nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2016‒07‒16
thirteen papers chosen by
Erik Thomson
University of Manitoba

  2. The Economics and Ethics of Human Induced Climate Change By Clive L. Spash; Clemens Gattringer
  3. Economia Pluralista para Enfrentar Crisis Contemporanea By Parada, Jairo
  4. Social capital, institutions and policymaking By Savioli, Marco; Patuelli, Roberto
  5. No country for neoliberalism: a topic modeling approach to protean discourses to resist privatizations in Italy By Luca Pareschi; Edoardo Mollona
  6. The Social Provisioning Process and Heterodox Economics By Jo, Tae-Hee
  7. Current Emotion Research in Economics By Klaus Wälde; Agnes Moors
  8. The science of monetary policy: an imperfect knowledge perspective By Eusepi, Stefano; Preston, Bruce
  9. From Sunspots to Black Holes: Singular dynamics in macroeconomic models By Brito, Paulo; Costa, Luís F.; Dixon, Huw David
  10. How do biological markets compare to the markets of economics? By Noë, Ronald
  11. Green nudges: Do they work? Are they ethical? By Christian Schubert
  12. A Heterodox Theory of the Business Enterprise By Jo, Tae-Hee
  13. Perception vs Reality: How does the British electorate evaluate economic performance of incumbent governments in the post war period? By Jonathon M. Clegg

  1. By: Luca Fiorito; Cosma Orsi (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: The aim of this paper is to provide a compressive assessment of Thomas Nixon Carver’s thought - from his early formative years in the 1880s to his post WWII career as a journalist and pamphleteer. The main (albeit not exclusive) focus of this paper will be on the theoretical and philosophical coordinates of Carver’s “new liberalism” - his own definition - and how this broad vision was intrinsically connected with an explicit hierarchical and eugenic approach to human nature. Just as important, what follows is also an attempt to increase our general understanding of the extent in which eugenic considerations permeated the realm of political economy during the first decades of the last century and how, in some specific cases as that of Carver, this influence persisted after the end of the Progressive Era.
    JEL: B31 B13 B25
    Date: 2016–07
  2. By: Clive L. Spash; Clemens Gattringer
    Abstract: Human induced climate change poses a series of ethical challenges to the current political economy, although it has often be regarded by economists as only an ethical issue for those concerned about future generations. The central debate in economics has then concerned the rate at which future costs and benefits should be discounted. Indeed the full range of ethical aspects of climate change are rarely even discussed. Despite recent high profile and lengthy academic papers on the topic the ethical remains at best superficial within climate change economics. Recognising the necessary role of ethical judgment poses a problem for economists who conduct exercises in cost-benefit analysis and deductive climate modelling under the presumption of an objectivity that excludes values. Priority is frequently given to orthodox economic methodology, but that this entails a consequentialist utilitarian philosophy is forgotten while the terms of the debate and understanding is simultaneously restricted. We set out to raise the relevance of a broader range of ethical issues including: intergenerational ethics as the basis for the discount rate, interregional distribution of harm, equity and justice issues concerning the allocation of carbon budgets, incommensurability in the context of compensation, and the relationship of climate ethics to economic growth. We argue that the pervasiveness of strong uncertainty in climate science, incommensurability of values and non-utilitarian ethics are inherent features of the climate policy debate. That mainstream economics is ill-equipped to address these issues relegates it to the category of misplaced concreteness and its policy prescriptions are then highly misleading misrepresentations of what constitutes ethical action.
