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on Heterodox Microeconomics |
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Issue of 2026–06–08
eighteen papers chosen by Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza” |
| By: | Shekhtman, Boris M. |
| Abstract: | The aim of this article is to demonstrate the theoretical incoherence and practical futility of the longstanding public debate “Capitalism vs. Socialism”. The paper offers a conceptual and theoretical analysis of the term “socialism” within the framework of Marx’s philosophical–economic theory. It argues that contemporary discussions of capitalism and socialism are distorted by entrenched terminological errors that were consolidated and institutionalised within the Soviet ideological model, whose influence continues to shape political and intellectual discourse today. By drawing a systematic distinction between Marx’s scientific theory—comprising dialectical materialism, historical materialism, and political economy—and the ideological construct developed during the Soviet period and commonly known as Marxism, the author demonstrates that the concept of a “socialist social formation” is theoretically inconsistent and lacks any foundation within the framework of historical materialism. The analysis shows that, according to Marx’s theoretical system, the type of social formation is determined by the mode of production and, therefore, by the type of labour employed. From this standpoint, both private and state ownership are capitalist in character when the production process is based on wage labour. Hence, the so-called “socialist” states of the twentieth century should be regarded as systems of absolute state capitalism—a form of capitalism in which the state is the sole and monopolistic owner of all means of production. The article further argues that the modern use of the term “socialism” results from a semantic substitution: instead of denoting a theoretically invalid type of social formation, it now refers to a social function of the capitalist state—namely, redistributive policy within the capitalist economic system. Clarifying these distinctions enables a more accurate understanding of Marx’s theoretical legacy and shows that, unlike the ideological doctrine of Marxism, his philosophical–economic theory supports rather than rejects the principles of a free society: private property, free labour, and economic efficiency. |
| Keywords: | Capitalism, Socialism, Soviet Marxist ideology, terminological confusion, Marx’s philosophical–economic theory, Historical Materialism, wage labour, Absolute State Capitalism, Semantic Substitution, free society. |
| JEL: | B24 P12 P2 |
| Date: | 2026–04–23 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128837 |
| By: | Obregon Diaz, Carlos Federico |
| Abstract: | This paper reconstructs Adam Smith’s moral philosophy as a theory of social coordination grounded in moral sentiments and institutional structures, and extends it through the Economics of Belonging. It argues that economic participation depends on structures of belonging that integrate individuals into institutional systems. The paper develops a framework in which effective demand is understood as the economic expression of belonging, and the middle class as its structural carrier. It shows that sustained economic development depends on the expansion of socially integrated participation rather than solely on capital accumulation. The analysis contributes to institutional economics, moral economy, and development theory by providing a unified framework linking ethics, institutions, and macroeconomic dynamics. |
| Keywords: | Belonging; Effective Demand; Moral Economy; Adam Smith; Institutional Economics; Middle Class; Economic Development; Inclusion |
| JEL: | B12 B41 D64 O11 O15 Z13 |
| Date: | 2026–04–23 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128832 |
| By: | Davis, John B. (Department of Economics Marquette University); (Department of Economics Marquette University) |
| Abstract: | Behavioral Macroeconomics draws on cognitive psychology’s errors and biases approach to argue that psychological factors acting on individual choice affect how the economy functions. Keynes drew on psychology in his ‘beauty contest’ account of convention to explain individual investor expectations in terms of the average expectation of all investors. This assumes individual investors identify with the group of all investors, anticipating social psychology social identity analysis. Kaleckian Post-Keynesian Economics focuses on distributional conflict between capital and labor. This also assumes individual capitalists and laborers identify with groups of capitalists and laborers. Stratification Economics makes social group identity the basis on which economies operate as systems of intergroup inequalities. This raises two related questions: what role do economic agents’ perceptions of their social identities have in explaining economies, and what does this imply for the Keynesian understanding of the income determination process and economic policy recommendation? This chapter discusses how social identity is understood in Stratification Economics to answer these questions. |
| Keywords: | Behavioral macroeconomics, Keynes' 'beauty contest, ' social group identity, HANK models, Kaleckian Post-Keynesian economics, Stratification economics, Keynesian income determination |
