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on Heterodox Microeconomics |
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Issue of 2024–12–30
nineteen papers chosen by Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza” |
| By: | Giovanni Scarano |
| Abstract: | This paper argues that the concern to determine the rate of profit, attributed by the modern surplus approach to the classics, was not the main focus in most classical authors before Ricardo and certainly did not have a central place in Marx’s analysis. According to Marx, a uniform rate of profit was only one way to determine the distribution of surplus value among the owners of capital, while the distribution of income among capitalists and workers was strictly determined by the rate of surplus value. Marx did not use his own version of the labour theory of value to determine the rate of profit and production prices, but to analyse the dynamics of economic aggregates and bring to light the inner social nature of production and distribution processes. In this context, Marx’s rate of profit was only an aggregate measure of the maximum potential growth rate. |
| Keywords: | surplus approach, classical economists, rate of profit, rate of interest, prices of production |
| JEL: | B14 B24 B51 C67 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:rtr:wpaper:0284 |
| By: | Davis, John B. (Department of Economics Marquette University); (Department of Economics Marquette University) |
| Abstract: | This paper investigates philosophy’s engagement with one social science, economics, via the philosophy of economics. It first distinguishes mainstream philosophy of economics and heterodox/non-mainstream philosophy of economics, and then argues that the latter’s increasing recourse to analytical reasoning in philosophy to advance its critiques of mainstream economics points toward a new engagement between philosophy of economics and philosophy. To provide grounds for this argument, the paper discusses shared thinking of three key figures: philosophy’s Derek Parfit and from economics Herbert Simon and Amartya Sen. It argues their respective critiques of dominant ideas in their fields reflect a little discussed convergence in thinking between philosophy and economics through heterodox/non-mainstream philosophy of economics. This convergence is argued to reflect a shared commitment to one philosophical conception of temporal sequences, namely, the past-present-future as opposed to the before-after sequence. Philosophy’s future engagement with economics as a social science, the paper concludes, builds on the role this conception plays in both in the future. |
| Keywords: | philosophy of economics, mainstream, heterodox/non-mainstream, Parfit, Simon, Sen, temporal science |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:mrq:wpaper:2024-05 |
| By: | Robert A. Blecker |
| Abstract: | This article presents neo-Kaleckian macroeconomic models that are intended for under-graduate instruction at the introductory and intermediate levels. The neo-Kaleckian approach incorporates markup pricing, monopoly power, and income distribution into a demand-driven macro model for short-run analysis. The model is used to demonstrate the potentially stagnating effects of increased monopoly power and the more expansionary impact of tax cuts on wages compared with profits. This article also shows how a neo-Kaleckian model can be used to analyze the cases in which aggregate demand and the level of output are either ‘wage-led’ or ‘profit-led.’ For pedagogical reasons, the models are presented in a way that is parallel to how mainstream Keynesian theory is typically covered in undergraduate macro textbooks. |
| Keywords: | Aggregate demand; autonomous spending; multiplier; profit share; wage-led demand; profit-led demand; monopoly capitalism; markup pricing; tax cuts; Michal Kalecki; Josef Steindl; economic stagnation |
| JEL: | E11 E12 A22 B22 P10 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:imk:fmmpap:111-2024 |
| By: | Richard N. Langlois (University of Connecticut) |
| Abstract: | Edith Penrose was far from underappreciated in management theory, where she was considered the inspiration for more than one research program. But she was virtually unknown in economics, the discipline in which she was trained and in which she considered herself to be working. This essay chronicles the life and work of Edith Penrose. It examines the streams of thought she influenced – and didn’t influence. As a special bonus, the essay also considers another underappreciated economist, George Richardson, who built on Penrose’s work and overcame some of its limitations. Following Brian Loasby, the essay ultimately argues for understanding Penrose and Richardson as industrial organization economists in the tradition of Adam Smith and Alfred Marshall. |
| JEL: | B25 B31 B52 B53 L2 L65 O32 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:uct:uconnp:2024-05 |
| By: | Annie L. Cot (Centre d'Economie de la Sorbonne, Université Paris 1 Panthéon-Sorbonne, REhPERE) |
