nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2016‒06‒18
twenty-one papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Pluralism in economics: Inquiries into a Daedalean concept By Heise, Arne
  2. Monopoly Capital and Capitalist Management: Too Many Managers? By Lambert, Thomas
  3. China in Between Varieties of Capitalism and Communism By Maria Csanadi
  4. How complex is agricultural economics? By Butler, Allan
  5. Evolution of Islamic Economics:Definition, nature, methodology, problems and challenges By Hasan, Zubair
  6. How economics got it wrong: Formalism, equilibrium modelling and pseudo-optimization in banking regulatory studies By Aldegwy, Mohamed; Thiemann, Matthias
  7. Corporate Crime and Plea Bargains By Uriel Procaccia; Eyal Winter
  8. The Problem of Calibrating a Simple Agent-Based Model of High-Frequency Trading By Donovan Platt; Tim Gebbie
  9. The New Economics of Entrepreneurship, Innovation and Institutions: Considerations for Australian Agriculture By Potts, Jason
  10. Challenges to the Development of an Islamic Economic System By Noha Farrag; Hebatallah Ghoneim
  11. La transition ne pourra être qu’écologique et sociale By Eloi Laurent; Philippe Pochet
  12. Toward a Diachronic Conception of Well-Being: Thoughts from Georgescu-Roegen By Nicolò Bellanca; Benedetto Rocchi
  13. Cowboying Stock Market Herds with Robot Traders By Galimberti, Jaqueson; Suhadolnik, Nicolas; Da Silva, Sergio
  14. A Simple Intertemporal Model of Capabilities Expansion By Mercdo, Ruben
  15. Things are not always what it is measured: On the importance of adequately assessing energy poverty By Sandrine Meyer; Laurence Holzemer; Thiago Nyssens Moraes Da Silva; Kevin Maréchal
  16. Indices de Pobreza Multidimensional: alcances y limitaciones By Mercado, Ruben
  17. Productivity effects of eco-innovations using data on eco-patents By Giovanni Marin; Francesca Lotti
  18. Theory of Mind Predicts Cooperative Behavior By Gregory DeAngelo; Bryan McCannon
  19. Are distortions good for development? Structural transformations and cotton in Uzbekistan By Lorena Lombardozzi
  20. Beyond rationality, towards reasonableness: Deliberative monetary valuation and Amartya Sen’s approach to rationality By Bartkowski, Bartosz; Lienhoop, Nele
  21. Productivité agricole, intégration et transformation structurelle de l’économie marocaine By Chatri, Abdellatif; Maarouf, Abdelwahab; Ezzahid, Elhaj

  1. By: Heise, Arne
    Abstract: The state of contemporary economics had been a subject of discussion even before the most recent global financial crisis. The one-sidedness of the discipline has frequently been lamented and calls are often made for its pluralisation. Nevertheless, there is neither a consensus over the form of pluralism that is required (whether this is a theory, method, or paradigm pluralism, for example), nor agreement among economists over the underlying diagnosis of a lack of pluralism. Even the justification for this pluralistic norm - i.e. whether it should be seen in terms of an ethics of fairness and tolerance or as the imperative of academic freedom - remains disputed and is often unclear. The present paper aims to shed some light on these ambiguities.
    Keywords: pluralism,philosophy of science,heterodoxy,orthodoxy,mainstream
    JEL: B40 B41 B50
    Date: 2016
  2. By: Lambert, Thomas
    Abstract: The mainstream or neoclassical economics view that labor is rewarded according to its productivity has been extended to managers and management teams as justification for the levels of compensation that they receive. Additionally, the management concept of “span of management” has been used to explain the total number of and per employee number of managers in any organization along with the economics assumption that the appropriate span of management is where the marginal productivity of the last manager employed equals his/her marginal cost, or wage. On the other hand, Marxists and institutionalists hold different views of the roles and purposes of managers within organizations and attempt to explain these through either the view of managers exploiting workers on behalf of owners or the view of managers exploiting both workers and owners in order to advance their own agenda. This research note examines managerial compensation and intensity from both traditional/mainstream and alternative views by focusing on measures of managerial salaries, employee productivity, return on owners’ equity, return on assets, and rates of workers exploitation.
