nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2020‒06‒08
thirteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Amartya Sen, social theorizing and contemporary India By Gasper, D.R.
  2. Deficiencies of international investment law: What chances for "critical lawyers" to civilize global value chains and/or to transform the status quo of the economic world order? By Diaby-Pentzlin, Friederike
  3. A gender-transformative response to COVID-19 in Myanmar By Lambrecht, Isabel; Mahrt, Kristi; Ragasa, Catherine; Wang, Michael; Ei Win, Hnin; Win, Khin Zin
  4. Schumpeter in Vienna: A Study Abroad Course By Dalton, John; Logan, Andrew
  5. Input-Output Analysis of COVID-19: Methodology for Assessing the Impacts of Lockdown Measures By Eduardo A. Haddad; Fernando S. Perobelli, Inacio F. Araujo
  6. Exhaustible resources and classical theory By Bidard, Christian; Erreygers, Guido
  7. Economic Development and the Death of the Free Market By Fix, Blair
  8. La transition sociale-écologique dans cinq villes françaises By Éloi Laurent
  9. Public policies and the art of catching up: matching the historical evidence with a multi-country agent-based model By Giovanni Dosi; Andrea Roventini; Emanuele Russo
  10. Covid-19 Pandemic and Abuse of Economic Dependence. Short-run Market Vulnerability and Exploitative conduct By Safieddine Bouali
  11. Boom, Bust, and Bitcoin: Bitcoin-Bubbles As Innovation Accelerators By Tobias Huber; Didier Sornette
  12. Towards Economic Democracy and Social Justice: Profit Sharing, Co-Determination, and Employee Ownership By FitzRoy, Felix; Nolan, Michael A.
  13. Still the lands of equality? On the heterogeneity of individual factor income shares in the Nordics By Roberto Iacono; Elisa Palagi

  1. By: Gasper, D.R.
    Abstract: The work of economist and philosopher Amartya Sen (1933-) has attracted attention in other fields too, including in political science, human geography, planning, health and social policy, and, to a lesser but growing extent, in sociology and occasionally anthropology. This paper, written as part of a project on Indian social theorists, discusses Sen’s relation to social theorizing. While he is not a ‘social theorist’ in the sense recognized in sociology and anthropology, being grounded instead in the earlier perspectives of Adam Smith, Condorcet and J.S. Mill, much of his work, both theoretical and empirical, proves of interest to a wide range of social scientists. The paper’s first main part outlines his contributions as a social analyst, under four connected headings: (1) theorization on how people reason as agents within society; (2) ‘entitlements analysis’ of the social determinants of people’s access or lack of access to goods; (3) theorizing the effective freedoms and agency that people enjoy or lack, in his ‘capability approach’ (CA); (4) treatments of societal membership, identity and political life, including a liberal theory of personal identity and a strong advocacy of and high expectations for ‘voice’ and deliberative democracy. The second part characterizes Sen’s intellectual style, marked by systematic conceptual refinement, associated emphases on complexity, heterogeneity, and individuality, including personal individuality, and a reformist optimism. The third part treats his relation to ‘social theory’ as considered by sociologists, including the connections, contributions and possible blind spots: in his attention to work by sociologists, in his system for theorizing human action in society, in treatment of power structures and capitalism, and in his optimistic programmatic conception of personhood that stresses the freedom to make a reasoned composition of personal identity. The final substantial part discusses his preoccupation with public reasoning and democracy, and the focus on an arguably idealized version of the former and relative neglect of the sociology of the latter. It contrasts the ideal of a reasoning polity with features and trends in independent India. Nevertheless, Sen’s programmes or critical autonomy in personhood and for reasoned politics carry significant normative force, and his analytical formats can help not only structured evaluation but investigation of obstacles to more widespread agency, voice and democratic participation.
    Keywords: capability approach, democracy, freedom, identity, public reasoning
    Date: 2020–05–13
  2. By: Diaby-Pentzlin, Friederike
    Abstract: Rules should be fair, no matter from which perspective (Rawls, 1999). Given that Justitia holds a balance, current international investment law is disturbingly onesided. It mainly sets out to protect property positions of foreign investors. According to mainstream legal thinking, imposing obligations on transnational corporations (TNC) is only possible by means of the gentle non-binding rules of corporate social responsibility (CSR). As will be documented here, international investment law today has become a body of law for enterprises with hardly any regard for people and planet putting the private gains of few above the common good of many. Conventional approaches to legal questions deal with legal dogmata by detaching the law from its economic and political context. However, since legal norms are the result of societal negotiations, critical jurists have a role in analysing the law and its implementation, given the prevailing social and economic backgrounds. They see more easily that private interests increasingly drive legal doctrines and that social or environmental needs are largely neglected in mainstream legal activities. In international relations, the political consensus of the states in the United Nations (UN) has now moved beyond the Millennium Development Goals and their ideology of rich countries helping the poor (for a critique see Amin, 2006) within the dominant asymmetrical, fossil-based production and consumption paradigms. Due to acknowledgment of the increasingly pressing environmental and social needs, since 2016 more comprehensive and universal UN Sustainable Development Goals now aim to "transform our world" (United Nations, 2019). In international investment law, such changes are still to come. African states and societies in particular are undergoing economic and social transformations towards a nowadays also questionable modernity, and within decades, a process that took centuries in Europe. There are no more rural areas spared from agricultural or mining investments. So particularly in Africa, critical jurists and scientists need to analyse and point out which legal rules and interpretations on the international, regional, national and local level really serve the interests of the population in Africa. (...)
