nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2015‒01‒19
twelve papers chosen by
Erik Thomson
University of Manitoba

  1. "The Socialization of Investment, from Keynes to Minsky and Beyond" By Riccardo Bellofiore
  2. On the Missing Macroeconomics of Social Liberalism: From Physiocrats to Pre-war Chicagoans and Freiburg By Soldatos, Gerasimos T.
  3. Schumpeter and Venture Finance. Radical Theorist, Broke Investor and Enigmatic Teacher By Michael Peneder; Andreas Resch
  4. Unprecedented actions: the Federal Reserve’s response to the global financial crisis in historical perspective By Mishkin, Frederic S.; White, Eugene
  5. Antinomies de Le Capital au XXIe siècle By Estrada, Fernando
  6. A Model Of Tacit Collusion: Nash-2 Equilibrium Concept By Marina S. Sandomirskaia
  7. Women and happiness By Matteucci, Nicola; Vieira Lima, Sabrina
  8. Новая теория рынка и капитализма. В 3-х частях. Предисловие By Zheleznyak, Anatoliy
  9. Exploitation, Mutual Advantage and The Myth of the Samaritan's Dilemma By Alain Marciano
  10. Cooperating against inequality? War and commons in Renaissance Lombardy By Matteo Di Tullio
  11. The Crisis of International Human Rights Law in the Global Market Economy By Daniel Augenstein
  12. The Rational Islamic Actor? Evidence from Islamic Banking By Seda Demiralp; Selva Demiralp

  1. By: Riccardo Bellofiore
    Abstract: An understanding of, and an intervention into, the present capitalist reality requires that we put together the insights of Karl Marx on labor, as well as those of Hyman Minsky on finance. The best way to do this is within a longer-term perspective, looking at the different stages through which capitalism evolves. In other words, what is needed is a Schumpeterian-like, nonmechanical view about long waves, where Minsky's financial Keynesianism is integrated with Marx's focus on capitalist relations of production. Both are essential elements in understanding neoliberalism's ascent and collapse. Minsky provided crucial elements in understanding the capitalist "new economy." This refers to his perceptive diagnosis of "money manager capitalism," the new form of capitalism that came from the womb of the Keynesian era itself. It collapsed a first time with the dot-com crisis, and a second time, and more seriously, with the subprime crisis. The focus is on the long-term changes in capitalism, and especially on what L. Randall Wray appropriately calls Minsky's "stages approach." Our aim is to show that this theme has a deep connection with the topic of the socialization of investment, central in the conclusions of the latter's 1975 book on Keynes.
    Keywords: Great Recession; Marx; Minsky; Money Manager Capitalism; Neoliberalism; Schumpeter; Socialization of Investment; Stages Approach
    JEL: E5 E11 E12 E32 E44 E60 G01 G20 N10 P16
    Date: 2014–12
  2. By: Soldatos, Gerasimos T.
    Abstract: Put in terms of the two fundamental theorems of welfare economics, social or welfare liberalism is being defined as the tenet criticizing classical liberalism for neglecting the second theorem, having nothing to say about the “liberalism” of macroeconomic policymaking. This note claims that the macroeconomic dimension of social liberalism is the one advanced by pre-war, Old Chicago, which, based on the quantity theory of money, was maintaining (i) that it abides by laissez-faire but against classical liberalism’s laissez faire of “let the cycle run its course”, and given (ii) that Old Chicago was seeing government intervention necessary for income-redistribution reasons, too. Which of the two liberalisms holds the true version of laissez faire? Going back to the Physiocrats who had coined the term, one realizes that they had done so from the welfare liberalist point of view abstracting from the macro-monetary issues raised of Jean Bodin separately. This abstraction continues until today neglecting the “fact” that what Old Chicago had really done was to integrate into social liberalism the quantity-theory-of-money macro-monetary considerations having started with Bodin. The German “experiment” with the Freiburg-School-inspired Soziale Marktwirtschaft - an experiment in social liberalism - attests to the need for “Chicago rules” if social liberalism is to stand out as a different system altogether. In sum, the only microeconomics-cum-macroeconomics consistent with the true, the socio-liberal laissez-faire is the Old Chicago economics. Examples in classical liberalism are Monetarism and Austrian economics whereas Keynesianism and Marxism abandon laissez faire altogether.
