nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2007‒12‒01
twelve papers chosen by
Erik Thomson
University of Chicago

  1. Professor Becker on Free Banking: A Comment By van den Hauwe, Ludwig
  2. Keynesian uncertainty in modern macroeconomics By Angel Asensio
  3. Economics for marketing revisited By Ana Isabel Costa; Cesaltina Pires
  4. Generalized Darwinism in Evolutionary Economics: The Devil is in the Details By Jack Vromen
  5. Chaos in economics and finance By Dominique Guégan
  6. Labor as a source of value and capital formation:Ibn Khaldun, Ricardo and Marx – A Comparison By Hasan, Zubair
  7. The Heterogeneous State of Modern Macroeconomics: A Reply to Solow By V. V. Chari; Patrick J. Kehoe
  8. The Economic Consequences of Legal Origins By Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer
  9. Economic Rights and the Policymaker's Decision Problem By Lanse Minkler
  10. Jacques Laffitte, an investment banker who did not create a model for investment banking (In French) By Hubert BONIN (GREThA)
  11. Three analyses of sour grapes By Hill, Brian
  12. Consensus vs. freedom of consensus upon freedom? From Washington disorder to the rediscovery of Keynes By Cedrini Mario

  1. By: van den Hauwe, Ludwig
    Abstract: Professor Becker´s 1956 paper about free banking was originally intended as a reaction to the 100-percent reserve proposals that were then popular at the University of Chicago. Today the original paper clearly illustrates how considerably our views and theories about free banking have evolved in the past 50 years. This development is to a considerable extent the result of the work and the writings of economists of the Austrian School. Pascal Salin is one of the most prominent members of the Austrian free banking school. In a new introduction to the 1956 paper written especially for the Festschrift in honor of Pascal Salin, Professor Gary Becker partially repudiates and mitigates some of his previous conclusions. This event offers a fitting opportunity to review some developments in the theory of free banking and related issues and to add a few clarifications concerning the present “state of the art” as regards an acceptable and adequate notion of free banking.
    Keywords: Free Banking; Monetary Regimes; Monetary Standards; Business Cycles
    JEL: E42 E32 E58
    Date: 2007–10–04
  2. By: Angel Asensio (CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII)
    Abstract: Recent developments in econometrics and economic theory attest more and more that the mainstream restricted definitions of uncertainty and rational expectations discard the powerful concepts Keynes put forward, therefore weakening dramatically the ‘new consensus’ theory. The paper emphasizes, in a formal way, how economic decisions in uncertain contexts transforms the standard four competitive macro-markets system into a shifting demand-driven system which may be in equilibrium at different levels of employment, depending on the views about the future and on the level where wages stabilize. Keynes’s theory therefore proves to be more general and realistic owing to its approach to uncertainty.
    Keywords: General equilibrium, Uncertainty, Post-Keynesian
    Date: 2007–11–20
  3. By: Ana Isabel Costa (Universidade de Évora – Departamento de Gestão e Aarhus School of Business – Department of Marketing and Statistics); Cesaltina Pires (Universidade de Évora – Departamento de Gestão)
    Abstract: This paper aims to provide evidence supporting the following: that recent theoretical, empirical and methodological advances in microeconomics are decisive to the progress of marketing science. That such a notion is not yet mainstream and uncontroversial, we contend, is more due to insufficient knowledge dissemination and outdated perceptions about irreconcilable differences between economists and psychologists than to lack of intrinsic value or cognitive appeal. Evidence is provided by describing these advances in a concise manner, showing how they can contribute to tackle complex marketing issues and providing examples from published matter in which this contribution already takes place.
    Keywords: Marketing Science, Economic Psychology, Behavioral Economics, Experimental Economics
    JEL: M31 A11
    Date: 2007
  4. By: Jack Vromen
    Abstract: Hodgson and Knudsen want their version of Generalized Darwinism to meet two /desiderata. /First, their formulation of Darwinism should be sufficiently general and abstract, so that it only refers to general, domain-unspecific features that processes of biological and of socio-cultural evolution have in common with each other. Their formulation should leave out features of Darwinism that are specific to the biological domain only. Second, their version should be able to guide the development of theories that can causally explain processes of economic evolution. Hodgson and Knudsen argue that the latter – going from their abstract and general formulation of Darwinism to such full-fledged economic theories – is a matter of adding details that are specific to the economic domain. Both desiderata seem reasonable. Yet they pull in opposite directions. It is argued that in order to meet the first desideratum the formulation of Darwinism should be so general and abstract that it is bereft of any substance and content and, as such, of little use in guiding further theory development. If going from such a formulation to a full-fledged economic theory is called a matter of adding details, the devil surely is in the details.
    Keywords: Length 26 pages
    Date: 2007–11
  5. By: Dominique Guégan (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: In this article, we specify the different approaches followed by the economists and the financial economists in order to use chaos theory. We explain the main difference using this theory with other research domains like the mathematics and the physics. Finally, we present tools necessary for the economists and financial economists to explore this domain empirically.
    Keywords: Chaos theory, attractor, Economy, Finance, estimation theory, forecasting.
    Date: 2007–06
  6. By: Hasan, Zubair
