for firm-fixed effects, we find deregulation to be associated with a reduction in labor input and material use of 6 and 4 percent, respectively. This effect only appears two years after the reforms, is robust to alternative ways of identifying restructured firms, and to the nonrandom selection of restructured firms using a matching estimator. Input use of new state-owned firms that start operations two years into the reform period does not differ significantly anymore from input use of private sector entrants.
    Keywords: Productivity; regulation
    JEL: L5 L9 O4
    Date: 2011–12
  15. By: Peter Klimek; Ricardo Hausmann; Stefan Thurner
    Abstract: We show that world trade network datasets contain empirical evidence that the dynamics of innovation in the world economy follows indeed the concept of creative destruction, as proposed by J.A. Schumpeter more than half a century ago. National economies can be viewed as complex, evolving systems, driven by a stream of appearance and disappearance of goods and services. Products appear in bursts of creative cascades. We find that products systematically tend to co-appear, and that product appearances lead to massive disappearance events of existing products in the following years. The opposite - disappearances followed by periods of appearances - is not observed. This is an empirical validation of the dominance of cascading competitive replacement events on the scale of national economies, i.e. creative destruction. We find a tendency that more complex products drive out less complex ones, i.e. progress has a direction. Finally we show that the growth trajectory of a country's product output diversity can be understood by a recently proposed evolutionary model of Schumpeterian economic dynamics.
    Date: 2011–12

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