nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2024‒04‒22
seventeen papers chosen by
Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza”

  1. Exploring the Foundations of Complexity Economics: Unveiling the Interplay of Ontological, Epistemological, Methodological, and Conceptual Aspects By Sandye Gloria
  2. Trans-development and the Global South: Counter-hegemonic Strategy for Building an Ecological Global Civilization By Khan, Haider
  3. Uneven Development: Causal Explanations and Counterfactuals with Structural Depth By Khan, Haider
  4. Sustainable development in a center-periphery model By Gabriel Porcile
  5. Robust-less-fragile: Tackling Systemic Risk and Financial Contagion in a Macro Agent-Based Model By Gianluca Pallante; Mattia Guerini; Mauro Napoletano; Andrea Roventini
  6. Finance, violence et justice selon Blaise Pascal By Bernard Gazier
  7. Global production networks meets evolutionary economic geography By Lee, Neil
  8. METROPOLIS2: Bridging Theory and Simulation in Agent-Based Transport Modeling By Lucas javaudin; André de Palma
  9. A Kaleckian approach to financialization and functional income distribution: Austria and Finland in comparative perspective By Dabrowski, Cara; Kuhls, Sonia
  10. Hayek's Austrian Theory of the Business Cycle By Harald Hagemann
  11. What relevance has division of labour in a world of precarious work? By James, Deborah
  12. Intersectionality in Individual Choice Behavior: Pitfalls and Opportunities By Liqui-Lung, C.
  13. Сколько прав нужно человеку: взлет и падение либерализма By Popov, Vladimir
  14. Exchange Rate Regime and Sectorial Profi tability in a Small Open Economy: A Theoretical and Empirical Analysis of Argentina (2016-2022) By Ariel Dvoskin; Germán Feldman; Gabriel Montes-Rojas
  15. Breaking the Divide: Can Public Spending on Social Infrastructure Boost Female Employment in Italy? By Jelena Reljic; Francesco Zezza
  16. Carl Menger on time and entrepreneurship By Campagnolo, Gilles
  17. The Degeneration of Workers' Cooperatives under Endogenous Membership in Mixed Oligopoly By Flavio Delbono; Carlo Reggiani

  1. By: Sandye Gloria (Université Côte d'Azur, CNRS, GREDEG, France)
    Abstract: What gives complexity economics its identity is the relationships and hierarchy among its ontological, epistemological, methodological, and conceptual aspects. This paper explores each one of these aspects and their interplays, to precise the contours of the complexity approach. This paper aims to stress the coherent articulation and architecture of these four dimensions. In particular, ontology matters, it comes first as an indispensable pre-scientific analysis that conditions the adoption of an adequate criterion of scientific explanation with methodological consequences in terms of relevant tools and key concepts. Reflections on the concept of emergence are particularly symptomatic of the overall coherence of the complexity approach. It becomes challenging to persist in attempting to enhance the mainstream with new tools to address novel phenomena and, more broadly, to regard the complexity approach as a supplement. Instead, the complexity approach emerges as a distinct alternative approach.
    Keywords: Complexity economics, ontology, generativism, constructivism, emergence
    JEL: B20 B50 B41
    Date: 2024–03
  2. By: Khan, Haider
    Abstract: We define Trans-development as an overcoming of maldevelopment under capitalism towards building a planetary ecological civilization that is equitable, life-affirming and can ensure flourishing of humans along with nature and other species. How can such a planetary ecological counterhegemony be established in the Global South? I answer this question through exploring a fairly comprehensive strategy for development as freedom beyond the ecological and other crises-filled capitalism in the 21st century. Accordingly, I try to find a way to integrate useful markets with the key characteristics of the Enabling Ecological Trans-developmental State(EETDS) 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. Relative Degrowth which involves sustainable people’s capabilities enhancing growth in the Global South, and degrowth in the Global North is a necessary condition for such a postcapitalist planetary civilization. Proceeding from a critical capabilities perspective that is fully grounded in social reality of deepening structural and ecological crises of the Global Capitalist System, we discover that such a perspective leads to the need to include among the characteristics of the EETDS for the 21st Century its capacity to build an ecologically sustainable egalitarian Trans- 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. The Gramscian idea of counterhegemony can be a fruitful way to carry out a thoroughgoing decolonization that dialectically addresses both material and ideational/ideological aspects of such decolonization. Strengthening the global south counterhegemonic movement built around a strategic program of trans-development is crucial for achieving real decolonization and creating a planetary ecological civilization.