    Abstract: Exclusive writings on the contribution of Ibn Khaldun to economics in the English language have not been many, the references to his work also remain scanty and far between. Even in what little is available mostly authors talk about his views on professions, markets and the cloud he castes on merchants. The present paper avoids treading the familiar tracks. It sees close similarities between the views of Ibn Khaldun (1332 – 1406), David Ricardo (1772 – 1823) and Karl Marx (1818 -I823) in regarding labour as the measure of value and source of capital formation in the course of economics maturing to an academic discipline. The three intellectuals agree, directly or indirectly, that labour creates economic surplus which it does not receive. Even so, the policy implications each derives from this conclusion are interestingly much different. Ibn Khaldun did not -- indeed imbued with Islamic faith he could not – think of workers’ predicament becoming a source of social turmoil. Ricardo implicitly saw labour exploitation in a free enterprise system of organizing production but himself being a great capitalist he could not swallow the pill and once tended to regard cost of production – wages plus profit – as the measure of value. Marx regarded exploitation of labour as the intrinsic vice of capitalism that revolution alone could obliterate.
    Keywords: Labor; Capital formation; Value;Ibn Khaldun;Ricardo; Narx
    JEL: D46
    Date: 2007
  7. By: V. V. Chari; Patrick J. Kehoe
    Abstract: Robert Solow has criticized our 2006 Journal of Economic Perspectives essay describing "Modern Macroeconomics in Practice." Solow eloquently voices the commonly heard complaint that too much macroeconomic work today starts with a model with a single type of agent. We argue that modern macroeconomics may not end too far from where Solow prefers. He is also critical of how modern macroeconomists use data to construct models. Specifically, he seems to think that calibration is the only way that our models encounter data. To the contrary, we argue that modern macroeconomics uses a wide variety of empirical methods and that this big-tent approach has served macroeconomics well. Solow also questions our claim that modern macroeconomics is firmly grounded in economic theory. We disagree and explain why.
    JEL: E12 E13 E2 E20 E21 E22 E32 E4 E5 E52 E58 E6 E62
    Date: 2007–11
  8. By: Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer
    Abstract: In the last decade, economists have produced a considerable body of research suggesting that the historical origin of a country's laws is highly correlated with a broad range of its legal rules and regulations, as well as with economic outcomes. We summarize this evidence and attempt a unified interpretation. We also address several objections to the empirical claim that legal origins matter. Finally, we assess the implications of this research for economic reform.
    JEL: K00 N20 P51
    Date: 2007–11
  9. By: Lanse Minkler
    Abstract: Economic rights can be instantiated in a variety of ways. This paper investigates the problem with making economic rights into policy from one source: the political policymaker. By modeling the policymaker's decision problem we can identify particular decision flaws and possible correctives that might prompt economic rights instantiation through "enlightened self-interest." A complementary approach involves constitutionalizing economic rights with directive principles and enforceable law, which could work somewhat independently of the policymaker's preferences and/or beliefs. The last part of the paper looks at a sample of actual constitutions to see if government effort toward economic rights fulfillment is related with constitutionalization. The evidence here suggests a positive relationship: those countries with better economic rights provisions in their constitutions demonstrate greater economic rights effort.
    Keywords: Economic Rights; Constitutions; Human Rights; Political Policymaker
    JEL: A12 A13 D72 P48
    Date: 2007–11
  10. By: Hubert BONIN (GREThA)
    Abstract: The research program about the history of investment banking gauged in this text the legacy of Jacques Laffitte, one of the initiators of modern investment banking in the years 1800-1840. It assesses the reality of his contributions and argues about their role within the process of modernisation of the Paris banking market at the heart of the first stage of the first industrial revolution. It tried to precise the limits of the breakthroughs achieved by Laffitte within the banking economy of the merchant banks of this time and to explain the flaws of its competitiveness.
    Keywords: Bank, investment banking, banking history, first industrial revolution, Paris market place, merchant banking
    JEL: N23 N24 G21
    Date: 2007
  11. By: Hill, Brian
    Abstract: The phenomenon of adaptive preferences – sometimes also known under the name of sour grapes – has long caused a stir in Social Theory. In this paper, the precise problem posed by adaptive preferences, as seen from the point of view of a theoretician who intends to model or understand the phenomenon, will be clarified, and three models of the phenomenon will be presented and compared. The general intention of the article is to sound out some of the wider consequences of the phenomenon for the project of modelling and understanding the relationship between decisions taken in different situations. Difficulties which arise when several decisions and several situations are involved shall be discussed, and an approach to these difficulties shall be suggested.
    Keywords: Adaptive preferences; preference change; belief change; decision theory; belief and utility elicitation; representation theorems.
    JEL: B49 D89
    Date: 2007–04–13
  12. By: Cedrini Mario
    Abstract: The paper retraces the history of the debate on the Washington Consensus according to the four-stage partition Consensus, Confusion, Contention, Conclusion, with particular attention to the criticisms evoked by the use of it as a tool for the “integrationist agenda” of the Nineties. We argue that the excessive shrinking in policy space available to developing countries is among the key factors explaining why the saga has rapidly come to a Conclusion, leaving room to the rediscovery of the “embedded liberalism” of Bretton Woods. It is our aim to show, however, that Keynes’s plan for a new international order inspired by a consensus on freedom rather than discipline, is still the most relevant model for a new system of national capitalisms enhancing member countries’ freedom to choose.
    Date: 2007–08

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