nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2019‒11‒18
eleven papers chosen by
Erik Thomson
University of Manitoba

  1. Time for a Paradigm Shift: From Economic Growth and Price-Making Markets to Social Ecological Economics By Clive L. Spash
  2. Relative Fairness and Quasifairness By McCain, Roger
  3. The Efficient Market Hypothesis and Rational Expectations. How Did They Meet and Live (Happily?) Ever After By Thomas Delcey; Francesco Sergi
  4. Sniff Tests in Economics: Aggregate Distribution of Their Probability Values and Implications for Publication Bias By Snyder, Christopher; Zhuo, Ran
  5. Natural Resources in the Theory of Production: The Georgescu-Roegen/Daly versus Solow/Stiglitz Controversy By Quentin Couix
  6. On the Role of Finance in Sraffa’s System By Dvoskin, Ariel; Feldman, Germán David
  7. Commodity Instability and Developing Countries By Maizels, Alfred
  8. Law’s Humility: The Possibility of Metajurisprudence By Gkouvas, Triantafyllos
  9. Dobrogea School of Economics By ARTENE, Alin
  10. Political acceptability of climate policies : do we need a "just transition" or simply less unequal societies ? By Francesco Vona
  11. Friedrich Hayek and the Price System : a speech at "The Road to Serfdom at 75: The Future of Classical Liberalism and the Free Market" Ninth Annual Conference of the William F. Buckley, Jr., Program at Yale, New Haven, Connecticut, November 1, 2019. By Quarles, Randal K.

  1. By: Clive L. Spash
    Abstract: Ecological economics has ontological foundations that inform it as a paradigm both biophysically and socially. It stands in strong opposition to mainstream thought on the operations of the economy and society. The core arguments deconstruct and oppose both growth and price-making market paradigms. However, in contradiction of these theoretical foundations, ecological economists can be found who call upon neoclassical economic theory as insightful, price-making and capitalist markets as socially justified means of allocation and economic growth as achieving progress and development. The more radical steady-state and post-growth/degrowth movements are shown to include confused and conflicted stances in relation to the mainstream hegemonic paradigms. Ecological economics personally challenges those trained in mainstream theory to move beyond their orthodox education and leave behind the flawed theories and concepts that contribute to supporting systems that create social, ecological and economic crises. This paper makes explicit the paradigmatic struggle of the past thirty years and the need to wipe away mainstream apologetics, pragmatic conformity and ill-conceived postmodern pluralism. It details the core paradigmatic conflict and specifies the alternative social ecological economic paradigm along with a new research agenda.
    Keywords: Paradigm shift; Economic growth; Markets, Price, Value theory, Social ecological economics, Steady-state economics, Degrowth, Post-Growth, Capitalism, Neoclassical economics, Socialism
    JEL: A11 A12 A13 A14 B29 B50 D40 D46 D62 O44 P1 P2 P16 P28 Q56 Q57
    Date: 2019
  2. By: McCain, Roger (Drexel University School of Economics)
    Abstract: Fairness has been an important topic of the philosophic literature in recent decades, with John Rawls' (1971 1993), ideas at the center. It is less well known that there is a literature on fairness (or equity) in neoclassical economics, which shows the influence, at least, of Rawls' difference principle, and that that literature has in turned influenced philosophical writing, principally through the work of Robert Dworkin (1981). Dworkin designates his view as "resource equalitarianism" and essentially adopts Varian's (1973) ideas from the neoclassical literature in order to define equal access to resources. In this paper, the first section will outline concepts of relative fairness and quasifairness in the comparison of social situations; the second will offer an argument for their representation of fairness based on an adaptation of the veil of ignorance, and the third will argue that relative quasifairness, in particular, addresses what has been an unsolved problem: intergenerational fairness.
