nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2018‒09‒03
sixteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Industry rates of return in Korea and alternative theories of competition: equalising convergence versus tendential equalisation By Trofimov, Ivan D.
  2. Workers’ awareness context in Italian 4.0 factories By Cirillo, Valeria; Rinaldini, Matteo; Staccioli, Jacopo; Virgillito, Maria Enrica
  3. A Proof of Labor Theory of Value based on Marginalist Principle By Hiroshi Onishi
  4. Kaldor and Piketty's Facts: the Rise of Monopoly Power in the United States By Gauti Eggertsson; Jacob Robbins
  5. Does Openness Matter for Structural Change? By Lidia Smitkova
  6. Beyond "Bounded Rationality": Behaviours and Learning in Complex Evolving Worlds By Giovanni Dosi; Marco Faillo; Luigi Marengo
  7. Objectives’ alignment between members and agricultural cooperatives By Bareille, François; Bonnet-Beaugrand, Florence; Duvaleix-Treguer, Sabine
  8. Global Market Power By Jan De Loecker; Jan Eeckhout
  9. The Dialectics of Motivation and Action: A Look into the ‘Why’ of the “Kerala Model” By Pillai N., Vijayamohanan
  10. The labour-augmented K+S model: a laboratory for the analysis of institutional and policy regimes By Dosi, G.; Pereira, M. C.; Roventini, A.; Virgillito, M. E.
  11. Exploitation and the Decision to Migrate: The Role of Abuse and Unfavorable Working Conditions in Filipina Domestic Workers' Desire to Return Abroad By Naufal, George S; Malit, Jr., Froilan T.
  12. Self-regulation promotes cooperation in social networks By Dario Madeo; Chiara Mocenni
  13. Supporting Crowd-Powered Science in Economics: FRACTI, a Conceptual Framework for Large-Scale Collaboration and Transparent Investigation in Financial Markets By Jorge Faleiro; Edward Tsang
  14. Combining Locally Owned Farmer Cooperatives By Van Dyne, Donald L.; Rhodes, V. James
  15. The role of complex analysis in modeling economic growth By Angelica Sbardella; Emanuele Pugliese; Andrea Zaccaria; Pasquale Scaramozzino
  16. Die Ministererlaubnis als Element der deutschen Wettbewerbsordnung: Eine theoretische und empirische Analyse By Budzinski, Oliver; Stöhr, Annika

  1. By: Trofimov, Ivan D.
    Abstract: This paper considers convergence and equalisation in industry profit rates in the Republic of Korea in the period of 1970–2015, from the perspective of alternative paradigms of competition – classical and neoclassical. Two measures of profitability are estimated: average rate of profit based on the total capital stock in the economy, and incremental rate of profit (IROP) based on the concept of regulating capital. It is shown that little convergence in industry rates of profit occur when the former measure is used, while almost complete equalisation of IROP is achieved. The classical-type equalisation takes place in particular capital accumulation and competitive settings in Korea, characterised by the prominent role of diversified conglomerate firms, the capital flows within conglomerates, investment coordination by the state, and the fast pace of capital accumulation and renewal).
    Keywords: Convergence, gravitation, average profit rate, incremental profit rate, unit roots
    JEL: B5 C22 L0 L60 L70 L90
    Date: 2018–08–08
  2. By: Cirillo, Valeria; Rinaldini, Matteo; Staccioli, Jacopo; Virgillito, Maria Enrica
    Abstract: The study of the co-evolution of processes of technological innovation and the resulting organisational changes has been a topic of interest since the first appearance of the idea of division of labour and specialisation in Adam Smith’s works. The major phases of organisational change are in fact the result of ‘waves’ of technological innovations attributable to the various industrial revolutions. Nowadays, a new potential technological paradigm dubbed ‘Industry 4.0’ is shaping the manufacturing output of USA, Europe, and China, particularly in the automotive/engineering industry. With reference to the latter, the present research contribution aims at investigating, by means of field-work research activity, the degree of openness of the awareness context of workers and their intervention authority on the production process within three factories in the so-called Italian ‘Motor Valley’. Together with state-of-the-art 4.0 technology adoption, these firms exhibit different organisational practices ranging from the Japanese Toyotism (Cesab-Toyota), to a mix of Taylorism and co-determination (Ducati), up to the example most akin to the German ‘Mitbestimmung’ (Lamborghini). This technological wave is fostering the process of making the production system lean. Our findings corroborate the presence of a hybrid process of Industry 4.0 adoption, reflected into a hybrid process of workforce empowerment.
