nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2010‒02‒05
nine papers chosen by
Erik Thomson
University of Manitoba

  1. The problem with economics: naturalism, critique and performativity By Fabian Muniesa
  2. An Evolutionary Theory of Household Consumption Behavior By Nelson, Richard; Consoli, Davide
  3. Solving the paradox of monetary profits By Keen, Steve
  4. Shari’ah Board, The Task of Fatwa, and Ijtihad in Islamic Economics, and Finance By Alsayyed, Nidal
  5. The crisis and beyond: thinking outside the box By Hillinger, Claude
  6. Inequality as Policy: The United States Since 1979 By John Schmitt
  7. Social Business: A Step Toward Creating a New Economic and Social Order By Mohammad Yunus
  8. The convergence of fictitious play in games with strategic complementarities: A Comment By Berger, Ulrich
  9. Will You Accept Without Knowing What? A Thuringian Newspaper Experiment of the Yes-No Game By Werner Güth; Oliver Kirchkamp

  1. By: Fabian Muniesa (Centre de Sociologie de l'Innovation, Mines ParisTech)
    Abstract: Reviews debates on the performativity of economics from the vantage point of a general anthropology of modern economic reason.
    Keywords: Performativity, naturalism, critique, economics, science studies, anthropology, thought experiments
    JEL: A10 A11 A12 A13 A14 B00 B40 Z13
    Date: 2010–01
  2. By: Nelson, Richard; Consoli, Davide
    Abstract: Evolutionary economics badly needs a behavioral theory of household consumption behavior, but to date only limited progress has been made on that front. Partly because Schumpeter's own writings were focused there, and partly because this has been the focus of most of the more recent empirical work on technological change, modern evolutionary economists have focused on the "supply side". However, because a significant portion of the innovation going on in capitalist countries has been in the form of new consumer goods and services, it should be obvious that dealing coherently with the Schumpeterian agenda requires a theory which treats in a realistic way how consumers respond to new goods and services. The purpose of this essay is to map out a broad alternative to the neoclassical theory of consumer behavior.
    Keywords: Household Consumption Behaviour; Evolutionary Economics
    JEL: D11 O33 D83
    Date: 2010–01–22
  3. By: Keen, Steve
    Abstract: Bruun and Heyn-Johnsen (2009) state the paradox that economics has failed to provide a satisfactory explanation of how monetary profits are generated, even though the generation of a physical surplus is an established aspect of non-neoclassical economics. They emphasise that our ability to explain phenomena like the Global Financial Crisis (GFC) will be limited while ever we are still unable to explain this fundamental aspect of capitalism. In fact this paradox can be solved very simply, using insights from what is known as Circuit Theory. In this paper the author shows how monetary profits are generated, and introduces a multisectoral dynamic disequilibrium monetary model of production. --
    Keywords: Endogenous money,circuit theory
    JEL: E12 E17 E20 E51
    Date: 2010
  4. By: Alsayyed, Nidal
    Abstract: The rulings of Mua‟malat in today‟s Islamic Economics, and Finance can be adapted through the process of Ijtihad. While the basic principles or doctrines of the Mua‟malat are given in Shari‟ah, the interpretation of these principles to suit circumstances in different times and places constitutes the Fiqh Mua‟malat. New rulings can be reached by understanding the effective cause (Illah) and rationale (hikmah) of the original ruling and the importance of Maslaha (benefit) under the changed circumstances (Usul Fiqh); which is normally evaluated by the Shari‟ah Board members of the concerned entity. Fatwa issuing via Ijtihad is used to derive laws from the basic principles of Shari‟ah to address the needs of people in different places and times. The important aspect of these new rules is that they may at times change depending on the context of application. Islamic Finance contemporary practices of Ijtihad through various bodies like Islamic Fiqh Academy, have resolved the practice of taqlid (limitation). The doctrine of maqasid al-Shari‟ah establishes Maslahah as an essential element of the ends of law, so that it becomes an important goal in framing new rules (Shari‟ah parameters and guidelines) through Ijtihad. Thus, both the principles set by Shari‟ah and use of Ijtihad to frame new rules has Maslahah or benefit of people as the underlying basis and goal. On the other hand; the standardization of Shari‟ah may become against the fundamental premise of Ijtihad which has existed for centuries and especially in today‟s finance. If rules become standards, and imposed by legal authorities, then Ijtihad cannot be applied towards a critical and dynamic industry like Islamic Finance today. This will eventually damage the very reason that we are able to apply Shari‟ah in all times and places, that is, Ijtihad is the main reason why Shari‟ah is dynamic and is able to be applied in different circumstances. In addition; to standardize Shari‟ah rulings may mean the precedence of one Islamic school of thought over the other, which cannot be universally acceptable. There is no doubt that the synchronization of these two views has to be done through mutual understanding and collaboration between Shari‟ah scholars and various Shari‟ah key board members, market leaders, and regulators. To be very clear and accurate, the question of whether Shari‟ah standards can be harmonized is a matter to be dealt with by Shari‟ah scholars and not market professionals or regulators. The simple reason for this is because Shari‟ah scholars are specialized in their field and whether a Fatwa can be standardized or not is a matter of religious reasoning and should be taken from Shari‟ah own instructions and judgments.
