nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2015‒06‒13
twelve papers chosen by
Erik Thomson
University of Manitoba

  1. Going for the Juglar: Keynes, Schumpeter and the Theoretical Crisis of Economics By Freema, Alan
  2. From Hierarchies to Levels: New Solutions for Games By Mikel Álvarez-Mozos; René van den Brink; Gerard van der Laan; Oriol Tejada
  3. Again on the relevance of reverse capital deepening and reswitching By Ariel Dvoskin; Fabio Petri
  4. The Average Tree permission value for games with a permission tree By van den Brink, R.; van der Laan, G.; Herings, P.J.J.; Talman, Dolf
  5. Social Preference and Social Welfare Under Risk and Uncertainty By Mongin , Philippe; Pivato , Marcus
  6. Judge: Don't Vote! By Balinski, Michel; Laraki, Rida
  7. Economic beliefs and party preference By Roos, Michael W. M.; Orland, Andreas
  8. Estudiando economía después de Pikkety By Guillermo Maya Muñoz
  9. Harmonising Hayek and Posner: revisiting Posner, Hayek & the economic analysis of Law By Ojo, Marianne
  10. Directed Technical Change and Capital Deepening: A Reconsideration of Kaldor’s Technical Progress Function By Schlicht, Ekkehart
  11. Was an Pikettys Thesen dran ist – und was nicht By Lorenz, Hanno
  12. Bernard Maris in memoriam By Tomas Lukin

  1. By: Freema, Alan
    Abstract: This paper was presented in the session on ‘Long Waves in Political Economy’ organised by Ingo Schmidt at the Congress of the Humanities and Social Sciences, Ottawa, June 1-4 2015. It discusses the ‘theoretical turn’ towards state intervention in the last Great Depression and the need for clarity about the underlying views of Keynes and Schumpeter – two of the major opposed players in that theoretical turn. It argues that primary function of economics as an esoteric discipline disguises the essence of these underlying theoretical positions. Thus in order to make a rational and evidence-based connection between theory and policy, attention both to interpretation and to assertive pluralism is indispensable.
    Keywords: pluralism, political economy, economics
    JEL: B0 B4
    Date: 2015–06–03
  2. By: Mikel Álvarez-Mozos (Universitat de Barcelona, Spain); René van den Brink (VU University Amsterdam, the Netherlands); Gerard van der Laan (VU University Amsterdam, the Netherlands); Oriol Tejada (ETH Zürich, Switzerland)
    Abstract: Recently, applications of cooperative game theory to economic allocation problems have gained popularity. In many of these problems, players are organized according to either a hierarchical structure or a levels structure that restrict players’ possibilities to cooperate. In this paper, we propose three new solutions for games with hierarchical structure and characterize them by properties that relate a player’s payoff to the payoffs of other players located in specific positions in the structure relative to that player. To define each of these solutions, we consider a certain mapping that transforms any hierarchical structure into a levels structure, and then we apply the standard generalization of the Shapley Value to the class of games with levels structure. The transformations that map the set of hierarchical structures to the set of levels structures are also studied from an axiomatic viewpoint by means of properties that relate a player’s position in both types of structure.
    Keywords: TU-game; hierarchical structure; levels structure; Shapley Value; axiomatization
    JEL: C71
    Date: 2015–06–02
  3. By: Ariel Dvoskin; Fabio Petri
    Abstract: Among the recent interventions in the capital controversy, the debate between Paola Potestio and Kurz&Salvadori has raised important issues. We agree with Potestio’s rejection of the legitimacy of a value endowment of capital but we disagree with her dismissal of the relevance of reswitching and reverse capital deepening: these phenomena are very important because they undermine the demand-side role of the conception of capital as a single factor. For the marginal approach to be plausible, this demand-side role had to imply the stability of the savings-investment market even in shorter time frames than those required by a complete adaptation of the ‘form’ of capital; this was taken by Marshall to authorize doing without a given endowment of value capital, which opened the door to the shift to the modern neo-Walrasian versions of the marginal approach. With proof from Hayek, Hicks, Malinvaud and Lucas we argue that a continuing belief in traditional time-consuming marginalist disequilibrium adjustments based on capital-labour substitution is the hidden reason why the claim, often made by contemporary marginalist economists, that the economy can be assumed to be all the time on the equilibrium-growth path is not found patently unacceptable. The true microfoundation of DSGE macromodels is not intertemporal equilibrium theory, but the adjustment mechanisms on whose basis the marginal approach was born and accepted, and on whose basis monetarism was then able to re-assert a pre-Keynesian view of the working of the economy.
