nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2020‒07‒13
twelve papers chosen by
Erik Thomson
University of Manitoba

  1. Celso Furtado as 'Romantic Economist' from Brazil's Sertão By Jonas Rama; John Hall
  2. The Role of Values of Economists and Economic Agents in Economics: A Necessary Distinction By Nestor Nieto
  3. A Retrospective Look at The Hayek Story: Roundaboutness, Sticky Consumption, and Sequestered Capital By McClure, James; Thomas, David Chandler; Spector, Lee C.
  4. On Simon Nelson Patten’s Progressivism: A note By Fiorito, Luca; Vatiero, Massimiliano
  5. Thomas Piketty, le capitalisme et la société juste By Nicolas Brisset; Benoît Walraevens
  6. Harry Johnson's "Case for Flexible Exchange Rates" - 50 Years Later By Obstfeld, Maurice
  7. Poland, the international monetary system and the Bank of England, 1921–1939 By William Anthony Allen
  8. Liberalism, conservatism and contested boundaries By Tate, John William
  9. Les réseaux de Smith en Occitanie By Alain Alcouffe; Andew Moore
  10. Interest, profit and saving in Arrow-Debreu equilibrium models By Saverio M. Fratini
  11. Nicolas Kaldor, increasing returns and Verdoorn's Law By Roger Sandilands; Ramesh Chandra
  12. Does credit affect stock trading? Evidence from the South Sea Bubble By Braggion, Fabio; Frehen, Rik; Jerphanion, Emiel

  1. By: Jonas Rama (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 UFR02 - Université Panthéon-Sorbonne - UFR d'Économie - UP1 - Université Panthéon-Sorbonne); John Hall (PSU - Portland State University [Portland])
    Abstract: In The Romantic Economist (2009), Richard Bronk laments that Enlightenment thinking dominated Economics during its formation as a science. As counterpoint, the 'Romantic Movement' had much to offer but remained peripheral. Consequently Economics embraced the centrality of rationality and other Enlightenment precepts, leading to a 'socialphysics'. Meanwhile human characteristics such; as sentiments, imagination and creativity were eschewed. While Bronk fails to identify an in-the-flesh 'Romantic Economist', our inquiry seeks to establish that indeed Celso Furtado qualifies. Profoundly influenced by his sensitivities and attachment to place, Furtado relies upon an organic metaphor - o sertão nordestino - for insights into complex developmental processes.
    Abstract: Em The Romantic Economist (2009), Richard Bronk lamenta que o pensamento iluminista tenha dominado a economia durante sua formação como ciência. O "Movimen-to Romântico" seria um contraponto, mas foi mantido distante. A economia abraçou a cen-tralidade da racionalidade e preceitos iluministas, tornando-se uma "física-social". Desde então, as características humanas como sentimento, imaginação e criatividade são evitadas. Embora Bronk não identifique um economista "romântico" de carne e osso, nossa pesquisa busca estabelecer Celso Furtado como um. Profundamente influenciado por sua sensibili-dade e raízes, Furtado fez uso de uma metáfora orgânica-o sertão nordestino-em seu entendimento de complexos processos de desenvolvimento. PALAVRAS-CHAVE: Brasil; Celso Furtado; Richard Bronk; movimento romântico; sertão.
    Keywords: Brazil,Celso Furtado,Richard Bronk,romantic movement
    Date: 2019
  2. By: Nestor Nieto (REGARDS - Recherches en Économie Gestion AgroRessources Durabilité Santé- EA 6292 - URCA - Université de Reims Champagne-Ardenne)
    Abstract: The distinction between the value judgments of economists and those of economic agents is not clear in the literature of welfare economics. In this article, I show that the importance of making this distinction lies in determining not only whether economists can make value judgments in their professional work, but also determine how value judgments may be crucial to justify the economic agents' preferences. I consider the Interpersonal Comparisons of Utility to discuss this distinction, specifically the analysis of Harsanyi's impartial observer theorem, which provides a framework to justify that value judgments of economists and economic agents have to be properly identified. I suggest that it is essential to have a theoretical framework to make this distinction. For this purpose, I focus on two approaches that can be useful: Sen's classification of value judgments and Mongin's theses about value neutrality in economics.
    Date: 2020–06–02
  3. By: McClure, James (Ball State University); Thomas, David Chandler; Spector, Lee C.
    Abstract: Friedrich Hayek’s business cycle theory, withered throughout the 1930s as he admitted that its underlying model of Böhm-Bawerkian roundaboutness was incomplete and inadequate. In 1934, Hayek started a two-volume book on capital theory, completing only one volume in 1941. Curiously, Hayek (1941) cites Hicks’ (1939) Value and Capital but not the financial measure of roundaboutness that Hicks suggested as a substitute for Böhm-Bawerkian roundaboutness. In 1967, Hicks criticized the inexplicable lags in The Hayek Story. Hayek maintained his view that consumption was sticky and responded to Hicks with a mound-of-honey analogy. Nevertheless, Hayek maintained that his business cycle theory was fundamentally correct and continued to hope that others might someday discover a capital structure theory to undergird it. Toward fulfilling Hayek’s hope, we suggest augmenting the canonical stages of production with a sequestered-capital stage where products are invented, productized, and inventoried prior to launch, uncoordinated by observable prices.
