nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2023‒10‒09
fourteen papers chosen by
Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza”

  1. The Historicity of Economic Sciences: The Main Epistemological Ruptures By Alain Herscovici
  3. News-driven Expectations and Volatility Clustering By Sabiou Inoua
  4. Lesen und Interpretieren der Wirtschaftsphilosophie von Ibn Khaldun By Ahmed E Souaiaia
  5. A journey into the foundations and transformative implications of social ecological economics: An interview with Clive Spash By Clive L. Spash; Philippe Méral; Olivier Petit
  6. Business Ethics as Ideology By Hugo Letiche
  7. Review essay: The young Hayek By Ivo Maes
  8. Back to the classics: R-evolution towards statistical equilibria By Theodosio, Bruno Miller; Weber, Jan
  9. A test of “turbulent arbitrage” By Eric Kemp-Benedict
  10. ”Defamilializing” how women’s economic independence is measured. By Romane FRECHEVILLE-FAUCON
  11. Is Economics Self-Correcting? Replications in the American Economic Review By Ankel-Peters, Jörg; Fiala, Nathan; Neubauer, Florian
  12. Maintaining human wellbeing as socio-environmental systems undergo regime shifts By Andrew R. Tilman; Elisabeth H. Krueger; Lisa C. McManus; James R. Watson
  13. The effect of housewife labor on gdp calculations By Saadet Yagmur Kumcu
  14. There is power in general equilibrium By Juan Jacobo

  1. By: Alain Herscovici (UFES - Universidade Federal do Espirito Santo)
    Abstract: The object of this work is threefold: it consists (a) in explaining and justifying, based on Foucault's concept of episteme, the epistemological foundations from which Classical Economics, Keynesian Economics and Neoclassical Economics were built; (b) in studying the nature of the epistemological ruptures that allow differentiating these schools; and (c) in defining the degree of incommensurability of these different paradigms. In the first part, I will define the main epistemological tools that allow studying the birth and evolution of science. In the second part, I will study the nature of the epistemological ruptures that characterize these evolutions and these different schools.
    Keywords: Historicity -Epistemological Ruptures -History of Economic Thought -Episteme
    Date: 2023–08–28
  2. By: Alberto Botta; Eugenio Caverzasi (Universita' degli Studi dell'Insubria); Alberto Russo (Department of Economics and Social Sciences, Universita' Politecnica delle Marche)
    Abstract: This paper analyzes the macroeconomic and distributional implications of central banks' decisions to raise interest rates after a prolonged period at near the Zero Lower Bound (ZLB). The main goal of our study is to assess the interaction between monetary policy, inequality, and financial fragility, in a financialized economic system. Financialization is here portrayed as the presence in the economy of complex financial products, i.e., asset-backed securities, produced via the securitization of banks' loans. We do so in the context of a hybrid Agent-Based Model (ABM). We first compare the prevailing macroeconomic and nancial features of a low interest rate environment (LIRE) with respect to a "Great Moderation"(GM)-like setting. As expected, we show that LIRE tends to stimulate faster growth and higher employment, and to reduce income and wealth inequality, as well as (poor) households' indebtedness. Consistent with existing empirical literature, this comes at the cost of higher inflation and some signs of financial system's fragility, i.e., lower banks' profitability and Capital Adequacy Ratio (CAR), and higher "search for risk" given by credit extension to poorer households. We then show that increases in the central bank's policy rate, as motivated by the central bank's willingness to reduce inflation, effectively curb price dynamics and accomplish with central bank's inflation targeting mandate. Higher interest rates also improve commercial banks' CAR and profitability. However, they also cause a pronounced increase in non-performing loans (stronger than what possibly observed in a GM scenario) and some worrisome macro-financial dynamics. In fact, higher interest rates give rise to higher households' and overall economy indebtedness as allowed by wealthier households' demand for highyield complex financial products and mounting securitization. We finally show how financialization structurally changes the functioning of the economy and the behavior of central banks. Financialization actually contributes to create a (private sector) debt-led economy, which becomes structurally more resistant to central bank's attempts to control inflation. Central bank's reaction in terms of higher interest rates could likely come with perverse distributional consequences.
