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on Heterodox Microeconomics |
| By: | Hatgioannides, John (City University London); Karanassou, Marika (University of London) |
| Abstract: | In this paper we aim to trace the roots of the ongoing economic mayhem and to unmask the chorus of the tragedy which plays on the world stage. The main thesis of our work is that, despite the triumphant rhetoric praising the merits of perfect competition, the global fields of the dysfunctional market system have mushroomed in what we call Warrant Economics for the Free-Market Aristocracy. Warrant Economics unfolds in two symbiotic tenets that constitute the subtle architecture of the neoliberal edifice: (i) the systemic creation and preservation of inequality via Call-Put policy options, and (ii) the systemic exploitation of inequality via novel and toxic forms of securitisation. In effect, the power structure of insiders’ capitalism that we describe, trough the costless appropriation of an intricate cobweb of Call-Put structures, has distorted competition and accelerated economic concentration. We view the income distribution effect, which favours the top 1%, and the business concentration effect, which gravitates competition towards oligopolistic/monopolistic industries, as the two sides of the Warrant Economics coin. We argue that the Warrant Economics state of capitalism has been legitimised by a degenerating research programme blossomed under the fallacy that economics is the “physics of society”. In this faculty of thought, we perceive the Great Recession as a symptom of Warrant Economics, rather than as a tsunami-like event. |
| Keywords: | income distribution, monopoly, securitisation, Call-Put policy options, Warrant Economics, Great Recession, sovereign debt |
| JEL: | E66 G01 G10 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6251&r=hme |
| By: | Graziano , Mario; Schilirò, Daniele |
| Abstract: | The paper critically discusses the issue of rationality and choices in economics in both the behavioural and evolutionary approaches. Our study aims, on the one hand, to highlight the scientific contributions of psychology in economics, since psychology, and with it the theoretical approach of the behavioral economics, has made more complex and problematic the analysis of economic choices, showing the limits of rationality. On the other hand, the work offers a reinterpretation of the theory of Alfred Marshall in a biologicalevolutionary perspective. The reinterpretation of Marshall's theory in a evolutionary perspective aims to show that, historically, economics has not been a discipline aligned in a homogenous way to a single and undifferentiated thought, locked into the idea of perfect rationality, but, on the opposite, is a discipline that has enriched itself and continually is enriching by contributions and significant contaminations with other research fields. |
| Keywords: | rationality; choices; behavioral economics; evolutionary theories; biology; |
| JEL: | D03 D81 B52 D90 B13 D01 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:35971&r=hme |
| By: | Alberto Quadrio Curzio |
| Abstract: | The essay investigates non producible (natural) resources and rent from three points of views: stylized facts, quantitative economics and economic theory. Taking the first point of view, the author discusses how economic growth can be represented in terms of never-ending tension between scarcity and technical progress. At least since the onset of modern economic growth, whenever scarcity produced a slowdown of growth, technical progress followed and scarcity was thereby removed. Scarcity, in a long-run perspective, has always been of the «relative» type, while absolute scarcity never set in. This essay consider this problem from many points of view. First of all it considers the point of view of quantitative economics like those of Simon Kuznets and Wassily Leontief who emphasized the relative character of scarcity and the importance of keeping the relationship between scarcity and innovation into account (this is especially true of Kuznets). Secondly the essay considers the contribution of economic theory. In this connection, the author points out that both the macroeconomic and multi-sectoral models developed since the 1930s overlooked the investigation of scarce natural resources and rent, as well as their relationship with technical progress. Only Piero Sraffa examined non producible resources and rent but he has done it in a single-period model. The author of this essay investigated the same issues in a more general analytical set-up starting with a contribution published in 1967 followed by many others. Later on, Quadrio Curzio and Pellizzari, especially in the 1996 volume, analyzed the general relationships among production, prices, income distribution, technical progress and growth when scarce resources play a significant role. Those contributions also investigated the nature of technological rents, which are an important feature of modern economic growth in the presence of technical progress. At the same time Quadrio Curzio, in collaboration with Marco Fortis and Roberto Zoboli, analysed historical, quantitative and qualitative aspects of economic dynamics, and the way in which natural resources and raw materials exert an influence on economic growth and more generally economic dynamics. Those aspects are not fully considered in the present essay, but they represent its fundamental background. Finally in 2008 Quadrio Curzio, Pellizzari and Zoboli outlined in a valuable encyclopaedic dictionary a compact synthesis of the above approach to the economic analysis of raw materials and primary commodities. The essay takes a point of view which is not typical of the «post- Keynesian» approach, yet it belongs to a post-classical perspective that is closely connected to the Italian-Cambridge tradition of political economy as a social discipline. Tradition on which Alberto Quadrio Curzio, especially researching with Roberto Scazzieri, focused his attention in many essays from a methodological point of view. |