    Keywords: fairness; efficiency; preference; overlapping generations
    JEL: D60
    Date: 2019–10–07
  3. By: Thomas Delcey (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Francesco Sergi (UWE Bristol - University of the West of England [Bristol])
    Abstract: This article investigates the origins and early development of the association between the efficient market hypothesis and rational expectations. These two concepts are today distinctive theoretical benchmarks for mainstream approaches to, respectively, finance and macroeconomics. Moreover, scholars in each of these two fields tend to associate the two ideas as related equilibrium concepts; they also claim that the two have a common historical origin. Although some historical accounts have been provided about either the origins of rational expectations or of the efficient market hypothesis, very few historians have been investigating the history of the association between the two concepts (or, more generally, the history of the interactions between macroeconomics and finance). The contribution of this paper is precisely to fill this gap in the historical literature, while assessing and challenging self-produced narratives told by practitioners. We suggest that the two concepts were independently developed in the 1960s. Then, we illustrate how they were associated for the first time the early 1970s, within a debate about the term structure of the interest rates involving Sargent, Modigliani, Shiller, and Fama. Finally, we discuss some early controversies about the association, which nevertheless became, at the turn of the 1970s, a step-stone for both macroeconomics and finance.
    Keywords: Efficient market hypothesis,Fama (Eugene),Lucas (Robert E),history of finance,history of macroeconomics,rational expectations,Sargent (Thomas J)
    Date: 2019–07–17
  4. By: Snyder, Christopher; Zhuo, Ran
    Abstract: The increasing demand for rigor in empirical economics has led to the growing use of auxiliary tests (balance, specification, over-identification, placebo, etc.) supporting the credibility of a paper’s main results. We dub these “sniff tests” because standards for passing are subjective and rejection is bad news for the author. Sniff tests offer a new window into publication bias since authors prefer them to be insignificant, the reverse of standard statistical tests. Collecting a sample of nearly 30,000 sniff tests across 60 economics journals, we provide the first estimate of their aggregate probability-value (p-value) distribution. For the subsample of balance tests in randomized controlled trials (for which the distribution of p-values is known to be uniform absent publication bias, allowing reduced-form methods to be employed) estimates suggest that 45% of failed tests remain in the “file drawer” rather than being published. For the remaining sample with an unknown distribution of p-values, structural estimates suggest an even larger file-drawer problem, as high as 91%. Fewer significant sniff tests show up in top-tier journals, smaller tables, and more recent articles. We find no evidence of author manipulation other than a tendency to overly attribute significant sniff tests to bad luck.
    Date: 2018–11–30
  5. By: Quentin Couix (UP1 UFR02 - Université Panthéon-Sorbonne - UFR d'Économie - UP1 - Université Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)
    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: Dvoskin, Ariel (National University of San Martín); Feldman, Germán David (National University of San Martín)
    Abstract: We critically review the previous attempts to introduce money and finance into Sraffa’s price system, whose main difference is, we argue, their conception of the interest rate, either as an opportunity cost or as an effective cost of production. We examine the implications on three different grounds: (i) the formal consistency of the system; (ii) the possibilities to explicitly treat the financial industry as any other productive sector; and (iii) the validity of the so-called “monetary theory of distribution” (MTD). We then suggest a possible route, inspired by Schumpeter’s ideas on economic development, to introduce the banking sector through its role of granting credit to innovation. Unlike previous contributions, this reformulation allows us both to justify the basic nature of the financial sector and simultaneously preserve the validity of MTD.
    Keywords: Banking industry; Innovation; Monetary theory of distribution; Sraffa; Surplus approach.
    JEL: E11 E43 E52
    Date: 2019–10–16
  7. By: Maizels, Alfred
    Abstract: The significance of commodity price instability for the economic development of commodity-exporting countries has been perhaps the dominant theme in the postwar literature on the "commodity problem". One of the contending postwar views of the significance of excessive commodity price fluctuations on the economies of producing countries can be traced back to Keynes. In a now famous memorandum, written in 1942, Keynes argued that commodity price fluctuations led to unnecessary waste of resources and, by resulting in fluctuations in export earnings, had a detrimental effect on investment in new productive capacity and perpetuated a cycle in commodity output and thus in commodity prices. His solution to the problem was to propose the establishment of a series of international buffer stocks for the main primary commodities entering international trade, with finance to be provided by his proposed Clearing Union (which later came into existence, in modified form, as the International Monetary Fund), and with a General Council to oversee and guide the operations of the individual buffer stocks. Keynes' analysis of the problem of excessive instability in commodity prices was not, however, accepted by the postwar school of neoclassical economists, who argued that intervention by governments in the working of commodity markets was not in the interests of producing countries or of the world economy in general. Several distinct arguments have been advanced by neoclassical economists to support the view that market intervention would be harmful to the economies of commodity-exporting developing countries or to world economic growth, or that such intervention is unnecessary since its objective of reducing fluctuations in export earnings could be achieved more efficiently by other means. The purpose of this Working Paper is to show that these arguments, which underlie the perceptions of the 'commodity problem' of developed country negotiators, are based on untenable assumptions or are otherwise invalid or of limited applicability.
