nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2021‒08‒23
fifteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. On the Labor Theory of Value as the Basis for the Analysis of Economic Inequality in the Capitalist Economy By Yoshihara, Naoki
  2. Paradox of Monetary Profit, Shortage of Money in Circulation & Financialisation By Javidanrad, Farzad
  3. Speculation: a political economy of technologies of imagination By Bear, Laura
  4. The Dynamics of International Exploitation By Cogliano, Jonathan F.; Veneziani, Roberto; Yoshihara, Naoki
  5. Entrepreneurship and crisis in Greece from a neo-Schumpeterian perspective: A suggestion to stimulate the development process at the local level By Vlados, Charis; Koronis, Epaminondas; Chatzinikolaou, Dimos
  6. Financial Instability and Income Inequality: why the connection Minsky-Piketty matters for Macroeconomics By Filippo Gusella; Anna Maria Variato
  7. Mutations of the emerging new globalization in the post-COVID-19 era: Beyond Rodrik’s trilemma By Vlados, Charis; Chatzinikolaou, Dimos
  8. The Ritual of Capitalization By Fix, Blair
  9. Nation branding, in what context? Spatial competitiveness and attractiveness By Vlados, Charis; Chatzinikolaou, Dimos
  10. The consequences for peace of the underlying ideologies of economic and management sciences By Jacques Fontanel
  11. Simulation and estimation of an agent-based market-model with a matching engine By Ivan Jericevich; Patrick Chang; Tim Gebbie
  12. New Inequality and Late Modernity Analysis: Economic Perspectives and Sociological Misperceptions By Paul J.J. Welfens
  13. Dehumanized gender identity: Critical reflection on neuroscience, power relationship and law By Sinha, Chetan
  14. Market Power in the United States Potato Industry By Bolotova, Yuliya V.
  15. Civilizzazione e funzione ancillare della forza By Misuraca, Francesco

  1. By: Yoshihara, Naoki
    Abstract: In this paper, we have reviewed the labor theory of value as the basis for the analysis of economic inequality in the capitalist economy. According to the standard Marxian view, the system of labor values of individual commodities can serve as the center of gravity for long-term price fluctuations in the precapitalist economy with simple commodity-production, where no exploitative social relation emerges, while in the modern capitalist economy, the labor value system is replaced by the prices of production associated with an equal positive rate of profits as the center of gravity, in which exploitative relation between the capitalist and the working classes is a generic and persistent feature of economic inequality. Some of the literature such as Morishima (1973, 1974) criticized this view by showing that the labor values of individual commodities are no longer well-defined if the capitalist economy has joint production. Given these arguments, this paper firstly shows that the system of individual labor values can be still well-defined in the capitalist economy with joint production whenever the set of available production techniques is all-productive. Secondly, this paper shows that it is generally impossible to verify that the labor-value pricing serves as the center of gravity for price fluctuations in precapitalist economies characterized by the full development of simple commodity-production.
    Keywords: UE-Exploitation, The Labor Theory of Value, Prices of Production
    JEL: D63 D51
    Date: 2021–08
  2. By: Javidanrad, Farzad (University of Warwick)
    Abstract: Over the last four decades, the term “financialisation” has entered economics terminologies to explain the development of capitalist economies in which: a) the rate of profit in the production sector is falling or narrowing relative to that in the financial sector b) profit seeking through financial speculation has grown rapidly among the household and the production sectors; c) public and private debt is rapidly accelerating and its ratio to GDP is increasing swiftly; d) there is an independent and accelerated growth of the financial sector compared to that of the real sector. This paper is a theoretical attempt to shed light on these features through the lens of the paradox of monetary profit and its manifestation in the capitalist economy, i.e. the shortage of money in circulation. The aim of this paper is to show how the paradox of monetary profit provides a theoretical framework to analyse the mechanism by which the capitalist economies move towards financialisation. This theoretical argument shows the connection between the shortage of money in circulation and financialisation. The core idea proposed in this paper is that financialisation is the direct result of the shortage of money in circulation, and that this shortage can be explained through the paradox of monetary profit.
