nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2015‒05‒22
sixteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Hayek’s Scientism Essay and the social aspects of objectivity and the mind By Diogo de Melo Lourenço
  2. Do spinoff dynamics or agglomeration externalities drive industry clustering? A reappraisal of Steven Klepper’s work By Boschma, Ron
  3. Interrelationships Among Input Costs and Product Prices: Notes on the Empirical Use of a Price Input-output Model By Marcelo de M. Lara Resende
  4. What Makes People Go to War? Defensive Intentions Motivate Retaliatory and Preemptive Intergroup Aggression By Böhm, Robert; Rusch, Hannes; Gürerk, Özgür
  5. "Financing the Capital Development of the Economy: A Keynes-Schumpeter-Minsky Synthesis" By Mariana Mazzucato; L. Randall Wray
  6. On the Historical Roots of Women’s Empowerment across Italian Provinces: Religion or Family Culture? By Monica Bozzano
  7. Declining trust in growing China: A dilemma between growth and socio-economic damage By Dai, Shuanping; Elsner, Wolfram
  9. Women\u2019s vulnerability to climatic and non-climatic change in the eastern Gangetic Plains By International Water Management Institute (IWMI).
  10. Corporate Bankruptcy and Survival on the Market: Lessons from Evolutionary Economics By Katarzyna Boratynska
  11. Innovation in contemporary economies By Elzbieta Pohulak-Zoledowska
  12. Aristotle versus Marx: Modes of Use, Use Value or Useful Object? By Adolfo Rodriguez
  13. Profil de Privations au Cameroun : Une analyse combinée Pauvreté et Exclusion sociale By Miamo Wendji, Clovis
  14. Reasons for the changes of the concepts of human nature in the economics exemplified on the contemporary trends[1] By Anna Horodecka
  15. Adam Smith's Concept of Labour: Value or Measure? By Adolfo Rodriguez

  1. By: Diogo de Melo Lourenço (FEP-UP)
    Abstract: In his Scientism and the Study of Society, Hayek wishes to show the errors to which the moral scientist is led by emulating the methods of the natural sciences. The present paper argues that Hayek’s argument relies on a differentiation between the natural sciences and what he calls “ordinary experience” that is based on an unacceptable appearance-reality distinction and an implausible ontology. An alternative justification for the differentiation is offered by appealing to the manifold goals and social contexts of inquiry. Also, according to Hayek, the moral scientist needs to understand agents’ attitudes, and such understanding is possible because there is a similarity between the mind of the moral scientist and that of the agent. This paper tries to elucidate what Hayek thinks such similarity to be and how it may lead to the understanding of others. It proposes two alternatives: first, understanding as the projection of mental categories from behavioral evidence, and second, by looking forward to Hayek’s The Sensory Order, understanding as a functional correspondence between structures in the central nervous system.
    Keywords: Hayek, Scientism, The Sensory Order, Attitudes
    JEL: B31 B41 B53
    Date: 2015–05
  2. By: Boschma, Ron (CIRCLE, Lund University and Regional research centre Utrecht (URU), Utrecht University)
    Abstract: Klepper’s theory of industry clustering based on organizational reproduction and inheritance through spinoffs challenged the Marshallian view on industry clustering. The paper provides an assessment of Klepper’s theoretical and empirical work on industry clustering. We explore how ‘new’ his spinoff theory on industry clustering was, and we investigate the impact of Klepper’s theory on the economic geography community. Klepper’s work has inspired especially recent literature on regional branching that argues that new industries grow out of and recombine capabilities from local related industries. Finally, the paper discusses what questions on industry location are still left open or in need of more evidence in the context of Klepper’s theory.
    Keywords: Klepper; spinoff dynamics; agglomeration economies; Marshall; industry cluster; evolutionary economic geography
    JEL: B15 B52 O18 R11
    Date: 2015–05–14
  3. By: Marcelo de M. Lara Resende
    Date: 2015–01
  4. By: Böhm, Robert; Rusch, Hannes; Gürerk, Özgür
    Abstract: Although humans qualify as one of the most cooperative animal species, the scale of violent intergroup conflict among them is unparalleled. Explanations of the underlying motivation to participate in an intergroup conflict, however, remain unsatisfactory. While previous research shows that intergroup conflict increases ‘in-group love’, it fails to identify robust triggers of ‘out-group hate’. Here, we present a controlled laboratory experiment, which demonstrates that ‘out-group hate’ can be provoked systematically. We find direct and causal evidence that the intention to protect the in-group is not only a crucial motivator of ‘out-group hate’ in defensive reactions, but also promotes preemptive offensive actions against out-group threat. Hence, the strength of ‘out-group hate’ depends on whether the own group is perceived to be on the offensive or the defensive side of the conflict. This finding improves our understanding of the escalation of intergroup conflicts and may have important implications for their prevention, as we find in our experiment that removing out-group threat substantially reduces intergroup aggression, leading to full peace.
