nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2023‒05‒15
fourteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Towards a New Non-aligned Movement(NNAM) and a New International Economic Order:A Strategy for Comprehensive Non-capitalist Development in the 21st Century By Khan, Haider
  2. The Homer Economicus Narrative: From Cognitive Psychology to Individual Public Policies By Guilhem Lecouteux
  3. Instabilité et résilience des économies de marché: Essai sur l'économie du libéralisme social By Jean-Luc Gaffard
  4. A North-South agent based model of segmented labour markets. The role of education and trade asymmetries By Lucrezia Fanti; Marcelo C. Pereira; Maria Enrica Virgillito
  5. The 'View from Manywhere': Normative Economics with Context-Dependent Preferences By Guilhem Lecouteux; Ivan Mitrouchev
  6. Understanding the paradox of control and freedom of consumption under digital capitalism with Stafford Beer's cybernetic theory By Hannah Bensussan
  7. The Disciplinary Mobility of Core Behavioral Economists By Alexandre Truc
  8. The interpretive and relational work of financial innovation: A resemblance of assurance in Islamic finance By Pitluck, Aaron Z.
  9. Is Islamic Finance A Panacea for Global Economic Disruptions After COVID-19 By Abubakar, Jamila; Bashayer AlQashouti, Bashayer AlQashouti; Aysan, Ahmet Faruk; Unal, Ibrahim Musa
  10. El reconocimiento del valor del capital natural de la Amazonia colombiana a través de la financiación para la conservación By María Claudia García Dávila; María José Mejía; Ximena Cadena (Directora Proyecto); Luis Fernando Mejía (Director Proyecto)
  11. Neuroeconomics Hype or Hope? An Answer By Alexandre Truc
  12. A representation of Keynes's long-term expectation in financial markets By Marcello Basili; Alain Chateauneuf; Giuliano Antonio; Giuseppe Scianna
  13. A Stationary Mean-Field Equilibrium Model of Irreversible Investment in a Two-Regime Economy By Aïd, René; Basei, Matteo; Ferrari, Giorgio
  14. Environmental and Natural Resource Economics and Systemic Racism By Awokuse, Titus; Chan, Nathan W.; González-Ramírez, Jimena; Gulati, Sumeet; Interis, Matthew G.; Jacobson, Sarah; Manning, Dale T.; Stolper, Samuel; Ando, Amy

  1. By: Khan, Haider
    Abstract: The main purpose of this paper is to explore a fairly comprehensive strategy for development as freedom beyond capitalism in the 21st century. Accordingly, I try to find a way to integrate useful markets with the key characteristics of the Enabling Developmental State for the 21st Century in order to build a growing ecologically sustainable economy with equity in terms of capabilities. This will doubtless require a new global financial and ecological architecture. We aim for theoretical clarification as well as for aiding the strategies of popular democratic movements. A few tentative steps are taken here to serve this dual purpose. Proceeding from a critical capabilities perspective that is fully grounded in social reality of deepening structural and ecological crises of the World Capitalist System, we discover that such a perspective leads to the need to include among the characteristics of the Enabling Developmental State for the 21st Century its capacity to build an ecologically sustainable egalitarian development strategy from the beginning. In addition, democracy must be deepened from the beginning. For the Global South including Eurasia, and particularly for Africa and Latin America, a new cooperative community of nations following their own rhythm to reach their own dynamic trajectories towards development as freedom will be possible if they cooperate regionally and globally on the basis of equal sovereignty and mutual respect. One precondition is to pragmatically unite for a common economic strategy. For this a decolonization of the mind in the global south is also necessary. I conclude with some further thoughts on extending the model to an information theoretic based fractal model of development. A mathematical model of integrated financial and real sectors on abstract function space is presented in the appendix that can be extended for this purpose.
    Keywords: New Non-aligned Movement(NNAM), New International Economic Order, Global South, Enabling Developmental State, Egalitarianism, Ecological Crisis, World Capitalist System, Counterhegemonic movements, Nonlinearities, Multiple equilibria, Entropy and Information Theory
    JEL: A1 F5 O1
    Date: 2023–01–31
  2. By: Guilhem Lecouteux (Université Côte d'Azur; GREDEG, CNRS, France)
    Abstract: A common narrative among some behavioural economists and policy makers is that experimental psychology highlights that individuals are more like Homer Simpson than the Mr Spock imagined by neoclassical economics, and that this justifies policies aiming to 'correct' individual behaviours. This narrative is central to nudging policies and suggests that a better understanding of individual cognition will lead to better policy prescriptions. I argue that this Homer economicus narrative is methodologically flawed, and that its emphasis on cognition advances a distorted view of public policies consisting in fixing malfunctioning individuals, while ignoring the possibly malfunctioning environment within which they evolve.