    Keywords: Fatwa ; fatawa ; Ijtihad ; Shari’ah Board; Islamic Economics Jurisprudence ; GCC ; Ijma;
    JEL: Z12 A23 Z00 F02
    Date: 2009–06–05
  5. By: Hillinger, Claude
    Abstract: In this paper the author attempts an analysis of the current financial/economic crisis that is wider ranging and more fundamental than he has been able to find. For this purpose he reviews some social science literature that views the current crisis as an episode in the secular decline of the United States and more generally of the Western Democracies. The timidity of current reforms, which is striking when compared to those that followed the excesses of the Gilded Age and the Great Depression, can be understood in this framework. The author discusses alternatives to the financial bailouts and shows how the crisis could have been dealt with more efficiently and at little cost to taxpayers. Finally, he discusses fundamental reforms that would greatly reduce the volatility of financial markets and increase their efficiency. --
    Keywords: Deficit financing,financial crisis,financial instability,full reserve banking,toxic assets
    JEL: E31 E42 E58
    Date: 2010
  6. By: John Schmitt
    Abstract: Since the end of the 1970s, the United States has seen a dramatic increase in economic inequality. While the United States has long been among the most unequal of the world’s rich economies, the economic and social upheaval that began in the 1970s was a striking departure from the movement toward greater equality that began in the Great Depression, continued through World War II, and was a central feature of the first 30 years of the postwar period. This is not due to chance circumstances but is the direct result of a set of policies designed first and foremost to increase inequality.
    Keywords: inequality
    JEL: E E6 E61 E62 E64 E65 E66 H I I3 I38 J J5 J8 J88
    Date: 2009–10
  7. By: Mohammad Yunus
    Abstract: The concept of social business flows from a firm conviction that profit or benefit is not the only motivating factor for an entrepreneur and an entrepreneur can also be motivated by social goals and enjoy success. Social business, as advocated by the author, is essentially a non-loss, non-dividend business aimed at social objectives like education, health, environment, etc. Yet another type of social business is business that is profitable but is owned by the poor and the disadvantaged, who can gain either through receiving direct dividends or some indirect benefits.Seeing the effectiveness of social business, governments may decide to create their own social businesses or partner with citizen-run social businesses and/or incorporate the lessons from the social businesses to improve the effectiveness of their own programmes. [Second Professor Hiren Mukherjee Memorial Annual Lecture]
    Keywords: social business, microcredit, Nobel Laureate, Bangladesh,Economics, Political Science
    Date: 2010
  8. By: Berger, Ulrich
    Abstract: In a recent article, Hahn [Hahn, S. (2008). The convergence of fictitious play in games with strategic complementarities. Economics Letters 99, 2, 304-306] claims to prove convergence of fictitious play in games with strategic complementarities. I show here that the proof is flawed and convergence remains an open question.
    Keywords: Fictitious play; Strategic complementarities; Supermodular games
    JEL: D83 C72
    Date: 2009–09–03
  9. By: Werner Güth (Strategiec Interaction Group, Max Planck Institute of Economics, Jena); Oliver Kirchkamp (Friedrich-Schiller-University Jena, School of Economics and Business Administration)
    Abstract: Many economic experiments are run in the laboratory with students as participants. In this paper we use a newspaper experiment to learn more about external validity of lab research. Our workhorse is the Yes-No game. Unlike in ultimatum games responders of the Yes-No games do not know the proposal when deciding between whether to accept it or not. We use two different amounts that can be shared (100 Euro and 1000 Euro). In line with findings for the ultimatum game, offers were fairer and rejections less likely when participants are older and submit their decisisons via mail rather than the Internet. By comparing our results with other studies (using executives or students), we demonstrate, at least for this type of game, the external validity of lab research.
    JEL: C91 C93
    Date: 2010–01–25

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