nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2021‒03‒15
twelve papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. The History of Pollution ‘Externalities’ in Economic Thought By Clive L. Spash
  2. Development and Underdevelopment from the Perspective of Evolutionary Socioeconomics in the Post-COVID-19 Era By Vlados, Charis
  3. The Growth and Development Analytical Controversies in Economic Science: A Reassessment for the Post-COVID-19 Era By Vlados, Charis
  4. The Physics of Financial Networks By Marco Bardoscia; Paolo Barucca; Stefano Battiston; Fabio Caccioli; Giulio Cimini; Diego Garlaschelli; Fabio Saracco; Tiziano Squartini; Guido Caldarelli
  5. Family and Women in Alfred Marshall’s Analysis of Progress and Well-being. By Virginie Gouverneur
  6. Is capacity utilization variable in the long run? An agent-based sectoral approach to modeling hysteresis in the normal rate of capacity utilization By Federico Bassi; Tom Bauermann; Dany Lang; Mark Setterfield
  7. Dominant Capital is Much More Powerful Than You Think By Bichler, Shimshon; Nitzan, Jonathan
  8. Do social enterprises walk the talk? Assessing microfinance performances with mission statements By Roy Mersland; Samuel Anokye Nyarko; Ariane Szafarz
  9. Mind the task: evidence on persistent gender gaps at the workplace By Marta Fana; Davide Villani; Martina Bisello
  10. The Evolution of Sectarianism By Ille, Sebastian
  11. Corruption and Cooperative Organizations By Giannakas, Konstantinos; Fulton, Murray E.
  12. From Growth Poles and Clusters to Business Ecosystems Dynamics: The ILDI Counterproposal By Vlados, Charis; Chatzinikolaou, Dimos

  1. By: Clive L. Spash
    Abstract: Today, environmental economics is the response of the neoclassical economic school to the ecological crisis, but at one time its leading contributors regarded it as a revolutionary development that would change the conduct and content of economics as a discipline. Understanding and addressing environmental pollution was core to that potential paradigm shift. In tracing the history of conceptualising pollution as an externality and market failure this paper covers the development of ideas by Marshall, Pigou, Pareto, Coase, Stigler, Samuelson, Ciciacy-Wantrup and Kapp. Pollution externality theory is shown to have incorporated an elitist ethics and liberal market ideology. As a market failure pollution was deemed a minor correctible error of the price system. Monetary valuation of social and environmental harm became the means of justifying optimal levels of pollution. Neoliberal theories of spreading property rights further watered down potential interventionist aspects. Bio-physical realism, in the work of Kneese, Ayres and dÂ’Arge, and social realism in KappÂ’s theory of cost shifting were lost once environmental economics adopted a deductivist mathematical formalism. KappÂ’s alternative theory is based on a classic institutionalists economic understanding of cost shifting and power relations. It advocates a public policy response in the form of objective social minima achieved via regulation and planning. This theory has until now been successfully supressed to prevent a potential revolutionary paradigm shift in economic price theory
    Keywords: externalities; market failure, cost shifting; price theory; pollution; Pigou; Coase; Kapp; paradigm shift; environmental economics, neoclassical economics; institutional economics, neolibera
    JEL: A13 B2 B55 D61 D62 H21 H23 P16 P18 P48 Q5 Q52 Q53 Q57 Q58
    Date: 2021
  2. By: Vlados, Charis (Democritus University of Thrace, Department of Economics)
    Abstract: In economics, the problematics of development and underdevelopment is a field of conceptual controversies and constant “re-comprehension,” already since classical economists’ fundamental explorations. Nowadays, especially within the particularly pressing conditions caused by the global pandemic of COVID-19, it seems that this field of research and scientific knowledge must be profoundly re-fertilized in analytical and explanatory terms. The current crisis seems to function as a catalyst for various structural changes globally, leading to a necessary reorientation of the related thematics towards exploring the inner evolutionary “mechanisms” that will drive socio-economic development (and underdevelopment) in the future. This article aims to study the conceptual evolution of the notions of development and underdevelopment in the light of modern evolutionary economics, which we think could offer a foundational repositioning at the interpretative level in response to the new emerging conditions. More specifically, this article tries to respond to what development and underdevelopment mean over time, where analytical readjustments the evolutionary economics lead to nowadays, and whether it is possible to counter-propose a multilevel approach that enriches the theoretical background for an interdisciplinary and unifying understanding of the specific problematics at the dawn of the new global reality that appears in the post-COVID-19 era. At first, we look at essential development and underdevelopment concepts by critically exploring corresponding basic definitions throughout time. Next, we study the essential and associated elements of evolutionary economics, in the light of the problematics of development and underdevelopment of our days, intending to reach a synthesizing theoretical perspective. We counter-propose the multilevel “development web” approach and analysis as a useful repositioned perspective on addressing the developmental/underdevelopmental problem since the compartmentalization of social sciences between the “micro, meso and macro” approaches seems progressively inadequate and sterile.
