nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2014‒06‒22
eight papers chosen by
Carlo D'Ippoliti
La Sapienza University of Rome

  1. Micro Processes and Isomorphic Adaptation: Insights from the Struggle for the Soul of Economics at the University of the Holy Spirit By Bouchikhi, Hamid; Kimberly, John R.
  2. Rationality and Beyond: A Critique of the Nature and Task of Economics By Li, Cheng
  3. Towards Full Employment Through Applied Algebra and Counter-Intuitive Behavior By Kakarot-Handtke, Egmont
  4. Dinámica de los sectores productivos para el cambio estructural By Fernando Isabella
  5. Social Network Analysis Methodologies for the Evaluation of Cluster Development Programs By Giuliani, Elisa; Pietrobelli, Carlo
  6. The dynamics of ethical judgment: an essay of modelization By Loréa Hireche Baiada; Lionel Garreau
  7. International division of labour and countries’ competitiveness: the case of Italy and Germany By Garbellini, Nadia
  8. From Custom to Law – Hayek revisited By Rossi, Guido; Spagano, Salvatore

  1. By: Bouchikhi, Hamid (ESSEC Business School); Kimberly, John R. (The Wharton School, University of Pennsylvania)
    Abstract: As of July 1, 2010, the College of Humanities and Social Sciences at the University of the Holy Spirit (UHS) has a single Department of Economics. However, in the seven prior years, there were two economics departments, one that was resolutely mainstream and the other that was just as resolutely heterodox. What accounts for this unusual organizational arrangement? We show that this arrangement was part of a protracted conflict about the kind of economics that befits the Catholic identity of UHS that resulted, ultimately, in a full embrace of mainstream economics in July 2010. We draw on and amend Oliver's (1991) typology of organizational responses to institutional processes and investigate why and how UHS went from deliberate avoidance to full acquiescence to mainstream economics. Our analysis suggests that while organizations may be compelled to adapt to dominant norms, as institutional theorists contend, the process of adaptation involves a variety of conflicting moves and counter moves that engage identity and power and that require forceful leadership to resolve.
    Keywords: Institutional Isomorphism; Micro-processes; Organizational Adaptation
    JEL: I20
    Date: 2014–05
  2. By: Li, Cheng
    Abstract: This paper shows that the means-end rationality principle, as an ‘ultimate given’ of economics, delimits the faculty of economists to observe, describe and understand the manifold human behavior. Given such epistemological limitations, as a descriptive science, the main task of economics is to incorporate appropriate empirical content into the a priori analytical framework with the aim of better explaining and predicting some aspect of human behavior. As a normative science, economists should draw on their persuasion and communication skills whereby changing the means and end of the decision makers to the extent that the real world decision-making can be improved.
    Keywords: Rationality; Constrained maximization model; Methodology; Epistemology
    JEL: A11 A12 B41
    Date: 2014–06–18
  3. By: Kakarot-Handtke, Egmont
    Abstract: It is common knowledge that neither Walrasians nor Keynesians nor Marxians nor Institutionialists nor Austrians nor Sraffaians came to grips with profit. The reason is a defective formal basis. In the present paper the formal foundations are first renewed. When the profit theory is false the rest of an approach is questionable. What is reexamined next because of its vital practical implications is the theory of employment. One remarkable result is that the popular recipe to eliminate unemployment, viz. downward wage rate flexibility, is self-defeating because it does not take the objective systemic properties of the monetary economy into account.
    Keywords: new framework of concepts; structure-centric; axiom set; Path Core; algebraic market clearing; indifference of employment
    JEL: B49 B59 E24
    Date: 2014–06–18
  4. By: Fernando Isabella (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: Starting from a current debate about the effects of productive structures on long run development outcomes we propose a new methodology that, relying on the tools from the “Product Space” literature, applies Neo-Schumpeterian concepts to evaluate pathways of structural transformation. We seek to assess the technological sophistication and pervasiveness of different productive sectors as indicators of their potentiality to lead the economies towards development. We find that the “key sectors” in the world economy are, in order, those we called: “Industrial Machinery”; “Scientific and Medical Instrument” and “Pharmaceuticals”. The poor results displayed by the sector called “Electronics”, and the high pervasiveness of sectors based on mature technologies like “Basic Manufactures” or “Transport Equipment”, lead us to question the consolidation of a new paradigm based on ICTs. As an alternative hypothesis, we argue that rather than a new paradigm clearly distinguishable from the previous, what we observe is the survival and overlap of key sectors of different historical stages, in a kind of “geological layers”, explained by the persistence of previous technological systems. It seems then that those sectors that rise to key positions in a certain technological paradigm tend to see their relative sophistication eroded as incremental innovation opportunities tend to disappear and new radical innovations change the trend of economic growth. However, those sectors tend to keep high pervasiveness for a long time. In other words, they lose the capacity to capture extraordinary rents because of the technological diffusion and the increased competition, but they continue to play a central role in the productive structure.
