nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2020‒01‒13
nineteen papers chosen by
Erik Thomson
University of Manitoba

  1. Schumpeter vs. Minsky on the Evolution of Capitalism and Entrepreneurship By Sau, Lino
  2. Theories of reasoning and focal point play with a non-student sample By Zhixin Dai; Jiwei Zheng; Daniel John Zizzo
  3. Die New Austrians als Pseudo-Heterodoxe? By Quaas, Friedrun
  4. How threatening are transformations of reported happiness to subjective wellbeing research? By Kaiser, Caspar; Vendrik, Maarten C. M.
  5. Journal of the History of Economic Thought Preprints – Book Review: Cameralism in Practice: State Administration and Economy in Early Modern Europe, by Marten Seppel and Keith Tribe By Suprinyak, Carlos Eduardo
  6. The Importance of Beliefs in Shaping Macroeconomic Outcomes By Roger Farmer
  7. Bankers as Immoral? The Parallels between Aquinas’s Views on Usury and Marxian Views of Banking and Credit By Lambert, Thomas
  9. WORKING PAPER SERIES: PHILOSOPHY AND KNOWLEDGE: Reflexion on a flexible management method. By Fascia, Michael
  10. FAIRNESS MEETS MACHINE LEARNING: SEARCHING FOR A BETTER BALANCE By Ekaterina Semenova; Ekaterina Perevoshchikova; Alexey Ivanov; Mikhail Erofeev
  11. Journal of the History of Economic Thought Preprints – Review of “Time, Space and Capital” by Åke E. Andersson and David Emanuel Andersson By Zelmanovitz, Leonidas
  12. Post-Keynesian Controversy About Uncertainty: Methodological Perspective, Part I By Luká? Augustin Máslo
  13. Weal: the universal core of human well-being By Folk, György
  14. Journal of the History of Economic Thought Preprints -- Review of “Stuff and Money in the Time of the French Revolution” by Rebecca L. Spang By Paganelli, Maria Pia
  15. Journal of the History of Economic Thought preprints - "The GT and Keynes for the 21st Century" (ed Dow, Jespersen and Tily) By Grieve, Roy H
  16. European Economics and the Early Years of the “International Seminar on Macroeconomics†By Aurélien Goutsmedt; Matthieu Renault, Francesco Sergi
  17. A reconsideration of the doctrinal foundations of monetary-policy rules: Fisher versus Chicago By George S. Tavlas
  18. Embezzlement and guilt aversion By Giuseppe Attanasi; Claire Rimbaud; Marie Claire Villeval
  19. Field experiments and the practice of economics By Banerjee, Abhijit

  1. By: Sau, Lino (University of Turin)
    Abstract: Joseph Schumpeter and Hyman Minsky have devoloped, during their lives, both a theory of the business cycles and a theory of capitalist development. Minsky was influenced by Schumpeter during the period he spent at Harvard University in 1942 and he thought that Schumpeter vision of the capitalist process required an integration of financial markets and investment behaviour: roughtly speaking, Minsky’s financial keynesianism was what Schumpeter needed to complete his own theory of the devoloping of a capitalist economy. Minsky explored an even broader historical framework during the last decade of his life: the theory of capitalist development along the idea that there are many types of capitalism. As pointed out by Whalen (2001) to analyse each stage of capitalist development following Minsky’s perspective, one should ask what is the distinctive activity being financed, what is the pivotal source of financing, and what is the balance of economic power between those in business and in banking/finance activity. Capitalist development is shaped by the institutional structure, but this structure is always evolving in response to profit-seeking activity. The financial system takes on special importance in this theory not only because finance exerts a strong influence on business activity but also because this system is particularly prone to innovation. In this paper, I shall focus particularly on this analysis trying to up-date his taxonomy, taking into account the process of global financialisation, and comparing it with Schumpeter’s previous scrutinity on the evolution of capitalism.
    Date: 2019–11
  2. By: Zhixin Dai (China Financial Policy Research Center, School of Finance, Renmin University of China); Jiwei Zheng (School of Economics and Centre for Behavioural and Experimental Social Science, University of East Anglia); Daniel John Zizzo (School of Economics, University of Queensland)
    Abstract: We present a coordination game experiment testing the robustness of the predictive power of level-k reasoning and team reasoning in a sample of Chinese tax administrators. We show how the incidence of coordination game play is virtually identical between Chinese tax administrators and university students, which in turn is comparable with that found in research with a Western university student sample. However, relatively to non-students, students are comparatively more attracted by the focal point under team reasoning when this has equal payoffs and the other outcomes do not.