| Abstract: | In France, Charles Gide had been the first economist to analyse Marx's theses in depth. Translated into French by Joseph Roy, proofread by Marx and published in the form of fascicles by the publisher Maurice Lachâtre between 1872 and 1875. Book I of Capital met with a somewhat unexpected reception. An initial review of the German version, by the philosopher Eugène de Roberty, appeared in the columns of Emilie Littré and Grégroire Wyrouboff's journal La Philosophie Positive. Two economists close to the Guillaumin publishing house, Maurice Block and Emilie de laveleye, then commented it. But beyond these early exchanges, Marx's theories were ignored in French academic debates until Charles Gide's close analytical presentation of them more than two decades later. In accordance with the reading grid he claimed in his Histoire des doctrines économiques, Gide proposed a dual reading of Capital: one in terms of "theories" and one in terms of "doctrines". Janus bifrons: on the one hand, the academic texts, which reproduce the logical rigour of Book I of Capital; on the other, the texts of a citizen involved in the ooperative movement and solidarism, close to the pre-Marxist French socialists. As Jean Starobinski puts it, this dual perspective requires us to "shift the point of application of historical attention", and to analyse these two postures as embodying what the Konstanz School calls two "horizons of expectation" articulated here not diachronically, as in Hans-Robert Jauss, but synchronically |
| Keywords: | Karl Marx; Charles Gide; Collège de France; French socialism; Horizon of expectation; Hans-Robert Jauss |
| JEL: | B10 B14 B31 A12 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:mse:cesdoc:24012 |
| By: | Lars Fluri; A. Ege Yilmaz; Denis Bieri; Thomas Ankenbrand; Aurelio Perucca |
| Abstract: | This research investigates liquidity dynamics in fractional ownership markets, focusing on illiquid alternative investments traded on a FinTech platform. By leveraging empirical data and employing agent-based modeling (ABM), the study simulates trading behaviors in sell offer-driven systems, providing a foundation for generating insights into how different market structures influence liquidity. The ABM-based simulation model provides a data augmentation environment which allows for the exploration of diverse trading architectures and rules, offering an alternative to direct experimentation. This approach bridges academic theory and practical application, supported by collaboration with industry and Swiss federal funding. The paper lays the foundation for planned extensions, including the identification of a liquidity-maximizing trading environment and the design of a market maker, by simulating the current functioning of the investment platform using an ABM specified with empirical data. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.13381 |
| By: | Masazumi Wakatabe (Faculty of Political Science and Economics, Waseda University) |
| Abstract: | Capitalism is in trouble, or so have we been told. What could we learn from Adam Smith about the future of capitalism? I argue that Adam Smith has a lot to teach us about the future of capitalism. I first examine recent discussions about the current challenges and criticisms against capitalism such as the productivity slowdown, the waning competition, the role of globalization, the rising inequality and climate change. Through this exercise, I emphasize that there are indeed some global trends, but there are also important national and regional differences reflecting differences in institutions and policy; in this sense, not only natural scientific technology but also social scientific technology, i.e. governance, policy and institutions, matter. Then, I argue that what Smith could teach us on in five aspects. First, it should be noted that Adam Smith conceived a truly inclusive capitalism: he took income distribution into account when he argued for the desirability of economic development. Secondly, an inclusive capitalism requires broad knowledge formation and sharing among the people. Smith’s inclusive capitalism is based on the division of labor principle, markets or broad exchange basis to foster the division of labor, and policy measures to alleviate side effects of the division of labor. Thirdly, the expansion of exchange and trade has beneficial effects, but we should be aware of its distributional consequences. Fourthly, institutions matter. Markets are the most fundamental institutions, but it is imperative to preserve competition in markets, especially free entry. Fifthly, proper law and institutions are essential to the well-functioning market economy, the “system of natural liberty”. However, the “system of natural liberty” is not automatically achieved. Policy and institutions are history dependent, therefore history matters. Here “relatively cautious sense of progress” of the Scottish enlightenment thinkers including Smith should be reminded of. |
| Keywords: | : Adam Smith; inclusive capitalism; competition; economic development; institutions |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2407 |
| By: | Stefan Ederer; Miriam Rehm |
| Abstract: | This paper develops a stock-flow consistent Post-Keynesian model in the Kalecki-Steindl tradition with endogenous wealth accumulation and distribution, which captures the key aspects of the Cambridge debate on (anti-)dual and Pasinetti equilibria. We find that a stable interior solution – that is, a Pasinetti equilibrium – is the most likely outcome, while the corner solutions of dual and anti-dual equilibria – both the euthanasia and the triumph of the rentier – are special cases of a standard Bhaduri-Marglin model. Endogenizing the profit share yields a two-dimensional dynamic system of the wealth concentration and the profit share, which is stable for a wide range of parameter values, as long as the concentration of wealth is not unrealistically low. An interior Pasinetti equilibrium thus remains the most likely outcome. However, for certain parameter combinations, the system may move onto an explosive trajectory with an ever-rising concentration of wealth and income in the hands of capitalists. Numerically illustrating the results of the analytical model shows that endogenizing the profit share leads to a more unequal wealth distribution, and a negative feedback effect between high wealth inequality, a high profit share, and growth. |