    Keywords: Climate change; economics; ethics; carbon budgets; discounting; compensation; harm; intergenerational equity; intragenerational distribution; justice; consequentialism; utilitarianism; incommensurability; risk; uncertainty; cost-benefit analysis; growth economy
    Date: 2016
  3. By: Parada, Jairo
    Abstract: Despite the deep impact of the 2008s Great Recession, Department of Economics around the world keep teaching the neoclassical paradigm as it nothing happened. Economics´ teaching, especially at the undergraduate level, does not leave room for a pluralist background, although somewhat similar process happens at the graduate level. Global dominance of approaches market oriented, based on an individualistic ontology, a methodological deductivism and the massive use of mathematical models since the last three decades, have been closing the possibilities of different approaches. In this essay, possible causes behind this phenomenon are explored, and several proposals are presented about how a more integral and plural Microeconomics could be taught, and a more grounded Macroeconomics involved with today´s problems, and a development theory that does not give up with the theoretical richness of the Latin American traditions, could be also presented to students. The main criteria would be to endow our graduates with a more versatile vision about economic thought and economic theory, aiming toward the opening of new and creative approaches about public policies that would be able to solve our structural problems. Several concrete suggestions are offered regarding curriculums and books, and mechanism to overcome the Procrustean bed that incorporates the teaching of the dominant approach only. At the end, we would have creative professionals and conscious about the myriad of possibilities that a pluralist approach of economics science brings about, and new avenues of creative ideas will be opened to implement such policies. This proposal implies a more audacious curriculum and less timid toward the critique of the dominant cathedral of the main current of thought in Economics.
    Keywords: economic crisis, pluralist economics, economics teaching
    JEL: A2 A22 A23
    Date: 2016–06–15
  4. By: Savioli, Marco; Patuelli, Roberto
    Abstract: Economic processes, consisting of interactions between human beings, exploit the social capital of persons endowed with specific cultures, identities and education. By taking into account this complexity, the authors focus on the role of institutions and policymaking in the building of social capital and its relevance to the fulfilment of their objectives. Social capital, however, is elusive and has several dimensions with which to interpret its multifaceted functions in economics and society. The authors cannot forget that social capital is sometimes even undesirable for society, for instance when unethically used. Even so, it is widely accepted that social capital has stable and positive effects.
    Keywords: social capital,institutions,policymaker,education
    JEL: Z13 B52 D78
    Date: 2016
  5. By: Luca Pareschi (Dept. of Management, Università Ca' Foscari Venice); Edoardo Mollona (Dept. of Computer Science and Engeneering, Università di Bologna)
    Abstract: This paper analyzes the resistance to the neoliberal discourse supporting privatizations in the Italian sociopolitical field: we address the change from a state control over economy to a situation where most of the state owned enterprises are sold and neoliberal principles are widely adopted and accepted. We focus on resistance, which builds on two frames that differ according to the period when they arise, the words they are composed of, the meanings they bear upon. The first one, which is more prevalent in the period 1984-2000, and that we called Òvalues of developmental stateÓ, opposes privatizations from a technical point of view: it is used in quotes that rationally support state intervention in economy. The second frame, that we called Òstigma privatizationsÓ, becomes prevalent starting in 2000 and appears mainly in articles that deal with societal issues, literature, movies and the wider sociocultural debate. Here influential speakers blame privatizations as something that eroded societal cohesion. To explain the transformation, we mobilize the concept of capital as described by Bourdieu: as economic capital attached to delegitimized institutions erode, discourse on resistance does not disappear but is framed within the fields that are less dependent on economic capital. As a connected contribution, the key role played by cultural capital in preserving areas of resistances revives the debate on the role of intellectuals within power dynamics as described by Antonio Gramsci. From a technical point of view, we study the evolution of the vocabulary of privatizations by analyzing almost 70.000 articles in the period 1984-2014. we use Topic Modeling, that is an automated text analysis technique that elicits topics, which are the sets of words that constitute discourses. We then reconstruct frames starting from these topics.
    Keywords: institutional change, privatizations, discourse, frames, topic modeling, symbolic capital, discursive struggles
    JEL: H82 L32 L50 M00 P00
    Date: 2016–06
  6. By: Jo, Tae-Hee
    Abstract: The social provisioning process is how heterodox economists define economics in general. Instead of having a narrow definition of what constitutes economics, such as the mainstream has with its allocation of scarce resources among competing ends via the price mechanism, heterodox economists have opted for a much more expansive definition that permits different theoretical explanations for ways in which the provisioning process can take place in different types of economies in different historical contexts. In this chapter, we first examine the changes in the definition of economics from classical political economy to neoclassical and heterodox economics. The comparison between classical political economy and neoclassical economics manifests a clear distinction in view of economy and economics. The second section substantiates the meaning of the social provisioning process. In doing so we make a case that, first, defining heterodox economics as the study of the social provisioning process positions heterodox economics as an alternative to neoclassical economics, and, second, that such an expansive definition of economics has potential to synthesize various heterodox theoretical frameworks in a constructive manner.