| JEL: | B22 D01 D91 E11 E12 E71 Z13 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:mrq:wpaper:2026-02 |
| By: | Claude Diebolt; Romain Diebolt; Tapas Mishra |
| Abstract: | This contribution revisits the origins of the concept of creative destruction by returning to Werner Sombart’s Krieg und Kapitalismus (1913). Although Sombart never used the expression schöpferische Zerstörung, a systematic page-by-page reading shows that he articulated a destruction–creation mechanism that anticipates the structural logic later formalized by Joseph Schumpeter. Sombart presents war as simultaneously destructive and generative, arguing that fiscal, institutional, and ecological ruptures are not peripheral to capitalism but central to its emergence. His analysis of deforestation, scarcity, and technological substitution (especially the shift from wood to coal and coke) offers an early model of how material crises can trigger innovations that reshape production systems and energy regimes. The article also examines the subsequent marginalization of Sombart’s contribution, situating it within broader methodological and political shifts in twentieth-century economics. It contrasts Sombart’s historically grounded mechanism with the evolution of Schumpeter’s thinking from 1911 to 1942, when the canonical formulation of creative destruction finally appeared. More broadly, the paper reflects on the dynamics of intellectual attribution in economic thought, illustrating how concepts often achieve recognition not through priority of insight but through subsequent elaboration and institutionalization. Reassessing Sombart thus enriches the genealogy of creative destruction and deepens our understanding of contemporary debates on innovation, energy transitions, war-related technological change, and the macroeconomic implications of AI. Building on recent work by Acemoglu, Mokyr, and others, the article argues that Sombart emerges not as the inventor of the term but as the first thinker to articulate its structural logic, and that recognizing this lineage enhances both historical scholarship and contemporary economic analysis. |
| Keywords: | Creative destruction; Werner Sombart; Joseph Schumpeter; History of economic thought; War and capitalism; Technological change; Structural transformation. |
| JEL: | B00 B31 O30 N00 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ulp:sbbeta:2026-15 |
| By: | Obregon Diaz, Carlos Federico |
| Abstract: | This paper presents a theoretical framework integrating artificial intelligence (AI), institutional economics, and the concept of belonging. It argues that AI, while representing a major technological innovation, lacks autonomous agency because it is not grounded in biological evolution or emotional structures. As a result, its economic and social effects depend on institutional configurations and patterns of participation. The paper analyzes the implications of AI for labor markets, income distribution, and social cohesion, emphasizing the role of middle-class formation and effective participation in sustaining stable development paths. It proposes that AI can either reinforce exclusionary equilibria or support inclusive growth depending on institutional design. The framework contributes to development theory and political economy by incorporating belonging as a foundational determinant of economic outcomes. |
| Keywords: | Artificial Intelligence; Philosophy of Belonging; Emotions; Human Intelligence; Social Ontology; Institutional Economics; Economy of Belonging; Middle Class; Technological Change; Automation; Labor Markets; Inequality; Power and Domination; Evolutionary Psychology; Digital Capitalism; AI Ethics; Social Belonging; Development Economics; Political Economy; Affective Simulation |
| JEL: | D02 D91 I31 J24 J31 O33 O40 P16 |
| Date: | 2026–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128759 |
| By: | Magdalena Rath (University of Graz, Austria); Patrick Mellacher (University of Graz, Austria) |
| Abstract: | We develop an agent-based model to study how the Covid-19 pandemic may have affected the distribution of paid and unpaid work in families. The behavior of the agents in our model is informed by theories from psychology and sociology, as well as by economic considerations. We study two channels which were important during the pandemic: changes in time availability, resulting from an increase in unemployment and short-time work, and increased care work, triggered by the closure of kindergartens and schools, among others. Starting from a baseline scenario which is empirically calibrated with Austrian data on time use, we show that, on its own, each channel only exerts marginal post-pandemic effects. In combination, however, the model suggests that these channels promote a small, but significant egalitarian redistribution of paid and unpaid work. Social influence plays a crucial role in these results. A sensitivity analysis suggests that long-run regressive effects would also be possible, but only if the increased time availability fell to a much stronger extent on women, which seems to be empirically implausible. |
| Keywords: | opinion dynamics, gender norms, agent-based model, lockdown, care work |
| JEL: | C63 D13 J16 J22 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:grz:wpaper:2026-09 |
| By: | Marián Suchánek (Masaryk University, Faculty of Economics and Administration); Ján Krchňavý (Masaryk University, Faculty of Economics and Administration) |
