nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2021‒02‒22
thirteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. La Teoría del Capitalismo de Karl Marx. Exposición, Crítica y Evaluación By Escudé, Guillermo J.
  2. In search of a suitable heuristic for evolutionary economics: from generalized Darwinism to economic self-organisation. By Foster, John
  4. Money and markets : limits of mainstream critique By Jérôme Maucourant
  5. Instability of Employment Careers and Union Dissolution. A Complex Micro-level Relation By Elena Bastianelli; Daniele Vignoli
  6. A Balance for Fairness: Fair Distribution Utilising Physics in Games of Characteristic Function Form By Song-Ju Kim; Taiki Takahashi; Kazuo Sano
  7. Wage labor is not an exchange relationship: the influence of Schmitt's theory on that of Jean Cartelier By Nicolas Piluso
  8. A maximum entropy model of bounded rational decision-making with prior beliefs and market feedback By Benjamin Patrick Evans; Mikhail Prokopenko
  9. Blockchain and Institutions (II): Is The Platform Economy The New Rentier Capitalism? Actualising Achille Loria’s Analysis Of Rent And Its Elision By Plinio Limata; Paolo Santori
  10. Peripherical Financialization and Premature Deindustrialization: A Theory and the Case of Brazil (2003-2015) By José Luis Oreiro; Carmem Aparecida Feijó; Lionelo Franco Punzo; João Pedro Heringer Machado
  11. Talking about competition? Discursive shifts in the economic imaginary of competition in public debates By Stephan Puehringer; Laura Porak; Johanna Rath
  12. What is the Impact of an Intensification of Labour on the Rate and Form of Exploitation? By Deepankar Basu; Cameron Haas; Athanasios Moraitis
  13. TAX DECENTRALIZATION AND ECONOMIC GROWTH IN LATIN AMERICA: EVIDENCE OF PANEL DATA: 2000-2018 By Amílcar Marcelo Varela Enríquez; Gustavo Adrián Salazar Espinoza

  1. By: Escudé, Guillermo J.
    Abstract: This book gives a clear synthesis of Marx’s theory of Capitalism and its relation with economic theory as it evolved over the course of the last 300 years. It places Marx’s though in perspective, comparing it with the main aspects of the economic theories that preceded it, including not only the Classical Adam Smith and David Ricardo but also economists like Cantillon, Turgot, and Ramsay that Marx chose to ignore with respect to the crucial issue of entrepreneurship because it was incompatible with his Theory of Surplus Value. But the book also contrasts Marx’s theory with Walras’, the Neoclassical economist whose influence on contemporary mainstream economic theory was most lasting. The analytical aspects of Marx’s theory are rigorously expressed by means of the technique of Input-Output Analysis, which is explained from the most elementary level in order to make the book self-contained. Each of the multiple topics of Marx’s complex and refined theory is explained in detail, including his theory of money, the heterogeneity in kinds of labor and in productive techniques, the turnover of capital, Simple and Extended Reproduction, his theory of the economic cycle, his theory of ground rent, his theory of productive and unproductive labor, and his view of the main tendencies of capitalist society. The book is structured in accordance with the development process of Marx’s thought. Hence, it begins with the life project he generated in his youth and drove him from the study of history and philosophy to that of Political Economy, on the one hand, and political praxis, on the other. Hence, Parts I, II, and IV of the book respectively address A) the philosophical-methodological foundations of his scientific endeavor (his Historical Materialism); B) his scientific theory of capitalist society as expressed in Capital; and C) his political thought and praxis, which had enormous effects over the course of the 20th century. Part III of the book addresses our critique of Marx’s theory of Capitalism. Beyond our criticisms, however, the book shows that Marx made important contributions to the comprehension of the functioning of Capitalism in the more conventional part of his theory, which we denominate ‘exoteric’ in order to contrast it with his ‘esoteric’ Theory of Surplus Value which was the foundation of his view of the exploitation of wage labor in Capitalism. RESUMEN Este libro brinda una síntesis clara de la teoría del Capitalismo de Marx y de su relación con la teoría económica que se desarrolló en el curso de los últimos 300 años. Pone al pensamiento de Marx en perspectiva, comparándola con los aspectos principales de la teoría económica que le precedió, incluyendo no sólo los clásicos Adam Smith y David Ricardo sino también los de economistas como Cantillon, Turgot y Ramsay, cuya crucial cuestión del aporte del empresario Marx eligió ignorar era incompatible con su Teoría de la Plusvalía. Pero también se contrasta la teoría de Marx con la de Walras, el economista neoclásico que tuvo más perdurable