nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2015‒03‒27
fourteen papers chosen by
Erik Thomson
University of Manitoba

  1. History of the Concept of Value By J. E. King; Michael McLure
  2. The Question of Knowledge in Economics* By Hans Christian Garmann Johnsen
  3. A-Historical Economic Dynamics: A Book Review By Michael McLure
  5. Democratic Ideal and Democratic Institution ——Study on Mihailo Marlcovic’s Democracy Thought By Xueping Hu
  6. Supply and Demand Is Not a Neoclassical Concern By Lima, Gerson P.
  7. From Aristotle and Thomas Aquinas to Francisco Suárez: a survey of influential topics By Rui Gonçalves
  8. How culture matters: The impact of individual values on development By Judit Kapas
  9. Stable Observable Behavior By Heller, Yuval; Mohlin, Erik
  10. The role of soft factors on economic growth By Bozena Kaderabkova; Klara Cermakova; Robert Holman
  11. A. C. Pigou’s Membership of the ‘Chamberlain-Bradbury’ Committee Part Ii: ‘Transitional’ and ‘Ongoing’ Issues By Michael McLure
  12. Equality of opportunity : theory and evidence By Ferreira,Francisco H. G.; Peragine,Vito
  13. Price Level Stabilization: Hayek and New Keynesians By Pavel Potuzak

  1. By: J. E. King (La Trobe University, Victoria); Michael McLure (University of Western Australia)
    Abstract: In this historical review we distinguish between two broad categories of value theories, objective and subjective, which focus respectively on the conditions of production and on the preferences of consumers. The objective approach to value theory is discussed with respect to classical political economy and the labour theory of value and the Sraffian revival of classical value theory in the twentieth century. The subjective approach to value theory is discussed with reference to neoclassical economics, with emphasis on marginal utility and equilibrium; marginal productivity and the distribution of product; and enhancements to utility analysis developed in the late nineteenth and early twentieth centuries. We conclude with a very brief and speculative reflection on the challenge of the digital age for value theory. The paper has been prepared as an entry for the forthcoming second edition of the International Encylopedia of the Social and Behavioural Sciences (Elsevier).
    Date: 2014
  2. By: Hans Christian Garmann Johnsen (University of Agder)
    Abstract: This article argues that despite the fact that the concept of knowledge and is much discussed, it is underdeveloped in economic theory. It discusses this in relation to three dominant positions in economics; the Neoclassical, Institutional and Austrian. Of the three, the Austrian is the position that has gone deepest into the study of knowledge. However, not even the Austrian position has fully explored how knowledge development can be integrated into its theory. It is therefore argued that economic theory should embrace a broader understanding of knowledge, which draws upon a cross-disciplinary approach and takes into account that knowledge is inherently both a subjective, social and complex phenomenon.
    Keywords: knowledge in economics, economic theory
    Date: 2014–10
  3. By: Michael McLure (Business School, University of Western Australia)
    Abstract: Eralier this year, Mario Pomini published an interesting book titled The Paretian Tradition during the Interwar Period: From Dynamics to Growth (London: Routledge pp162, $140.00, ISBN: 978-0-415-66140-9). In this brief paper, prepared for the History of Economic Thought and Policy, I review Ponimi’s book, discussing his treatment of the contributions of the largely Italian scholars – including Luigi Amorono, Giulio La Volpe, Eraldo Fossati and Giuseppe Palomba – to the Paretian tradition of dynamic general equilibrium. I suggest that this is a useful book that deals with a very interesting episode in intellectual history; although the significant limits of the Pareto inspired approach to dynamics are not fully delineated or explored.
    Date: 2014
    Abstract: The French philosopher Jean Jacques Rousseau (1712-1778) has expressed strident criticism of what he perceived to be the Enlightenment contractualism in Lockean sense and offered his own alternative of republican political theory against it. Moreover, he has very plainly rejected the enlightened confidence in technological progress as a necessary condition in the formation of modern civilization. These two aspects of his political theory have been rightly considered as the preliminary examples of Europe-wide Counter-Enlightenment thought. However, Rousseau’s views on political economy have not much been evaluated for a clear understanding of his Counter-Enlightenment position. This paper will first concentrate on possible reasons for why Rousseau’s work has not become a source of discussion within the nexus of Enlightenment and Counter-Enlightenment. At the second level, the paper will discuss that the lack of references to the mechanisms of commercial society and Enlightenment notions of political economy in his work actually makes it a Counter-Enlightenment tract. In this sense, this paper optimistically suggests that the anatomizing of Rousseau’s views on political economy will be an attempt not only to fill an important gap in Rousseau’s Counter-Enlightenment thought but also it will offer a new insight for the general framework of Counter-Enlightenment political economy.
