nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2012‒06‒25
eighteen papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Economic Cosmology and the Evolutionary Challenge By John M. Gowdy; Denise E. Dollimore; David Sloan Wilson; Ulrich Witt
  2. Financing investment under fundamental uncertainty and instability: A heterodox microeconomic view By Jo, Tae-Hee
  3. How Well Are Women Represented at the AEA Meeting? A Study of the 1985-2010 Programs By Cunningham, Rosemary; Zavodny, Madeline
  4. Time Poverty, Work Status and Gender: The Case of Pakistan By Najam us Saqib; G. M. Arif
  5. Economic Coordination and Dynamics: Some Elements of an Alternative "Evolutionary" Paradigm By Giovanni Dosi
  6. Systemic financial fragility and the monetary circuit: a stock-flow consistent Minskian approach By Marco Passarella
  7. "Time Use of Mothers and Fathers in Hard Times: The US Recession of 2007-09" By Gunseli Berik; Ebru Kongar
  8. Real Wage Flexibility in the European Union: New Evidence from the Labour Cost Data By Jan Babecky; Kamil Dybczak
  9. Applying relevant ethical theories to equality By Punabantu, Siize
  10. Inequality in Our Age By Azizur R. Khan
  11. Seeds of Gold: How Environmental Considerations Influence Cacao Production Decisions for Small Landholder Households in Northwestern Ecuador By Useche, Pilar; Blare, Trent
  12. A Stock-Flow Analysis of a Schumpeterian Innovation Economy By Stefano Lucarelli
  13. Solidarity Economies in Marche, Italy: current trends and perspectives By Belletti, Matteo; Orazi, Francesco; Socci, Marco; Giovagnoli, Marco; Pojaghi, Barbara
  14. Marx's theory of crisis in the context of financialization. analytical insights on the current crisis By Stravelakis, Nikos
  15. The Marginal Productivity Theory Of The Price Of Capital: An Historical Perspective On The Origins Of The Codswallop By Grieve, Roy
  16. The co-operative as institution for human development By Sara Vicari; Pasquale De Muro
  17. Neither Private nor Public: The Effects of Communal Provision of Water on Child Health in Peru By Calzada, Joan; Iranzo Sancho, Susana
  18. The fading scope of labour – remarks about the lost rationale of a common term By Mann, Stefan; Wüstemann, Henry

  1. By: John M. Gowdy; Denise E. Dollimore; David Sloan Wilson; Ulrich Witt
    Abstract: The intellectual histories of economics and evolutionary biology are closely intertwined because both subjects deal with living, complex, evolving systems. Because the subject matter is similar, contemporary evolutionary thought has much to offer to economics. In recent decades theoretical biology has progressed faster than economics in understanding phenomena like hierarchical processes, cooperative behavior, and selection processes in evolutionary change. This paper discusses three very old "cosmologies" in Western thought, how these play out in economic theory, and how evolutionary biology can help evaluate their validity and policy relevance. These cosmologies, as manifested in economic theory are, (1) rational economic man, (2) the invisible hand of the market, and (3) the existence of a general competitive equilibrium. It is argued below that current breakthroughs in evolutionary biology and neuroscience can help economics go beyond these simple cosmologies.
    Date: 2012–06–12
  2. By: Jo, Tae-Hee
    Abstract: The business enterprise in the real world wrestles with fundamental uncertainty and instability. Key enterprise decisions such as pricing, financing, and investment are thus made strategically rather than optimally. Heterodox economists are, however, divided in the account of business enterprise's financing behavior; macroeconomists put an emphasis on external financing, whereas microeconomists on internal financing. Moreover, they often stop short of establishing a link between the two. Drawing upon the social provisioning perspective, this essay aims at providing a new light on financing focusing on strategic enterprise decision-making mechanisms.
    Keywords: Business enterprise; pricing; financing; investment; uncertainty; instability; social provisioning process; social surplus; effective demand
    JEL: D21 B50 G30
    Date: 2012–06–13
  3. By: Cunningham, Rosemary (Agnes Scott College); Zavodny, Madeline (Agnes Scott College)
    Abstract: The proportion female in the economics profession in the U.S. has been low historically compared with other disciplines. Although the percentage of Ph.D. degrees awarded to women and the representation of women on faculties have increased over time, economics still lags many other fields. Previous research has documented gender gaps in tenure, promotion and publication, some of which have narrowed over time. This study examines another aspect of women's representation within the economics profession: their participation in a session at the American Economic Association annual meeting. We examine the gender of participants on the program at the 1985-2010 meetings to determine how women's participation at this important venue has changed over the past 25 years. The results show that women's participation has increased over time, particularly since 2002. However, women appear to be underrepresented on the program relative to other measures of their representation in the profession.
