nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2022‒04‒11
twenty-one papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Had Keynes Read More Veblen: The Imperative of a Scientific Theory of Human Behavior By Jon D. Wisman
  2. Locating Industrial Policy in Developmental Transformation: Lessons from the Past, Prospects for the Future By Ben Fine; Seeraj Mohamed
  3. Social classes in economics analysis. A brief historical account. By Rafael Muñoz de Bustillo Llorente; Fernando Esteve Mora
  4. Charging the macroeconomy with an energy sector: an agent-based model By Ciola, Emanuele; Turco, Enrico; Gurgone, Andrea; Bazzana, Davide; Vergalli, Sergio; Menoncin, Francesco
  5. How the Bourgeoisie’s Quest for Status Placed Blame for Poverty on the Poor By John Wisman
  6. Moral institutions and evolution: In search of equilibria By Leroch, Martin Alois
  7. Tools and concepts for understanding disruptive technological change after Schumpeter By Mark Knell; Simone Vannuccini
  8. Reputation systems and recruitment in online labor markets: insights from an agent-based model By Lukac, Martin; Grow, André
  9. Supply-Use and Input-Output Tables By Dutta, Sourish
  10. It is not la vie en rose. New insights from Graziani’s theory of monetary circuit By Marco Veronese Passarella
  11. Why has economic shrinking receded in Latin America? A social capability approach By Andersson, Martin; Palacio, Andrés; von Borries, Alvaro
  12. The Internal Outsiders: A Standpoint and Intersectional Perspective on Gender and Power in Organisations By Mariam Mohsin; Saman Nazir
  13. Changing accounts of the relationship between capitalism and democracy: From incompatibility to partnership, and back? By Krahé, Maximilian
  14. Gender Norms in the Former Socialist States: An approach using micro data in a case of Russia By Kumo, Kazuhiro
  15. Alternative uses of functional finance: Lerner, MMT and the Sraffiansh By Summa, Ricardo de Figueiredo
  16. Von der Pandemie zu einer Neuordnung der Zeit? Zeitsoziologische Perspektiven auf das Verhältnis von Zeitlichkeit, Wirtschaft und Staat By Suckert, Lisa
  17. Male and Female Voices in Economics By Hans Henrik Sievertsen; Sarah Smith
  18. Firm foundations: The statistical footprint of multinational corporations as a problem for political economy By Ergen, Timur; Kohl, Sebastian; Braun, Benjamin
  19. The economic returns of circular economy practices By Antonioli, Davide; Ghisetti, Claudia; Mazzanti, Massimiliano; Nicolli, Francesco
  20. Prinsip-Prinsip Manajemen dalam Al-Quran dan Hadis By Arief, A. Anggie Zabrina
  21. What is financial inclusion? A critical review By Thereza Balliester Reis

  1. By: Jon D. Wisman
    Abstract: John Maynard Keynes rejected the strict assumption of rational behavior embraced by neoclassical economists, providing causal importance to instincts, habits, and intuition. However, he mostly failed, as did they, to incorporate in his analysis that human decisions are frequently, if not most often, dependent upon the decisions of others. Further, and more particularly, he failed to grant importance to the fact that humans struggle for the recognition and social status necessary for social and self-respect. Thorstein Veblen also rejected the neoclassical expression of rational behavior, and 37 years before Keynes's The General Theory, focused upon interdependence in decision making and status competition by drawing upon Charles Darwin's theory of evolutionary biology to ground in science his theory of human behavior. Had Keynes read Veblen's The Theory of the Leisure Class (1899), he may have recognized the need in his own theory to account for interpersonal decision making and especially of incorporating the struggle for social recognition and status. This article examines how drawing upon aspects of Veblen's work would have enriched the explanatory power of Keynes's economics as well as that of those engaged in furthering Keynes's project. It concludes with reflections on the necessity that economic analysis, and social science generally, be constructed upon a scientifically-grounded conception of human behavior.