    Keywords: non-student subjects, focal points, team reasoning, level-k, coordination games
    JEL: C72 C78 C91
    Date: 2019–12–12
  3. By: Quaas, Friedrun
    Abstract: In recent years, the Austrian School of Economics (NASE) has decisively expanded its ideological sphere of influence with the help of neoliberal think tanks. At the same time it explicitly cultivates the image of a scientifically heterodox actor far away from the economic mainstream. In this way, it has succeeded in arousing the interest of representatives of the plural economy, which the Austrian School has since adopted as part of its heterodox canon. But how coherent is this image of the NASE as an opponent of orthodoxy? The article examines this question from a historical-theoretical perspective and analyses the mainstream contribution of the various generations of the Austrian School.
    Keywords: Austrian School of Economics, Neoclassical Mainstream, Heterodoxy
    JEL: B13 B25 B53
    Date: 2019–12–01
  4. By: Kaiser, Caspar (University of Oxford); Vendrik, Maarten C. M.
    Abstract: A recent paper by Bond & Lang (2018) forcefully argues that the results of most happiness research are reversible. If they are right, empirical happiness research is in crisis. In this paper, we make four related contributions. First, we show that B&L’s reversal conditions imply that respondents answer happiness questions in a manner that is implausible and which is contradicted by previous empirical research. Second, we show that reversals are driven by effect heterogeneities across the distribution of reported happiness. Third, we give a simple procedure by which such heterogeneities can be detected and provide conditions under which OLS coefficients can be reversed by appropriately relabeling response categories. These conditions turn out to be similar to those given by Schröder & Yitzhaki (2017). Fourth, using GSOEP data, we empirically assess the plausibility of Bond & Lang’s reversal conditions and check whether coefficients from OLS and fixed-effects models can be reversed. Our analysis focuses on household income, unemployment, childbirth, sickness, and marriage. Bond & Lang’s reversal conditions turn out to be implausible for all these variables. Moreover, when using a full set of controls, no reversals of coefficients of the OLS and FE models are possible.
    Date: 2019–07–19
  5. By: Suprinyak, Carlos Eduardo
    Abstract: This a review of the volume Cameralism in Practice: State Administration and Economy in Early Modern Europe, a collection of essay on cameralism edited by Marten Seppel and Keith Tribe.
    Date: 2019–03–10
  6. By: Roger Farmer
    Abstract: For the past thirty years of the history of macroeconomic thought, the Indeterminacy School of Macroeconomics has used general equilibrium models with indeterminate equilibria to understand the independent role of beliefs in shaping macroeconomic outcomes. In this paper I describe the most recent advances in the indeterminacy agenda, Keynesian Search Theory, in which the steady-state unemployment rate is indeterminate as a consequence of labour-market frictions. In Keynesian Search Theory, the belief of market participants is an independent exogenous variable that selects a steady-state equilibrium. I study two assumptions about beliefs, one where investment is exogenous and one where the belief about the stock market is exogenous and I examine their implications for fiscal policy.
    JEL: D50 E12 E24 E32
    Date: 2019–12
  7. By: Lambert, Thomas
    Abstract: Throughout history, the performance, practices and ethics of bankers and banking in general have received mixed reviews in both popular and scholarly writings. Early writings by philosophers, clerics, and scribes played a crucial role in the perceptions of banking and banking occupations. Thomas Aquinas’s thoughts and writings were greatly influenced by the Romans’ and Aristotle’s opinions on usury and the charging of interest, and Aquinas was in a position to have his opinions implemented in policy and practice. Marx noted how banking and credit were used to expand the production and sales of a capitalistic economy beyond certain limits, although his focus was mostly on credit extended to businesses. At the same time, he wrote about how the credit system could lead to economic crises as well as to the concentration and centralization of capital. While lending is motivated by profit, and while households are not coerced into borrowing money, the justice of a system which exploits workers and at the same time encourages them to borrow money in order to maintain a certain standard of living can be viewed as unfair and immoral. The value of goods, according to Aquinas and Marx, should mostly reflect the value of labor embodied in them, and for that reason, labor should be compensated fully for its work. For these reasons, Aquinas and Marxian economists offer somewhat similar views on both the labor theory of value as well as on the morality of certain banking practices. If credit and the banking system also bring about crisis and the greater concentration and centralization of capital, then the morality of these outcomes also needs to be examined.