    Keywords: bureaucracy, economic systems, managers, and productivity
    JEL: B51 D24
    Date: 2016–06–14
  3. By: Maria Csanadi (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: This paper is challenging mainstream views about the contemporary Chinese system as a developmental state and a variety of capitalism. Based on a comparative analytical model (Csanádi, 1997, 2006) I will demonstrate that in China the general features of a communist system prevail to date, and that the „Chinese specifics” is a structural variety of those general features. I will point out why the Chinese system is neither capitalist nor post-socialist. Instead, it is a complex party-state system in the process of transformation comparable, but not identifyable - to all other party-state systems in their period of operation and transformation. Mainstream concepts of Chinese developmental state, state capitalism, socialist market economy, emerging system, hybrid system variegated capitalism, polymorphous state, centralized developmental autocracy, entrepreneurial state, instrumental development state and clientelist state may be detected embedded in and accomodated to this complex and transforming party-state system.
    Keywords: developmental state, variety of capitalism, party-state system, network, power distribution, China
    JEL: P1 P2 P3 P5
    Date: 2016–01
  4. By: Butler, Allan
    Abstract: Recognition that an economy is complex is not new. Frederick von Hayek, for example, made explicit that markets are complex systems in the 1960s. Contemporary proponents of complexity, movement across the sciences including economics, argue that an economy is a complex system in which economic agents (whether consumers, banks, firms or farmers) continually adjust and react to market behaviour of others. A major claim by these 2 proponents is that economics is going through its most profound change in over a hundred years. A further claim is that the neoclassical era in economics, upon which many agricultural economics principles are grounded, is being replaced by the complexity era. Indeed, is there some evidence that concepts such as agent-based modelling path dependency, self-organisation and network analysis used by the complexity movement are making inroads into agricultural economics research? This paper through a survey of literature of leading agricultural economic journals and the online repository, AgEcon Search, seeks to understand the degree that concepts from the complexity movement are emerging in agricultural economics research. Are they merely an adjunct to standard economic modelling or does it represent a more profound change in the way of analysing an economy?
    Keywords: Agricultural Economics, Complexity Theory, Complex Adaptive Systems, Agent-Based Modelling, Literature Survey, Agricultural and Food Policy, B590 Current Heterodox Approaches: Other,
    Date: 2016–04
  5. By: Hasan, Zubair
    Abstract: Since the ill-conceived separation of finance from Islamic economics proper in the literature, the latter has landed in confusion and neglect. Of late, much concern is being voiced on this state of affairs; divergence of views on various aspects of the subject tends to grow, cohesive efforts are missing. It is in this context that the present paper takes a hurried look at the evolutionary process of the subject and examines the definition, nature and scope, the issue of methodology, system approach, the problems that seems to beset its growth, the challenges it faces and how can same of these be faced.
    Keywords: Islamic economics, methodology, economic systems
    JEL: A13 B4 P4
    Date: 2016–06–07
  6. By: Aldegwy, Mohamed; Thiemann, Matthias
    Abstract: Since the outbreak of the financial crisis, the macro-prudential policy paradigm has gained increasing prominence (Bank of England, 2009; Bernanke, 2011). The dynamics of this shift in the economic discourse, and the reasons this shift has not taken place prior to the crisis have not been addressed systemically. This paper investigates the evolution of the economic discourse on systemic risk and banking regulation to better understand these changes and their timing. Further, we use our sample to inquire whether, and if so, why the economic regulatory studies failed to recommend a reliable banking regulation prior to the crisis. By following a discourse analysis, we establish that the economic discourse on banking regulation has not been suitable for providing the knowledge basis required for a dynamically reliable banking regulation, and we identify the underlying reasons for such failure. These reasons include the obsession of economic discourse with optimization and particular forms of formalism, particularly, partial equilibrium analysis. Further, the economic discourse on banking regulation excludes historical and practitioners' discourses and ignores weak signals. We point out that post-crisis, these epistemological failures of the economic discourse on banking regulation were not sufficiently recognized and that recent attempts to conceptualize systemic risk as a negative externality and to thus price it point to the persistence of formalism, equilibrium thinking and optimization, with their attending dangers.
    Keywords: Sociology of Finance,Optimal Regulation,Dynamic and Reliable Regulation,Banking Regulation,Financial Crisis
    Date: 2016
  7. By: Uriel Procaccia; Eyal Winter
    Abstract: Corporate entities enjoy legal subjectivity in a variety of forms, but they are not human beings, and hence their legal capacity to bear rights and obligations of their own is not universal. This paper explores, from a normative point of view, one of the limits that ought to be set on the capacity of corporations to act "as if" they had a human nature, their capacity to commit crime. Accepted wisdom has it that corporate criminal liability is justified as a measure to deter criminal behavior. Our analysis supports this intuition in one subset of cases, but also reveals that deterrence might in fact be undermined in another subset of cases, especially in an environment saturated with plea bargains involving serious violations of the law.
