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on History and Philosophy of Economics |
| By: | L. Randall Wray |
| Abstract: | This paper integrates the various strands of an alternative, heterodox view on the origins of money and the development of the modern financial system in a manner that is consistent with the findings of historians and anthropologists. As is well known, the orthodox story of money's origins and evolution begins with the creation of a medium of exchange to reduce the costs of barter. To be sure, the history of money is "lost in the mists of time," as money's invention probably predates writing. Further, the history of money is contentious. And, finally, even orthodox economists would reject the Robinson Crusoe story and the evolution from a commodity money through to modern fiat money as historically accurate. Rather, the story told about the origins and evolution of money is designed to shed light on the "nature" of money. The orthodox story draws attention to money as a transactions-cost-minimizing medium of exchange. Heterodox economists reject the formalist methodology adopted by orthodox economists in favor of a substantivist methodology. In the formalist methodology, the economist begins with the "rational" economic agent facing scarce resources and unlimited wants. Since the formalist methodology abstracts from historical and institutional detail, it must be applicable to all human societies. Heterodoxy argues that economics has to do with a study of the institutionalized interactions among humans and between humans and nature. The economy is a component of culture; or, more specifically, of the material life process of society. As such, substantivist economics cannot abstract from the institutions that help to shape economic processes; and the substantivist problem is not the formal one of choice, but a problem concerning production and distribution. A powerful critique of the orthodox story regarding money can be developed using the findings of comparative anthropology, comparative history, and comparative economics. Given the embedded nature of economic phenomenon in prior societies, an understanding of what money is and what it does in capitalist societies is essential to this approach. This can then be contrasted with the functioning of precapitalist societies in order to allow identification of which types of precapitalist societies would use money and what money would be used for in these societies. This understanding is essential for informed speculation on the origins of money. The comparative approach used by heterodox economists begins with an understanding of the role money plays in capitalist economies, which shares essential features with analyses developed by a wide range of Institutionalist, Keynesian, Post Keynesian, and Marxist macroeconomists. This paper uses the understanding developed by comparative anthropology and comparative history of precapitalist societies in order to logically reconstruct the origins of money. |
| Keywords: | Origins of Money; Evolution of Financial System; Substantivist Methodology; Comparative History; Nature of Money |
| JEL: | B5 B25 B41 E11 E12 N01 N2 P1 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_717&r=hpe |
| By: | Esther Kessler (University College London, Behavioural & Brain Sciences Unit); Maria Ruiz-Martos (Department of Economics, Universitat Jaume I); David Skuse (University College London, Behavioural & Brain Sciences Unit) |
| Abstract: | Destructive behavior has mostly been investigated by games in which all players have the option to simultaneously destroy (burn) their partners' money. In the destructor game, players are randomly paired and assigned the roles of destructor versus passive player. The destructor player chooses to destroy or not to destroy a share of his passive partner's earnings. The passive partner cannot retaliate. In addition, a random event (nature) destroys a percentage of some passive subject's earnings. From the destructor player's view, destruction is benefit-less, costless, hidden and unilateral. Unilateral destruction diminishes with respect to bilateral destruction studies, but it does not vanish: 15% of the subjects choose to destroy. This result suggests that, at least for some, destruction is intrinsically pleasurable. |
| Keywords: | anti-social behaviour, nastiness, money-burning |
| JEL: | C72 C90 D82 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2012/11&r=hpe |
| By: | Salvadori, Neri; Signorino, Rodolfo |
| Abstract: | The paper analyzes Adam Smith’s views on monopoly focusing on Book IV and V of The Wealth of Nations and argues that Smith has left his analysis of monopoly in an embryonic form while the majority of scholars have assessed it starting from premises different from those, actually though implicitly, used by Smith to approach this subject. We show that Smith makes use of the word ‘monopoly’ to refer to a heterogeneous collection of market outcomes, besides that of a single seller market, and that Smith’s account of monopolists’ behavior is richer than that provided by later monopoly theorists. |