| Keywords: | natural resources; technological innovation; relative scarcity; investments; rent; |
| JEL: | O10 O11 O33 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:crn:wpaper:crn1102&r=hme |
| By: | Beckert, Jens |
| Abstract: | Auch die Wirtschaft moderner Gesellschaften folgt nicht einfach einer ökonomischen Eigengesetzlichkeit, sondern konstituiert sich aus ihrer Einbettung in ein Gefüge sittlicher Werte, Interessen und sozialer Macht. Von welcher theoretischen Grundlage lässt sich die Sittlichkeit der Wirtschaft beschreiben? In dem Artikel zeige ich in kritischer Auseinandersetzung mit der auf der Neoklassik aufbauenden orthodoxen Wirtschaftstheorie, dass es gerade deren normativer Charakter ist, der verhindert, Normen einen angemessenen Platz einzuräumen. Es ist jedoch verfehlt zu denken, dass die Soziologie per se hierzu eine angemessene Alternative anbieten würde. Weder die funktionalistische Differenzierungstheorie noch Teile der Wirtschaftssoziologie werden der Herausforderung gerecht. Vielversprechender erscheint, wirtschaftliche Strukturen mit dem Instrumentarium der Theorie sozialer Felder zu analysieren. -- The economy of modern societies does not simply operate according to its own inherent laws, but is embedded in a moral order, interests, and in social power. Upon what theoretical basis can we describe the morality of the economy? Critically reflecting on orthodox neoclassical economics, I argue that it is the normative character of neoclassical theory which stands in the way of improving our understanding of the normative foundations of the economy. It would be wrong, however, to think that sociology necessarily offers a more adequate alternative. Neither functionalist theories of social differentiation nor certain strands of the new economic sociology are up to the challenge. Using the toolkit provided by the theory of social fields seems to be the more promising way to investigate economic structures. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:mpifgw:118&r=hme |
| By: | Masaru Ichihashi (Graduate School for International Development and Cooperation, Hiroshima University); Satoru Komatsu (Graduate School for International Development and Cooperation, Hiroshima University); Shinji Kaneko (Graduate School for International Development and Cooperation, Hiroshima University) |
| Abstract: | Environmental problems such as global warming due to GHG emissions have necessitated some constraint in our economic activities, as many countries and many people around the world are concerned about these issues. Environmental and economic policies such as carbon tax are one such constraint. A tax policy can be interpreted as a desirable method that can lead the economy, which has to pay the social cost of false economic activity or market failure, to a more optimal path. However, this policy will surely raise prices of goods. On the one hand, this price rise will benefit the public sector, but on the other hand, consumers demand will decline. The magnitude of the reduction usually depends on the price elasticity of demand, and the increase in government gain depends on the necessity of the goods for the people. Therefore, it is not necessarily trivial to ask whether the total effect of rising energy prices will be negative. In addition, nowadays, many people are concerned about environmental problems, and there are indications that consumers tend to change their purchasing behavior regarding certain goods to take environmental concerns into account even if this necessitates paying a higher price. This paper will empirically prove how the rise in oil and gas prices due to environmental policies like carbon tax affects the total production/consumption when we take into account the change in consumer behavior reflecting their attitudes toward preventing global warming. The main result of the analysis using an input-output model and price elasticity of demand in several sectors will show that most of sectors do not experience a decline in production after a price rise except the biggest sector, real estate. In Japan, real estate might be the main target to support for consumerfs purchasing from the viewpoint of economic policy. |
| Keywords: | consumer behavior; disclosure of information about environmental damage; energy price rising effect; price elasticity of demand; International Input-Output model. |
| JEL: | O44 Q56 R15 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:hir:idecdp:2-1&r=hme |
| By: | Cathrine Holst |