| Keywords: | Aggregate demand; autonomous spending; multiplier; profit share; wage-led demand; profit-led demand; monopoly capitalism; markup pricing; tax cuts; Michal Kalecki; Josef Steindl; economic stagnation, wealth distribution, Post-Keynesian model, aggregate demand, Pasinetti, profit rate |
| JEL: | B22 D31 D33 E12 E21 E64 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:imk:fmmpap:112-2024 |
| By: | Jan Frankowski; Aleksandra Prusak; Jakub Sokołowski; Joanna Mazurkiewicz; Tomasz Świetlik |
| Abstract: | The importance of energy as a common good becomes especially pronounced during crises. This paper reconstructs the response of housing cooperatives to the energy crisis by applying Kenneth Burke’s five categories of theatre interpretation and eighteen impression management strategies inspired by Erving Goffman’s dramaturgical sociology to assess the dominant cooperative approaches. We analyse a unique dataset of 215 annual reports of Polish rural housing cooperatives, which display a range of reactive, proactive, and collaborative attitudes to high energy prices and fuel shortages resulting from the embargo on Russian coal. The unexpected nature of the crisis led four out of five rural housing cooperatives to adopt defensive impression management strategies. The three most common strategies were crisis attribution (66%), resourceful management (18%), and deliberative silence (12%). Our findings portray housing cooperatives as solitary and routine actors, undertaking an extraordinary effort often beyond their capacities. While cooperative efforts were partially supplemented by resident solidarity, particularly within micro-cooperatives reliant on coal with a stronger sense of community, the uncertain future of these entities calls for louder advocacy, targeted financial support, and better recognition of rural cooperatives as heating communities and intermediaries essential for ensuring local energy security. |
| Keywords: | housing cooperatives, heating, local communities, energy transition |
| JEL: | P13 O18 P28 P48 P31 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:ibt:wpaper:wp042024 |
| By: | Jose Barrales-Ruiz (Center of Economics for Sustainable Development (CEDES), Faculty of Economics and Government, Universidad San Sebastian and Universidad Catolica de la Santısima Concepcion.); Ivan Mendieta-Muñoz (Department of Economics, University of Utah) |
| Abstract: | This paper examines the changes in the dynamic interactions between aggregate demand and income distribution in the USA. We focus on two periods that capture the relevant characteristics before and after contemporary neoliberal capitalism. We study the interactions between aggregate demand and income distribution in both periods using structural quantile vector autoregression models. This allows us to assess the informational content of the dynamic interactions at all parts of the relevant distributions, including the potential tail risks. The results show evidence of important reductions in the profit-led effect across the whole distribution of aggregate demand during neoliberalism; while profit squeeze dynamics have decreased at most parts of the distribution of income but have increased its downside risk, thus becoming more heterogeneous across the distribution of income. Notwithstanding the underlying transmission mechanisms have remained unaltered across the two periods, our results highlight that the interactions between aggregate demand and income distribution have become a more complex phenomenon to study since the mid-1980s. |
| Keywords: | Aggregate demand, income distribution, tail risks, quantile vector autoregression, neoliberalism |
| JEL: | D33 E11 E12 E32 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2414 |
| By: | Eduardo da Motta e Albuquerque (Cedeplar/UFMG) |
| Abstract: | This paper discusses contemporary changes in the global capitalistic dynamic and their implications for political elaboration. The challenges for this programmatic elaboration are huge, especially those related to internationalization of economies – the road for a global capitalism. The role of the periphery in these metamorphoses shows how strategic it is for the making of global capitalism, highlighting how this outcome is a global hierarchy that changes over time. This evaluation introduces a discussion on six contemporary problems, from global warming to wars, indicating how international they are. An agenda for global reforms is suggested to face those challenges.' |
| Keywords: | metamorphoses of capitalism, socialism |
| JEL: | P00 P5 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:cdp:texdis:td678 |
| By: | Beatriz Estulano Vieira (University of Brasilia and New School For Social Research); Jorge Thompson Araujo (University of Brasilia and World Bank) |
