nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2021‒12‒13
fourteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Academic discipline of economics as hedonist philosophy By Tiago Cardão-Pito
  2. Economics as the scientization of politics By Jon Mulberg
  3. Coping with increasing tides: technological change, agglomeration dynamics and climate hazards in an agent-based evolutionary model By Alessandro Taberna; Tatiana Filatova; Andrea Roventini; Francesco Lamperti
  4. “If you compete with us, we shan't marry you” The (Mary Paley and) Alfred Marshall Lecture By Rohini Pande; Helena Roy
  5. Growth, Concentration and Inequality in a Unified Schumpeter Mark I + II model By Patrick Mellacher
  6. Opinion Dynamics with Conflicting Interests By Patrick Mellacher
  7. How the attitude of Chicago economics towards philosophy changed over time: an essay on what role some historical methods should play in practicing the philosophy of economics By Peter Galbács
  8. Mechanical analyses and derivations of money velocity By Saccal, Alessandro
  9. What can economists learn from Foucault? By Ceyhun Gürkan
  10. The replicability crisis and the p-value debate – what are the consequences for the agricultural and food economics community? By Heckelei, Thomas; Huettel, Silke; Odening, Martin; Rommel, Jens
  11. The correspondence between Baumol and Galbraith (1957–1958) An unsuspected source of managerial theories of the firm. By Alexandre Chirat
  12. Introduction : la transition juste. Un nouvel âge de l’économie et de l’environnement By Eloi Laurent
  13. Teaching the philosophical grounding of economics to economists: a 10 years' experience By Ricardo Crespo
  14. Framing Measurement Beyond GDP By Paul Schreyer

  1. By: Tiago Cardão-Pito (ULisboa - University of Lisbon = Universidade de Lisboa)
    Abstract: Contemporary mainstream economics cannot be seen as disconnected from philosophical concerns. On the contrary, it should be understood as a defence for a specific philosophy, namely, crude quantitative hedonism where money would measure pleasure and pain. Disguised among a great mathematical apparatus involving utility functions, supply, and demand, lies a specific hedonist philosophy that every year is lectured to thousands of economic and business students around the world. This hedonist philosophy is much less sophisticated than that in ancient hedonist philosophers as Epicurus or Lucretius. Furthermore, it does not solve any of the systematic difficulties regularly faced by hedonist philosophy. However, the argument that economics is detached from philosophy works as a rhetorical artifice to protect its dominant underlying philosophy: Philosophical disputes would have to be addressed within the biased mathematical apparatus of quantitative hedonism. Economists and business students must learn to identify the underlying philosophy in mainstream economics and alternative philosophical systems.
    Keywords: quantitative hedonism,hedonism,qualitative hedonism,rhetorical artifice,hedonist economic theory,utilitarianism,labour based economic theory
    Date: 2021–11–20
  2. By: Jon Mulberg (Faculty of Arts and Social Sciences, The Open University (UK))
    Abstract: This paper uses Beck's concept of reflexive modernity, and a Foucauldian approach, to critique the positivist philosophy associated with contemporary conventional economics, and to show its inadequacy for the environmental emergency. The paper suggests economics is not neutral but performs an ideological function in justifying the political and social order. Economics can be deconstructed by tracing its history, thereby laying bare its philosophical and political roots. The environmental debate repeats past debates of the 1920s and 30s. By employing the 'subjugated' institutional economics approaches economics can be redefined, and the path to a truly Green New Deal can be unearthed.
    Date: 2021–11–20
  3. By: Alessandro Taberna; Tatiana Filatova; Andrea Roventini; Francesco Lamperti
    Abstract: By 2050 about 70% of the worldùs population is expected to live in cities. Cities offer spatial economic advantages that boost agglomeration forces and innovation, fostering further concentration of economic activities. For historic reasons urban clustering occurs along coasts and rivers, which are prone to climate-induced flooding. To explore trade-offs between agglomeration economies and increasing climate-induced hazards, we develop an evolutionary agent-based model with heterogeneous boundedly-rational agents who learn and adapt to a changing environment. The model combines migration decision of both households and firms between safe Inland and hazard-prone Coastal regions with endogenous technological learning and economic growth. Flood damages affect Coastal firms hitting their labour productivity, capital stock and inventories. We find that the model is able to replicate a rich set of micro- and macro-empirical regularities concerning economic and spatial dynamics. Without climate-induced shocks, the model shows how lower transport costs favour the waterfront region leading to self-reinforcing and path-dependent agglomeration processes. We then introduce five scenarios considering flood hazards characterized by different frequency and severity and we study their complex interplay with agglomeration patterns and the performance of the overall economy. We find that when shocks are mild or infrequent, they negatively affect the economic performance of the two regions. If strong flood hazards hit frequently the Coastal region before agglomeration forces trigger high levels of waterfront urbanization, firms and households can timely adapt and migrate landwards, thus absorbing the adverse impacts of climate shocks on the whole economy. Conversely, in presence of climate tipping points which suddenly increase the frequency and magnitude of flood hazards, we find that the consolidated coastal gentrification of economic activities locks-in firms on the waterfront, leading to a harsh downturn for the whole economy.