    JEL: B21 D24 D46 D51
    Date: 2015–05
  4. By: van den Brink, R.; van der Laan, G.; Herings, P.J.J. (Tilburg University, School of Economics and Management); Talman, Dolf (Tilburg University, School of Economics and Management)
    Abstract: In the literature, various models of games with restricted cooperation can be found. In those models, instead of allowing for all subsets of the set of players to form, it is assumed that the set of feasible coalitions is a subset of the power set of the set of players. In this paper, we consider such sets of feasible coalitions that follow from a permission structure on the set of players, in which players need permission to cooperate with other players.We assume the permission structure to be an oriented tree. This means that there is one player at the top of the permission structure, and for every other player, there is a unique directed path from the top player to this player.<br/>We introduce a new solution for these games based on the idea of the Average Tree value for cycle-free communication graph games.We provide two axiomatizations for this new value and compare it with the conjunctive permission value.
    Date: 2015
  5. By: Mongin , Philippe; Pivato , Marcus
    Abstract: This handbook chapter covers the existing theoretical literature on social preference and social welfare under risk (i.e., when probability values enter the data of the situation) and uncertainty (i.e., when this is not the case and only subjective probability assessments can be formed). Section 1 sets the stage historically by contrasting classical social choice theory and welfare economics, which are restricted to the certainty case, with Harsanyi's pathbreaking attempt at extending these fields to the risk case. Section 2 reviews the work, both ancient and recent, stemming from Harsanyi's Impartial Observer Theorem. Section 3 does the same job for Harsanyi's Social Aggregation Theorem and discusses Sen's objections against the utilitarian relevance of either theorem. Section 4 explains why the Social Aggregation Theorem does not carry through from risk to uncertainty, a major conundrum that can also be expressed as a clash between ex ante and ex post welfare assessments; the proposed solutions are covered, including some very recent ones. Section 5 explains that equality, like social welfare, can be defined either ex ante or ex post, and using a basic example by Diamond, that these two definitions clash with each other. Section 6 covers the main solutions that egalitarian writers have given to this problem, again including some very recent ones.
    Keywords: N/A
    Date: 2015–01–01
  6. By: Balinski, Michel; Laraki, Rida
    Abstract: This article argues that the traditional model of the theory of social choice is not a good model and does not lead to acceptable methods of ranking and electing. It presents a more meaningful and realistic model that leads naturally to a method of ranking and electing—majority judgment—that better meets the traditional criteria of what constitutes a good method. It gives descriptions of its successful use in several different practical situations and compares it with other methods including Condorcet's, Borda's, first-past-the-post, and approval voting.
    Keywords: methods of electing and ranking; Condorcet and Arrow paradoxes; strategic manipulation; faithful representation; meaningful measurement; figure skating; presidential elections; jury decision;
    JEL: C72 D71
    Date: 2014
  7. By: Roos, Michael W. M.; Orland, Andreas
    Abstract: This paper reports the results of a questionnaire study used to explore the economic understanding, normative positions along the egalitarian-libertarian spectrum, and the party preferences of a large student sample. The aim of the study is both to find socio-economic determinants of normative and positive beliefs and to explore how beliefs about the economy influence party support. We find that positive beliefs of lay people differ systematically from those of economic experts. Positive beliefs can be explained by high school grades, field of study, reasons for the choice of subject, personality traits, and - in part - by gender. Normative beliefs are self-serving in the sense that students whose father have high-status jobs and who seek high incomes are more libertarian than others. Party preferences are explained by the professional status of the father, religion, gender, and economic beliefs. Normative beliefs are more important for party support than positive beliefs. While there is a clear positive relation between libertarianism and support for right-leaning parties, positive beliefs only matter for some parties. A parochialism bias in positive beliefs seems to reinforce libertarian views favoring the most conservative party.