    Keywords: Capitalism, Paradox of Monetary Profit, Financialisation, Monetary production Economy, Marx JEL Classification: B11 ; E11 ; P10
    Date: 2021
  3. By: Bear, Laura
    Abstract: This introduction explores how to build a critical analysis of post-crisis capitalism by moving beyond Marx, Foucault and Callon's approaches. This is crucially important because powerful technocratic institutions and the discipline of economics are attempting to regain legitimacy by adopting theories that mirror performativity, discursive, narrative and network concepts within the social sciences. To combat this we need to forge a new approach that returns our attention to questions of accumulation and inequality. It is with this in view that the articles in the special issue use the concept of speculation and explore it in real estate markets, infrastructure financing, oil and gold trading, ethical finance and gambling. Overall speculation is understood to be future-oriented affective, physical and intellectual labour that aims to accumulate capital for various ends. Control of the means of speculation is governed by the distribution of contracts and credit in society. And crucially the amount of surplus value extracted depends on calculations of risk based on the imagination of social differences. Social evaluations are at the core of the technologies of imagination used in speculation. Speculation is akin to practices of divination or magic because it aims to reveal a hidden order of human and non-human ethical powers that explain the past, present and future and make it possible to act. Importantly this means that racial, gendered, national and other imaginings of the social permeate acts of speculation. From our perspective, we can write a critical and post-colonial account of capitalism that addresses inequalities of race and nation scandalously omitted from Marx, Foucault and Callon's accounts of ‘the economic’.
    Keywords: speculation; capitalism; accumulation; post-coloniality; timescapes
    JEL: J1
    Date: 2020–02–18
  4. By: Cogliano, Jonathan F.; Veneziani, Roberto; Yoshihara, Naoki
    Abstract: This paper develops a theoretical and computational framework to analyse imperialistic international relations and the dynamics of international exploitation. A new measure of unequal exchange across borders - an exploitation intensity index - is proposed which can be used to characterise the structure of imperialistic international relations in the current global economy. It is shown that wealthy nations are net lenders and exploiters, whereas endowment-poor countries are net borrowers and suer from exploitation. Capital ows transfer surplus from countries in the core of the global economy to those in the periphery. However, while international credit markets and wealth inequalities are sucient to generate unequal exchange, they are proved to be insucient for it to persist. Various possible factors are considered, including technical change and varying social norms, that may explain the persistence of international inequalities.
    Keywords: International exploitation, imperialism, capital movements, technical change
    JEL: B51 D63 C63 F21 F54
    Date: 2021–08
  5. By: Vlados, Charis (Democritus University of Thrace, Department of Economics); Koronis, Epaminondas (University of Westminster, London, UK); Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics)
    Abstract: In economies where most firms are family-owned, there is a risk of poor management and problematic strategic and technological comprehension. Multiple cases prove the existence of a series of socio-economic pathologies in such firms that undermine an economy’s ability to overcome economic crises through innovative and entrepreneurial thinking and adaptability. The paper aims to present the relationship between entrepreneurship and “development and crisis” from the perspective of Greece’s current socio-economic crisis. It first analyzes the neo-Schumpeterian entrepreneurship theory and the structures that allow innovative and competitive models to appear and then links this context with Greece’s case. The “Stra.Tech.Man” theoretical framework of physiological types of entrepreneurship is suggested as the analytical base for elaborating a local development policy instrument for economies where such less competitive businesses prevail.
