nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2023‒10‒16
sixteen papers chosen by
Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza”

  1. Is the economy a complex system in eternal disequilibrium? By Ávila, Diego
  2. Degrowth and Capital: Assembling a Power-Centred Theory of Change By Julien Vastenaekels
  3. Economic Crises and Energy Use: An Input-Output Analysis of Catalonia’s 2008–2014 Financial Crisis By Jaume Freire González; Oliver Canosa
  4. The global green shift: Where it comes from, how it works, and where it’s heading By Jan Fagerberg
  5. Beyond the Matrix: Experimental Approaches to Studying Social-Ecological Systems By Hertz, Uri; Koster, Raphael; Janssen, Marco; Leibo, Joel Z.
  6. Tasks Makyth Models: Machine Learning Assisted Surrogates for Tipping Points By Gianluca Fabiani; Nikolaos Evangelou; Tianqi Cui; Juan M. Bello-Rivas; Cristina P. Martin-Linares; Constantinos Siettos; Ioannis G. Kevrekidis
  7. Ideologies and Utopia: A Ricoeurian Reading of Thomas Piketty By Benoît Walraevens
  8. Temporal criticality By Moran, José; P. Pijpers, Frank; Weitzel, Utz; Panja, Debabrata; Bouchaud, Jean-Philippe; Romeijnders, Matthijs; Le Doussal, Pierre
  9. A dynamic systems approach to harness the potential of social tipping By Sibel Eker; Charlie Wilson; Niklas H\"ohne; Mark S. McCaffrey; Irene Monasterolo; Leila Niamir; Caroline Zimm
  10. The performance of cooperative Vs capitalistic micro firms in the pandemic By Michele Costa; Flavio Delbono; Francesco Linguiti
  11. Bottom-Up Policies Trump Top-Down Missions By Henrekson, Magnus; Stenkula, Mikael
  12. The Behavioral Mechanisms of Voluntary Cooperation across Culturally Diverse Societies: Evidence from the US, the UK, Morocco, and Turkey By Till O. Weber; Jonathan F. Schulz; Benjamin Beranek; Fatima Lambarraa-Lehnhardt; Simon Gaechter
  13. Structural Transformation and Value Change: The British Abolitionist Movement By Valentín Figueroa; Vasiliki Fouka
  14. Value-transforming financial, carbon and biodiversity footprint accounting By S. El Geneidy; S. Baumeister; M. Peura; J. S. Kotiaho
  15. Decentralized Token Economy Theory (DeTEcT) By Rem Sadykhov; Geoffrey Goodell; Denis de Montigny; Martin Schoernig; Philip Treleaven
  16. Structural change in the Mozambique economy between 2007 and 2019: A social accounting matrix approach By Dirk van Seventer; Finn Tarp

  1. By: Ávila, Diego (Universidad Nacional de Colombia)
    Abstract: This article presents a general discussion of some of the reasons for believing that an economy would be better framed in the theory of complex (organic) systems than in the theory of mechanical systems of the dominant neoclassical school. Complex systems are characterized here by heterogeneous units that interact with each other, with non-linear trajectories, positive feedbacks, co-creation of regularities, non-ergodicity of the system and constant evolution. Financial and urban systems are analyzed as examples of economic problems that present these characteristics.
