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on Heterodox Microeconomics |
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Issue of 2025–11–03
nineteen papers chosen by Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza” |
| By: | Russo, Alberto |
| Abstract: | Drawing on Peter Turchin’s structural-demographic theory, this paper provides a preliminary examination of how rising inequality and financial liberalization contribute to political instability through the interplay of mass immiseration and elite overproduction. We capture these dynamics through a simplified agent-based macroeconomic model, introducing two structural shocks - growing inequality and financial liberalization - that reflect the transformations reshaping advanced economies in recent decades, a process intertwined with political disintegration. A wealth tax on the richest households can reduce political fragmentation and improve economic performance, but lasting resilience will require embedding such measures within a broader rethinking of the policy paradigm that has prevailed since the 1980s. |
| Keywords: | growing inequality; financial liberalization; political instability; agent-based model |
| JEL: | C63 D31 E02 |
| Date: | 2025–10–03 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126357 |
| By: | L. Randall Wray |
| Abstract: | This working paper integrates the credit money approach (associated with Post Keynesian endogenous money theory) with the state money approach (associated with Modern Money Theory) by drawing on Wray's 1990 book (Money and Credit in Capitalist Economies: The Endogenous Money Approach, Edward Elgar), his 1998 book (Understanding Modern Money: the Key to Full Employment and Price Stability, Edward Elgar), and his 2004 edited book (Credit and State Theories of Money: The Contributions of A. Mitchell Innes, Edward Elgar). New sources and interpretation of the history of money make it clear that there is no contradiction between state money and private credit money--each played a role in the creation of the modern monetary system. Indeed, today's system was created by bringing state money into the private money giro, thereby strengthening both. |
| Keywords: | credit money; state money; Modern Money Theory (MMT); Bank of England; fiat money; giro money; history of money; central bank; nominalism; origins of money |
| JEL: | B25 B52 E42 E58 E62 N11 N20 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1076 |
| By: | Soriano, Carles |
| Abstract: | Market and planned economies are considered antagonistic types of material production systems in modern society. Since they are thermodynamic systems, the entropy and energy requirements of each system can be estimated based on its specific characteristics and dynamics. The results show that the entropy and energy requirements of a market economy are much higher than those of a planned economy. This is due to competition for profit, the driving mechanism of market dynamics and self-organization, which is absent in a planned economy. Thus, the entropy and energy needs of a planned economy approach the minimum magnitudes required of a modern economic system that is irreversibly driven to equilibrium with an external reservoir supplying low-entropy energy. Dissipative systems on Earth absorb low-entropy energy from an external source, using it to gain internal order and stability while emitting high-entropy energy. Conversely, a market economy increases its internal entropy during energy exchange with an external reservoir. Large internal entropy in a market economy does not result from summing the entropy of individual capitals. Rather, it results from self-similar dynamics driven by competition for profit, which manifests as larger system property magnitudes. |
| Keywords: | capital, competition, entropy, probabilistics, profit, self-similarity |
| JEL: | P51 |
| Date: | 2025–10–11 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126451 |
| By: | Alberto Baccini |
| Abstract: | This article challenges the conventional reading of Francis Ysidro Edgeworth by reconstructing his intellectual project of unifying the moral sciences through mathematics. The contribution he made in the first phase of his writing, culminating in \textit{Mathematical Psychics}, aimed to reconfigure utilitarianism as an exact science, grounding it in psychophysics and evolutionary biology. In order to solve the utilitarian problem of maximizing pleasure for a given set of sentient beings, he modeled individuals as ``quasi-Fechnerian'' functions, which incorporated their capacity for pleasure as determined by their place in the evolutionary order. The problem of maximization is solved by distributing means according to the individuals' capacity for pleasure. His radical anti-egalitarian conclusions did not stem from an abstract principle of justice, but from the necessity to maximize welfare among naturally unequal beings. This logic was applied not only to sentients of different evolutionary orders, such as Mr. Pongo, a famous gorilla, and humans, but also to human races, sexes, and classes. The system, in essence, uses the apparent neutrality of science to naturalize and justify pre-existing social hierarchies. This analysis reveals that the subsequent surgical removal of his utilitarianism by economists, starting with Schumpeter, while making his tools palatable, eviscerates his overarching philosophical system. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.20854 |