    Keywords: Industry 4.0,Technological Paradigms,Organisational Change,Lean Systems,Awareness Context
    JEL: L23 L6 M54 O33
    Date: 2018
  3. By: Hiroshi Onishi (Faculty of Economics, Keio University)
    Abstract: Because anti-Marxist's criticism against Fundamental Marxian Theorem(FMT) is based on an assertion that this proof can be understood as a "sun-power exploitation,"if we assume, for example, "Sun-power Theory of Value", we should prove not only exploitation but also Labor Theory of Value itself. Therefore, this paper aims to prove Labor Theory of Value mathematically by focusing on the historically conditional proportionality between labor input and amount of products which is assumed in Labor Theory of Value. By this proof of the conditional proportionality, we show that marginalist principle does not disturb Labor Theory of Value in capitalism at all. Furthermore, marginalist principle is important to show the labor process as a subjective optimization process which is not by the sun but only by human beings. In this way, we use anti-Marxist's marginal principle to object anti-Marxist criticism against Labor Theory of Value.
    Keywords: Fundamental Marxian Theorem, labor theory of value, marginalist principle, constant return to labor, machine-based production system
    JEL: B13 B14 B24
  4. By: Gauti Eggertsson (Brown University); Jacob Robbins (Brown University)
    Abstract: The macroeconomic data of the last thirty years has overturned at least two of Kaldor's famous stylized growth facts: constant interest rates, and a constant labor share. At the same time, the research of Piketty and others has introduced several new and surprising facts: an increase in the financial wealth-to-output ratio in the US, an increase in measured Tobin's Q, and a divergence between the marginal and the average return on capital. In this paper, we argue that these trends can be explained by an increase in market power and pure profits in the US economy, i.e., the emergence of a non-zero-rent economy, along with forces that have led to a persistent long term decline in real interest rates. We make three parsimonious modifications to the standard neoclassical model to explain these trends. Using recent estimates of the increase in markups and the decrease in real interest rates, we show that our model can quantitatively match these new macroeconomic facts.
    Date: 2018
  5. By: Lidia Smitkova (University of Cambridge)
    Abstract: This paper develops a novel framework to assess the contribution of openness and trade to structural change. I develop an identity-based decomposition to study the evolution of the share of manufacturing value added at country level, and apply it to a sample of 20 large manufacturing exporters relying on sectoral data from the World Input-Output Database for the years 1995-2007. The analysis features two new mechanisms of structural change, arising from changes in sectoral competitiveness in international markets, and changes in the size of the foreign market. The average contribution of these channels to structural change is 33 and 34 percent, respectively. This suggests that, by omitting trade, closed economy analyses may be severely limited. To investigate the driving forces underlying structural change, I rely on a quantitative model building on Eaton and Kortum (2002) and simulate the effects of shocks to trade costs and trade deficits on the manufacturing value added shares of China, Germany, the United Kingdom and the United States. I find that shocks to trade costs and trade imbalances play a key role as drivers of structural change. They explain most of the change in the manufacturing value added shares in China and the United States. They contribute significantly, alongside shocks to sectoral productivity levels, in Germany and the United Kingdom.
    Date: 2018
  6. By: Giovanni Dosi; Marco Faillo; Luigi Marengo
    Abstract: This work challenges the very notion of bounded rationality as dangerously too near to some "unbounded rationality" used as a benchmark. Should we assume that there is an "unbounded" rationality as a benchmark? Should one start, in order to describe and interpret human behaviour, from a model which assumes that we, human beings, have complete and well-defined knowledge of our preferences, all possible states of the world, all possible actions (our "technologies"), the mappings among them, and then look for possible "bounds" and "biases"? Our answer is negative. Rather, the question should be: how do human agents and organizations thereof actually behave in complex and changing environments? Answering this question, we suggest, entails also a significant departure from what is now accepted as behavioural economics, often meant as the analysis of more or less significant deviations from the "Olympic rationality". On the contrary, we suggest, human beings and human organizations behave quite distinctively from the prescriptive model derived from the axioms of rationality.
    Keywords: bounded rationality, heuristics, cognition, memory
    Date: 2018–08–26
  7. By: Bareille, François; Bonnet-Beaugrand, Florence; Duvaleix-Treguer, Sabine
    Abstract: Members’ commitment lessens when agricultural cooperatives grow larger. Their organization becomes more complex and their membership more heterogeneous, which threatens their sustainability and leads them to implement specific mechanisms for collective decisions. We explore how the alignment of objectives between a multi-purpose cooperative and its members influences member commitment. We estimate a multinomial probit model on a cross-section sample of 3,205 members from a large agricultural cooperative in France. We assess the determinants of member commitment through four factors: the offer of new agricultural practices, the availability of outlets and supplies to members, the farm distance to the cooperative headquarters and the farm governance. We show that the adoption of new agricultural practices has a small but significant effect. The availability of outlets and supplies has the strongest effect on the economic involvement of the farmers. Other determinants, such as farm governance or geographical distance to the cooperative headquarters, also reinforce member commitment.
