nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2012‒03‒21
twelve papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Contested Relationships: Womenâ..s Economic and Social Empowerment, Insights from the Transfer of Material Assets in Bangladesh By Scott, Lucy
  2. The topology of cross-border exposures: beyond the minimal spanning tree approach By Alessandro Spelta; Tanya Araújo
  3. Governments in economic crisis: What is the 99% and why does it exist? By Punabantu, Siize
  4. Gender, Agricultural Commercialization, and Collective Action in Kenya By Fischer, Elisabeth; Qaim, Matin
  5. Karl Marx Labor Theory of Value. Delusion or Truth? By Билыч Геннадий
  6. The three worlds of welfare capitalism revisited. By Sarah Brockhoff; Stéphane Rossignol; Emmanuelle Taugourdeau
  7. Appraising the Thailand village fund By Boonperm, Jirawan; Haughton, Jonathan; Khandker, Shahidur R.; Rukumnuaykit, Pungpond
  8. The Disappearance of Hard Constraints in Neoclassical Economics By William M. Wadman
  9. Are complex innovators more persistent than single innovators ? An empirical analysis of innovation persistence drivers By Christian Le Bas; Nicolas Poussing
  10. The Idea of Good (Enough) Governance. A Look from Complexity Economics By Łukasz Hardt
  11. Changes in the Italian economy: the cooperatives By Chiara Bentivogli; Eliana Viviano
  12. Kantian Optimization, Social Ethos, and Pareto Efficiency By John E. Roemer

  1. By: Scott, Lucy
    Abstract: This article examines the relationship between womenâ..s economic and social empowerment in the context of extreme poverty. It is based on the findings of primary fieldwork on the char islands of north-west Bangladesh, investigating the processes resulting from the implementation of the Chars Livelihoods Programme (CLP). The first phase of the CLP, funded by the UK governmentâ..s Department for International Development (DFID), operated from 2004-2010. Its central activity was the transfer of approximately £100sâ.. worth of investment capital to targeted extremely poor households. This investment capital was given specifically to a woman within that household and the majority of these female beneficiaries used it to purchase cattle. This article argues that interventions which adopt primarily an economic entry point can contribute to womenâ..s empowerment beyond the economic realm, including in terms of changing intra-household relationships and increasing womenâ..s self-esteem. Clearly interventions beyond the economic sphere are needed to ensure that this empowerment is sustainable and can contribute to changing social norms. However, the contribution which practical gender needs make in providing a basis for extremely poor women to achieve their future strategic gender needs should not be underestimated.
    Keywords: extreme poverty, asset transfer, female empowerment, Bangladesh
    Date: 2012
  2. By: Alessandro Spelta; Tanya Araújo
    Abstract: The recent financial crisis has stressed the need to understand financial systems as networks of interdependent countries, where crossborder financial linkages play the fundamental role. It has also been emphasized that the relevance of these networks relies on the representation of changes follow on the occurrence of stress events. Here, from series of interbank liabilities and claims over different time periods, we have developed networks of positions (net claims) between countries. Besides the Minimal Spanning Tree analysis of the time-constrained networks, a coefficient of residuality is defined to capture the structural evolution of the network of cross-border financial linkages. Because some structural changes seem to be related to the role that countries play in the financial context, networks of debtor and creditor countries are also developed. Empirical results allows to relate the network structure that emerges in the last years to the globally turbulent period that has characterized financial systems since the latest nineties. The residuality coefficient highlights an important modification acting in the financial linkages across countries in the period 1997-2011, and situates the recent financial crises as replica of a larger structural change going on since 1997.
    Keywords: Cross-border exposures, interbank networks, financial linkages, minimal spanning tree, financial crises
    Date: 2012–03
  3. By: Punabantu, Siize
    Abstract: What is the 99% and why does it exist? In this paper an attempt is made to explain why socio-economic unrest remains a modern problem. An effort has to be made to understand the origins of strife in systemic design of modern economics. Without this knowledge it may not be possible to fix the very fundamental problems that lead to a broken society.
    Keywords: Scarcity; banking; credit creation; banks; resource creation; implosion; poverty; wealth; money; price; mark-up; cost plus pricing; rationality; operating level economics; economic growth; paradox
    JEL: A22 A23 A13 F02 A10 A11
    Date: 2012–03–12
  4. By: Fischer, Elisabeth; Qaim, Matin
    Abstract: With the commercialization of agriculture, women are increasingly disadvantaged because of persistent gender-disparities in access to productive resources. Farmer collective action that intends to improve smallholder access to markets and technology could potentially accelerate this trend. Here, we use survey data of small-scale banana producers in Kenya to investigate the gender implications of recently established farmer groups. Traditionally, banana has been a women’s crop in Kenya. Our results confirm that the groups contribute to increasing male control over banana. While male control over banana revenues does not affect household food security, it has a negative marginal effect on dietary quality. We demonstrate that the negative gender implications of farmer groups can be reduced or avoided when women are group members themselves. In the poorest income segments, group membership even seems to have a positive effect on female-controlled income share. Some policy implications towards gender mainstreaming of farmer collective action are discussed.