    Keywords: entrepreneurship; socio-economic crisis; Greek crisis; neo-Schumpeterian perspective; Stra.Tech.Man physiology; entrepreneurship types; less competitive firms; local development
    JEL: B52 L26
    Date: 2021–01–11
  6. By: Filippo Gusella; Anna Maria Variato
    Abstract: In recent years the names of Minsky and Piketty gained increasing notoriety to researchers because the two authors investigated issues of financial instability and income inequality, which represent both two unsolved macroeconomic problems of the new millennium, and evidence contradicting the long†run implications of mainstream macroeconomics. By combining these two names we set ourselves an ambitious goal, going beyond the technical aspects of the model presented in the paper. Indeed, not only we want to contribute directly to the debate meant at clarifying the controversial relationship between financial instability and income inequality; we also aim at addressing a broader issue which is the explanation of the reasons why a theoretical revolution in macroeconomics has not yet occurred, and why financial aspects still play a subordinate role to real factors in the explanation of growth and cycles. In this broader perspective Minsky and Piketty are assumed as extreme examples of the opposite poles of heterodoxy and orthodoxy. Both target and argumentative line of the contribution are quite unconventional, as usually financial instability and income inequality, are treated as separate if not independent issues of inquiry; and methodological reflection is no longer a customary explicit part of technical papers. We discuss possible reasons why these two circumstances happen. The theoretical framework proposed in this paper builds on Ferri (2016), who presents a class of demandled models in a medium†run time horizon. This class of models is not conventional too, though it belongs to “pedagogical models†, we consider especially relevant tool for macroeconomics. Among the different specifications investigated by the author, we select the nearest to possible comparison with Piketty (2014) and then we introduce corporate debt into the financial account of firms. Because of the non†linearity of the model, we explore its dynamic properties with numerical simulations. Such simulations are also performed to assess the parameters enabling to support the Financial Instability Hypothesis. Aiming at deepening the comprehension of robustness properties, we also consider analytic results from a linearized version of the model. Obviously, the criticism addressed to Piketty with respect to the definition and measurement of inequality can be extended to our model too, as we use the same expedient to check the evolution of inequality. This leads to emphasize the relevance of the issue of measurement as a critical one for future developments. Nevertheless, this does not impinge on the achievement of our purpose. Indeed, our analysis confirms the utility of pedagogical models. Furthermore, it underlines the need of a change of economic vision such that complexity comes as a substantial part of representation. In terms of future perspectives these considerations point out the need for macroeconomic epistemology to resume constructive dialectics: a mixture of plural narratives and foundations for new visions of economic policy. Those just proposed at the end of the paper differ from orthodox ones as they call for financial regulation, they underline qualitative aspects and heterogeneity; but such embryonal policy suggestions stem from the overall perspective described in the paper, a perspective rooted into Ferri’s notion of medium†run, and qualified by Minsky through an eclectic approach leading to networks of balance†sheets: two ways highly overlapping though not totally equivalent to represent the reality of and endogenously unstable capitalism lying at the edge of chaos.
    Keywords: Economic Inequality, Financial Instability Hypothesis, Endogenous Cycles
    JEL: B41 D31 E32
    Date: 2021
  7. By: Vlados, Charis (Democritus University of Thrace, Department of Economics); Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics)
    Abstract: Today’s tensions and challenges at the global governance level seem to constitute structural expressions of the global system’s mutations towards the post-COVID-19 era. This study examines whether the structural changes observed in various socio-economic dimensions and interdependent spatial levels due to the pandemic crisis are accelerating the emergence of a new phase of global governance. It investigates whether Rodrik’s trilemma (the incompatibility of synchronously achieving national sovereignty, democracy and globalization) seems to be relatively inadequate to approach today’s emerging global reality and challenges comprehensively. After an elliptic overview of world governance’s evolutionary shaping and reaching the present-day necessarily repositioned role of Brazil, Russia, India, China and South Africa (BRICS), we argue that these countries must no longer be perceived as emerging exceptional cases but as central participants, equally responsible for promoting a more balanced and sustainable development perspective for the less developed socio-economic formations and the entire global socio-economic system’s stability. We conclude that in the progressively shaped ‘new globalization’, which is a distinct evolutionary phase of the international economy and international relations, Rodrik’s trilemma seems to some extent analytically insufficient since there is no more a sustainable optimum in any of its coupled dimensions, which could allow a viable exit from the current crisis.
    Keywords: global governance; BRICS; post-COVID-19 era; new globalization; global socio-economic development; Rodrik’s trilemma
    JEL: F63 F69
    Date: 2021–07–27
  8. By: Fix, Blair (York University)
    Abstract: For more than a century, political economists have sought to understand the nature of capital. The prevailing wisdom is that there must be something ‘real’ — some productive capacity — that underpins capitalized values. This thinking, I argue, is a mistake. Building on Jonathan Nitzan and Shimshon Bichler’s theory of capital as power, I argue that capitalization is an ideology. It is a quantitative ritual for converting earnings into present value. Although the ritual is arbitrary, it gives rise to astonishing empirical regularities, reviewed here.
