nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2019‒09‒16
nine papers chosen by
Erik Thomson
University of Manitoba

  1. "Positional Views" as the Cornerstone of Sen's Idea of Justice By Antoinette Baujard; Muriel Gilardone
  2. Macroeconomic Dynamics at the Cowles Commission from the 1930s to the 1950s By Robert W. Dimand; Harald Hagemann
  3. Everything must change, so that the world can remain the same: In memory of the life and work of Elmar Altvater By Mahnkopf, Birgit
  4. The Cowles Commission and Foundation for Research in Economics: Bringing Mathematical Economics and Econometrics from the Fringes of Economics to the Mainstream By Robert W. Dimand
  5. The ideological use and abuse of Freiburg's ordoliberalism By Dold, Malte; Krieger, Tim
  6. How economics forgot power By Carlos Mallorquin; ;
  7. On Artificial Intelligence’s Razor’s Edge: On the Future of Democracy and Society in the Artificial Age By Julia M. Puaschunder
  8. Schumpeter 4.0.: Unternehmungsgeist und wirtschaftlicher Fortschritt im digitalen Zeitalter By Lorenzen, Sünje; Vöpel, Henning
  9. The Political Economy of the Prussian Three-Class Franchise By Sascha O. Becker; Erik Hornung

  1. By: Antoinette Baujard (CREED and Tinbergen Institute, University of Amsterdam, Amsterdam, Netherlands); Muriel Gilardone (Normandie Université, Unicaen, CNRS, CREM UMR 6211, F-14000, France)
    Abstract: Our paper offers a novel reading of Sen’s idea of justice, beyond the standard prisms imposed by theories of justice – resting on external normative criteria – and formal welfarism – involving the definition of individual welfare and its aggregation. Instead we take seriously Sen’s emphasis on personal agency and focus on his original contribution to the issue of objectivity. Firstly, we demonstrate that Sen’s idea of justice, with at its core “positional views”, is more respectful of persons’ agency than would be a theory based on individual preference or capability. Secondly, we argue that Sen’s conception of objectivity considers that both information and sentiments are relative to a position. Such an alternative approach to subjectivity allows the formation of more impartial views through collective deliberation and a better consideration of justice by agents themselves.
    Keywords: Individual preferences, positional objectivity, sentiments, public reasoning, agency, justice
    JEL: A13 B31 B41 D63 I31
    Date: 2019
  2. By: Robert W. Dimand (Department of Economics, Brock University); Harald Hagemann (University of Hohenheim)
    Abstract: Jacob Marschak shaped the emergence of monetary theory and portfolio choice at the Cowles Commission (which he directed from 1943 to 1948, but with which he was involved already from 1937) at the University of Chicago, where he was the doctoral teacher of Leonid Hurwicz, Harry Markowitz and Don Patinkin, and then from 1955 at the Cowles Foundation at Yale University, where he was a senior colleague of James Tobin until moving to UCLA in 1960. Marschak’s later attempts to clarify the concept of liquidity and to emphasize the role of new information for economic behavior date back as far as to his early experiences with hyperinflationary processes in the Northern Caucasus during the Russian Revolution. Marschak came to monetary theory with his 1922 Heidelberg doctoral dissertation on the quantity theory equation of exchange (published in 1924 as “Die Verkehrsgleichung”), and embedded monetary theory in a wider theory of asset market equilibrium in studies of “Money and the Theory of Assets” (1938), “Assets, Prices, and Monetary Theory” (with Helen Makower, 1938), “Role of Liquidity under Complete and Incomplete Information” (1949), “The Rationale of the Demand for Money and of ‘Money Illusion’” (1950), and “Monnaie et liquidité dans les modèles macroéconomiques et microéconomiques” (1955), as well as in Income, Employment and the Price Level (lectures Marschak gave at Chicago, edited by Fand and Markowitz, 1951). We examine Marschak’s analysis of money within a broader theory of asset market equilibrium and explore the relation of his work to the monetary and portfolio theories of his doctoral students Markowitz and Patinkin and his colleague Tobin and to the revival of the quantity theory of money by Milton Friedman, a University of Chicago colleague unsympathetic to the methodology of the Cowles Commission.