influencia sobre la teoría económica contemporánea del mainstream. En lo analítico, la teoría de Marx es expuesta rigurosamente utilizando la técnica del Análisis de Insumo-Producto, que se explica desde el nivel más elemental para hacer al libro auto-contenido. Se explica cada uno de los múltiples tópicos de la refinada y compleja teoría de Marx, incluyendo su teoría del dinero, la heterogeneidad de tipos de trabajo y de técnicas productivas, la rotación del capital, la Reproducción Simple y Ampliada del capital, su teoría del ciclo económico, su teoría de la renta de la tierra, su teoría del trabajo productivo e improductivo y su visión de las principales tendencias de la sociedad capitalista. El libro está estructurado en base al proceso de desarrollo del pensamiento de Marx. Por eso parte del proyecto de vida que éste elaboró en su juventud y que lo llevó del estudio de la historia y la filosofía al estudio de la Economía Política, por un lado, y a la práctica política, por el otro. Por ello, las Partes I, II, y IV del libro encaran respectivamente A) los fundamentos filosófico-metodológicos de su quehacer científico (el Materialismo Histórico); B) su teoría científica de la sociedad capitalista, según la expresó en El Capital; y C) su pensamiento y accionar político, que tuvo enormes efectos en el curso del siglo 20. La Parte III del libro encara nuestras críticas a la teoría del Capitalismo de Marx. Más allá de nuestra crítica, sin embargo, el libro muestra que Marx hizo importantes contribuciones a la comprensión del funcionamiento del Capitalismo en la parte más convencional de su teoría, que denominamos ‘exotérica’ para contrastarla con su ‘esotérica’ Teoría de la Plusvalía, núcleo de su concepción de la explotación del trabajo asalariado en el Capitalismo.
    Keywords: Karl Marx, Theory of capitalism, Surplus value theory, Labor value theory, Historical Materialism, Entrepreneurship
    JEL: B14 B3 B4 Z13
    Date: 2021–01–11
  2. By: Foster, John
    Abstract: The generalised Darwinism heuristic for application in evolutionary economics is evaluated. Although conceptually useful, it is found to be lacking as a basis for empirical research. Instead, the economic self-organisation heuristic is offered as a viable scientific alternative which has an explicit connection with an augmented logistic diffusion methodology which can be applied directly to the modelling of historical data in phases of economic growth. It is also argued that economists cannot analyse economic evolution without the parallel involvement of researchers from other disciplines.
    Keywords: Evolutionary economics, complex economic system, generalised Darwinism, economic self-organisation, logistic diffusion
    JEL: B41 B5 B52 O3 O33
    Date: 2021–02–16
  3. By: Konrad Gunesch (American University in the Emirates, College of Media and Mass Communication, Dubai, United Arab Emirates)
    Abstract: Abundance Economics, also called post-scarcity economics, increasingly attracts attention in macroeconomic research as well as in policy practice, with its relevance predicted to be ever growing. After a historical overview, this article traces that research attention, shows the need and motivation for this investigation, and then predefines and differentiates the concept. Conceptually, abundance and post-scarcity economics is discussed within the frameworks of heterodox and postKeynesian economics, before examining how writings on abundance economics confront and overcome the scarcity paradigm within economics. Hence the first conceptual contribution of this research is the systematization of abundance economics within classical, heterodox and postKeynesian economics in a concise yet comprehensive form that does not yet exist in macroeconomic literature. The second conceptual contribution is the investigation of abundance economics as a macroeconomic paradigm shift, together with this paradigm shift’s pragmatic advantages in today’s world. The third conceptual contribution is the precise definition, itemization and scrutiny of abundance economics within the global macroeconomic system, in a form also not yet existing in the literature. Methodologically, this research evaluates a range of suggested disciplines contributing to, and benefitting from abundance economics, before studying the arguments for their use and introducing its own multidisciplinary approach. Hence its methodological contribution is the consideration, combination and practical application of a coherent multidisciplinary framework for evaluating the macroeconomic potential of abundance economics in 21st century scenarios. Its final and overall contribution is the synthesis, analysis and discussion of eight distinct yet relatable solutions for conceiving and using abundance economics in economic, social, political, ecological and cultural sustainability reflections and recommendations for local practice and global policy.