    Date: 2021–08–14
  9. By: Vlados, Charis (Democritus University of Thrace, Department of Economics); Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics)
    Abstract: This chapter examines the conceptual evolution of national identity and specificity creation and promotion (nation branding), combining it with theoretical background and developments in the concept of competitiveness and attractiveness and suggesting a new interpretive framework for understanding nation branding policy and strategy. The chapter is divided into specific elliptical steps, with the first one concerning the critical overview of nation branding recent literature, developed towards understanding the main research directions related to competitiveness. Competitiveness and attractiveness are then presented as a dynamic and undivided diptych, which cannot be exhausted in fragmented nation-centric approaches but arises through dynamic processes at the co-evolving levels of spaces, industries, and firms. In conclusion, a systemic contour for understanding space is composed and suggested as a multi-layered continuum, called the “cone of entrepreneurial and innovational dynamics,” which can be the substantial basis for articulating an integrated nation branding policy.
    Keywords: Nation branding concept; Competitiveness; Attractiveness; Cone of entrepreneurial and innovational dynamics; Micro-meso-macro; Seduction of nations; Evolutionary analysis
    JEL: L53 M31
    Date: 2021–07–12
  10. By: Jacques Fontanel (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - UPMF - Université Pierre Mendès France - Grenoble 2 - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble)
    Abstract: Wars and the threat of war remain constant realities in our societies, and the twentieth century has been particularly rich in deadly conflicts. However, the neoclassical current still assumes, never discussed as if it were self-evident, that international trade is a factor of peace; when states cannot and should not intervene in the national economy, they are no longer in a position to wage economic war. With the slogan "America first" inspired by mercantilism and government-controlled Chinese capitalism, the domination and demonstration effects of states obviously change the conditions of the international market economy. Moreover, short-term self-interest is not compatible with the need to collectively save the planet Earth in great danger. Capitalism reveals its flaws, especially in the fields of ecology, environment, climate, but also in the unbearable inequalities of income and power between countries or between citizens.
    Abstract: Les guerres et les menaces de guerre restent des réalités constantes dans nos sociétés et le vingtième siècle a été particulièrement friand de conflits meurtriers. Pourtant, le courant néoclassique émet toujours l'hypothèse, jamais discutée comme s'il s'agissait d'une évidence, que le commerce international est un facteur de paix.Lorsque les Etats ne peuvent et ne doivent pas intervenir dans l'économie nationale, ils ne sont plus en mesure e d'engager une guerre économique. Avec le slogan "America first" inspiré par le mercantilisme et le capitalisme chinois contrôlé par le gouvernement, les effets de domination et de démonstration des Etats modifient évidemment les conditions de l'économie de marché internationale. De plus, l'intérêt personnel de court terme n'est pas compatible avec la nécessité de sauver collectivement la planète Terre en grand danger. Le capitalisme révèle ses failles, notamment dans les domaines de l'écologie, de l'environnement, du climat, mais aussi dans les inégalités insupportables de revenus et de pouvoir entre pays ou entre les citoyens.
    Keywords: Peace,War,economics,management sciences,Paix,Guerre,Economie,science du management
    Date: 2021–08–05
  11. By: Ivan Jericevich; Patrick Chang; Tim Gebbie
    Abstract: An agent-based model with interacting low frequency liquidity takers inter-mediated by high-frequency liquidity providers acting collectively as market makers can be used to provide realistic simulated price impact curves. This is possible when agent-based model interactions occur asynchronously via order matching using a matching engine in event time to replace sequential calendar time market clearing. Here the matching engine infrastructure has been modified to provide a continuous feed of order confirmations and updates as message streams in order to conform more closely to live trading environments. The resulting trade and quote message data from the simulations are then aggregated, calibrated and visualised. Various stylised facts are presented along with event visualisations and price impact curves. We argue that additional realism in modelling can be achieved with a small set of agent parameters and simple interaction rules once interactions are reactive, asynchronous and in event time. We argue that the reactive nature of market agents may be a fundamental property of financial markets and when accounted for can allow for parsimonious modelling without recourse to additional sources of noise.