| Keywords: | Competition; Monopoly; Classical Economics; Adam Smith |
| JEL: | L51 B31 B12 L41 D42 |
| Date: | 2012–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38411&r=hpe |
| By: | Alain Béraud (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise) |
| Abstract: | Review article |
| Keywords: | Marshall |
| Date: | 2012–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00690922&r=hpe |
| By: | Chatelain, Jean-Bernard; Ralf, Kirsten |
| Abstract: | The bargaining power of international banks is currently still very high as compared to what it was at the time of the Bretton Woods conference. As a consequence, systemic financial crises are likely to remain recurrent phenomena with large effects on macroeconomic aggregates. Mainstream macroeconomic models dealing with financial frictions failed to explain at least eight features of the ongoing crisis. We therefore suggest two complementary assumptions: (I) A systemic bankruptcy risk stable equilibrium may be feasible, besides another stable equilibrium related to a stability corridor, (II) inefficient financial markets rarely ensure that the price of an asset is equal to its “fundamental long term value”. Both assumptions are compatible with a structural research programme taking into account the Lucas' critique (1976) but may start a creative destruction process of the Lucas' view of business cycles theory. |
| Keywords: | asset prices; liquidity trap; monetary policy; financial stability; business cycles; liquidity trap; dynamic stochastic general equilibrium models |
| JEL: | E5 E6 E4 E3 |
| Date: | 2012–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38474&r=hpe |
| By: | Hsu, Sara |
| Abstract: | The Great Recession was an enormous surprise to mainstream economists, while not as much to non-mainstream economists, due to differences in views of the financial economy and its interaction with the real economy. While policy makers continue to follow mainstream economic theory, with the implication that regulation and transparency can fix any market glitches, many remain skeptical of the ability of regulation to prevent this type of crisis in the future. Deeper restructuring of the economy, with curbs on the worst practices of speculation, are necessary to provide long-term stability. We have explored one way in which to measure speculation versus production, in what we call a “speculative spread,” and suggest that this may be an important means to understanding to what degree the economy is overfinancialized. |
| Keywords: | Great Recession; speculation; financialization; shadow banking |
| JEL: | G01 G20 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38478&r=hpe |
| By: | Carfì, David; Fici, Caterina |
| Abstract: | In this paper, we model - quantitatively – a possible realistic interaction between a tax-payer and his Government. We formalize, in a general setting, this strategic interaction. Moreover, we analyze "completely" a particular realistic sample of the general model. We determine the entire payoff space of the sample game; we find the unique Nash equilibrium of the interaction; we determine the payoff Pareto maximal boundary, conservative payoff zone and the conservative core of the game (part of Pareto boundary greater than the conservative payoff vector). Finally, we suggest possible compromise solutions between the two players. From an economic point of view, the sample chosen gives an example of normative settings, for which there is no reason (convenience), for the tax-payer, to evade the taxes or to declare less than his real income. Moreover, the two proposed compromise solutions (which realize the maximum collective gain) could be significantly applied to distinguished tax-payer (big companies and so on). |
| Keywords: | Government; taxpayer; tax; fiscal policy; tax evasion |
| JEL: | E62 H21 E42 G38 G18 G28 H26 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38506&r=hpe |
| By: | Pablo Branas-Garza (GLoBE, University of Granada and Economic Science Institute, Chapman University); Antonio M. Espin (GLoBE, University of Granada); Filippos Exadaktylos (GLoBE, University of Granada) |
| Abstract: | Economic experiments are usually conducted with university students who voluntarily choose to participate. Outside as well as within the discipline, there is some concern about how this “particular” subject pool may systematically produce biased results. Focusing on social preferences, this study employs a representative sample of a city’s population and reports behavioral data for five experimental decisions. The dataset allows for a ceteris paribus comparison between self-selected students (i.e. the standard subject pool) and the representative population. We demonstrate that in spite of volunteers’ and students’ effects, experimental subjects seem to be an appropriate subject pool for the study of social preferences. |
| Keywords: | experimental economics, external validity, subject pool, selfselection bias, field experiment. |
| JEL: | C90 D03 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:12-11&r=hpe |