nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2024‒03‒18
twelve papers chosen by
Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza”

  1. The Elephant in the Other Room By Roberto Veneziani; Gilbert L. Skillman
  2. "Übergewinne" und Erklärungen des Gewinns im Kapitalismus - Ökonomie im Resonanzraum I By Hübscher, Marc C.
  3. Axiomatic Marxian Exploitation Theory: a Survey of the Recent Literature By Rylan Chinnock; Roberto Veneziani; Naoki Yoshihara
  4. Borrower based measures analysis via a new agent based model of the Italian real estate sector By Gennaro Catapano
  5. Institutionalist Clues in Celso Furtado’s Economic Thought By Nastasi, Federico; Spagano, Salvatore
  6. Heterodox Science Leadership By Julia M. Puaschunder
  7. The dependence of growth on the profitability of capital in the Kaleckian literature: a critical evaluation By Trezzini, Attilio; Salvati, Luigi
  8. Activists and Victorians: The Langham Place Group and the advocacy of women's labor By Raisssa Vieira de Melo; Laura Valladao de Mattos
  9. ABIDES-Economist: Agent-Based Simulation of Economic Systems with Learning Agents By Kshama Dwarakanath; Svitlana Vyetrenko; Peyman Tavallali; Tucker Balch
  10. Social determinants of health and institutional complementarities in Africa: a challenge for health policies By Bruno Boidin
  11. The origins of yield curve theory: Irving Fisher and John Maynard Keynes By BRILLANT, Lucy
  12. Innovation is dead, long live Exnovation? A systematic and bibliometric review for a theoretical conceptualisation of exnovation By Verger, Nicolas; DUYMEDJIAN, Raffi; Roberts, Julie

  1. By: Roberto Veneziani (School of Economics & Finance, Queen Mary University of London); Gilbert L. Skillman (Department of Economics, Wesleyan University)
    Abstract: Fabio Petri’s Microeconomics for the Critical Mind (2021) is an impressive tour de force in the field of microeconomic theory. It manifests the author’s command of cutting edge analytical tools, concepts, and theoretical approaches both in the mainstream and in the heterodox literature. The book aims to show that the neo-Ricardian approach, as augmented by the Keynesian/Kaleckian account of demand-constrained equilibrium, is a viable -- indeed, superior -- alternative to mainstream theory. While the book is effective in identifying current shortcomings of mainstream equilibrium and welfare analysis (many of which were first identified in the mainstream literature), it does not provide a rigorous demonstration that these or related difficulties are clearly avoided by the surplus approach, or that the latter is completely consistent with phenomena such as persistent unemployment. This is primarily a consequence of Petri’s central distinction between “core” and “out-of-core” analysis, which offers no unified or clearly articulated basis for deriving or characterizing general equilibrium outcomes. In lieu of such foundations, Petri discusses a portfolio of analytically unconnected formal and informal narratives, some of which rely on the very theoretical constructs that he criticizes the mainstream for employing.
    Keywords: economic theory, general equilibrium, stability, normative economics.
    JEL: D5 D6 B5
  2. By: Hübscher, Marc C.
    Abstract: Dieser Beitrag beschäftigt sich mit Unternehmensgewinnen und ihrer theoretischen Erklärung. Ausgehend von dem üblichen Gewinnverständnis, wie wir es aus dem Shareholder-Kapitalismus kennen, wird einerseits gefragt, wie in der Politischen Ökonomie der Gewinn erklärt und behandelt wird, um daraus eine Arbeitsdefinition der Gewinnkomponenten abzuleiten. Andererseits wird darauf basierend die Distribution von Gewinnen diskutiert und behauptet, dass der Gewinn zunächst einmal der Unternehmung selbst zusteht.
    Abstract: The paper deals with the profit of the firm and its theoretical explanations. Starting with the usual understanding of profit in the shareholder capitalism, on the one hand we investigate how the profit can be understood from the view of political economy. Based on these results we introduce a working definition for profit and its components. On the other hand we discuss the distribution of wealth stating that the profits are attributable to the firm in its own rights.