    Keywords: Jacob Marschak, Money in a theory of assets, Cowles Commission, Harry Markowitz, James Tobin
    JEL: B22 B31
    Date: 2019–09
  3. By: Mahnkopf, Birgit
    Abstract: Elmar Altvater was a renowned political economist and professor at the Otto-Suhr-Institute of Freie Universität Berlin from 1970 until 2006. Until his death in 2018 he was a point of reference for several generations of students, left-wing academics and politicians, trade union activists, representatives of civil society organizations in Germany, across Europe and in Latin America. He became one of the few academics in Germany who based the analysis of contemporary economic and political developments on a critical reading of Marxian approaches to understand the historical cycles of growth, recession and crisis in modern capitalism. The following text attempts to sketch some elements of a remarkable leftist intellectual history of the Federal Republic of Germany through the prism of Elmar Altvater while referring to some of the political initiatives Elmar Altvater was involved in and touching on some of the most important topics he has dealt with: the causes and consequences of the numerous debt crisis; the role of neoliberalism which emerged in the course of crisis of world finance since the late 1970s; the impact of "finanzialization" on social cohesion and politics at national, European and international level and, most importantly, his attempt to analyze the degradation of nature as the "price of progress" - on the basis of an ecologically expanded critique of political economy.
    Keywords: Marx,capitalism,critical political economy,debt crisis,globalization,nature
    Date: 2019
  4. By: Robert W. Dimand (Department of Economics, Brock University)
    Abstract: Founded in 1932 by a newspaper heir disillusioned by the failure of forecasters to predict the Great Crash, the Cowles Commission promoted the use of formal mathematical and statistical methods in economics, initially through summer research conferences in Colorado and through support of the Econometric Society (of which Alfred Cowles was secretary-treasurer for decades). After moving to the University of Chicago in 1939, the Cowles Commission sponsored works, many later honored with Nobel Prizes but at the time out of the mainstream of economics, by Haavelmo, Hurwicz and Koopmans on econometrics, Arrow and Debreu on general equilibrium, Yntema and Mosak on general equilibrium in international trade theory, Arrow on social choice, Koopmans on activity analysis, Klein on macroeconometric modelling, Lange, Marschak and Patinkin on macroeconomic theory, and Markowitz on portfolio choice, but came into intense methodological, ideological and personal conflict with the emerging “Chicago school.” This conflict led the Cowles Commission to move to Yale in 1955 as the Cowles Foundation, directed by James Tobin (who had declined to move to Chicago to direct it). The Cowles Foundation remained a leader in the more technical areas of economics, notably with Tobin’s “Yale school” of monetary theory, Scarf’s computable general equilibrium, Shubik in game theory, and later Phillips and Andrews in econometric theory but as formal methods in economic theory and econometrics pervaded the discipline of economics, Cowles (like the Econometric Society) became less distinct from the rest of economics.
    Keywords: Cowles Commission, Formalism in economics, Mathematics in economics, Cowles approach to econometrics
    JEL: B23 B41 C01 C02
    Date: 2019–06
  5. By: Dold, Malte; Krieger, Tim
    Abstract: In the aftermath of the Eurozone crisis, a "battle of ideas" emerged over whether ordoliberalism is part of the cause or the solution of economic problems in Europe. While German ordoliberals argued that their policy proposals were largely ignored before and during the crisis, implying a too small role of ordoliberalism in European economic policy, critics saw too much ordoliberal influence, especially in form of austerity policies. We argue that neither view is entirely correct. Instead, both camps followed their ideological predispositions and argued strongly in favor of their preconceived Weltanschauung. The ordoliberal Freiburg School ceased being an active research program and instead grew to resemble a "tradition" whose proponents shared a certain mindset of convenience. As a result, ordoliberal thinking was both used and abused by its proponents and critics to emphasize their ideologically framed policy recommendations. The present paper analyzes this ongoing debate and reflects on how the different ideological camps refer to the Freiburg School to push their own agendas. Building on this discussion, we end our paper with some constructive thoughts on how a contemporary ordoliberalism might want to react to some of the challenges of the ongoing Eurozone crisis.
    Keywords: Freiburg School,Ordoliberalism,Eurozone Crisis,Austerity,Ideology
    JEL: B29 D43 E61 G18 P16
    Date: 2019
  6. By: Carlos Mallorquin (Universidad Autónoma de Zacatecas); ;
    Abstract: The article discusses a recent book publication by Philip Pilkington, in which an interesting and novel reconceptualizing of the investment (accumulation) process and economic growth is proposed. The gaze and critique through which the book is examined underlines certain theoretical similarities found in the Latin American economic discourse during the 1950´s, denominated as “Latin American structuralism”, in Anglo Saxon or European academia. Central to its perspective is the examination of economic formations and its agents as a configuration of power asymmetries.
