nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2018‒03‒12
fifteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Marx Was Mistaken on Capitalism's Principal Institutions of Markets and Private Property By Jon D. Wisman
  2. Bargaining to work: the effect of female autonomy on female labour supply By Chloé van Biljon; Dieter von Fintel; Atika Pasha
  3. Human Ethics and Virtues: Rethinking the Homo-Economicus Model By Sanjit Dhami
  4. Measuring women’s economic empowerment: Critical lessons from South America By Susana Martínez-Restrepo; Laura Ramos-Jaimes; Alma Espino; Martin Valdivia; Johanna Yancari Cueva
  5. A multi-dimensional measure of environmental behavior: Exploring the predictive power of connectedness to nature, ecological worldview and environmental concern By Halkos, George; Gkargkavouzi, Anastasia; Matsiori, Steriani
  6. The financialisation of the nonfinancial corporation. A critique to the financial rentieralization hypothesis By Joel Rabinovich
  7. Exploitation, skills, and inequality By Jonathan F. Cogliano; Roberto Veneziani
  8. Gender role changes and their impacts on Syrian women refugees in Berlin in light of the Syrian crisis By Habib, Nisren
  9. The Communist Manifesto: What can we learn today for a country like Vietnam? By Herr, Hansjörg
  10. High unknowability of climate damage valuation means the social cost of carbon will always be disputed By John C. V. Pezzey
  11. Exploitation, Human Nature, and Social Institutions By Jon D. Wisman
  12. Public Communication and Collusion in the Airline Industry By Aryal, Gaurab; Ciliberto, Federico; Leyden, Benjamin
  13. Market Impact in a Latent Order Book By Pierre Laffitte; Ismael Lemhadri
  14. The common heritage of mankind as a means to assess and advance equity in deep sea mining By Bourrel, Marie; Thiele, Torsten; Currie, Duncan
  15. Cooperative banks and local economic growth By Paolo Coccorese; Sherrill Shaffer

  1. By: Jon D. Wisman
    Abstract: Ever since capitalism came to be recognized as a new economic system, its principal institutions of private property and markets have had vociferous critics, of whom none was more wide-ranging than Karl Marx. Marx claimed that not only were private property and markets critical to creating an ideological patina of freedom, behind which, as in slavery and feudalism, a small class extracted from the mass of producers practically all output above that necessary for bare subsistence, but they also served to enable this exploitation. Further, Marx and other critics faulted private property and markets for being corrupting. Yet Marx recognized that capitalism, unlike earlier exploitative systems, was radically dynamic, producing unprecedented wealth, while transforming not only all it inherited from the past, but also its own nature so as to eventually empower even the producers, who he believed would abandon these capitalist institutions. He did not imagine that the dynamism, wealth, and potential freedom that capitalism was delivering might have little chance of flourishing in the absence of its institutions of private property and markets. This article claims that Marx and other critics were wrong to blame capitalism's principal institutions of private property and markets for the injustices that accompanied them. Instead it is the specific form of inequality that co-evolved with them that enables an elite to extract surplus from the producers. It is the inequality that must be targeted. A dynamic and just social order needs private property and markets.
    Keywords: Exploitation, Markets, private property, Marx
    JEL: B51 P11 P16
    Date: 2017
  2. By: Chloé van Biljon (Department of Economics and ReSEP, Stellenbosch University); Dieter von Fintel (Department of Economics and ReSEP, Stellenbosch University); Atika Pasha (Department of Economics, University of Mannheim)
    Abstract: Female labour supply is an important outcome for measuring gender equality and is therefore regarded as one of the key indicators for women's empowerment. The empowerment of women through greater labour force participation is well documented in the literature. We argue, however, that the relationship between female labour force participation and empowerment is endogenous. We instead turn our attention to understanding whether greater female household autonomy causes participation in the labour market in the first place. Using the roll out of banking cards associated with the South African government cash transfers as an exogenous shock, we show that financial inclusion improves women's decision making power in the household. In response to this redistribution of bargaining power in the household, we provide evidence of increased female labour force participation. Our results show that becoming a primary decision maker leads to a 92 percentage point increase in the probability that women participate in the labour market.
    Keywords: Female labour force participation, SASSA cards, female autonomy, non-cooperative household bargaining model, South Africa, NIDS
    JEL: C36 C78 D13 J16 J22
    Date: 2018
  3. By: Sanjit Dhami
    Abstract: The neoclassical model in economics envisages humans as amoral and self-regarding (Econs). This model, also known as the homo-economicus model, is not consistent with the empirical evidence. In light of the evidence, the continued use of the homo-economicus model is baffling. It also stymies progress in the field by putting the burden of adjustment on auxiliary assumptions that need to compensate for an unrealistic picture of human motivation and behavior. This essay briefly outlines the evidence for a more inclusive picture of humans in which ethics and morality play a central role. It argues for replacing the homo-economicus model with a homo-behavioralis model that has already enabled great progress to be made in the field of behavioral economics.
