nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2006‒06‒17
nine papers chosen by
Erik Thomson
University of Chicago

  1. The Ricardo puzzle By Francisco L. Lopes
  2. Karl Polanyi et les monnaies modernes = un réexamen By Jérôme Blanc
  3. Musings on the Cass Trick By David Cass
  4. Competitive Equilibrium with Incomplete Financial Markets By David Cass
  5. The ignorant observer. By Thibault Gajdos; Feriel Kandil
  6. Willpower and the Optimal Control of Visceral Urges By Emre Ozdenoren; Stephen Salant; Dan Silverman
  7. Does Democracy Foster Trust? By Helmut Rainer; Thomas Siedler
  8. „Wohlstand für alle“ – Nachdenkliches zum Thema „Vermögen, Kapital und Eigentum“ By Hans-Günter Krüsselberg
  9. The Right to Work and the Political Economy of Human Rights By Manuel Couret Branco

  1. By: Francisco L. Lopes (Macrométrica)
    Abstract: This paper tackles the puzzle of Ricardo’s stubborn commitment to a labor theory of value that he himself saw as no more than an approximation to reality and which was heavily opposed by Malthus, his most respected contemporary. We show it is wrong to think that the theory had no analytical use. Quite to the contrary, it was the only defence Ricardo could find against Malthus’ destructive criticism, which introduced an unacceptable degree of indetermination in his theory of profits. By adopting the labor theory of value, Ricardo drastically simplified the method of proof of his main proposition, which otherwise seemed to present unsurmountable analytical difficulties. The irony is that the proposition was correct, quite independently of the labor theory of value, but Ricardo was just unable to prove it.
    Date: 2006–06
  2. By: Jérôme Blanc (LEFI - Laboratoire d'économie de la firme et des institutions - [Université Lumière - Lyon II])
    Abstract: Karl Polanyi a établi une célèbre distinction entre "all purpose money", caractéristiques des sociétés modernes, et "special purpose money", caractéristiques des sociétés anciennes. C'est la conception polanyienne des monnaies modernes qui est critiquée dans ce texte : non seulement elle conduit à considérer que les sociétés modernes ne connaissent pas de "special purpose money", mais en plus elle ne permet pas de renouveler la conception courante de la monnaie (sous-entendu moderne) qui en fait un moyen de paiement universel.
    Keywords: Monnaie moderne. Pratiques monétaires. Polanyi. Monnaies parallèles. Fongibilité. Cloisonnements.
    Date: 2006–06–09
  3. By: David Cass (Department of Economics, University of Pennsylvania)
    Abstract: This is a leisurely introduction, in the vein of a piece in the history of science, to belated publication of my well-known paper on incomplete Markets, Competitive Equilibrium with Incomplete Financial Markets.
    Keywords: financial equilibrium, incomplete markets, Cass trick
    JEL: D52
    Date: 2006–06–02
  4. By: David Cass (Department of Economics, University of Pennsylvania)
    Abstract: This is my classic paper, written in early 1984, concerning existence and optimality in general financial equilibrium with incomplete markets for nominal assets, just now being published in a special issue of the Journal of Mathematical Economics.
    Keywords: financial equilibrium, incomplete markets, Cass trick
    JEL: D52
    Date: 2006–06–02
  5. By: Thibault Gajdos (Centre d'Economie de la Sorbonne); Feriel Kandil (CERC)
    Abstract: Most prominent models of economic justice (and especially those proposed by Harsanyi and Rawls) are based on the assumption that impartiality is required for making moral decisions. However, although Harsanyi and Rawls agree on that, and furthermore agree on the fact that impartiality can be obtained under appropriate conditions of ignorance, they strongly disagree on the consequences of these assumptions. According to Harsanyi, they provide a justification for the utilitarian doctrine, whereas Rawls considers that they imply egalitarianism. We propose here an extension of Harsanyi's Impartial Observer Theorem, that is based on the representation of ignorance as the set of all possible probability distributions. We obtain a characterization of the observer's preferences that, under our most restrictive conditions, is a linear combination of Harsanyi's and Rawls' criteria. Furthermore, this representation is ethically meaningful, in the sense that individuals' utilities are cardinally measurable and unit comparable. This allows us to conclude that the impartiality requirement cannot be used to decide between Rawls' and Harsanyi's positions. Finally, we defend the view that a (strict) combination of Harsanyi's and Rawls' criteria provides a reasonable rule for social decisions.
    Keywords: Impartiality, justice, decision under ignorance.
    JEL: D63 D81
    Date: 2005–02
  6. By: Emre Ozdenoren; Stephen Salant; Dan Silverman
    Abstract: Common intuition and experimental psychology suggest that the ability to self-regulate, willpower, is a depletable resource. We investigate the behavior of an agent who optimally consumes a cake (or paycheck or workload) over time and who recognizes that restraining his consumption too much would exhaust his willpower and leave him unable to manage his consumption. Unlike prior models of self-control, a model with willpower depletion can explain the increasing consumption sequences observable in high frequency data (and corresponding laboratory findings), the apparent links between unrelated self-control behaviors, and the altered economic behavior following imposition of cognitive loads. At the same time, willpower depletion provides an alternative explanation for a taste for commitment, intertemporal preference reversals, and procrastination. Accounting for willpower depletion thus provides a more unified theory of time preference. It also provides an explanation for anomalous intratemporal behaviors such as low correlations between health-related activities.
