nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2013‒11‒16
seven papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Schumpeter's conceptions of process and order By Mário Graça Moura
  2. The Institutional Approach to Economic History: Connecting the Two Strands By Richard N. Langlois
  3. Corporate governance and corporate social performance By Kurt A. Desender; Mircea Epure
  4. The financing of Italian firms and the credit crunch: findings and exit strategies By Elisabetta Gualandri; Valeria Venturelli
  5. Kalecki’s Profit Equation after 80 Years By Kazimierz Laski; Herbert Walther
  6. The Costs to Fast-Food Restaurants of a Minimum Wage Increase to $10.50 per Hour By Jeannette Wicks-Lim; Robert Pollin
  7. Competition, Time Horizon and Corporate Social Performance By Graafland, J.J.; Smid, H.

  1. By: Mário Graça Moura (Faculdade de Economia, Universidade do Porto e CEF.UP)
    Abstract: Abstract: This paper scrutinises Schumpeter’s conceptions of process and reproduced order. In order to facilitate a detailed understanding of his position, his work is examined from different angles, in three successive ‘approximations’. The coherence, or mismatch, of Schumpeter’s conceptions is subsequently discussed. The paper argues that Schumpeter’s essay on social classes provides an ontologically grounded theory of process which is also a theory of reproduced order; and that this theory does not fit well with Schumpeter’s alternative conception of order as equilibrium. His methodological commitment to an orthodox notion of order as equilibrium is shown to be the source of pervasive tensions in his writings, here classified as ‘retroductive problems’ and ‘spurious problems’.
    Keywords: Schumpeter, methodology, ontology, critical realism
    JEL: B3 B4
    Date: 2013–11
  2. By: Richard N. Langlois (University of Connecticut)
    Abstract: This essay examines the historiography of two episodes in history – the scattering of plots in the open fields in the Middle Ages and the transition to the factory system in the Industrial Revolution – to shed light on the uses of institutional economics in economic history. In both of these episodes, economic “just-so” stories advanced our understanding of history. What animated intellectual innovation in both cases was a bold conjecture about the raison d’être of a puzzling institutional structure. But what ultimately enriched our understanding was the process of conjecture and revision those conjectures set off. In both episodes, the revised conjectures that best withstood criticism and revision were those that saw the phenomena not as static snapshots of economic agents confronting an economic problem but rather those that embedded the phenomena within a larger economic problem and within a process of economic change. In the end it is an account of institutional change – what I call the good old New Institutional Economics – that connects the use of institutional economics to explain puzzling historical phenomenon with the role of institutional economics in addressing the big questions of economic growth.
    Keywords: institutions, institutional change, transaction costs, open-field system, factory system
    JEL: B52 D02 D23 N01 N53 N63
    Date: 2013–09
  3. By: Kurt A. Desender; Mircea Epure
    Abstract: By integrating the agency and stakeholder perspectives, this study aims to provide a systematic understanding of the firm- and institutional-level corporate governance factors that affect corporate social performance (CSP). We analyze a large global panel dataset and reveal that CSP is positively associated with board independence, but negatively with ownership concentration. These results underscore the idea that the benefits of CSP do not flow to shareholders to the same extent as the costs and that the allocation of resources to CSP is lower when shareholders are powerful. Furthermore, these findings indicate that independent directors should be understood as agents in their own right, not only focused on defending shareholder interests. We also find that CSP is negatively related to investor protection and shareholder-oriented environments, while it is positively related to egalitarian environments. Finally, we jointly analyze firm-level drivers and institutional contexts.
    Keywords: corporate social performance; corporate governance; agency theory; stakeholder theory
    JEL: A13 G3 M0 M1 M14 M4 M41
    Date: 2013–10
  4. By: Elisabetta Gualandri; Valeria Venturelli
    Abstract: The aim of the paper is to analyse how credit crunch has modified the traditional bank-firm relationship with a particular attention to the Italian situation. Our analysis reinforces the finding that in Italy, the credit available to the real economy is insufficient in terms not only of quantity but also of quality. The subsequent step is to identify and discuss possible exit strategies for eliminating the credit crunch and to overcome serious intrinsic shortcomings in terms of alternative instruments, markets and intermediaries. In fact, if on the one hand the crisis has revealed the underdevelopment of the Italian financial market, the insufficient role of institutional investors, the embryonic state of the corporate bond markets and the virtual non-existence of commercial paper markets; on the other hand, it could finally provide the opportunity for the development of these channels. The changing role of banks in the new scenario is also analysed as well as the characteristics firms will require to benefit from it.
    Keywords: credit crunch, sovereign debt crisis, bank-firm relationship, SMEs financing, alternative financing measures
    JEL: G18 G21 G28 G32 L50
    Date: 2013–10
  5. By: Kazimierz Laski; Herbert Walther
    Abstract: Abstract Keynes and Kalecki both assume that private investment determines (but is not determined by) private savings. For Keynes, the desired level of saving is an increasing function of GDP, somehow related to the psychology of the society; ‘autonomous’ shifts of investment are determined by the state of long-term expectations. For Kalecki, the saving propensity depends on the income distribution in a capitalist society, while investment expenditures are determined by past investment decisions. The causality link between investment and saving runs through profits. We take a look at short-run and long-run aspects of Kalecki’s fundamental profit equation (1) We argue that the short lag between investment decisions and expenditures is an essential element of any meaningful interpretation of Kalecki’s profit equation. This lag has critical implications for the interpretation of the multiplier, for the story of ‘wage-led versus profit-led growth’ and for the various tax paradoxes related to the Kaleckian profit equation. (2) We argue that an excess of desired long-term saving over investment, which might be caused by demographic ageing in Western economies, can only be eliminated by accepting the necessity of a permanent primary public deficit and/or active redistributive policies.
    Keywords: profit equation, wage-led and profit-led growth, Kalecki
    JEL: B22 B31 E12
    Date: 2013–04
  6. By: Jeannette Wicks-Lim; Robert Pollin
    Abstract: As fast-food workers join picket lines around the country, media outlets are questioning how much a minimum wage increase would cost businesses, fast-food restaurants in particular. Jeannette Wicks-Lim and Robert Pollin examine the potential impact of a proposal to raise the federal minimum wage, concluding that the proposed hike to $10.50 would impose only modest costs, and could� meaningfully improve living standards for low-wage workers while avoiding the unintended consequence of reducing employment. They explain how they arrived at their key finding:�the average fast-food establishment�could�fully�cover the costs from the $10.50 minimum by raising prices 2.7 percent.
    Date: 2013
  7. By: Graafland, J.J.; Smid, H. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: This paper develops and tests a conceptual framework on the relationships between competition, time horizon and corporate social performance (CSP). We hypothesize that more intense competition discourages CSP by lowering the time horizon of companies. We test the hypothesis on a sample of 4696 of mainly small and medium-sized companies from twelve European countries. We distinguish between price competition, market position and technological competition. We find that companies with a longer time horizon have a higher CSP and that price competition and a ‘level playing field’ market position shorten the time horizon. The intensity of technological competition has a positive effect on time horizon, but also exerts a direct positive influence on CSP. Test results show that time horizon significantly mediates the influence of price competition, the market position and technological competition on CSP. The analysis implies that, from the perspective of CSP, the economic policy of the government should not focus on fostering price competition, but rather on strengthening competition in innovation.
    Keywords: Corporate social performance;time horizon;price competition;SMEs;technological competition
    JEL: L1 M14
    Date: 2013

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