    Keywords: real world economics; disequilibrium; collective decision; making; Economía del mundo real; desequilibrio; toma colectiva de decisiones
    JEL: B59
    Date: 2023–02–10
  2. By: Julien Vastenaekels
    Abstract: In the context of contemporary socio-environmental shifts, the concept of “degrowth” advocates for transforming societies to ensure environmental justice and a well-being for all within planetary boundaries. This PhD thesis, positioned within degrowth studies, provides a processual, holistic and interdisciplinary exploration of the dynamics between degrowth transformations and capital accumulation, understood as an all-encompassing power process. I start by critically exploring the role of capital accumulation in the unfolding of degrowth transformations, highlighting some shortcomings of conventional views that predominantly see capital accumulation as a primarily production-oriented process. While, historically, the degrowth project has opposed economism, these perspectives tend to overlook the deep intertwinement between economics and politics in the intersection between degrowth transformations and capital accumulation. This thesis then considers “Capital as Power” (CasP) theory, which dissolves the boundaries between economics and politics in the study of capital. Key implications of CasP for the unfolding of degrowth transformations are highlighted. Through this lens, I identify four distinct elements of dynamics, each represented as a causal loop diagram (CLD), capturing the complex relationship between degrowth transformations and the power processes of capital accumulation. Using insights from Social Practice Theory (SPT), I further investigate how degrowth-aligned practices, reforms, and ruptures may be inhibited by “strategic sabotage” processes that bolster capital accumulation, conceptualising four modes of sabotage, set into motion through two additional elements of dynamics. These six elements of dynamics are then assembled into a single CLD, which is used to explore four scenarios for the unfolding or marginalisation of degrowth transformations against the process of capital accumulation. In short, as the journey progresses, this thesis assembles a power-centred theory of change for degrowth against the process of capital accumulation. It emphasises the importance of understanding and navigating these power dynamics for those willing to move towards a degrowth society.
    Keywords: degrowth; capitalism; capital accumulation; transformations; change; power dynamics
    Date: 2023–09–06
  3. By: Jaume Freire González; Oliver Canosa
    Abstract: The impact of economic crises on an economy’s energy consumption, considering its sectorial interactions, remains an unexplored area. For this article, we investigated the structural sectorial relationships in energy terms before, during, and after Catalonia’s 2008– 2014 financial crisis, using environmentally extended input-output analysis. We used three input-output tables from 2005, 2011, and 2014, for which we constructed and employed five vectors representing sectorial energy consumption (‘natural gas’, ‘coal’, ‘petroleum’, ‘electricity’, and ‘biomass and waste’) for 41 economic sectors. We studied the evolution of backward and forward linkage coefficients in terms of energy, as well as key sectors over this period. Our findings reveal that most sectors, particularly energy-intensive ones, experienced a reduction in both backward and forward linkages. However, the relative importance of sectors in the Catalan economy remained relatively stable, indicating a certain level of persistence in this indicator throughout the period, despite the economic crisis.
    Keywords: financial crisis, energy use, environmentally extended input-output analysis, Key sectors, economic structure
    JEL: C67 Q43
    Date: 2023–09
  4. By: Jan Fagerberg (Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: This chapter analyses the ongoing global green shift from an evolutionary (Schumpeterian) perspective. Understanding such large techno-economic shifts, their causes, dynamics, and implications, has been a recurrent theme in evolutionary economics, from Schumpeter onwards. Following this perspective, what primarily characterizes large techno-economic shifts is that the radical changes they entail concern not just one but a whole range of industries and sectors, including ways of life, the organization of work, and infrastructure. The driving forces behind such shifts, according to Christopher Freeman, Carlota Perez and other contributors to the literature, are key inputs (or factors) characterized by rapidly declining costs, almost unlimited supply, and very broad applicability. This chapter argues that the global green shift, currently unfolding, is a techno-economic shift of a similar (or even larger) magnitude as the earlier shifts discussed by Freeman and Perez and others. The analysis shows that the green shift is driven by interaction of innovations in three interrelated areas, that is, renewable energy innovation; innovation in energy-using sectors; and energy infrastructure innovation, e.g., energy storage and distribution. A number of key innovations from these three areas are identified and their development and spread during the last hundred years or so explored. Particular attention is given to the various factors, including policy, that have influenced these processes. Finally, the lessons for policymaking supporting the global green shift are considered.
