nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2008‒05‒24
fourteen papers chosen by
Erik Thomson
University of Chicago

  1. The social science of economics By Brian Loasby
  2. Valeur et travail chez Destutt de Tracy By Jean Magnan De Bornier
  3. Individual deliberation, moral autonomy and emotions: Rousseau on citizenship By Christophe Salvat
  4. Smith and Rawls Share a Room: Stability and Medians By Klaus Bettina; Klijn Flip
  5. Hayek's challenge to economists By Brian Loasby
  6. Scratch a Would-Be Planner: Robbins, Neoclassical Economics and the End of Socialism By Brigitte Granville; Judith Shapiro
  7. The psychology of financial markets: Keynes, Minsky and emotional finance By Sheila Dow
  8. The ethics of efficiency By Irene van Staveren
  9. Falsifiability By Alvaro Sandroni; Wojciech Olszewski
  10. The Nature of Boehm-Bawerk's Capital Market By Jean Magnan De Bornier
  11. Usages de l'argent et pratiques monétaires By Jérôme Blanc
  12. Inequality and Quiescence: A Continuing Conundrum By R. E. Pahl; David Rose; Liz Spencer
  13. The Behaviour of Corporate Actors. A Survey of the Empirical Literature By Christoph Engel

  1. By: Brian Loasby (SCEME, University of Stirling)
    Abstract: The argument of this paper is that much modern economics is drastically undersocialised because it lacks an understanding of the distinctive characteristics of the evolved human mind, despite the significant insights provided by three of our most famous economists, Adam Smith, Alfred Marshall and Friedrich Hayek. This deficiency results from a failure to apply what may be considered the defining principle of economics, that of analysing the implications of scarcity. These implications challenge the adequacy of a theoretical structure based on the confrontation of preference functions and opportunity sets, even when extended to include formal interdependence, as in game theory; they require both a more modest view of human cognitive abilities and a more extensive view of human motivation and potential.
    Keywords: Adam Smith, Alfred Marshall, Hayek
    JEL: B41 Z1
    Date: 2007–11
  2. By: Jean Magnan De Bornier (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579)
    Abstract: On examine la théorie de la valeur de Destutt de Tracy et ses rapports avec le travail. Cet auteur propose une théorie originale comportant deux valeurs, l'une naturelle et l'autre conventionnelle. Seule la première est reliée au travail, qui est conçu comme toute activité productive et la seule origine de toute production. La théorie des deux valeurs amène finalement à des contradictions insurmontables, dues probablement à la tentative de déduire l'économie politique de la philosophie des idéologistes.
    Keywords: Destutt de Tracy, Idéologie, valeur, travail
    Date: 2008–05–13
  3. By: Christophe Salvat (Greqam, CNRS Marseille)
    Abstract: The present study addresses the question of uncertainty in individual deliberation in Rousseau’s philosophy. Accordingly, it intends to consider in a new light his account of virtue and citizenship which cannot possibly be defined as systematic obedience to the general will. Weakness of the will, indeterminacy and prudence have not yet been adequately emphasized, despite some convincing evidence. Chapter XI, book III, of the Social Contract on the death of the body politic, for example, prompts us to reconsider the individuals’ allegiance to the general will. However, it would be equally extreme to dismiss the core of his thought which affirms the legitimate superiority of the general will over particular desires. Rather it will be illustrated here that, when brought together, these two propositions provide a fruitful way of approaching this ethical issue.
    Keywords: Rousesau, uncertainty, citizenship
    JEL: B11 B31 B41 D60
    Date: 2007–10
  4. By: Klaus Bettina; Klijn Flip (METEOR)
    Abstract: We consider one-to-one, one-sided matching (roommate) problems in which agents can either be matched as pairs or remain single. We introduce a so-called bi-choice graph for each pair of stable matchings and characterize its structure. Exploiting this structure we obtain as a corollary the “lonely wolf” theorem and a decomposability result. The latter result together with transitivity of blocking leads to an elementary proof of the so-called stable median matching theorem, showing how the often incompatible concepts of stability (represented by the political economist Adam Smith) and fairness (represented by the political philosopher John Rawls) can be reconciled for roommate problems. Finally, we extend our results to two-sided matching problems.