    Keywords: Marginal propensity to consume, Conspicuous consumption, Darwinism, Instinct, Status, Emulation
    JEL: B22 B41 E12 E71
    Date: 2022
  2. By: Ben Fine (Department of Economics, SOAS University of London); Seeraj Mohamed (Parliamentary Budget Office, South Africa)
    Abstract: What can we learn from structural change of countries that successfully industrialised in the 20th and 21st century? This paper explains that current attempts at economic transformation of the structure of countries’ economies, including industrial development, have to be analysed and understood within the shift to the new, financialised phase of capitalism and the imposition of neoliberal practices, interests and ideologies within countries and on their international economic and financial relations. Rather than reflecting an ideology of the reduction of the role of the state, neoliberalism has entailed the redirection and transformation of the control and role of the state in the provision of welfare, social security, industrial development and deregulation of trade, labour and finance as well as reorientation of both domestic macroeconomic policies and the global financial architecture. The lessons that can be learned from studying late industrialising countries, such as the Asian Tigers, that had achieved relatively high levels of industrial transformation, have to take into account this context, including the analytical reduction, even implosion, of concepts such as development and industrial policy. Further, one has to understand the limitation of current mainstream economics approaches in the context of the redefined and degraded notions of development and the roles of the state that neoliberalism deployed defensively in response to ideas that developmental states played key roles in economic transformations of the late industrialisers. First, we revisit the nature and role of industrial policy. Second, we situate these in relation to one another and what lessons we have learned from the developmental state paradigm and how we might take these lessons forward. And, third, we turn to the relationship between economic and social development. We are mindful, as already suggested, that neoliberalism, as the current stage of capitalism – now longer lasting than its “Keynesian†predecessor – is underpinned by financialisation, something that is increasingly acknowledged across the literature but which needs to be taken into account other than treating finance as one amongst many other factors.
    Keywords: Development; Developmental State; Economic Transformation; Financialisation; Industrial Policy; Neoliberalism
    JEL: G00 H11 O1 P10
    Date: 2022–01
  3. By: Rafael Muñoz de Bustillo Llorente (Universidad de Salamanca); Fernando Esteve Mora
    Abstract: The purpose of this working paper, the first of a series of three aiming at studying social classes from an economic perspective, is to review the role played by social classes in economic analysis. With that aim, we will first discuss the use of the concept of social classes in the analysis of classical economists. Then we will present the reasons behind the abandonment of the concept of social classes as an analytical tool by the marginalist school who triumphed in the final quarter of the 19th century, changing the economic paradigm, and by mainstream economists in the 20th Century. Nevertheless, it can be argued that the classical idea of social class (based on the source of income: wages versus profits) has somehow remained alive in modern macroeconomic analysis, if in disguise, behind the concept of functional (or factorial) distribution of income. The last part of the paper reviews the role played by the functional distribution of income in current macroeconomic analysis, and studies how the evolution of the economy and labour relations in the last few decades has made the interpretation of the functional distribution of income in terms of social classes less relevant than in the past.
    Keywords: Social Class, Functional Distribution of Income, Labour segmentation
    Date: 2022–03
  4. By: Ciola, Emanuele; Turco, Enrico; Gurgone, Andrea; Bazzana, Davide; Vergalli, Sergio; Menoncin, Francesco
    Abstract: The global energy crisis that began in fall 2021 and the following spike in energy price constitute a major challenge for the world economy which risks undermining the post-COVID-19 recovery. In this paper, we develop and validate a new macroeconomic agent-based model with an endogenous energy sector to analyse the role of energy in the functioning of a complex adaptive system and assess the effects of energy shocks on the economic dynamics. The economic system is populated by heterogeneous agents, i.e., households, firms and banks, who take optimal decision rules and interact in decentralized markets characterized by limited information. After calibrating the model on US quarterly macroeconomic data, we investigate the economic and distributional effects of different types of energy shocks, that is an exogenous increase in the price of natural resources such as oil or gas and a decrease in the energy firms' productivity. We find that whereas the two energy shocks entail similar effects at the aggreagate level, the distribution of gains and losses across sectors is largely driven by the subsequent impact on the relative energy price, which varies depending on the type of shock. Our results suggest that, in order to design effective measures in response to energy crises, policymakers need to carefully take into account the nature of energy shocks and the resulting distributional effects.