    Keywords: banking, exploitation, usury, Aquinas, Marx
    JEL: B11 B51 N20
    Date: 2019–12–20
  8. By: Pack, Spencer
    Abstract: Favourable Book Review
    Date: 2019–01–30
  9. By: Fascia, Michael
    Abstract: In this discussion, we reflect on the value given to knowledge in a business context and deliberate a contrary philosophical perspective which does not conform to prevailing knowledge theory. We consider why, if knowledge is key for business success and competitive advantage, the transfer of knowledge within an organisation remains problematic. Whereby, if the creation of knowledge before transfer is recognised is a significant factor in determining a starting point for analogous scrutiny, then what makes this focal point so difficult to establish and measure? We therefore consider parallelism between agents who believe propositions and the formal system that derives proposition. In doing so, we synthesise from current literature and research, the epistemic principal of ‘knowledge’, which underpins the understanding of the many congruent knowledge transfer theories, in a business context. To do this we reflect on Lindström and the epistemic states of Spohn, wherein, we can draw on descriptions of conditional doxastic maps, as a natural extension of contemporary Kripke models. We conclude the epistemic principle of ‘knowledge’, which underpins the plausibility of comparisons between epistemically distinguishable knowledge transfer, must include perspectives and doyennes from a recognisable, not implied, value standpoint
    Date: 2019–02–18
  10. By: Ekaterina Semenova (National Research University Higher School of Economics); Ekaterina Perevoshchikova (National Research University Higher School of Economics); Alexey Ivanov (National Research University Higher School of Economics); Mikhail Erofeev (Lomonosov Moscow State University)
    Abstract: Machine learning (ML) affects nearly every aspect of our lives, including the weightiest ones such as criminal justice. As it becomes more widespread, however, it raises the question of how we can integrate fairness into ML algorithms to ensure that all citizens receive equal treatment and to avoid imperiling society’s democratic values. In this paper we study various formal definitions of fairness that can be embedded into ML algorithms and show that the root cause of most debates about AI fairness is society’s lack of a consistent understanding of fairness generally. We conclude that AI regulations stipulating an abstract fairness principle are ineffective societally. Capitalizing on extensive related work in computer science and the humanities, we present an approach that can help ML developers choose a formal definition of fairness suitable for a particular country and application domain. Abstract rules from the human world fail in the ML world and ML developers will never be free from criticism if the status quo remains. We argue that the law should shift from an abstract definition of fairness to a formal legal definition. Legislators and society as a whole should tackle the challenge of defining fairness, but since no definition perfectly matches the human sense of fairness, legislators must publicly acknowledge the drawbacks of the chosen definition and assert that the benefits outweigh them. Doing so creates transparent standards of fairness to ensure that technology serves the values and best interests of society
    Keywords: Artificial Intelligence; Bias; Fairness; Machine Learning; Regulation; Values; Antidiscrimination Law;
    JEL: K19
    Date: 2019
  11. By: Zelmanovitz, Leonidas
    Abstract: This “preprint” is the accepted typescript of a book review that is forthcoming in revised form, after minor editorial changes, in the Journal of the History of Economic Thought (ISSN: 1053-8372), volume 41 (2019), June issue.
    Date: 2019–01–29
  12. By: Luká? Augustin Máslo (University of Economics, Prague)
    Abstract: In this paper, the author summarizes key arguments in a discussion of two post-Keynesian economists, Paul Davidson and Rod O?Donnell, about the nature of uncertainty in economics. The author focuses on a controversy about necessity/unnecessity to supply a proof of ergodicity/non-ergodicity of economic processes. The author draws a conclusion that O?Donnell perceives the difference between probabilistic and non-probabilistic uncertainty as quantitative rather than qualitative in opposition to Davidson who perceives this difference as qualitative. In a controversy about necessity/unnecessity, the author sides with O?Donnell and supports O?Donnell?s argumentation by pointing to baselessness of the burden-of-proof argument, as long as both parties of the controversy have an interest in finding the truth.
    Keywords: ergodicity, uncertainty, probability
    JEL: B41 D80
    Date: 2019–10
  13. By: Folk, György
    Abstract: Well-being is a formative concept of our times, one of the most widely used constructs in the social sciences, publicity, political and lifestyle discourses. Notwithstanding its commonness the term well-being remains elusive, the disagreement regarding how to properly understand and measure well-being persists. Present paper proposes an attempt to reorientate the discourse on well-being by the introduction of a tertium datur between the two extremes of ad infinitum culturally variable and individually malleable and the rigidly materialistic, biologically and by natural scarcity determined interpretations of human nature. Weal defines a singular domain in which human life is possible, sustainable and flourishing. Most other available constructs with comparable aspirations including happiness, desire theories, Quality of Life (QOL), subjective well-being (SWB), and objective lists carry Western cultural biases and lack ontological rigour. Weal is the unitary domain in which human communities balance between self-sufficiency and flourishing in a sustainable way. The descriptive approach to weal, mapping it under the guidance of discrete scientific disciplines reveals a limited set of cardinal aspects, the cardinal needs (CDN). To serve the purpose of reorientation, weal is operationalised as a domain in multidimensional space, each dimension encompassing an optimal level of availability of the fundamental satisfiers between the two extremes of drastic insufficiency and harmful excess. The cardinal needs are briefly presented as assessed fundamental by corresponding research, with some elementary references illustrating their non-infinite nature.