| By: | Emilio Barucci; Andrea Gurgone; Giulia Iori; Michele Azzone |
| Abstract: | We analyse financial stability and welfare impacts associated with the introduction of a Central Bank Digital Currency (CBDC) in a macroeconomic agent-based model. The model considers firms, banks, and households interacting on labour, goods, credit, and interbank markets. Households move their liquidity from deposits to CBDC based on the perceived riskiness of their banks. We find that the introduction of CBDC exacerbates bank-runs and may lead to financial instability phenomena. The effect can be changed by introducing a limit on CBDC holdings. The adoption of CBDC has little effect on macroeconomic variables but the interest rate on loans to firms goes up and credit goes down in a limited way. CBDC leads to a redistribution of wealth from firms and banks to households with a higher bank default rate. CBDC may have negative welfare effects, but a bound on holding enables a welfare improvement. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.21071 |
| By: | Islam, Asiya; Galeano Alfonso, Silvana; Lorena Pla, Jésica |
| Abstract: | Building on recent interventions in platform work scholarship that centre social reproduction and draw attention to informal economies in the Global South, this paper advances a ‘working lives’ framework to account for the entanglements of production/reproduction, informality and precarity, and gender norms in the shaping of platform work. Based on interviews with women engaged in delivery work through digital platforms in Buenos Aires, Argentina and Delhi, India, the paper shows that women enter platform delivery work compelled by adverse socio-economic conditions and work-life histories of informality. Women organise their participation in platform delivery work, making use of its location flexibility, for and around the needs of the household. Further, they operationalise this flexibility to navigate gendered constraints, such as, curtailed radius of work to ensure safety and continued responsibility for housework and childcare. The paper, empirically novel in accounting for narratives of women in the Global South, offers the analytical framework of ‘working lives’, combining long-term and place-based perspectives with everyday perspectives, with attention to social norms, for research on platform work globally. |
| Keywords: | digital technology; gender inequalities; Global South; informality; platform work; precarity; social reproduction |
| JEL: | R14 J01 |
| Date: | 2025–10–20 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128920 |
| By: | Clara Punzi |
| Abstract: | The rapid growth of the digital platform economy is transforming labor markets, offering new employment opportunities with promises of flexibility and accessibility. However, these benefits often come at the expense of increased economic exploitation, occupational segregation, and deteriorating working conditions. Research highlights that algorithmic management disproportionately impacts marginalized groups, reinforcing gendered and racial inequalities while deepening power imbalances within capitalist systems. This study seeks to elucidate the complex nature of digital platform work by drawing on feminist theories that have historically scrutinized and contested the structures of power within society, especially in the workplace. It presents a framework focused on four key dimensions to lay a foundation for future research: (i) precarity and exploitation, (ii) surveillance and control, (iii) blurring employment boundaries, and (iv) colonial legacies. It advocates for participatory research, transparency in platform governance, and structural changes to promote more equitable conditions for digital platform workers. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.19450 |
| By: | Wang, Gaowang; Zou, Heng-fu |
| Abstract: | In this article, we develop a growth theory by integrating the Weber-Schumpeterian spirit of capitalism into Romer's (1990) model of endogenous technological change. The spirit of capitalism influences innovation and long-run growth through capital accumulation and the reallocation of human capital, mediated by a price mechanism. It also helps prevent economic stagnation arising from a limited stock of human capital. Explicit solutions illustrate the qualitative effects of the spirit of capitalism on growth. Using calibrated parameters based on U.S. data, we find this effect is quantitatively significant, accounting for more than half of U.S. long-run growth. |
| Keywords: | Weber's Spirit of Capitalism; Schumpeter's entrepreneurial psychology; Endogenous Growth; Economic Stagnation; Heterogeneous Ability |
| JEL: | E1 O3 O4 |
| Date: | 2025–10–18 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126518 |
| By: | Tucci, Candelaria Fernández |