    Date: 2023–09
  5. By: Hertz, Uri (University of Haifa); Koster, Raphael; Janssen, Marco (Arizona State University); Leibo, Joel Z.
    Abstract: Studying social-ecological systems, in which agents interact with each other and their environment is a challenging but important task. In such systems, the environment shapes the agents' experience and actions, and in turn collective action of agents changes social and physical aspects of the environment. Experimental and computational approaches to studying complex social behaviors and processes have come a long way since the 1950s. However, emphasis on directly mapping the paradigms that are most computationally convenient (matrix games) to their direct analogs in the laboratory may have impoverished experimental design. Modern artificial intelligence (AI) techniques provide new avenues to model complex social worlds, preserving more of their characteristics. These techniques can be fed back to the laboratory where they help to design experiments in more complex social situations without compromising their tractability for computational modeling. This novel approach can help researchers bring together insights from human cognition, sustainability, and AI, to tackle real world problems of social ecological systems such as climate change, pandemics, and conflict resolution.
    Date: 2023–09–06
  6. By: Gianluca Fabiani; Nikolaos Evangelou; Tianqi Cui; Juan M. Bello-Rivas; Cristina P. Martin-Linares; Constantinos Siettos; Ioannis G. Kevrekidis
    Abstract: We present a machine learning (ML)-assisted framework bridging manifold learning, neural networks, Gaussian processes, and Equation-Free multiscale modeling, for (a) detecting tipping points in the emergent behavior of complex systems, and (b) characterizing probabilities of rare events (here, catastrophic shifts) near them. Our illustrative example is an event-driven, stochastic agent-based model (ABM) describing the mimetic behavior of traders in a simple financial market. Given high-dimensional spatiotemporal data -- generated by the stochastic ABM -- we construct reduced-order models for the emergent dynamics at different scales: (a) mesoscopic Integro-Partial Differential Equations (IPDEs); and (b) mean-field-type Stochastic Differential Equations (SDEs) embedded in a low-dimensional latent space, targeted to the neighborhood of the tipping point. We contrast the uses of the different models and the effort involved in learning them.
    Date: 2023–09
  7. By: Benoît Walraevens (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In his most recent books, Piketty offers a global history of ine-quality in its economic, social, political, and intellectual dimensions, ar-guing that history is moved by the struggle of ideologies. To take part in this battle of ideas, he conceives a new ideal model of society, ‘participa-tive socialism', as an egalitarian alternative to the dominant neoproprie-tarian ideology and to the dangerous resurgence of nationalism and pop-ulism. This paper provides a new interpretation of Piketty's view of his-tory and of his participatory socialism in light of Paul Ricoeur's study of the dialectics of ideology and utopia. First, I present Ricoeur's singular analysis of ideology and utopia, which he sees as two inseparable facets of social imagination. Then I show how Ricoeur's concepts can be fruit-fully applied to Piketty's conception of history and to his conception of a new form of socialism for the 21st century, drawing lessons from history and forming a ‘good' or ‘realist' utopia. Finally, I demonstrate that this interpretation of Piketty's socialism can help to better understand some of the criticisms he has received. © 2023, Erasmus Journal for Philosophy and Economics. All Rights Reserved.
    Keywords: ideology, participatory so-cialism, Piketty, realism, Ricoeur, utopia
    Date: 2023
  8. By: Moran, José; P. Pijpers, Frank; Weitzel, Utz; Panja, Debabrata; Bouchaud, Jean-Philippe; Romeijnders, Matthijs; Le Doussal, Pierre
    Abstract: In complex systems, external parameters often determine the phase in which the system operates, i.e., its macroscopic behavior. For nearly a century, statistical physics has extensively studied systems' transitions across phases, (universal) critical exponents, and related dynamical properties. Here we consider the functionality of systems, notably operations in socio-technical ones, production in economic ones and possibly information-processing in biological ones, where timing is of crucial importance. We introduce a stylized model on temporal networks with the magnitude of delay-mitigating buffers as the control parameter. The model exhibits temporal criticality, a novel form of critical behavior in time. We characterize fluctuations near criticality, commonly referred to as "avalanches", and identify the corresponding critical exponents. We show that real-world temporal networks, too, exhibit temporal criticality. We also explore potential connections with the Mode-Coupling Theory of glasses and the directed polymer problem.