    Keywords: International Development
  8. By: Gkouvas, Triantafyllos
    Abstract: This thesis propounds a metatheoretical regimentation of legal claims that can accommodate theoretical disagreement across the board. The solution explored does not question the incommensurability between the descriptive and the normative variants of first-order disputes about the grounds of law. What it targets instead is an unpronounced agnosticism about the possibility of a more inclusive type of metajurisprudential disagreement that does not take for granted either the existence of legal facts—construed either as descriptive or as normative facts about what the law requires—as the trivial truthmakers of propositions of law or their potentially reason-giving properties. On the assumption that the fact that for every legal proposition there is something in the world that makes it true is a premise shared by all legal philosophers but those of an expressivist inclination, an unpronounced, primitive division of opinion occurs as early as one ventures to question that our commitment to the possibility of legal truth logically entails our commitment to entities of a distinctly legal kind. The alternative idea that comes out of the rejection of this entailment will be that part of what could explain the slow pace at which the positivism-antipositivism debate is moving beyond the traditional conceptual jargon of 20th century analytic jurisprudence is the fact that we may have been blind to the possibility that our quest for the ultimate grounds of law could have been taking place under the veil of a narrow understanding of the available options with regard to what could legally exist. In virtue of this reconfiguration the prospect of metajurisprudential disagreement acquires definitive shape. At this higher level of abstraction questions about the perspectival character of legal statements, the constitution of legal authority, the relation of legal truth to reality as well as about the nature of legal grounding and legal normativity become available for meaningful contestation. If there is something that could serve as a leitmotiv for this research proposal is that there is no more apt a byword for what it is to conduct foundational work in legal philosophy than that there is no royal way from semantics to ontology.
    Date: 2018–05–11
  9. By: ARTENE, Alin
    Abstract: At present, we have all the necessary elements to be able to claim that "Dobrogea Economics School in Constanta" really exists in the Romanian and European academic landscape. Among these elements, we take into account those related to tradition, university education programs, valuable teaching staff, material basis, results / scientific visibility, etc. This article provides an approach to the establishment and further development of the Faculty of Economics at "Ovidius" University of Constanta. The continuous development of the collaboration relations with other universities - Romanian and foreign -, with governmental or private institutions, with the business environment, etc. confirms that today there is a Dobrogean School of Economics and, moreover, it has all the chances to last forever.
    Date: 2018–09–17
  10. By: Francesco Vona (Observatoire français des conjonctures économiques)
    Abstract: This blog post is partly based on the policy paper published in the journal Climate Policy: ‘Job Losses and the Political Acceptability of Climate Policies: why the job killing argument is so persistent and how to overturn it.’ Concerns for a ‘just transition’ towards a low-carbon economy are now part of mainstream political debates as well as of international negotiations on climate change. Key political concerns centre on the distributional impacts of climate policies. On the one hand, the ‘job killing’ argument has been repeatedly used to undermine the political acceptability of climate policy and to ensure generous exemptions to polluting industries in most countries. On the other hand, the rising populist parties point to carbon taxes as another enhancer of socio-economic inequalities. For instance, the Gilets Jaunes (Yellow vest) movement in France is a classic example of the perceived tension between social justice and environmental sustainability.
    Keywords: Low carbon economy; Climate policy; Social justice; Environmental sustainability
    Date: 2019–10
  11. By: Quarles, Randal K. (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2019–11–01

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