    JEL: F53 F54 O18
    Date: 2020
  3. By: Lambrecht, Isabel; Mahrt, Kristi; Ragasa, Catherine; Wang, Michael; Ei Win, Hnin; Win, Khin Zin
    Abstract: On 27 April, the Myanmar Government published the COVID-19 Economic Relief Plan (CERP) which aims to mitigate COVID-19’s impact on the macroeconomic environment and the private sector and to ease the impact on laborers, workers, and households. The CERP action plan should pay explicit attention to gender discrepancies to avoid unintentional harm or aggravating existing gender inequalities.
    Keywords: MYANMAR, BURMA, SOUTHEAST ASIA, ASIA, gender, Coronavirus, coronavirus disease, Coronavirinae, employment, migration, women, empowerment, decision making, maternal and child health, social protection, health, Covid-19, COVID-19 Economic Relief Plan (CERP), informal work, household chores, cash transfer
    Date: 2020
  4. By: Dalton, John; Logan, Andrew
    Abstract: This paper builds upon the work of Dalton and Logan (forthcoming a) by describing the motivation for and mechanics of teaching a course dedicated to Schumpeter as a study abroad program in the city of Vienna. We argue that the qualities Vienna possesses, both historical and contemporary, make a good laboratory for exploring Schumpeter's ideas and that the process of encountering a new culture through a study abroad course is the best way to internalize his theory of innovation. To do so, our paper first outlines the course content before describing the linkages between "techno-romantic" Vienna and Schumpeter's intellectual development. We then describe specific examples for how instructors can use Vienna as a laboratory for teaching Schumpeter's ideas. We close by sharing preparatory details for instructors and offering the perspective of a student who took this course in the summer of 2018.
    Keywords: Joseph Schumpeter; Vienna; Innovation; Entrepreneurship; Creative Destruction; Study Abroad; Education
    JEL: A20 B30 O31 O33 P00
    Date: 2020–05–13
  5. By: Eduardo A. Haddad; Fernando S. Perobelli, Inacio F. Araujo
    Abstract: This technical note describes in details the methodology developed for assessing the daily economic costs of control strategies for mitigating the effects of COVID-19. It is based on the partial hypothetical extraction approach to input-output systems. This methodology is being currently applied to inform regional and national governments in Brazil and Colombia on the potential regional and sectoral economic costs of different strategies of lockdown measures. Simulated scenarios based on different durations and intensities of the control measures are also being used to help designing sectoral and territorial-based policies to ease lockdown against the coronavirus outbreak after reaching a downward trend in the growth rate of new infections.
    Keywords: COVID-19; Economic Impacts; Lockdown; Input-Output Analysis; Hypothetical Extraction
    JEL: D24 C67 R15
    Date: 2020–05–27
  6. By: Bidard, Christian (EconomiX, Université Paris Nanterre); Erreygers, Guido (Department of Economics, University of Antwerp)
    Abstract: Smith, Ricardo, Marx and Sraffa made no theoretical distinction between exhaustible resources and lands. The very notion of exhaustibility, however, can be opposed to that of ‘indestructible powers of the soil’ (Ricardo) and calls for a specific analysis distinct from that of rent. The diversity of the contemporary attempts to deal with that question in a classical framework shows how varied are the understandings of the main methodological features of classical theory. Three crucial points emerge: first, the treatment of prices, which are invariant in classical theory but, according to the Hotelling rule, are changing through time for exhaustible resources; second, the notion and the measure of the rate of profits; and, third, the relationship between economic analysis and a more historical and sociological approach stressing the balances of power between classes. Our own approach starts from a very simple model, called the corn-guano model, where guano is the exhaustible resource, and examines the dynamics of such an economy on the physical side and the value side. These lessons serve as a basis for an extension to multisector models. We provide a critical assessment of a few alternative approaches developed by Sraffian scholars.