    Keywords: Political Economy, Production Economics, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy
    Date: 2022–03–07
  5. By: John Wisman
    Abstract: From the rise of the state to the emergence of capitalism, the poor were seldom blamed for their poverty. Because everyone was born into essentially unchangeable status roles, legitimated by religions and a static understanding of the social world, they could take neither credit for their good economic fortune, nor blame for their privation. Most traditional religions insisted that the well-off must be charitable to the poor. This changed with the rise of capitalism and the ideology that legitimated its institutions and practices. Following upon the works of Max Weber and Richard Tawney, the role of Protestantism in generating an ideology that blames the poor for their abject condition has been widely acknowledged. What has been less appreciated is that this ideology has its roots in a new bourgeois class’s struggle for respectability and social status, and that this struggle was a principal force fueling Protestantism’s doctrinal character and success. This ideology depicted the success of the bourgeoisie as the result of virtuous behavior and the misery of the poor as consequent to their moral failings. Secular political economic that arose alongside Protestantism also expressed the attitudes and practices of the emerging bourgeoisie, equally blaming the poor for their poverty. Social respect is essential for self-respect both of which the bourgeoisie realized. Doing so set in motion forces delegitimating ascriptive status. However, it did so at the cruel cost of further debasing the social condition of the poor, depriving them of social and self-respect.
    Keywords: Ideology, Protestantism, Meritocracy, Social Status
    JEL: B15 B11 N3
    Date: 2022
  6. By: Leroch, Martin Alois
    Abstract: After having met severe opposition with its introduction, evolutionary ethics is becoming increasingly popular. One adherent is Ken Binmore, who - extremely simplified - argues that evolution has equipped humans with the inclination to reciprocate, and that via reciprocity moral norms have evolved. While Binmore's theory more or less implicitly rests upon several behavioral assumptions, it lacks a clear empirical foundation. In this paper, I provide a summary of key results from various disciplines related to the core assumptions, namely: i) People behave as if they held other-regarding preferences, ii) Such other-regarding behavior is enforced via reciprocity, iii) Norm-violators are punished, and iv) In the absence of norms, people employ a trial-and-error strategy from which an equilibrium will evolve. While most of these assumptions are well-supported, the application of equilibria to real-world states of the world seems problematic. Rather, human behavior is heterogenous and in constant flux. Further, because morality is merely one institution embedded in a wider set of institutions, the evolutionary pressure does not influence moral norms in isolation. If one institution changes, so will the (theoretical) equilibrium of the institution "morality".
    Date: 2022
  7. By: Mark Knell (NIFU); Simone Vannuccini (SPRU, University of Sussex)
    Abstract: This chapter is about radical innovation and disruptive technological change. Discovering the nature and mechanisms of disruptive technological change can help to understand the long-run dynamics of innovation and map profound transformation in socio-economic systems. The chapter considers four concepts essential for the understanding radical and disruptive technological change: long waves, techno-economic paradigms, general purpose technologies (GPTs), and disruptive technologies. We conclude with some insights on the emerging technologies in the latest techno-economic paradigm. The tools and concepts given here remain the cornerstone of a useful theory of innovation and change even in our current complex socio-technical landscape.
    Keywords: Radical innovation, Kondratiev, long wave cycle, Schumpeter, perennial gale of creative destruction, technological discontinuities, techno-economic paradigm, technological revolution, great surge of development, general purpose technology, disruptive technology, emerging technology
    JEL: O31
    Date: 2022–04–04
  8. By: Lukac, Martin; Grow, André
    Abstract: Online labor markets—freelance marketplaces, where digital labor is distributed via a web-based platform—commonly use reputation systems to overcome uncertainties in the hiring process, that can arise from a lack of objective information about employees’ abilities. Research shows, however, that reputation systems tend to create winner-takes-all dynamics, in which differences in candidates’ reputations become disconnected from differences in their objective abilities. In this paper, we use an empirically validated agent-based computational model to investigate the extent to which reputation systems can create segmented hiring patterns that are biased toward freelancers with good reputation. We explore how jobs and earnings become distributed on a stylized platform, under different contextual conditions of information asymmetry. Our results suggest that information asymmetry influences the extent to which reputation systems may lead to inequality between freelancers, but contrary to our expectations, lower levels of information asymmetry can facilitate higher inequality in outcomes.