    Keywords: women in economics, economics profession, academic labor market
    JEL: A1
    Date: 2012–05
  4. By: Najam us Saqib (Pakistan Institute of Development Economics, Islamabad.); G. M. Arif (Pakistan Institute of Development Economics, Islamabad.)
    Abstract: Time is an important economic resource that can be spent in a variety of ways. Diverse demands on a person’s time may reach a point where the individual may be categorized as time poor. Time poverty may vary across gender, occupational groups, industries, regions, and income levels. The present study focuses on measurement of time poverty and its incidence among these categories using Time Use Survey (TUS) 2007, the first nationwide time use survey for Pakistan. The results of this study provide some important insights into the phenomenon of time poverty in Pakistan and lead to some interesting conclusions. In the entire TUS sample, the incidence of time poverty is 14 percent. Women are found to be more time poor than men whether they are employed or not. A closer look at time use statistics reveals the reason behind this occurrence. There are certain women-specific activities that they have to perform irrespective of their employment status. This additional time burden plays a key role in making them more time poor. Working women are far more time poor as compared to not working women. Thus, while accepting a job, women have to deal with a major tradeoff between time poverty and monetary poverty. People in certain professions and industries are more time poor as compared to people in other professions and industries. These professions and industries generally require extended hours from the workers, while offering low wage rates. This entails a situation of double jeopardy for the workers who tend to be monetary and time poor at the same time. The close association of time poverty with low income found in this study corroborates this conclusion. In the light of these findings, several policy areas emerge where we need to focus. First thing that needs to be done is to generate awareness about a fair distribution of responsibilities between men and women. Government can also play its part in reducing time poverty by enforce minimum wage laws and mandatory ceiling on work hours in the industries which have high concentration of time poverty. Eradication of monetary poverty can also go a long way in this respect by eliminating the need to work long hours at the lowest wage rate just to survive. Improving education also has significant potential in this regard, as high education is found to be associated with low time poverty.
    Keywords: Time Poverty, Gender Disparities, Time Use, SNA Activities, Time Use Survey, Pakistan
    Date: 2012
  5. By: Giovanni Dosi
    Abstract: The paper, largely based on the introduction to Dosi (2012), elaborates on the main interpretative ingredients, methodology and challenges ahead of the evolutionary research program in economics. Telegraphically, such a perspective attempts to understand a wide set of economic phenomena - ranging from microeconomic behaviours to the features of industrial structures and dynamics, all the way to the properties of aggregate growth and development - as outcomes of far-from-equilibrium interactions among heterogeneous agents, characterized by endogenous preferences, most often "boundedly rational" but always capable of learning, adapting and innovating with respect to their understandings of the world in which they operate, the technologies they master, their organizational forms and their behavioural repertoires. And on methodological grounds, far from disdaining formal modelling and statistical analysis, the research program is, however, largely inductive, taking very seriously indeed empirical regularities at all levels of observation as discipline for the modelling assumptions. Together, the paper places such interpretative perspective against some fundamental questions addressed by the economic discipline in general and against the answers to such questions that contemporary theory has to offer. Such questions fundamentally concern first, the drivers of dynamics and, second, the conditions of coordination among interacting agents.
    Keywords: Economic Evolution, Coordination, Dynamics, Bounded Rationality, Agent-based Macro Models, Innovation
    Date: 2012–06–06
  6. By: Marco Passarella
    Abstract: In the last few years, a number of scholars has referred to the crop of contributions of Hyman P. Minsky as „required reading? for understanding the tendency of capitalist economies to fall into recurring crises. However, the so-called „financial instability hypothesis? of Minsky relies on muchdisputed assumptions. Moreover, Minsky?s analysis of capitalism must be updated on the basis of the deep changes which, during the last three decades, have concerned the world economy. In order to overcome these theoretical difficulties, the paper supplies a simplified, but consistent, re-formulation of some of the most disputed aspects of Minsky?s theory by cross-breeding it with inputs from the current Post-Keynesian literature. This allows us to analyze (within a simplified stock-flow consistent monetary circuit-model) the impact of both „capital-asset inflation? and consumer credit on the financial „soundness? of a monetary economy of production.