    Keywords: exhaustible resources; classical theory; Hotelling rule; Sraffian approach
    JEL: B24 Q32
    Date: 2020–05–26
  7. By: Fix, Blair
    Abstract: Free markets are, according to neoclassical economic theory, the most efficient way of organizing human activity. The claim is that individuals can benefit society by acting only in their self interest. In contrast, the evolutionary theory of multilevel selection proposes that groups must suppress the self interest of individuals. They often do so, the evidence suggests, by using hierarchical organization. To test these conflicting theories, I investigate how the ‘degree of hierarchy’ in societies changes with industrial development. I find that as energy use increases, governments tend to get larger and the relative number of managers tends to grow. Using a numerical model, I infer from this evidence that societies tend to become more hierarchical as energy use grows. This result is inconsistent with the neoclassical theory that individual self-interest is what benefits society. But it is consistent with the theory of multilevel selection, in which groups suppress the self-interest of their members.
    Keywords: culture,development,energy,free market,hierarchy,multilevel selection,power,sociality
    JEL: P16 P48 O43 Z1 O2
    Date: 2020
  8. By: Éloi Laurent (Sciences Po-OFCE et Université de Stanford)
    Abstract: This study examines some major structuring projects in the advancement of the social- ecological transition in five French cities. It proposes to define the challenges of the urban social- ecological transition in France in two ways. The first consists in dividing the fields of social-ecological transition into four main domains covering a certain number of key themes and the related policies; the second aims to specify the social-ecological competences of the municipalities according to existing law. The first part of this study is devoted to the definition of this double evaluation framework. And the second details some major projects implemented in the five selected cities. In conclusion, the study draws four lessons from this partial panorama.
    Keywords: Urban social-ecological transition, Paris, Grenoble, Nantes, air pollution.
    JEL: Q3 Q5 D3 D6
    Date: 2020–05
  9. By: Giovanni Dosi (Institute of Economics and EMbeDS, Scuola Superiore Sant’Anna, Pisa (Italy)); Andrea Roventini (OFCE Sciences Po, Sophia-Antipolis (France), Institute of Economics and EMbeDS, Scuola Superiore Sant’Anna, Pisa (Italy)); Emanuele Russo (Institute of Economics and EMbeDS, Scuola Superiore Sant’Anna, Pisa (Italy))
    Abstract: In this paper, we study the effects of industrial policies on international convergence using a multi-country agent-based model which builds upon Dosi et al. (2019b). The model features a group of microfounded economies, with evolving industries, populated by heterogeneous firms that compete in international markets. In each country, technological change is driven by firms’ activities of search and innovation, while aggregate demand formation and distribution follows Keynesian dynamics. Interactions among countries take place via trade flows and international technological imitation. We employ the model to assess the different strategies that laggard countries can adopt to catch up with leaders: market-friendly policies; industrial policies targeting the development of firms’ capabilities and R&D investments, as well as trade restrictions for infant industry protection; protectionist policies focusing on tariffs only. We find that markets cannot do the magic: in absence of government interventions, laggards will continue to fall behind. On the contrary, industrial policies can successfully drive international convergence among leaders and laggards, while protectionism alone is not necessary to support catching up and countries get stuck in a sort of middle-income trap. Finally, in a global trade war, where developed economies impose retaliatory tariffs, both laggards and leaders are worse off and world productivity growth slows down.
    Keywords: Endogenous growth, catching up, technology-gaps, industrial policies, agent-based models.
    JEL: F41 F43 O4 O3
    Date: 2020–06
  10. By: Safieddine Bouali (ISG - Institut Supérieur de Gestion de Tunis [Tunis] - Université de Tunis [Tunis])
    Abstract: Economic disruptions due to the global Covid-19 pandemic have unleashed uncountable litigation between firms on how to enforce their contractual relationships. In this context, the survival of undertakings becomes a real issue when partners in vertical relationships or global value chains behave opportunistically. Should this exploitative conduct be scrutinized as anti-competitive practices by the competition authorities in full separation from ordinary courts? In this paper, we argue that the well-known rule of abuse of the state of economic dependence (ASED) could deter opportunism that arises likewise during the Covid-19 pandemic or any other global crises. Actually, rejected by the Chicago School of Antitrust, and not acknowledged by the contract doctrine except its facet of negligent conduct, exploitative abuses could reintegrate the list of harmful practices to the consumers albeit after an intricate analysis. The article further investigates the extent to which the ASED, deterring a wide spectrum of exploitative conduct, fills the gap left by the provisions punishing unfair practices albeit it confers a considerable room for the specialist judges' discretion. Such ASED implementation would ensure more deterrence of the lawful opportunism inasmuch it narrows cracks of the legal corpus between exclusionary and exploitative abuses.
