nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2020‒09‒21
eighteen papers chosen by
Erik Thomson
University of Manitoba

  1. H. Gregg Lewis: Perhaps the Father of Modern Labor Economics By Hamermesh, Daniel S.
  2. The Economics of Happiness By Nikolova, Milena; Graham, Carol
  5. Evolution and Heterogeneity of Social Preferences By Ayoubi, Charles; Thurm, Boris
  6. Mind the gap: virtue ethics and financial crisis By Greene, Catherine
  7. Understanding the Gains to Capitalists from Colonization: Lessons from Robert E. Lucas, Jr., Karl Marx and Edward Gibbon Wakefield By Edwyna Harris; Sumner La Croix
  8. Does market interaction erode moral values? By Björn Bartling; Ernst Fehr; Yagiz Özdemir
  10. ON SIMON NELSON PATTEN’S PROGRESSIVISM: A NOTE. By Fiorito, Luca; Vatiero, Massimiliano; Assistant, JHET
  11. Friedman's Instrumentalismus und das Problem von Kopernikus By Katrin Hirte
  12. Directly Valuing Animal Welfare in (Environmental) Economics By Alexis Carlier; Nicolas Treich
  15. L'idée de régulation dans les sciences : hommage à l'épistémologue Jean Piaget By Claude Diebolt
  16. Keynes, Inflation, and the Public Debt: "How to Pay for the War" as a Policy Prescription for Financial Repression? By Teupe, Sebastian
  18. The differential calculus, mathematicians and economists in the nineteenth century K. Marx and H. Laurent, readers of J. L. Boucharlat By Alain Alcouffe

  1. By: Hamermesh, Daniel S. (Barnard College)
    Abstract: H. Gregg Lewis did fundamental research outlining the economic effects of trade unions and considering how to measure them carefully. He also laid out the theory of the supply and demand for labor in careful detail that has underlain economists' thinking about these outcomes. Aside from innovating modern-style research in labor economics, his work provided an exemplar of care in thinking about and measuring economic phenomena. His study of labor markets foreshadowed numerous subsequent fundamental articles, including our theories of hedonic prices and of wage selectivity. Supervising numerous Chicago Ph.D. dissertations, all of which heavily bore his stamp and two of which were by future Nobel Prize winners, he contributed indirectly to the development of applied microeconomics through several later generations of researchers.
    Keywords: economics of unions, labor demand, labor supply, Chicago dissertations, general equilibrium, empirical methods
    JEL: B21 C29
    Date: 2020–07
  2. By: Nikolova, Milena; Graham, Carol
    Abstract: Welfare and well-being have traditionally been gauged by using income and employment statistics, life expectancy, and other objective measures. The Economics of Happiness, which is based on people’s reports of how their lives are going, provides a complementary yet radically different approach to studying human well-being. Typically, subjective well-being measures include positive and negative feelings (e.g., momentary experiences of happiness or stress), life evaluations (e.g., life satisfaction), and feelings of having a life purpose. Both businesses and policymakers now increasingly make decisions and craft policies based on such measures. This chapter provides an overview of the Happiness Economics approach and outlines the promises and pitfalls of subjective well-being measures.
    Date: 2020
  3. By: Zappia, Carlo; Assistant, JHET
    Abstract: This paper explores archival material concerning the reception of Leonard J. Savage’s foundational work of rational choice theory in its subjective-Bayesian form. The focus is on the criticism raised in the early 1960s by Daniel Ellsberg, William Fellner and Cedric Smith, who were supporters of the newly developed subjective approach, but could not understand Savage’s insistence on the strict version he shared with Bruno de Finetti. The episode is well-known, thanks to the so-called Ellsberg Paradox and the extensive reference made to it in current decision theory. But Savage’s reaction to his critics has never been examined. Although Savage never really engaged with the issue in his published writings, the private exchange with Ellsberg and Fellner, and with de Finetti about how to deal with Smith, shows that Savage’s attention to the generalization advocated by his correspondents was substantive. In particular, Savage’s defence of the normative value of rational choice theory against counterexamples such as Ellsberg’s did not prevent him from admitting that he would give careful consideration to a more realistic axiomatic system, should the critics be able to provide one.
