nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2022‒01‒10
fourteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Economics as a Normative Discipline: Value Disentanglement in an 'Objective' Economics By Davis, John B.
  2. Growth theory and the growth model perspective: Insights from the supermultiplier By Guilherme Spinato Morlin; Nikolas Passos; Riccardo Pariboni
  3. Differential Economic Impact for Cooperative Business Structure: An Application to Farmer-Owned Cooperatives in New York State By Schmit, T.M.; Tamarkin, F.C; Seversorn, R.M
  4. Faith in Science: What Can We Learn from Michael Polanyi? By Agnès Festré; Stein Østbye
  5. Gender, Race, and Class in an Intersectional Framework: Occupations and Wages in the United States By Olga Alonso-Villar; Coral del Río
  6. An Input-Output Hydro-Economic Model to Assess the Economic Pressure on Water Resources in Tuscany By Benedetto Rocchi; Gino Sturla
  7. Contemporary Class Analysis By Daniel Oesch
  8. COVID-19, Gender and Labour By Corsi, Marcella; Ilkkaracan, Ipek
  9. An ECB’s Staff Narrative of Two Decades of European Central Banking: a critical review By Sergio Cesaratto
  10. Deterministic chaos within the transfer space - An unstable fixed point as a narrow ford to complexity through chaos By Friedrich, Thomas
  11. Book Review: Capital as Power By Lynch, Owen
  12. Financiarisation du risque pandémique : l'emprunt obligataire pandémique By Emmanuel Okamba
  13. Women empowerment and environmental sustainability in Africa By Elvis Dze Achuo; Simplice A. Asongu; Vanessa S. Tchamyou
  14. Managing Inequality over Business Cycles: Optimal Policies with Heterogeneous Agents and Aggregate Shocks By François Le Grand; Xavier Ragot

  1. By: Davis, John B. (Department of Economics Marquette University)
    Abstract: This chapter critically evaluates standard economics’ treatment of positive and normative, drawing on Putnam’s (2002) fact-value entanglement argument. It argues that economics is an inherently value-laden discipline but may still be an ‘objective’ one. The means of achieving this is to carry out a programme of value disentanglement that evaluates research approaches according to whether their different value structures are consistent. The method employed assumes that economics and social science disciplines are built around anchor values or normative ideals and additional sets of values concerning what most people in those disciplines see as most valuable and good about human society and characteristic of human nature from the perspective of their disciplines. Since the rise of neoclassicism, in economics the anchor value has been what I term an ‘individual realisation’ ideal. This normative ideal is coupled with values that interpret what individual well-being involves, based on additional values regarding what individuals are. The chapter evaluates the value structures of mainstream economics preferences/utility and the capability conceptions of individuals. The chapter concludes with discussion of different forms of interdisciplinarity and advances a general framework for ethics and economics in an ‘objective’ economics.
    Keywords: positive, normative, fact-value entanglement, individual realisation, capability, disciplinarity
    JEL: A13 B20 B41 B55
    Date: 2022–01
  2. By: Guilherme Spinato Morlin; Nikolas Passos; Riccardo Pariboni
    Abstract: Recently, demand-led growth theories reshaped the study of comparative political economy. Since the Baccaro and Pontusson critique of Varieties of Capitalism, a new wave of studies has sought to analyze national economies in terms of their main demand driver of growth. Post-Keynesian authors provided extensions to perfect the fit between demand-led growth theories and comparative political economy. We argue that the Sraffian supermultiplier provides a growth theory compatible with the growth model perspective advanced by Baccaro and Pontusson and has advantages over Kaleckian and New Keynesian approaches. The concept of the autonomous components of demand, which comprise government spending, export, and debt-financed consumption, is already central for the studies of growth models. The supermultiplier provides a theory that coherently understands the relation between the autonomous demand drivers and the other induced components of demand. We demonstrate our arguments by decomposing the growth of four advanced economies: the United States, Germany, Japan, and Sweden. The decomposition shows the importance of separating the autonomous from the induced components and highlights the relevance of public expenditures and exports as growth drivers in advanced economies.