    Keywords: Rousseau, political economy, enlightenment, counter-enlightenment, General Will, republican political theory.
    JEL: B12 Y70 A14
    Date: 2014–05
  5. By: Xueping Hu (Harbin Engineering university)
    Abstract: In the democratic history, there are inner conflicts always between democratic institution and democratic ideal. It is due to the inherent ideal dimension of democracy that each democratic society is inherent imbalanced regardless of which in history or in reality.Mihailo Marlcovic,the philosopher of Yugoslavia Praxis Group, in the view of constructing people’s genuine relationship,he reflected upon what the connotation of democratic ideal is.He argued the deviation between the democratic institution and the democratic ideal, as well as the hazard of this deviation.At the same time; he explored the possible ways to integrate these two democratic dimensions. His research is a significant contribution to nowaday democratic society’s development.
    Keywords: Democracy Ideal ,Institution ,Human emancipation
    JEL: P39
    Date: 2014–10
  6. By: Lima, Gerson P.
    Abstract: The central point of this paper is the demonstration that there is a real world supply and demand theory, supported by an estimate of the US aggregate supply curve. The fundamental idea is that demand and supply interaction is the smallest economic act, an act without which there would be no economics. Paper’s first point is that what neoclassical textbooks call supply and demand is just a disguising device created to justify a given goal and stresses three mistakes that plague all profit maximisation models thus condemning the neoclassical approach to unfeasibility: the notions of competition and equilibrium and the econometrics of disequilibrium data. The second point is the proposal of rescuing and improving the approach to the supply and demand theory prevailing before the upsurge of the neoclassical doctrine. Fundamental assumptions are three; first, supply and demand generates price and production of all relevant products and services, being thus the immediate cause of all economic outcomes: (un)employment, income, tax receipts, etc., and their social consequences on education, wealth distribution, and so forth. Second, supply and demand interplay depends on several exogenous factors, mainly human ontological behaviour, economic policy and natural resources; exogenous phenomena, especially the economic policy, command supply and demand and supply and demand commands the economy. Third, production takes time; quantities produced and sold are never equal; disequilibrium is the usual status of the supply and demand interaction and therefore the entire economy. Econometrics of the experiment described deals with disequilibrium without using the time series method and gives support to the proposed economic structure and theory.
    Keywords: Economic theory, equilibrium,supply and demand.
    JEL: A11 B41 C13
    Date: 2015–03–03
  7. By: Rui Gonçalves (Centre for Classical and Humanistic Studies)
    Abstract: Departing from the true process of translatio studii that we can find in the own roots of the connection established between philosophy and nature in the bosom of the XIIIth century European thought through the introduction in Paris via the Arabic Spain of works of Aristotle such as Physics, Metaphysics and On the Soul, several questions result pointed out in a new view as they were not since one entire millennium.Among those until then unsuspected topics we could nominate the conciliation between faith and nature, almost unknown before the scholastic age of Saint Thomas Aquinas. According to Saint Peter Damian and his two centuries older dominant precept, only in God would be conceivable the omnipotent entity creative of the universe. In his turn was adopted by Thomas Aquinas the Aristotelian concept of the unmoved mover and he manage to fit it with his famous doctrine of the Five Ways (the “Quinque Viae†from the Summa Theologiae), as an extra manner to explain the substantive nature of God. According to him, not only we could find the divinity in the bosom of nature but also the faculty of locomotion of each different created being was an argument in addition to prove the entire creative work of God.Also the subject arisen by the discussion around the determination of the eternity of world founds support in Master Aquinas in spite of having remained the positions sustained by him on the matter with no solution all along his life. Further themes like the possible intellect and the sensations were sought developed by the Dominican theologian while exploring the Avicenna’s theories concerning the same subject in matter of psychology, maintaining all along of such a process a kind of innovative analysis on matters until then despised or forgetful.When we reach the age of the Jesuit grenadine father Francisco Suárez, and with him the plenitude of the second Spanish scholasticism, it becomes easy to verify that much of these elements crossed to or maintained their importance within this last setting. Among those acquainted as holder of decisive value over the Doctor Eximius we can account ethics, psychology, theodicy and metaphysics. Being perhaps opposed to some conceptualist ideas from the medieval scholastic domain, is due to Suárez the formulation of an authentic anthropocentric theory which was settled in the worry to consider all men as true beings without exception of race and civilization, an approach that made him much more close to the Scottish monk Duns Scotus and the English academic William of Ockham.The way by which we know now having Suárez opened new perspectives to contemporary and future Wiseman (like Descartes, Leibniz, Spinoza and Thomas Hobbes, all from the rationalist century that saw his death in Lisbon, in 1617, after the professorship exerted by him in the University of Coimbra), witnesses us enough a proof of the flows that always travelled over each main epoch of the Aristotelian and Thomistic system of thought from the very beginning of the modern age almost to our days.