| Abstract: | The nature of money is within the discipline of economics typically analysed merely by way of listing its functions grounded in properties of money things. But the discourse has recently more explicitly turned to addressing this foundational question of “What is money?” from the perspective of social ontology that sees money as a social phenomenon. We argue that any such venture should be able to account for the hierarchical structure of money. This argument integrates three distinct aspects of money i.) that in any community there is usually not one but multiple kinds of money; ii.) that these monies are of different qualities and therefore are structured within a hierarchy, and iii.) that these qualitative differences that distinguish individual kinds of money ultimately pertain to the rights and obligations that define each form of money. Building on recent debates about the hierarchy of money in economics—particularly The Money View and Modern Money Theory—this paper seeks to extend these discussions into the domain of social ontology, using the framework of social positioning developed by the Cambridge Social Ontology Group. |
| Keywords: | money; institutions; hierarchy of money; social ontology; money view; social positioning theory |
| JEL: | E42 B41 Z13 E51 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:mub:wpaper:2026-03 |
| By: | Lamont, Dougald |
| Abstract: | Given that money is so ubiquitous, it is surprising that neoclassical macroeconomic theories, among other monetarist schools, do not model money: it is assumed. As a consequence, their theories often analyze the economy by a kind of mathematical analogy, This manuscript starts with understanding money by describing the public and private legal processes by which it is created. This reveals that all money is created as specific kind of legal agreement: a forward contract. This concept of money is fundamentally different than the monetarist theories. It is not a commodity based on past work, but an agreement from fulfilling future promises. Archaeological evidence from Mesopotamia that pre-date the alphabet suggests this is what money has always been. Such contracts were the first examples of writing. To help understand mechanisms at work in generating value based on uncertainty and partial information, I provide a philosophy of money that draws the links between Keynes’ concept of probability, a/h, and Claude Shannon and Norbert Weiners’ formulas and concepts of information as entropy. I’ll then examine some of the implications and consequences for monetarist macroeconomics, including on what could be done differently to assess and address the many crises besetting the world. |
| Keywords: | Monetary Sovereignty; Private Credit Creation; Forward Contracts; Chartalism (State Theory of Money); Debt Deflation; Monetarist Critique; FIRE Sector; Information Theory; Entropy (Economic); a/h Probability; Cybernetics; 80/20 Power Law (Pareto Principle); Fractal Distribution; Legal Bond; Cuneiform/Mesopotamian Accounting; Double-Entry Bookkeeping; PolyCrisis; Rule of Law; Greek Economic Crisis; Hyperinflation (Germany/Venezuela); The Great Depression (Canada) |
| JEL: | A1 B52 C60 D31 D80 E12 E51 E52 E58 G01 H6 H60 H63 K0 |
| Date: | 2026–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128767 |
| By: | Vienneau, Robert |
| Abstract: | Consider a model of the production of commodities by means of commodities. This article illustrates how to construct a Hayekian triangle with such a model, in the case with circulating capital. Capital-theory paradoxes, specifically the reswitching of techniques, have implications for such triangles. The use of such triangles to tell the stories that Austrian economists want to tell cannot be sustained. The switch point that is normal in a reswitching example, from a mainstream neoclassical perspective, has perverse Hayekian triangles. The switch point that is perverse from a mainstream perspective has Hayekian triangles consistent with the Austrian story about how a decreased time preference rotates the triangle to lengthen the structure of production. |
| Keywords: | Cambridge Capital Controversy; Hayekian Triangles; Reswitching of techniques |
| JEL: | B51 B53 C67 D24 E43 |
| Date: | 2026–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128751 |
| By: | Obregon Diaz, Carlos Federico |
| Abstract: | This paper presents a theoretical and historical analysis of economic development based on the concept of belonging. It argues that existing growth theories fail to explain cross-country differences because they neglect institutional inclusion and the role of the middle class in expanding effective market demand. The Economy of Belonging framework interprets development as a function of institutional arrangements that determine participation in markets and access to rights. Comparative evidence from Russia, Latin America, and East Asia shows that successful development depends on the expansion of a broad middle class and the alignment of investment with technological frontiers. The paper contributes to the literature by integrating institutional economics, growth theory, and political economy into a unified framework centered on belonging. |
| Keywords: | • Economic development • Growth theory • Institutional economics • Middle class • Effective demand • Comparative development • Political economy • Economic history • Development policy • Market size |
| JEL: | B52 F63 N10 O10 O11 O15 O43 O47 |