    Keywords: Economics (Jel: A)
    Date: 2008
  5. By: Brian Loasby (SCEME, University of Stirling, UK)
    Abstract: Bruce Caldwell argues that Hayek eventually favoured an evolutionary response, and he endorses this recommendation. I am increasingly inclined to agree, although I believe that the concept of evolution needs to be handled with some care. Hayek himself was cautious, not least in The Sensory Order, where he carefully avoided any discussion of the relative roles of evolution within the species and evolution within the individual. He does not even attempt to explain why the sensory order is formed before the physical order. However we can supplement Hayek’s theory of the mind – which seems to be broadly consistent with contemporary neuroscience – with earlier attempts to explain the development of human knowledge.
    Keywords: Hayek, Marshall, evolution
    JEL: Z1 B41
    Date: 2007–10
  6. By: Brigitte Granville; Judith Shapiro
    Abstract: Robbins’s central contribution to the debate on market versus plan links with identification of economics as science of how societies handle scarcity, a central contribution of the Essay. This was not a narrow focus on static efficiency; inflation was a key part of Robbins’s conception of (mis)handling scarcity. The irony that transition to the market led to movement away from the market in economics is analysed, highlighting the obscured role of macroeconomics, and questioning a new conventional wisdom that Russia should have followed the Chinese path of gradual and Pareto-improving institutional development. A conclusion is that the demise of the Washington Consensus should not lead to a new dogma: the neoclassical paradigm is not being replaced but extended.
    Keywords: Transition, Lionel Robbins, socialist calculation debate, Russia, inflation
    JEL: P21 B31
    Date: 2008–05
  7. By: Sheila Dow (SCEME, University of Stirling)
    Keywords: uncertainty, Keynes, Minsky, emotional finance
    JEL: B41
    Date: 2008–05
  8. By: Irene van Staveren (Institute of Social Studies, The Hague)
    Abstract: Efficiency is generally regarded as a value-neutral concept, concerned with assessing whether an economy produces at its possibility frontier, that is, generating maximum possible market output with given resources. Efficiency analysis generally rejects concerns with distribution – often referred to as equity – which leads to the common understanding of efficiency and equity as being trade-offs. This is also the comprehension of the widely applied Pareto efficiency criterion. There is a solid body of critique of the concept of Pareto efficiency, and much of it is concerned precisely with its exclusive focus on efficiency, which allows for equilibrium situations that are dramatically unequal. However sympathetic I am to this position, sharing the deep concerns about inequality and deprivation, I will argue here that the project of ‘normative economics’ is missing the point and not very helpful in challenging the inconsistencies in the Paretian efficiency concept or for developing alternative efficiency criteria. By complementing equity evaluations to efficiency evaluations, the critics, just like the proponents of Pareto efficiency, tend to accept the presumed trade-off between efficiency and equity. The problem is that the defense of normative economics, as complementary to positive economics, reduces ethics to the Humean ‘ought’ category of morality. In this paper, I will challenge the dichotomy between positive and normative economics, focusing on efficiency, and hence, I will challenge the idea of a necessary trade-off between efficiency and equity. I will argue, instead, that efficiency is not a ‘positive’ concept – as dealing with facts only – but intertwined with values.
    Keywords: ethics, normative economics, economic values
    JEL: B41 Z1
    Date: 2007–10
  9. By: Alvaro Sandroni (Department of Economics, University of Pennsylvania); Wojciech Olszewski (Department of Economics, Northwestern University)
    Abstract: We examine the fundamental concept of Popper’s falsifiability within an economic model in which a tester hires a potential expert to produce a theory. Payments are made contingent on the performance of the theory vis-a-vis future realizations of the data. We show that if experts are strategic, then falsifiability has no power to distinguish legitimate scientific theories from worthless theories. We also show that even if experts are strategic there are alternative criteria that can distinguish legitimate from worthless theories.
    Keywords: Testing Strategic Experts
    JEL: D81 C11
    Date: 2008–03–12
  10. By: Jean Magnan De Bornier (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579)
    Abstract: The capital market in Böhm-Bawerk's Positive Theory of Capital appears at several places. The last chapter of the book provides the complete exposition of Böhm's view of this market where present goods are exchanged for future goods. Studying this exposition leads to understand that many variables, prices as well as quantities, are determined together in this ``enormous market''. The capital market is a macroeconomic system, the nature of which we try to assess.
