nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2018‒06‒25
nineteen papers chosen by
Erik Thomson
University of Manitoba

  1. How much income inequality is fair? Nash bargaining solution and its connection to entropy By Venkat Venkatasubramanian; Yu Luo
  2. The Composition of Capital and Technological Unemployment: Marx's (and Ricardo's) Intellectual Debt to John Barton and George Ramsay. By Miguel D. Ramirez
  3. Book Review: Economic Thinking of Arab Muslim Writers During the Nineteenth Century: Abdul Azim Islahi (Editor), Reviewed by: Javed Ahmad Khan مراجعة كتاب: التفكير الاقتصادي للكتاب العرب المسلمين خلال القرن التاسع عشر: عبد العظيم اإصلاحي (محرر) ، مراجعة: جاويد أحمد خان By Javed Ahmad Khan جاويد أحمد خان
  4. Status maximization as a source of fairness in a networked dictator game By Jan E. Snellman; Gerardo I\~niguez; J\'anos Kert\'esz; R. A. Barrio; Kimmo K. Kaski
  5. Of time, uncertainty, and policy-making : Lionel Robbins’ lost philosophy of political economy By Thiago Dumont Oliveira; Carlos Eduardo Suprinyak
  6. Theoretical and Methodological Context of (Post)-Modern Econometrics and Competing Philosophical Discourses for Policy Prescription By Jackson, Emerson Abraham
  7. Trades unions, real wages and full employment By Mark Hayes
  8. Taxes and Growth: New Narrative Evidence from Interwar Britain By Cloyne, James; Dimsdale, Nicholas; Postel-Vinay, Natacha
  9. Push no one behind By Diane Elson
  10. Truth Be Told An Experimental Study of Communication and Centralization By Jordi Brandts; David J. Cooper
  11. Long-run Effects of Lottery Wealth on Psychological Well-being By Lindqvist, Erik; Östling, Robert; Cecarini, David
  12. Role of Symmetry in Irrational Choice By Ivan Kozic
  13. Why Great Strategies Spring from Identity Movements By Rao, Hayagreeva; Dutta, Sunasir
  14. Willingness to take risk: The role of risk conception and optimism By Thomas Dohmen; Simone Quercia; Jana Willrodt
  15. Market Mechanism in the View Of Ibn Taimiyyah By Pancarini, Ans Shinta
  16. François Perroux : Echange pur contre échange composite - Controverses et enjeux de justice By Claire Baldin; Ludovic Ragni
  17. Monotone Global Games By Hoffmann, Eric; Sabarwal, Tarun
  18. Peasant Aristocrats? Wealth and Social Status of Swedish Farmer Parliamentarians 1769–1895 By Bengtsson, Erik; Olsson, Mats
  19. Die Selbstwahrnehmung der Wirtschaft: Entstehung und Wandel von Statistik und Ökonomik als Theorie für Eliten By Brodbeck, Karl-Heinz

  1. By: Venkat Venkatasubramanian; Yu Luo
    Abstract: The question about fair income inequality has been an important open question in economics and in political philosophy for over two centuries with only qualitative answers such as the ones suggested by Rawls, Nozick, and Dworkin. We provided a quantitative answer recently, for an ideal free-market society, by developing a game-theoretic framework that proved that the ideal inequality is a lognormal distribution of income at equilibrium. In this paper, we develop another approach, using the Nash Bargaining Solution (NBS) framework, which also leads to the same conclusion. Even though the conclusion is the same, the new approach, however, reveals the true nature of NBS, which has been of considerable interest for several decades. Economists have wondered about the economic meaning or purpose of the NBS. While some have alluded to its fairness property, we show more conclusively that it is all about fairness. Since the essence of entropy is also fairness, we see an interesting connection between the Nash product and entropy for a large population of rational economic agents.
    Date: 2018–06
  2. By: Miguel D. Ramirez (Department of Economics, Trinity College)
    Abstract: This brief note contends that Marx's (and Ricardo's) views on fixed (constant) and circulating (variable) capital,the impact of machinery on the working class,and their conception of how the accumulation of capital gives rise to a relative diminution in the demand for labor were strongly influenced by the works of English economists John Barton and George Ramsay. With a few notable exceptions, Marx's (and Ricardo,s)intellectual debt to these classical economists has been practically neglected in the extant literature. Second, the note into Marx's theory of technological unemployment (surplus labor) and its main components. Again, the textual evidence strongly suggests that Marx was influenced by the writings of Barton, Ricardo, and Ramsay. The latter seems to have also influenced Marx's conception of one of the three major components of the surplus population, viz. the latent component.