    Keywords: Financial Instability; Stock-Flow Consistency; Monetary Theory of Production
    JEL: B50 E12 E32 E44
    Date: 2012
  7. By: Gunseli Berik; Ebru Kongar
    Abstract: The recession precipitated by the US financial crisis of 2007 accelerated the convergence of women's and men's employment rates, as men experienced disproportionate job losses and women's entry into the labor force gathered pace. Using the American Time Use Survey (ATUS) data for 2003-10, this study examines whether the recession also occasioned a decline in disparity in unpaid work burdens and provided impetus for overall progress toward equity in the workloads, leisure time, and personal care hours of mothers and fathers. Controlling for the prerecession trends, we find that the recession contributed to the convergence of both paid and unpaid work only during the December 2007-June 2009 period. The combined effect of the recession and the jobless recovery was a move toward equity in the paid work hours of mothers and fathers, a relative increase in the total workload of mothers, and a relative decline in their personal care and leisure time.
    Keywords: Economics of Gender; Unemployment; Time Use; Economic Crises
    JEL: D13 J16 J22 J64
    Date: 2012–06
  8. By: Jan Babecky; Kamil Dybczak
    Abstract: This paper presents evidence on the extent of real wage flexibility in 24 EU member countries based on the Eurostat labour cost data covering 2000Q1-2010Q2. The term 'wages' refers, for brevity, to total hourly labour costs and their two main components, namely wages and salaries per hour, and non-wage costs. Following the structural VAR approach, real wage flexibility is measured as the responsiveness of real wages to real (permanent) versus nominal (temporary) shocks. The data shows that the impact of the 2008/2009 crisis on real wage adjustment has not been uniform across the sample countries, with some evidence for an increase in real wage rigidity. A strong negative correlation is observed between our aggregate measure of wage flexibility and both the ESCB Wage Dynamics Network firm-level survey estimates of downward real wage rigidity and the International Wage Flexibility Project microeconomic estimates of downward real wage rigidity. Finally, we find that institutional features of labour markets could help explain the variation in the results across countries; for example, stricter employment protection legislation and stronger presence of unions go hand in hand with higher real wage rigidity.
    Keywords: Labour cost indices, real wage rigidity, structural VAR.
    JEL: C22 E24 F02 J30 P20
    Date: 2012–01
  9. By: Punabantu, Siize
    Abstract: Nelson Mandela said, “During my lifetime I have dedicated myself to this struggle of the African people. I have fought against White domination, and I have fought against Black domination. I have cherished the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities. It is an ideal which I hope to live for and to achieve. But if needs be, it is an ideal for which I am prepared to die.” In other words Nelson Mandela did not simply engage in the struggle for Black people, he did so for Black people, White people, Asians, Arabs and people of diverse backgrounds. As a result he has special place in history and in the hearts of many diverse people. Martin Luther King Jnr is respected not because he engaged the civil rights movement for African Americans, but he did so for all Americans and all people alike. Today he is still fondly remembered by a diverse section of society. The question of ethics in society in terms of the regard human beings have for one another be it by gender, race, tribe or group has an impact on business and socio-economic development. It is this issue in governance that this paper will address. It raises interesting questions. When does the integration, for example, of gender equality interfere with the ability of a CEO or leader to make decisions that are in the interests of the institutions they manage and when is it a necessary active policy by which to improve gender equality? When does empowerment become discriminative and when does discrimination betray the more positive expectations of empowerment? If we as members of society are held to the highest ideal then mutual respect and equality between people of different races, of different tribes and groupings is an example of the best possible use of human reason and the most useful application of human emotional and social intelligence.