    Keywords: intergroup conflict; parochial altruism; in-group love; out-group hate; defense
    JEL: B52 C92 N40
    Date: 2015–04–09
  5. By: Mariana Mazzucato; L. Randall Wray
    Abstract: This paper discusses the role that finance plays in promoting the capital development of the economy, with particular emphasis on the current situation of the United States and the United Kingdom. We define both "finance" and "capital development" very broadly. We begin with the observation that the financial system evolved over the postwar period, from one in which closely regulated and chartered commercial banks were dominant to one in which financial markets dominate the system. Over this period, the financial system grew rapidly relative to the nonfinancial sector, rising from about 10 percent of value added and a 10 percent share of corporate profits to 20 percent of value added and 40 percent of corporate profits in the United States. To a large degree, this was because finance, instead of financing the capital development of the economy, was financing itself. At the same time, the capital development of the economy suffered perceptibly. If we apply a broad definition--to include technological advances, rising labor productivity, public and private infrastructure, innovations, and the advance of human knowledge--the rate of growth of capacity has slowed. The past quarter century witnessed the greatest explosion of financial innovation the world had ever seen. Financial fragility grew until the economy collapsed into the global financial crisis. At the same time, we saw that much (or even most) of the financial innovation was directed outside the sphere of production--to complex financial instruments related to securitized mortgages, to commodities futures, and to a range of other financial derivatives. Unlike J. A. Schumpeter, Hyman Minsky did not see the banker merely as the ephor of capitalism, but as its key source of instability. Furthermore, due to "financialisation of the real economy," the picture is not simply one of runaway finance and an investment-starved real economy, but one where the real economy itself has retreated from funding investment opportunities and is instead either hoarding cash or using corporate profits for speculative investments such as share buybacks. As we will argue, financialization is rooted in predation; in Matt Taibbi's famous phrase, Wall Street behaves like a giant, blood-sucking "vampire squid." In this paper we will investigate financial reforms as well as other government policy that is necessary to promote the capital development of the economy, paying particular attention to increasing funding of the innovation process. For that reason, we will look not only to Minsky's ideas on the financial system, but also to Schumpeter's views on financing innovation.
    Keywords: Banker as Ephor of Capitalism; Capital Development; Finance; Global Financial Crisis; Innovation; Minsky; Schumpeter
    JEL: B5 B51 B52 G G1 G2 H6 L5 N1 O1 O2 O3 O4 P1
    Date: 2015–05
  6. By: Monica Bozzano
    Abstract: In most developed countries the gender gap is nearly closing in the health and educational spheres while there is still sizeable gender inequality in the economic and political dimensions. Why do women’s economic decision-making and political empowerment vary so widely? What are the main potential determinants of such variations? In this paper we explore the association between two specific facets of women’s empowerment, the percentage of women holding office in local political bodies and the percentage of women in high-ranking jobs, with the cultural environment in which women make their career decisions. Our hypothesis is that culture, in particular those values embodied by religious culture, plays a central role in shaping norms and beliefs about the role and involvement of women in society. Moreover we suggest that these cultural norms are inherited from the past and therefore have a high degree of inertia. Over a cross section of Italian provincial data, both OLS and IV results indicate that our measures of women’s empowerment are strongly associated with religious culture, as proxied by religious marriages. These results are robust and consistent across specifications
    Keywords: women’s empowerment, politics, glass ceiling, religion, family culture, historical determinants
    JEL: J16 J7 N30 R1 Z10 Z12
    Date: 2015–04
  7. By: Dai, Shuanping; Elsner, Wolfram
    Abstract: Declining general trust has become a serious social issue in China in recent years. This paper attempts to understand and analyze this social phenomenon from a social interaction perspective. Based on a repeated prisoners´ dilemma game on networks, it finds that the evolution of general trust is dependent on changes of the social interaction structure, and the increases of both social and spatial distance may explain a decrease of the levels of cooperation and general trust. In addition, we find that the traditional Chinese family and clan networks culture has an ambiguous effect on general trust, and simple reactive social "homing behavior" might be critical for China´s future economic development. In order to recover the general trust level, a major strategic option for China, and for fast growing countries in economic transition in general, is to (re-)develop appropriate network structures and properties, as our model indicates.