    Keywords: Homer Simpson and Mr Spock; homo economicus; rational choice; replication crisis; behaviourally informed policy
    JEL: A12 B41 C91 D04 D91
    Date: 2022–09
  3. By: Jean-Luc Gaffard (OFCE Sciences-Po; Université Côte d'Azur; GREDEG CNRS; Institut Universitaire de France)
    Abstract: Les crises, crise financière de 2008, crise sanitaire de 2020, crise écologique récurrente ont des effets destructeurs sur les économies comme sur les théories censées expliquer leur évolution. Le projet qualifié de néo-libéral est remis en cause concrètement quand les repères habituels, issus de la théorie économique dominante, sont perdus et les politiques se rallient à ce qu'il est convenu d'appeler des mesures non conventionnelles. Les sociétés développées semblent osciller entre la continuation de ce projet avant tout guidé par la confiance dans les régulations par des marchés aussi flexibles que possible et une rupture incarnée dans le retour au pouvoir d'États autoritaires jouant de nationalismes identitaires. Cette situation n'est pas sans rappeler celles déjà vécues à la fin du XIXe siècle puis dans les années 1920-1930, situations de crise du libéralisme et de la théorie économique, un libéralisme qui a dû se renouveler pour ne pas sombrer et qui a pris la forme du libéralisme social dont le trait distinctif a été de faire place à une régulation macroéconomique au cœur d'un renouvellement de la théorie économique elle-même. Fort de cette expérience, le propos du livre est de faire valoir les avancées théoriques nécessaires et, par suite, les fondements économiques d'un libéralisme social présenté comme la réponse institutionnelle la mieux adaptée à la conduite d'économies de marché qui s'avèrent décidément être intrinsèquement instables mais néanmoins capables de résilience.
    Keywords: coordination, entreprise, instabilité, institutions, État, libéralisme, monnaie, nation, norme, rationalité, travail
    JEL: B41 O43 P17 P40
    Date: 2022–09
  4. By: Lucrezia Fanti; Marcelo C. Pereira; Maria Enrica Virgillito
    Abstract: Drawing on the labour-augmented K+S agent-based model, this paper develops a two-country North-South ABM wherein the leader and the laggard country interact through the international trade of capital goods. The model aims to address sources of asymmetries and possible converge patterns between two advanced economies that are initially differentiated in terms of the education level they are able to provide. Education is modeled as a national-level policy differently targeting the three usual levels, that is primary, secondary and tertiary. After being educated and entering the labour force, workers face a segmented market, divided into three types of job qualification, and the resulting position levels inside firms, i.e., elementary, technical and professional occupations. The three resulting labour market segments are heterogeneous in terms of both requested education level and offered wages. To address the role of trade and education, we experiment with different education-policy and trade settings. Ultimately, we are interested in understanding the coupling effects of asymmetries in education, which reverberate in segmented labour markets and differentiated growth patterns. Notably, our focus on capital-goods trade, rather than consumption goods, allows us to assess a direct link between productive capabilities in producing complex products and country growth prospects.
    Keywords: Agent-Based Model; Education; International Trade; Technology Gap; Labour Market.
    Date: 2023–04–27
  5. By: Guilhem Lecouteux (Université Côte d'Azur; GREDEG, CNRS, France); Ivan Mitrouchev (IESEG School of Management, iRisk, France)
    Abstract: We propose a methodology for normative economics in presence of contextdependent preferences. The key feature of our approach is to locate normative authority, not in the synoptic and third-person judgement of the social planner ('view from nowhere'), nor in the first-person judgement of the individual ('view from somewhere'), but in the second-person ability of the individual to confront conflicting judgements across contexts ('view from manywhere'). We offer a precise definition of context-dependence and detail our own proposition. We formulate a normative criterion of self-determination and advance two complementary justifications, interpreting the view from manywhere either as an extension of Sugden's opportunity criterion, or as an application of Sen's positional views in his theory of justice.
    Keywords: normative economics, social planner, context-dependent preferences, second-person standpoint, behavioural public policy
    JEL: D63 D90 I31
    Date: 2022–09
  6. By: Hannah Bensussan (CEPN - Centre d'Economie de l'Université Paris Nord - LABEX ICCA - UP13 - Université Paris 13 - Université Sorbonne Nouvelle - Paris 3 - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité - Université Sorbonne Paris Nord - CNRS - Centre National de la Recherche Scientifique - Université Sorbonne Paris Nord)
    Abstract: Studies on the digitalization of markets and economic relations provide contrasting statements on its impact on consumers: it seems to have enhanced both control and freedom of these actors. This paper proposes to understand this paradox through the lens of Stafford Beer's cybernetic theory. We read the literature on digitalization and consumption at the light of Beer's concepts of regulated variety, regulatory variety and recursion, three concepts at the source of Beer's understanding of control and freedom. These concepts, we argue, allow to show the conditioned rise of consumers' freedom to the purpose of control in capitalist orders, i.e., commodity circulation and capital accumulation.