| Date: | 2026–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128765 |
| By: | Van Den Hauwe, Ludwig |
| Abstract: | In this age of rising technocracy economists are called upon to re examine the methodological and epistemological foundations of their science. After an introduction concerning the nature and importance of economic methodology, this paper contains four sections. The first provides a summary overview of the development of economic methodology in the 20th century. The second reviews some aspects of what undoubtedly constitutes the most important methodological debate of the 20th century, namely the instrumentalism-versus-realism debate. The third section is devoted to the ongoing critique and disagreement brought forward by the Austrian School of economics in the domain of methodology. In the final section we consider the question “Where is economics going?”. |
| Keywords: | Methodology; Economic Methodology; Methodological Dualism; Methodological Monism; Instrumentalism-Realism Debate; Austrian School. |
| JEL: | B40 B41 |
| Date: | 2026–03–30 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129032 |
| By: | Davis, John B. (Department of Economics Marquette University); (Department of Economics Marquette University) |
| Abstract: | W. E. B. Du Bois and Thorstein Veblen employed the concept of relative position. Du Bois' thinking reflects how for Stratification economics people's relative positions explain racial discrimination and segregation. Veblen reflects how for Institutionalist economics people's relative positions explain the role institutions have in the evolution of the economy. Racism in the US marginalized Du Bois' contributions, leaving a divide between his and Veblen's thinking and also between Stratification economics and Institutionalist economics. This has limited the perceived importance of the concept of relative position in economics, leaving it with the 'position-less' asocial individualism of Neoclassical-mainstream economics. This paper compares Du Bois and Veblen's conceptions of the concept of relative position and discusses the potential common ground it creates for Stratification economics and Institutionalist economics. |
| Keywords: | relative position, Du Bois, Veblen, racism, Stratification economics, Institutionalist economics |
| JEL: | B15 B31 B41 Z13 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:mrq:wpaper:2026-01 |
| By: | Obregon Diaz, Carlos Federico |
| Abstract: | This paper develops the Economics of Belonging as a structural extension of the capability approach. It proposes that capabilities are not primary units of analysis but outcomes of institutional belonging, defined as effective participation within institutional structures. The analysis integrates institutional economics, social choice theory, mechanism design, and game theory to demonstrate that aggregation from individual states is structurally infeasible under incomplete information and multiple equilibria. A dynamic framework is developed in which belonging drives effective demand and sustained economic growth through middle-class expansion. The paper contributes to development theory by providing a unified institutional and relational framework linking participation, demand, and long-term growth. |
| Keywords: | Economics of Belonging; Institutions; Effective Demand; Economic Development; Social Choice; Game Theory; Middle Class |
| JEL: | B41 D02 O11 O43 |
| Date: | 2026–04–21 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128817 |
| By: | Obregon Diaz, Carlos Federico |
| Abstract: | This paper develops a theoretical model of the firm based on the concept of belonging, defined as the degree of relational and institutional integration of individuals within an organization. It proposes that belonging determines the structure of internal competition, cooperation, and overall firm performance. The model distinguishes between low-belonging equilibria characterized by internal conflict and inefficiency, and high-belonging equilibria characterized by cooperation and improved economic outcomes. The framework incorporates elements of game theory and institutional analysis to explain how organizational structures influence equilibrium selection. The paper contributes to the literature on institutional economics, organizational behavior, and firm theory by introducing belonging as a key explanatory variable linking micro-level interactions with macro-level performance. |
| Keywords: | Belonging Philosophy of Belonging Firm Theory Organizational Economics Institutional Economics Corporate Governance Organizational Culture Cooperation and Competition Game Theory Nash Equilibrium Social Capital Relational Economics Stakeholder Theory Business Ethics Organizational Performance Institutional Legitimacy Economic Sociology |
| JEL: | D21 D23 L20 L22 M14 O10 P16 |
| Date: | 2026–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128766 |
| By: | Paul Auerbach |