    Keywords: Development; Underdevelopment; Evolutionary economics; Development web; Micro-meso-macro; Evolutionary microeconomics; Evolutionary mesoeconomics; Evolutionary macroeconomics
    JEL: B52 O40
    Date: 2020–12–30
  3. By: Vlados, Charis (Democritus University of Thrace, Department of Economics)
    Abstract: A repositioning of the theoretical instruments of development and growth in the context of economics and political economy that we have at our disposal to date seems necessary, especially after the structural transformation caused by the COVID-19 socio-economic and pandemic crisis. Specifically, the overcoming of the COVID-19 era of crisis seems to depend on how we will manage to re-perceive the theory of economic development and apply its proposals in new economic policies, in global terms. In this context, this article examines whether the conceptual and “therapeutic” foundations of development economics have today the necessary potential to cope with structural changes caused by the ongoing global socio-economic crisis. We assess the current debate in the literature of “economic development versus economic growth” and conclude that a new, comprehensive and evolutionary, orientation to understanding economic development seems necessary to respond to new global challenges for the post-COVID-19 era. We propose a multidisciplinary and evolutionary conceptual direction that suggests the multi-angle understanding of diverse historical configurations. We argue that all socio-economic mutations accelerated by the current pandemic crisis have systemic and evolutionary content and effects and cannot be reliably perceived as mere coincidences of “quantities” and growth “performances.” In this way, we can only disagree with any static and linear approach to the current crisis that directly or indirectly leads to reproducing the rigid enclosure of the analysis in partial specializations of economics. On the contrary, we counter-propose a theoretical response of evolutionary type to assess the contemporary theory of economic development and the political economy in the post-COVID-19 era as an interdisciplinary crossroads for all socio-economic sciences.
    Keywords: International political economy; Economic science; Economic development; Economic growth; Economic development versus economic growth; Social science; Socioeconomic crisis; Post-COVID-19 era; Evolutionary economics
    JEL: B52 O10 O40
    Date: 2020–12–30
  4. By: Marco Bardoscia; Paolo Barucca; Stefano Battiston; Fabio Caccioli; Giulio Cimini; Diego Garlaschelli; Fabio Saracco; Tiziano Squartini; Guido Caldarelli
    Abstract: The field of Financial Networks is a paramount example of the novel applications of Statistical Physics that have made possible by the present data revolution. As the total value of the global financial market has vastly outgrown the value of the real economy, financial institutions on this planet have created a web of interactions whose size and topology calls for a quantitative analysis by means of Complex Networks. Financial Networks are not only a playground for the use of basic tools of statistical physics as ensemble representation and entropy maximization; rather, their particular dynamics and evolution triggered theoretical advancements as the definition of DebtRank to measure the impact and diffusion of shocks in the whole systems. In this review we present the state of the art in this field, starting from the different definitions of financial networks (based either on loans, on assets ownership, on contracts involving several parties -- such as credit default swaps, to multiplex representation when firms are introduced in the game and a link with real economy is drawn) and then discussing the various dynamics of financial contagion as well as applications in financial network inference and validation. We believe that this analysis is particularly timely since financial stability as well as recent innovations in climate finance, once properly analysed and understood in terms of complex network theory, can play a pivotal role in the transformation of our society towards a more sustainable world.
