nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2019‒04‒08
eighteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Of Ecosystems and Economies: Re-connecting Economics with Reality By Spash, Clive L.; Smith, Tone
  2. Post-Truth: An Alumni Economist’s Perspective By Ben Fine
  3. The economization of education and the implications of the quasi-commodification of knowledge on higher education for sustainable development By Petra Biberhofer
  4. Untangling the radical imaginaries of the Indignados' movement: Commons, autonomy and ecologism By Viviana Asara
  5. Mobiliser les sciences de gestion pour réussir la transition écologique et sociale By P. Eynaud
  6. On Conceptualizing Risk: A Comment on Hoffmann By Xavier Méra
  7. Forward Rank-Dependent Performance Criteria: Time-Consistent Investment Under Probability Distortion By Xue Dong He; Moris S. Strub; Thaleia Zariphopoulou
  8. The past and future of the social sciences. A Schumpeterian theory of scientific development? By Stefano Lucarelli; Alfonso Giuliani; Hervé Baron
  9. Discrimination and public policies By Pierre Deschamps
  10. The Elephant in the room: For an economic analysis of plant-based diets and animal welfare By Romain Espinosa
  11. Labour Market Flexibility in Indian Industry A Critical Survey of the Literature By Aditya Bhattacharjea
  12. Sharing the liberal utopia. The case of Uber in France and the US By Katarzyna Gruszka; Andreas Novy
  13. Capital Accumulation, GreeParadox, and Stranded Assets: An Endogenous Growth Perspective By Jin, Wei; Zhang, ZhongXiang
  14. Building blocks for the macroeconomics and political economy of housing By Engelbert Stockhammer; Christina Wolf
  15. Spleen; The Failures of the Cliometric School By Stefano Fenoaltea
  16. Comparative Economic Studies and Comparative Economics: Six Decades and Counting By Josef C. Brada; Paul Wachtel
  17. Literature and Political Economy: An Invitation By Bichler, Shimshon; Nitzan, Jonathan
  18. A critical realist knowledge production: Enhancing a Potential-oriented Approach By Mikael Stigendal; Andreas Novy

  1. By: Spash, Clive L.; Smith, Tone
    Abstract: This discussion paper looks at the connections between economies and ecosystems, or more generally biophysical reality. The term "economies" is used, rather than "the economy", because of the prevalent false claim that there is only one type of economic system that is possible. We outline how the ecological crises is linked to the dominant drive for economic growth and the tendency to equate growth with progress and development; common even amongst those apparently critical of the need for continued growth in the materially rich countries. The unreality of mainstream economics is epitomised by the accolades given to those justifying mild reformist policy in response to human induced climate change in order to continue the pursuit of economic growth. We emphasise the structural aspects of economies as emergent from and dependent upon the structure and functioning of both society and ecology (energy and material flows). Finally, that the structure of the global economy must change to avoid social ecological collapse, poses the questions of how that can be achieved and what sort of economics is necessary? We explain the need for: (i) a structural change that addresses the currently dysfunctional relationships between economic, social and ecological systems, and (ii) an economics that is interdisciplinary and realist about its social and natural science relations.
    Keywords: growth, development, economics, ecosystems, thermodynamics, political economy, critical realism
    Date: 2019
  2. By: Ben Fine (Department of Economics, SOAS University of London, UK)
    Abstract: Drawing upon fifty years as an academic economist, this lecture to alumni of SOAS’s Department of Economics reflects upon the continual “post-truth†aspects of mainstream economics, ranging over its substantive, if shifting, content, its methodology, and its treatment of methodology and interdisciplinarity. It draws upon a wide range of theory, empirical analysis, policy and anecdote to highlight both the need for alternatives and the continuing, even increased, failure of the mainstream to engage with criticism and alternatives.