    Abstract: Dieser Artikel berichtet die Resultate einer Umfrage, die genutzt wurde, um das ökonomische Verständnis, die normative Einstellung entlang des egalitär-libertären Spektrums und die Parteipräferenzen eines großen studentischen Samples zu untersuchen. Das Ziel der Studie ist es, sowohl die sozioökonomischen Determinanten der normativen und positiven Beliefs zu ermitteln, als auch zu untersuchen, wie diese Beliefs über die Wirtschaft die Parteipräferenz beeinflussen. Wir finden, dass die positiven Beliefs von Laien sich signifikant von denen der ökonomischen Experten unterscheiden. Die positiven Beliefs können durch Abiturnoten, Studienfachwahl, die Gründe für die Wahl des Studienfachs, Persönlichkeitsmerkmale und - zum Teil - durch das Geschlecht erklärt werden. Normative Beliefs sind einer selbstwertdienlichen Verzerrung in dem Sinne unterworfen, dass Studierende, deren Vater einer Beschäftigung mit hohem Status nachgeht und die ein hohes Einkommen anstreben, libertärer als andere sind. Parteipräferenzen werden durch den Beschäftigungsstatus des Vaters, die Religionszugehörigkeit, das Geschlecht und die ökonomischen Beliefs erklärt. Normative Beliefs sind für die Parteipräferenz wichtiger als positive Beliefs. Während es eine klare positive Beziehung zwischen Libertarismus und der Unterstützung nach rechts tendierender Parteien gibt, sind positive Beliefs nur für einige Parteien wichtig. Ein Parochialismus-Bias der positiven Beliefs scheint die libertären Ansichten zu verstärken und die konservativste Partei zu begünstigen.
    Keywords: economic beliefs,party preference,sociotropic voting,pocketbook voting,survey,personality traits
    JEL: D83 D72 Z13
    Date: 2014
  8. By: Guillermo Maya Muñoz
    Abstract: Por qué solo la economía entre las ciencias sociales tiene Premio Nobel? “Si lo tienen (…) el Premio Nobel de literatura”, responde George Stigler, Premio Nobel (Kuttner, 1985: 79). Los economistas reciben cada año El Premio del Banco de Suecia en Ciencias Económicas en memoria de Alfred Nobel, erróneamente conocido como Premio Nobel de Economía, establecido por el Banco Central de Suecia Sveriges Riksbank, y no por Alfred Nobel, para premiar a sus economistas preferidos, del campo de la ortodoxia económica. Joan Robinson, Nicolás Kaldor y Roy Harrod nunca recibieron el Nobel porque eran verdaderos keynesianos. Esta situación ha legitimado, no solo a los ojos de los economistas sino del público, entre otros, el paradigma de la economía ortodoxa, hipotético-deductivo-apriorístico, copiado de las matemáticas, como el único con validez científica, inmunizándola a las críticas, y validando la funcionalidad de la “ciencia” económica y de sus practicantes con los intereses creados, los dueños del mundo.
    Keywords: Capital; Siglo XXI; Pikkety; Distribución del ingreso
    Date: 2014–12–19
  9. By: Ojo, Marianne
    Abstract: This paper is aimed at highlighting Posner and Hayek’s consensus on the importance of decentralization, as well as the significance of the incorporation of non-legal actors as tools for facilitating the efficient allocation of resources in common law. In addition to highlighting the consensus on the views of Posner and Hayek, in respect of de centralization of information within the judicial process, this paper aims to address why de centralization serves as a vital tool in facilitating the objective of common law as an efficiency allocation mechanism. Whilst it is argued that lower court judges may not and should not be given such flexibility to make and unmake the law, the principles and decisions of law lords acting in the capacity of legislature, have also illustrated in several leading cases that the flexibility intended by Parliament may be misinterpreted and wrongly applied in future cases. This has also resulted in the criticism of extrinsic aids to statutory interpretation. This paper analyses and expands on these observations.