    Date: 2017–05–23
  8. By: Jan De Loecker; Jan Eeckhout
    Abstract: To date, little is known about the evolution of market power for the economies around the world. We extract data from the financial statements of over 70,000 firms in 134 countries, and we analyze and document the evolution of markups over the last four decades. We show that the average global markup has gone up from close to 1.1 in 1980 to around 1.6 in 2016. Markups have risen most in North America and Europe, and least in emerging economies in Latin America and Asia. We discuss the distributional implications of the rise in global market power for the labor share and for the profit share.
    JEL: E0 K0 L0
    Date: 2018–06
  9. By: Pillai N., Vijayamohanan
    Abstract: The so-called “Kerala Model” had generated a lot of energy in both academic and political circles in diverse degrees of appreciation and apprehension. The present paper argues that it was the political will that prevailed over the constraints of economic capability in bringing about wonders in Kerala. This political will sums up the spirit of public action, involving both the demand and supply forces: organized public demand and willing state provision. And this in turn is made possible by a historical conjunction of complementary interaction between an objective enabling environment and a subjective receptivity, the motivations of the agents, here the state and the public, to act. Kerala today presents a positive organic system of interactive development forces – a sort of cumulative causation through a ‘chain interaction’: human development economic growth further human development. The initial objective reality in Kerala, to be precise, in the then princely States of Travancore and Cochin, corresponded to a state of flux in which the old order was fast falling under the pressure of the social-economic changes brought about by monetisation and commercialisation, nascent industrialisation and proletarianization of the working mass. The freedom struggle imparted the inevitable political dimension to this flux. Interacting in/with this objectivity condition in a complementary coupling is the motivational receptivity of the agents to development. Given the absence of an analytical interpretation of this dynamic process, the present author sought to explore the ‘how’ of this development in 2003 in terms of a human rights perspective of ‘norms-rights transition process’ through public action: norms are progressively realised on a time-bound priority basis to form an ever-expanding set of rights through public action. This highlights the significance of the role of a willing state in opening up opportunities, that is, creating capabilities, in response to a pressuring public demand. Here individual freedom is taken up as a social commitment. Following this interpretation, the present paper attempts to look into the ‘why’ of the dynamics of “Kerala Model”.
    Keywords: Kerala model, economic growth-human development interaction, motivation, public action
    JEL: O1 Z1
    Date: 2018
  10. By: Dosi, G.; Pereira, M. C.; Roventini, A.; Virgillito, M. E.
    Abstract: In this work we discuss the research findings from the labour-augmented Schumpeter meeting Keynes (K+S) agent-based model. It comprises comparative dynamics experiments on an artificial economy populated by heterogeneous, interacting agents, as workers, firms, banks and the government. The exercises are characterised by different degrees of labour flexibility, or by institutional shocks entailing labour market structural reforms, wherein the phenomenon of hysteresis is endogenous and pervasive. The K+S model constitutes a laboratory to evaluate the effects of new institutional arrangements as active/passive labour market policies, and fiscal austerity. In this perspective, the model allows mimicking many of the customary policy responses which the European Union and many Latin American countries have embraced in reaction to the recent economic crises. The obtained results seem to indicate, however, that most of the proposed policies are likely inadequate to tackle the short-term crises consequences, and even risk demoting the long-run economic prospects. More objectively, the conclusions offer a possible explanation to the negative path traversed by economies like Brazil, where many of the mentioned policies were applied in a short period, and hint about some risks ahead.
    Keywords: Labour market,Policy evaluation,Agent-based model
    JEL: C63 E24 H53 J88
    Date: 2018
  11. By: Naufal, George S (Texas A&M University); Malit, Jr., Froilan T. (Cornell University)
    Abstract: The Gulf Cooperation Council (GCC) countries host at least 2.4 million foreign domestic workers, who are legally excluded from national labor laws and regulations, thus placing them in precarious social, legal, and economic conditions in the GCC labor markets. Despite the recent growth of academic scholarship on domestic work in the GCC and beyond, little attention has been paid to absconding foreign domestic workers and the complex role abuse plays in determining their future decision to migrate. This paper examines the likelihood that Filipina domestic workers will migrate after absconding from their previous employer. Applying a unique dataset of absconding Filipina domestic workers collected at the Philippine Labor Office (POLO) in Qatar between 2013 - 2015, we find that abuse and poor working conditions do not act as deterrents for future migration. Paradoxically, absconding domestic workers who have been financially abused are more likely to want to return and seek employment abroad. This study offers empirical and theoretical insights into the connection between migrant exploitation and domestic workers' desire to migrate once again.