    Keywords: Heterodox economics, economics imperialism, pluralist economics
    JEL: B2 B4 B5
    Date: 2019–03
  3. By: Petra Biberhofer
    Abstract: This paper analyses an ongoing economization trend in the sphere of higher education (HE) and discusses its implications on higher education for sustainable development (HESD). The sources of this trend are connected with neoliberalism understood as a political project that seeks to extend competitive market forces, consolidate a market-friendly constitution, and promote individual freedom. In global HE neoliberalism, decision-makers, be it educational, scientific, or other, are pressured to assess how their activities impact financially on the individual, organizational, and institutional levels and/or the imperatives of an internationally competitive economy. The paper provides a contemporary analysis of the rise of neoliberalism in HE, understood as the specific trend of an academic capitalist knowledge/learning regime explained by JessopÂ’s six analytic distinct and potentially overlapping stages of economization. This analysis is based on a review of European policies from 2006 until 2017 and explains characteristics of current economization strategies. Their core principles relating to higher education are about improving economic performance based on knowledge and innovation. Smart growth is defined politically as the main purpose of HE and positioning students as future workers, with the right higher skills, as the means. The relevance of studentsÂ’ skills higher education institutions (HEI) are urged to develop highly depend on business demands. European policies are driven by a comprehensive entrepreneurial agenda restructuring the organizational mechanisms in HE. Accountability towards the labour market and skills performance of students set this agenda. Funding strategies rest on strong industry ties and diversification of revenue streams depend on HEI capability to establish tech-driven knowledge alliances between research, education and business. These new intermediary and powerful alliances drive economization strategies, influence curriculum development and decide on relevant higher level skills. Respective learning practices are oriented strongly towards developing entrepreneurial and digital skills based on personalized learning environments. Currently HESD adapts towards a neoliberal education agenda rather than preventing further shifts from a capitalist towards a competitive financialized economy. A profound critique would have to question the dominant economization trends in higher education i.e. the very purpose of education and the current raison dÂ’etre of HEI. The core of the critique might build on new institutionalized learning environments allowing deep, social learning and, hence, the potential of HEI to act as social catalysts empowering collective and disruptive agency.
    Keywords: economization, higher education, sustainable development, neoliberalism, knowledge-based economy
    Date: 2019
  4. By: Viviana Asara
    Abstract: The 'movements of the squares' involved first and foremost an awakening or re-discovering of the radical imagination both in the square encampments, and in later projects created with the movements' decentralizations. The new alternative projects born after the square have materialized the movements' radical imaginaries in urban environments, extending and deepening concerns of broad political change over everyday life. Based on ethnographic work on the Indignados' movement in the city of Barcelona, this paper delves more particularly into three Indignant urban projects. It untangles three common and interlinked radical imaginaries both embodied and actualized in participants' social practices, and further orienting their future visions: commons, autonomy and ecologism. Scrutinizing their meaning, it also sheds light on connected issues such new ways of interfacing with local state authorities and redefining the boundaries between the public and the common. It shows that the ecologism imaginary cannot be properly grasped if disconnected from the other two imaginaries, and argues that a transformative eco-politics can only be claimed as such if it is able to articulate such an integrated vision typical of 'socio-environmental movements'.
    Keywords: Indignados, imaginary, movement of the squares, commons, autonomy, environment
    Date: 2018
  5. By: P. Eynaud (IAE Paris - Sorbonne Business School)
    Abstract: Certains auteurs soulignent que l'économie rend compte d'une dépendance de l'Homme par rapport à la nature et à ses semblables. La question de la soutenabilité n'est pas simple à traiter car nous faisons face à un double péril : l'exploitation abusive des ressources naturelles met en danger l'équilibre du climat et de la biodiversité, et les inégalités croissantes condamnent notre capacité à faire société. Dans son livre « Insoutenables inégalités », le chercheur Lucas Chancel nous montre d'ailleurs clairement que les deux questions, sociale et environnementale, ne peuvent pas être dissociées. Face à de tels enjeux, les sciences de gestion peuvent grandement contribuer à l'affirmation d'une double solidarité : celle qui relie les hommes et la nature, et celle qui unit les hommes entre eux. Un tel effort ne se décrète pas. Il s'organise. Et c'est là que leur apport est déterminant. Il faut toutefois reconnaître que la solidarité n'est que peu prise en compte dans l'histoire de la pensée organisationnelle. On peut même affirmer qu'elle est négligée dans l'enseignement de la gestion, dont la pédagogie reste trop centrée sur le modèle de l'entreprise marchande et sur ses attendus. Pourquoi les manuels de gestion retiennent-ils de Smith le concept de « main invisible » et pas son attention à la question de la redistribution ? Et pourquoi ne jamais mentionner Tocqueville lorsqu'il répond à Smith en pointant l'apport des organisations démocratiques dans la richesse des nations ?
    Date: 2019
  6. By: Xavier Méra (Granem - Groupe de Recherche ANgevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage)
    Abstract: Hoffmann (2018) attempts to reconstruct a typology of risks deemed more accurate and useful to both economists and risk managers than currently received views on the subject within mainstream economics/finance and Austrian economics. This comment argues that his criticisms of the Misesian approach and his case for an alternative are unconvincing. We explain weaknesses in his criticisms of the Misesian approach and outline some problems with his constructive task of building up the alternative.