    Date: 2021–08
  12. By: Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))
    Abstract: Since the 1990s, distributional issues have once again become a focus of analysis in OECD countries and elsewhere. It has, however, become less common in the social sciences to engage in vigorous scientific debate about important phenomena and theses or to engage critically with different scientific approaches. This has led to the existence of different analytical findings in the social sciences - for example, in the fields of Economics and Sociology - that at times completely contradict each other; interestingly, this also applies to questions of inequality analysis. Based on a knowledge of key statistics and regression or simulation analyses, as well as thanks to theorems of foreign trade theory, a differentiated picture of inequality developments in the context of globalization has been formed in Economics. However, some experts in the field of Sociology in Germany, such as Andreas Reckwitz in his book "The Society of Singularities" , offer contributions to the debate which lack any recognizable theoretical foundation or empirical evidence on such important topics as economic-cultural rise and decline or inequality dynamics. In turn, certain influential actors in the political sphere have been demonstrably influenced by unscientific passages in Reckwitz's book, so that his very questionable claims regarding inequality dynamics - under the heading of a "paternoster effect" could have a destabilizing effect in national politics in Germany, supranational EU politics and even beyond. Policies that do not rely on theory- and evidence-based statements in important fields, but rather on untested assumptions, contribute to the "risk society" : endangering the stability and economic prosperity of all strata. It seems desirable to work on the basis of theory and evidence-based foundations in science and to pay careful attention to empirical results in the scientific and political communities; in doing so, also to take critical note of the current Reckwitz debate, which has also been somewhat controversial within the field of Sociology. Moreover, the approach of using lifetime effective income for the purposes of international comparison is both important and innovative.
    Keywords: Inequality, global economy, technology, singularity, critical rationalism, evidence, paternoster effect
    JEL: D63 F00 O1 O33
    Date: 2021–07
  13. By: Sinha, Chetan
    Abstract: This article discusses the gender question which is directed towards power, whether it is family dynamics, scientific domain or another sociocultural arena. Gender was not discussed as prominently in various forums integrating neuroscience and law. The gender movement comprising feminist and queer group movement addressed various issues of prejudices in the legal domain including, the logic derived from the dominant male value system. This metatheory to critically address gender in various domains has an important role in the interdisciplinary social sciences. The context of the body in all forms were observed from the eye of the male observer rather than the eye of beholder of one’s body. The genesis of one’s existence in the context of gender was heavily theorized both in order to subjugate the matter of identity movement, ownership and self. Article discusses how the stereotypical view corresponding to the mythology and parasitic view prevalent in the history was made as fact through discourse construction, scientific appropriations, historical writings. Thus, identifying simplistic psychology of one’s agency, societal framing of the methods of socialization and institutionalizing the common sense of inferiority about one’s identity including the process of internalization along with the biological inferiority has maintained the gap in the gender equality
    Date: 2021–08–14
  14. By: Bolotova, Yuliya V.
    Abstract: The motivations for this case study are the U.S. potato industry developments involving the implementation of a potato supply management program by a nation-wide group of cooperatives of potato growers during the period of 2005-2010. This program aimed to mitigate potato oversupply adversely affecting profitability of potato growers and provide fair returns for potato growers. The potato supply management program raised legal issues leading to antitrust lawsuits filed by potato buyers against potato growers and their cooperatives, which resulted in a large settlement. The case study introduces economic, business, and legal issues surrounding the implementation of this potato supply management program. The case study also provides simple contemporary applications of economic models of the profit-maximizing behavior of firms with seller market power in the U.S. potato industry. The case study presents a theoretical framework, which explains conduct and performance of the U.S. potato industry in alternative market scenarios, and a basic market and price analysis. The intended audiences are undergraduate and graduate students, as well as extension and outreach audiences. A teaching note includes a set of discussion questions and suggested answers. The teaching note also discusses teaching objectives, teaching strategies, and student background knowledge.
    Keywords: Agricultural Finance, Production Economics
  15. By: Misuraca, Francesco
    Abstract: A very respectable theory (K.R. Popper) argues that civilization tends to limit the use of violence and opposes a state of chaos, madness, barbarism and war. It is a philosophical theory that in its empirical validity can find a minimum (not exclusive) support from a triad of arguments. In fact, by limiting the concept of civilization to that field that we can call "law and legal justice", we can have, in this case, three arguments, to argue that law actually tends to limit the use of violence, without being based exclusively on the force (and violence) of the sanction: (i) A philosophical-juridical argument, the theory of “international regimes; (ii) A sociological one, the theory of companies such as "Small World Networks" and (iii) A mathematical one, the theory of deterministic chaos applied to the phenomenon of sanction (also definable as coercive force, deterrence or even "just war").
    Date: 2021–08–04

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