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on History and Philosophy of Economics |
| By: | Dembinski, Paul H. |
| Abstract: | On the 29 of June 2009, the Pope Benedict XVIth published Caritas in Veritate, his third encyclical letter. It was addressed to the clergy but also to “lay faithful and all people of good will”. In the two papers assembled here under one single title, the author enters in dialogue with the Papal encyclical from the perspective of an economist interested in ethical issues related specially to finance. > First paper “Incompleteness of Economy and Business: A Forceful Reminder” is to be published in the Journal of Business Ethics. It underlines the logical incompleteness of both economic theory and business practice. Although Caritas in Veritate does not address this question explicitly, the reminder of incompleteness seems to be the main lessons the “dismal” discipline should draw form the encyclical. > Second paper “Fecundity vs. Efficiency: Rediscovering Relations” will appear in the forthcoming book “Human Development in Business” (D. Mele & C. Dierksmeier, ed). The paper analyses the ethical underpinnings of the present systemic crisis. It builds on the “category of relation” - as suggested by Caritas in Veritate - in the context of financial activities and contrasts it with the “category of transaction”. In conclusion, the paper suggests that transactions may breed efficiency but only relations will breed fecundity - economic, social and spiritual. Caritas in Veritate, as every encyclical is a letter, an invitation to exchange. The comments and thoughts expressed here are not only respectful answer to the Pope's message but also a set of questions and possible suggestions on how to make the main message of the Church easier to understand be by “lay faithful and all people of good will” who are either practitioners of business and finance, or teachers of management, finance or economics in universities or business schools. |
| Keywords: | Caritas in Veritate ; ethics ; exchange ; financial crisis ; Gödel's Theorems ; incompleteness in economics ; purpose of business ; relation ; System of National Accounts (SNA) ; transaction |
| JEL: | A11 A12 A13 A2 G01 |
| Date: | 2011–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:fri:fribow:fribow00422&r=hpe |
| By: | Konzelmann, S.; Fovargue-Davies, M. |
| Abstract: | The return to economic liberalism in the Anglo-Saxon world was motivated by the apparent failure of Keynesian economic management to control the stagflation of the 1970s and early 1980s. In this context, the theories of economic liberalism, championed by Friederich von Hayek, Milton Friedman and the Chicago School economists, provided an alternative. However, the divergent experience of the US, UK, Canada and Australia reveals two distinct 'varieties' of economic liberalism: the 'neo-classical' incarnation, which describes American and British liberal capitalism, and the more 'balanced' economic liberalism that evolved in Canada and Australia. In large part, these were a product of the way that liberal economic theory was understood and translated into policy, which in turn shaped the evolving relationship between the state and the private sector and the relative position of the financial sector within the broader economic system. Together, these determined the nature and extent of financial market regulation and the system's relative stability during the 2008 crisis. |
| Keywords: | Corporate governance, Regulation, Financial market instability, liberal capitalism, Varieties of capitalism |
| JEL: | E44 G38 N10 N20 P16 P17 P52 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp422&r=hpe |
| By: | Deakin, S. |
| Abstract: | This paper explores the scope for synthesis between economic and systemic approaches to the understanding of legal evolution. The evolutionary and epistemic branches of game theory predict that stable norms will emerge when agents share common beliefs concerning future states of the world. Systems theory see the legal order as a social system which reproduces itself by recursive acts of legal communication, thereby giving rise to self-reference and operational closure. At the same time, the legal system is cognitively open, that is to say, indirectly influenced by other social systems in its environment. This gives rise to the possibility of coevolution of law and the economy. It will be argued that systems theory, by developing the idea of law as an adaptive system with cognitive properties, provides a missing link in the evolutionary theory of norms. Recent game theoretical models imply that common knowledge is not entirely endogenous to agents' interactions, but depends to a certain extent on emergent normative structures. These include the public representations of common knowledge which are provided by the legal system. The paper will explore the implications of this idea, argue for an integrated economic and systemic analysis of legal evolution, and consider some of the theoretical and methodological implications of such a step. |
| Keywords: | Legal evolution, game theory, correlated equilibrium, social norms, systems theory, contract theory, legal origins |
| JEL: | C72 C73 K12 K22 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp424&r=hpe |
| By: | Estrada, Fernando |
| Abstract: | This article evaluates Herbert A. Simon’s contribution to organization theory, placing special emphasis on the criterion of bounded rationality. Simon’s criticism of the orthodox version of organizational bureaucracy is interpreted and his analysis is extended to institutional economics. One of Simon’s main achievements in organizational theory consisted of analytically evaluating the psychology of individual and collective behaviour, thereby opening up the way for future investigation by D. Kahneman and T. Schelling. |
| Keywords: | Herbert Simon; Bounded rationality; Organizaciones; Racionalidad Limitada; Teoría de las Decisiones; Economía Institucional |
| JEL: | D23 D73 D86 D2 B52 D20 D80 B41 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38686&r=hpe |
| By: | Frances M. B. Lynch; Fernando Guirao |
| Abstract: | Alan S. Milward was an economic historian who developed an implicit theory of historical change. His interpretation which was neither liberal nor Marxist posited that social, political, and economic change, for it to be sustainable, had to be a gradual process rather than one resulting from a sudden, cataclysmic revolutionary event occurring in one sector of the economy or society. Benign change depended much less on natural resource endowment or technological developments than on the ability of state institutions to respond to changing political demands from within each society. State bureaucracies were fundamental to formulating those political demands and advising politicians of ways to meet them. Since each society was different there was no single model of development to be adopted or which could be imposed successfully by one nation-state on others, either through force or through foreign aid programs. Nor could development be promoted simply by copying the model of a more successful economy. Each nation-state had to find its own response to the political demands arising from within its society. Integration occurred when a number of nation states shared similar political objectives which they could not meet individually but could meet collectively. It was not simply the result of their increasing interdependence. It was how and whether nation-states responded to these domestic demands which determined the nature of historical change. |