    Keywords: agent-based modeling; economic sociology; gig economy; inequality; online labor markets; reputation systems
    JEL: R14 J01
    Date: 2020–08–02
  9. By: Dutta, Sourish
    Abstract: The Supply-Use Tables (SUTs) form a central part of the national accounts, providing a framework to bring together a range of data and, through balancing, to ensure the coherency and consistency of various parts of the national accounts. The SUTs thus serve many purposes, in particular, statistical and analytical, not just for producers but also for a range of different users, and their analytical dimension is especially enhanced when the SUTs are transformed into Input-Output Tables (IOTs). For analytical purposes, the assumptions about the relationships between inputs and outputs are required irrespective of whether the products have been produced by the primary industry or by other industries as their secondary output.
    Keywords: Supply-Use Tables,Input-output Tables
    Date: 2022
  10. By: Marco Veronese Passarella (University of Leeds)
    Abstract: The aim of this paper is twofold. First, it shows how a standard stock-flow consistent model (SFCM) can be modified to embed some fundamental insights from Graziani’s theory of monetary circuit (TMC). Second, it aims at addressing some common mis- conceptions about the TMC. More precisely, it is argued that: a) a market-clearing price mechanism does not necessarily imply a neoclassical-like closure of the model; b) the ways in which SFCMs and the TMC define bank loans are mutually consistent, although they are based on different accounting periods; c) consumer credit is final finance, not initial finance; d) the paradox of profit is not a logical conundrum, but an abstract counterfactual that allows shedding light on a neglected role of government spending; e) overall, the TMC can be regarded as a “Marxian” rendition of Keynes’s method of aggregates.
    Keywords: Theory of Monetary Circuit, Stock-Flow Consistent Models, Macroeconomics, Monetary Economics
    JEL: E11 E12 E16 E17
    Date: 2022–03
  11. By: Andersson, Martin (Department of Economic History, Lund University); Palacio, Andrés (Department of Economic History, Lund University); von Borries, Alvaro (Department of Human Geography, Lund University)
    Abstract: Episodes of economic shrinking have declined since the 1980s in Latin America and the Caribbean (LAC). This paper asks why. We propose that the reduction in the frequency and rate of shrinking reveals the dynamic transition from being natural states towards becoming open access societies. To provide empirical support to the argument, we rest on the notion of social capabilities. Hence, societies that invest in their social capabilities are more likely to reduce the frequency of shrinking and become better off in the long run. Using survival models, we test three capabilities (transformative, distributive and regulative) that, we argue, reflect an increase in the resilience to economic shrinking. The results suggest that the transformative capability has not lowered the risk of shrinking in the region. Neither has the distributive capability despite the increases in productive employment during the 2000s. In contrast, regulative capability seems to reduce the risk of shrinking. We conclude that the institutional transformations in LAC are part of the explanation of why economic shrinking has receded. Compared to previous decades, this is an essential step towards open access societies. However, the persistent dependence on a few natural resources seems to hinder progressive transformation and remains a menace to sustainable catching up of the countries in the region.
    Keywords: economic shrinking; income convergence; natural states; social capabilities
    JEL: O47 O57
    Date: 2022–02–11
  12. By: Mariam Mohsin (Pakistan Institute of Development Economics, Islamabad.); Saman Nazir (Pakistan Institute of Development Economics, Islamabad.)
    Abstract: Despite being at a disadvantage in terms of power, women often achieve success in the face of power. To understand the mechanisms underlying the exercise of agency in response to strong power structures, this paper describes power using Foucault’s (1982) conceptualisation as a socially constructed, fluid, and ongoing process that is omnipresent even at the grass-root level of human interaction. This notion of power is connected to the viewpoints of the disempowered, arguing that since power is socially constructed, the powerful and the disempowered are likely to view it from different perspectives. Thus there are multiple versions of power depending upon the position of the perceiver. We support this notion using the Standpoint theory (Harding, 1987; 2004). We argue that the perspectives of the disempowered are important to have a more objective account of power relations and understand the mechanisms underlying their responses in the face of power. However, it is argued that most definitions of power in organisational studies are focused on the perspective of the powerful with little or no mention of those upon whom power is being exercised (Salanick & Pfeffer, 1977). The disempowered are then defined using Intersectionality Theory (Crenshaw, 1991), based on the intersection of gender, religion, and class. We present a theoretical analysis of the argument coupled with anecdotal pieces of evidence that support the argument.