| Abstract: | This paper extends the post-Keynesian model of the firm to an open-economy context to investigate the determinants of firms' target profit rates in developing and emerging economies (DEEs) and the ways in which these rates have been affected by the financialisation phenomenon. Our findings show that firms' intrinsic vulnerabilities, persistent risks, and tighter financial constraints-stemming from the hierarchical structure of the international monetary system-lead to structurally higher target profit rates in DEEs compared to those in advanced economies. At the microeconomic level, we show that financialisation, in the form of increasing foreign indebtedness, can induce the firm to raise profitability targets through the finance, preference, and distribution transmission channels. Moreover, by establishing the link between the microeconomic effects of financialisation with its macroeconomic implications, we identify the conditions under which the changes in firm behaviour induced by financialisation generate either the same macroeconomic outcomes or micro-macro fallacies, giving rise to a paradox of profits, a paradox of growth, a paradox of risk and a paradox of liquidity. |
| Keywords: | target profit rates, financialisation, theory of the firm, foreign indebtedness, portfolio dollarisation |
| JEL: | D21 E12 F33 F41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ipewps:330332 |
| By: | Alberti, Manfredi; Telesca, Giuseppe |
| Abstract: | This paper aims at challenging a consolidated reading of the 1970s as an age of crisis par excellence, from the perspective of Britain and Italy. It focuses on both real economic facts and their interpretation by economists, “second hand dealers in economic ideas” and policy makers. We reflect on the actors who “proclaimed” the crisis in the 1970s and the recipes they suggested to overcome it. We argue that the rise of neoliberalism and the paradigm change in economic policies were also the product of a narrative construction, influenced by political and ideological reasons, which contrasted an extremely negative picture of the 1970s to a very positive, nearly caricatural, representation of the 1980s. |
| Keywords: | 1970s crisis; narrative economics; Keynesianism; neoliberalism; monetarism. |
| JEL: | B0 N1 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126624 |
| By: | Ngunza Maniata, Kevin |
| Abstract: | The recent ascent of Anthropic, a United States-based artificial-intelligence company founded in 2021 by former OpenAI executives, has reignited the debate over whether the global AI boom represents sustainable technological transformation or a new financial bubble. With a private valuation surpassing 180 billion USD and projected annualized revenue exceeding 20 billion USD by 2026, Anthropic embodies both the promise of rapid innovation and the risks of speculative exuberance. This paper examines the firm’s growth within the theoretical frameworks of Schumpeterian innovation, Minskyan financial cycles, and contemporary analyses of digital-economy concentration. Drawing on publicly available financial data, corporate disclosures, and secondary literature, it interprets Anthropic’s trajectory as a case study in the financialization of cognition. The discussion highlights how alliances with Amazon and Google have turned frontier AI into an infrastructure-dependent oligopoly, while unresolved issues of data ownership and legal accountability question the durability of such valuations. The study concludes that Anthropic’s rise illustrates the dual nature of modern technological capitalism: the capacity for exponential value creation tempered by systemic fragility and institutional lag. |
| Keywords: | Artificial Intelligence; Anthropic; Financialization; Valuation; Technological Innovation; Industrial Organization; Intellectual Property; Speculative Cycles. |
| JEL: | G32 K11 L86 M21 O33 |
| Date: | 2025–10–18 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126512 |
| By: | Buchner, Martin; Rose, Julian; Johannesson, Magnus; Malan, Mandy; Ankel-Peters, Jörg |
| Abstract: | Consensus is crucial to authoritative science, as is replicability. Yet, in economics and the social sciences, the publication of contradictory replications often sparks fierce debates between replicators and original authors. This paper investigates whether experts can reach a consensus on a famous yet unsettled debate about the robustness of the seminal paper by Acemoglu, Johnson, and Robinson (AJR, 2001) following a replication by Albouy (2012). We recruited 352 experts mainly from the pool of scholars citing one of the involved or similar articles. Through a structured online questionnaire, we assess the extent to which these experts align with AJR or Albouy. Our findings indicate no consensus on whether the original results hold after Albouy's replication, although there is a slight tendency among experts to side with the replicator. Exploratory heterogeneity analysis suggests that experts with greater academic credentials are more likely to align with Albouy. Our study demonstrates a potential way to scope scientific consensus formation and navigate replication debates and contested literatures. |