    Keywords: Abundance Economics, Post-Scarcity Economics, Post-Keynesian Economics, Heterodox Economics, Wealth and Welfare.
    JEL: B55 E12 E71 O35 P46
    Date: 2019–06
  4. By: Jérôme Maucourant (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - CNRS - Centre National de la Recherche Scientifique, UJM - Université Jean Monnet [Saint-Étienne])
    Abstract: A key argument of Karl Polanyi's work is that market society needs policies to emerge, develop and survive, money being an essential institution in this process. But, fictituously transforming that which was not made to be sold into commodities, such as man, money or nature, entails unexpected effects, as State interventions. This total subversion of the liberal view enables new perspectives for understanding the crisis of 2008 and the continuing crisis of the Eurozone. Furthermore, it could highlight the usual critiques of many leftwing thinkers. Actually, they were blinded by the apparent success of globalisation during the 1990's and the cosmopolitical rhetoric of neoliberalism. The case of European Union and Euro is interesting because these social machines are labs of neoliberalism. A time is coming when the consent of free trade and a single currency-which unites many neoliberals, far leftists, "socialists" and some trade union leaders-must come to an end.
    Keywords: markets,mainstream Critique,Euro,money order,Karl Polanyi,fictitious commodity,globalism,Institutional analysis
    Date: 2020
  5. By: Elena Bastianelli (UDipartimento di Culture, Politica e Società , Università di Torino); Daniele Vignoli (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti", Università di Firenze)
    Abstract: The present study contributes to a more comprehensive understanding of the relation between employment instability and union dissolution. To address the oversights of previous research, we disentangle the effect of employment instability on union dissolution by: (i) considering not only the effect of joblessness, but also the type of employment contract; (ii) evaluating both status and the accumulation of instability over the life course; and (iii) detecting variation across gender and generations. We focus on Italy, applying event-history techniques to the 2009 and 2016 Italian Multipurpose Survey on Family and Social Subjects, observing cohorts from 1950 to 1980. Our results suggest that the effect of employment instability on union dissolution is gender-specific: joblessness and limited-time employment are facilitators for men’s dissolution, while joblessness is an inhibitor for women’s dissolution. Nonetheless, these differences weaken across recent cohorts as gender equality gains relevance in the labor market. We also highlight the crucial role of the persistence of instability in unpacking the association between employment instability and union dissolution.
    Keywords: Union dissolution; Employment instability; Joblessness; Time-limited employment; Gender
    JEL: J12 J41
    Date: 2021–02
  6. By: Song-Ju Kim; Taiki Takahashi; Kazuo Sano
    Abstract: In chaotic modern society, there is an increasing demand for the realization of true 'fairness'. In Greek mythology, Themis, the 'goddess of justice', has a sword in her right hand to protect society from vices, and a 'balance of judgment' in her left hand that measures good and evil. In this study, we propose a fair distribution method 'utilising physics' for the profit in games of characteristic function form. Specifically, we show that the linear programming problem for calculating 'nucleolus' can be efficiently solved by considering it as a physical system in which gravity works. In addition to being able to significantly reduce computational complexity thereby, we believe that this system could have flexibility necessary to respond to real-time changes in the parameter.
