nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2019‒11‒11
ten papers chosen by
Erik Thomson
University of Manitoba

  1. Game of Thrones or Game of Class Struggle? Revisiting the Demise of Feudalism and the Dobb-Sweezy Debate By Lambert, Thomas
  2. The "new" crisis of the liberal order: Populism, socioeconomic imbalances, and the response of contemporary ordoliberalism By Dold, Malte; Krieger, Tim
  3. Keynesian Economics - Back from the Dead? The Godley-Tobin Lecture By Robert Rowthorn
  4. Trade Wars: Nobody Expects the Spanish Inquisition By Bekkers, Eddy; Francois, Joseph; Rojas-Romagosa, Hugo
  5. Natural Resources in the Theory of Production: The Georgescu-Roegen/Daly versus Solow/Stiglitz Controversy By Quentin Couix
  6. Making Pollution into a Market Failure Rather Than a Cost-Shifting Success: The Suppression of Revolutionary Change in Economics By Clive L. Spash
  7. Theories of social trust formation: a brief literature overview By Tamilina, Larysa
  8. Individual Sense of Justice and Harsanyi's Impartial Observer By Abhinash Borah
  9. Economía naranja By Alexander Cotte Poveda; Clara Inés Pardo
  10. Associative Memory and Belief Formation By Benjamin Enke; Frederik Schwerter; Florian Zimmermann