    Keywords: probability,Austrian economics,risk,uncertainty,complexity
    Date: 2018–09–23
  7. By: Xue Dong He; Moris S. Strub; Thaleia Zariphopoulou
    Abstract: We introduce the concept of forward rank-dependent performance processes, extending the original notion to forward criteria that incorporate probability distortions. A fundamental challenge is how to reconcile the time-consistent nature of forward performance criteria with the time-inconsistency stemming from probability distortions. For this, we first propose two distinct definitions, one based on the preservation of performance value and the other on the time-consistency of policies and, in turn, establish their equivalence. We then fully characterize the viable class of probability distortion processes, providing a bifurcation-type result. Specifically, it is either the case that the probability distortions are degenerate in the sense that the investor would never invest in the risky assets, or the marginal probability distortion equals to a normalized power of the quantile function of the pricing kernel. We also characterize the optimal wealth process, whose structure motivates the introduction of a new, distorted measure and a related market. We then build a striking correspondence between the forward rank-dependent criteria in the original market and forward criteria without probability distortions in the auxiliary market. This connection also provides a direct construction method for forward rank-dependent criteria. A byproduct of our work are some new results on the so-called dynamic utilities and on time-inconsistent problems in the classical (backward) setting.
    Date: 2019–04
  8. By: Stefano Lucarelli (UniBG - Università degli studi di Bergamo); Alfonso Giuliani (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Hervé Baron (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)
    Abstract: The paper argues that Vergangenheit und Zukunft der Sozialwissenschaften (The Past and Future of the Social Sciences), a contribution not always well understood in the literature, is important to an understanding of Schumpeter's concept of development as applied to the field of the social sciences. To this end, it addresses three key questions. First, can the book be taken as a starting point to reconstruct a Schumpeterian theory of scientific development? Second, is Vergangenheit und Zukunft merely ‘a brief outline of what first became the Epochen [der Dogmen- und Methodengeschichte] and finally the History of Economic Analysis', as Elizabeth Boody Schumpeter wrote in her Editor's Introduction (July 1952) to the latter work (p. XXXII), or should it be read as a complement to Epochen and perhaps the History? Third, is the eminent Japanese scholar Shionoya right to claim that Schumpeter's work pursued the ambitious goal of developing a ‘comprehensive sociology'?
    Keywords: method,scientific development,Schumpeter,social sciences
    Date: 2019–03–10
  9. By: Pierre Deschamps (Département d'économie)
    Abstract: Dans les trois chapitres de cette thèse, j’étudie l’effet des préjugés et des préférences discriminatoires sur le marché du travail. Je m’intéresse aussi à l’efficacité de politiques publiques qui ont pour objectif d’atténuer les effets négatifs de ces préférences. Dans mon premier chapitre, je m’appuie sur un arrêt célèbre qui a changé le pouvoir de monopsone des entreprises pour voir si, comme l’avait prédit Becker, les défaillances du marché ont un impact sur la discrimination salariale. Mes résultats montrent que lorsque le pouvoir de monopsone diminue, la discrimination salariale disparaît. Ce résultat montre que les préjugés ne doivent pas nécessairement se traduire par une discrimination salariale. Dans le deuxième chapitre, j’analyse l’effet d’une autre politique publique, une réforme de 2015 qui a imposé des quotas de genre dans les comités de sélection académique en France. L’objectif de cette réforme était d’améliorer les classements des femmes en augmentant la part des celles-ci dans les comités. En évaluant la réforme, je trouve l’effet inverse ; les femmes sont moins bien classées par les comités de recrutement après la réforme. Cependant, ce résultat ne montre pas que les femmes ont une préférence pour les hommes. L’effet négatif de la réforme ne se trouve que dans les commissions dirigées par des présidents de jury masculins, ce qui suggère que le comportement des hommes a peut-être lui aussi changé suite à la réforme. Ce chapitre démontre qu’il est nécessaire d’évaluer les politiques publiques, afin d’éviter que des réformes bien intentionnées ne causent plus de mal que de bien. Dans le troisième et dernier chapitre, je m’intéresse aux choix de localisation des individus. Je m’intéresse tout particulièrement à la question suivante : Les travailleurs préfèrent-ils habiter dans une ville avec une proportion plus importante de résidents du même groupe ethnique qu’eux, ceteris paribus ? J’utilise un modèle d’équilibre spatial qui permet de répondre à cette question. En contrôlant pour les salaires, les loyers, les revenus de transfert et les réseaux des individus, ces préférences sont comparables aux salaires réels dans les choix de localisation des villes des individus. Je simule ensuite le modèle pour essayer de voir quel est l’impact de ces préférences sur les écarts de salaires entre travailleurs blancs et noirs aux États-Unis.