    Keywords: Comparative Political Economy, growth models, Sraffian supermultiplier
    JEL: B52 E12 O47 O57 P52
    Date: 2021–12
  3. By: Schmit, T.M.; Tamarkin, F.C; Seversorn, R.M
    Abstract: A comprehensive economic impact assessment using input-output methods is developed to account for localized spending activities and distributions of residual earning to member owners by cooperatives. The framework is applied to agricultural supply, service, marketing, farm credit, and rural electric cooperatives doing business in New York State. Detailed spending patterns from cooperative survey data reveal that agricultural cooperatives in the state have higher levels of localized spending when compared to average industry firms using aggregate industry data and equivalent levels of direct industry output. Accordingly, total economic impacts for these cooperatives; i.e., the direct, indirect, and induced effects, are larger. Overall, agricultural cooperatives contribute 7%, 3%, and 10% more total impact with respect to jobs, labor income, and output in New York State. Limitations to the enumeration of total impact to local economies are discussed and directions for future research that encompass more than current economic impacts are proposed
    Keywords: Agricultural and Food Policy
    Date: 2021–12–22
  4. By: Agnès Festré (GREDEG CNRS; Université Côte d'Azur, France); Stein Østbye (University of Tromsø, Norway)
    Abstract: In this paper we revisit Michael Polanyi's overall contribution to the understanding of tacit knowledge and its implications in philosophy of science with a focus on experimental research in social sciences. We first review and discuss Polanyi's references to experiments in general. An extensive number of these experiments are summarised in tabular form in the Appendix, distinguishing between experiments on the phenomenon of tacit knowledge, discussed in Subsection 2.1, and experiments on the epistemological implications of tacit knowledge, discussed in Subsection 2.2 Secondly, we discuss tacit knowledge as a confounding factor and limitation to replicability in social science experiments (Subsection 3.1) and tacit knowledge as a phenomenon to be elicitated through controlled variation in experimental design (Subsection 3.2). In the concluding section, we call for rejuvenation of the study of social epistemology and the social construction of science, suggested to start with Polanyi and his generation, where attention now should be directed to social science rather than hard science.
    Keywords: philosophy of science, tacit knowledge, methodology, experiments, replication
    JEL: B25 B31 B41 B5 C9
    Date: 2021–12
  5. By: Olga Alonso-Villar; Coral del Río
    Abstract: The literature offers limited insights into the labor market experiences of women and men of different racial/ethnic groups by social class beyond considering their educational achievements or occupational status, common proxies for social class, or their positions on the wage distribution. This paper follows a different approach by thinking of class as life conditions at the family level, which we approximate with family income, and by exploring wages at the intersection of gender, race/ethnicity, and family class. Dealing with “individuals in families,” this paper delves deeper into the stratification of women and racial minorities. Our analysis suggests that the “mark of gender” extends beyond race and class. No matter the social class to which individuals belong, women of any race/ethnicity receive conditional wages below the average wage of workers in the corresponding class. Our investigation also suggests that the racial wage penalty of Black women (vis-à-vis White women) stems from a stratification by class that penalizes them. When compared with individuals of the same class, Black women do not earn less than White women with similar characteristics do. On the contrary, the wage disadvantage of Black men (vis-à-vis White men) goes beyond class. No matter the class to which they belong, Black men have lower wages than comparable White men do because they tend to concentrate in occupations that pay less.
    Keywords: Class, Gender, Race, Ethnicity, Occupations, Earnings
    JEL: D63 J15 J16 J71
    Date: 2021–10
  6. By: Benedetto Rocchi; Gino Sturla
    Abstract: In this work, an input-output hydro-economic model based on the Guan and Hubacek (2008) methodology is applied for the Tuscany region in Italy. The model integrates the input-output table (for the year 2017) of the regional economy developed by IRPET with a satellite account, expressed in volume (cubic meters of water), accounting for the flows of water resources between the hydrological system and the economy. Two innovations are incorporated in the model: i) the reclassification of withdrawals and restitutions of water by demanding sector and ii) the creation of an indicator of pressure on water resources based on an analysis of the feasible water supply. The model is built on the basis of economic and hydrological data generated by the different national and regional institutions, also using specific methodologies that are described in this work. The developed model provides estimates of the net water demand generated by 56 economic sectors and by the ecosystem requirements, and allows to compare the net demands by extracting and demanding sectors. The indicator of economic pressure on the total water resource, groundwater and surface water supports a better understanding of the linkages existing between the economic activities and the regional hydrological system.
