nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2010‒02‒20
eleven papers chosen by
Erik Thomson
University of Manitoba

  1. The Contributions of Two Eminent Japanese Scholars on the Development of Economic Theories: Michio Morishima and Takashi Negishi By Kurz, Heinz D.
  2. A propósito de Antonio Maria: tendências recentes da metodologia econômica By Bianchi, Ana Maria
  3. Cooperation and diversity. An evolutionary approach By Bruni, Luigino; Smerilli, Alessandra
  4. International economic theory and politics: world structure before, during and after the early 21st Century Crisis By Naqvi, Nadeem
  5. What Determines Productivity? By Chad Syverson
  6. Edgeworth vs. Walras on Equilibrium and Disequilibrium By Franco Donzelli
  7. In Favor of Rigor and Relevance. A Reply to Mark Blaug By Kurz, Heinz D.; Salvadori, Neri
  8. Certain and Uncertain Utility: The Allais Paradox and Five Decision Theory Phenomena By James Andreoni; Charles Sprenger
  9. The Beat of the Economic Heart: Joseph Schumpeter and Arthur Spiethoff on Business Cycles By Kurz, Heinz D.
  10. So you want to run an experiment, now what? Some Simple Rules of Thumb for Optimal Experimental Design By John A. List; Sally Sadoff; Mathis Wagner
  11. Sukukization: Islamic Economic Risk Factors in Shari’ah View By Alsayyed, Nidal

  1. By: Kurz, Heinz D.
    Abstract: There can be no doubt that Michio Morishima and Takashi Negishi are two of the most important historians of economic thought of the recent past. Both authors contributed numerous papers and books to the subject, dealing with the works of major economists from the very inception of systematic economic thought at the time of the classical economists up until modern times. And both authors combined a vivid interest in modern economic theory with an interest in what past masters had to say. The paper assesses and compares the motivations of the two authors to engage in the history of economic theories, their similar, but different approaches to do historical research, and their achievements in this regard. Given the remarkable amount of work each one of them accomplished, the paper has to focus attention on a subset of the themes the two authors dealt with. The emphasis will be on (i) their treatment of the classical theories of value, distribution and capital accumulation, especially those of Adam Smith and David Ricardo, (ii) their discussion of the contributions of Karl Marx and some Marxists, (iii) their interpretation of some early and mature marginalist economists, especially Léon Walras, Eugen von Böhm-Bawerk and Knut Wicksell, and (iv) their views about the achievements of John Maynard Keynes. Given the intrinsic complexity of each of these themes, it goes without saying that the paper is bound to proceed largely in terms of synthetic statements.
    Keywords: Negishi; Takashi; Morishima; Michio; general equilibrium; Marxist economics; trade; growth
    JEL: B31 C02 B16
    Date: 2010
  2. By: Bianchi, Ana Maria
    Abstract: This is a discussion about the recent trends in the field of economic methodology. I argue that methodologists now agree that the evaluation of economic theories based on universal fixed rules has proven to be sterile. Instead, they tend to focus the methodological options actually made by economists in their effort to build theories. Nevertheless, some very general questions about the nature of science and the relation between theory and empirical work still need to be addressed. I use as an illustration of my point of view the case of behavioral economics.
    Keywords: economic methodology methodological rules behavioral economics
    JEL: B40 B41
    Date: 2010–01
  3. By: Bruni, Luigino; Smerilli, Alessandra
    Abstract: n this paper we propose a pluralistic and multi-dimensional ap- proach to cooperation. Specifically, we seek to show that, in certain settings, less unconditional forms of cooperation may be combined with more gratuitous ones. Starting with the prisoner’s dilemma game, the evolution of cooperation is analyzed in the presence of different strate- gies, which represent the heterogeneity of the forms of cooperation in civil life. There are many behaviour patterns, though not all of them are based on self-interest and conditionality. The dynamics of coop- eration are studied through the use of evolutionary games applied in contexts that are either one-shot or repetitive. One of the most impor- tant results of the paper is the conclusion that cooperation is favoured by heterogeneity.