    Keywords: economic transition,growth and development,migration,trust,games on networks,China
    JEL: B52 C72 D01 D02 D30 E24 O17 O43 O53 P21 Z10
    Date: 2015
  8. By: Carlos Arturo Téllez
    Abstract: La Responsabilidad Social se considera un elemento central en la discusión al interior de los gobiernos y los estados, a continuación se presenta una descripción detallada acerca de la evolución histórica de la responsabilidad social y se confronta con las doctrinas económicas inmersas en el tema, las cuales arrojan a su vez el surgimiento de la Responsabilidad Social Empresarial. Igualmente, este documento puntualiza la información relativa a los derechos humanos en los informes de sostenibilidad de las organizaciones y estos se cotejan con otra documentación especializada del tema con el fin de producir una matriz que valore en las organizaciones los derechos humanos en el marco de la responsabilidad social empresarial y que finalmente permite hacer la valoración en relación con las aproximaciones que las empresas colombianas más importantes en la actualidad han efectuado sobre el tema.
    Keywords: bienestar, responsabilidad social empresarial, derechos humanos, informe de sostenibilidad.
    JEL: M14 I31
    Date: 2014–02–24
  9. By: International Water Management Institute (IWMI).
    Keywords: Climate change/Farmers/Gender/Women/Households/Land ownership
    Date: 2014
  10. By: Katarzyna Boratynska (Warsaw University of Life Sciences)
    Abstract: The following paper is a theoretical and empirical study. The terminological differences between bankruptcy and insolvency have been indicated and compared in the article. Most frequently considered aspects of bankruptcy appear in definitions. The first of them emphasises the economic character of bankruptcy. Insolvency is a culmination of a lack of financial means and the loss of solvency, which does not have a fading tendency but develops into a permanent phenomenon. In legal terms, solvency is an institution, whose purpose is to stop the accumulation of debts and most frequently it consists on the liquidation of the debtor's estate. A critical review of the scientific achievements of the representatives of evolutionary economics within the scope of bankruptcy and the survival of enterprises was presented. The analysed case of the Beta company, which went bankrupt, indicates that the companies which are not able to undertake proper adjustments to competitive conditions of the market at the right moment are eliminated from it. The theoretical law “the survival of the fittest” finds then its reflection in practice. The following research methods were used in the article: a descriptive analysis and the trajectories of J. Argenti in terms of models. Detailed examinations of files of insolvency proceedings of the Beta company have been carried out.
    Keywords: corporate bankruptcy and survival, creative destruction, evolutionary economics
    JEL: G33
    Date: 2015–05
  11. By: Elzbieta Pohulak-Zoledowska (Wroclaw University of Economics)
    Abstract: The hereby article discusses the issues related to the existing or required support given by the State to enterprises in order to provide them conditions to innovate. Neoclassical economy puts an emphasis to the price mechanism as a decision making effective tool, but enterprises meet many barriers in creating and introducing innovation, like high cost, high risk or lack of demand for innovation. These phenomena tend to inhibit innovation of enterprises. This means that market is not an efficient mechanism for innovation activity of enterprises, and its imperfections provoke State’s intervention. The goal of the article is to shape the objectives of State’s impact on decisions of innovative enterprises. Research method is the critical literature review and public data on State’s support on business R&D analysis. The research results show State’s support for both – incremental and radical innovation, which proves that innovative activity of enterprises is far from being a spontaneous, market-based process.
    Keywords: innovation, knowledge, market economies, the state
    JEL: H53 O12 O32 O38
    Date: 2015–05
  12. By: Adolfo Rodriguez (Universidad de Costa Rica)
    Abstract: In the first three pages of his Capital, without any warning to the reader, Marx introduces a modification of the traditional meaning of the term “use value”. For Locke, Quesnay, and Smith, “use value” was the ability of a thing to satisfy human needs, for Marx it becomes the thing itself. This change of meaning has not been properly perceived, and many authors continue to attribute to Marx the same conception of use value than his predecessors have. When Marx translates some passages of Aristotle’s Politics from English to German, his translation surprisingly attributes the term “use value” to Aristotle; worse, Marx does not attribute to Aristotle the predominant meaning of this term but the new meaning adopted by him. This note offers a brief history of the term “use value”, summarizes the significant change of meaning introduced by Marx, conjectures about the possible motivations of Marx to act this way, and finally documents the amazing translation of Marx.
    Date: 2014–11
  13. By: Miamo Wendji, Clovis
    Abstract: In this study, we analyze the privations welfare in Cameroon considering poverty and social exclusion. The framework provided by the capability approach and construction of indicators of poverty and social exclusion by the fuzzy method from ECAM III survey data shows that the overall level of poverty and social exclusion (respectively 0.4008 and 0.2291), are still very high. The definition of two-dimensional profile of welfare deprivation reveals that the determinants of deprivation are different for each form of deprivation. There is a high proportion of population experiencing both poverty and social exclusion.