    Keywords: Gewinn, Zins, Wertschöpfung, Kooperationsrente, Politische Ökonomie, Distribution, Unternehmung, Unternehmer, Profit, interest, value creation, cooperation rent, political economy, distribution, firm, entrepreneur
    Date: 2023
  3. By: Rylan Chinnock (Department of Economics, University of Massachusetts); Roberto Veneziani (School of Economics and Finance, Queen Mary University of London); Naoki Yoshihara (Department of Economics, University of Massachusetts)
    Abstract: In this paper we review recent developments in axiomatic studies of Marxian exploitation theory. First, given the acute controversy over the formal definition of exploitation during the 1970-1990s, we review the study of the axiomatic framework, which identifies some fundamental properties – technically, domain conditions – that any definition of exploitation should satisfy. Moreover, we provide a survey on the axiomatic studies about the proper measures of exploitation which coherently preserve the basic Marxian perceptions represented by two axioms, Profit- Exploitation Correspondence Principle and Class-Exploitation Correspondence Principle. Finally, we examine the relevance of the labour theory of value in these axiomatic studies of the proper measures of exploitation.
    Keywords: Axiomatic analysis; Labour Exploitation; Profit-Exploitation Correspondence Principle; Class-Exploitation Correspondence Principle; Labour Theory of Value.
    JEL: D63 D51
  4. By: Gennaro Catapano (Bank of Italy)
    Abstract: This paper presents a new agent-based model (ABM) of the real estate and credit sectors. The main purpose of the model is to study the effects of introducing a borrower-based macroprudential policy on the banking system, households, and the real estate market. The paper describes a comprehensive set of policy experiments simulating the effects of introducing different loan-to-value (LTV) caps on newly issued mortgages. The analysis sheds light on the relevance of the degree of heterogeneity in household indebtedness tolerance and its mean level. Moreover, it studies the impact of the phase-in period length and of the timing of the introduction of such a measure. While generally effective in reducing credit risk and curbing both house prices and household indebtedness growth, these measures may also have transitory negative side effects on banks’ balance sheets and real estate markets. The results suggest the scenarios, calibration, and timing under which the introduction of an LTV cap might have the most favorable outcomes.
    Keywords: agent based model, housing market, macroprudential policy
    JEL: D1 D31 E58 R2 R21 R31
    Date: 2023–12
  5. By: Nastasi, Federico; Spagano, Salvatore
    Abstract: The Brazilian economist Celso Furtado escapes from the traditional distinctions among different schools of thought. Indeed, he made large use of tools from various proveniences according to a pragmatic approach. Nonetheless, this paper shows that his work also contains several characteristic elements of the institutionalist tradition. In the early 1960s, Furtado placed institutions at the centre of his analysis of the evolution of the economic history. Moreover, he rejected the kind of determinism that follows a concept of choice entirely dependent on the utility-maximizing rationality. Coherently, he opposed the New Institutional Economics as an example of neoclassical retread of institutional issues. Finally, and especially, even without theorizing it, he adopted the institutionalised individual as an economic agent. This choice, rather than that of the homo oeconomicus, implied assuming an agent able to shape institutions that, in turn, influence human behaviours according to a downward cumulative causation.
    Keywords: Furtado, Structuralism, Institutionalism
    JEL: B2
    Date: 2023–02–02
  6. By: Julia M. Puaschunder (Columbia University, USA)
    Abstract: Heterodox science challenges orthodox science. Unorthodox science approaches are heterodox if they apply more unconventional, pluralistic views and methods than the leading orthodox tradition. Heterodox science has been practiced ever since science exists. Heterodox scientists have been fundamental drivers of change through pluralistic innovations in many different fields, such as astronomy, physics, economics as well as behavioral sciences, to name a few. Heterodox science can stem from methodological pluralism in acknowledging and applying different methods than conventional science. Heterodox science can also be a reality check in questioning the validity of prevailing results and state-of-the-art methods. The internal validity gets backtested by replication, which has led to scientific advancements in many fields, most recently notable in the widely discussed replication crisis in behavioral economics. he external validity gets evaluated in a reality check of stylized artificial models for applicability to real-world contexts. For instance, historically external validity tests opened the gates for groundbreaking advancements in physics, macroeconomics as well as behavioral insights. In all these accomplishments of heterodox science approaches though, it is also to note that not all heterodox scientists are successful and sometimes they are doomed to be left on the periphery of discussion and not become influential parts of vibrant communities. This paper addresses the question of why heterodox scientists are sometimes successful in breaking new trends and sometimes they are left in the periphery of scientific discourse and do not claim a leadership role. The paper argues that obstacles for heterodox scientists arise if they engage in the following behavior: (1) an obsessive focus on the critique, which can detach socially; (2) an obsessive focus on discrimination of