    Keywords: Agglomeration; path-dependency; climate; flood; shock; relocation; migration; agent-based model; tipping point; resilience; lock in.
    Date: 2021–11–29
  4. By: Rohini Pande; Helena Roy
    Abstract: Alfred Marshall and Mary Paley Marshall are often described as the first academic economist couple. Both studied at Cambridge University, where Paley became one of the first women to take the Tripos exam and the first female lecturer in economics, with Marshall’s encouragement. But in later life, Marshall opposed granting Cambridge degrees to women and their participation in academic economics. This paper recounts Alfred Marshall’s use of gender norms, born out of a separate spheres ideology, to promote and ingrain women’s exclusion in academic economics and beyond. We demonstrate the persistence of this ideology and resultant norms, drawing parallels between gendered inequities in labor market outcomes for Cambridge graduates in the UK post-Industrial Revolution and those apparent in cross-country data today. We argue that the persistence of the norms produced by separate spheres ideologies is likely to reflect, at least in part, the rents associated with preferential access to better paid, high-skilled labor market opportunities. In doing so, we ask who benefits from gender norms, who enforces them, and suggest relevant policy work and areas for future research.
    JEL: B3 J16 J7 O43
    Date: 2021–11
  5. By: Patrick Mellacher
    Abstract: I develop a simple Schumpeterian agent-based model where industries are born and evolve endogenously and use it to study the interrelation between technological change, economic growth, market concentration and inequality. This theoretical model combines features of the Schumpeter Mark I (centering around the entrepreneur) and Mark II model (emphasizing the innovative capacities of firms), and is capable of reproducing a large set of stylized facts concerning growth, market concentration, inequality and productivity. In particular, the model can reproduce the industry life-cycle, a Kuznets curve, a Piketty-style increase of inequality in "mature" economies, as well as recent stylized facts on "declining business dynamism". I conduct an extensive policy analysis to identify the parameters that produce these stylized facts in the model. Notably, the empirically-grounded assumption that the difficulty to imitate a firm depends on its technological distance to the imitator can explain prominent stylized facts of economic development since the 1980s. However, growth in the number of industries triggered by the exploitation of new technological opportunities can prove to be a counteracting force to these tendencies in the short run. Thus, the model suggests a wave-like evolution of growth, inequality and market concentration centered around advances in basic research. Extensive sensitivity analysis suggest that policies aimed at increasing the innovative capacities of firms increase the rate of growth of output and real wages (dynamic efficiency) at the expense of increasing market concentration (static inefficiency) and inequality.
    Date: 2021–11
  6. By: Patrick Mellacher
    Abstract: I develop a rather simple agent-based model to capture a co-evolution of opinion formation, political decision making and economic outcomes. I use this model to study how societies form opinions if their members have opposing interests. Agents are connected in a social network and exchange opinions, but differ with regard to their interests and ability to gain information about them. I show that inequality in information and economic resources can have a drastic impact on aggregated opinion. In particular, my model illustrates how a tiny, but well-informed minority can influence group decisions to their favor. This effect is amplified if these agents are able to command more economic resources to advertise their views and if they can target their advertisements efficiently, as made possible by the rise of information technology. My results contribute to the understanding of pressing questions such as climate change denial and highlight the dangers that economic and information inequality can pose for democracies.
    Date: 2021–11
  7. By: Peter Galbács (Budapest Business School)
    Date: 2021–11–20
  8. By: Saccal, Alessandro
    Abstract: The equation of exchange is derived from a standpoint encompassing the physics and economics thereof, whereby the maximisation of a money value function, increasing in real output and decreasing in the real money supply, while accounting for time and space, subjected to a money constraint, at the macroeconomic level, gives rise to an optimal level of real output thereby, expressing the liquidity demand coefficient as the inverse quotient of space over time. The fusion of such a liquidity demand coefficient expression with the money constraint, which is the equilibrium Cambridge equation, in turn gives rise to an equation for space, being the position of money, whose differentiation is precisely instantaneous money velocity and thence the exchange equation as presented by Fisher. The present analysis also derives money position on account of non-constant instantaneous money velocity as instantiated by Fisher, advancing a framework for the macroeconomy’s general money value function and money constraint in the process. It likewise advances simulations of non-constant average and instantaneous money velocity, with a particular application to a stylised closed macroeconomy. It finally proceeds to remodel instantaneous money velocity through the use of ordinary differential equations (ODEs) for the money equations of motion, both generally, by letting the sum of the three equal a corrected exponential random walk with drift, and through a money force model, of free accumulation with financial assets resistance. This work thus remarks in sum that money velocity as customarily calculated, taught and understood is not univocal.