    Date: 2016–03
  8. By: Donovan Platt; Tim Gebbie
    Abstract: Agent-based models, particularly those applied to financial markets, demonstrate the ability to produce realistic, simulated system dynamics, comparable to those observed in empirical investigations. Despite this, they remain fairly difficult to calibrate due to their tendency to be computationally expensive, even with recent advances in technology. For this reason, financial agent-based models are frequently validated by demonstrating an ability to reproduce well-known log return time series and central limit order book stylized facts, as opposed to being rigorously calibrated to transaction data. We thus apply an established financial agent-based model calibration framework to a simple model of high- and low-frequency trader interaction and demonstrate possible inadequacies of a stylized fact-centric approach to model validation. We further argue for the centrality of calibration to the validation of financial agent-based models and possible pitfalls of current approaches to financial agent-based modeling.
    Date: 2016–06
  9. By: Potts, Jason
    Abstract: Agriculture is often represented as a case study in perfect competition, with a large number of small price-taking producers choosing an optimal input mix from a simple production function to maximize profits. Entrepreneurship and innovation do not seem to enter into this story, and nor do institutions. But this characterization misrepresents the complexity and niche competition in agricultural markets and the opportunities for cooperation. Old models of innovation policy emphasized market failure and recommended more or less direct government support to fund R&D investment. Examples were public funding of agricultural science. But new approaches to economics of innovation emphasise the role of entrepreneurial or market (rather than technical) discovery, and the increasing use of private institutions to solve the innovation problem through pooling innovation resources in the ‘commons’. This shift from market failure to collective action models of the innovation problem, and from government solutions to governance solutions, represents a fundamental shift in modern economic thinking about how industries grow through entrepreneurship and innovation, and the role of government in this process.
    Keywords: Agricultural and Food Policy,
    Date: 2016–02
  10. By: Noha Farrag (Canadian International College); Hebatallah Ghoneim (Faculty of Management Technology, The German University in Cairo)
    Abstract: The disappointment with the failure of the capitalist and socialist economic systems in solving the development problems of many countries has led several scholars to inves-tigate the Islamic Economic System (IES) as an alternative. Nienhaus (2010) describes the IES as a system that has the potential to capture the dynamism of capitalism and the equality of socialism. This paper contributes to the literature by identifying the pillars of an IES in conformity with the basic features that identify other economic systems. The paper aims at emphasizing the challenges that may arise in association with every pillar of this system to propel an Islamic economy forward in the modern world. The paper explores the challenges associated with ownership, economic decision making, incentives, and the role of the government in an Islamic framework. Accordingly, this study highlights that attaining a balanced demeanor, continuous assessment and inno-vation of financial instruments, employing spiritual incentives, institutional reform, and fighting Islamophobia are key challenges to the implementation of an IES.
    Keywords: Islamic Economics, Economic System, Ethical Economics, Islamic Governance, In-centives, Motivation, Waqf, Decision Making, ownership, role of the government, Um-mah, Islamophobia.
    JEL: H10 P40 P48
    Date: 2016–05
  11. By: Eloi Laurent (OFCE); Philippe Pochet
    Abstract: Pour que la transition écologique devienne une réalité, il faut proposer un récit mobilisateur fondé sur la justice sociale, car le défi environnemental impose de nouvelles solidarités. Comment accélérer la nécessaire transition de nos économies et de nos sociétés vers la soutenabilité ? Autrement dit, comment parvenir à maintenir, et si possible à améliorer, notre bien-être sur la durée et sous la contrainte écologique ? D'abord, en clarifiant la nature du changement social requis et en écartant d'emblée deux fausses pistes. La première met en scène un monde social purement cérébral où des scientifiques de plus en plus sûrs de leur fait s'efforcent de convaincre des citoyens encore ignorants de la gravité des crises écologiques. La science nous alerte, ce qui est déjà considérable, mais elle ne peut suffire à nous mobiliser. L'admonestation scientifique peut à vrai dire devenir contre-productive si elle est perçue comme l'expression d'une arrogance intellectuelle des élites envers les peuples. La transition écologique ne saurait être une transition par l'obéissance. La seconde représentation se situe aux antipodes de la raison. Elle met en scène un monde social mû par la peur des catastrophes. Dans un réflexe reptilien, les sociétés humaines accepteraient le changement non par adhésion consciente, mais sous l'effet de la pédagogie de l'Apocalypse. La peur serait un puissant moteur de l'action. En réalité, la frayeur écologique - dont le "péril climatique" est une des modalités - paralyse probablement davantage qu'elle n'incite à agir : plus on dira que la fin du monde est proche et que les catastrophes menacent, plus on encouragera les comportements irresponsables. La transition écologique ne saurait être une transition par la terreur.