    Date: 2020–05–19
  4. By: Fiorito, Luca; Vatiero, Massimiliano
    Abstract: This note is an attempt to offer a somewhat more comprehensive assessment of Patten’s views on individual rights, poverty and social efficiency, as well his ideas on eugenics, biological determinism, and immigration. This will allow us to better delineate the differences—as well as the affinities—between Patten and the core of progressives recently discussed by Thomas C. Leonard in his acclaimed Illiberal Reformers. It is our contention that even within the persisting intricacies, ambiguities and contradictions of Patten’s expository style it is possible to trace a shift in some aspects of his ideas—a gradual evolution which makes his peculiar brand of progressivism different from that of his most “illiberal” counterparts.
    Date: 2020–05–19
  5. By: Nicolas Brisset (Université Côte d'Azur, France; GREDEG CNRS); Benoît Walraevens (Université de Caen-Normandie, France; CREM CNRS)
    Abstract: Le présent article revient sur le dernier ouvrage de Thomas Piketty, Capital et idéologie (2019). Nous commençons par inscrire l’ouvrage dans l’argument développé par l’auteur dans ses précédents ouvrages, avant d’en souligner un certain nombre de limites. Nous questionnons d’abord la manière dont Piketty pense le capitalisme, avant d’en venir à sa théorie de l’idéologie. Enfin, nous tenterons de définir les contours et limites du projet de dépassement du capitalisme de Piketty.
    Keywords: Thomas Piketty, Capitalisme, Propriété, Idéologie, Justice sociale
    JEL: B4 B51 D63 N01
    Date: 2020–06
  6. By: Obstfeld, Maurice
    Abstract: Fifty years ago, Harry G. Johnson published "The Case for Flexible Exchange Rates, 1969," its title echoing Milton Friedman's earlier classic essay of the early 1950s. Though somewhat forgotten today, Johnson's reprise was an important element in the late 1960s debate over the future of the international monetary system. The present paper has three objectives. The first is to lay out the historical context in which Johnson's "Case" was written and read. The second is to examine Johnson's main points and see how they stand up to nearly five decades of experience with floating exchange rates since the end of the Bretton Woods system. The third is to review the most recent academic critiques of exchange-rate flexibility and ask how fatal they are to Johnson's basic argument. I conclude that the essential case for exchange rate flexibility still stands strong.
    Keywords: dominant currency pricing; effective lower bound; exchange rate regimes; Floating Exchange Rates; Global financial cycle; global value chains; international monetary system
    JEL: F31 F33 F41 F42 N20 N24
    Date: 2020–03
  7. By: William Anthony Allen (National Institute of Economic and Social Research London, England, United Kingdom)
    Abstract: The paper uses archive material, mainly from the Bank of England, to give an account of the relationship between Poland and the international monetary system between 1921 and 1939, as seen from the United Kingdom. It describes the 1923 – 1924 Hilton Young mission of ‘money doctors’ and its role in the establishment of the Bank Polski and the introduction of the złoty in 1924; the abandonment of the złoty’s gold parity in 1925; the tortuous negotiations leading to the stabilisation programme and stabilisation loan of 1927, including the Bank of England’s unsuccessful efforts to induce Poland to accept the oversight of the League of Nations; Poland’s gold purchases after the stabilisation loan; the process of deflation during the Great Depression; the abortive discussions in 1934 – 1936 of the possibility of Danzig, Germany and Poland pegging their exchange rates to sterling; the imposition of exchange restrictions in 1936; debt default in 1937; and the approach of war. It also provides information about the management of Poland’s gold and foreign exchange reserves. The narrative makes clear that it is impossible to understand Poland’s international financial affairs without reference to the international political tensions of the period.
    Keywords: Poland, United Kingdom, international monetary system, Bank Polski, Bank of England, złoty, gold exchange standard, foreign exchange, sterling bloc, exchange restrictions, default, Genoa conference, money doctors, stabilisation, League of Nations, Polish Corridor, Federal Reserve, Bank of France, Reichsbank, J.P. Morgan, Council of Foreign Bondholders, Danzig, Germany, France, Norman, Hilton Young, Grabski, Karpiński, Młynarski, Barański, Koc, Strong, Harrison, Moreau, Niemeyer, Siepmann, Schacht, Kemmerer.