    Keywords: Aristotle, Saint Thomas Aquinas, Francisco Suárez, Aristotelianism, Thomism, Second Scholasticism
    Date: 2014–06
  8. By: Judit Kapas (University of Debrecen)
    Abstract: Recently, the view that culture matters for economic development has gained much ground within institutional economics; scholars have provided us with empirical evidence on the positive effect of culture on economic performance. This evidence shows, in some cases, the overwhelming effect of culture vis-à-vis that of formal institutions (Williamson 2009). In these investigations, culture is generally measured by the subjective evaluation of those answering the question “Do you think that most people can be trusted?†in the World Values Survey. However, whether an answer to this question really refers to culture has recently been doubted by a growing number of scholars, a problem which goes back to a somewhat ambiguous definition of culture. Another problematic issue here is that these empirical investigations do not rely on an economic theory concerning the effects of culture on economic performance, at least when it comes to the mechanisms through which culture may effect development.One way to overcome these shortcomings – more importantly the “black box†view of culture – is to move from general statements about culture to a narrower, and consequently more reliable dimension of culture. My argument is that Schwartz’s (2006) theory of cultural value orientations developed in cross-cultural psychology can be fruitfully used for two reasons. First, this theory relies on a priori theorizing about three basic issues that all societies confront, rather than post hoc examination of data. Secondly, it captures only one, but an unambiguous, aspect of culture: individual values.So, in this paper I argue that an analysis of individual values on economic development contributes to a clarification of the effects of culture by “unbundling†culture itself. Using individual values allows me to rely on theories of institutional economics – namely Williamson’s (2000) theory about the levels of institutions and of Boettke et al’s (2008) theory on institutional stickiness – to make hypotheses about their effects on development, and then empirically investigate them. The cross-country empirical investigation using the Schwartz Values Survey data on individual values provides evidence for the main hypothesis: individual values have no effect on development after controlling for formal institutions, and this result is different from the effect of the culture index derived from the World Values Survey and that of Hofstede’s “individualismâ€, and is very robust.
    Keywords: culture, economic development, institutions, individual values
    JEL: E02 O10
    Date: 2014–12
  9. By: Heller, Yuval; Mohlin, Erik
    Abstract: We study stable behavior when players are randomly matched to play a game, and before the game begins each player may observe how his partner behaved in a few interactions in the past. We present a novel modeling approach and we show that strict Nash equilibria are always stable in such environments. We apply the model to study the Prisoner's Dilemma. We show that if players only observe past actions, then defection is the unique stable outcome. However, if players are able to observe past action profiles, then cooperation is also stable. Finally, we present extensions that study endogenous observation probabilities and the evolution of preferences.
    Keywords: Evolutionary stability, random matching, indirect reciprocity, secret handshake, submodularity, image scoring.
    JEL: C72 C73 D01
    Date: 2015–03–19
  10. By: Bozena Kaderabkova (University of Economics, Economic Faculty); Klara Cermakova (University of Economics, Economic Faculty); Robert Holman (University of Economics, Economic Faculty)
    Abstract: Former growth theories did not give a satisfactory answer to stimuli of economic growth and possibilities of sustainable growth. An important contribution to the economic growth theories was given by research in institutional economics. Today formal and informal institutions such as rule of law, habits, religion or corruption, are considered by many authors very significant for economic growth. This paper is based on findings of The Heritage Foundation and on Economic freedom index, which identifies four groups of institutional factors Rule of law (Property rights, Freedom from corruption), Limited government (Government spending, Fiscal freedom), Regulatory efficiency ( Business freedom, Labor freedom, Monetary freedom), Open markets( Ttrade freedom, Financial freedom, Investment freedom). This study is focused on the relationship between religion and economic growth. The impact of different religions is measured by regression and correlation analysis within each of the four groups.