    JEL: D9 J2 I1
    Date: 2006–06
  7. By: Helmut Rainer (University of St. Andrews); Thomas Siedler (University of Essex, DIW Berlin and IZA Bonn)
    Abstract: The level of trust inherent in a society is important for a wide range of microeconomic and macroeconomic outcomes. This paper investigates how individuals’ attitudes toward social and institutional trust are shaped by the political regime in which they live. The German reunification is a unique natural experiment that allows us to conduct such a study. Using data from the German General Social Survey (ALLBUS) and from the German Socio- Economic Panel Study (SOEP), we obtain two sets of results. On one side, we find that, shortly after reunification, East Germans displayed a significantly less trusting attitude than West Germans. This suggests a negative effect of communism in East Germany versus democracy in West Germany on social and institutional trust. However, the experience of democracy by East Germans since reunification did not serve to increase levels of social trust significantly. In fact, we cannot reject the hypothesis that East Germans, after more than a decade of democracy, have the same levels of social distrust as shortly after the collapse of communism. In trying to understand the underlying causes, we show that the persistence of social distrust in the East can be explained by negative economic outcomes that many East Germans experienced in the post-reunification period. Our main conclusion is that democracy can foster trust in post-communist societies only when citizens’ economic outcomes are right.
    Keywords: social trust, institutional trust, political regimes
    JEL: P51 Z13
    Date: 2006–05
  8. By: Hans-Günter Krüsselberg (Faculty of Business Administration and Economics, Philipps Universitaet Marburg)
    Date: 2005
  9. By: Manuel Couret Branco (Department of Economics, University of Évora)
    Abstract: The second part of the paper is dedicated to the presentation of arguments that attempt to legitimize the right to work. For those members of the international community that have signed and ratified the proclamations described above the process through which they were approved confers the right to work plenty enough legitimacy. But given the highly political nature of the process that led to their adoption it should not come as a surprise that, especially among economists, economic rights are considered just a legal ornament. Therefore, it may be useful to search for different sources of legitimacy for human rights, and economic rights in particular, other than political and philosophical if one intends to make economics take economic rights seriously. The first argument is based on the inequality established in the capitalist system between the two contractors in the labour market, in this case freedom to work, in other words freedom to engage in contract, becomes meaningless without a right to work. The second argument arises from a basic ethical principle of economics. In order to live, that is in economic terms to consume, in other words, to satisfy needs or to acquire utility, one has to consent in sacrifice of an equivalent amount of utility of a different kind. In our society the sacrifice demanded from individuals for the satisfaction of one’s needs is the supply of a certain amount of work, or of a socially useful activity, except in cases of incapability resulting from misfortune. There is, therefore, an obligation to work. Now by definition, if work is an obligation in order to live, no one should be deprived of the access to it. The third argument in favour of the right to work concerns the social utility of the existence of such a right. The third part of the paper concerns the possibility of the existence of a competition between the right to work and the right to property. After concluding that this is not a problem I will focus on the conflict that seems more obvious, which is the conflict between the interests of capital and labour. There are two aspects of this conflict. The microeconomic aspect of this conflict concerns the fact that for firms unemployment is useful to attain certain objectives. For a long time unemployment, and the spectrum of hunger, has been seen as some sort of menace to workers in order to make them work harder and stay in line. At the macro economic level, unemployment appears to be an instrument in controlling inflation and full employment no longer a goal, regardless of the theory one professes, Philips curve or Natural Rate of Unemployment in any of its versions. The fourth part of the paper concerns the responsibility for ensuring the right to work. Is it a state or a corporate responsibility? Generally it is admitted that in terms of human rights the responsibility is the State’s. But this would also means that firms would then externalise the social costs of their activity which is not coherent with the new wave of Corporate Social Responsibility. Finally the last part of the paper will concern the policy implications of the right to work. Sustaining that ensuring the right to work means to promote full employment with decent jobs I will analyse the traditional instruments used to create jobs in the advanced countries and conclude that not all public action aiming to just creating jobs qualifies to right to work securing policy if it contributes to an erosion of the rights at work. In the end I will suggest that the only policy that seems to qualify in present economic circumstances is to share the asset work by substantially reduce the working hours.
    Keywords: Right to Work, Human Rights, Political Economy, Employment, Unemployment
    JEL: A10 A12 A13 J20 J23 K00
    Date: 2006

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