    JEL: B10 B12 B14
    Date: 2018–06
  3. By: Javed Ahmad Khan جاويد أحمد خان (Professor, Centre For West Asian Studies, Jamia Millia Islamia, New Delhi أستاذ ، مركز دراسات غرب آسيا - الجامعة الملية الإسلامية - نيودلهي - الهند)
    Abstract: Arab Islamic world of the last three centuries is generally seen as an era of Muslim’s intellectual decline, with no worthwhile breakthrough in the human intellectual development. On the contrary, this period saw a renaissance in Western philosophical and scientific development, and their political and economic domination even in Muslim countries. A number of studies in this regard have tried to trace out as what contributions Muslim made during this period of colonial domination in the Arab Islamic world? What were the sources of inspirations and rationale for their religious based socio-economic intellectual awakening particularly since mid-eighteenth century? For, the scholars in modern times have argued that Muslims intellectuals’ awakening of last two hundred years are basically taken from the European intellectual developments. Albert Hourani in his work Arabic Thought in the Liberal Age 1798-1939 has mentioned how the modernizing trend of political and social thought in the Arab Middle East changed during the nineteenth and the first half of the twentieth centuries, in response to the expanding influence of Europe (Hourani 1962). Muslim countries that came under Western influence or domination were awakened by the European development and Muslim theorists, leadership of the time, accepted the importance of acquisition of Western knowledge on technology as well as intellectualism. ينظر العالم الإسلامي العربي في القرون الثلاثة الأخيرة بشكل عام إلى حقبة من التدهور الفكري للمسلمين ، مع عدم وجود أي انفراج جدير بالاهتمام في التنمية الفكرية البشرية. على العكس ، شهدت هذه الفترة نهضة في التطور الفلسفي والعلمي الغربي ، وهيمنتها السياسية والاقتصادية حتى في البلدان الإسلامية. لقد حاول عدد من الدراسات في هذا الصدد تحديد ما هي المساهمات التي قدمها المسلمون خلال هذه الفترة من الهيمنة الاستعمارية في العالم العربي الإسلامي؟ ما هي مصادر الإلهام والأساس المنطقي لاستيقاظهم الديني الاجتماعي الاقتصادي القائم على أساس ديني خاصة منذ منتصف القرن الثامن عشر؟ ل ، وقد جادل العلماء في العصر الحديث أن الصحوة المسلمين المثقفين من مائتي سنة الماضية مأخوذة أساسا من التطورات الفكرية الأوروبية. ألبير حوراني في عمله لقد ذكر الفكر العربي في العصر الليبرالي 1798-1939 كيف تغير اتجاه التحديث للفكر السياسي والاجتماعي في الشرق الأوسط العربي خلال القرنين التاسع عشر والنصف الأول من القرن العشرين ، استجابة للتوسع في تأثير أوروبا (حوراني 1962). استيقظت البلدان الإسلامية التي دخلت تحت النفوذ أو الهيمنة الغربية من قبل التنمية الأوروبية ووافق المنظرين المسلمين ، وقيادة ذلك الوقت ، على أهمية اكتساب المعرفة الغربية على التكنولوجيا وكذلك الفكر
    Date: 2017–01
  4. By: Jan E. Snellman; Gerardo I\~niguez; J\'anos Kert\'esz; R. A. Barrio; Kimmo K. Kaski
    Abstract: Human behavioural patterns exhibit selfish or competitive, as well as selfless or altruistic tendencies, both of which have demonstrable effects on human social and economic activity. In behavioural economics, such effects have traditionally been illustrated experimentally via simple games like the dictator and ultimatum games. Experiments with these games suggest that, beyond rational economic thinking, human decision-making processes are influenced by social preferences, such as an inclination to fairness. In this study we suggest that the apparent gap between competitive and altruistic human tendencies can be bridged by assuming that people are primarily maximising their status, i.e., a utility function different from simple profit maximisation. To this end we analyse a simple agent-based model, where individuals play the repeated dictator game in a social network they can modify. As model parameters we consider the living costs and the rate at which agents forget infractions by others. We find that individual strategies used in the game vary greatly, from selfish to selfless, and that both of the above parameters determine when individuals form complex and cohesive social networks.