    Keywords: gender, collective action, market access, agricultural technology, household food security and nutrition, Kenya, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Institutional and Behavioral Economics, International Development, Research and Development/Tech Change/Emerging Technologies, D71, J16, O12, O13, O31, Q13,
    Date: 2012–02
  5. By: Билыч Геннадий
    Abstract: Karl Marx’s labor theory of value has been on the periphery of the economic thought for already more than 100 years. Being a follower of Ricardo D., who, as many believe, never adhered to the labor theory of value (his theory is often called 93% theory of labor value), Marx contended that product value is defined in full by the quantity of invested labor. Presence of capital in manufacturing process should not embarrass anybody: it constitutes paid labor of the creation of instruments of labor, equipment, erections, and the last thought causes no doubts. At such an approach the profit of capitalists and businessmen can be obtained only by way of exploitation, in other words, by the appropriation of a part of the labor. Marx was subjected to severe criticism as early as during his lifetime, the most successful example of the criticism being works by Bohm-Bawerk E. V., on which we are going to dwell later. But other theories, including contemporary ones, suffer from the same shortcomings. Profit is interpreted as payment for a specific production factor “entrepreneurial talent” and is a reward for efficient resources use. Entrepreneurial activity is connected with an extremely high risk and nothing guarantees adequate payback. All this arouses no doubt. But all theories have one hidden defect. The paradox is in the following: if salary is only a part of end value of a product (even if 93% of the value), then how comes that all end products are bought. All workers’ salary is clearly insufficient to buy out all products and services. If one assumes that all the profit is also directed at the purchase of product manufactured, then where is here a place for savings and investments, which we observe in the real world. Savings must be made from workers’ available funds, and those are definitely not enough. How to solve the existing paradox?
    Date: 2011–04–10
  6. By: Sarah Brockhoff (Bielefed University and University of Freiburg); Stéphane Rossignol (LED - Université Paris 8); Emmanuelle Taugourdeau (Centre d'Economie de la Sorbonne)
    Abstract: We introduce a new way to model the Bismarckian social insuance system, stressing its corporatist dimension. Comparing the Beveridgean, Bismarckian and Liberal systems according to the majority voting rule, we show that for a given distribution of risks inside society, the Liberal system wins if the inequality of income is low, and the Beveridgean system wins if the inequality of income is high. Using a utilitarian criterion, the Beveridgean system always dominates and the Bismarckian system is preferred to the Liberal one.
    Keywords: Social insurance systems, political economy, Bismarck, Beveridge, inequality, redistributions.
    JEL: D63 D72 H53
    Date: 2012–03
  7. By: Boonperm, Jirawan; Haughton, Jonathan; Khandker, Shahidur R.; Rukumnuaykit, Pungpond
    Abstract: The Thailand Village Fund is the second-largest microcredit scheme in the world. Nearly 80,000 elected local Village Fund committees administer loans that reach 30 percent of all households. The value of Village Fund loans has remained steady since 2006, even without new infusions of government funds, and loans go disproportionately to the poor. Based mainly on a custom-built survey of more than 3,000 Village Funds conducted in 2010, this paper evaluates the performance of Village Funds, which it argues are best modeled as altruistic, and do not appear to be subject to elite capture. As expected, profit rates are difficult to model, but the regression analysis shows that loan recovery rates, total lending, credit ratings, and the proportion of loans going to the poor are all higher when a Village Fund borrows additional funds from a formal bank and on-lends to households, as was done by one in five Village Funds. An economic analysis suggests that Village Fund benefits exceed the costs. Most Village Funds are social rather than financial intermediaries; they have little incentive to take risks or to innovate, which explains why Village Fund lending has not kept pace with the growth of the Thai economy.