    Keywords: Liberalism, Physiocrats, Pre-war Chicagoans, Soziale Marktwirtschaft, Macro-Monetary Economics
    JEL: B1 B2 D02 E3 P1
    Date: 2014
  3. By: Michael Peneder (WIFO); Andreas Resch
    Abstract: Schumpeter's relation to venture finance constitutes a fascinating yet so far unacknowledged chapter of his biography and financial history. Presenting new historical evidence and pointing out connections that have so far escaped attention, we first discuss Schumpeter's venture theory of money and banking, then his personal history as a broke investor in Vienna, and finally his influence on the emerging venture industry during his later years at Harvard. We show how the theoretical vision inspired his failed effort as a venture investor in the 1920s, and provided a powerful intellectual frame for the later development of venture finance in the 1940s.
    Date: 2014–12–16
  4. By: Mishkin, Frederic S. (Columbia University); White, Eugene (Rutgers University)
    Abstract: Interventions by the Federal Reserve during the financial crisis of 2007-2009 were generally viewed as unprecedented and in violation of the rules---notably Bagehot’s rule---that a central bank should follow to avoid the time-inconsistency problem and moral hazard. Reviewing the evidence for central banks’ crisis management in the U.S., the U.K. and France from the late nineteenth century to the end of the twentieth century, we find that there were precedents for all of the unusual actions taken by the Fed. When these were successful interventions, they followed contingent and target rules that permitted pre- tive actions to forestall worse crises but were combined with measures to mitigate moral hazard.
    JEL: E58 G01 N10 N20
    Date: 2014–10–01
  5. By: Estrada, Fernando
    Abstract: Thomas Piketty's "Capital in the 21st century" has been the most important book economy in recent times. Its aim integrates the debate theories of growth, income distribution, inequality and differences between the extremes income and income of the majority. The work predicts a slow increase in the share of capital income and inequality. His proposal for a global tax on capital is a way to evaluate such tendencies.
    Keywords: Piketty, Capital in the 21st century, Capitalism, Distribution, Theory of economics.
    JEL: D3 D31 D33 E2 E25
    Date: 2015
  6. By: Marina S. Sandomirskaia (National Research University Higher School of Economics)
    Abstract: We examine the novel concept for repeated noncooperative games with bounded rationality: \Nash-2" equilibrium, called also \threatening-proof prole" in [16, Iskakov M., Iskakov A., 2012b]. It is weaker than Nash equilibrium and equilibrium in secure strategies: a player takes into account not only current strategies but also the next-stage responses of the partners to her deviation from the current situation that reduces her relevant choice set. We provide a condition for Nash-2 existence, criteria for a strategy prole to be the Nash-2 equilibrium in strictly competitive games, apply this concept to Bertrand and Hotelling game and interpret the results as tacit collusion
    Keywords: Nash-2 equilibrium, secure deviation, Bertrand paradox, Hotelling model, tacit collusion.
    JEL: C72 D03 D43 D70 L13
    Date: 2014
  7. By: Matteucci, Nicola; Vieira Lima, Sabrina
    Abstract: We survey the Happiness and Economics field to systematize the explanations of the happiness gender gap, whose puzzling evidence stands out both synchronically and diachronically. Further, this analysis is completed by an interdisciplinary review of competing perspectives, mostly from psychology and medical sciences. Beside disciplinary specificities and differences, results and explanations also reveal some intriguing commonalities. Psychology and medical sciences (also assisted by cutting edge medical technologies) lead in the static (time-invariant) explanation of happiness and its gender gap, while economic works are better equipped to detect external factors and the role of time-varying objective life conditions. In particular, the Happiness and Economics field has provided original evidence on the country and time variant nature of the happiness gender gap. Finally, different disciplines uncovered the common stylized fact that women are increasingly worse off during their life, by aging, with respect to men: its full explanation still remains at the center of the research agenda.