    Keywords: Scarcity; race; culture; discrimination; prejudice; equality; economic thought; poverty; wealth; rationality; operating level economics; economic growth; paradox
    JEL: D63 A13 A12
    Date: 2012–06–18
  10. By: Azizur R. Khan
    Abstract: <p> The purpose of this essay is to outline the evolution of inequality in the post-World War II period and the causes shaping that evolution.<span>  </span>The starting proposition of the essay is that both inequality and the social tolerance of inequality have substantially increased almost everywhere over this period. The increase in inequality over this period, however, consists of divergent changes over two sub-periods: for the first three decades after the end of WWII inequality actually declined over much of the world; over the last three decades the increase in inequality has afflicted pretty much every significant human society. While in the decades immediately after WWII human societies almost everywhere were, at least seemingly, engaged in finding ways to reduce inequality, in the last three decades societies everywhere have demonstrated greater tolerance of inequality. The essay also argues that these trends in inequality were not determined by inevitable technological, economic or historical forces but largely by policy choices made by political forces. Finally it argues that, the demise of traditional standard bearers of equality, such as the actually-existing socialist system and the quest for non-capitalist development in the Third World, and the emergence of capitalism as the only economic system, do not signal the “end of history” for the human pursuit of equality. Plenty of paths to greater equality are available to contemporary societies that are serious in their pursuit of the goal.</p><p></p>
    Keywords: Personal Income, Wealth, Income Distribution, Living Standards
    JEL: D31 I31 I38
    Date: 2012
  11. By: Useche, Pilar; Blare, Trent
    Abstract: Many factors besides profit maximization such as nonmarket ecological and social benefits influence smallholder households to adopt one agricultural production system or another. Thus, different techniques are needed that take into consideration more than monetary income to fully capture these additional benefits in order to better understand the production decision of smallholder farmers. We build upon previous work on the household model and shadow wage estimation to develop a shadow wage for Ecuadorian cacao producers that includes these nonmarket benefits. We found that the shadow wage correctly indicated that these households would prefer to use an agroforestry production system instead of the more profitable modern system because these additional nonmarket benefits in additional to the economic benefits from participating in specialty markets make the traditional cropping system more attractive to these households.
    Keywords: Crop Production/Industries, Environmental Economics and Policy,
    Date: 2012
  12. By: Stefano Lucarelli
    Abstract: Credit money plays a crucial role in Schumpeterian theoretical analysis of economic development. Nevertheless, it is not simple to propose an analytical framework which is able to clarify the meaning of credit creation considered as the monetary complement of innovation. This contribution aims to describe Schumpeterian economic development in a “monetary theory of production” framework. According to the Schumpeterian perspective, we propose to emphasize within the monetary circuit both the monetary nature and the qualitative change of the capitalist system (i.e. the innovative process). We will describe the different phases of Schumpeterian economic development by employing a set of accounting matrixes, which allows us to respect the condition of stock-flow consistency.
    JEL: B50 E51 O33
    Date: 2012
  13. By: Belletti, Matteo; Orazi, Francesco; Socci, Marco; Giovagnoli, Marco; Pojaghi, Barbara
    Abstract: The paper illustrates selected results of an exploratory research study coordinated by the “Solidarity Economy Network” of the Marche Region in Italy (REES Marche) in 2010-2011. The study was funded by Banca Popolare Etica, it involved three Universities of the Region (Università Politecnica delle Marche, Università di Macerata, Università di Camerino), adopting an interdisciplinary approach. It aimed at investigating the cultural, economic and political determinants that characterize the world of critical consumption, examining a sample of 20 GAS (Gruppi di Acquisto Solidale, Solidarity Purchasing Groups), 182 GAS members and 50 firms (among which 20 agricultural GAS suppliers). Data was collected through ad hoc questionnaires, in depth interviews and focus group interviews. Qualitative and quantitative data have been analysed by the different research equips from a sociological, psycho-sociological and economic point of view, providing an insight on different issues concerning the actual framework of the solidarity economy in the region and possible further developments. The GAS experience emerges as a very diversified reality centred in the food economy, and food quality is a particularly sensitive issue to those who are involved in a GAS. In some ways the GAS members emerge as an élite group that does not represent the worldwide society. There is an abstract belief in the social function of the state of minority active citizenship as a factor of social change, but to affect the social reality a relevant set of organization and communication skills is needed. Focusing on the suppliers linked to the GAS network, the analysis highlights that the question of market organization was sometimes lived as personal hard work rather than a goal to be achieved together with a participatory approach and shared aims. Basing the analysis on GAS experience, a reading of Solidarity Economy nature and development in Marche Region will be provided.
