nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2011‒02‒26
twelve papers chosen by
Erik Thomson
University of Manitoba

  1. (Mis)understanding Classical Economics By Thomas, Alex M
  2. Money and Keynesian Uncertainty By Lucarelli, B.
  3. The Influence of Michal Kalecki on Joan Robinson’s Approach to Economics By Peter Kriesler; G. C. Harcourt
  4. On Smith's ambiguities on value and wealth By Meacci, Ferdinando
  5. Взгляд экономиста-социолога: заметки с XVII Мирового социологического конгресса, Гетеборг, Швеция, 11-17 июля 2010 By Kirdina, Svetlana
  6. Fiscal decentralisation in the Netherlands: History, current practice and economic theory By Frits Bos
  7. The Tyranny Puzzle in Welfare Economics: An empirical investigation By Marc Fleurbaey; Frank A Cowell; Bertil Tungodden
  8. Irish Perceptions of the Great Depression By Frank Barry and Mary E. Daly; Mary E. Daly
  9. Neoliberalism’s relationship with economic growth in the developing world: Was it the power of the market or the resolution of financial crisis? By Cohen, Joseph N
  10. Personality Psychology and Economics By Almlund, Mathilde; Duckworth, Angela Lee; Heckman, James J.; Kautz, Tim
  11. Tocqueville on Poverty in Industrial Democracies By Jimena Hurtado
  12. Social Norm, Costly Punishment and the Evolution to Cooperation By Yu, Tongkui; Chen, Shu-Heng; Li, Honggang