    JEL: E42 E58 F33 F34 F52 N34 N44
    Date: 2020
  8. By: Tate, John William (The University of Newcastle, Newcastle Business School)
    Abstract: Within contemporary liberal democracies, the relationship between liberalism and conservatism is a contested one. Some political parties, seeking to challenge a more egalitarian left-wing tradition, have sought to combine both within their political agenda. This article uses a debate between two professional politicians, George Brandis and John Howard, concerning the relationship between liberalism and conservatism, and the respective place of these political traditions within the Liberal Party of Australia, as the impetus for an investigation of both political traditions and the extent to which each are compatible as political philosophies. The discussion extends to an investigation of key liberal political philosophers - John Rawls, Ronald Dworkin, Friedrich von Hayek and James Buchanan. We shall see that these thinkers split on the extent to which liberalism is capable of incorporating conservative principles, thereby revealing the contested boundaries of the liberal tradition. As a result of this investigation, we shall see that the liberal tradition is in fact far more plural, and at times less individualist, than some of its most rigorous proponents proclaim.
    Keywords: political theory; political philosophy; liberalism; conservatism
    JEL: Z10
    Date: 2019
  9. By: Alain Alcouffe (UT1 - Université Toulouse 1 Capitole); Andew Moore
    Abstract: From March 1764 to October 1765, Smith and Henry Scott, heir to the Dukedom of Buccleugh, made Toulouse their home port. During this period they were in permanent contact with many French people, and others from Scotland, Ireland, England or Norway. These networks (Scottish, British, Protestant, and Freemasons) aided travel and made life more enjoyable. Facilitated by David Hume, Smith and his pupil became familiar with one Seignelay Colbert of Castlehill, himself a Scottish immigrant, who was at the start of a career that saw him play an important part in the lead up to, the events of, and the aftermath of the Revolution. His letters to the Scottish visitors enlighten us on the social life of the upper classes in the last decades of Ancient Regime as well on the sentimental life of the protagonists.
    Keywords: Scottish emigration,Scottish emigration Keywords : Adam Smith,Bagnères de Bigorre,Adam Smith,Duke of Buccleugh,Hume,Seignelay Colbert of Castlehill
    Date: 2018–07–17
  10. By: Saverio M. Fratini
    Abstract: The paper aims to point out that the concepts of interest, profit and saving that we come across in the Arrow-Debreu equilibrium models are significantly different from what is usually indicated by these same terms in economic analysis. In fact, in the Arrow-Debreu models, they are not related to the investment of capital. As we shall try to show, the difficulties that the Arrow-Debreu theory encounters with reference to capital and related concepts derive from the hypothesis of markets open in a single moment that characterizes these models.
    Keywords: Arrow-Debreu general equilibrium; own-rate of interest; firm profit; saving
    JEL: D11 D46 D51
    Date: 2020–06
  11. By: Roger Sandilands (Department of Economics, University of Strathclyde); Ramesh Chandra
    Abstract: Kaldor, a student of Allyn Young, made much of Verdoorn’s Law but the evidence for this ‘law’ is at best mixed. Verdoorn himself in his 1980 Economic Journal paper made it clear that his law did not have as general a validity as he had earlier believed. Evidence suggests that it is possible for agricultural productivity to grow many times faster than that in manufacturing, as in the US during 1947-84. Also, Young (1928) himself did not regard the law of diminishing returns as useful for prophesying the prospects of agriculture as the agricultural fields of newer lands had been brought closer to the older world through revolution in transportation and technical change in agriculture. Moreover, the logic of Verdoorn’s Law of favouring manufacturing at the cost of other sectors distorts intersectoral relationships, leads to adverse terms of trade for agriculture, and is likely to pose a demand constraint for industry itself. To undo one wrong (i.e., protection to industry), one has to match it with other wrongs like price support and marketing board in agriculture, and dual exchange rates to promote exports. The whole economic system becomes an intricate maze with adverse consequences for growth and productivity for the whole economy.
    Keywords: Verdoorn’s Law, Increasing returns, Nicholas Kaldor, Allyn Young, Lauchlin Currie
    JEL: B10 B20 B31 O21 O14 O41
    Date: 2020–03
  12. By: Braggion, Fabio; Frehen, Rik; Jerphanion, Emiel
    Abstract: We study the relationship between credit, stock trading and asset prices. There is a wide array of channels through which credit provision can fuel stock prices. On one extreme, cheap credit reduces the cost of capital (discount rate) and boosts prices without trading or wealth transfers. On the other extreme, extrapolators use credit to ride a bubble and lose money. We construct a novel database containing every individual stock transaction for three major British companies during the 1720 South Sea Bubble. We link each trader's stock transactions to daily margin loan positions and subscriptions of new share issues. We find that margin loan holders are more likely to buy (sell) following high (low) returns. Loan holders also sign up to buy new shares of overvalued companies and incur large trading losses as a result of the bubble.
    Keywords: Bubble; Credit Provision; Investor Behavior; Margin Loans
    JEL: G01 G12 G21 N23
    Date: 2020–03

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