    Keywords: Trans-development, Counterhegemony, Decolonization, Global South, Dialectics, Enabling Ecological Trans-developmental State(EETDS), Stoffwechsel, Ecological Imperialism, Relative Degrowth, New Non-aligned Movement(NNAM), New International Economic Order, Democratic Internationalism, Egalitarianism, Ecological Crisis, Global Capitalist System(GCS), Counterhegemonic movements, Ecosocialism, Nonlinearities, Multiple equilibria, Entropy and Information Theory
    JEL: F6 O1 P0
    Date: 2024–02–28
  3. By: Khan, Haider
    Abstract: What does a deep structural causal explanation for uneven development deliver ? To answer this question, we must ask: How are relatively deeper scientific explanations to be distinguished from superficial or shallower ones? Furthermore, what roles can counterfactual analysis play in social sciences and policy making which can help overcome uneven and unequal development? For a competent, morally motivated scientific policy maker in Development Economics, it is important to avoid inflicting harm and promote the common good. The purpose of this paper is to clarify how the idea of depth can play a role in finding the more "approximately true" explanation through causal comparisons and counterfactual conditionals that are scientifically salient in principle. In doing so, we must also be able to avoid inflicting harm and promote the common good. It is not an exhaustive treatment but rather focuses on a few aspects that may be the most critical in evaluating the explanatory strengths of a theory in the social sciences. It presents on the critical side a general argument which stresses the need for going beyond the Humean focus on just constant conjunction and temporal succession. On the positive side---and in contradistinction with Hume--- it develops a scientific realist argument for deep causality in development studies and social sciences in general on the epistemological, ontological and ethical side. It attempts to elucidate via an extensive example from research in the political economy of development how these ends can be achieved in a topic-specific manner when explanations in political economy and other social sciences can be judged by the scientific realist criterion of causal depth. In this particular case, an "intentional" and methodologically individualist neoclassical explanation is contrasted with a "structural" dual-dual approach as rival theories purporting to explain the same set of phenomena. Finally, avoiding harmful policies and aiding in making policies for advancing the common good are more likely if the methodological approach advocated here is adopted for responsible practice. Ultimately, following the methodology advanced here , it will be possible to drive further the tendencies towards the creation of an ethically efficacious economics(EEE) for ecologically sustainable humane policy making.
    Keywords: Uneven Development, Structural Dual-Dual Development Model, Scientific Explanations, Social and Economic Explanations, Causal Depth, Critical Scientific Realism, Political Economy, Neoclassical Economics, Structuralism, Social Science Theories, Economic Models, Ethics and Economics, Counterfactuals and Causal Efficacy, Common Good. Economic Justice, Ethically Efficacious Economics(EEE or Triple E)
    JEL: C3 O1 O2
    Date: 2024–02–29
  4. By: Gabriel Porcile
    Abstract: Latin American Structuralism is an important strain in development theory, one which focuses on the center-periphery dynamics arising from an international economy ridden by technological, financial and power asymmetries. This paper discusses recent Structuralist contributions around the concept of sustainable development, defined as a growth path that is sustainable in three dimensions: economic, social and environmental. The economic dimension of sustainability means that the effective rate of growth is compatible with the Balance-of-Payments constraint; the social dimension means that growth is inclusive and reduces inequality; and the environmental dimension means that it respects the ecological boundaries of the planet. There are no endogenous market forces that could deliver a sustainable growth path: the role of politics and political negotiations (at the domestic and international levels) is paramount. The effective path that will be observed emerges as political power and structural change co-evolve and create tensions and disequilibria, shaping income distribution and the direction of industrial transformation and technological change.
    Keywords: Center-periphery models; Structuralism; sustainable development
    Date: 2024–03–25
  5. By: Gianluca Pallante (Institute of Economics and l'EmbeDS, Scuola Superiore Sant'Anna, Pisa, Italy); Mattia Guerini (Universita di Brescia; Fondazione ENI Enrico Mattei; Université Côte d'Azur, CNRS, GREDEG, France; Sant'Anna School of Advanced Studies); Mauro Napoletano (Université Côte d'Azur, CNRS, GREDEG, France; Sciences Po, OFCE, France; Sant'Anna School of Advanced Studies); Andrea Roventini (Institute of Economics and EMbeDS, Scuola Superiore Sant'Anna; Sciences Po, OFCE)
    Abstract: We extend the Schumpeter meeting Keynes (K+S; see Dosi et al., 2010, 2013, 2015) to model the emergence and the dynamics of an interbank network in the money market. The extended model allows banks to directly exchange funds, while evaluating their interbank positions using a network-based clearing mechanism (NEVA, see Barucca et al., 2020). These novel adds on, allow us to better measure financial contagion and systemic risk events in the model and to study the possible interactions between micro-prudential and macro-prudential policies. We find that the model can replicate new stylized facts concerning the topology of the interbank network, as well as the dynamics of individual banks' balance sheets. Policy results suggest that the economic system at large can benefit from the introduction of a micro-prudential regulation that takes into account the interbank network relationships. Such a policy decreases the incidence of systemic risk events and the bankruptcies of financial institutions. Moreover, a trade-off between financial stability and macroeconomic performance does not emerge in a two-pillar regulatory framework grounded on i) a Basel III macro-prudential regulation and ii) a NEVA-based micro-prudential policy. Indeed, the NEVA allows the economic system to achieve financial stability without overly stringent capital requirements.
