nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2010‒07‒17
seven papers chosen by
Erik Thomson
University of Manitoba

  1. Georg de Buquoy - Founder of Mathematical Economy with South Bohemian Roots By Dalibor Stys; Miroslav Valcihova
  2. A remark on intensive differential rent and the labour theory of value in Ricardo By Fratini, Saverio M.
  3. Parallel Journeys: Adam Smith and Milton Friedman on the Regulation of Banking By Hugh Rockoff
  4. Incomplete Contracts: Foundations and Applications By Pei, Di
  5. Are They Watching You and Does It Matter? - Evidence from a Natural Field Experiment By Alpízar, Francisco; Martinsson, Peter
  6. Johansen's contribution to CGE modelling: originator and guiding light for 50 years By Peter B. Dixon; Maureen T. Rimmer
  7. Europe, German Mercantilism and the Current Crisis By Sergio Cesaratto

  1. By: Dalibor Stys; Miroslav Valcihova
    Abstract: Georg de Buquoy, Lord de Vaux, lived in Nove Hrady, Prague and Cerveny Hradek for most of his productive life. From his extensive scientific contributions, both theoretical and experimental, we expand here the discussion of his contributions to mathematical economy. He is mainly celebrated as the first persons to define correctly net yield and describe method for its optimization, which was considered "strikingly modern" still in 1950. Buquoy's program was "systematic overview of all theorems which affect maintenance and increase of national wealth" for which he correctly defined and mathematically expressed many economic terms. The most striking feature of Buquoy's writing is that he was also a very influential economic practitioner. He governed one of the wealthiest possessions in Bohemia, and perhaps in Austria, of his time. Thus his economical thinking expands from the "political part", which is economy in modern sense, to "...sources of national wealth, or the technical part of national economy ...". The complexity of Buquoy's view has little match in modern literature namely because the extent of data sources is hardly available in modern times. The article puts Buquoy's mathematical economy contributions in context to his mathematical physics thoughts and approaches. The last direct citation of Buquoy's work comes from the year 2008.
    Date: 2010–07
  2. By: Fratini, Saverio M.
    Abstract: One of the foundations of the labour theory of value used by Ricardo in the Principles is that rent does not enter into commodity prices. In response to objections raised by Malthus and Say, Ricardo defended this idea by arguing that even where all cultivated land pays rent, the last dose of capital employed on the land does not and no rent is therefore involved in the price of the product of this capital. We will show that this claim, which has been believed true by several generations of economists, is based on a misleading argument and in fact incorrect. In particular, we will show that the intensive differential rent paid on land of the worst quality under cultivation enters into the agricultural product price and so, even in the most favourable case, commodities are no longer exchanged at a ratio corresponding to the relative quantities of labour they embody.
    Keywords: differential rent; labour theory of value; methods of production; Ricardo; Sraffa; Smith
    JEL: D46 B12
    Date: 2010–06
  3. By: Hugh Rockoff (Rutgers)
    Abstract: Adam Smith and Milton Friedman are famous for championing Laissez Faire, yet both supported government regulation of the banking system. In both cases their deviation from free market orthodoxy was based on a careful reading of financial history: especially Smith's reading of the Crisis of 1772 and Friedman's reading of the Crisis of 1929-33. In both cases they based their reading on a complex and nuanced account of human nature. This paper describes their parallel journeys to the conclusion that banking requires government regulation.
    Keywords: banking, Adam Smith, Milton Friedman
    JEL: B10
    Date: 2010–03–19
  4. By: Pei, Di
    Abstract: More than twenty years have elapsed since Oliver Hart's Fisher-Schultz lecture on the topic of incomplete contracts. Incomplete contract theory (ICT) has become a rigorous and widely used approach in dealing with various issues. It's applications include firm theory (hierarchies, ownership and control rights, authority,etc.), international trade (judicial quality as comparative advantage, intra-firm trade, etc.), scope of organizations (including the government, see Hart et. al. 1997) and many others. However, it's theoretical foundations have been seriously debated since its first emergence, and even today, the debate is not coming to an end. We will review several significant works on the foundations on ICT, and from comparing their differences in assumptions, methodology and results, we could get some merit on the critical disagreement over these issues, and from these critical disagreements, we could also capture the central ideas for future research on this field. The critical comments on Hart and Moore's 2008 paper about reference point may also suggest that ICT desperately need a solid foundation.
    Keywords: incomplete contracts; unforeseen contingencies; unverifiable; renegotiation; property rights; transaction costs; complexity; implementation mechanism
    JEL: D23 D86
    Date: 2010–05–31
  5. By: Alpízar, Francisco (Environment for Development Program, CATIE); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: In a natural field experiment, we tested whether being alone or in a group had an effect on prosocial behavior as expressed in donations to a recreational park. We also explored whether the presence of people exogenous to the group at the time of the donation had any behavioral effect. Our first treatment aimed at identifying peer effects, whereas our second treatment was similar to being in the public eye. We found that being in a group significantly increases the share of people acting prosocially. Moreover, we found that only individuals who are part of a group are positively affected by the presence of a third party.<p>
    Keywords: Donation; natural field experiment; prosocial behavior; public disclosure
    JEL: C93 Q28
    Date: 2010–07–07
  6. By: Peter B. Dixon; Maureen T. Rimmer
    Abstract: Fifty years ago the Norwegian economist, Leif Johansen, gave us what is now recognised as the first CGE model. While Johansen was first, he is not the father of the whole field. CGE modelling in different styles sprang largely independently from several sources. This paper describes how Johansen's style of CGE modelling took root in Australia in the 1970s and has from there spread to the rest of the world. Today, thousands of economists from nearly every country are undertaking Johansen-style CGE modelling to elucidate policy questions in trade, taxation, environment, labour markets, immigration, income distribution, technology, resources, micro-economic reform and macro stabilization.
    Keywords: CGE modelling, Leif Johansen
    JEL: C68 B23 B31
    Date: 2010–05
  7. By: Sergio Cesaratto
    Abstract: Contributions to Brancaccio and Fontana (2011) look at a variety of aspects of the current crisis, some of them focusing on the contingent financial causes, others on the underlying contradictions of capitalist economies. In this context, less attention has been paid to the role of Europe and particularly Germany. Europe has not been distinguished by an assertive and cooperative economic policy stance in the aftermath of the current crisis. German mercantilist policies are said to be behind the European policy stance and a source of regional and global imbalances. After a brief examination of the main pillars of European economic policy and German behaviour during the present crisis, these notes suggest an embryonic interpretation of the origins of mercantilist behaviour, dwelling on the nature of mercantilism in economic theory and commercial practice, and of the allegedly German mercantilist model. The suggested interpretation is that in the German case, the national mystique of a trade surplus may have had a role in disciplining the labour market and at the same time assuring profits. Recent developments in Spring 2010 have shown the gravity of the European imbalances in the global crisis (see Cesaratto 2010) and the relevance of the background issues discussed in the present paper.
    JEL: B11 N14 F1 F33
    Date: 2010–05

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