    Keywords: wellbeing, evolutionary anthropology, human being, human need, community, environment
    JEL: A1 A11 O1 Q5 Q56
    Date: 2019–11–05
  14. By: Paganelli, Maria Pia
    Abstract: Book Review of “Stuff and Money in the Time of the French Revolution” by Rebecca L. Spang
    Date: 2019–01–30
  15. By: Grieve, Roy H
    Abstract: Book review (title and editors as above)
    Date: 2019–02–15
  16. By: Aurélien Goutsmedt; Matthieu Renault, Francesco Sergi
    Abstract: The International Seminar on Macroeconomics (ISoM) is an annual conference, which was co-sponsored, during 15 years (1978-1993) by the French EHESS and the NBER. This article uncovers the scientiï¬ c and institutional dynamics unrolling from this cooperation. The ISoM, we argue, constituted a decisive step towards the making of a European network of economists, sharing a distinctive style of economics, insofar that the Seminar gathered macroeconomists who were leading the development of this European network. We illustrate how the ISoM stands at the crossroad of two types of ‘internationalisation’ of economics: on the one hand, the integration of European national communities; on the other hand, the process of ‘Americanisation’ of economics. While existing literature on ‘internationalisation’ focuses on the national level, our contribution investigates its European level. Moreover, we unveil the key role played in this process by macroeconomics—and more speciï¬ cally, large-scale macroeconometric modelling on the one hand, and the disequilibrium theory on the other hand. These two approaches provided a common research agenda and shared scientiï¬ c standards for the emerging network.
    Keywords: History of macroeconomics; International Seminar on Macroeconomics; NBER; EHESS; Disequilibrium theory
    JEL: A11 A14 B22 B30
    Date: 2019–12–13
  17. By: George S. Tavlas (Bank of Greece)
    Abstract: There has long been a presumption that the price-level-stabilization frameworks of Irving Fisher and Chicagoans Henry Simons and Lloyd Mints were essentially equivalent. I show that there were subtle, but important, differences in the rationales underlying the policies of Fisher and the Chicagoans. Fisher’s framework involved substantial discretion in the setting of the policy instruments; for the Chicagoans the objective of a policy rule was to tie the hands of the authorities in order to reduce discretion and, thus, monetary-policy uncertainty. In contrast to Fisher, the Chicagoans provided assessments of the workings of alternative rules, assessed various criteria -- including simplicity and reduction of political pressures -- in the specification of rules, and concluded that rules would provide superior performance compared with discretion. Each of these characteristics provided a direct link to the rules-based framework of Milton Friedman. Like Friedman’s framework, Simons’s preferred rule targeted a policy instrument.
    Keywords: monetary policy rules; Chicago monetary tradition; Irving Fisher; Henry Simons;Lloyd Mints; Milton Friedman
    JEL: B22 E52
    Date: 2019–11
  18. By: Giuseppe Attanasi; Claire Rimbaud (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Psychological game theory can contribute to renew the analysis of unethical behavior by providing insights on the nature of the moral costs of dishonesty. We investigate the moral costs of embezzlement in situations where donors need intermediaries to transfer their donations to recipients and where donations can be embezzled before they reach the recipients. We design a novel three-player Embezzlement Mini-Game to study whether intermediaries in the laboratory suffer from guilt aversion and whether guilt aversion affects the decision to embezzle. We show that the proportion of guilt-averse intermediaries is the same irrespective of the direction of guilt and guilt aversion reduces embezzlement. Structural estimates indicate no difference in the effect of guilt aversion toward the donor and toward the recipient on intermediaries' behavior. This is striking as embezzlement affects the earnings of the recipient but not those of the donor. It shows that guilt aversion matters even when decisions have no direct monetary consequences. JEL code: C91
    Keywords: Embezzlement,dishonesty,guilt aversion,psychological game theory,experiment
    Date: 2019
  19. By: Banerjee, Abhijit (MIT)
    Abstract: Abhijit Banerjee delivered his Prize Lecture on Sunday 8 December 2019, at the Aula Magna, Stockholm University.
    Keywords: poverty; field experiments;
    JEL: C90 I30
    Date: 2019–12–08

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