    Keywords: Financial contagion, Systemic risk, Micro-prudential policy, Macro-prudential policy, Macroeconomic stability, Agent-based computational economics
    JEL: C63 E32 E42 E58 G18
    Date: 2024–03
  6. By: Bernard Gazier (Centre d'Economie de la Sorbonne)
    Abstract: This text aims at identifying and discussing the content and present meaning of Blaise Pascal's contribution to the understanding of justice in economic matters: which inequalities in terms of wealth, status and power are acceptable or not in a country or a community? Such a project faces a difficulty and a paradox. The difficulty is that economics as a separate discipline does not exist in Pascal's times; the paradox lies in the fact that while Pascal was politically conservative, his heirs in the XXth century converge in a strongly critical stance against capitalism and established order. Our analysis proceeds in three steps. In the first step, we briefly situate Pascal's approach in its historical context, by comparing it to the views of other authors of his time who are considered as forerunners of political economy. In the second, we discuss the content of the legacy as identified and used in the XXth century, by comparing Pascal's statements on justice to the conceptions of his heirs, in order to pinpoint convergences and divergences. The last step adopts an epistemologic and genealogic stance. We take into consideration the long-terme changes in knowledge modalities leading to the "human sciences" and among them to "positive" and "normative" economics, in order to set and discuss the meaning of the references to Blaise Pascal in contemporary debates on economic and social justice
    Keywords: Blaise Pascal; social justice; normative economics
    JEL: B11 B50 B55 D60
    Date: 2024–02
  7. By: Lee, Neil
    Abstract: Two of the canonical approaches in regional studies are global production networks (GPNs) and evolutionary economic geography (EEG). Recent geopolitical and economic events have shown the importance of both theories in explaining regional economic change. Yet they remain discrete and separate, and there is now consensus that, together, they could explain more. A vibrant debate on the relationship between these two approaches is needed, starting with identifying unifying themes and areas of analytical difference, to develop a research agenda for future work which can better explain regional change.
    Keywords: complexity; evolutionary economic geography; global production networks; global value chains; relatedness; T&F deal
    JEL: D00 F23
    Date: 2024–03–08
  8. By: Lucas javaudin; André de Palma (Université de Cergy-Pontoise, THEMA)
    Abstract: Transport simulators can be used to compute the equilibrium between transporta- tion demand and supply within complex transportation systems. However, despite their theoretical foundations, there is a lack of comparative analysis between simula- tor results and theoretical models in the literature. In this paper, we bridge this gap by introducing METROPOLIS2, a novel mesoscopic transport simulator capable of simulating agents’ travel decisions (including mode, departure-time, and route choice), based on discrete-choice theory within a dynamic, continuous-time framework. We demonstrate METROPOLIS2’s functionality through its application to the single-road bottleneck model and validate its ability to replicate analytical results. Furthermore, we provide a comprehensive overview of METROPOLIS2 in large-scale scenarios. Fi- nally, we compare METROPOLIS2’s results with those of the original METROPOLIS1 simulator in a simulation of Paris, highlighting its speed and ability to converge to an equilibrium.
    Keywords: transport simulation; agent-based modeling; bottleneck; dynamic traffic assignment; discrete-choice models
    JEL: C63 R4
    Date: 2024
  9. By: Dabrowski, Cara; Kuhls, Sonia
    Abstract: In this paper, we examine if and to what extent the Kaleckian theory of mark-up pricing can explain changes in functional income distribution in an environment of financialization. Following this approach, we expect financialization to influence the aggregate wage share through three channels: (1) sectoral recomposition, (2) financial overhead costs and rentiers' profits claims, and (3) bargaining power of trade unions and workers. We empirically analyze the long-term trends for each of the channels before and after the Great Financial Crisis and the Great Recession for Austria and Finland. Overall, we find evidence for all three re-distributional channels contributing to the changes in functional income distribution. The explanatory power of the individual channels, however, differs strongly due to the heterogeneity of the countries.