| Abstract: | This paper compares and contrasts Joan Robinson’s theoretical – and “mythical”, in her words – Golden Age with the real-world Golden Age of Capitalism documented in Marglin and Schor (1990). The former provided the analytical backdrop for Robinson’s (1956, 1962) economic growth model based on a two-sided relationship between profits and investment, while the latter was a post-war empirical phenomenon in developed countries characterized by high and stable growth as well as low unemployment. In the mythical Golden Age, full-employment steady-state growth results from a highly stringent set of conditions that are satisfied only accidentally: Namely, the equality over time between the natural, the warranted, and the actual rate of growth of national income. In turn, the real-world Golden Age of Capitalism was born in the context of the welfare state, a robust trade union movement, the commitment to demand management, and international leadership by the USA, within which the macroeconomic structure, the international order, the system of production, and the rules of coordination operated. The paper then argues that Joan Robinson’s economic growth model, with suitable adjustments that preserve the two-way investment-profits relationship, also offers a sound basis for the understanding of the real-world Golden Age. These adjustments are provided by Bhaduri and Marglin (1990) and Marglin and Bhaduri (1990), who allow for idle capacity in the long period and a more realistic investment function. The Bhaduri-Marglin approach provides a coherent and innovative account of real-world Golden Age, while preserving the theoretical core of the Robinsonian growth model. Therefore, this comparison exercise highlights the explanatory power of Joan Robinson’s growth model: While originally designed to show the theoretical limits of economic growth and capital accumulation in a stylized capitalist economy, it also supplied the conceptual basis for an understanding of post-war capitalism in developed countries. |
| Keywords: | Golden Age of capitalism, economic growth, capital accumulation, profit squeeze, conflict inflation |
| JEL: | B15 E62 O23 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2415 |
| By: | Cappelli, Federica; Di Bucchianico, Stefano |
| Abstract: | Given the empirical evidence showing the crucial role of income distribution and excessive consumption of richer households in determining greenhouse gas emissions, understanding their connection becomes especially important. Building on the distinction between subsistence and luxury emissions, we study where to intervene in reducing non-essential emissions. In doing so, we are able to connect the double role of luxury goods. Together with surplus production of other wage-goods, they are the reason why profits exist, but they are also the major constituent of wasteful luxury consumption and, hence, major drivers of consumer-generated greenhouse gas emissions. Among the three different scenarios ('greener consumption', 'reformist', and 'just transition') we depict, only the just transition is a viable option to respect both social and environmental boundaries. |
| Keywords: | rate of profit, luxury goods, GHG emissions, just transition, climate change |
| JEL: | Q57 Q52 B24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ipewps:306820 |
| By: | Samartzidis, Lasare; Mundt, Philipp; Schulz-Gebhard, Jan |
| Abstract: | This article examines how input relationships in fragmented production systems shape functional income inequality. We argue that input specificity - reflecting the degree of specialization in intermediate goods production - affects workers' bargaining power and, consequently, the labor share through skill premia and the disruptive potential of strikes. Using regional input-output data for European economies and a novel methodology for constructing sectoral production trees, we measure input specificity and analyze its impact on the functional income distribution. Our results suggest significant regional and sectoral differences in input specificity and reveal a robust positive association between input specificity and labor share, offering new insights into regional economic inequality. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bamber:306854 |
| By: | Giovanni Dosi; Lorenzo Cresti; Federico Riccio; Maria Enrica Virgillito |
| Abstract: | This paper posits that what has been currently understood as a new return of industrial policies is actually a vague and rhetorical usage of the notion, as the current framework lacks the proper understanding of industrial policies as instruments to firstly, orient the rate and direction of technical change; secondly, govern and shape the direction of collective answers to challenges; thirdly, promote alliances beyond different and possibly conflicting interests, bringing together actors and institutions with the ability to undertake social coordination at the benefit of society. Overall, this contribution advocates a new political economy of industrial policies, going beyond simple and mostly ineffective "incentives" such as tax deductions. |
| Keywords: | Industrial policies, global commons, decarbonization, social planning |
| Date: | 2024–12–04 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2024/32 |
| By: | Bernard Gazier (Centre d'Economie de la Sorbonne); Frédéric Bruggeman (Ex-expert auprès des comités d'entreprise) |