    Keywords: Discrimination, Économie urbaine, Économie du travail, Mobilité; Discrimination, Urban economics, Labour economics, Mobility
    Date: 2018–07
  10. By: Romain Espinosa (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Cet article propose une discussion sur l'alimentation végétale et la condition animale comme objets d'étude pour la science économique. Il répond à trois questions : Pourquoi les économistes devraient-ils s'intéresser à la question de la consommation de produits d'origine animale ? Quelle peut être la contribution de l'économie aux discussions académiques existantes ? Quelles raisons peuvent expliquer le peu d'intérêt porté jusque-là par les économistes à cette problématique ? Ce travail expose tout d'abord trois arguments pour lesquels la science économique devrait prendre en compte la consommation de produits d'origine animale : une raison environnementale, une raison sanitaire et une raison éthique. Il présente ensuite l'analyse comportementale de la consommation de viande développée en psychologie, puis discute comment l'économie pourrait contribuer à ce champ de recherche (économie comportementale, économie des politiques publiques, économie industrielle et économie politique). La dernière partie propose une discussion plus exploratoire sur le faible intérêt porté jusqu'à aujourd'hui par les économistes à ces questions.
    Keywords: animal studies,veganomics,Alimentation végétale,condition animale
    Date: 2019
  11. By: Aditya Bhattacharjea (Department of Economics, Delhi School of Economics)
    Abstract: This paper updates, expands and reinforces my earlier critical reviews (Bhattacharjea 2006 and 2009) of the growing literature on the relationship between India’s supposedly ‘restrictive’ labour laws and poor performance on a range of industrial and social indicators. I first summarize the main claims of this literature, and the construction of the indices that it uses to measure inter-state differences in labour regulation. I show, on the basis of a detailed textual analysis of the relevant laws, that the original authors made multiple errors in coding the legal provisions, and that later contributors to the literature misinterpreted the resulting indices as measures of labour market flexibility. I then highlight some econometric issues that undermine their findings, and the difficulties involved in replicating their analyses with a ‘corrected’ indicator. I briefly discuss two kinds of flaws in some recent papers: they inaccurately capture the employment thresholds at which different sections of the law become applicable, and they wrongly differentiate between contract and ‘permanent’ workers. I conclude by summarizing evidence of deteriorating labour market outcomes for workers and growing de facto flexibility in Indian industry, without any changes in the regulatory framework.
    Keywords: India, manufacturing, inter-state inequality, labour regulation, employment protection legislation.
    Date: 2019–03
  12. By: Katarzyna Gruszka; Andreas Novy
    Abstract: This article takes the case of Uber, a global platform specialized in transport technologies, to reappraise the claims of the sharing economy. The case presents a chronology of the struggles over the regulation of these digital markets in the US and France, using Uber's self-description and web discourse for additional illustrative purposes. It exposes Uber's business model, the key driving actors and their strategies as well as multi-scalar counter movements. The analysis is framed from a Hayekian and a Polanyian perspective, and the potential of the sharing economy to go beyond market fundamentalism. The Polanyian utopia of sharing as more than market relations based on self-interest is mobilized for legitimizing the platform. The Hayekian utopia of a market society which transforms social relations of friendship and community service into market activities is describing actual development. Finally, Polanyian "counter movements" are described and their potentials are discussed.
    Keywords: political economy, socio-economics, economic change, markets
    JEL: P16
    Date: 2018
  13. By: Jin, Wei; Zhang, ZhongXiang
    Abstract: The existing studies on Green Paradox and stranded assets focus on dirty exhaustible assets (fossil fuel reserves) and show that environmental regulations, by changing the costs of dirty inputs relative to clean ones, lead to replacements of the former by the latter and stranding of dirty assets due to perfect substitution. It, in turn, induces acceleration of dirty resource extractions and pollution emissions for fear of dirty assets becoming stranded - the Green Paradox effect. This paper uses an endogenous growth framework to revisit the problem of Green Paradox and stranded assets by taking a new perspective that focuses on capital accumulation with investment irreversibility. We show that if 1) direct irreversibility of investment does not rule out the indirect channel of converting dirty capital goods into clean ones through final goods allocations, and 2) interactions between dirty and clean capital as imperfect substitutes can generate reciprocal effects, then environmental regulation, through directing investment towards clean capital, does not necessarily leads to asset stranding of dirty capital. Accumulation of clean capital with a pollution-saving effect offsets the polluting impact of dirty one and leads to reversed Green Paradox. We further propose an endogenous growth mechanism through which the accumulation of both dirty and clean capital, as well as environmental improvement, can be sustained in the long run without converging to the steady state.