excellence in trying to bring down those who are in power dominating fields and thereby being distracted from contributing to science in better ways of doing research or providing new results; as well as in (3) colleague amnesia and motivated forgetting of citing colleagues, which harms networking advantages and creates silos of knowledge and self-reinforcing echo-chambers in inefficiently one-dimensional school-thinking. The paper closes by providing recommendations for heterodox scientists, who aspire to become leaders-in-the-field, in pointing at positive critique mechanisms in only commenting on research if being able to show a way how to do it better. Science diplomacy can help educate upcoming researchers to offer critique constructively and in a tactful way. Embracing excellence in honest acknowledgment of colleagues’ accomplishments and whole-hearted efforts to see others’ points of view as well as collaboration attempts with leading scholars are additional strategies to break through with heterodox thoughts without discriminating against excellence. Science advancements to improve the gap between the orthodox and heterodox world include heterodox science ethics and science diplomacy solutions. Open discussions and democratization of knowledge creation can complement the few key journals per field through additional online outlets with international and pluralistic outlooks. Incentivizing collaborations that bridge the divide between orthodox and heterodox scientists is another institutionally-implementable strategy to foster scientific advancement through heterodox ideas. Raising awareness for the concept of colleague amnesia as the motivated forgetting of colleagues’ work appears as a favorable institutional move and proactive community standard that can make science a better, more inclusively innovative world.
    Keywords: Advancement of Science, Collaboration, Colleague Amnesia, Cooperation, Discrimination of Excellence, Economics, Ethics, Heterodox Leadership, Heterodox Science Ethics, Interdisciplinary Research, Motivated Forgetting, Leadership, Orthodox Science, Pluralism, Science, Science Diplomacy
    Date: 2023–06
  7. By: Trezzini, Attilio; Salvati, Luigi
    Abstract: Kaleckian models can be considered as the most relevant set of theoretical works which study growth as a demand-led phenomenon. In these models, the pace of accumulation depends on demand expansion and on different measures of capital profitability. The relevance of the latter is generally assumed without any in-depth scrutiny of theoretical principles. This article identifies the theoretical underpinnings of this alleged dependence and reconsiders and develops the criticisms of them which can be found in the literature. This analysis leads to argue that this fundamental assumption of the Kaleckian models is not sufficiently argued as much as its cruciality would require.
    Keywords: Investment-profit relation; Kaleckian models; Demand-led growth
    JEL: E11 E22
    Date: 2024
  8. By: Raisssa Vieira de Melo; Laura Valladao de Mattos
    Abstract: In the second half of the nineteenth century, a small group of middle class women organized itself with the aim of promoting some social changes that they considered important for their sex, with special emphasis to questions relating to women’s work. They founded a journal that was written and edited by women – the English Women’s Journal – and demanded improvements in women’s education and the opening of more professions for the women of their class. This paper analysis the use they made of Political Economy in support of their cause. It is argued that this science was used both in their diagnosis of the problems engendered by the restricted access women had to the labor market; and in their attempt to persuade society to change this situation. It is also argued that, despite aiming to give the possibility of independent existence to women by means of work, these activists embraced many of the Victorian values concerning women’s role in society. The conclusion is that this mixture of economic activism with Victorian values was important for it allowed these women to go against some ingrained prejudices and habits of the time without being ostracized from society.
    Keywords: Lagham Place; Political Economy; women’s labor
    JEL: B10 B12
    Date: 2024–02–16
  9. By: Kshama Dwarakanath; Svitlana Vyetrenko; Peyman Tavallali; Tucker Balch
    Abstract: We introduce a multi-agent simulator for economic systems comprised of heterogeneous Households, heterogeneous Firms, Central Bank and Government agents, that could be subjected to exogenous, stochastic shocks. The interaction between agents defines the production and consumption of goods in the economy alongside the flow of money. Each agent can be designed to act according to fixed, rule-based strategies or learn their strategies using interactions with others in the simulator. We ground our simulator by choosing agent heterogeneity parameters based on economic literature, while designing their action spaces in accordance with real data in the United States. Our simulator facilitates the use of reinforcement learning strategies for the agents via an OpenAI Gym style environment definition for the economic system. We demonstrate the utility of our simulator by simulating and analyzing two hypothetical (yet interesting) economic scenarios. The first scenario investigates the impact of heterogeneous household skills on their learned preferences to work at different firms. The second scenario examines the impact of a positive production shock to one of two firms on its pricing strategy in comparison to the second firm. We aspire that our platform sets a stage for subsequent research at the intersection of artificial intelligence and economics.