    Keywords: Input-output models, water resources, hydrology, Tuscany
    JEL: C67 Q25 Q50
    Date: 2021
  7. By: Daniel Oesch (University of Lausanne)
    Abstract: A popular thesis in social stratification argues that the middle class is declining. Our chapter argues that this thesis is flawed both conceptually and empirically. Conceptually, it mixes up the middle and working class and, empirically, misrepresents the trends that shape the class structure. Our chapter discusses the main concepts of class and proposes a model that grasps the class structure of contemporary Western societies. Based on clearer concepts, labour force surveys clearly show that the early 21st century did not see the demise, but the expansion of the (salaried) middle class. Never in history had so many people been working in managerial, professional and technical jobs. By contrast, over the last four decades, the working class experienced a massive employment decline – and this decline had far-reaching consequences. It has vastly reduced its political clout as shown in decreasing trade union density and strike activity as well as in rising income inequality. Moreover, it has led to a fundamental realignment of class voting and contributed to growing family instability. Rather than eroding the middle class, the last decades have put an end to the working-class century.
    Keywords: Social classes; Middle class; Employment structure; Working class
    Date: 2022–01
  8. By: Corsi, Marcella; Ilkkaracan, Ipek
    Abstract: The Covid-19 pandemic has triggered simultaneously a global health crisis and a global economic crisis which have further deepened existing inequalities along several dimensions, including gender. Increasing gender inequalities in paid and unpaid work has been a primary outcome of the pandemic and the associated economic crisis. Given the disproportionate gender division of labor, women were foremost in bearing the brunt of the increased demands on unpaid care work under the lockdown conditions. At the same time, women were also overrepresented in informal employment and service sectors hard-hit by the pandemic resulting in more severe job loss for female workers overall. In many labor markets, women constituted the majority of so-called essential workers, who were protected from job loss yet exposed to increased health risks and prolonged work hours under distressed work conditions. The increasing demand for household production and the unpaid work burden contributed to weakening women's labor market attachment resulting in higher declines in female labor force participation than male. The increased prevalence of teleworking under the pandemic has the potential to provide improved work-life balance conditions, yet at the risk of widening the gender inequalities in the labor market. While these outcomes point to the threat that Covid-19 poses at rolling back the gains achieved in gender equality, the experiences under the pandemic conditions have also contributed to increased awareness around the Globe of the importance of caring labor and care workers, establishing a solid basis for advocacy of gender equal care policies.
    Keywords: COVID-19,gender,paid and unpaid work,work-life balance,telework
    JEL: B54 J08 J01
    Date: 2022
  9. By: Sergio Cesaratto
    Abstract: Monetary Policy in Times of Crisis (Rostagno et al. 2021) has three relevant features. The first is its criticism of the absence of an adequate European fiscal policy during the financial crisis. This left the ECB on its own. The second feature concerns the explanation of the theoretical framework that guided the ECB's action. While it is interesting that the authors point out that monetary policy acts on the demand side (and is therefore neutral neither in the short nor in the long-run), a plain explanation of the channels through which the central bank can influence demand is absent. The third feature is the chronicle of events and of the clash of positions within the ECB. This aspect would have, however, gained from a bolder and less conventional interpretative scheme. The book thus appears to be lacking both in a clear exposition of the ECB's analytical background and its evolution during the crisis, and in a comprehensive explanation of its policies. It is likely that the authors' economic training based on the neo-Keynesian mainstream model has greatly conditioned them in a technically convoluted, but too often uninspiring interpretation of events and policies. It is also possible that the difficulty of demonstrating the effectiveness of the monetary policy measures undertaken by the ECB in the absence of a proactive fiscal policy contributed to the widespread technical laboriousness of the argument in many pages of the book. Especially for academic teaching, but also for the informed public debate, a more accessible level would have been advisable. An appendix seeks to explain T-LTRO operations, the logic of which the book fails to elucidate
    JEL: E11 E12 E52 E58 N14
    Date: 2021–12
  10. By: Friedrich, Thomas
    Abstract: The complete reinvestment of the net profit of a previous production cycle as substrate of the next cycle of a single party may result in deterministic chaos. The dynamics of such a feedback loop is controlled by the size relation of a benefit factor (serves also as complexity factor) and a cost factor. An increasing benefit factor or decreasing cost factor trigger bifurcation and deterministic chaos at certain size relations. In deterministic chaos the size of the net profit of the reinvestment is no longer reliable. Thus, a limit to the evolution of complexity via an increasing benefit factor and complete reinvestment would be expected. Chaos already starts when benefit exceeds cost; a sink. In a source cost exceeds benefit. Both conditions met, source and sink form an ensemble, peacefully transfer substrate when in contact, and produce superadditivity. At low substrate concentrations a sink has to pass through the region of chaos to become a source. To suppress chaotic behaviour, an ensemble could become active when on both sides benefit still exceeds cost; two sinks. The emerging superadditivity supports such a behaviour. In addition, the mathematical analysis of my model identifies a unique substrate concentration leading to an unstable fixed point. Notably, this concentration is independent of an increasing benefit factor and thus does not collide with evolution towards complexity. Moreover, this concentration is a turning point as the result of a further complete reinvestment no longer grows. This limit guides the ensemble through chaos towards complexity and division of labour by a sink and a source.