    Keywords: cooperation; Prisoner’s Dilemma; reciprocity; hetero- geneity; evolutionary game theory
    JEL: D64 C73 C72
    Date: 2010–01
  4. By: Naqvi, Nadeem
    Abstract: In his Inquiry into the Nature and Causes of the Wealth of Nations Adam Smith (1776) considered the phenomenon of division of labor so enormously significant for the creation of a nation’s wealth that he devoted the first three chapters of his book to an investigation of this process. This is an ongoing process of greater and greater specialization, and there have been episodes of faster pace, and some slower pace, but the process has never stopped so far in human history. However, this process, carried far enough, can eventually results in episodes, sometimes painfully prolonged, in which there emerges a divergence between the distribution of quantities supplied of horizontally-differentiated distinct types of human capital embodied in different persons and distribution of quantities demanded of persons with distinct skills by employers, private or public, or otherwise. This sustained divergence of supply and demand distributions of distinct skill categories may be called Embodied Human Capital Unemployment. This is a phenomenon not seen before in social history, simply because specialization of persons in very narrowly partitioned skill types that are, effectively, non-transferable across different persons, had never occurred before in our history. That is why it is a new phenomenon, and it is time we understood what it is. Moreover, it has an abiding character, a stationary state nature, and (1) thus should emerge as an equilibrium phenomenon in a fully specified general equilibrium model of a market economy, and (2) should be of concern to us, since it is going to be around for a while as we all live our lives. I illustrate the relevance of this new concept of unemployment to the U.S economy in the first decade of the 21st Century. This helps achieve a deeper understanding of the current global economic crisis, and inter alia to identification of potentially effective, and potentially ineffective, public policies. Additional implications are (b) the emergence of a new social formation that may be called World Market Capitalism, which has a vastly different economic foundation of relations of production and income distribution compared to the pre-21st Century economic system that then existed in the world, and (c) the transition from a uni-polar world, with the U.S.A. as the single center of power, after the fall of the Soviet Union in 1989, to a multi-polar world order at the end of the first decade of the 21st Century, with implications for strategic interaction and coalition formation. (403 words)
    Keywords: Marxian; Keynesian; human capital; unemployment; economic; financial; political; crisis; globalization; capitalism; international capital mobility; division of labor; Adam Smith; USA; China; India; Japan
    JEL: F16 N10 F54 P16 J62 E30 E24 N30 F01 F21 D50 O24 J01 E44 E10 E60 P50 F11 F02 F41 I28
    Date: 2010–02–07
  5. By: Chad Syverson
    Abstract: Economists have shown that large and persistent differences in productivity levels across businesses are ubiquitous. This finding has shaped research agendas in a number of fields, including (but not limited to) macroeconomics, industrial organization, labor, and trade. This paper surveys and evaluates recent empirical work addressing the question of why businesses differ in their measured productivity levels. The causes are manifold, and differ depending on the particular setting. They include elements sourced in production practices—and therefore over which producers have some direct control, at least in theory—as well as from producers’ external operating environments. After evaluating the current state of knowledge, I lay out what I see are the major questions that research in the area should address going forward.
    JEL: D2 D24 E2 E23 F1 L1 L11 L2 L23
    Date: 2010–01
  6. By: Franco Donzelli (University of Milano)
    Abstract: In a brief review of the second edition of Walras's Eléments, published in 1889, Edgeworth criticizes Walras's theory of tâtonnement, viewed as a misplaced and misleading attempt at explaining the equilibration process in a multi-market economy. Edgeworth's attack sets off a controversy, raging over the 1889-1891 period, and then smouldering over the entire lives of both economists. The chief aim of this paper is to analyze the joint evolution of Edgeworth's and Walras's ideas on equilibrium and equilibration from the 1889-1891 controversy onwards. Even if Edgeworth's original critique concerns Walras's tâtonnement only, it will be proved that the fundamental divide between the two authors involves not only the dynamic, but also the static part of their respective theoretical systems. The Edgeworth-Walras controversy will be shown to produce major effects on both Walras and Edgeworth: both of them will partially revise their ideas on statics and dynamics; further, either one will take in some hints originating from the other. Yet, in spite of their reciprocal influences, their mutual communication will turn out to be quite limited. For Edgeworth will prove unable to understand the central, and unsolvable, problem of tâtonnement from Walras's own standpoint: how to preserve a "realistic" and comprehensive picture of an observable disequilibrium process in "real" time, without disrupting the assumption of data invariance during the equilibration process. At the same time Walras will prove unable to grasp the essence of Edgeworth's critique: that bargaining is more "fundamental" than price-taking behavior, so that the core is a broader solution concept than competitive equilibrium and recontracting a more general equilibration process than tâtonnement.