    Keywords: Low interest rate environment, Contractionary monetary policy, Securitization
    JEL: E24 E44 E52
    Date: 2023–09
  3. By: Sabiou Inoua
    Abstract: Financial volatility obeys two fascinating empirical regularities that apply to various assets, on various markets, and on various time scales: it is fat-tailed (more precisely power-law distributed) and it tends to be clustered in time. Many interesting models have been proposed to account for these regularities, notably agent-based models, which mimic the two empirical laws through a complex mix of nonlinear mechanisms such as traders' switching between trading strategies in highly nonlinear way. This paper explains the two regularities simply in terms of traders' attitudes towards news, an explanation that follows almost by definition of the traditional dichotomy of financial market participants, investors versus speculators, whose behaviors are reduced to their simplest forms. Long-run investors' valuations of an asset are assumed to follow a news-driven random walk, thus capturing the investors' persistent, long memory of fundamental news. Short-term speculators' anticipated returns, on the other hand, are assumed to follow a news-driven autoregressive process, capturing their shorter memory of fundamental news, and, by the same token, the feedback intrinsic to the short-sighted, trend-following (or herding) mindset of speculators. These simple, linear, models of traders' expectations, it is shown, explain the two financial regularities in a generic and robust way. Rational expectations, the dominant model of traders' expectations, is not assumed here, owing to the famous no-speculation, no-trade results
    Date: 2023–09
  4. By: Ahmed E Souaiaia (University of Iowa [Iowa City])
    Abstract: Diese Arbeit zielt darauf ab, Schlüsselkonzepte, Ideen und Ereignisse darzustellen, die sich hauptsächlich aus Ibn Khalduns Kapitel über das Wirtschaftsleben ableiten lassen, das er mit der Überschrift „Kapitel über den Lebensunterhalt" (ma`āsh) zusammenfasst. Die Rechtfertigung dieses Unterfangens ist die Bedeutung von Ibn Khalduns Beiträgen, der Mangel an Übersetzungen seiner Werke und die Abhängigkeit sekundärer Interpretationswerke von einer einzigen englischen Übersetzung. Während die Lektüre der Wirtschaftsphilosophie von Ibn Khaldun durch eine Textanalyse der Primärquellen weiterhin im Mittelpunkt dieser Arbeit steht, wird hier auch eine Auswahl der Interpretations- und Übersetzungswerke präsentiert, um den Grad der Auseinandersetzung nichtarabischer Gelehrter mit Ibn zu verstehen Khalduns Werk und als Geisteshaltung, mit der sich Wirtschaftsphilosophen und Sozialhistoriker auseinandersetzen könnten.
    Abstract: This work aims to present key concepts, ideas, and events that can be derived mainly from Ibn Khaldun's chapter on economic life, which he captures with the heading, Chapter on Making a Living (ma`āsh). Justifying this undertaking is the significance of Ibn Khaldun's contributions, the scarcity of translations of his work, and the dependency of secondary interpretive works on a single English translation. While a reading of Ibn Khaldun's economic philosophy through a textual analysis of the primary sources remains the focus of this work, a sampling of the interpretive and translation works is also presented here in order to understand the level of engagement of non-Arabic scholars with Ibn Khaldun's work and as a frame of mind with which economic philosophers and social historians might engage.
    Abstract: Cet ouvrage vise à présenter des concepts, des idées et des événements clés qui peuvent être dérivés principalement du chapitre d'Ibn Khaldun sur la vie économique, qu'il capture sous le titre Chapitre sur Gagner sa vie (ma`āsh). Cette entreprise est justifiée par l'importance des contributions d'Ibn Khaldun, la rareté des traductions de son œuvre et la dépendance des travaux d'interprétation secondaires à une seule traduction anglaise. Bien qu'une lecture de la philosophie économique d'Ibn Khaldun à travers une analyse textuelle des sources primaires reste au centre de ce travail, un échantillon des travaux d'interprétation et de traduction est également présenté ici afin de comprendre le niveau d'engagement des érudits non arabes avec Ibn Khaldun. Khaldun et comme état d'esprit dans lequel les philosophes économiques et les historiens sociaux pourraient s'engager.
    Keywords: The economic philosophy of Ibn Khaldun, Theories of Work, Systems Thinking, Islamic social history, philosophy of economics, Economics theories, Ibn Khaldun, Urbanization and Civilization
    Date: 2023–08–25
  5. By: Clive L. Spash; Philippe Méral (SENS - Savoirs, ENvironnement et Sociétés - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVM - Université Paul-Valéry - Montpellier 3 - IRD - Institut de Recherche pour le Développement, IRD - Institut de Recherche pour le Développement); Olivier Petit (CLERSÉ - Centre Lillois d’Études et de Recherches Sociologiques et Économiques - UMR 8019 - Université de Lille - CNRS - Centre National de la Recherche Scientifique)
    Keywords: black box, institutions, participation, critical approaches, interdisciplinarity, categories, transformation, ontology, power relationships, heterodoxy, boîte noire, approches critiques, interdisciplinarité, catégories, ontologie, relations de pouvoir, hétérodoxie
    Date: 2023–06–30
  6. By: Hugo Letiche (Business University Nyenrode - Nyenrode Business Universiteit, LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], IMT-BS - DEFI - Département Droit, Economie et Finances - TEM - Télécom Ecole de Management - IMT - Institut Mines-Télécom [Paris] - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris])
    Abstract: In The Ungorvernable Society; A Genealogy of Authoritarian Liberalism (2021) [La société ingouvernable (2018)] Grégoire Chamayou makes the claim that business ethics has served as an ideological smoke screen for globalized hyper-capitalism. Business ethics has fostered 'knowledge' in the service of power and supported generalized obedience to managerial prerogatives. Instead of applying moral philosophy to business, it has created an ideology of entrepreneurship, TINA profit maximization and shareholder value. Academics, and business supported thinktanks, paved the way for neo-liberal hegemony. Chamayou claims that his study is a genealogy in Foucault's tradition. First, I will summarize his position; and second, I will contest his methodological claim. Whatever the merit of his attack on business ethics, Chamayou I will argue, has not produced a genealogical text, nor are his claims to be defended from a Foucaultian position. Chamayou calls out 'fire' in the theater of business ethics; but his own text is methodologically just as mythic and ideological (i.e. tendentious) as the texts he attacks.