| Abstract: | Konsens ist für die autoritative Wissenschaft ebenso zentral wie Replizierbarkeit. In den Wirtschafts- und Sozialwissenschaften führen widersprüchliche Replikationen jedoch häufig zu intensiven Auseinandersetzungen zwischen den Replizierenden und den ursprünglichen Autorinnen und Autoren. Dieser Beitrag untersucht, ob sich Expertinnen und Experten in einer bekannten, aber bis heute ungelösten Debatte über die Robustheit der einflussreichen Studie von Acemoglu, Johnson und Robinson (AJR, 2001) nach der Replikation durch Albouy (2012) auf einen gemeinsamen Standpunkt einigen können. Wir haben 352 Expertinnen und Experten rekrutiert, überwiegend Forschende, die AJR oder ähnliche Arbeiten zitieren. Mithilfe eines strukturierten Online-Fragebogens erfassen wir, in welchem Maße sie mit den Ergebnissen von AJR oder Albouy übereinstimmen. Unsere Ergebnisse zeigen, dass kein Konsens darüber besteht, ob die ursprünglichen Befunde nach Albouys Replikation Bestand haben - auch wenn eine leichte Tendenz erkennbar ist, sich auf die Seite des Replikators zu stellen. Eine explorative Heterogenitätsanalyse deutet darauf hin, dass Expertinnen und Experten mit höherer akademischer Qualifikation und Erfahrung eher Albouys Einschätzung teilen. Die Studie zeigt darüber hinaus einen möglichen Weg auf, wie sich die Bildung wissenschaftlichen Konsenses empirisch erfassen und der Umgang mit Replikationsdebatten und kontroverser Literatur besser verstehen lässt. |
| Keywords: | replication, scientific consensus, scientific credibility, expert survey, institutions and growth |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:330180 |
| By: | Fenghua Wen; Xieyu Yin; Chufu Wen |
| Abstract: | We develop a theory of demand economics for an era of material abundance. The binding constraint on growth has shifted from insufficient aggregate demand to inadequate demand-tier upgrading. Our result is that, the new engine of growth lies in upgrading the demand hierarchy: higher-tier demands generate larger value-creation multipliers. The key mechanism is education-driven utility management. Education transforms the social utility function, raises the utility of higher-tier goods, and directs resources toward higher-value domains; this warrants a policy reorientation away from short-run aggregate stimulus toward education-centered, long-horizon investments in human capital. Methodologically, we build an estimable general-equilibrium framework. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.17121 |
| By: | Francesco Molica; Francesco Cappellano; Teemu Makkonen |
| Abstract: | Since a few years, the international economic system has been experiencing growing fragmentation and uncertainty. However, research on Regional Innovation Systems (RIS) has yet to comprehensively engage with this phenomenon, despite its (spatial) significance. The paper contributes to addressing this gap, in particular by exploring the potential implications for RIS arising from the decline and disruptions of international knowledge flows associated with economic de-globalization. The study seeks to define a theoretical approach grounded in evolutionary geography to assess this trend. It applies such perspective to three types of RIS—metropolitan, old industrial, and peripheral—across five analytical dimensions that capture the structural and relational factors shaping RIS exposure and resilience to de-globalization. The discussion highlights that, in the face of knowledge and technological disruptions arising from international instability, metropolitan RIS may leverage their diversified knowledge bases, dense institutional frameworks, and strong global connectivity to successfully reconfigure external linkages; old industrial RIS may follow mixed trajectories, with the risk of deepening economic and policy lock-ins; while peripheral RIS—due to their reliance on external knowledge sources and limited endogenous innovation capacity—emerge as the most vulnerable. |
| Keywords: | De-globalization; Knowledge flows; Regional innovation system; Resilience |
| Date: | 2025–10–22 |
| URL: | https://d.repec.org/n?u=RePEc:ict:wpaper:2013/395461 |
| By: | Dotti, Nicola Francesco (Directorate-General for Research and Innovation, European Commission); Canton, Erik (Directorate-General for Research and Innovation, European Commission); Benoit, Florence (Directorate-General for Research and Innovation, European Commission); Cavicchi, Bianca (Directorate-General for Research and Innovation, European Commission); Di Girolamo, Valentina (Directorate-General for Research and Innovation, European Commission); Ravet, Julien (Directorate-General for Research and Innovation, European Commission); Steeman, Jan-Tjibbe (Directorate-General for Research and Innovation, European Commission) |
| Abstract: | The allocation of public funding for research and innovation (R&I) projects is a fundamental element for every R&I policy, at the EU level and elsewhere. While the mainstream approach is based on peer review and merit-based funding where the proposals with the highest scores receive funding, several alternative models have been proposed, among which the so-called ‘funding-by-lottery’ has received particular attention. Despite few empirical experimentations, the discussion on these alternative models for R&I funding distribution seems relevant because it questions the fundamental elements and values of peer review-based systems. This literature review aims to explore alternative R&I funding models to investigate the arguments in favour or against these models that question the mainstream approach based on the peer review and merit-based funding. |
| Keywords: | research funding, funding-by-lottery, peer review, merit-based funding, research and innovation |
| JEL: | O32 O38 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-24-045-en-n |
| By: | Rodrigo Barra Novoa |