    Keywords: Critical consumption, active citizenship, territorial networks, alternative and non-market relations, short food supply chain, Food Consumption/Nutrition/Food Safety, A13, D12, Z13, Q12, Q56, Q57.,
    Date: 2012
  14. By: Stravelakis, Nikos
    Abstract: In the context of the current crisis a vigorous debate is taking place with regard to its’ cause . A debate which has important policy implications in the sense that it justifies or condemns the main reaction policy to the evolution of the crisis i.e. the persistent securitization of financial capital on a global scale through trillions of government and central bank money resting in private bank vaults until proven insufficient, triggering a new round of bank refinance and / or recapitalization. The main question to be answered, in order to understand the present crisis, is whether the explosion of interest rates and the lack of credit is the cause or the trigger of a depression and why. If financial turmoil is the cause of depressions then each crisis is unique, the result of a «black swan» game and securitization will prove efficient since no risk arises from capitalist production and the reproduction of capital. Of course, history has taught us that capitalist economies experience periods of prosperity followed by depressions with almost periodical recurrence. However, the present crisis poses additional questions for Marxist and heterodox economics, since it prevailed following a period of stable (not declining) profit rates associated with weak corporate growth side by side with an explosion of financial sector growth a phenomenon referred to as financialization of capital. Contributing to the response to these questions is the main scope of this paper.
    Keywords: Marx's Theory of Crisis, Financialization, Rate of Profit, Profit of Enterprise
    JEL: B51 B22 E44
    Date: 2012–06–14
  15. By: Grieve, Roy
    Abstract: Although it might have been expected that, by this point in time, the unacceptability of the marginal productivity theory of the return on capital would be universally agreed, that is evidently not the case. Popular textbooks still propound the dogma to the innocent. This note is presented in the hope that a succinct indication of the origins of the theory it will contribute to a more general appreciation of the unrealistic and illogical nature of this doctrine.
    Keywords: marginal revolution, marginal productivity theory of distribution, reswitching,
    Date: 2012
  16. By: Sara Vicari; Pasquale De Muro
    Abstract: Toward a reassessment of the role of co-operative enterprises as a tool for fighting poverty both from the academic community and the international organisations, the paper aims at contributing to the understanding of the added value of the co-operative form of business especially in a people-centred development setting. In particular, in applying the human development and capability approach to co-operative economics and therefore by linking co-operatives to the concept of well-being, the paper contributes to shifting the co-operative thinking beyond the homo oeconomicus rational choice perspective bringing it closer to the reason why people adhere to collective livelihood strategies, thus providing greater insight for policies and practice.
    Keywords: co-operative enterprises; human development; capability approach;institutions; economic democracy; poverty eradication
    JEL: O15 B52 P13
    Date: 2012–06
  17. By: Calzada, Joan; Iranzo Sancho, Susana
    Abstract: The literature on local services has focused on the effects of privatization and, if anything, has compared the effects of private and mixed public-private systems versus public provision. However, alternative forms of provision such as cooperatives, which can be very prevalent in many developing countries, have been completely ignored. In this paper, we investigate the effects of communal water provison (Comités Vecinales and Juntas Administrativas de Servicios de Saneamiento) on child health in Peru. Using detailed survey data at the household- and child-level for the years 2006-2010, we exploit the cross-section variability to assess the differential impact of this form of provision. Despite controlling for a wide range of household and local characteristics, the municipalities served by communal organizations are more likely to have poorer health indicators, what would result in a downward bias on the absolute magnitude of the effect of cooperatives. We rely on an instrumental variable strategy to deal with this potential endogeneity problem, and use the personnel resources and the administrative urban/rural classi fication of the municipalities as instruments for the provision type. The results show a negative and signi cant effect of comunal water provision on diarrhea among under- five year old children. Keywords: water utilities, cooperatives, child health, regulation, Peru. JEL Classi fication Numbers: L33; L50; L95
    Keywords: Aigua -- Abastament, Infants -- Salut i higiene, Perú, Cooperatives, Aigües residuals, 338 - Situació econòmica. Política econòmica. Gestió, control i planificació de l'economia. Producció. Serveis. Turisme. Preus,
    Date: 2012
  18. By: Mann, Stefan; Wüstemann, Henry
    Abstract: Work and labour describe activities with a redistributional and a reproductive component. In addition, the terms have gained the function of creating social status and self-esteem. This paper argues that the shifts on the labour market during the past decades question both the redistributive and the reproductive functions of labour. An increasing number of activities are taking place both in paid and unpaid settings simultaneously. And the productivity of employed persons, particularly in the growing management sector, is increasingly difficult to judge. Moreover, the strong social esteem of paid work has led to economic misjudgements, inefficient political measures and consequences for our individual well-being. While it would be helpful to speak of paid and unpaid activities instead of labour, it is likely that the term will continue to be used due to its esteem-generating function.
    Keywords: labor; redistributional/reproductive function; paid work; unpaid work
    JEL: B52 J00 J20
    Date: 2012–06–12

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