    Abstract: Dans La société ingouvernable (2018), Grégoire Chamayou affirme que l'éthique des affaires a servi d'écran de fumée idéologique à l'hyper-capitalisme mondialisé. L'éthique des affaires a favorisé le « savoir » au service du pouvoir et soutenu l'obéissance généralisée aux prérogatives managériales. Au lieu d'appliquer la philosophie morale aux entreprises, elle a créé une idéologie de l'esprit d'entreprise, de la maximisation des profits TINA et de la valeur pour les actionnaires. Les universitaires et les groupes de réflexion soutenus par les entreprises ont ouvert la voie à l'hégémonie néolibérale. Chamayou affirme que son étude est une généalogie dans la tradition de Foucault. Dans un premier temps, sa position sera résumée et, dans un second temps, son affirmation méthodologique est contestée. Quel que soit le mérite de son attaque contre l'éthique des affaires, Chamayou, selon nous, n'a pas produit de texte généalogique et ses affirmations ne peuvent être défendues à partir d'une position foucaldienne. Chamayou crie « au feu » dans le théâtre de l'éthique des affaires, mais son propre texte est méthodologiquement tout aussi mythique et idéologique (c'est-à-dire tendancieux) que les textes qu'il attaque.
    Keywords: Grégoire Chamayou, Foucaultian genealogy, CMS, Business Ethics, Neo-con ideology, Généalogie foucaldienne, Ethique des affaires, Idéologie néo-conservatrice
    Date: 2023–06–23
  7. By: Ivo Maes (Robert Triffin Chair, University of Louvain and Visiting Fellow, Bruegel)
    Abstract: Friedrich Hayek has been one of the dominating intellectual figures of the 20th century. Hayek, together with Gunnar Myrdal, received the 1974 Nobel Memorial Prize in economics, for “their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena”. Bruce Caldwell (Duke University) and Hansjoerg Klausinger (WU Vienna University of Economics and Business), two distinguished historians of economic thought, have produced a massive (840 pages) work, covering the first five decades of Hayek’s existence. Hayek: A Life, 1899-1950 is a monumental and sympathetic biography. The book is based on painstaking archival research and shows great scholarship. The novelty is very much in bringing the person of Hayek to life, with its strengths and weaknesses.
    Keywords: Friedrich Hayek, Austrian school, biography, business cycle theory
    JEL: B20 B31 B53 E14 G28 N10 P00
    Date: 2023–09
  8. By: Theodosio, Bruno Miller; Weber, Jan
    Abstract: Economic modeling struggles often with a lack of realism. The reason for that is that economic theory for the last 100 years has focused on simplifying assumptions which reduced important aspects of the economic reality. Concentrating on fix-point solutions and external statistical shocks prevented the profession from accurately describing the economy as a complex system with characteristics like feedback mechanism, evolution, and emergence. We propose a re-evaluation of major findings in the Classical economic literature. The classical literature described the economic system as inherently probabilistic. In this spirit, we discuss the importance of statistical equilibrium models as one way to model complex economic systems in a probabilistic way.
    JEL: B12 B41 C18 D59
    Date: 2023
  9. By: Eric Kemp-Benedict
    Abstract: Anwar Shaikh's theory of turbulent arbitrage predicts that incremental profit rates will tend to equalize across sectors, albeit in a noisy and turbulent fashion. He supports the claim with plots of time series of average and incremental profit rates for US sectors. This paper applies a Kolmogorov-Smirnov two-sided test to pairs of sectoral profit rate time series, drawing on Shaikh's data. The results support Shaikh's claim.