    Abstract: Les perturbations économiques dues à la pandémie mondiale de Covid-19 ont déclenché d'innombrables litiges entre les entreprises sur la manière de faire respecter leurs relations contractuelles. Dans ce contexte, la survie des entreprises devient un réel problème lorsque les partenaires dans les relations verticales ou les chaînes de valeur mondiales se comportent de manière opportuniste. Ce comportement d'exploitation devrait-il être examiné comme des pratiques anticoncurrentielles par les autorités de la concurrence, en toute séparation des tribunaux ordinaires? Dans cet article, nous soutenons que la règle bien connue de l'abus de l'état de dépendance économique (ASED) pourrait dissuader l'opportunisme qui survient également lors de la pandémie de Covid-19 ou de toute autre crise mondiale. En fait, rejetés par la Chicago School de l'antitrust, non reconnus par la doctrine du contrat, à l'exception de sa facette de conduite négligente, les abus d'exploitation pourraient réintégrer la liste des pratiques néfastes pour les consommateurs, bien qu'après une analyse complexe. L'article examine en outre dans quelle mesure l'ASED, dissuadant un large éventail de comportements d'exploitation, comble le vide laissé par les dispositions réprimant les pratiques déloyales, même s'il confère une latitude considérable au pouvoir discrétionnaire des juges spécialisés. L'article soutien que la mise en œuvre de l'ASED assurerait une plus grande dissuasion de l'opportunisme légal dans la mesure où elle rétrécit les fissures du corpus juridique entre les abus d'exclusion et d'exploitation.
    Keywords: Covid-19,Exploitative conduct,Competition Law,Contract Governance,Abuse of State of Economic dependence
    Date: 2020–05–05
  11. By: Tobias Huber (ETH Zürich); Didier Sornette (ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Swiss Finance Institute)
    Abstract: Bitcoin represents one of the most interesting technological breakthroughs and socio-economic experiments of the last decades. In this paper, we examine the role of speculative bubbles in the process of Bitcoin’s technological adoption by analyzing its social dynamics. We trace Bitcoin’s genesis and dissect the nature of its techno-economic innovation. In particular, we present an analysis of the techno-economic feedback loops that drive Bitcoin’s price and network effects. Based on our analysis of Bitcoin, we test and further refine the Social Bubble Hypothesis, which holds that bubbles constitute an essential component in the process of technological innovation. We argue that a hierarchy of repeating and exponentially increasing series of bubbles and hype cycles, which has occurred over the past decade since its inception, has bootstrapped Bitcoin into existence.
    Keywords: Bitcoin, Money, Cryptocurrencies, Financial Bubbles, Technological Innovation, Economic Growth, Reflexivity
    JEL: E40 G01 O40
    Date: 2020–05
  12. By: FitzRoy, Felix (University of St. Andrews); Nolan, Michael A. (University of Hull)
    Abstract: Modern economies deprive workers of natural democratic rights and any share of the surplus they produce, with most of the benefits of growth appropriated by capital owners. Worker wellbeing and job satisfaction are ignored unless they contribute directly to profitability, while precarious employment and underemployment, with stagnant or declining real wages, have persisted over four decades, despite recent low official unemployment. For economic democracy and social justice, we propose redistributive tax and welfare reform, extended codetermination, subsidised profit sharing and employee buyouts.
    Keywords: economic democracy, participation, co-determination, profit sharing, employee ownership
    JEL: H P
    Date: 2020–05
  13. By: Roberto Iacono; Elisa Palagi
    Abstract: As far as standard measures of income inequality are concerned, the Nordic countries rank among the most equal economies in the world. This paper studies whether and how this picture changes when the focus is on inequality of income composition, meaning the heterogeneity in individuals' factor income shares. We highlight the structural change taking place in all the Nordic countries since the early 1990s, with rising inequality in composition of individual incomes due mostly to a shift in capital incomes towards the top of the distribution. We link this result to changes in taxation of factor incomes, by highlighting the role played by the introduction of Dual Income Taxation reforms in the 1990s throughout the Nordic countries. Our estimates of the degree of income composition inequality allow a descriptive analysis of the role of functional distribution as a determinant of personal income inequality in the Nordics. We show that for Denmark in the period 2009 - 2013, Finland 1990 - 2007, and Norway 1991 - 2005, rising capital shares of income contributed to changes in personal income inequality, whilst for Sweden the evidence leads to disregard the capital share as a determinant of income inequality.
    Keywords: Functional distribution; personal income distribution; income composition inequality; Nordic countries.
    Date: 2020–05–23

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