    Date: 2023–09
  9. By: Sibel Eker; Charlie Wilson; Niklas H\"ohne; Mark S. McCaffrey; Irene Monasterolo; Leila Niamir; Caroline Zimm
    Abstract: Social tipping points are promising levers to achieve net-zero greenhouse gas emission targets. They describe how social, political, economic or technological systems can move rapidly into a new state if cascading positive feedback mechanisms are triggered. Analysing the potential of social tipping for rapid decarbonization requires considering the inherent complexity of social systems. Here, we identify that existing scientific literature is inclined to a narrative-based account of social tipping, lacks a broad empirical framework and a multi-systems view. We subsequently outline a dynamic systems approach that entails (i) a systems outlook involving interconnected feedback mechanisms alongside cross-system and cross-scale interactions, and including a socioeconomic and environmental injustice perspective (ii) directed data collection efforts to provide empirical evidence for and monitor social tipping dynamics, (iii) global, integrated, descriptive modelling to project future dynamics and provide ex-ante evidence for interventions. Research on social tipping must be accordingly solidified for climate policy relevance.
    Date: 2023–09
  10. By: Michele Costa; Flavio Delbono; Francesco Linguiti
    Abstract: We present a statistical analysis of the impact of the Covid-19 pandemic on Italian micro enterprises. Within the period we are examining (2012-2021), our primary focus will be on the last two years. We will show that, overall, cooperatives have been more severely affected than capitalist enterprises. The challenges faced by micro cooperatives began well before the pandemic period, but the gap with capitalist enterprises widened significantly during this time. Some concern about employment seems featuring micro cooperatives more than conventional firms. Additionally, we will concentrate on micro firms operating nationwide in two sectors that the pandemic has hit very asymmetrically and on all micro enterprises operating in the Emilia-Romagna region.
    JEL: I31 J54 L21 L25
    Date: 2023–09
  11. By: Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Stenkula, Mikael (Research Institute of Industrial Economics (IFN))
    Abstract: Mission-oriented innovation policies are becoming increasingly popular among policymakers and scholars. We maintain that these policies are based on an overly mechanistic view of innovation and economic growth, suggesting that a more bottom-up approach is called for. By invoking an entrepreneurial ecosystem perspective, we point out that innovative entrepreneurship requires many other actors―besides the entrepreneur―whose skills and abilities are necessary to realize an entrepreneurial project. When mission-oriented policies play a large role in the economy, connections between actors in the ecosystem risk becoming distorted. A functioning and well-balanced entrepreneurial ecosystem requires instead an institutional framework that levels the playing field for potential entrepreneurs and encourages productive entrepreneurship. To promote this kind of system, we discuss in more detail eight key areas where appropriate horizontal or bottom-up policy measures can foster innovation and, in the end, the welfare-enhancing productive entrepreneurship policymakers and scholars strive for.
    Keywords: Collaborative innovation bloc; Entrepreneurial ecosystem; Entrepreneurship policy; Institutions; Public choice
    JEL: H50 L26 O31 P16
    Date: 2023–09–28
  12. By: Till O. Weber; Jonathan F. Schulz; Benjamin Beranek; Fatima Lambarraa-Lehnhardt; Simon Gaechter
    Abstract: We examine the role of cooperative preferences, beliefs, and punishments to uncover potential cross-societal differences in voluntary cooperation. Using one-shot public goods experiments in four comparable subject pools from the US and the UK (two similar Western societies) and Morocco and Turkey (two comparable non-Western societies), we find that cooperation is lower in Morocco and Turkey than in the UK and the US. Using the ABC approach – in which cooperative attitudes and beliefs explain cooperation – we show that cooperation is mostly driven by differences in beliefs rather than cooperative preferences or peer punishment, both of which are similar across the four subject pools. Our methodology is generalizable across subject pools and highlights the central role of beliefs in explaining differences in voluntary cooperation within and across culturally, economically, and institutionally diverse societies. Because our behavioral mechanisms correctly predict actual contributions, we argue that our approach provides a suitable methodology for analyzing the determinants of voluntary cooperation of any group of interest.