    Keywords: Control, freedom, consumption, digital capitalism
    Date: 2023–03–29
  7. By: Alexandre Truc (Université Côte d'Azur, CNRS, GREDEG, France)
    Abstract: Disciplinary mobility occurs when researchers publish outside their disciplines of origin. It is an important mechanism of interdisciplinarity and knowledge transfer. New behavioral economics (BE) was founded by two psychologists, Daniel Kahneman and Amos Tversky, who used disciplinary mobility to influence economics. In this article, we study the disciplinary mobility of seven core behavioral economists to better understand how it has influenced the early development of BE and the interdisciplinary practices of later behavioral economists. Besides the movement of psychologists towards the center of economics, we identify an outward movement of economists away from the discipline. This movement away from economics has allowed some behavioral economists to gain new scientific legitimacy, while escaping some of the normative traditions of economics. This has enabled them to push the frontiers of economics and promote a more radical approach to BE.
    Keywords: Behavioral Economics, Interdisciplinarity, Social Network Analysis
    Date: 2022–08
  8. By: Pitluck, Aaron Z. (Illinois State University)
    Abstract: What social forces shape the trajectory of novel, moralized forms of finance such as social finance, green finance, or Islamic banking and finance? More broadly, how do agents mobilize arguments and organize each other to create any form of financial innovation? This article addresses both questions by contributing an ethnography of a novel financial innovation pseudonymously named Sukuk Illumination, an internationally traded moral alternative to a corporate bond. This article’s findings both elaborate and subsume existing functionalist and critical explanations of financial innovation. The central argument is that we can better understand what causes financial innovation and the trajectory that new innovations take when we conceptualize each financial instrument as a polysemic cultural object materialized in legal contracts and institutionalized work practices and created by parties with asymmetric power to define the new object. Financial innovation necessarily involves multiple parties in a financial service commodity chain with multivalent motivations co-producing and hotly debating interpretations of the prospective financial instrument while simultaneously creating, refashioning, and differentiating existing relationships with one another. Sukuk Illumination demonstrates both the potential and constraints for creating new moralized financial instruments and for transforming financial systems.
    Date: 2023–04–12
  9. By: Abubakar, Jamila; Bashayer AlQashouti, Bashayer AlQashouti; Aysan, Ahmet Faruk; Unal, Ibrahim Musa
    Abstract: The coronavirus pandemic has led to unprecedented financial and economic disruptions worldwide. Academic interest in the topic of COVID-19 outbreak has led to a rapid influx of publications on the subject matter from both Islamic and conventional finance and economy perspectives. This paper analyses the contributions of Islamic finance and economy (IFE) literature to the global discussion through a bibliometric analysis and literature review of publications on IFE and COVID-19 using the dimensions database. The paper investigates the role IFE research has played in providing solutions capable of addressing global challenges in the wake of the pandemic. The paper reveals that IFE has made efforts during the pandemic to mitigate the effect of the crisis and strengthen economies. But unlike after the 2008 global financial crisis, IFE is not focusing on global solutions and is more confined to localized country-specific solutions for recovery and resilience. The paper recommends repositioning IFE's academic focus towards tackling issues and providing solutions at a global scale.
    Keywords: Resilience, Islamic Finance and Economy, COVID-19, Economic Recovery
    JEL: G00 G01 G20 G21
    Date: 2022–09–05
  10. By: María Claudia García Dávila; María José Mejía; Ximena Cadena (Directora Proyecto); Luis Fernando Mejía (Director Proyecto)
    Abstract: El reconocimiento ambiental de la Amazonia no necesariamente se traduce en la implementación de políticas ni en la asignación de recursos financieros para su conservación. Además, recientemente se ha manifestado un creciente interés y compromisos financieros para la conservación de los bosques. Este documento busca identificar los fundamentos que debe tener un arreglo financiero para reconocer el valor del capital natural de la Amazonia colombiana. Para ello, se explica qué es el reconocimiento y valoración económica del capital natural; luego se expone la urgencia de tomar una acción al respecto; después, se describen fondos forestales; en seguida, se presenta el rol de la cooperación internacional en el financiamiento para conservación; y se finaliza con unas recomendaciones para fortalecer los mecanismos financieros existentes.******Abstract: The environmental recognition of the Amazon does not necessarily translate into the implementation of policies or the allocation of financial resources for its conservation. In addition, there has recently been a growing interest and financial commitment to forest conservation. This document seeks to identify the fundamentals that a financial arrangement should have to recognize the value of the natural capital of the Colombian Amazon. To this end, it explains what the recognition and economic valuation of natural capital is; then, the urgency of taking action in this regard is explained; next, forest funds are described; then, the role of international cooperation in financing conservation is presented; and it ends with some recommendations to strengthen the current financial mechanisms.