    Date: 2018–06
  5. By: Thiago Dumont Oliveira (University of Siena); Carlos Eduardo Suprinyak (Cedeplar-UFMG)
    Abstract: In the second edition of his methodological Essay, Lionel Robbins attributes a significant role to uncertainty, dynamics and the time element. Understanding the motives that led to these revisions may offer important clues to assess what happened to political economy ever since, and how far economics has diverged from Robbins’ agenda. Our main claim is that these topics appeared on the second edition of the Essay because Robbins saw them as fundamental if economics (as a science) were to achieve its goal of being a useful tool for political economy, following the English Classical economists’ distinction between science and art. His conception of science was thus tailored to his interests in political economy, rejecting attempts to mimic the methods of the natural sciences by preserving the human element that makes economics a social science.
    Keywords: Lionel Robbins, Political Economy, Uncertainty, Time, Methodology of Economics
    JEL: B20 B31 B40
    Date: 2018–05
  6. By: Jackson, Emerson Abraham
    Abstract: This research article was championed as a way of providing discourses pertaining to the concept of "Critical Realism (CR)" approach, which is amongst many othe forms of competing postmodern philosophical concepts for the engagement of dialogical discourses in the area of established econonetric methodologies for effective policy prescription in the economic science discipline. On the the whole, there is no doubt surrounding the value of empirical endeavours in econometrics to address real world economic problems, but equally so, the heavy weighted use and reliance on mathematical contents as a way of justifying its scientific base seemed to be loosing traction of the intended focus of economics when it comes to confronting real world problems in the domain of social interaction. In this vein, the construction of mixed methods discourse(s), which favour that of CR philosophy is hereby suggested in this article as a way forward in confronting with issues raised by critics of mainstream economics and other professionals in the postmodern era.
    Keywords: Theoretical, Methodological Intervention, Postmodern, Critical Realism, Econometrics
    JEL: A12 B50 C18
    Date: 2018–05–18
  7. By: Mark Hayes (University of Cambridge)
    Abstract: A core proposition of Keynes’s General Theory is that money wages do not determine real wages or employment at the aggregate level in a closed economy. What then is the macroeconomic role of trades unions in the determination of real wages and employment? What are the mechanisms through which bargaining power takes effect? The paper argues that trades unions play important roles in countering employer monopsony as well as in determining the non-wage terms and conditions of employment and the incidence of risk between capital and labour. In the former role, it is the money wage that is relevant, while the latter role is a factor in the determination of aggregate real income and profit, yet the aggregate real wage itself and the wage share are residuals. Trades unions have the potential to support the promotion of full employment with price stability as part of a policy of demand management through the adoption of co-ordinated wage bargaining institutions.
    Keywords: Collective bargaining, wage co-ordination, income distribution
    JEL: E23 E25 J30 J51 J52
    Date: 2016–08
  8. By: Cloyne, James; Dimsdale, Nicholas; Postel-Vinay, Natacha
    Abstract: The impact of fiscal policy on economic activity is still a matter of great debate. And, ever since Keynes first commented on it, interwar Britain, 1918-1939, has remained a particularly contentious case --- not least because of its high debt environment and turbulent business cycle. This debate has often focused on the effects of government spending, but little is known about the effects of tax changes. In fact, a number of tax reforms in the period focused on long-term and social objectives, often reflecting the personality of British Chancellors. Based on extensive historiographical research, we apply a narrative approach to the interwar period in Britain and isolate a new series of exogenous tax changes. We find that tax changes have a sizable effect on GDP, with multipliers around 0.5 on impact and exceeding 2 within two years. Our estimates contribute to the historical debate about fiscal policy in the interwar period and are remarkably similar to the sizeable tax multipliers found after WWII.
    Keywords: Fiscal History; Fiscal policy; Macroeconomic Policy; multiplier; narrative approach; Public Finance; taxation
    JEL: E23 E32 E62 H2 H30 N1 N44
    Date: 2018–05
  9. By: Diane Elson
    Abstract: One of the pillars of the 2030 Agenda for Sustainable Development is the pledge to ‘leave no one behind’. This paper argues that we must recognise that many people throughout the world are not just being left behind. They are being pushed even further behind, and their levels of well-being are falling, often in ways from which it is impossible to fully recover. Indeed, many are confronted with forces that lead to their avoidable premature deaths. Thus, development policies should have as their first priority to ensure that no one is pushed behind. The paper argues that this could be secured through a different way of framing economic policy, that focuses on the obligations of states to respect, protect and fulfil economic, social and cultural rights. The paper also highlights the ways in which deprived people are using the human rights system to claim their rights.