    Keywords: migration, absconding, domestic workers, GCC countries, abuse, mobility
    JEL: J61 J68 O15
    Date: 2018–07
  12. By: Dario Madeo; Chiara Mocenni
    Abstract: Cooperative behavior in real social dilemmas is often perceived as a phenomenon emerging from norms and punishment. To overcome this paradigm, we highlight the interplay between the influence of social networks on individuals, and the activation of spontaneous self-regulating mechanisms, which may lead them to behave cooperatively, while interacting with others and taking conflicting decisions over time. By extending Evolutionary game theory over networks, we prove that cooperation partially or fully emerges whether self-regulating mechanisms are sufficiently stronger than social pressure. Interestingly, even few cooperative individuals act as catalyzing agents for the cooperation of others, thus activating a recruiting mechanism, eventually driving the whole population to cooperate.
    Date: 2018–07
  13. By: Jorge Faleiro; Edward Tsang
    Abstract: Modern investigation in economics and in other sciences requires the ability to store, share, and replicate results and methods of experiments that are often multidisciplinary and yield a massive amount of data. Given the increasing complexity and growing interaction across diverse bodies of knowledge it is becoming imperative to define a platform to properly support collaborative research and track origin, accuracy and use of data. This paper starts by defining a set of methods leveraging scientific principles and advocating the importance of those methods in multidisciplinary, computer intensive fields like computational finance. The next part of this paper defines a class of systems called scientific support systems, vis-a-vis usages in other research fields such as bioinformatics, physics and engineering. We outline a basic set of fundamental concepts, and list our goals and motivation for leveraging such systems to enable large-scale investigation, "crowd powered science", in economics. The core of this paper provides an outline of FRACTI in five steps. First we present definitions related to scientific support systems intrinsic to finance and describe common characteristics of financial use cases. The second step concentrates on what can be exchanged through the definition of shareable entities called contributions. The third step is the description of a classification system for building blocks of the conceptual framework, called facets. The fourth step introduces the meta-model that will enable provenance tracking and representation of data fragments and simulation. Finally we describe intended cases of use to highlight main strengths of FRACTI: application of the scientific method for investigation in computational finance, large-scale collaboration and simulation.
    Date: 2018–08
  14. By: Van Dyne, Donald L.; Rhodes, V. James
    Keywords: Agricultural and Food Policy
  15. By: Angelica Sbardella; Emanuele Pugliese; Andrea Zaccaria; Pasquale Scaramozzino
    Abstract: Development and growth are complex and tumultuous processes. Modern economic growth theories identify some key determinants of economic growth. However, the relative importance of the determinants remains unknown, and additional variables may help clarify the directions and dimensions of the interactions. The novel stream of literature on economic complexity goes beyond aggregate measures of productive inputs, and considers instead a more granular and structural view of the productive possibilities of countries, i.e. their capabilities. Different endowments of capabilities are crucial ingredients in explaining differences in economic performances. In this paper we employ economic fitness, a measure of productive capabilities obtained through complex network techniques. Focusing on the combined roles of fitness and some more traditional drivers of growth, we build a bridge between economic growth theories and the economic complexity literature. Our findings, in agreement with other recent empirical studies, show that fitness plays a crucial role in fostering economic growth and, when it is included in the analysis, can be either complementary to traditional drivers of growth or can completely overshadow them.
    Date: 2018–08
  16. By: Budzinski, Oliver; Stöhr, Annika
    Abstract: Das Instrument der Ministererlaubnis ist ein vieldiskutierter Sonderfall in der deutschen Wettbewerbspolitik, bei welchem der Bundeswirtschaftsminister einen vom Bundeskartellamt (BKartA) untersagten Zusammenschluss bei Vorliegen besonderer Gründe im Nachhinein doch noch erlauben kann. Im vorliegenden Beitrag werden sowohl die Ausgestaltung, als auch die Sinnhaftigkeit des Instrumentes an sich aus ökonomischer Sicht beleuchtet, indem zunächst die im Gesetz verankerten Gründe für eine Erlaubnis auf einen Konflikt mit dem Schutz des Wettbewerbs, als übergeordnete Aufgabe des BKartA, untersucht werden. Nach einer Analyse der bisherigen 22 Fälle, bezogen auf die jeweiligen Begründungen und Erfolge, werden abschließend fünf Möglichkeiten zur Novellierung des Instrumentes diskutiert. Dabei kommen die Autoren zu dem Schluss, dass eine Anpassung des Gesetzes, sowohl bezogen auf das entscheidende Gremium, als auch bezüglich der zulässigen Begründungen für eine Ministererlaubnis, notwendig wäre, um das Bestehen des Instrumentes wohlfahrtsökonomisch rechtfertigen zu können.
    Keywords: Ministererlaubnis,Wettbewerbspolitik,Zusammenschlusskontrolle,Mergers & Acquisitions,Wettbewerbsökonomik,Antitrust,Recht & Ökonomik,Fusionskontrolle,Wettbewerbsordnung,Wirtschaftspolitik
    JEL: L40 K21 B52 L51
    Date: 2018

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