    Keywords: public goods, voluntary cooperation, ABC method, conditional cooperation, beliefs, punishment, cross-cultural experiments, WEIRD societies
    JEL: C90 H40 C70 D20
    Date: 2023
  13. By: Valentín Figueroa; Vasiliki Fouka
    Abstract: What drives change in a society’s values? From Marx to modernization theory, scholars have identified a connection between structural transformation and social change. To understand how changes in a society’s dominant mode of production affect its dominant values, we examine the case of the movement for the abolition of slavery in the late 18th and early 19th century Britain, one of history’s most well-known campaigns for social change, which coincided temporally with the Industrial Revolution. We argue that structural transformation alters the distribution of power in society and enables groups with distinct values and weak economic interest in the status quo to mobilize for change. Using data on anti-slavery petitions, membership in abolitionist groups, MP voting behavior in Parliament and economic activity, we show that support for abolition was strongly connected to manufacturing at the aggregate and individual level. We rely on biographical data and the analysis of parliamentary speeches to show that industrialists were relatively less reliant on income from slavery and were characterized by a universalist worldview that distinguished them from established elites. Together, our findings suggest that both values and economic interest play a role in driving social change.
    JEL: A13 N63 O14 P16 Z10
    Date: 2023–09
  14. By: S. El Geneidy; S. Baumeister; M. Peura; J. S. Kotiaho
    Abstract: Transformative changes in our production and consumption habits are needed to enable the sustainability transition towards carbon neutrality, no net loss of biodiversity, and planetary well-being. Organizations are the way we humans have organized our everyday life, and much of our negative environmental impacts, also called carbon and biodiversity footprints, are caused by organizations. Here we show how the financial accounts of any organization can be exploited to develop an integrated carbon and biodiversity footprint account. As a metric we utilize spatially explicit potential global loss of species which, we argue, can be understood as the biodiversity equivalent, the utility of which for biodiversity is similar to what carbon dioxide equivalent is for climate. We provide a global Biodiversity Footprint Database that organizations, experts and researchers can use to assess consumption-based biodiversity footprints. We also argue that the current integration of financial and environmental accounting is superficial, and provide a framework for a more robust financial value-transforming accounting model. To test the methodologies, we utilized a Finnish university as a living lab. Assigning an offsetting cost to the footprints significantly altered the financial value of the organization. We believe such value-transforming accounting is needed in order to draw the attention of senior executives and investors to the negative environmental impacts of their organizations.
    Date: 2023–09
  15. By: Rem Sadykhov; Geoffrey Goodell; Denis de Montigny; Martin Schoernig; Philip Treleaven
    Abstract: This paper presents a pioneering approach for token pricing in token economies for risk mitigation and economic stability. The paper proposes a framework for simulating interactions between economic participants that leads to the distribution of wealth within the economy. Using this framework, we define a mechanism for identifying prices that achieve optimal token distribution according to some metric and stability of economic dynamics. The motivation to study tokenomics theory is the increasing use of tokenization, specifically in financial infrastructures, where designing token economies is in the forefront. Tokenomics theory establishes a quantitative framework for token allocation amongst economic participants and implements the algorithmic regulatory controls mechanism that reacts to changes in economic conditions, much like a command economy. In our framework, we introduce a concept of tokenomic taxonomy where agents in the economy are categorized into agent types and interactions between them. This novel approach is motivated by having a generalized model of the macroeconomy with controls being implemented through interactions and policies. Having the defined controls allows us to measure and readjust the wealth dynamics in the economy.
    Date: 2023–08
  16. By: Dirk van Seventer; Finn Tarp
    Abstract: This study makes use of Mozambican social accounting matrices (SAMs) for the years 2007 and 2019, which we compare to uncover structural changes. Our findings reflect the significant short- and long-term challenges that Mozambican policy makers face. Broad-based dynamic change and structural transformation is lacking. Using structural decomposition analysis, the study finds that at the economy-wide level, final demand is the overwhelming determinant of the change in value added.
    Keywords: Social Accounting Matrix, National accounts, Structural change, Shocks, Income distribution, Mozambique
    Date: 2023

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