    Keywords: 2030 Agenda, poverty, inequality, deprivation, dispossession, human rights obligations, human rights claims
    JEL: D63 I15 I31
    Date: 2018–06
  10. By: Jordi Brandts; David J. Cooper
    Abstract: We study the tradeoffs between centralized and decentralized management using a new experimental game, the decentralization game. Product types for two divisions are either chosen independently by the divisions (decentralization) or imposed by a central manager (centralization). Centralization makes it easier to coordinate the divisions’ product types but more difficult to take advantage of the divisions’ private information. We find that total surplus is highest when centralization is combined with free-form chat between the three players. This high performance occurs because divisions almost never lie about their private information, yielding unambiguous transmission of information from divisions to the central manager.
    Keywords: Coordination, experiments, Organizations, asymmetric Information
    JEL: C92 D23 J31 L23 M52
    Date: 2018–06
  11. By: Lindqvist, Erik (Department of Economics); Östling, Robert (Institute for International Economic Studies); Cecarini, David (Department of Economics)
    Abstract: We surveyed a large sample of Swedish lottery players about their psychological well-being and analyzed the data following pre-registered procedures. Relative to matched controls, large-prize winners experience sustained increases in overall life satisfaction that persist for over a decade and show no evidence of dissipating with time. The estimated treatment effects on happiness and mental health are significantly smaller, suggesting that wealth has greater long-run effects on evaluative measures of well-being than on affective ones. Follow-up analyses of domain-specific aspects of life satisfaction clearly implicate financial life satisfaction as an important mediator for the long-run increase in overall life satisfaction.
    Keywords: Psychological Well-being; Subjective Well-being; Happiness
    JEL: D69 I31
    Date: 2018–06–18
  12. By: Ivan Kozic
    Abstract: Symmetry is a fundamental concept in modern physics and other related sciences. Being such a powerful tool, almost all physical theories can be derived from symmetry, and the effectiveness of such an approach is astonishing. Since many physicists do not actually believe that symmetry is a fundamental feature of nature, it seems more likely it is a fundamental feature of human cognition. According to evolutionary psychologists, humans have a sensory bias for symmetry. The unconscious quest for symmetrical patterns has developed as a solution to specific adaptive problems related to survival and reproduction. Therefore, it comes as no surprise that some fundamental concepts in psychology and behavioral economics necessarily involve symmetry. The purpose of this paper is to draw attention to the role of symmetry in decision-making and to illustrate how it can be algebraically operationalized through the use of mathematical group theory.
    Date: 2018–06
  13. By: Rao, Hayagreeva (Stanford University); Dutta, Sunasir (University of Minnesota)
    Abstract: We extend the emergent lens on strategy formulation by arguing that great strategies arise from insurgent identity movements. In motivating the paper, we depict Steve Jobs as an activist constituted by the personal computing movement that attacked corporate computing. We discuss the processes that mediate the link between great strategies and oppositional movements, and suggest that the strategist ought to be an activist rather than an analyst alone.
    Date: 2017–10
  14. By: Thomas Dohmen; Simone Quercia; Jana Willrodt
    Abstract: We show that the disposition to focus on favorable or unfavorable outcomes of risky situations affects willingness to take risk as measured by the general risk question. We demonstrate that this disposition, which we call risk conception, is strongly associated with optimism, a stable facet of personality and that it predicts real-life risk taking. The general risk question captures this disposition alongside pure risk preference. This enlightens why the general risk question is a better predictor of behavior under risk across different domains than measures of pure risk preference. Our results also rationalize why risk taking is related to optimism.
    Keywords: risk taking behavior, optimism, preference measures, risk conception
    JEL: D91 C91 D81 D01
    Date: 2018–06
  15. By: Pancarini, Ans Shinta
    Abstract: The advancement of the economy is heavily dependent on market conditions. The market brings together the sellers and buyers, to conduct transactions on goods and services (supply and demand). Balance in supply and demand is needed to maintain economic stability. Market urgency attracts the characters to put forward their theories of both Islamic and western thinkers. Islam is a divine religion that brings the benefit of the afterlife. Islam has different views and thoughts about market mechanisms. This thinking precedes what western thinkers have expressed. Ibn Taimiyyah reveals five concepts in the development of market mechanisms, namely fair prices, fair markets, fair profit concepts, the concept of fair wages and aims for society. The essence of Ibn Taimiyyah's thought is about the justice of the ummah. Broadly speaking Ibn Khaldun thought of concept of justice.
    Keywords: Ibn Taymiyyah, Market Mechanism, History of Islamic Economics.