    Keywords: turbulent arbitrage; real competition; profit rates; Kolmogorov-Smirnov test
    JEL: C14 E12 E22
    Date: 2023–09
    Abstract: This paper seeks to take the notion of women’s economic independence out of the study of income inequalities within couples. The aim is to propose a new definition of women’s economic independence, based on the concept of defamilialisation as defined by Lister. The women’s economic independence index (WEII) is based on a methodology that looks beyond the boundaries of the household to study women’s economic position. Defamilialisation operates on two levels. Firstly, women’s economic independence is measured in terms of the poverty line (60% of median income), in order to determine their ability to meet their primary needs through labour income and social benefits. Secondly, the indicator is based on a method of approximating individual incomes that differs from the method of individualizing incomes found in the literature, as it does not retain the assumption of equal or equitable distribution of certain social benefits, information on which is only available at household level. Instead, social assistance for married women or women in couples is approximated on the basis of available data on single female households, according to income level and number of children. The results of this indicator show that married or cohabitted women are the least economically independent, which confirms the importance of going beyond the household to also account for the economic situation of women.
    Keywords: Women’s economic independence, Defamilialisation, Intra-household inequalities, Women poverty, Individualized income.
    JEL: B54 I32 J12
    Date: 2023
  11. By: Ankel-Peters, Jörg; Fiala, Nathan; Neubauer, Florian
    Abstract: This paper reviews the impact of replications published as comments in the American Economic Review between 2010 and 2020. We examine their citations and influence on the original papers' subsequent citations. Our results show that comments are barely cited, and they do not affect the original paper's citations - even if the comment diagnoses substantive problems. Furthermore, we conduct an opinion survey among replicators and authors and find that there often is no consensus on whether the original paper's contribution sustains. We conclude that the economics literature does not self-correct, and that robustness and replicability are hard to define in economics.
    Keywords: replication, citations, meta-science
    JEL: A11 A14 B40
    Date: 2023
  12. By: Andrew R. Tilman; Elisabeth H. Krueger; Lisa C. McManus; James R. Watson
    Abstract: Global environmental change is pushing many socio-environmental systems towards critical thresholds, where ecological systems' states are on the precipice of tipping points and interventions are needed to navigate or avert impending transitions. Flickering, where a system vacillates between alternative stable states, is touted as a useful early warning signal of irreversible transitions to undesirable ecological regimes. However, while flickering may presage an ecological tipping point, these dynamics also pose unique challenges for human adaptation. In this work, we link an ecological model that can exhibit flickering to a model of human adaptation to a changing environment. This allows us to explore the impact of flickering on the utility of adaptive agents in a coupled socio-environmental system. We highlight the conditions under which flickering causes wellbeing to decline disproportionately, and explore how these dynamics impact the optimal timing of a transformational change that partially decouples wellbeing from environmental variability. The implications of flickering on nomadic communities in Mongolia, artisanal fisheries, and wildfire systems are explored as possible case studies. Flickering, driven in part by climate change and changes to governance systems, may already be impacting communities. We argue that governance interventions investing in adaptive capacity could blunt the negative impact of flickering that can occur as socio-environmental systems pass through tipping points, and therefore contribute to the sustainability of these systems.
    Date: 2023–09
  13. By: Saadet Yagmur Kumcu
    Abstract: In this study, the evolutionary development of labor has been tried to be revealed based on theoretical analysis. Using the example of gdp, which is an indicator of social welfare, the economic value of the labor of housewives was tried to be measured with an empirical modeling. To this end; first of all, the concept of labor was questioned in orthodox (mainstream) economic theories; then, by abstracting from the labor-employment relationship, it was examined what effect the labor of unpaid housewives who are unemployed in the capitalist system could have on gdp. In theoretical analysis; It has been determined that the changing human profile moves away from rationality and creates limited rationality and, accordingly, a heterogeneous individual profile. Women were defined as the new example of heterogeneous individuals, as those who best fit the definition of limited rational individuals because they prefer to be housewives. In the empirical analysis of the study, housewife labor was taken into account as the main variable. In the empirical analysis of the study; In the case of Turkiye, using turkstat employment data and the atkinson inequality scale; the impact of housewife labor on gdp was calculated. The results of the theoretical and empirical analysis were evaluated in the context of labor-employment independence.
    Date: 2023–09
  14. By: Juan Jacobo
    Abstract: The article develops a general equilibrium model where power relations are central in the determination of unemployment, profitability, and income distribution. The paper contributes to the market forces versus institutions debate by providing a unified model capable of identifying key interrelations between technical and institutional changes in the economy. Empirically, the model is used to gauge the relative roles of technology and institutions in the behavior of the labor share, the unemployment rate, the capital-output ratio, and business profitability and demonstrates how they complement each other in providing an adequate narrative to the structural changes of the US economy.
    Date: 2023–09

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