  1. By: Thomas, Alex M
    Abstract: In 1936, Keynes published The General Theory of Employment, Interest and Money, one of the most influential books in economics of the twentieth century. With this publication, Keynes has confused and will continue to confuse generations of economists as to what classical economics means. This short essay argues that the 'classical economists' whom Keynes referred to in The General Theory were actually those economists who primarily employed 'marginal methods' in economics.
    Keywords: Classical economics; Keynes; Ricardo
    JEL: B12 E12 B22 B13
    Date: 2011
  2. By: Lucarelli, B.
    Abstract: Keynes’s theory of a monetary economy and his liquidity preference theory of investment will be examined in order to highlight the essential properties of money under the conditions of uncertainty, which inevitably prefigures the existence of involuntary unemployment and could – within a laissez faire, deregulated financial system – induce phases of endemic financial instability and crises.
    Keywords: uncertainty; money; liquidity preference; crisis; investment
    JEL: B10 D53 B31 A20 B50 B22 A10
    Date: 2010–06–26
  3. By: Peter Kriesler (School of Economics, University of New South Wales); G. C. Harcourt (Jesus College Cambridge and University of New South Wales)
    Abstract: Joan Robinson and Michal Kalecki were two of the intellectual giants of twentieth century economics, whose contributions over a significant range of issues have had major impacts on economics. This paper examines the significant communications between them, concentrating on the major cross influences which were apparent from the first time that they met. It focuses on Kalecki’s influence on Joan Robinson in a number of areas. In particular, there was much communication between them about developments in Keynesian theory, where Joan Robinson was influenced by Kalecki’s Marxian approach. Further areas of influence included the role and determination of investment and innovation, the nature of price setting in capitalist economies, and methodological issues associated with the nature of economic theory, particularly with respect to economic cycles and trends.
    Keywords: History of Economic Thought since 1925; Current Heterodox Approaches; Economic Methodology
    JEL: B20 B50 B41
    Date: 2010–11
  4. By: Meacci, Ferdinando
    Abstract: Ricardo’s criticisms of Adam Smith on value and wealth have been sometimes rejected and sometimes accepted in the period following the publication of his Principles. By contrast, they have been mostly ignored in the recent revivals of Ricardian economics both in the branch concerned with value and distribution and in the branch devoted to wealth and equilibrium growth. This paper intends to fill the gap between these two branches by revisiting Smith’s link between value and wealth in the light of Ricardo’s criticisms. This is done in two steps. The first step is provided in Part I and deals with Ricardo’s criticisms i) of Say’s and Lauderdale’s criticisms of Smith on this issue, and ii) of Smith’s and Malthus’ arguments on the related issues of rent and of the “annual produce of the land and labour of a country”. The second step is provided in Part II. The aim of this Part is to dissolve Smith’s terminological inaccuracies or contradictions by disentangling them from the analytical foundations of his system of thought. This is done by re-examining Smith’s arguments on value and wealth in the light of two distinctions. One runs between the two points of view –of an individual and of society– which underlie the whole of his system of thought. The other is put forward by Smith himself in a neglected passage of the Wealth and runs between the notions of “work done” and “work to be done”. Both distinctions are then utilized to revisit the principle of exchangeable value as command of labour in the economy as a whole and in the sense of work to be done. The paper is closed by arguing that this principle is needed for supporting the idea of a permanent increase in the natural price of labour (in Smith’s rather than in Ricardo’s sense) in economies exposed to a continuous process of accumulation.
    Keywords: Smith, Ricardo, value, wealth, labour
    JEL: B12 B0
    Date: 2010–10
  5. By: Kirdina, Svetlana
    Abstract: The objective of the paper is to analyze the results of XVII World Congress of Sociology (Gothenburg, Sweden) in July 2010. The necessity to reconstruct the key-sociological paradigm with its western-centric modality is claimed. Parallels with the situation in modern economic theory are emphasized.
    Keywords: социологическая теория методология международное сотрудничество ученых Россия
    JEL: B40 P51
    Date: 2010–09
  6. By: Frits Bos
    Abstract: This paper describes and discusses the division of tasks between Dutch central and local government and their financing in view of economic theory.
    JEL: D70 H11 H70 N43 N44
    Date: 2010–12
  7. By: Marc Fleurbaey; Frank A Cowell; Bertil Tungodden
    Abstract: We address a puzzle in welfare economics - the possibility that rational people may be simultaneously against two apparently con‡icting forms of "tyranny." In fact the two types of tyranny can be reconciled but at the possible cost of con‡ict with other standard welfare principles. We examine whether such con‡icts do arise using a questionnaire-experimental study. Our study shows that both tyrannies are rejected by a majority of the parti- cipants, and in many cases also pose a practical problem in moral reasoning
    Keywords: Keywords: social welfare, aggregation, questionnaire, income distribution
    JEL: H20 H21
    Date: 2010–05
  8. By: Frank Barry and Mary E. Daly (Institute for International Integration Studies, Trinity College Dublin); Mary E. Daly (University College Dublin)
    Abstract: This paper traces how the Great Depression was perceived in 1930s Ireland. Perceptions were complicated by internal political developments. Fianna Fáil, upon acceding to power in 1932, rapidly expanded protection and engaged in (near balanced budget) fiscal expansion. Despite the tariff war with Britain triggered by the land annuities dispute, Ireland appears to have weathered the storm better than most other European economies. The contemporary writings of academic economists reflected the influence of Lionel Robbins and the Austrian School, while – to paraphrase Ronan Fanning – the winds of change in Irish economics blew much more vigorously in the corridors of the public service.
    Keywords: Great Depression, Ireland, Irish Economic Thought, Irish Economic Policy
    JEL: B22 N14 N74
    Date: 2011–01
  9. By: Cohen, Joseph N
    Abstract: Between 1995 and 2007, the world’s economies embraced neoliberal reforms and prospered, a coincidence that is often taken as proof that liberal economies grow faster. A large body of econometric research shows that “freer” economies are more prosperous. I levy two methodological criticisms at this literature that ultimately render a very different picture of pro-market reforms’ relationship with growth. My analysis suggests that neoliberal reforms did not significantly affect growth where they did not ease public financing or encourage foreign investment. The evidence does not suggest that the economic prosperity of the past 20 years is due to economic liberalism per se, but rather the developing world enjoying stabilized macrofinancial systems and a global investment boom. Neoliberal reforms may have helped produce this stability and investment, but systemic financial stabilization was only one of several goals that they pursued. A sober interpretation of the data finds little evidence for believing that economies will prosper as they embrace laissez-faire ideals.
    Keywords: economic freedom; neoliberalism; laissez faire; periodicity; economic growth; economic development; capitalism
    JEL: P11 O4 E61 O21
    Date: 2011–02–15
  10. By: Almlund, Mathilde (University of Chicago); Duckworth, Angela Lee (University of Pennsylvania); Heckman, James J. (University of Chicago); Kautz, Tim (University of Chicago)
    Abstract: This paper explores the power of personality traits both as predictors and as causes of academic and economic success, health, and criminal activity. Measured personality is interpreted as a construct derived from an economic model of preferences, constraints, and information. Evidence is reviewed about the "situational specificity" of personality traits and preferences. An extreme version of the situationist view claims that there are no stable personality traits or preference parameters that persons carry across different situations. Those who hold this view claim that personality psychology has little relevance for economics. The biological and evolutionary origins of personality traits are explored. Personality measurement systems and relationships among the measures used by psychologists are examined. The predictive power of personality measures is compared with the predictive power of measures of cognition captured by IQ and achievement tests. For many outcomes, personality measures are just as predictive as cognitive measures, even after controlling for family background and cognition. Moreover, standard measures of cognition are heavily influenced by personality traits and incentives. Measured personality traits are positively correlated over the life cycle. However, they are not fixed and can be altered by experience and investment. Intervention studies, along with studies in biology and neuroscience, establish a causal basis for the observed effect of personality traits on economic and social outcomes. Personality traits are more malleable over the life cycle compared to cognition, which becomes highly rank stable around age 10. Interventions that change personality are promising avenues for addressing poverty and disadvantage.
    Keywords: personality, behavioral economics, cognitive traits, wages, economic success, human development, person-situation debate
    JEL: I2 J24
    Date: 2011–02
  11. By: Jimena Hurtado
    Abstract: In this paper I explore Tocqueville’s views on poverty and pauperism in democratic times. Tocqueville’s explanation of economic and social phenomena linked to the raise of equality, show the difficult dilemmas he foresaw with the consolidation of democracy and increasing industrialization. New social classes and the unequal access to wealth would generate a social problem which could, eventually, threaten freedom.
    Date: 2011–02–02
  12. By: Yu, Tongkui; Chen, Shu-Heng; Li, Honggang
    Abstract: Both laboratory and field evidence suggest that people tend to voluntarily incur costs to punish non-cooperators. While costly punishment typically reduces the average payoff as well as promotes cooperation. Why does the costly punishment evolve? We study the role of punishment in cooperation promotion within a two-level evolution framework of individual strategies and social norms. In a population with certain social norm, players update their strategies according to the payoff differences among different strategies. In a longer horizon, the evolution of social norm may be driven by the average payoffs of all members of the society. Norms differ in whether they allow or do not allow for the punishment action as part of strategies, and, for the former, they further differ in whether they encourage or do not encourage the punishment action. The strategy dynamics are articulated under different social norms. It is found that costly punishment does contribute to the evolution toward cooperation. Not only does the attraction basin of cooperative evolutionary stable state (CESS) become larger, but also the convergence speed to CESS is faster. These two properties are further enhanced if the punishment action is encouraged by the social norm. This model can be used to explain the widespread existence of costly punishment in human society.
    Keywords: social norm; costly punishment; cooperative evolutionary stable state; attraction basin; convergence speed
    JEL: C02 D64 C73
    Date: 2011–02–01

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