    Keywords: Finance-dominated capitalism, financialization, distribution, financial and economic crisis, Kaleckian theory of distribution
    JEL: D31 D33 D43
    Date: 2024
  10. By: Harald Hagemann (Universität Hohenheim)
    Abstract: The essay begins with Hayek's grappling with the equilibrium framework as the starting point for the analysis of cyclical fluctuations and the fundamental methodological challenge raised by Lowe's attack against the construction of business-cycle theory within the system of general economic equilibrium. It then shows that Hayek elaborated his Austrian theory of the business cycle on the innovative combination of five building blocks: (1) Wicksell's theory of the cumulative process where price changes are caused by the discrepancy between the market rate and the natural (equilibrium) rate of interest; (2) Mises's theory of money and credit in which banks artificially lowering the money (market) rate of interest are responsible for overinvestment and a misallocation of resources which necessarily has to be corrected; (3) Böhm-Bawerk's theory of capital with its emphasis on the time structure of the production process; (4) Cantillon effects of changes in the money supply on the price structure and hence on the structure of production (non-neutrality of money); (5) Ricardo effects of a shortage of consumption goods on the production of investment goods (disproportionality of circulating and fixed capital).
    JEL: B22 B25 B31 E32
    Date: 2024–03
  11. By: James, Deborah
    Abstract: Post-Marx, social scientists have tended to define ‘labour’ by reference to working for others in return for a wage, rather than to a harmonious Durkheimian-style co-dependency. This mini-review of recent anthropological literature considers whether, in a world where the ‘standard employment contract’ is dwindling and many are out of work, ‘division of labour’ has any continuing relevance.
    JEL: R14 J01
    Date: 2024–03–11
  12. By: Liqui-Lung, C.
    Abstract: I show how intersectionality, interconnections of social organizations that create interdependent systems of disadvantage, plays a role in individual choice behaviour when people use outcomes of others like them to cope with sources of noise in decision making they cannot control for. I analyze how the different dimensions of a social type interact in belief formation and choice behaviour at the individual and aggregate level, and show how an intersectional lens sheds light on inequalities and patterns in aggregate choice behaviour that are not visible with a one-dimensional lens. I furthermore discuss the effects of strategy restrictions imposed by stigmatization, stereotypes or norms, and the ability of agents to self-identify. Finally, I illustrate how these insights could help explain the pitfalls we encounter in the evaluation of one-dimensional policy measures targeting the underrepresentation of social groups, and guide us in developing potentially more effective multidimensional approaches.
    JEL: D81 D91 Z13
    Date: 2023–12–11
  13. By: Popov, Vladimir
    Abstract: The main idea of liberalism – the inviolability of “inalienable human rights” – is considered in a historical context, not as an eternal principle, but as a changing moral and legal norm. It is argued that the economic success of the West during the transition to capitalism is associated not so much with the expansion of human rights (the abolition of slavery and serfdom, guarantees of property rights and contracts), but with an increase in the rate of savings and investment resulting from the destruction of the community and growing inequality in income distribution. The expansion of human rights becomes a consequence of economic success, a kind of luxury that successful and competitive countries can afford. Later, however, the inability to curb these rights in a variety of areas (regulation of incomes and progressive taxation to cut income and wealth inequalities, limiting the greenhouse gas emissions, coping with populism in the media and in politics) breeds internal conflicts, reduces competitiveness as compared to societies that do not hesitate to limit the rights of individuals for the sake of the common good. Explanation is provided for the changes in the electoral base of right and left parties (Piketty, 2018) – immediately after the Second World War, left parties were supported mainly by the poor and uneducated, whereas today, on the contrary, more educated and wealthier are more leftist oriented. Главная идея либерализма – нерушимость прав человека – рассматривается в историческом контексте, не как вечный неизменный принцип, а как меняющаяся моральная и правовая норма. Доказывается, что экономический успех Запада при переходе к капитализму связан не столько с расширением прав человека (отмена рабства и крепостничества, гарантии прав собственности и контрактов), сколько с повышением нормы сбережений и инвестиций при разрушении общины и росте неравенства в распределении доходов. Расширение же прав человека становится следствием экономического успеха, своего рода роскошью, которую могут себе позволить успешные и конкурентоспособные страны. В дальнейшем, однако, отсутствие готовности ограничить права человека в самых разных областях (отказ от прогрессивного налогообложения и активного регулирования доходов, ведущий к росту неравенства, нерешительность в ограничении выбросов парниковых газов в богатых странах, неспособность справиться с популизмом в медиа-пространстве и в политике) стимулирует внутренние конфликты, снижает конкурентоспособность и вызывает отставание от стран, более решительно ограничивающих права индивидуумов ради общего блага. Объясняется эффект изменения электоральной базы правых и левых партий (Piketty, 2018) – сразу после второй мировой войны за левые партии голосовали в основном бедные и необразованные, а сегодня, наоборот, более образованные и богатые.