    Keywords: Cambridge equation; equation of exchange; liquidity; money position; money velocity; quantity theory of money.
    JEL: A12 B59 E21 E23 E31 E41 E43 E51 Z00
    Date: 2021–11–21
  9. By: Ceyhun Gürkan (Ankara Üniversitesi)
    Date: 2021–11–20
  10. By: Heckelei, Thomas; Huettel, Silke; Odening, Martin; Rommel, Jens
    Abstract: A vivid debate is ongoing in the scientific community about statistical malpractice and the related publication bias. No general consensus exists on the consequences and this is reflected in heterogeneous rules defined by scientific journals on the use and reporting of statistical inference. This paper aims at discussing how the debate is perceived by the agricultural economics community and implications for our roles as researchers, contributors to the scientific publication process, and teachers. We start by summarizing the current state of the p-value debate and the replication crisis, and commonly applied statistical practices in our community. This is followed by motivation, design, results and discussion of a survey on statistical knowledge and practice among the researchers in the agricultural economics community in Austria, Germany and Switzerland. We conclude that beyond short-term measures like changing rules of reporting in publications, a cultural change regarding empirical scientific practices is needed that stretches across all our roles in the scientific process. Acceptance of scientific work should largely be based on the theoretical and methodological rigor and where the perceived relevance arises from the questions asked, the methodology employed, and the data used but not from the results generated. Revised and clear journal guidelines, the creation of resources for teaching and research, and public recognition of good practice are suggested measures to move forward.
    Keywords: Research Methods/ Statistical Methods
    Date: 2021–12–02
  11. By: Alexandre Chirat
    Abstract: Baumol’s impact on the development of managerial theories of the firm is investigated here through material found in Galbraith’s archives. In 1957 Galbraith published a paper claiming that the impact of macroeconomic policies varies with market structures (competitive versus oligopolistic). That publication prompted Baumol (1958b) to send Galbraith a manuscript dealing extensively with a crucial question of managerial theories of the firm, namely, the trade-off between sales and profits. I argue that Baumol’s critiques and Galbraith’s answers largely explain the way Baumol (1958a, 1959) framed his alternative model of the behavior of corporations. He reasoned in terms of maximization of sales with a profit constraint as their main objective. In return, Business Behavior, Value and Growth fostered the development of Marris’ (1964) and Galbraith’s (1967) theories of the corporation. While Tullock (1978) provides a narrative in which the sales maximization hypothesis has two main branches – Baumol for the one and Galbraith-Marris for the other – the paper demonstrates that these branches are intimately connected.
    Keywords: Baumol – Galbraith – Theory of the firm – Managerialism – Marginalisme
    JEL: B21 B22 D43
    Date: 2021
  12. By: Eloi Laurent (OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po)
    Abstract: L'article propose une introduction au numéro spécial de la Revue de l'OFCE « Écologie et inégalités » en présentant les différents âges de l'économie de l'environnement, le défaut d'intérêt de la discipline économique contemporaine pour les enjeux environnementaux et les étapes de ce que serait une transition juste.
    Keywords: Transition juste,Économie écologique,Économie de l’environnement
    Date: 2020–01
  13. By: Ricardo Crespo (Universidad Austral)
    Date: 2021–11–20
  14. By: Paul Schreyer (OECD Statistics and Data Directorate)
    Abstract: While the Beyond GDP agenda has been with us for some time, it has come centre stage in the Covid crisis. The idea of building back a greener, more inclusive, more resilient economy resonates well with measurement e orts beyond GDP. But the eld of potential indicators is vast and measurement choices need some structure. We present a measurement framework that distinguishes between the production sphere, the well-being sphere and the asset sphere. GDP remains a cornerstone of the production sphere but is not suited to capture people's well-being, or sustainability of produced and natural assets. As one moves beyond GDP, however, ambitions for a single-valued aggregate have to be scaled down in favour of pragmatic choices for indicators.
    Keywords: Beyond GDP, green accounting, national accounts, well-being
    Date: 2021–11

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