| Abstract: | The study explores the evolution of Chile's industrial policy from 1990 to 2022 through the lens of state capacity, innovation and endogenous development. In a global context where governments are reasserting their role as active agents of innovation, Chile presents a paradox. It is a stable and open economy that has expanded investment in science and technology but still struggles to transform this effort into sustainable capabilities. Drawing on the works of Mazzucato, Aghion, Howitt, Mokyr, Samuelson and Sampedro, the study integrates evolutionary economics, public policy and humanist ethics. Using a longitudinal case study approach and official data, it finds that Chile has improved its innovation institutions but continues to experience weak coordination, regional inequality and a fragile culture of knowledge. The research concludes that achieving inclusive innovation requires adaptive governance and an ethical vision of innovation as a public good. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.20863 |
| By: | Barrales-Ruiz, Jose; Kim, Gyeongho; Mendieta-Munoz, Ivan |
| Abstract: | This paper provides an empirical analysis of the dynamic determinants of US labor productivity growth by considering that the latter is an endogenous outcome, mainly influenced by changes in the size of the economy and relative labor costs. Specifically, we consider that changes in GDP, real wages, wages relative to the price of capital, and investment effect simultaneously the evolution of labor productivity growth. We focus on studying whether the response of the latter to these effects has been stable or time-varying by adopting a flexible hybrid time-varying parameter Bayesian vector autoregression with stochastic volatility empirical framework. This allows us identify whether none, some, or all lagged and contemporaneous coefficients in the equations in the model are constant or time-varying via model selection. We find: (i) evidence supporting the view of time-varying endogenous labor productivity growth dynamics; (ii) that the response of labor productivity growth to GDP growth has tended to increase over time; and (iii) that the response of labor productivity growth to real wage growth has tended to decrease over time. Our findings have important policy recommendations that can help to improve the future performance of labor productivity growth in the USA. |
| Keywords: | labor productivity growth, induced technical change effect, Kaldor-Verdoorn effect, model selection, time-varying parameter vector autoregressions |
| JEL: | B50 C11 C32 C52 E12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:330302 |
| By: | Danzer, Natalia (Freie Universität Berlin); Kranton, Rachel; Larysz, Piotr (Freie Universität Berlin); Senik, Claudia (Paris School of Economics) |
| Abstract: | How do gender identity and norms relate to happiness? This paper takes advantage of the 2024 European Social Survey, which asks respondents to report their feelings of femininity and masculinity, and studies the relationships between these self-assessments, (non-)conformity to gender norms, and life satisfaction. The results show a robust asymmetry between men and women. For men, feeling more masculine, behaving in ways more typical of men, and life satisfaction are all positively cross-correlated. For women, while feeling more feminine and life satisfaction are similarly positively correlated, behaving in ways more typical of women is, in contrast, associated with lower life satisfaction. These patterns vary across European regions, potentially reflecting different histories. The results are robust to alternative measures of typical behavior of men and women and subjective well-being. The findings support theories of gender identity and reveal possible trade-offs implied by gender norms for women. |
| Keywords: | life satisfaction, measures of norms, masculinity, femininity, gender identity, subjective well-being |
| JEL: | I31 J16 Z10 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18209 |
| By: | Jose Eduardo Alatorre; Gabriel Porcile; Julia Juarez; Juan Carlos Moreno-Brid |
| Abstract: | The paper presents a Kaleckian extended model exploring sustainable development, defined as growth that is economically stable, socially inclusive, and environmentally respectful. The model links CO2 emission trends with public investments in green capabilities, represented by the share of renewables in total energy supply. It incorporates three key actors: green capitalists (G), brown capitalists (B), and workers (R), whose alliances influence taxes, social expenditure, and green capabilities investments. Three political coalitions are formed: green-red (GR), green-brown (GB), and red-brown (RB). The GR coalition promotes sustainable and inclusive growth but may face trade imbalances depending on public investment's ability to boost non-price competitiveness. The GB alliance yields sustainable but non-inclusive growth with a high long-term deficit. The RB coalition results in environmentally unsustainable outcomes but may produce stable growth with income redistribution during high commodity export demand. Applying the model to Mexico highlights fiscal space challenges for public investment and income redistribution amidst emissions reduction targets. |
| Keywords: | Climate |
| JEL: | B50 Q43 Q56 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1074 |