    Date: 2021–01
  7. By: Nicolas Piluso (CERTOP - Centre d'Etude et de Recherche Travail Organisation Pouvoir - UT2J - Université Toulouse - Jean Jaurès - UT3 - Université Toulouse III - Paul Sabatier - Université Fédérale Toulouse Midi-Pyrénées - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Wage labor is not an exchange relationship: the influence of Schmitt's theory on that of Jean Cartelier Abstract. This article attempts to highlight Schmitt's influence on Cartelier's theory of the wage relationship. The two authors question the standard conception of wage labor, which consists in analyzing the latter as a simple exchange report. They argue that the remuneration of the labor factor is not an act of purchase. To understand this, we must go back on the one hand to their criticism of the links between money and value theory in the standard approach, and on the other hand to their adherence to Keynes' idea that the relationship between entrepreneurs and employees is basically asymmetrical.
    Abstract: Cet article tente de mettre en évidence l'influence de Schmitt sur la théorie de Cartelier concernant le rapport salarial. Les deux auteurs remettent en cause la conception standard du salariat qui consiste à analyser ce dernier comme un simple rapport d'échange. Ils soutiennent que la rémunération du facteur de travail n'est pas un acte d'achat. Pour le comprendre, il faut remonter d'une part à leur critique des liens entre monnaie et théorie de la valeur dans l'approche standard, et d'autre part à leur adhésion à l'idée de Keynes selon laquelle la relation entre entrepreneurs et salariés est fondamentalement asymétrique.
    Keywords: circuit,exchange,exploitation,money,value,wage labor,valeur,salariat,monnaie,échange
    Date: 2020
  8. By: Benjamin Patrick Evans; Mikhail Prokopenko
    Abstract: Bounded rationality is an important consideration stemming from the fact that agents often have limits on their processing abilities, making the assumption of perfect rationality inapplicable to many real tasks. We propose an information-theoretic approach to the inference of agent decisions under Smithian competition. The model explicitly captures the boundedness of agents (limited in their information-processing capacity) as the cost of information acquisition for expanding their prior beliefs. The expansion is measured as the Kullblack-Leibler divergence between posterior decisions and prior beliefs. When information acquisition is free, the \textit{homo economicus} agent is recovered, while in cases when information acquisition becomes costly, agents instead revert to their prior beliefs. The maximum entropy principle is used to infer least-biased decisions, based upon the notion of Smithian competition formalised within the Quantal Response Statistical Equilibrium framework. The incorporation of prior beliefs into such a framework allowed us to systematically explore the effects of prior beliefs on decision-making, in the presence of market feedback. We verified the proposed model using Australian housing market data, showing how the incorporation of prior knowledge alters the resulting agent decisions. Specifically, it allowed for the separation (and analysis) of past beliefs and utility maximisation behaviour of the agent.
    Date: 2021–02
  9. By: Plinio Limata (LUMSA University); Paolo Santori (LUMSA University)
    Abstract: Today there is a growing consensus on the benefits of the platform economy. All the stakeholders are fairly remunerated, and the market sphere is grounded on the parties’ mutual advantage; points of equilibria are reached more efficiently, and costs of production and transaction are lowered thanks to the channels created by the platforms. We question this idyllic picture highlighting their role as value extractors in current market societies, which parallels the role of rent in the modern era’s economic system. Therefore, we employ Achille Loria’s (1857–1943, dubbed ‘the Italian Marx’) philosophical and economic categories to understand whether the platform economy is a form of contemporary rent-seeking and, if so, to suggest steps to avoid its continued, yet hidden, value extraction.
    Keywords: platform economy; rent; Achille Loria; value extraction
    Date: 2021–01
  10. By: José Luis Oreiro (None); Carmem Aparecida Feijó; Lionelo Franco Punzo; João Pedro Heringer Machado
    Abstract: The main objective of this paper is to discuss the concept of financialization in developing economies, arguing that the broad definition of financialization - understood as a growing role of motivations, markets and financial institutions in the operation of domestic and international economies – does not take into consideration important features of those economies, such as the hierarchy of currencies and the subordination to the principles of the so-called Washington Consensus. The latter imposed the adoption of a foreign savings-driven growth model, which mostly applied to Latin American countries. Hence, the financialization process in LDCs will be denominated peripherical financialization, since it is associated with dependence upon capital inflows from developed countries and with the reduction in the autonomy of their macroeconomic policies, even within flexible exchange rate regimes. Attraction of capital inflows to countries with a subordinate position in international financial markets, requires high interest rate differentials which have as side effect a trend to the overvaluation of real exchange rates. This creates a trap, high interest rates with an associated overvalued exchange rate. This trap reduces policy space, turning procyclical even fiscal policy. Moreover, the overvaluation of real exchange rate reduces price competitiveness of the manufacturing industry, becoming the main drive toward these countries’ premature deindustrialization. It will be shown that the macroeconomic performance of the Brazilian economy in the period 2003-2015 fits almost perfectly this model of peripherical financialization.