    Keywords: economic growth, institutions, formal and informal factors of economic growth
    JEL: E02 O43
    Date: 2014–12
  11. By: Michael McLure (University of Western Australia)
    Abstract: In 1924-25 A. C. Pigou was a member of the “Committee on the Currency and Bank of England Note Issues”, which became known as the ‘Chamberlain-Bradbury’ Committee after its two successive chairmen. The historical context of that report, including Pigou’s highlighting of discussion pertaining to that context, has been presented in Part I of this study. The present paper, which is the Part II of the study, considers Pigou’s reading of the transcripts of interview between the Committee’s members and those appearing before the Committee to give evidence. The contribution of the present part of the study is to examine the ‘transitional’ and ‘ongoing’ issues that Pigou highlighted in a thematically organised manner, with a view to establishing the character of Pigou’s membership of the ‘Chamberlain-Bradbury’ Committee. His reading of the witness testimony suggests a far more cautious and moderate approach to the return to the gold standard than what can be inferred from the bold and urgent recommendations included in the Committee’s report. A likely reason for Pigou unwillingness to oppose the pro-gold position is also presented.
    Date: 2014
  12. By: Ferreira,Francisco H. G.; Peragine,Vito
    Abstract: Building on earlier work by political philosophers, economists have recently sought to define a concept of equity that accommodates the fairness of reward to individual responsibility and effort, while allowing for the existence of some inequalities which are unfair and should be compensated. This paper -- commissioned as a chapter for the Oxford Handbook of Well Being and Public Policy -- provides a critical review of the economic literature on equality and inequality of opportunity. A simple'canonical model'of equal opportunity is proposed, and used to explore the two fundamental concepts in this (relatively) new theory of social justice: the principles of compensation and reward. Ex-ante and ex-post versions of the compensation principle are presented, and the tensions between them are discussed. Different approaches to the measurement of inequality of opportunity -- and empirical applications -- are reviewed, and implications for the measurement of poverty and of the rate of economic development are discussed.
    Keywords: Economic Theory&Research,Gender and Law,Inequality,Equity and Development,Poverty Impact Evaluation
    Date: 2015–03–20
  13. By: Pavel Potuzak (University of Economics, Prague)
    Abstract: The doctrine of price level stabilization is one of the most important building blocks in modern macroeconomics. In 1920s and 1930s, Friedrich August von Hayek presented a theory that challenged this monetary-policy regime. Hayek stressed that attempts to stabilize the price level in the situation of a growing natural output might cause serious injection effects leading the economy to a boom-bust cycle. This article compares the Hayek theory with the New Keynesian doctrines. A simple graphical model is used to elucidate differences between the two theories. It is suggested that a declining price level might be a normal response of the price system in the expanding economy because the New Keynesian arguments stressing price rigidities may be of lower significance when the deflation in prices is caused by technological progress.
    Keywords: Price level stabilization, business cycle, natural rate of interest
    JEL: E42 B25 B53
    Date: 2014–12
  14. By: Jaime LLambi­as-Wolff (York University)
    Abstract: I will argue that law is the expression of politics. In its multivalent character, law is the result of its own dynamics and the outcome of negotiations mediated by unequal actors in a political scenario of power relations. When the impersonality, neutrality and uniformity of the law is discussed, it is only a representation and an illusion, because at its essence is the creative process, which is not homogeneous and contains both authoritarian and liberating elements, as the very legal system reveals the contradictory nature of social life. The law disguises its internal contradictions and develops a dialectical and fetishist identity, taking on a life of its own, independent of how, when and in what context it was created. The negotiations and mediations that influence the creation of law are not independent from the relationship between the different interests at play in each historical and political context. They make the process of law creation possible and/or feasible. I discuss law as a process and argue that law and legality have different dimensions and different moments. Their ideological, political and rational dimensions would seem to exclude one another, but they do not. In this process, the individual is present and absent from the different moments of the law and the legal system makes the individual both appear and disappear. The law is finally the result of interaction between different individuals in the political, as well as in the cultural-ideological and the economic level, but the law ultimately makes them equal: we are all equal before the law. In other words, the law denies individuals their autonomy and transforms them, making them all equal even when they are not, but at the same time it gives them autonomy and presence by making them subjects of law endowed with rights, epitomized in the doctrine of the Rule of law. From a theoretical perspective, I explore the relation between law and politics, understanding lawmaking as the outcome of processes of struggle that either maintain the social and political order or promote change. Analyzing the dynamics of legal processes is essential for comprehending how the law has been embedded in the political sphere (via conflict and consensus) and in ideological debates. It is in this sense that I claim that law is both an expression of politics and the result of its own dynamics.
    Keywords: law, politics, law creation
    Date: 2014–10

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