| Abstract: | The literature concerned with the state’s productive role in the economy is compromised by links to an economic orthodoxy that uses a free market, competitive outcome as a default setting in both predictive and normative terms, and to conceptions of capitalism as a species of spontaneous order, so that state intervention is invariably perceived as an exceptional event (‘market failure’) in the context of an otherwise autonomously functioning economy. Historically, the state has played a foundational role in economic activity through government exaction and confiscation of resources, the expanding and constricting market extent, by responses to the pervasive externalities present in commercial activity and in the development of human capital, and has had to cope with the complementarities between educational development and the absence of material deprivation. Further contemporary issues of public policy are first, the recent emergence (or, indeed, re-emergence) of China as a great economic power and second, the invariant presence of state intervention in the transition from agriculture to industry. A last issue is the political economy of the state: how do alternative political arrangements shape the real economy and, contrarily, how do differing outcomes in the real economy shape political structures and decisions? |
| Keywords: | socialism; production externalities; political processes; human capital; industrial policy |
| JEL: | B51 D62 D72 J24 L52 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2614 |
| By: | Zehra, Urooj; Siddiqui, Danish Ahmed |
| Abstract: | This study investigates sukuk investment behavior through the lens of the Theory of Planned Behavior (TPB), integrating Islamic ethical principles to understand the factors influencing individuals' intentions to invest in sukuk. The research first examines the impact of Islamic moral values on Empathy, while assessing the mediating roles of internal behavioral control (IBC), and external behavioral control (EBC), At the same time the onwards effect of empathy on investment intentions (niyyah) was established. Employing an Islamic behavioral framework, the study delves into how these psychological constructs shape ethical investment behavior. Subsequently, it explores the moderating effects of market-related factors-sukuk pricing, rating, and ulama influence-on the relationship between these behavioral variables and investment intentions. Data were collected from 700 clients across Meezan Bank and other institutions in the Islamic banking sector. Using Partial Least Squares Structural Equation Modeling (SmartPLS), the findings reveal that Islamic moral values, empathy, IBC, and EBC significantly drive sukuk investment intentions. Empathy and behavioral control serve as key mediators in the relationship between Islamic values and investment behavior. Among the moderating factors, ulama pressure and sukuk pricing notably strengthen the ethical and financial appeal of sukuk investments, whereas sukuk ratings demonstrate a relatively weak influence, possibly due to limited awareness or skepticism regarding rating credibility. The study contributes to the understanding of ethical investment behavior in Islamic finance and offers strategic implications for promoting sukuk through moral, behavioral, and market-based interventions. |
| Keywords: | Sukuk, Theory of Planned Behavior, Islamic Moral Values, Niyyah, Empathy, Internal Behavioral Control, External Behavioral Control, Ulama Influence, Sukuk Pricing, Sukuk Rating, Ethical Investment, Islamic Finance |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:341022 |
| By: | Luca Zamparelli (Department of Social Sciences and Economics, Sapienza University, Italy) |
| Abstract: | This paper develops a growth model that integrates automation, conceptualized as a distinct form of "automation capital", into a Classical–Marxian framework characterized by an institutionally given real wage and an endogenous labor supply. Automation capital and labor are perfect substitutes, while the two are perfect complements with traditional capital. Capitalists allocate savings between investment in traditional and automation capital. Below a critical investment share in automation, the economy converges to a balanced growth path, characterized by stable income distribution and a negative relationship between automation and the labor share. Beyond it, the economy tends toward full automation and a null wage share. Automation’s effect on growth is regime-dependent: it accelerates growth under high wages but retards it under low wages. Consequently, profit-maximizing capitalists with an infinite horizon choose full automation under high wages and none under low wages. With a finite horizon in a low-wage regime, they may adopt limited automation, trading immediate distributional gains against long-run growth. A strategic union, valuing both wages and employment growth, will set a low wage to preempt full automation, leading to an equilibrium with partial or no automation depending on the capitalists’ planning horizon. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2604 |
| By: | Grimaud, André; Lafforgue, Gilles; Rougé, Luc |
| Abstract: | Degrowth is often advocated as a response to the climate crisis, but its consistency with growth theory remains unclear. We develop an endogenous growth model of directed technical change and climate in which the economy relies on both a polluting fossil resource and a clean renewable alternative. We fully characterize the social optimum and show that accounting for climate damages may justify an initial phase of degrowth. Such a phase is more likely when fossil resources are abundant and fossil-oriented research is relatively inefficient. In all cases, long-run optimal growth remains positive. |
| Keywords: | degrowth; directed technical change; endogenous growth; social optimum; climate change. |
| JEL: | O33 O44 Q32 Q55 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131735 |