    Keywords: Financialization, Premature Deindustrialization, high interest rate-overvalued exchange rate trap
    JEL: O11 O14 O16
    Date: 2021–02
  11. By: Stephan Puehringer (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Laura Porak (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Johanna Rath (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria)
    Abstract: In this paper, we apply a discourse analytical framework to explore the performativity of the economic concept of competition in public policy discourses. We focus on the role of professional economists as opinion leaders to analyze how concepts of competition have entered public discourses. The main economic imaginary ascribes to competition the function of a primary mode for economic and social coordination, ensuring prosperity and wealth. Competitiveness is predominately interpreted not as a means but an end in itself. Furthermore, three partly conflicting discursive positions on how competition should be organized arise in the discourse: first, the neoliberal position interprets every non-efficient market outcome as the result of institutional intervention, hindering effective competition; second, the ordoliberal position of fair competition evaluates governance intervention positively, as long as they promote the functioning of competition; third, the Keynesian position promotes corrected competition, i.e. diverse policy intervention to compensate for market failure outcomes.
    Keywords: competition, competitiveness, media debates, consulting, economic experts, critical discourse analysis
    Date: 2021–02
  12. By: Deepankar Basu (Department of Economics, University of Massachusetts Amherst); Cameron Haas (Department of Economics, University of Massachusetts Amherst); Athanasios Moraitis (Department of Economics, University of Massachusetts Amherst)
    Abstract: Does the intensification of labour increase the rate of exploitation? Does it produce absolute surplus value or relative surplus value? This paper develops a framework to answer these questions by incorporating intensity of labour in the widely-used linear model of production, both in its one and two department forms. We show, first, that an intensification of labour always leads to an increase in the rate of exploitation, and second, that the increase in the rate of exploitation takes the form of the production of absolute surplus value in all realistic situations. We also highlight, in the case of any model with more than one industry or sector, an interesting difference in short run and long run changes in the rate and form of surplus value.
    Keywords: rate of exploitation; absolute surplus value; relative surplus value; linear model of production
    JEL: B51
    Date: 2021
  13. By: Amílcar Marcelo Varela Enríquez (Universidad Central del Ecuador / Instituto de Altos Estudios Nacionales, Av. Universitaria, Quito 170129 Ecuador); Gustavo Adrián Salazar Espinoza (Universidad Central del Ecuador, Av. Universitaria, Quito 170129 Ecuador)
    Abstract: The objective of this research is to determine the relationship between fiscal decentralization and economic growth for Latin America from a heterodox perspective based on the research question, what is the relationship between fiscal decentralization and economic growth? For this, the evidence and the empirical works, as well as the methodologies used, which are contrasted to determine their viability are widely discussed. The methodology used is an ordinary least squares model based on balanced panel data to correct possible errors, that is, a panel data specification model that measures the fixed and random effects that combine appropriate interest variables with variables of interest, control to avoid bias of mutual causality. The tests applied for the selection of the most appropriate estimators determine that the null hypothesis is accepted that a greater fiscal decentralization affects economic growth, in which the public investment of the Latin American countries from the application of decentralization, it has allowed its impact on per capita GDP to be stronger. Finally, the null hypothesis is accepted and there is no structural change in the slopes of the model in the public investment variable. So, it is not necessary to create dummy variables to pick up the change in the public investment coefficient.
    Keywords: Fiscal decentralization, economic growth, panel data, GDP per capita, public investment
    JEL: O43 H77 C33
    Date: 2020–09

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