    Date: 2014–05
  5. By: Giuliani, Elisa (Department of Economics and Management, University of Pisa; CIRCLE, Lund University); Pietrobelli, Carlo (Inter-American Development Bank)
    Abstract: Cluster development programs (CDPs) have been adopted widely in many countries worldwide. Many such programs aim to promote economic development by forming and strengthening inter-organizational networks. Despite their widespread diffusion, we know very little about CDP outputs or the impact CDPs have on host regions and their populations. Evaluation studies are beginning to appear, but the overall concern is that a distinct evaluation concept and method with a focus on CDPs is not yet available. The objective of this paper is to address this limitation, by proposing a novel methodological approach in the evaluation of CDPs based on the application of concepts and methods of social network analysis (SNA).
    Keywords: cluster development programs; policy evaluation; social network analysis
    JEL: O22 O29 Z13
    Date: 2014–06–16
  6. By: Loréa Hireche Baiada (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine, MMS - Département Management et Marketing et Stratégie - Institut Mines-Télécom - Télécom Ecole de Management); Lionel Garreau (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine)
    Abstract: A growing body of research has been drawing on the sensemaking perspective in order to modelize ethical judgment. Nevertheless, these sensemaking models do not account for how sensemaking can further our conceptualisation of the evolution of ethical judgment over time. In this study, we build on an interview-based design to develop a process model that accounts for the dynamics of ethical judgment. We then identify the mechanisms and influences of this process. Finally, we discuss the practical implications of our findings for ethical decision-making and for the teaching of business ethics.
    Keywords: ethical judgment, ethical decision making, sensemaking, process
    Date: 2014–06–04
  7. By: Garbellini, Nadia
    Abstract: The paper is going to use the WIOD to analyse the structure, extent and evolution of production processes outsourcing in Italy and Germany from 1995 to 2011 by means of global vertically integrated sectors, in order to single out and compare the different sources of gains/losses in competitiveness. Secondly, global vertically integrated sectors are going to be employed to get a measure of labour productivity changes in the two countries. By comparing the trends of these two sets of indicators, it is possible to shed light on the evolution of international competitiveness in the two countries, to assess the extent to which competitiveness gains/losses are associated to actual productivity increases/decreases and to what extent they are simply due to a different geographical allocation of production stages.
    Keywords: Labour productivity, International fragmentation of production, offshoring
    JEL: B51 F14 R15
    Date: 2014–06–09
  8. By: Rossi, Guido; Spagano, Salvatore
    Abstract: The present paper combines legal history with economic theory so to explain the passage from custom to law. Economists have usually explained the shift from customary to statutory law (that is, from spontaneous to formal rules) either in terms contractualism or evolutionism. In the first case, law is the only efficient solution for a Hobbesian-like immanent social conflict. In the second case, customs do create an efficient enough equilibrium. Law comes on a later stage just to formalise an already accepted rule, vesting the custom with a formal status. Neither theory, however, is fully able to explain the transition from custom to law. One struggles with the very acceptance of customs in the first place. The other fails to provide a satisfactorily explanation of the passage from custom to law. The present work seeks to reconcile the two theories by looking at the economic advantages of statutory law over custom. Unlike the first theory, it does not deny that customs may produce a relatively efficient status, but it seeks to explain why, at a certain point, customs were considered as inadequate and statutory law became more desirable. Our answer lies in the publication of written rules, for the presumption of knowledge it entails. Presumption of knowledge of the applicable rules is one of the elements that (oral) customs could not provide to contracts. Although somewhat neglected in many studies on customs and legislation, publication is a crucial element for our understanding of the passage from spontaneous custom to positive law. The work shall first introduce the passage from customary to statutory law in both legal and economic theories. Then, it will analyse the deep symmetry between the number of agents involved and the number of transactions on the one hand and the progressive replacement of customs with statutes on the other. The conclusions of such an analysis will be used to prove the crucial role played by the presumption of knowledge, which is perhaps the missing link between different economic theories on customs and law.
    Keywords: Evolutionary Economics, Constitutional Law
    JEL: B25 H10
    Date: 2014

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