    Keywords: Transition écologique; Justice sociale
    Date: 2015–12
  12. By: Nicolò Bellanca (Dipartimento di Scienze per l'Economia e l'Impresa); Benedetto Rocchi (Dipartimento di Scienze per l'Economia e l'Impresa)
    Abstract: In the first part of this paper, we revisit some concepts proposed by Nicholas Georgescu-Roegen. Without attempting an overall interpretation of Georgescu’s reflection, and without any intent of philological completeness, we want to show the strength and the suggestiveness of some of his insights, with the aim of setting a conception of human well-being that is intrinsically permeated by subjective time. We argue that an important part of human well-being simply depends on our being able to live-in-time. The Georgescu-Roegen’s conception of personal time as an irrevocable flow of living suggests that the right perspective in analysing the use of time made by persons in their never-ending search of well-being is a diachronic one. In the second we discuss the consequences of adopting a diachronic perspective in the study of relationships between time use and well-being and try to suggest a coherent empirical approach.
    Keywords: Georgescu-Roegen, time, well-being
    Date: 2015
  13. By: Galimberti, Jaqueson; Suhadolnik, Nicolas; Da Silva, Sergio
    Abstract: One explanation for large stock market fluctuations is its tendency to herd behavior. We put forward an agent-based model where instabilities are the result of liquidity imbalances amplified by local interactions through imitation, and calibrate the model to match some key statistics of actual daily returns.We show that an “aggregate market-maker” type of liquidity injection is not successful in stabilizing prices due to the complex nature of the stock market. To offset liquidity shortages, we propose the use of locally triggered contrarian rules, and show that these mechanisms are effective in preventing extreme returns in our artificial stock market.
    Keywords: Herding, Robot trading, Financial regulation, Agent-based model
    JEL: C63 G02
    Date: 2016
  14. By: Mercdo, Ruben
    Abstract: The “capabilities approach” due to Amartya Sen has become influential in the field of economic development, and it is up to a point the theoretical background of the Human Development Index. While the approach provides a rich conceptual framework to define the goals of development, its analysis of the means to achieve them seems lacking. Building on Kuklys and Robeyns interpretation of Sen’s theory, I show how take a first step to link goals and means in the capabilities approach using a simple modified model grounded on standard growth theory.
    Keywords: Economic growth; Capabilities Theory; Human Development Theory
    JEL: O1 O10 O11
    Date: 2015
  15. By: Sandrine Meyer; Laurence Holzemer; Thiago Nyssens Moraes Da Silva; Kevin Maréchal
    Abstract: Energy poverty is a major societal issue with both economic impacts and solidarity implications. Although its main drivers (e.g. insufficient income, bad quality housing, high energy prices) are widely recognised, there is no common definition of energy poverty at the European level, let alone a common way of measuring the phenomenon. The energy poverty barometer for Belgium has been developed accordingly. It draws on a set of composite indicators with the aim of grasping the multifaceted nature of energy poverty: excessive energy bills compared to available income (measured energy poverty), restriction in energy consumption below basic needs (hidden energy poverty) and self-reported difficulties to heat the housing correctly (perceived energy poverty). The results of the barometer are enriched and complemented with the insights of a field survey carried out in collaboration with municipal Public Centres for Social Action from the Brussels-Capital Region. The usefulness of combining an indicatorbased approach relying on macro statistics with a more qualitative field study leads us to support the setting up of a dedicated platform involving stakeholders. This broader and more systemic understanding would help moving beyond a ‘one size fits all’ approach to intervention which could be detrimental for some affected households.
    Keywords: Energy poverty; Barometer; Indicators; Social inclusion
    JEL: Q40 D10 D63
    Date: 2016–06–07
  16. By: Mercado, Ruben
    Abstract: En éste trabajo se presentan las características de los principales índices de pobreza multidimensional, y se analizan sus alcances y limitaciones tanto para la medida de la pobreza como para servir como guías de las políticas públicas. This paper presents the characteristics of the main indices of multidimensional poverty, and analyses their scope and limitations as measures of poverty and as guides for public policy.