    Date: 2021
  13. By: Krahé, Maximilian
    Date: 2022
  14. By: Kumo, Kazuhiro
    Date: 2021–10
  15. By: Summa, Ricardo de Figueiredo
    Abstract: In the present paper, we will construct three comparable 'toy models' to evaluate the alternative uses of functional finance from Lerner, MMT, and the Sraffians. First, we will argue that the general functional finance framework can be separated from the specific views of Lerner on how the private sector and the economy works and its policy recommendations. Then, we use this separation to provide an alternative comparison between Lerner and the MMT to that proposed by Wray (2018), arguing that both agree with the general functional finance framework but disagree on how the private sector and the economy works, the policy objectives and the policy toolkit and recommendations. We argue that Lerner never abandoned his functional finance framework or his theoretical principles towards Monetarism. Finally, we will extend the same scheme to evaluate the functional finance framework from the Sraffian standpoint, motivated by recent attempts to check the compatibility of a specific Sraffian model - the supermultiplier - with functional finance (Skott et al, 2022, Fiebiger, 2021). The presentation of the three comparable 'toy models', by stressing the shared principles and specific disagreements between Lerner, MMT and the Sraffians allows us to discuss different policies and consequences of government's active role in promoting expansionary policies.
    Keywords: Functional finance,Abba Lerner,MMT,Sraffians,Macroeconomic policies
    JEL: E11 E12 E52 E62
    Date: 2022
  16. By: Suckert, Lisa
    Abstract: Erleben wir in der Pandemie eine veritable Neuordnung der Zeit? Erlaubt die Krise gar eine Abkehr vom kapitalistischen Zeitregime? Der Beitrag betrachtet Covid-19 und die einhergehenden staatlichen Maßnahmen aus einer zeit- und wirtschaftssoziologischen Perspektive. Er macht deutlich, dass sich die sozialen und ökonomischen Verwerfungen der Pandemie auch als Ergebnis einer Kollision entgegengesetzter zeitlicher Logiken verstehen lassen. Staatliche Maßnahmen der Pandemiebekämpfung erzwangen zunächst einen Umgang mit Zeit, der dem kapitalistischen Zeitregime und dessen Prinzipien - Kommodifizierung und rationale Verwertung von Zeit, Beschleunigung sowie Aneignung der Zukunft - zuwiderläuft. Diese 'Rückkehr des Staates' als zeitpolitische Ordnungsmacht impliziert jedoch keineswegs schon eine 'Neuordnung der Zeit', die über den Ausnahmezustand Bestand hat. Der Beitrag zeigt, dass jene staatlichen Interventionen, die über die reine Pandemiebekämpfung hinausgehen, als Vermittlungsversuche zwischen unterschiedlichen zeitlichen Logiken zu verstehen sind, die die Kollision entgegengesetzter zeitlicher Logiken abfedern. Dabei erleichtern sie jedoch im Kern ein 'Zurück' zum kapitalistischen Zeitregime und schreiben zeitbezogene Ungleichheiten unbeirrt fort.
    Keywords: Corona,Kapitalismus,Krise,Staat,Zeitlichkeit,Zukunft,capitalism,crisis,Covid-19,future,state,temporality
    Date: 2021
  17. By: Hans Henrik Sievertsen; Sarah Smith
    Abstract: Women’s voices are likely to be even more absent from economic debates than headline figures on female under-representation suggest. Focusing on a panel of leading economists we find that men are more willing than women to express an opinion and are more certain and more confident in their opinions, including in areas where both are experts. Women make up 21 per cent of the panel but 19 per cent of the opinions expressed and 14 per cent of strong opinions. We discuss implications for the economics profession and for promoting a genuine diversity of views.