    Date: 2021–03
  5. By: Virginie Gouverneur
    Abstract: Standing out from most nineteenth-century economists, Marshall addresses the role of women and the family in the progress of society entirely from the perspective of economics. His ideas on the subject developed throughout the course of his career as an economist. In the early 1870s they appear in the background of his analysis concerning ways to increase laborers’ welfare. At the end of the 1870s, he presents the influences of the home, and especially the influence of the mother, as decisive causes of the individuals’ efficiency and character. These developments form the ground upon which Marshall’s ideas will later be systematized, leading to their inclusion in Principles in the form of a complete theory situated at the heart of his analysis of well-being and progress. The purpose of the article is to compare Marshall’s treatment of the question of the role of women and the family in the progress of society with his analysis of well-being and progress, as well as their respective evolution, for the period between the1870s and the last edition of Principles in 1920.
    Keywords: Alfred Marshall, progress, well-being, economic woman, household economics.
    JEL: B10 B13 I31 B15 A12 I25
    Date: 2021
  6. By: Federico Bassi (Centre de recherche en économie de l’Université Paris Nord (CEPN)); Tom Bauermann (Ruhr-University Bochum); Dany Lang (Université Sorbonne Paris Nord); Mark Setterfield (New School for Social Research)
    Abstract: Post Keynesian macrodynamic models make various assumptions about the normal rate of capacity utilization. Those rooted in the Classical and neo-Keynesian traditions assume the normal rate is fixed, whereas Kaleckian models treat it as a variable that is endogenous to the actual rate of capacity utilization. This paper contributes to the debate about the normal rate of capacity utilization by developing a model of strong or genuine hysteresis, in which firms make discrete decisions about the normal rate depending on the degree of uncertainty about demand conditions. An agent-based model based on empirical analysis of 25 sectors of the US economy is used to show that hysteresis can cause variation in the normal rate of capacity utilization within a subset of the range of observed variation in the actual capacity utilization rate. This suggests that the economy exhibits both constancy and (endogenous) variability in the normal rate of utilization over different ranges of variation in the actual rate. More broadly speaking, the genuine hysteresis model is shown to provide the basis for a synthesis of Post Keynesian macrodynamics that draws on both the Classical/neo-Keynesian and Kaleckian modeling traditions.
    Keywords: Normal rate of capacity utilization, Harrodian instability, genuine hysteresis, Kaleckian growth theory
    JEL: C36 E11 E12 L6 L7 L9
    Date: 2020
  7. By: Bichler, Shimshon; Nitzan, Jonathan
    Abstract: How should we measure the power of dominant capital? Economists, although seldom if ever referring to ‘dominant capital’, quantify the relative size of large firms by measuring their so-called aggregate concentration. But for all their insight, measures of aggregate concentration have one serious shortcoming: they tend to underestimate the power of dominant capital and its temporal growth – by a lot.
    Keywords: capital as power,corporate concentration,differential accumulation,dominant capital
    JEL: P16 G3
    Date: 2021
  8. By: Roy Mersland; Samuel Anokye Nyarko; Ariane Szafarz
    Abstract: We study mission drift in social enterprises by examining whether these organizations stick to the actual mission enshrined in their mission statements. We use data from microfinance organizations (MFOs), a homogeneous group of social enterprises which have been scrutinized—and sometimes criticized—for mission drift. We focus on three publicly recognized and non-mutually-exclusive microfinance social missions identified by previous studies: poverty alleviation, women's empowerment, and rural financial inclusion. Based on hand-collected data from 199 MFOs worldwide, our results suggest strong coherence between social missions and actual practices. Hence, we argue that, with respect to MFOs' own stated social missions, mission drift is no serious concern. The trustworthiness of social mission statements makes them suitable evaluation tools for social enterprises.