    Keywords: fuzzy sets, deprivation, poverty, social exclusion, Cameroon
    JEL: D63 I31 I32
    Date: 2015–05–05
  14. By: Anna Horodecka (Warsaw School of Economics)
    Abstract: The main objective of this paper is to characterize the key trends responsible for the changes of the concepts of human nature in the economics. The methodology is both deductive (conclusions from theories developed within social sciences and humanities) and inductive (observation of current trends, which according to the theory are potentially responsible for those changes). Basing on the insights of psychology, philosophy of science, sociology, and cognitive science main potential forces are deduced. From the observation of actual trends, the basic contemporary factors responsible for the changes of the concepts of human nature are distinguished. Those can be divided in three groups. The first group contains factors focusing on the advance in knowledge about the human being, occurring within the general and specific sciences dealing with man (e.g. psychology, sociology, philosophy, cognitive science). The second group of factors includes the increasing complexity of the social processes. The third group refers to those social trends, which are responsible for altering understanding the world, which in turn results in real changes. Virtualization of life, greater sensitivity to human and environmental issues, increased contacts with other cultures and religions, greater sensitivity to the existing social injustice are some of those factors. Basing on those results, the reasons for growing criticism of traditional, orthodox image of man in the economics are discussed and the postulates of the heterodox economics for modifications in the concept of human nature, which reflect the changes taking place in society.
    Keywords: concepts of human nature, social trends, economic anthropology, heterodox economics, economic psychology
    Date: 2015–05
  15. By: Adolfo Rodriguez (Universidad de Costa Rica)
    Abstract: The terms employed by Smith to refer to value and measure of value are used in his time with imprecision, which has led to different interpretations about his position on these issues. It is no coincidence that Smith is considered the father of the theory of labour value developed by David Ricardo and Karl Marx and simultaneously of the cost-of-production theory developed by John Stuart Mill and Alfred Marshall. This note reviews the criticisms made by Ricardo and Marx on Smith’s position about value and measure of value. According to these authors, Smith is not consistent in proposing that value of a commodity is defined or measured as the amount of labour necessary to produce it and simultaneously as the amount of labour that can be purchased by this commodity. After demonstrating that the interpretation made by Ricardo and Marx on Smith’s arguments is wrong and that the criticized inconsistency does not really exist, I will argue that Smith proposes a labour theory of value that substantially corresponds to the one developed later by Marx.
    Date: 2014–06
    Abstract: Living in the shadows of the traditional sex-gender schema- viz. the male and female are the Hijras or the Third Genders of India. Because of their unique physiological attributes and personal preferences they transcend the gender binary, therefore in the process, establishing an identity that goes beyond the conventional delimitation of the so called normal sex/gender framework. This however creates negative repercussions for the third gender community as organizations like the medical healthcare or a psychiatric clinic fails to sympathize with their problems and ailments. Quite clearly, it is a result of improper sensitization and lack of awareness with respect to the third gender, their culture, sexual orientations and anatomical configurations. The paper explores the many sexual maladies (HIV, genital ulcer disease, genital wart to name a few) affecting the marginalized community of India, its possible prevention and the adoption of feasible solutions to ameliorate them. Because of cultural and religious obligations their genitalia is subject to much torture as they are compelled to undergo castration to prove their authenticity. Consequently, they may suffer from physical and psychological side-effects like infection, pus formation, decrease in energy, decline in memory and concentration etc. Also, there appears to be an acute shortage of medical personnel, clinical institutions and psychiatric aid to specifically cater to the needs of third gender community therefore making them reluctant to avail services provided by the The recent Supreme Court ruling, 2014 may have entitled them to a third gender categorization but the hegemonic heterosexual Indian society inundated with values of patriarchy and male potency still needs to accommodate them fully as one of the ‘normal’ sex/gender categorization. Until this is realized, the third gender will continue to lead marginal lives without any social support or welfare systems. As a result, there is a marked increase in mental health problems like depression and also the possibility of suicide cannot be ruled out. Recent social problems like rape and molestation can produce disturbing effects on the psychological health of the hijras as they are most vulnerable to sexual assaults and forced intercourse because of their effeminacy, impotency and a lack of working social agencies/law/police forces at place to redress their grievances. The paper also examines culture and its repercussions on the health of the hijras, the adverse effects of castration, psychological trauma and the subsequent results of hetero-normative puritanism.

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