    Keywords: legitimate expectations; certainty; flexibility; judicial precedents; statutory interpretation; allocative efficiency; Pepper v Hart; Daubert; common law; regulatory capture; regulation
    JEL: D8 E3 G3 K2 M4
    Date: 2015–06
  10. By: Schlicht, Ekkehart
    Abstract: This note proposes a growth model that is derived from the standard Solow growth model by replacing the neoclassical production function with Kaldor’s technical progress function while maintaining a marginalist theory of factor prices in the spirit suggested by von Weizsäcker (1966, 1966b). The hybrid model so obtained accounts for balanced growth in a way that appears less arbitrary than the Solow model, especially because it directly accounts for Harrod neutral technical change, without any need for further assumptions.
    Keywords: directed technical change; directed technological change; bias in innovation; technical progress function; neoclassical production function; Harrod neutrality; Hicks neutrality; Cambridge theory of distribution; marginal productivity theory; Kaldor; Kennedy; von Weizsäcker; Solow model
    JEL: O30 O40 E12 E13 E25 B59 B31
    Date: 2015–06–19
  11. By: Lorenz, Hanno
    Abstract: Nun liegt es auch auf Deutsch vor: „Das Kapital im 21. Jahrhundert“ von Thomas Piketty, jenes Buch, das in den USA und von dort nach Europa ausstrahlend für ein ökonomisches Werk ungewöhnlich viel Medienaufmerksamkeit bekam – ironischerweise sogar im Magazin „Vanity Fair“, das im Allgemeinen über die Reichen und Schönen berichtet. Auf mehr als drei Vierteln des Buches präsentiert der französische Ökonom Daten über die Größe und Aufteilung von Vermögen in mehreren Ländern über den Zeitraum von gut 200 Jahren. Bei deren Bewertung ist er zunächst relativ vorsichtig; in sich hat es dann das verhältnismäßig kurze letzte Kapitel mit Pikettys eigener Interpretation der Ergebnisse. Diese beruhen auf Annahmen, die zumindest diskussionswürdig sind. Hier nun eine Zusammenfassung und kritische Würdigung des Buches.
    Keywords: Buchrezension,Piketty
    JEL: Y30 A10
    Date: 2014–10
  12. By: Tomas Lukin
    Abstract: El profesor de Economía, Bernard Maris, fue asesinado en el atentado a la revista francesa Charlie Hebdo. El periodista era un histriónico crítico de la teoría económica ortodoxa y sus “profesionalizados” voceros mediáticos. “La economía es un anestésico del mismo tipo que el latín en la Iglesia, y sin duda ha ganado mucho allí donde la religión ha perdido mucho. Hay una dimensión de trance en la oración común, que se encuentra en la alabanza económica a la confianza, cantada en canon en las reuniones del G-7 y en otras. No hace falta ser clérigo para ver una utopía en la economía ortodoxa, la ley de la oferta y la demanda y el liberalismo idealizado, como en el comunismo; y como en él, una religión con sus fieles, sus papas, sus inquisidores, sus sectas, su ritual, su latín (las matemáticas), sus apóstatas, y quizás un día su Pascal y su Chateaubriand”, sostiene Maris en uno de los textos recopilados en Carta abierta a los gurúes de la economía que nos toman por imbéciles (Gránica 2001), que reproduce Cash en algunos de sus pasajes más destacados. El texto –una pobre traducción al español de los escritos del francés– ya no se consigue en las librerías, aunque es posible encontrarlo en alguna estantería de usados.
    Keywords: Bernard Maris; Charlie Hebdo; Ciencia económica
    Date: 2015–02–21

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