    Keywords: Content analysis; Microfinance; Mission drift; Mission statement; Social enterprise
    Date: 2019–06
  9. By: Marta Fana (European Commission – JRC); Davide Villani (The Open University); Martina Bisello (Eurofound, Dublin)
    Abstract: This article investigates gender differences in tasks performed at the workplace over a period of 25 years, from 1991 and 2016 in France. We exploit data from the Enquête Complémentaire Emploi: Conditions de travail, the oldest survey at the worker level among European countries on a wide range of work attributes and working conditions measures. In our study, we focus both on the content of work form a material perspective, looking concretely at what job tasks are performed by men and women, and on work organisational practices, to capture gender disparities in authority and power relations at the workplace. Our findings reveal that women tend to perform different tasks compared to their male colleagues within the same job also after controlling for supply-side factors, like education, age and seniority. While in line with previous studies we find that women still tend to perform fewer physical tasks than men, despite significant increase in such activities in female dominated jobs, there is no strong evidence supporting the "brain" hypothesis. On the contrary, women appear to be less involved in intellectual tasks and, especially, social tasks such as managing and coordinating. Furthermore, social interactions with clients or customers do not significantly characterise feminised jobs, challenging the idea according to which gender segregation between jobs is explained by the predominance of this type of tasks. Additionally, and more importantly, our analysis shows that gender matters also in terms of work organisation and distribution of power, highlighting strong asymmetries in the way authority and autonomy are distributed between male and female workers, unbalanced in favor of men. Finally, our study shows that these gender effects often exacerbate within male dominated jobs, although they do not necessarily disappear as the share of female workers increases at the job level. We conclude that power and authority are structurally a prerogative of men, regardless of individual and job characteristics, even within female dominated jobs.
    Keywords: employment, working conditions, tasks, gender differences
    JEL: J01 J21 J81
    Date: 2021–03
  10. By: Ille, Sebastian
    Abstract: Human cooperation for reasons other than self-interest has long intrigued social scientists leading to a substantial literature in economics. Its complement –sectarianism – has not received closer attention in economics despite its significant impact. Based on a dynamic model, the paper shows that sectarianism can be understood as the outcome of a repeated bargaining process in which sectarian affiliation evolves into a pure coordination signal that attributes economic and political benefits. It demonstrates that such sectarian social contracts co-evolve with the sects’ degree of coerciveness and are self-reinforcing. Sectarian conflict may then not be a result of diverging religious ideologies but is shown to be caused by external manipulations of the signal (e.g. via identity politics), and internal political and economic grievances within a sect that spill over to the inter-sectarian level while adopting a sectarian appearance. Theoretical results are supported by empirical findings from the Middle East.
    Keywords: Sectarianism Cooperation, Evolutionary game theory, Agent-based modelling
    JEL: C61 C7 C73 D74 P48 Z1
    Date: 2021–01–18
  11. By: Giannakas, Konstantinos; Fulton, Murray E.
    Keywords: Farm Management, Production Economics
    Date: 2020–10–14
  12. By: Vlados, Charis (Democritus University of Thrace, Department of Economics); Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics)
    Abstract: The study of spatial socio-economic development constitutes a significant field of analysis of innovation creation and diffusion. Understanding the spatial evolution of the different socio-economic systems in the age of globalization requires a synthesizing and integrated theoretical approach to how innovation is generated and replicated. This article aims to study three significant spatial socio-economic development theories –the growth poles, the clusters, and the business ecosystems. A literature review reveals that (a) the concept of growth poles concerns mostly the analysis of spatial polarization between specific territories and regions, (b) the clusters concept addresses the issue of developed inter-industrial competition and co-operation from a meso-level perspective, and (c) the analytical field of business ecosystems provides an evolutionary approach that can be valorized for all co-evolving spatial socio-economic organizations. In this context, an eclectically interventional mechanism to strengthen innovation is suggested. The Institutes of Local Development and Innovation (ILDI) policy is proposed for all firms and business ecosystems, of every size, level of spatial development, prior knowledge, specialization, and competitive ability. The ILDI is presented as an intermediate organization capable of diagnosing and enhancing the firm’s physiology in structural Stra.Tech.Man terms (strategy-technology-management synthesis).
    Keywords: Spatial Socio-Economic Development; Business Ecosystems; Clusters; Growth Poles; Institutes of Local Development and Innovation (ILDI); Stra.Tech.Man Physiology
    JEL: R11 R58
    Date: 2020–11–27

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