    Keywords: Happiness, Subjective Well-Being, Psycological Well-Being, Gender gap, Determinants, Interdisciplinary review
    JEL: A12 D10 I31 J13 J16
    Date: 2014–09
  8. By: Zheleznyak, Anatoliy
    Abstract: A new heterodox theory of market and capitalism is suggested. Its key moments and general logic are presented. The theory is based on the distinction between two market types – the simple commodity market and the capitalist one. Disequilibrium and "imperfect competition" are admitted to be a functional norm of capitalist market. Respectively, an equilibrium and "perfect competition" are admitted to be a functional anomaly; crises are considered as the result of such an anomaly. General principles and concrete measures of crisis-proof policy and crisis-proof behavior are suggested. The theory consists of three interconnected parts – a theory of market, a theory of value and a theory of capitalism. Every part is shaped as a separate text (with its abstract, introduction, conclusions and other attributes). Comparison with alternative theories is made in each part. This text contains a common preface and common references only.
    Keywords: Theory of market and capitalism; market; capitalism; value; price; profit; equilibrium (balance); disequilibrium (imbalance); perfect competition; imperfect competition; monopoly; crisis; crisis-proof policy; crisis-proof behaviour
    JEL: A10 B50 D00 D50 E00 E32 P00 P10
    Date: 2014–12
  9. By: Alain Marciano
    Abstract: The objective of this paper is to illustrate a potential problem in Samaritan's dilemmas: that Samaritans have a vested interest in encouraging parasitism. In effect, they gain from their altruism. To demonstrate this result, we show that the Nash equilibrium in a Samaritan's dilemma is a Pareto superior outcome.
    Keywords: Altruism; Samaritan's dilemma; Exploitation; Cooperation
    JEL: H84 I3
    Date: 2014–12
  10. By: Matteo Di Tullio
    Abstract: The aim of this paper is to understand how traditional societies faced a period of general crises and more specifically, which behaviours were adopted to limit the increase of local socio-economic inequality. Thus, this paper focuses on a boundary area (the Geradadda) disputed by Milan and Venice that was constantly crossed and occupied by armies during the long period of the Italian Wars (1494-1559). Analysing the management of local finances, and specifically the local commons, it is possible to show the different ways in which these societies organized themselves and, generally, how economic growth occurred in the early modern period.
    Keywords: Commons, Inequality, Cooperation, Italian Wars, Sixteenth Century, Rural societies
    Date: 2014–12
  11. By: Daniel Augenstein
    Abstract: The article argues that the facticity of the human rights impacts of economic globalisation increasingly undermines the normativity of the state-centred conception of international human rights law. The exposure of the international legal order of states to the operations of global business entities leads to a collusion of sovereign state interest and globalised corporate power at the expense of protecting the rights of victims of human rights violations. The article scrutinises two prominent attempts to address this lacuna of protection: transnational tort litigation and the UN Guiding Principles on Business and Human Rights. It is argued that both approaches are not only an expression of the present crisis of international human rights law but also risk contributing to its perpetuation. While the ‘escape into tort’ results in the privatisation of public human rights in the global market economy, the UN Guiding Principles entrench their territorialisation in the state legal order in the face of global economic challenges. The concluding section reflects on the future pathways of international human rights law by positing a choice between, on the one hand, a more radical departure from human rights’ state-centred heritage and, on the other hand, a transformation of the international legal order of states by virtue of human rights. It highlights the importance of extraterritorial human rights obligations in recovering the state’s legal accountability for human rights violations committed in the course of global business operations.
    Keywords: governance
    Date: 2014–12–03
  12. By: Seda Demiralp (Department of Political Science, Isik University); Selva Demiralp (Department of Economics, Koc University)
    Abstract: Islamic banks create an interest in their own right as a rising branch in financial intermediation, particularly in the post-crisis era. In addition, they also deserve the attention of the students of Islamism due to their possible connection with Islamic movements. Through a comparison of Islamic and conventional banking, we analyze the motivations and behavior of Islamic economic actors who determine the cash flow to Islamic banks. Our findings suggest that, in contrast to popular views that portray these actors as ideologues or financiers of radical Islam, they have pragmatic motivations and may adapt to liberal systems to seize economic incentives.
    Date: 2014–12

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