  1. By: Lambert, Thomas
    Abstract: In 1947, the Marxist economist Maurice Dobb published a book that attempted to outline and explain how the feudalistic economic system of medieval times gave way to capitalism. Dobb’s Studies in the Development of Capitalism (1947) started a debate among economists and historians over the following decades that has continued until this day. One of his most prominent and earliest critics was Paul M. Sweezy who, although he commended Dobb on raising the question of why feudalism gave way to capitalism, disagreed with Dobb’s conclusions on why the transition from feudalism to capitalism occurred. In general, Dobb thought that feudalism went into decline and was replaced by capitalism because of endogenous causes rooted in the class struggles between serfs and noblemen. Sweezy and others, on the other hand, thought that the factors which led to the decline of feudalism and rise of capitalism were exogenous, and these factors included the development and growth of international trade, production for markets and money, the growth and importance of cities, and the need for European monarchies to finance their wars and overseas empires. Other economists and historians, both mainstream and Marxian, also joined the debate, and a long list of articles and books have been generated on the “transition debate” since the late 1940s. In doing research for this paper, no statistical work on the Dobb-Sweezy debate and its competing hypotheses was found, and so this paper attempts to do some empirical testing of these hypotheses using data from England from the middle ages up to the late nineteenth century. The findings of this note are informative in trying to better understand the transition and provide some food for thought on how capitalism may change in the future.
    Keywords: capitalism, feudalism, Dobb-Sweezy debate, econometrics, productivity, surplus value, and transition debate
    JEL: B20 B24 B25 N3 N33
    Date: 2019–10–29
  2. By: Dold, Malte; Krieger, Tim
    Abstract: In recent years, commentators have noticed that the European liberal order is 'under attack'. Traditional parties of the center are in decline. Populist movements of the right and the left have won elections or significant shares in parliaments. In the face of this 'new' crisis of liberalism, our paper follows the spirit of Walter Lippmann's The Good Society and argues for a renewal of (ordo)liberal thinking. Similar to Lippman - who lamented, "liberalism had become a philosophy of neglect and refusal to proceed with social adaptation" -, we argue that our current liberal economic order is unfit to deal with fundamental social asymmetries. The benefits of open borders and economic integration are distributed unevenly in most societies with urban economic and political elites as main beneficiaries and supporters of the current order, while neglecting less-skilled, rural workers. In this paper, we argue for a contemporary ordoliberalism that takes up this distributional challenge. In spite of recurrent criticism of its value-laden nature, we argue that the normativity of ordoliberalism is actually an asset in the current debate on populism. Moral and ideological arguments are often at the heart of citizens' concerns. Following this rationale, we propose that contemporary ordoliberals advance their thinking in connection with the emerging field of Philosophy, Politics, and Economics (PPE).
    JEL: B25 B31 B41
    Date: 2019
  3. By: Robert Rowthorn
    Abstract: This paper surveys some the main developments in macroeconomics since the anti-Keynesian counter-revolution 40 years ago. It covers both mainstream and heterodox economics. Amongst the topics discussed are: New Keynesian economics, Modern Monetary Theory (MMT), expansionary fiscal contraction, unconventional monetary policy, the Phillips curve, and hysteresis. The conclusion is that Keynesian economics is alive and well, and that there has been a degree of convergence between heterodox and mainstream economics.
    Keywords: Macroeconomics, Keynesian economics, Keynes
    JEL: E60 E10 E31 B22
    Date: 2019–06
  4. By: Bekkers, Eddy; Francois, Joseph; Rojas-Romagosa, Hugo
    Abstract: This paper assesses the utility of economic theory of rational trade wars to predict such events or to prescribe courses of action to control their consequences. Trade wars are fundamentally political events whose causes are almost completely political and whose consequences are to a significant degree also political. Contemporary economic theory has developed during a uniquely peaceful and liberal period in world history, affecting how economists have thought about trade conflicts, leaving the profession unprepared to provide serious analysis or advice.
    Date: 2019–10–17
  5. By: Quentin Couix (UP1 UFR02 - Université Panthéon-Sorbonne - UFR d'Économie - UP1 - Université Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper provides a theoretical and methodological account of an important controversy between neoclassical resources economics and ecological economics, from the early 1970s to the end of the 1990s. It shows that the assumption of unbounded resources productivity in the work of Solow and Stiglitz, and the related concepts of substitution and technical progress, rest on a model-based methodology. On the other hand, Georgescu-Roegen's assumption of thermodynamic limits to production, later revived by Daly, comes from a methodology of interdisciplinary consistency. I conclude that neither side provided a definitive proof of its own claim because both face important conceptual issues.
    Keywords: Nicholas Georgescu-Roegen,Robert Solow,Joseph Stiglitz,natural resources,theory of production
    Date: 2019–10–24
  6. By: Clive L. Spash
    Abstract: This paper explores core failures of environmental economics as a scientific attempt to understand the ecological crises. The case of environmental pollution is used to show how neoclassical externality theory evolved to establish commitment to, and dogmatic support for, an elitist ethics and liberal market ideology. The public policy response to pollution then recommended is to internalise externalities by correcting market prices based on monetary valuation of the social costs (i.e., damages). Pollution as a market failure is deemed a correctible error of the price system. This is contrast with an alternative theory of pollution based on a classic institutional economic theory of cost-shifting that instead requires a public policy response involving regulation and planning. Reflection on the history of thought related to these two theories of pollution reveals how environmental economics became a marginalised field supporting the neoclassical economic orthodoxy with full commitment to its core paradigms. Why the critical and realist institutional approach had to be suppressed is explained as denying the potential for a revolutionary paradigm shift in economic price theory.
    Keywords: Environmental economics; externalities; cost-shifting; price theory; pollution; Arthur C Pigou; K William Kapp; paradigm shift; neoclassical economics; orthodoxy; institutional economics
    JEL: Q5 D62
    Date: 2019
  7. By: Tamilina, Larysa
    Abstract: In this paper, an overview of the theories on social trust formation is provided, which are grouped into two types: ‘individual’ and ‘societal’ theories. Individual theories embrace the network, socio-psychological, life experience, ideological and socio-demographic theories. Under societal theories, the following mechanisms of trust formation are specified: income inequality, country wealth, fractionalization, institutional, and Protestant theories.
    Keywords: social trust, trust determinants, trust formation mechanisms
    JEL: Z0
    Date: 2018–01–01
  8. By: Abhinash Borah (Department of Economics, Ashoka University)
    Abstract: We revisit, within Harsanyi’s impartial observer setting, the question of foundations underlying procedural fairness concerns in welfare judgments. In our setup—that of allocating an indivisible good using a lottery—such concerns, presumably, matter. We draw from the social preferences literature and relax a typical assumption made while addressing this question, namely, that individuals in society do not care about procedural fairness and such concerns arise exclusively at a societal level, which are captured by non-linear social welfare functions (SWFs). In our model, individual attitudes towards procedural fairness are identified and factored into welfare judgments. Specifically, we provide an axiomatic basis within Harsanyi’s (1955) framework to represent procedural fairness sensitive individual preferences by the representation in Karni and Safra (2002). We then show, in terms of underlying axioms, how such individual assessments incorporating both risk and procedural fairness attitudes can be aggregated by means of utilitarian and generalized utilitarian SWFs.
    Keywords: Procedural fairness, Harsanyi’s impartial observer, Karni-Safra (“individual sense of justice†) preferences, social preferences under risk, utilitarianism, generalized utilitarianism
    Date: 2019–06
  9. By: Alexander Cotte Poveda; Clara Inés Pardo
    Abstract: Se determinan e identifican indicadores de ciencia y tecnología relacionados con indicadores de economía naranja y su relación con la ciencia, tecnología e innovación (CTI) que permiten evidenciar como en el país el tema se ha comenzado a trabajar y es importante fortalecer estas métricas como insumo para análisis de política pública y que permitan desarrollar programas que logren una mayor aplicación y crecimiento.
    JEL: O3 O31 O34 O38
    Date: 2019–04–30
  10. By: Benjamin Enke; Frederik Schwerter; Florian Zimmermann
    Abstract: This paper experimentally studies the role of associative memory for belief formation. Real-world information signals are often embedded in memorable contexts. Thus, today’s news, and the contexts they are embedded in, may cue the selective retrieval of similar past news and hence contribute to the widely documented pattern of expectation overreaction. Based on a stylized version of models of associative memory in the literature, we develop a simple and tightly controlled experimental setup in which participants observe sequences of news about the stock market value of hypothetical companies. Here, identical types of news are associated with identical stories and images. In this setup, participants’ expectations strongly overreact to recent news. We successfully verify the model’s predictions about how the magnitude of overreaction should depend on the history of news. For example, once today’s news are associated with the stories and images of previous opposite news, expectations systematically underreact. By exogenously manipulating the scope for imperfect and associative recall in our setup, we further provide direct causal evidence for the role of memory in belief formation and overreaction. Finally, we use our experimental data to estimate the model parameters that govern the strength of imperfect and associative recall over different time horizons.
    Keywords: beliefs, expectations, memory, bounded rationality
    JEL: D01
    Date: 2019

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