    Keywords: Research Methods/ Statistical Methods
    Date: 2019–01–14
  14. By: Engelbert Stockhammer; Christina Wolf
    Abstract: Housing has played an essential part in the global financial crisis 2007-08 and the Euro crisis. Large parts of bank lending go to mortgages. Housing wealth is the largest part of wealth for most households and is, at the same time, more dispersed than other forms of wealth. House prices exhibit pronounced fluctuations that are closely linked to credit growth. Housing thus plays a crucial role in the macroeconomy, which has become even more pronounced under neoliberalism. We scrutinise different theoretical approaches to housing. Despite its theoretical shortcomings mainstream economics has pioneered empirical research on wealth effects in consumption and recently documented the role of house prices in financial cycles. Post-Keynesian theory emphasises endogenous money creation, cycles in asset prices and debt, and have formalised the notion of a debt-driven demand regime. Comparative Political Economy research has recently developed the concept of the varieties of residential capitalism, which has different structures of house ownership and housing finance at the core of political coalitions. Marxist political economy has long established the intrinsic link between ownership of land and economic rent and notes that homeownership can act as force of working class fragmentation. Wealth surveys can be used to trace the extent of conflicting interests in a class-relational approach.
    Keywords: housing, household debt, finance, real estate prices, class analysis
    Date: 2019–03
  15. By: Stefano Fenoaltea (Fondazione Luigi Einaudi, Torino; Department of Economics and Statistics "Cognetti de Martiis" University of Turin)
    Abstract: This paper argues that we cliometricians have failed as economists, because we did not drag the profession out of the nineteenth century and into the twentieth; that we have failed as historians, because we do not take measurement seriously, and misapprehend “the data”; and that we failed signally as economic historians, because we backcast “GDP” as if it measured gross domestic product.
    Keywords: economics, economic history, cliometrics
    JEL: A10 B40 N01
    Date: 2019–04
  16. By: Josef C. Brada; Paul Wachtel
    Date: 2018
  17. By: Bichler, Shimshon; Nitzan, Jonathan
    Abstract: Most people think of science and literature as distinct human endeavours. According to received convention, science is mostly about ‘mind’, whereas literature is largely about ‘heart’. Science, goes the argument, is by and large rational, literature primarily emotional. Science is about thinking, literature about feeling. The practical implication of this duality is that many who consider themselves scientists – particularly in the so-called ‘social sciences’ and especially in ‘economics’ – pay little or no attention to belles-lettres. As far as they are concerned, fiction, poetry and drama are diversions from serious academic work. Occasionally, when going on vacation or to an academic conference, they’ll throw a few cheap thrills into their handbag for ‘relaxation’. They’ll use them instead of sleeping pills after they are done surfing their phones and zapping their telescreen’s channels. Now, it is true the that line between creative belles-lettres and capitalized cheap thrills has blurred in recent decades – so much so that it’s sometimes difficult to tell them apart. And it is also true that as the number of new novels exploded, their average quality plummeted. But these shifting patterns are secondary. There is no need to read Leon Trotsky’s path-breaking book on Literature and Revolution (1925) or C.P. Snow’s warning on The Two Cultures and the Scientific Revolution (1959) to realize that literature in general and novels in particular remain crucial for understanding – and occasionally affecting – the socio-scientific history of humanity.
    Keywords: bisociation,literature,political economy
    JEL: P16 Z1
    Date: 2019
  18. By: Mikael Stigendal; Andreas Novy
    Abstract: This article explores the implications of founding transdisciplinary collaborations of knowledge production in critical realism. We call such equal partnerships of researchers and practitioners knowledge alliances. Using the distinction between the referents that we refer to (what our research is about) and our references (our research about that), we show that practitioners can contribute to the process of knowledge production by providing access to referents and producing references but also by achieving relevance. Researchers and practitioners bring different types of knowledge. To become excellent, knowledge production should be organized in ways, which engage these different types in a constructive interplay. We call this approach potential-oriented, which we put in contrast to the empiricism of evidence-based research and policy-making. Our deliberate choice of the term potential-oriented reflects the shifts in philosophy suggested by critical realism, but also a sensitivity for how practitioners communicate and express themselves.
    Keywords: knowledge alliance, critical realism, transdisciplinarity, social cohesion, urban development
    Date: 2018

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