    Keywords: ethics, morality, intrinsic motivation, consequentialistic choices, lying-aversion, guilt-aversion, markets and morality, moral balancing, self-image, self-serving justifications, partial lying, third party punishment, delegation, social identity, moral suasion
    JEL: D90 D64
    Date: 2017
  4. By: Susana Martínez-Restrepo; Laura Ramos-Jaimes; Alma Espino; Martin Valdivia; Johanna Yancari Cueva
    Abstract: Women face significant economic, social, and cultural challenges that limit their access to markets, quality jobs, and entrepreneurship and income-generation strategies. The big question among policy makers, development agencies, and researchers in the fi¬eld of women’s economic empowerment is how to effectively improve women’s economic empowerment through income-generation strategies, training, and social programs. Conventional measures of economic empowerment have used employment, income, and education as proxies. More recently, the research community has recognized the relevance of subjective dimensions such as decision-making power over purchases, bargaining power, subjective perceptions of well-being, and freedom of choice. In this context, the objective of this book is to provide empirical evidence from the South American countries of Colombia, Peru, and Uruguay about our experiences as researchers implementing existing methods and questionnaires used to explain and measure women’s economic empowerment in terms of individual outcomes. Our evidence focuses on the results, effects, impacts, and measurement of economic empowerment. To this end, the book explores both quantitative and qualitative methods to measure the usual proxies for empowerment—such as decision making and labor market participation—and the subjective dimensions of these measurements. In this book, we use the theoretical framework proposed by Naila Kabeer in her 1999 article "Resources, Agency, Achievements: Reflections on the Measurement of Women's Empowerment," which frames empowerment as a process rather than an outcome.
    Keywords: Mujeres, Empoderamiento Económico, Equidad de Género, Evaluación de Impacto, Interseccionalidad, Medidas Subjetivas, Métodos Mixtos.
    JEL: I00 J01 O11 I38
    Date: 2017–11–14
  5. By: Halkos, George; Gkargkavouzi, Anastasia; Matsiori, Steriani
    Abstract: In this study we examine the multi-dimensional structure of environmental behavior and its potential domains. Factor analysis reveal six behavioral domains: civic actions, policy support, recycling, transportation choices, behaviors in a household setting and consumerism. We use the Connectedness to Nature and Inclusion of Nature in Self scales to measure connection with nature, the New Environmental Paradigm to measure ecological worldviews, and Environmental Motives Scale to assess people’s environmental concern. We further explore the predictive power of connectedness to nature, ecological worldview, and environmental concern for explaining the diverse behavioral domains. Connectedness to nature and ecological worldview were more predictive of civic actions, recycling, household behaviors, and consumerism than were environmental concerns. In the case of policy support and transportation choices, environmental concerns explained more variance than the other constructs.
    Keywords: Environmental behavior; connectedness to nature; ecological worldview; environmental concern.
    JEL: A14 C38 Q00 Q51 Q56 Q59
    Date: 2018–02–17
  6. By: Joel Rabinovich (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)
    Abstract: One aspect in which nonfinancial corporations are said to be financialised is that they emulate the asset and income structure of financial corporations. This is what we call the financial rentieralization hypothesis. In this article we show that the evidence used to sustain it, in the US setting, has to be reconsidered. Our findings show that, contrary to the financial rentieralization hypothesis, financial income averages 2.5% of total income since the '80s while net financial profit gets more negative as percentage of total profit for nonfinancial corporations. In terms of assets, some of the alleged financial assets actually reflect other activities in which nonfinancial corporations have been increasingly engaging: internationalization of production, activities refocusing and M&As.
    Abstract: L'une des définitions de la financiarisation d'une société non financière est le fait qu'elle ac-quiert la structure de revenus et d'actifs des sociétés financières. C'est ce que nous appelons l'hypothèse de rentierisation financière. Dans cet article, nous montrons que les données à l'origine de cette hypothèse, dans le cas des Etats-Unis, doivent être reconsidérées. Nos résultats constatent que, contraire-ment à l'hypothèse de rentierisation financière, les revenus financiers représentent en moyenne 2,5% des revenus totaux depuis les années 1980, tandis que le profit financier net pèse négativement sur les profits totaux des sociétés non financières. En termes d'actifs, certains des actifs dits financiers sont en réalité issus d'autres activités dans lesquelles les sociétés non financières sont de plus en plus engagées : internationalisation de la production, recentrage sur des activités principales, fusions et acquisitions.