    Date: 2024–02
  10. By: Bruno Boidin (CLERSÉ - Centre Lillois d’Études et de Recherches Sociologiques et Économiques - UMR 8019 - Université de Lille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This article investigates the shortcomings in the implementation of an approach based on the social determinants of health in sub-Saharan Africa. This approach is extended by looking at health and development from a political economy perspective. This perspective acknowledges the non-linear nature of the political decision-making process and the absence of any institutional ideal type. The notion of institutional complementarities is used to investigate the deficiencies in this area in sub-Saharan Africa. It will be shown that the health programmes are based on a rationalist postulate and vertical concept of the problems and are characterised by low levels of institutional complementarity. The article's contribution to the literature rests on its use of an expanded political economy perspective to help bridge the gap between public health and analyses of public policy.
    Abstract: Cet article examine les défaillances dans la mise en oeuvre d'une approche fondée sur les déterminants sociaux de la santé en Afrique. Nous prolongeons cette approche en adoptant une perspective d'économie politique qui considère le processus de décision politique comme étant non linéaire et l'absence d'idéal-type institutionnel. La notion de complémentarité institutionnelle est mobilisée pour analyser les lacunes des politiques de santé en Afrique à partir d'une perspective systémique. Nous voulons montrer que les programmes de santé sont fondés sur une vision rationaliste et verticale des problèmes et caractérisés par de faibles complémentarités institutionnelles. La contribution de cet article à la littérature réside dans la mobilisation d'une perspective d'économie politique qui cherche à rapprocher la santé publique des analyses en termes de politique publique.
    Date: 2022–03–25
  11. By: BRILLANT, Lucy
    Abstract: The purpose of the paper is to rescue Irving Fisher’s theorizing of the yield curve (1896, 1907, 1930) from relative obscurity and to contrast it with the better known and equally pioneering theory of John Maynard Keynes (1930, 1936). The paper also adduces evidence that Fed economists and the U.S. monetary experience in the 1920s greatly influenced these authors, both of whom were concerned with the management of the long-term interest rate.
    Date: 2024–01–26
  12. By: Verger, Nicolas (Grenoble Ecole de Management); DUYMEDJIAN, Raffi; Roberts, Julie
    Abstract: Innovation has often been heralded as important in societal progress. Current innovation practices approach creation as an endless endeavour without much consideration of the end result of those innovations. However, in a world in which natural materials are ever depleting due to extractivism modes of operations that support those same innovations, it becomes increasingly important to reflect upon – and implement – new ways through which innovation comes to an end. In some fields, including Energy Studies and Transition Studies, this process has been labelled “exnovation”. Yet, literature on the subject remains scarce, and its development limited in other fields, notably in organisation and management studies. Part of the reason for this lack of research on exnovation could be explained by a lack of thorough synthesis presenting the concept. In this study, we used bibliometric network analyses to conduct a systematic review. We have critically explored the definition of exnovation across different fields, and identified the fields in which exnovation was (or has not) featured much development. We found two major clusters of fields that leverage the concept of exnovation: transition/energy/sustainability studies, on the one hand; medicine, on the other. There is however not much interconnectivity between these clusters. Moreover, we show that these two clusters do not use the term “exnovation” in the same way. The first cluster has mentioned approaches to exnovation from a global, policy perspective. The second cluster, from a practitioner perspective. This research article then builds on these systematic findings to propose a perspective that reconciles these two views. We propose that, far from being opposite to innovation, exnovation is a complement to it. As much as innovation is the ability to implement an idea; exnovation is the ability to dis-implement it. We further discuss that both are influenced by external factors that regulate them, either from a higher scale (global) policy-side or from a lower scale (local) practice side. We conclude through the concept of “Novation” a process that integrates both in-novation and ex-novation as the input and output of the same continuum.
    Date: 2024–02–12

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