    Keywords: Social Provisioning Process; Heterodox Economics; Classical Political Economy; Neoclassical economics; Surplus approach; monetary production economy; effective demand
    JEL: A11 B1 B2 B5 B51 B52
    Date: 2016–06–16
  7. By: Klaus Wälde (Johannes Gutenberg-University Mainz); Agnes Moors (KU Leuven)
    Abstract: Positive and negative feelings were central to the development of economics, especially in utility theory in classical economics. While neoclassical utility theory ignored feelings, behavioral economics more recently reintroduced feelings in utility theory. Beyond feelings, economic theorists use full-fledged specific emotions to explain behavior that otherwise could not be understood or they study emotions out of interest for the emotion itself. While some analyses display a strong overlap between psychological thinking and economic modelling, in most cases there is still a large gap between economic and psychological approaches to emotion research. Ways how to reduce this gap are discussed.
    Date: 2016–07
  8. By: Eusepi, Stefano (Federal Reserve Bank of New York); Preston, Bruce (University of Melbourne)
    Abstract: New Keynesian theory identifies a set of principles central to the design and implementation of monetary policy. These principles rely on the ability of a central bank to manage expectations precisely, with policy prescriptions typically derived under the assumption of perfect information and full rationality. However, the challenging macroeconomic environment bequeathed by the financial crisis has led many to question the efficacy of monetary policy, and, particularly, to question whether central banks can influence expectations with as much control as previously thought. In this paper, we survey the literature on monetary policy design under imperfect knowledge and asses to what degree its policy prescriptions deviate from the rational expectations benchmark.
    Keywords: monetary policy; expectations formation; learning
    JEL: E31 E32 E52
    Date: 2016–06–01
  9. By: Brito, Paulo; Costa, Luís F.; Dixon, Huw David (Cardiff Business School)
    Abstract: We present conditions for the emergence of singularities in DGE models. We distinguish between slow-fast and impasse singularity types, review geometrical methods to deal with both types of singularity and apply them to DGE dynamics. We find that impasse singularities can generate new types of DGE dynamics, in particular temporary determinacy/indeterminacy. We illustrate the different nature of the two types of singularities and apply our results to two simple models: the Benhabib and Farmer (1994) model and one with a cyclical fiscal policy rule.
    Keywords: slow-fast singularities; impasse singularities; macroeconomic dynamics; temporary indeterminacy
    JEL: C62 D43 E32
    Date: 2016–06
  10. By: Noë, Ronald
    Abstract: After an introduction to biological markets written for non-biologists, I explore whether and to what extent natural markets, i.e. markets on which non-human traders exchange goods and services with members belonging to their own or to other species, can be compared to human ‘economic’ markets, i.e. the markets analysed by economists. Biological Market Theory (BMT) borrows jargon and ideas from economics, but was at least as much inspired by sexual selection theory, a collection of models of ‘mating markets’, including human mating markets. Here I ask two main questions: (1) Is there more than only a superficial resemblance between both types of markets? (2) Can the analysis of one yield insights about the other? First, I consider the different forms of human trading and markets and propose some biological ones to which these can best be compared, e.g. companies trading goods in markets shaped by ‘comparative advantage’ to underground nutrient exchange markets between plants and rhizobial bacteria and mycorrhizal fungi; job and retail markets with pollination, seed dispersal and protection markets between plants and insects; ‘embedded markets’ with grooming markets in non-human primates and so forth. Then I look at some phenomena that are considered to be exclusive to human markets, such as common currencies and binding contracts, and ask whether these are indeed that exclusive. Finally I look at the common ground: negotiations that take place on several types of markets, natural or not; the honesty of advertisements, which is recognised as a major problem for both human and non-human clients; the biological equivalent of the market – firm dichotomy and the importance of the costs of partner choice, which are known to economists as ‘transaction costs’ and to sexual selection theoreticians as ‘search costs’. I conclude that there are several good reasons to have a closer look at those properties that set human and biological markets apart, but certainly also at those features that make them comparable to each other.