| Keywords: | historical change, development, World Wars, Third Reich, Blitzkrieg, New Order, Vichy, Fascism, Grossraumwirtschaft, German question, reconstruction, golden age, integration, supranationality, Bretton Woods, Marshall Plan |
| JEL: | B23 B31 F02 F13 F30 F42 F59 N01 N14 N44 N54 O10 O24 O38 O43 P16 P45 Q18 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:586&r=hpe |
| By: | Effrosyni Diamantoudi; Inés Macho-Stadler; David Pérez-Castrillo; Licun Xue |
| Abstract: | We consider environments in which agents can cooperate on multiple issues and externalities are present both within and across issues. We propose a way to extend (Shapley) values that have been put forward to deal with externalities within issues to games where there are externalities within and across issues. We characterize our proposal through axioms that extend the Shapley axioms to our more general environment. |
| Keywords: | externalities, cooperative game theory, Shapley value, linked issues |
| JEL: | C71 D62 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:569&r=hpe |
| By: | Amir Konigsberg |
| Abstract: | The problem of disagreement asks about the appropriate response (typically the response of a peer) upon encountering a disagreement between peers. The responses proposed in the literature offer different solutions to the problem, each of which has more or less normative appeal. Yet none of these seems to engage with what seems to be the real problem of disagreement. It is my aim in this paper to highlight what I think the real problem of disagreement is. It is, roughly, the problem of deciding whether a revisionary tactic is appropriate following the discovery of disagreement as well as deciding which revisionary tactic is appropriate. This, I will show, is a slippery and inevitable problem that any discussion of disagreement ought to deal with. |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:huj:dispap:dp608&r=hpe |
| By: | Shaikh, Salman |
| Abstract: | Poverty and inequality around the world has been rising over the last three decades and the attainment of the Millennium Development Goals (MDGs) seems a far fetched goal. In explaining underdevelopment, Classical Economics has offered many theories and models including but not limited to Rostow’s Stages of Growth Theory, Harrod-Domar Model, Solow’s Growth Model, Dependency Theory, Lewis Two Sector Model, Neo-colonial Dependence Model, False-Paradigm Model, and Dualistic-Development Thesis etc. This study analyzes the theories of development proposed in classical literature in the light of Islamic Economics and investigates whether policy response influenced by some of these theories had been effective or not in selected countries and regions. In light of recent developments in growth literature, the last section of the paper also analyzes whether Islamic economics principles have the capacity to ensure that determinants of growth suggested by ‘new growth theory’ will exist in an Islamic economy and together with these, do Islamic economic principles have other distinctive mechanisms and institutions that can help in the development process. |
| Keywords: | Interest free economy; Public finance; Taxation; Inequality; Income redistribution; Islamic economic system; fiscal policy; deficit financing |
| JEL: | O11 L38 I31 |
| Date: | 2012–04–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38530&r=hpe |
| By: | Larbi Alaoui |
| Abstract: | There are many situations in which individuals have a choice of whether or not to observe eventual outcomes. In these instances, individuals often prefer to remain ignorant. These contexts are outside the scope of analysis of the standard von Neumann-Morgenstern (vNM) expected utility model, which does not distinguish between lotteries for which the agent sees the nal outcome and those for which he does not. I develop a simple model that admits preferences for making an observation or for remaining in doubt. I then use this model to analyze the connection between preferences of this nature and risk-attitude. This framework accommodates a wide array of behavioral patterns that violate the vNM model, and that may not seem related, prima facie. For instance, it admits self-handicapping, in which an agent chooses to impair his own performance. It also accommodates a status quo bias without having recourse to framing e effcts, or to an explicit definition of reference points. In a political economy context, voters have strict incentives to shield themselves from information. In settings with other-regarding preferences, this model predicts observed behavior that seems inconsistent with either altruism or self-interested behavior. |
| Keywords: | value of information, uncertainty, recursive utility, doubt, unobserved outcomes, unresolved lotteries |
| JEL: | D03 D80 D81 D64 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:625&r=hpe |
| By: | Martin Machay (School of Business Administration, Silesian University) |
| Abstract: | One of the most enchanting areas in economics is the forward thinking. While Malthus and Ricardo agreed on the gloomy vision of the future, Mill described the wider stationary state and foresaw it in a more optimistic way. Space sciences and improvements in our technology provided us with the solution decades ago, although economics did not notice this possible solution of the classical stationary state until now. This article incorporates this knowledge into economics. Calories integrate the supply of means of production and the demand for means of consumption in one market. The stationary state could come only if the demand for means of subsistence grows faster than the supply of means of production. Increasing scarcity of free calories exceeding the minimal required volume of it preventing the malnutrition and death will push the calorie price up while economy will move towards the stationary state. But where to take the land when the very last piece of it – even the deserts – will be already cultivated? Increasing scarcity of land opens possibility for firms to make profit from producing land. Thus, the classical stationary state is only an illusion. |
| Keywords: | stationary state, terraforming, food, population growth, nutrition, space economics |
| JEL: | J11 Q11 Q15 Q21 Y90 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:men:wpaper:18_2012&r=hpe |