    Keywords: financialisation of the non-financial corporation, firm strategy, corporate governance, USA,Mots clés: financiarisation des entreprises non financières, stratégie des firmes, gouvernement d'entreprise,États-Unis
    Date: 2018–01–24
  7. By: Jonathan F. Cogliano (Department of Economics, Dickinson College); Roberto Veneziani (Queen Mary University of London)
    Abstract: This paper uses a computational framework to analyse the equilibrium dynamics of exploitation and inequality in accumulation economies with heterogeneous labour. A novel index is presented which measures the intensity of exploitation at the individual level and the dynamics of the distribution of exploitation intensity is analysed. The e ects of technical change and evolving social norms on exploitation and inequalities are also considered and an interesting phenomenon of exploitation cycles is identi ed. Various taxation schemes are analysed which may reduce exploitation or inequalities in income and wealth. It is shown that relatively small taxation rates may have significant cumulative effects on wealth and income inequalities. Further, taxation schemes that eliminate exploitation also reduce disparities in income and wealth but in the presence of heterogeneous skills, do not necessarily eliminate them. The inegalitarian effects of different abilities need to be tackled with a progressive education policy that compensates for unfavourable circumstances.
    Keywords: Exploitation, heterogeneous labour, wealth taxes, computational methods
    JEL: B51 C63 D31
    Date: 2018–01–10
  8. By: Habib, Nisren
    Abstract: Gender roles of Syrian women started to shift in 2011, in light of the Syrian conflict. This shift was a response to the difficult situations which Syrian women faced inside Syria as well as in the neighboring countries to which they fled in the attempt to find safer living conditions. However, the uncertain situation and the precarious working and living conditions in Syria and the neighboring countries forced many Syrian women and families to flee to Europe, with the highest number to Germany, facing the challenge of a new culture and new social norms. The main purpose of this study is to evaluate if and how the gender roles of Syrian women who fled to Berlin, Germany, have shifted. Using semi-structured interviews conducted in the period July - December 2016, the study illustrates the challenges and opportunities they face, both as women and as refugees, and in how far these affect their gender roles.
    Keywords: Gender roles changing,Refugees,Integration
    Date: 2018
  9. By: Herr, Hansjörg
    Abstract: Today we can learn from the Communist Manifesto that unregulated markets lead to disastrous economic, social, and political developments, which can endanger the reproduction of the capital system itself. The liberal argument, based on Adam Smith's invisible hand - that markets coordinate the selfish actions of millions of people and lead to the welfare of nations -, is a dangerous dream. The consequence is that politicians should not listen to economists, including foreign advisors who preach the liberal dreams of radical versions of capitalist systems. Especially for developing countries, it is vital that they strive for a regulated version of capitalist development. Marx and Engels had a deep understanding of the functioning of capitalism. They underestimated the possibilities to regulate the capitalist system and also allowed the working class to take part in prosperity. However, there is always the danger that capitalist systems evolve with low levels of regulation with the features of capitalism analysed in the Manifesto.
    Keywords: Marxism,Communist Manifesto,capitalism,development strategy
    JEL: B14 B30 O11
    Date: 2018
  10. By: John C. V. Pezzey (Fenner School of Environment and Society, The Australian National University)
    Abstract: The social cost of carbon (SCC), a carbon price calculated from cost-benefit based integrated assessment models and used to inform some climate policies, will always be highly disputed, partly because a key model assumption, the centennial climate damage valuation function (CDF), will "always" be highly unknowable. Current disputes are highlighted here by the huge range of SCCs resulting from alternative values of key parameters like discount rates, climate sensitivity and the CDF; by the implausibility to climate scientists of a leading model's warming projections; and by strong criticisms of mainstream CDFs by many climate economists. The claim that statistical analyses of "weather" impacts on local economies can improve centennial CDFs rests on untestable out-of-sample extrapolation. Compared to astronomy, geology and other earth sciences, prediction testing in climate science is generally harder because of Earth's uniqueness, and the unprecedented range and speed of likely centennial climate change, but stable underlying laws make modelling based on past observations meaningful. By contrast, the added complexity of human behaviour means there are no reliable laws for modelling centennial CDFs. For this reason alone, SCCs will always be disputed. I suggest instead more use of carbon prices based on marginal abatement costs, computed on cost-effective paths that achieve socially agreed, physical climate targets. Downplaying the SCC approach to carbon prices poses challenges to many economists, and a cost-effectiveness approach is no panacea, but it avoids the illusion of optimality, and allows more detailed analysis of many current climate policies.