    Keywords: cooperation, mutualism, trade, biological markets, mating markets, embedded markets, sexual selection, partner choice, currency, binding contract, negotiation, bargaining, honest advertisement, transaction costs, search costs, market – firm dichotomy
    JEL: B52 Z13
    Date: 2016–07–10
  11. By: Christian Schubert (University of Kassel)
    Abstract: Environmental policies are increasingly informed by behavioral economics insights. ‘Green nudges’ in particular have been suggested as a promising new tool to encourage consumers to act in an environmentally responsible way, such as choosing renewable energy sources or saving energy. While there is an emerging literature on the instrumental effectiveness of behavioral policy tools such as these, their ethical assessment has largely been neglected. This paper attempts to fill this gap by, first, providing a structured overview of the most important contributions to the literature on pro-environmental nudges and, second, offering some critical guidelines that may help the practitioner come to an ethically informed assessment of nudges.
    Keywords: Nudges, Libertarian Paternalism, Behavioral Economics, Green Defaults, Autonomy
    Date: 2016
  12. By: Jo, Tae-Hee
    Abstract: The business enterprise directs and controls the social provisioning process. Enterprise decisions on price, investment, output and employment, in particular, directly affect the material basis of society as well as the material standard of living of working class households. The understanding the structure of and changes in the capitalist capitalists system thus requires a theory of the business enterprise that offers relevant and convincing explanations of business decisions and actions embedded in the wider social context. Such a theory must replace the mainstream-neoclassical theory of the firm, which is not only theoretically incoherent but also practically irrelevant since it confines itself to the hypothetical market structure and individual optimizing behavior. With this rationale this chapter attempts to build a heterodox theory of the business enterprises incorporating contributions made by various theoretical traditions in heterodox economics.
    Keywords: Heterodox Microeconomics; Social Provisioning Process; Business Enterprise; Going Concern; Monetary Theory of Production; Effective Demand; Surplus Approach; Strategic Enterprise Decisions
    JEL: B21 B51 B52 D21
    Date: 2016–06–23
  13. By: Jonathon M. Clegg (Faculty of History, University of Oxford)
    Abstract: Rational retrospective voting models have dominated the literature on election forecasting and the economic vote since they were first proposed by Anthony Downs in 1957. The theory views voters as appraisers of incumbent government’s past performance, which acts as the principal source of information individuals use when making their vote. Pure retrospective voting requires far less of the electorate in order to hold a government accountable and empirical work based on this theory has been very adept at predicting election outcomes and explaining individual voting decisions. In terms of the time period assessed to form judgements on past performance however, there is a surprising disconnect between the theoretical line of thought and actual testing. The sensible assumption of retrospective voting models is that voters, looking to judge a government’s past performance, should assess changes in their own welfare over an entire term of office, with little or no discounting of past events. The majority of empirical studies however, focus on economic performance over shorter time horizons, usually within a year of an election. There have only been a handful of studies attempting to empirically test the correct temporal relationship between changes in economic indicators and election outcomes, despite its importance for retrospective voting models and democratic accountability. This working paper empirically tests over which time horizons changes in macroeconomic fundamentals continue to have a significant bearing on election outcomes in Post War Britain. It finds that longer-term measures of economic change, over entire government terms, are better at predicting changes in incumbent’s vote shares than shorter-term measures, closer to the election period. This has important consequences for future voting models and is a promising result for democratic accountability.
    JEL: D72 C52
    Date: 2016–03–10

This nep-hpe issue is ©2016 by Erik Thomson. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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