    JEL: A11 A13 B0 B00 D40 E20
    Date: 2018–03–17
  16. By: Claire Baldin (Université Côte d'Azur, France; GREDEG CNRS); Ludovic Ragni (Université Côte d'Azur, France; GREDEG CNRS)
    Abstract: Cet article examine les enjeux du concept d’Echange Composite que François Perroux propose pour critiquer celui d’Echange pur. La première partie étudie les critiques que Perroux adresse aux modèles marginalistes, néo-marginalistes, d’équilibre général et d’optimalité parétienne pour définir l’Echange Composite. La seconde partie apprécie les concepts qui caractérisent l’Echange Composite (effet de domination, luttes-concours, conflits-coopérations, coûts de l’homme, dons et transferts contraints). Nous étudions les enjeux de ces concepts par rapport aux formes de justice distributive que Perroux envisage pour définir l’Echange Composite par rapport aux théories de la justice de Walras et de Rawls.
    Keywords: Marginalisme, Equilibre général, Perroux, Rawls, Walras, Justice
    JEL: B13 B16 B21 B40 D51 D63
    Date: 2018–06
  17. By: Hoffmann, Eric; Sabarwal, Tarun
    Abstract: We extend the global games method to finite player, finite action, monotone games. These games include games with strategic complements, games with strategic substitutes, and arbitrary combinations of the two. Our result is based on common order properties present in both strategic complements and substitutes, the notion of p-dominance, and the use of dominance solvability as the solution concept. In addition to being closer to the original arguments in Carlsson and van Damme (1993), our approach requires fewer additional assumptions. In particular, we require only one dominance region, and no assumptions on state monotonicity, or aggregative structure, or overlapping dominance regions. As expected, the p-dominance condition becomes more restrictive as the number of players increases. In cases where the probabilistic burden in belief formation may be reduced, the p-dominance condition may be relaxed as well. We present some examples that are not covered by existing results.
    Keywords: Global games, strategic complements, strategic substitutes, monotone games, equilibrium selection
    JEL: C70 C72
    Date: 2018–05–15
  18. By: Bengtsson, Erik (Department of Economic History, Lund University); Olsson, Mats (Department of Economic History, Lund University)
    Abstract: Sweden was unique in early modern Europe, in that its parliament included a peasant farmer estate. It is commonplace in Swedish and international research to consider the peasant farmer politicians as the guarantee of a liberal and egalitarian path of development. On the other hand, in the Swedish-language political history literature, the peasant politicians are often seen as rather narrow-minded, their common political program limited to the issue of keeping (their own) taxes as low as possible, and opposed to any expansion of social policy and citizenship rights. To address the role of peasant farmer politicians, this paper presents a novel dataset of the social and economic status of the peasant MPs, with benchmarks for the 1769, 1809, 1840, 1865 and 1895 parliaments. We show that the politicians were three to four times wealthier than their voters, and in the 1895 parliament even 7.8 times wealthier. They were more likely to take bourgeois surnames and their children were likely to make a transition away from the peasant class and into the middle class. The exclusiveness of the peasant politicians, which increased over the nineteenth century, has implications for their policies, and helps explain the increasing conservatism and right-ward drift of Swedish farmer politics over the century.
    Keywords: peasant farmers; parliaments; Sweden; political economy
    JEL: I31 N13 N33
    Date: 2018–06–20
  19. By: Brodbeck, Karl-Heinz
    Abstract: Die Statistik war in ihren Anfängen "Staatszustandswissenschaft", Fürsten erfassten darin in der Kammer ihr jeweiliges Territorium. Durch die Bevölkerungswissenschaft wandelte sie sich schrittweise zu einer formalmathematischen Theorie. Parallel dazu setzte sich die Geldökonomie immer mehr als herrschende Form durch und transformierte auch die Vorstellung von den handelnden Subjekten. Durch das Prinzip, nur jeweils Durchschnitte zu erfassen, wurde vor allem in der schottischen Tradition des Liberalismus aus der Ökonomik als "moral science" eine naturalistische Theorie autonomer Marktprozesse. Die Selbstwahrnehmung der Wirtschaft in Statistik und Ökonomik dient – ungeachtet ihrer vermeintlich neutralen, äußerlichen und formal-mathematischen Struktur – vorwiegend den Interessen einer herrschenden Elite.
    Keywords: Statistik,Ökonomik,Kameralismus,Elitentheorie,Geldökonomie,implizite Ethik,österreichische Schule
    JEL: A12 A13 B11 B16 B25 C18
    Date: 2017

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