| Abstract: | This paper presents and discusses the idea that political democracy and social democracy must be coupled in order to successufully deal with the challenges of a necessarily radical ecological turning point. We face a double paradox here, because social dialogue nowadays is patchy and weakened, and because unions mainly relay the legitimate concerns of the workers, fearing the job losses and improverishment risks stemming from the ecological crisis as well as from the measures implemented to address it. However it is more than ever necessary to actively involve all the stakeholders, especially the workers. The paper argues that in order to do so, social dialogue must be enlarged and renewed. We proceed in four steps. First, we analyse the present difficulties of the political process and suggest that overcoming them implies among others to set out a new social contract, replacing the previous fordist one. Second, we examine the concrete ways through which the actors and stakes of environment are currently introduced in the social dialogue as it is practiced in Europe, and we show that such an introduction does not come up to the challenge. Third, we introduce a theoretical perspective, enlarging the picture and focussing on workers' "real freedom" and on the old and new forms of scarcities that our societies confront. Fourth and last, we go back to social dialogue and discuss the important transformations it needs in order to simultaneously foster workers' emancipation and the ecological turning point |
| Keywords: | Social dialogue; ecological transition; capabilities; "transitional labour markets" |
| JEL: | J22 J24 J50 J62 J80 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:mse:cesdoc:24002r |
| By: | Minh Tam Bui; Ivo Vlaev; Katsushi Imai |
| Abstract: | Ageing society poses an increasing need for elderly care and the essential role of unpaid family care in developing countries where more care burdens are imposed on women. Literature on the driver of gender care gap is limited and its association with social gender norms is both understudied and hardly measured/quantified. Using time-use data in 2014-15 and Labor Force Survey data in 2013-15 from Thailand, we first construct an altruistic time ratio for the whole sample to measure the extent to which individuals spend time on unpaid activities for others than themselves. We found that significant gender gaps in providing eldercare are associated with gender differences in altruistic time ratio. To consider the non-random selection for the elderly care, we then estimate the Tobit model with propensity score matching (PSM) for both elderly carers and non-carers and found that the social gender norm, defined as the district-level gender difference in the modes of altruistic time ratio, explains why women are more burdened with elderly care than men. To examine the underlying mechanisms behind women’s time burden, we estimate a simultaneous equation Tobit consisting of elderly care time, leisure time, and time for paid work. The results show that the social gender norm indirectly reduces elderly care time for women by significantly reducing leisure time and paid work time, while the direct effect is dominant for men. The trade-off between paid work time and elderly care time is similar for men and for women, while that between leisure time and elderly care time is greater for men. Associations between elderly care and altruism or peer pressure imply that behavioural changes with a focus on social norms and social policies inducing such changes are important to achieve more gender-equitable eldercare provision besides the state provision of long-term care. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:man:sespap:2403 |
| By: | Eoin McLaughlin (Heriot-Watt University); Paul Sharp (University of Southern Denmark, CAGE, CEPR); Christian Volmar Skovsgaard (University of Southern Denmark); Christian Vedel (University of Southern Denmark) |
| Abstract: | Agricultural cooperation is seen as a way to solve collective action problems and has been associated with high social capital and other beneficial impacts in the countryside beyond productivity increases. But what if it comes into conflict with existing private concerns? The Irish dairy cooperatives from the 1890s entered a contested market for milk, and soon became associated with various degrees of conflict: legal disputes and physical violence. We hypothesize that this led to poor social capital, manifesting in conflict during the Irish War of Independence. We analyze novel data on cooperative and private creameries, as well as measures of conflict. Our findings indicate a significant positive correlation between the presence of cooperatives and local conflict intensities, persisting even after controlling for various confounders. An instrumental variable approach based on prior specialization in dairying validates this. Cooperation might thus both reflect social capital but also have pernicious impacts on it. |
| Keywords: | Ireland, Cooperatives, Social Capital, Market Contestation |
| JEL: | N53 N54 Q13 Z13 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:hes:wpaper:0272 |
| By: | Giorgos Gouzoulis; Panagiotis Takis Iliopoulos; Giorgos Galanis |
| Abstract: | This paper examines the determinants of the income share of wage earners in the nonfinancial, private sectors of Greece since its introduction to the Eurozonein 1999. The main outcome of the integration of Greece into the Eurozone has been the financialisation of its economy, which has been particularly influential for households since it led to the rapid rise of household indebtedness. Building on recent research within industrial relations, sociology of work, and political economy, which shows that financialisation is a key driver of wage bargaining outcomes, we demonstrate that the relative size of the FIRE sectors and the increase in household debt have been negative drivers of the wage share in Greece over the last 22 years. Our findings also suggest that the employment-tied social benefits system and tertiary education provision have also been important determinants of workers’ income share. |
| Keywords: | Financialisation, Household Debt, EU Integration, Wage Share, Greece |
| Date: | 2024–10–18 |
| URL: | https://d.repec.org/n?u=RePEc:ete:leerwp:724850 |