    Keywords: Poverty indices, Multidimensional poverty indices
    JEL: D31 I32
    Date: 2016–05
  17. By: Giovanni Marin (IRCrES-CNR); Francesca Lotti (Bank of Italy)
    Abstract: We investigate the productivity effects of eco-innovations at the firm level using a modified version of the CDM model (Crepon et al., 1998). The distinctive nature of environmental innovations, especially as regards the need for government intervention to create market opportunities, is likely to affect the way they are pursued and their effect on productivity. The analysis is based on an unbalanced panel sample of Italian manufacturing firms merged with data on patent applications and balance sheet information. When looking at innovation’s return on productivity , we observe that eco-innovations exhibit a generally lower return relative to other innovations, at least in the short run. This differential effect is more pronounced for polluting firms, which are likely to face higher compliance costs for environmental regulations than other firms. This result holds for both the extensive (probability of patenting) and intensive (patent count) margin.
    Keywords: R&D, innovation, productivity, patents, eco-patents.
    JEL: L60 Q55
    Date: 2016–06
  18. By: Gregory DeAngelo (West Virginia University, Department of Economics); Bryan McCannon (West Virginia University, Department of Economics)
    Abstract: Explanations for cooperation in Prisoner’s Dilemma games (PD) have generated significant interest. While institutional explanations, such as the role of repeated interactions and communication, have offered considerable explanatory ability, a psychological measure of Theory of the Mind (ToM) – Reading the Mind in the Eyes – of an individual’s ability to process social and emotional cognition offers new insights. Using this measure, we examine how ToM explains (un)cooperative behavior in a standard PD game. We find that subjects who have higher ToM are less cooperative in PD games and extract higher payoffs.
    Keywords: Cooperation, Experiment, Prisoner’s Dilemma, Reading Mind in the Eyes, Theory of the Mind
    Date: 2016–06
  19. By: Lorena Lombardozzi (Department of Economics, SOAS, University of London, UK)
    Abstract: Agriculture is at the origin of all economic activities and thus obtains a notable position in growth theory. The contribution of primary sector to long-term economic development has given space to asymmetrical positions. In the current context of globalized markets and downsized states, Uzbekistan is incontestably an exceptional case-study, applying distortive measures to its economy, and to agricultural sector in particular, to actively shape its comparative advantages. With reference to the cotton sector taxation in Uzbekistan, this analysis proposes to shed light on the implications of the main theoretical arguments around distortions. It will investigate the ícircular cumulative and interactive processî produced and how it is being a driver of structural transformation, to exploit economies of scale and transfer capital investments for heavy industry, concluding that distortion can actually be instrumental for development.
    Keywords: cotton, cash-crops, structural transformation, Uzbekistan
    JEL: O53 O40 P16 P21 Q10
    Date: 2016–01
  20. By: Bartkowski, Bartosz; Lienhoop, Nele
    Abstract: Economic valuation is often deemed an important source of information for land-use policy. Stated preference methods (SPM) are a particularly potent class of economic valuation methods, but they are also particularly controversial. In response to accumulating criticism of SPM, deliberative monetary valuation (DMV) has been proposed as an alternative approach. DMV has gained considerable attention in recent years—however, being a combination of elements from neoclassical economic theory and from the theory of deliberative democracy, it lacks a consistent theoretical foundation, especially regarding rationality assumptions. In our paper, we aim at closing this gap and propose to found DMV on Amartya Sen’s approach to rationality. We show that his approach fits well the motivation for engaging with DMV and discuss its implications for the practice of DMV.
    Keywords: deliberative monetary valuation, communicative rationality, economic rationality, Land Economics/Use, Q51, Q57,
    Date: 2016–04
  21. By: Chatri, Abdellatif; Maarouf, Abdelwahab; Ezzahid, Elhaj
    Abstract: This paper aims to verify how the performance of the agricultural sector affects the process of structural transformation of the Moroccan economy. It analyzes the dynamics of productivity in two ways. First, the speed of convergence of agricultural productivity to the level recorded by other sectors of the economy. The second, the decomposition of the change in aggregate productivity into the structural changes or reallocation effect and the within or intra effect. Furthermore, the paper uses the Input-Output methodology for measuring the degree of integration of the Moroccan economy and seeing if there was or not emergence of new leading sectors.
    Keywords: Agriculture, Input-Output Analysis, Morocco, productivity, structural transformation.
    JEL: C5 C67 E23 E24 O10 O13 O47
    Date: 2015–07–21

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