    Keywords: Capital Natural, Contabilidad Ambiental, Financiamiento Ambiental, Amazonia, Natural Capital, Environmental Accounting, Environmental Finance, Amazon
    JEL: G23 O13 O16 Q23 Q56
    Date: 2022–12–09
  11. By: Alexandre Truc (Université Côte d'Azur, CNRS, GREDEG, France)
    Abstract: In June of 2010, a special issue in the Journal of Economic Methodology was introduced with the question "Neuroeconomics: hype or hope?" (Marchionni and Vromen, 2010). More than ten years later, we think it is time to provide an answer. Using a variety of sources ranging from Web of Science to Econlit, we assess the importance of neuroeconomics as a research program in economics. We show that after a very rapid increase in interest in the early 2000s, neuroeconomics decreased in importance after the 2010s especially when compared to the continuing rise of behavioral economics. After exploring a few explanations regarding this decreasing interest, we compare neuroeconomics and behavioral economics to emphasize key points in the ways these two programs at the frontiers of economics were constructed. Most notably, we show that neuroeconomists were more confrontational in their approach of economics, more focused on programmatic writings with few theoretical contributions, and more importantly, more oriented towards neurosciences than economics. Overall, we do find that the first 20 years of neuroeconomics as a research program in itself can be qualified to be more hype than hope.
    Keywords: Interdisciplinarity, Neuroeconomics, Behavioral Economics, Psychology, Neuroscience
    Date: 2022–08
  12. By: Marcello Basili (DEPS - Dipartimento di Economia Politica e Statistica - UNISI - Università degli Studi di Siena = University of Siena); Alain Chateauneuf (UP1 - Université Paris 1 Panthéon-Sorbonne); Giuliano Antonio; Giuseppe Scianna
    Abstract: This paper advances an intuitive representation of Keynes's notion of long-term expectation. We introduce the epsilon-contamination approach and represent the conventional judgment by the Steiner point of agents' common probability set. We anticipate a change in conventional judgment by updating the Steiner point.
    Keywords: uncertainty, multiple priors. JEL classification: D81, Keynes long-term expectation epsilon contamination uncertainty multiple priors. JEL classification: D81, Keynes, long-term expectation, epsilon contamination
    Date: 2023–03–28
  13. By: Aïd, René (Center for Mathematical Economics, Bielefeld University); Basei, Matteo (Center for Mathematical Economics, Bielefeld University); Ferrari, Giorgio (Center for Mathematical Economics, Bielefeld University)
    Abstract: We consider a mean-field model of firms competing à la Cournot on a commodity market, where the commodity price is given in terms of a power inverse demand function of the industry-aggregate production. Investment is irreversible and production capacity depreciates at a constant rate. Production is subject to Gaussian productivity shocks, while large non-anticipated macroeconomic events driven by a two-state continuous-time Markov chain can change the volatility of the shocks, as well as the price function. Firms wish to maximize expected discounted revenues of production, net of investment and operational costs. Investment decisions are based on the long-run stationary price of the commodity. We prove existence, uniqueness and characterization of the stationary mean-field equilibrium of the model. The equilibrium investment strategy is of barrier-type and it is triggered by a couple of endogenously determined investment thresholds, one per state of the economy. We provide a quasi-closed form expression of the stationary density of the state and we show that our model can produce Pareto distribution of firms' size. This is a feature that is consistent both with observations at the aggregate level of industries and at the level of a particular industry. We establish a relation between economic instability and market concentration and we show how macroeconomic instability can harm firms' profitability more than productivity fluctuations.
    Keywords: mean-field stationary equilibrium, irreversible investment, regime-switching, market concentration, value of economic stability
    Date: 2023–05–02
  14. By: Awokuse, Titus; Chan, Nathan W.; González-Ramírez, Jimena; Gulati, Sumeet; Interis, Matthew G.; Jacobson, Sarah; Manning, Dale T.; Stolper, Samuel; Ando, Amy (Resources for the Future)
    Abstract: This paper highlights some ways in which scholarly work in environmental and natural resource (ENRE) economics may be affected by and unintentionally further racial inequity. We discuss four channels through which these effects may occur: (1) prioritization of efficiency over distribution, (2) inattention to procedural justice, (3) abstraction from crucial historical or social contexts, and (4) a narrow focus on problems perceived as tractable. We offer specific examples of how racial inequity may be furthered by work in the field through welfare and valuation methods, policy modeling choices, and treatment of the commons. We document opportunities to improve the field by better considering how racial inequity may affect and be affected by ENRE analysis. ENRE scholars have tools that can mitigate systemic racism in access to natural resources and a clean environment, but work must be done to realize that potential.
    Date: 2023–03–29

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