    Keywords: Desarrollo, crecimiento económico, asimetrías.
    JEL: B22 B41 B50
    Date: 2019–08–01
  7. By: Julia M. Puaschunder (The New School, NY)
    Abstract: The introduction of Artificial Intelligence in our contemporary society imposes historically unique challenges for humankind. The emerging autonomy of AI holds unique potentials of eternal life of robots, AI and algorithms alongside unprecedented economic superiority, data storage and computational advantages. However, the introduction of AI to society also raises ethical questions. What is the social impact of robots, algorithms, blockchain and AI entering the workforce and our daily lives on the economy and human society? Should AI become eternal or is there a virtue in switching off AI at a certain point? If so, we may have to define a ‘virtue of killing’ and a ‘right to destroy’ that may draw from legal but also philosophical sources to answer the question how to handle the abyss of killing with ethical grace and fair style. In light of robots already having gained citizenship and being attributed as quasi-human under Common Law jurisdiction, should AI and robots be granted full citizen rights – such as voting rights? Or should we simply reap the benefits of AI and consider to define a democracy with different classes having diversified access to public choice and voting – as practiced in the ancient Athenian city state, which became the cradle of Western civilization and democratic traditions spread around the globe. Or should we legally justify AI slaves to economically reap their benefits, as was common in ancient Rome, which became the Roman Law legal foundation for Continental and some of Scandinavian Law traditions and which inspired very many different codifications around the world. Finally, we may also draw from the Code Napoléon, the French Code Civil established under Napoleon in 1804, which defined male and female into two classes of human with substantial right and power differences, and – to this day – accounts for one of the few documents that have influenced the whole world in legal and societal ways. In asking critical questions and unraveling the ethical boundary conditions of our future artificial world, the paper thereby takes a descriptive – afar from normative – theoretical angle targeted at aiding a successful introduction of AI into our contemporary workforce, democracy and society.
    Keywords: AI, Artificial Intelligence, Athenian city state, Code Civil, Code Napoléon, Democracy, Right to destroy, Roman Law, Slavery, Society, Workforce
    Date: 2019–04
  8. By: Lorenzen, Sünje; Vöpel, Henning
    Abstract: In dem vorliegenden Aufsatz geht es darum, die Ideen und Gedanken des Ökonomen Joseph A. Schumpeters und des Sozialpsychologen Erich Fromms aufzugreifen, auf die heutige Zeit zu übertragen und Ansätze für eine nicht unterlassende, sondern unternehmende Gesellschaft zu entwickeln. Es geht uns um die Vermittlung von ökonomischen und psychologischen Perspektiven. Mit Schumpeter und Fromm lässt sich eine wirtschaftspsychologische Diskussion anregen und entwickeln, mit der man den Unternehmungsgeist unserer Zeit aufspüren und die produktiven Kräfte identifizieren kann, die notwendig sind, um die bevorstehende digitale Transformation erfolgreich zu gestalten. Ökonomie und Psychologie kennen zwei wesentliche Determinanten des menschlichen Handelns: die Angst vor der Unsicherheit und die Lust zur Kreativität. Die Balance zwischen beiden Kräften ist entscheidend. Politik kann das gesellschaftliche Klima zugunsten einer produktiven Balance der Kräfte entscheidend mitprägen.
    Date: 2019
  9. By: Sascha O. Becker; Erik Hornung
    Abstract: Did the Prussian three-class franchise, which politically over-represented the economic elite, affect policy-making? Combining MP-level political orientation, derived from all roll call votes in the Prussian parliament (1867–1903), with constituency characteristics, we analyze how local vote inequality, determined by tax payments, affected policymaking during Prussia’s period of rapid industrialization. Contrary to the predominant view that the franchise system produced a conservative parliament, higher vote inequality is associated with more liberal voting, especially in regions with large-scale industry. We argue that industrialists preferred self-serving liberal policies and were able to coordinate on suitable MPs when vote inequality was high.
    Keywords: inequality, political economy, three-class franchise, elites, Prussia
    JEL: D72 N43 N93 P26
    Date: 2019

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