    Keywords: Liberalism, growth, human rights, East Asian model
    JEL: B51 P16 P17 P26 P27 P48 P5 P50
    Date: 2024–03–18
  14. By: Ariel Dvoskin (BCRA/CONICET); Germán Feldman (BCRA); Gabriel Montes-Rojas (BCRA/UBA/IIEP-CONICET)
    Abstract: This paper studies, both theoretically and empirically, tradable (T) and non-tradable (N) profit rates dynamics in a small, price-taker peripheral economy under foreign exchange controls and parallel exchange rates (ER). Using a state-space econometric representation of the Argentine economy for the period April 2016- April 2023, we found evidence to support three main hypotheses derived from the theoretical models. First, an official exchange rate depreciation increases tradable goods profit rates, but has no effect on non-tradeable goods profitability. Second, the rise of the financial exchange rate increases sector N’s profit rate but has no effect on T’s. Moreover, this effect depends on the magnitude of the ER gap in a positive, but non-linear way. Third and finally, over sufficient time, both profit rates tend to influence each other, through the action of competition. This means that, eventually, and increase (depreciation) in the official exchange rate exerts its influence on sector N’s profit rate; while, if sufficiently persistent and big enough, a rise in the financial ER ends up affecting sector T’s profit rate too.
    Keywords: Argentina, Inflation, Exchange rate, Foreign exchange controls, Sectorial profit rates, Small open economy
    JEL: E31 E11 F41
    Date: 2024–04
  15. By: Jelena Reljic; Francesco Zezza
    Abstract: We contribute to the long-standing debate on the Italian North–South divide by assessing the impact of public spending on social infrastructure - including education, healthcare, childcare and social assistance - on the gender employment gap over the last two decades, using a P-SVAR analysis. These investments, while not explicitly targeting women, may increase both their labour supply - by reducing the unpaid care work burden - and pro-women labour demand through job creation in care sectors that predominantly employ women. Our research reveals a positive and long-lasting impact of social infrastructure expenditure on private investment, GDP and employment in all areas of the country. However, the reduction of the gender employment gap is detected only in the South and among high-skilled women. These results stress the need for targeted policies to fill the investment gaps in social infrastructure, aiming for a more inclusive labour market, particularly in Southern regions, which suffer from chronic underinvestment and structural challenges.
    Keywords: Social infrastructure; Gender inequality; Fiscal Policy; Panel SVAR; Italian regions
    JEL: C33 E24 H30 J16 J18 J21 R58
    Date: 2024–03
  16. By: Campagnolo, Gilles
    Abstract: Carl Menger is remembered less for his analysis of entrepreneurship (which in the following analysis refers to his fundamental notions related to the nature of business practice) than for his views on matters like money, individualism or the nature of institutions (there are exceptions to this subdued interest, such as Kirzner 1978). However, these issues are related and a long-debated notion among Austrians, namely time, relates investment, entrepreneurship, uncertainty and Menger’s tentative quasi-anthropology (kept in his notes). This paper conscientiously investigates those issues through Menger’s views on the notion of time.
    Keywords: Böhm-Bawerk (Eugen von); entrepreneurship; innovation; Menger (Carl); time
    JEL: B13 B31 O31
    Date: 2022–09–03
  17. By: Flavio Delbono; Carlo Reggiani
    Abstract: We propose a new model of mixed oligopoly where a workers’ cooperative firms competes with a number of profit maximising companies. Building upon a large empirical evidence, we innovate as compared to the traditional literature on the objective function of the cooperative; moreover, its membership is treated as endogenous in the Cournot-Nash equilibrium. We show which factors may be responsible of the degeneration of the workers’ cooperative firms, which occurs when the number of members shrinks with respect to the overall employees.
    JEL: L21 L25 P13
    Date: 2024–04

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