    Keywords: Climate policy, cost-benefit analysis, global warming, centennial damage valuation, high unknowability, cost-effectiveness analysis
    JEL: Q54 Q51 D80 D61 E17 C18
    Date: 2018–01
  11. By: Jon D. Wisman
    Abstract: Exploitation exists where some gain advantage at others' expense. Its root force is found in human biology, the fact that as a socially-reproducing species, humans compete for mates and the exploitation of others can generate a competitive advantage. Social institutions direct and channel this competitiveness. Thus, during 97-98 percent of our species existence, competitiveness was not expressed by accumulating material wealth and political power, but by being good warriors and foragers, being cooperative, and being generous. However, with the rise of civilization and the state, elites gained ownership and control over the means of production, thereby subjugating all others and appropriating their surplus. Although violence stood behind this exploitation, ideology served as the principal political tool for its maintenance. It is the force of ideology that clarifies why, even with free speech, free press, free assembly, and the franchise, exploitation continues to exist.
    Keywords: Inequality, ideology, Sexual selection, Economic Surplus
    JEL: B52 N00 N40 P00
    Date: 2018
  12. By: Aryal, Gaurab; Ciliberto, Federico; Leyden, Benjamin
    Abstract: We investigate whether the top management of all legacy U.S. airlines used their quarterly earnings calls as a mode of communication with other airlines to coordinate output reduction (fewer passenger seats) on competitive routes. We build an original and novel dataset on the public communication content from the earnings calls, and use Natural Language Processing techniques from computational linguistics to parse and code the text from earnings calls by airline executives to measure communication. Then we determine if mentioning terms associated with ``capacity discipline'' is a way to sustain collusion on capacity. The estimates show that when all legacy carriers in a market communicate ``capacity discipline,'' it leads to a substantial reduction in the number of seats offered in the market. We find that the effect is driven entirely by legacy carriers, and also that the reduction is larger in smaller markets. Finally, we leverage our high-dimensional text data to develop novel approaches to implement falsification tests and check conditional exogeneity, and confirm that our finding ---legacy airlines use public communication regarding capacity discipline to collude ---is not spurious.
    Keywords: Airlines; Capacity Discipline; Collusion; communication; Text Data
    JEL: D22 L12 L41 L68
    Date: 2018–02
  13. By: Pierre Laffitte; Ismael Lemhadri
    Abstract: We revisit the classical problem of market impact through the lens of a new agent-based model. Drawing from the mean-field approach in Statistical Mechanics and Physics, we assume a large number of agents interacting in the order book. By taking the 'continuum' limit we obtain a set of nonlinear differential equations, the core of our dynamical theory of price formation. And we explicitly solve them using Fourier analysis. One could talk as well of a "micro-macro" approach of equilibrium, where the market price is the consequence of each ("microscopic") agent behaving with respect to his preferences and to global ("macroscopic") information. When a large market order (or metaorder) perturbs the market, our model recovers the square-root law of impact, providing new insights on the price formation process. In addition, we give various limiting cases, examples and possible extensions.
    Date: 2018–02
  14. By: Bourrel, Marie; Thiele, Torsten; Currie, Duncan
    Abstract: A key objective of the United Nations Convention on the Law of the Sea (UNCLOS) as stated in its Preamble, is to contribute to the realisation of a just and equitable international economic order which takes into account the interests and needs of mankind as a whole and, in particular, the special interests and needs of developing countries. As for any other principles of international law, the context within which the principle of the common heritage of mankind (CHM) has been developed is essential to understanding the philosophy behind it, its evolution and more particularly, the challenges faced today for is effective implementation as a means to advance the concept of equity in the context of deep sea mining (DSM mining).
    Keywords: common heritage of mankind principle; equity; deep sea mining; developing States; United Nations Convention on the Law of the Sea; International Seabed Authority
    JEL: R14 J01
    Date: 2016–08–11
  15. By: Paolo Coccorese; Sherrill Shaffer
    Abstract: In this paper we study the impact of cooperative banks on local economic development. Working on Italian municipality data in the period 2001-2011, we find that this type of banks plays a distinct role in enhanced local economic performance – particularly income, employment and firms’ birth growth rates – and that their presence is more effective compared to conventional banks. This evidence upholds the view that their more widespread presence would be beneficial, especially in those areas that suffer from lower economic growth, and accords with other studies underlining the decisive role of cooperative banks in supporting traditional credit provision to local borrowers.
    Keywords: Cooperative banks, Growth, Municipalities, Economic performance
    JEL: G21 O4 R11
    Date: 2018–02

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