| Abstract: | Equal pay for work of equal value is a fundamental principle in EU law and so in the EEA Agreement. The paper takes as its point of departure the debate in Norway on the interpretation of EEA equal pay legislation, and relates this debate to the broader equal pay controversy in Norway. Among arguments on both sides in these debates have been arguments about what is right and just: Whereas proponents for strong equal pay commitments typically stress that social justice requires work of equal value to be paid as equally as possible, if necessary by means of state intervention and law enforcement (the law enforcement position), proponents for weaker equal pay commitments stress typically either (1) the relative justice of markets; pay ought primarily to be distributed through markets and according to market value and not according to some market-external equality standard (the free market position), or (2) that wages should be set as far as possible by strong democratic unions that negotiate with employers and employers’ organizations (the collective bargaining position). The paper focuses on the law enforcement /collective bargaining confrontations and interprets these confrontations as reflecting dilemmas of justice (Nancy Fraser); in part a redistribution/recognition dilemma; in part a justice-from-above/justice-from-below dilemma. Finally, the paper investigates to what extent these dilemmas are genuine. Are there ways to narrow down the gap between the law enforcement camp and the collective bargaining camp? |
| Keywords: | democracy; gender policy |
| Date: | 2011–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:erp:reconx:p0114&r=hme |
| By: | LORD Sébastien; GERBER Philippe; SOHN Christophe; EGGERICKX Thierry; HERMIA Jean-Pierre; KESTELOOT Christian |
| Abstract: | This paper puts forward a methodology to rank the population along a hierarchical continuum, from a lower level to a higher level of social precariousness. Going beyond the complex layered issues related to the concept of poverty, it rather explores the notion of deprivation with the idea of social inequalities which are observable according to specific socio-economic key dimensions. Part of a broader research – Destiny – focusing on both the spatial and the temporal evolutions of social inequalities in Belgium and Luxembourg, this method represents a first phase of the project. The social inequalities are addressed in an individual perspective with disaggregated data. This standpoint allowed the analysis of the whole population for Belgium and Luxembourg in a ten-year period (1991 and 2001). The method is based, on the one hand, on the national censuses from both countries – the only comprehensive data available on an individual basis –, and on the second hand, on the European Union - Study on Income and Living Conditions Panel (EU-SILC). These two data sources have been combined for accessing economic information from EU-SILC and transposed into the national censuses in both countries. The EU-SILC detailed data on household income were used as an indicator of social inequalities for three dimensions: education, socio-professional status and housing. This enabled to rank each individual on a ‘social continuum’. After a presentation of the methodological framework, individual ranking results are exposed and discussed on the basis of spatial analysis. |
| Keywords: | Social inequality; Spatial inequality; Methodology; Census; Luxembourg; Belgium |
| JEL: | J11 J21 J80 R10 R20 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2011-47&r=hme |
| By: | Mok, Wallace (Chinese University of Hong Kong); Siddique, Zahra (IZA) |
| Abstract: | We examine racial and ethnic inequality in offers of employer provided fringe benefits (health insurance, life insurance and pension). Restricting to full-time workers in the private sector, we find that African Americans are significantly less likely to get fringe benefit offers than non-Hispanic whites after we control for individual differences in age and youth characteristics that matter for labor market success using the 1979 cohort of the National Longitudinal Survey of Youth. We do not find ethnic differences in the 1979 cohort or racial/ethnic differences in the 1997 cohort to be significantly large after controlling for individual differences in age and youth characteristics. Irrespective of race, ethnicity, gender or cohort, we always find that older workers are more likely to get fringe benefit offers as are workers with higher cognitive ability and years of education at age 22. We find that the cross-sections from the 1979 cohort of the National Longitudinal Survey of Youth have more fringe benefit offers than cross-sections from the 1997 cohort. A large part of the difference across cohorts can be explained by the older age profile of cross-sections from the 1979 cohort. Some part of the difference across cohorts can also be explained by differences in family background characteristics, particularly changing family structures which are important for non-Hispanic whites and for African American men. Improvements in cognitive ability and years of education at age 22 for the 1997 cohort increase the unexplained difference in fringe benefit offers across the two cohorts for women (irrespective of race or ethnicity), but not for men. |