    Keywords: Debt Markets,Banks&Banking Reform,Bankruptcy and Resolution of Financial Distress,Investment and Investment Climate,Economic Theory&Research
    Date: 2012–03–01
  8. By: William M. Wadman
    Abstract: This paper introduces variable quality into the general treatment of neoclassical economics. It also introduces subbudget decision making at all levels. The consequences of these introductions are enormous for traditional theory. Most importantly, is the realization that within the market model there exists the prospect that constraints in capitalism are not hard, nor exclusively determined by market prices. In addition to the above, this paper argues for expansion of demand theory, and for expansion of the theory of general equilibrium. The paper argues against the existence of a hard budget constraint, both for households and for firms; in fact, it argues that the constraint is influenced by subbudget decision making and by the selection of levels of quality, and as such, the constraint may become stochastic, not deterministic. It introduces the proposition that Marginal Rates of Substitution are not equal across consumers; that Marginal Rates of Transformation are not equal across firms; that the condition MRS=MRT is not attainable; that the condition, is not the long-run equilibrium for firms; and it presents arguments against lump-sum taxation, specifically, that the theoretical results of a lump-sum tax are unattainable. The paper introduces additional conditions for attainment of Pareto optimality in welfare economics. Ultimately, the paper argues that market forces are not impartial. This behavior surfaces in consumption space and in input space. This phenomenon arises from human decision making regarding the size of subbudgets and levels of quality, and the model explains how these issues influence the position and slope of constraints in consumption space and in input space. The avenue to attainment of these results lies within what has always been the Achilles tendon of neoclassical economics: the homogeneity assumption, or in this case, the assumption of constant quality and the absence of subbudgets in economic decision making. Insertion of these two elements into neoclassical economics demonstrates that the theoretical foundation of neoclassical capitalism (i.e., the Anglo-Saxon version of capitalism) is itself a special case. These results evolve slowly. Initially, the changes are subtle, but build and emerge forcefully as the paper unfolds. Toward the end of the paper the implication of these findings, in terms of evolution and the human condition, are discussed.
    Date: 2012–03–14
  9. By: Christian Le Bas (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Nicolas Poussing (CEPS/INSTEAD, 3, Avenue de la Fonte, 4364 Esch-sur-Alzette, Luxembourg)
    Abstract: This paper examines the persistence of innovation behaviour at the firm level (manufacturing and services sectors). We attempt to answer the question : does being successful in past innovation activities increase the probability of being successful in current innovation activities ? We contribute to the literature by explicitly distinguishing between single and complex innovation strategies. Using two waves of the Community Innovation Survey (2002–2004, 2006–2008) conducted in Luxembourg, the regressions show that complex innovators are more inclined to remain persistent innovators than single innovators. Within the group of single innovators pure product innovators have an advantage over pure process innovators. The results support the idea that the differences in innovation strategies across firms are important for understanding the firm innovation dynamics.
    Keywords: Innovation, Persistence, Single and Complex Innovators, CIS
    JEL: O31
    Date: 2012
  10. By: Łukasz Hardt (University of Warsaw, Faculty of Economic Sciences)
    Abstract: Nowadays we observe a consensus in the development literature that the quality of governance matters for economic development. Therefore, many postulate the implementation of good governance principle, however, that very idea is not well defined and conceptualized. This paper offers some insights into the way that concept can be better understood. We do that by applying the conceptual apparatus taken from the complexity economics. What follows is the conclusion that the idea of good governance as seen from the perspective of complexity economics is very similar to the one of good enough governance. Moreover, we present some pragmatic recommendations for both development policies as well as the ways such policies should be prepared.
    Keywords: good governance, good enough governance, complexity economics, economic development
    JEL: H11 O10 B52 D78
    Date: 2012
  11. By: Chiara Bentivogli (Banca d'Italia); Eliana Viviano (Banca d'Italia)
    Abstract: This work compares cooperatives with other firms along two lines: (1) a description of structural development; and (2) a comparison of the strategies in response to the changes in the competitive environment in the last decade. Between 2001 and 2009, compared with other types of firms, Italian cooperatives maintained their greater size, lower labour productivity and labour costs, and a similar level of profit margins. A survey conducted on a sample of cooperatives located in the region of Emilia-Romagna shows that cooperatives have adapted their strategies to the new context in the same way as other firms. Cooperatives are still more focused on core business and differentiate their products less; this exposes them to greater price competition.
    Keywords: cooperatives, strategies, governance
    JEL: J54 D21 L21
    Date: 2012–02
  12. By: John E. Roemer (Dept. of Political Science, Yale University)
    Abstract: Although evidence accrues in biology, anthropology and experimental economics that homo sapiens is a cooperative species, the reigning assumption in economic theory is that individuals optimize in an autarkic manner (as in Nash and Walrasian equilibrium). I here postulate an interdependent kind of optimizing behavior, called Kantian. It is shown that in simple economic models, when there are negative externalities (such as congestion effects from use of a commonly owned resource) or positive externalities (such as a social ethos reflected in individuals’ preferences), Kantian equilibria dominate Nash-Walras equilibria in terms of efficiency. While economists schooled in Nash equilibrium may view the Kantian behavior as utopian, there is some -- perhaps much -- evidence that it exists. If cultures evolve through group selection, the hypothesis that Kantian behavior is more prevalent than we may think is supported by the efficiency results here demonstrated.
    Keywords: Kantian equilibrium, Social ethos, Implementation
    JEL: D60 D62 D64 C70 H30
    Date: 2012–03

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