    Keywords: Edgeworth, Walras, equilibrium, disequilibrium, statics, dynamics,
    Date: 2009–11–27
  7. By: Kurz, Heinz D.; Salvadori, Neri
    Abstract: The paper discusses Mark Blaug’s recent criticisms of “Sraffian economics”. It is shown that none of the criticisms stand up to close examination. Blaug commits a number of elementary blunders and mistakes the mathematical form of an argument for its content. He variously contradicts himself and puts forward bold contentions that cannot be sustained. The paper concludes with an obvious plea for rigor and relevance.
    Keywords: Piero Sraffa;Mark Blaug; General Equilibrium
    JEL: B51 D50 B12 A12 A11
    Date: 2010–02–04
  8. By: James Andreoni; Charles Sprenger
    Date: 2010–02–04
  9. By: Kurz, Heinz D.
    Abstract: The paper discusses the relationship between Arthur Spiethoff and Joseph A. Schumpeter, the men and their works. Had it not been for Spiethoff Schumpeter would in all probability have forever been lost to scientific work. It was Spiethoff who brought the Austrian back to academia and research after a sequence of serious mishaps in politics and banking. Spiethoff's contribution to an analysis of business cycles is then summarized and important similarities and some differences between it and Schumpeter's are pointed out. The view of Spiethoff and Schumpeter that cycles are endogenous and cannot possibly be eliminated without at the same time eliminating the dynamism of the capitalist economy is then couterposed with views of some of their contemporaries and particularly modern mainstream macroeconomics that this is not so.
    Keywords: Schumpeter; Spiethoff; business cycles; innovations; creative destruction
    JEL: B31 E32 O31 O12
    Date: 2010–01
  10. By: John A. List; Sally Sadoff; Mathis Wagner
    Abstract: Experimental economics represents a strong growth industry. In the past several decades the method has expanded beyond intellectual curiosity, now meriting consideration alongside the other more traditional empirical approaches used in economics. Accompanying this growth is an influx of new experimenters who are in need of straightforward direction to make their designs more powerful. This study provides several simple rules of thumb that researchers can apply to improve the efficiency of their experimental designs. We buttress these points by including empirical examples from the literature.
    JEL: C9 C91 C92 C93
    Date: 2010–01
  11. By: Alsayyed, Nidal
    Abstract: Despite the Economic closeness of overall concept, Sukukization (Islamic Securitization) is not equal to “Securitization” as it is known in its conventional sense. Securitization, generally relates to the converting of loans of various sorts into marketable securities by packaging the loans into pools and then selling shares of ownership in the pool itself. Sukukization, on the hand; refers to, Islamic Sukuk Investment (as defined by AAOIFI) are certificates of equal value representing undivided shares in ownership of tangible assets, usufruct and services. The development of innovative Economic financial solutions in the Muslim world has been dormant for centuries. It is only recently, since the early 1970s that significant work that has been done in the field of Islamic Capital Market. In order to take benefit from Western financial structures, care must be taken to make sure that the concepts are acceptable by Shari’ah. The West has had significant success in linking the End-Investor (Excess Capital) with the most optimal user of this Excess Capital; be it the Stock Market, Debt Market or the Securitization structures, they all serve the purpose of linking Capital with its most optimal (on a risk-adjusted basis) user. It must be kept in mind, that even though the West has had more success than the Muslim world in implementation of a financial system, it has been plagued with constant cycles of boom and bust. The most recent financial markets crisis has again opened the discussion for the need of structural changes to the current financial models/instruments in place. Most commentators have stressed for the need of more regulation whereas the stress should be on making changes to the structural features of the financial instruments. An in-depth discussion of the financial system is beyond the scope of this article and for now the focus will only be on the Islamic Securitization structures (Sukukization) for the housing capital market and the relevant Economic factors.
    Keywords: Islamic Economics; Sukukization; Macroeconomics; Shari’ah Standards; AAOIFI; Islamic Economics; Securitization; SPV
    JEL: Z12 C12 A10 E60
    Date: 2010–01–02

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