    Keywords: Böhm-Bawerk, capital, market, macroeconomics
    Date: 2008–05–13
  11. By: Jérôme Blanc (LEFI - Laboratoire d'Economie de la Firme et des Institutions - Université Lumière - Lyon II)
    Abstract: L’objectif de ce texte est de faire le point sur la dynamique de travaux menés depuis les années 1980, sur l’argent et la monnaie, en économie institutionnaliste, sociologie économique et anthropologie économique et de proposer une synthèse subjective des pistes actuelles. Nous présentons d’abord le champ des travaux francophones et anglophones. Après avoir ainsi circonscrit le champ d’étude, nous discutons des usages de l’argent et des pratiques monétaires au travers de quatre grands thèmes : tout d’abord, les apports et les limites de la conception polanyienne des monnaies modernes, puis les bases d’un renouvellement de l’analyse par la mise au jour de qualités de la monnaie considérée comme avoir monétaire. Cela conduit à proposer une analyse critique du postulat économiste de fongibilité des monnaies et à présenter les fondements de ce qui constitue une socioéconomie des conversions monétaires. Enfin, nous procédons à un examen des rapports ambigus de la monnaie au marché et, au-delà du marché, au lien social dans une société marchande.
    Keywords: Argent;monnaie;pratiques;sociologie;économie;anthropologie
    Date: 2008–05
  12. By: R. E. Pahl (Institute for Social and Economic Research); David Rose (Institute for Social and Economic Research); Liz Spencer (New Perspectives)
    Abstract: How may we account for the fact that most people appear to accept widespread social and economic inequalities? This is a question that has often been posed in the social sciences. One possible explanation is that individuals tend to make comparisons with others like themselves and so, as a result, do not appreciate the full range of inequality. This was the conclusion drawn by research in the 1960s and was re-affirmed by further research in the 1970s. However, more recently, it has been suggested that social and economic change in the intervening period may have had effects on the range and type of comparisons people are able to make. In particular, it has been argued that the growth of the mass media has exposed people to a broader range of lifestyles and the expansion of the consumer society has created ever greater desires. In these circumstances, it is thought that people's horizons will have expanded so that they no longer have such restricted points of reference for their social comparisons. In this paper, we use evidence from a small scale pilot qualitative study to investigate social comparisons in the 21st century. We find that, in many ways, social comparisons are still narrow and knowledge of the true extent of inequality is still limited. What comparisons people do make appear to be based on lifestyle and consumption. Hence, they are neither resentful of the super-rich, nor of others closer to themselves who have done better in life. However, they are very aware of their advantages compared with less fortunate members of society. Our respondents see themselves as members of a comfortable middle mass of 'ordinary, hard-working families'. The paper concludes with some reflections on the nature of social cohesion in the UK today.
    Date: 2007–09
  13. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Much of behavioural research, both in economics and in psychology, is limited in one respect: it tests isolated individuals. In many practically relevant situations, there are discernible actors, but these actors are not individuals. Rather firms, regulatory bodies, associations, countries or international organisations become active. The social problem at hand is best understood if one attributes judgement and decision making to higher level aggregates of individuals. Which elements from the rich body of behavioural evidence transfer to these corporate actors? Are there other deviations from the predictions of the rational choice model, not present or studied in individuals? This paper surveys the empirical literature from experimental economics, psychology, sociology and law. While some building blocks, like the behaviour of managers and of ad hoc groups, are relatively well understood, our knowledge about the effects of more elaborate internal structure on the dealings of corporate actors with the outer world is still relatively limited.
    Keywords: Behaviour, Firms, Organizations, Associations, Groups
    JEL: C92 D21 D23 K22 L20
    Date: 2008–05
  14. By: Antonio Magliulo (Università degli Studi di Firenze, Dipartimento di Scienze Economiche)
    Abstract: Il “paradosso della felicità in economia” ha suscitato un interesse crescente tra studiosi di tutto il mondo. Nelle società opulente gli individui, nonostante l’aumento di reddito, non si dichiarano più felici. Una delle spiegazioni proposte si basa sulla constatazione che la crescita economica può distruggere alcuni beni relazionali da cui la felicità dipende: rapporti familiari, amicali, affettivi e civili. La spiegazione si avvale di un’interpretazione storica: il marginalismo, disconoscendo la natura economica dei beni relazionali, avrebbe offuscato il tema della felicità in economia. Questa ricerca intende ricostruire la storia di un tentativo, negletto ma rilevante, compiuto da Menger e Böhm-Bawerk e successivamente da Wicksteed e Robbins di risolvere il problema delle relazioni umane in economia.
    Keywords: Scuola Austriaca, Economia e Felicità
    JEL: B13 D60
    Date: 2008

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