    Keywords: source; sink; ensemble; net profit; benefit factor; cost factor; superadditivity; subadditivity; deterministic chaos; stable fixed point; unstable fixed point; bifurcation; evolution of complexity; division of labour
    JEL: Z0
    Date: 2021–12–08
  11. By: Lynch, Owen
    Abstract: FROM THE REVIEW: You see, I'm trying to give you a picture of what it is like to read this book, and the experience of having a tantalizing insight dangled in front of you but then being forced to read far more history and statistics than you would really like to understand it is essentially all of Capital as Power. Capital as Power is long, but extremely full of content [...] Bichler and Nitzan write in a very engaging way; not necessarily easy to read but certainly action-packed. And there are many, many interesting historical nuggets in the book, like the history of GM's EV1 car. [U]nlike the laws of economics which mostly claim to be universal across time, the strength of Capital as Power is that they can identify what things are true about some periods, and not of others, and integrate these assumptions into their models. In other words, rather than being a general theory of economics, Capital as Power is a general theory of the space of possible capitalist politics, or as Bichler and Nitzan seem to be so happy to coin, a general theory of possible capitalist creorders.
    Keywords: capital as power
    JEL: P16 P1
    Date: 2021
  12. By: Emmanuel Okamba (UPEM - Université Paris-Est Marne-la-Vallée)
    Abstract: La financiarisation du risque sanitaire conduit à l'émergence de l'emprunt obligataire pandémique. La capacité de cet outil à couvrir le risque sanitaire dépend du degré de maîtrise de l'aléa moral dans la coordination du cycle d'atténuation du choc à court terme, financé par des mesures de stabilisation et du cycle d'investissement, lié à la vitesse à laquelle le système retourne à son équilibre après ce choc, financé par des mesures structurelles.
    Keywords: health risk,economic resilience,moral hazard,Obligation sociale,risque sanitaire,résilience économique,aléa moral Social obligation
    Date: 2021–11–29
  13. By: Elvis Dze Achuo (University of Dschang, Cameroon); Simplice A. Asongu (Yaoundé, Cameroon); Vanessa S. Tchamyou (Yaoundé, Cameroon)
    Abstract: This study examines the effect of women’s socioeconomic empowerment on environmental sustainability in Africa over the 1996-2019 period. Results of the system Generalised Method of Moments (GMM) estimator reveal that women’s socioeconomic empowerment is environment enhancing. Moreover, the findings reveal that the environmental impact of women’s socioeconomic empowerment is modulated through GDP per capita and Foreign Direct Investments (FDI), leading to respective net effects of 0.002055 and 0.003478. These positive net effects are offset beyond respective threshold values of 9.513889 and 9.611398. These thresholds of GDP and FDI are critical for complementary policies relating to the link between women empowerment and environmental sustainability. Consequently, for women empowerment to effectively contribute to environmental sustainability in Africa, various governments, either through individual or concerted efforts should endeavour to create enabling business environments capable of attracting substantial FDI necessary to propel sustainable growth. Moreover, the nexus is not linear and hence, governments should also be aware of critical levels of FDI and GDP per capita at which, complementary policies are needed for women’s socioeconomic empowerment to maintain a positive influence on environmental sustainability.
    Keywords: Women empowerment, Environmental sustainability, Ecofeminism, Africa
    JEL: B54 J16 O55 Q56
    Date: 2022–01
  14. By: François Le Grand (EMLYON Business School); Xavier Ragot (Observatoire français des conjonctures économiques)
    Abstract: We present a truncation theory of idiosyncratic histories for heterogeneous agent models. This method allows us to derive optimal Ramsey policies in heterogeneous agent models with aggregate shocks, in general frameworks. We use this method to characterize the optimal level of unemployment insurance over the business cycle in a production economy, with occasionally binding credit constraints.
    Keywords: Incomplete markets; Optimal policies; Heterogeneous agent models
    JEL: E21 E44 D91 D31
    Date: 2020–12

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