    Date: 2022–03–07
  18. By: Ergen, Timur; Kohl, Sebastian; Braun, Benjamin
    Abstract: The discipline of comparative political economy (CPE) relies heavily on aggregate, country-level economic indicators. However, the practices of multinational corporations have increasingly undermined this approach to measurement. The problem of indicator drift is well-documented by a growing critical literature and calls for systematic methodological attention in CPE. We present the case for a rocky but ultimately rewarding middle road between indicator fatalism and indicator faith. We illustrate our argument by examining two important cases - Sweden's recent export success and the financialization of non-financial corporations in France. A careful parsing of the data suggests corrections to common characterizations of the two cases. Swedish exports have been reshaped by intragroup trade among foreign subsidiaries of domestic corporations. The growth of financial assets held by French firms is attributable to the growth of foreign direct investment and to cumulative revaluation effects, while what remains of financialization is concentrated among the very largest firms. Based on these findings, we propose a methodological routine that parses data by zooming in on the qualitative specifics of countries, sectors, and firms, while using all available options for disaggregation.
    Keywords: comparative methodology,comparative political economy,economic indicators,financialization,France,globalization,growth models,multinational corporations,Sweden,Finanzialisierung,Frankreich,Globalisierung,multinationale Unternehmen,Schweden,vergleichende Methoden,Vergleichende Politische Ökonomie,Wirtschaftsindikatoren,Wachstumsmodelle
    Date: 2021
  19. By: Antonioli, Davide; Ghisetti, Claudia; Mazzanti, Massimiliano; Nicolli, Francesco
    Abstract: Assessing the economic consequences of sustainable production choices aimed at reducing environmental negative externalities is crucial for policy making, in light of the increasing interest and awareness experienced in the recent EU policy packages (Circular Economy package; European Green Deal and Recovery Fund to support sustainable transition). This assessment is one of the goal of the current work, which tries to provide new empirical evidence on the economic returns of such choices, drawing on previous literature on the underlying determinants of greener production choices, which are stated to differ from standard technological innovations as they are subject to a knowledge and an environmental externality. Using an original dataset on about 3000 Italian manufacturing firms we provide evidence on the relations among innovations related to the Circular Economy concept and economic outcome in the short run. The evidence shows that in the short run it is difficult to obtain economic gains, especially for the SMEs.
    Keywords: Livestock Production/Industries, Production Economics
    Date: 2022–02–22
  20. By: Arief, A. Anggie Zabrina
    Abstract: The triumph of Islamic civilization in the past, can be achieved by the ummah by applying management principles sourced from the Qur'an and Hadith. On the other hand, the decline of Islamic civilization is due to the neglect of the principles of the Qur'an and Hadith regarding management. Basically, the “spirit” of professional management has been exemplified by Allah SWT. in the process of creation and regulation of the universe, and was applied by the Prophet Muhammad. However, it is unfortunate that the management principles contained in the Qur'an and Hadith are less competitive with human management theories. Nowadays, sharia management is starting to be known as an effort to "re-discover" Islamic management science based on the Qur'an and Hadith Keywords: Management. Sharia management, Islamic management principles
    Date: 2022–03–25
  21. By: Thereza Balliester Reis (Department of Economics, SOAS University of London)
    Abstract: Financial inclusion (FI) has become a key policy for poverty reduction in developing countries. However, there is no consensus on what FI comprises, who should be included and who will deliver this inclusion. The different interpretations of the concept may lead to implementations that do not correspond to the original intent. Moreover, by making certain assumptions implicit, FI may be a policy that merely replicates microfinance initiatives. In order to illustrate the inconsistencies in the existing literature, this article displays a literature review of 67 studies about the definition of FI. Built on the systematic review approach, studies are selected based on inclusion and exclusion criteria, as well as an explicit search strategy, thus providing a reliable and replicable outcome. After identifying the studies, we present a critical discussion about the underlying theoretical and empirical implications of the definitions of FI. This assessment enables a better understanding of FI and its framing. To conclude, a plain definition is suggested to ensure transparency and comparability of FI research.
    Keywords: Financial inclusion; financial development; systematic review; definition
    JEL: B50 G50 O12
    Date: 2021–12

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