| Keywords: | economics of minorities and races, non-wage labor costs and benefits |
| JEL: | I11 J15 J32 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6255&r=hme |
| By: | Jan Babecky; Kamil Galuscak; Lubomir Lizal |
| Abstract: | Using a large panel of Czech manufacturing firms with 50 or more employees, we update the firm-level labour demand elasticity estimates for 2002-2009. The economic crisis of 2008-2009 provides a source of variation needed for getting estimates that cover not only times of growth, but also a period of economic contraction. We find that in normal times (until 2007), the short-term elasticity is -0.53 with respect to wages and 0.43 with respect to sales, while the long-term elasticities are close to or below unity, standing at -0.94 for wages and 0.76 for sales. Both the wage and sales elasticities increased during the crisis, suggesting that firms became demand constrained, but only the sales elasticity is significantly different. The long-term wage elasticity close to -1 in the period before and during the crisis suggests that firms’ employment decisions are made within fixed budgets. Finally, we find that the inclusion of workers hired through temporary work agencies does not significantly affect the results, indicating that firms take into account total labour when deciding on employment and that hired workers are used as an equal labour demand channel with lower adjustment costs. As a robustness check, our results are qualitatively comparable with the narrative evidence from an ad-hoc firm-level survey on wage and price formation conducted in 2007 and 2009 within the ESCB Wage Dynamics Network. |
| Keywords: | Czech Republic, elasticity, firm-level data, labour demand, sales elasticity, wage elasticity, the crisis of 2008-2009. |
| JEL: | C23 J23 J33 P23 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2011/15&r=hme |
| By: | Vanessa Siebler (Goethe Universität Frankfurt am Main, Dep. Sociology) |
| Abstract: | Networks have been a hot topic in recent years, not only in mainstream media but also in academic literature. The sociological interest in industrial networks is one of multiple levels and surely stems from the question if networks can benefit society. It was the purpose of this paper to research the emergence of the study of networks or industrial networks and validate, using articles concerned with the matter, if they are in fact a new concept in business or not. Considering the review of literature, one can conclude that by no means are networks in business a novelty but a logical consequence of human relationships in general and also that network structures have been present long before their discovery through academia, only not identified as such. It was found that the previous definition of market structures in business, while maneuvering between the two extremes of hierarchy and a free market, may have been too rigid and networks provided an excellent alternative term. It can further be suggested that the study of networks should focus on exchange mechanisms, cultural differences and emotional involvement as industrial networks may differ in their degrees of freedom, scale and purpose but always rely on reciprocity, as do all human relationships. |
| Keywords: | Networks; industrial networks |
| JEL: | D21 L16 O12 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:ieu:wpaper:38&r=hme |
| By: | Murray, Michael/ M J |
| Abstract: | The Employer of Last Resort (ELR) program is a New Deal type of program to provide a government position for anyone seeking work. Unlike private industries who compete over prices and wages, the ELR “industry” is not meant to compete with the private sector; rather it provides public services that are not offered by the private sector. The task here is to estimate the private sector effects of the implementation of the ELR program for the State of Missouri. |
| Keywords: | Employer of Last Resort; Input-output Modeling; Heterodox Microfoundations of Macroeconomics |
| JEL: | B51 E12 E24 C02 E23 E11 |
| Date: | 2012–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:35981&r=hme |
| By: | Gilles Le Garrec (Observatoire Français des Conjonctures Économiques); (Observatoire Français des Conjonctures Économiques) |
| Abstract: | Departing from mainstream economics, surveys ?rst show that individ- uals do care about fairness in their demand for redistribution. They also show that the cultural environment in which individuals grow up a¤ects their preferences about redistribution. Including these two components of the demand for redistribution, we propose in this article a mechanism of cultural transmission of the taste for fairness. Consistently with the process of socialization, the young preferences depend on collective choices through observation and imitation. Observation during childhood of redistributive policies far from what is perceived as fair results then in a lower taste for fairness. As a consequence, the model exhibits a multiplicity of history- dependent steady states which may account for the huge di¤erence of redis- tribution observed between Europe and the United States. |
| Keywords: | redistribution, voting behavior, fairness, endogenous preferences |
| JEL: | H53 D72 D64 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1124&r=hme |