    Date: 2020–08–20
  4. By: Elen Riot (HEC Paris - Recherche - Hors Laboratoire - HEC Paris - Ecole des Hautes Etudes Commerciales, URCA - Université de Reims Champagne-Ardenne)
    Abstract: Presented here is an analysis of Schumpeter's interest in political economy , as it relates to his use of history to investigate economic change and capitalism. This aspect of Schumpeter's work-referring to style and involving a range of moral and aesthetic considerations-is largely neglected in entrepreneurship studies despite his influence on the discipline. This paper argues these considerations are essential to understand Schumpeter's entrepreneur and the role of creative destruction in rejuvenating capitalism. However, his theory also involves political inclinations and choices, such as elitism and a fear of declinism, both of which are more typical to conservative not destructive worldviews. To illustrate my argument I examine and describe two cases, those of Oberkampf and Knoll, the latter a rough contemporary of Schumpeter. The findings point to the central role of political economy in past and present debates about the political role of entrepreneurship in society, suggesting a need for further attention to the zeitgeist (spirit of the time) in future research. � �
    Date: 2019
  5. By: Ayoubi, Charles; Thurm, Boris
    Abstract: Why do individuals take different decisions when confronted with similar choices? This paper investigates whether the answer lies in an evolutionary process. Our analysis builds on recent work in evolutionary game theory showing the superiority of a given type of preferences, homo moralis, in fitness games with assortative matching. We adapt the classical definition of evolutionary stability to the case where individuals with distinct preferences coexist in a population. This approach allows us to establish the characteristics of an evolutionarily stable population. Then, introducing an assortment matrix for assortatively matched interactions, we prove the existence of a heterogeneous evolutionarily stable population in 2×2 symmetric fitness games under constant assortment, and we identify the conditions for its existence. Conversely to the classical setting, we find that the favored preferences in a heterogeneous evolutionarily stable population are context-dependent. As an illustration, we discuss when and how an evolutionarily stable population made of both selfish and moral individuals exists in a prisoner’s dilemma. These findings offer a theoretical foundation for the empirically observed diversity of preferences among individuals.
    Date: 2020–08–26
  6. By: Greene, Catherine
    Abstract: The financial crisis has led to calls for increased regulation of the financial sector. In many respects this is uncontroversial because increased regulation should promote the behaviours we want to see, while limiting the behaviours we do not. This article takes issue with the idea that regulation, and guidelines, promote ethical behaviour in the way that we want them to. Firstly, judgement is often required to implement guidelines and regulations, which allows room for unethical behaviour. Secondly, we want financial professionals to behave ethically even when there are significant incentives not to; so, verifying compliance with regulations and guidelines when such incentives are absent isn’t a good gauge of the ethical status of financial professionals. The example of the valuation of the assets (Net Asset Value) of hedge funds illustrates these issues well. There are many rules governing how NAVs should be calculated, and while we can verify that a fund is abiding by the rules, the ability to manipulate the NAV remains. Furthermore, the incentive to do so is often only present during a crisis (usually to understate losses). Therefore, verifying compliance during ‘normal’ times is of little help in judging whether a manager will behave ethically when we most need him to. I first argue that the gap between compliance with regulations and ethical behaviour is best filled by the adoption of a virtue ethics approach, as discussed by Spalding & Oddo (2011), and Graafland & van de Ven (2011). I then discuss the implications of adopting such an approach for the financial industry’s codes of conduct, such as the CFA Institute’s ‘Code of Ethics and Standards of Professional Conduct’ ( Adopting a virtue ethics perspective would require a significant change in the emphasis of such codes.
    JEL: J1 E6
    Date: 2018–09–23
  7. By: Edwyna Harris (Monash University); Sumner La Croix (University of Hawai‘i)
    Abstract: Britain after the Napoleonic wars saw the rise of colonial reformers, such as Edward Wakefield, who had extensive influence on British colonial policy. A version of Wakefield’s “System of Colonization” became the basis for legislation establishing the South Australia colony in 1834 and the New Zealand colony in 1840. We use extended versions of Robert Lucas’s 1990 model of coordinated colonial investment to show how Wakefield’s institutions were designed to work. We also show that the critique of Wakefield’s system by Karl Marx in Das Kapital closely follows Lucas’s analysis of colonial institutions.
    Keywords: Robert Lucas; Karl Marx; Edward Gibbon Wakefield; emigration; settler colonization; South Australia
    JEL: N47 N57 N97 R30 D44
    Date: 2020–09
  8. By: Björn Bartling; Ernst Fehr; Yagiz Özdemir
    Abstract: The widespread use of markets leads to unprecedented material well-being in many societies. We study whether market interaction, as a side effect, erodes moral values. An encompassing understanding of the virtues and vices of markets, including their possible impact on moral values, is necessary to make informed decisions on the spheres in society where the allocation and incentive functions of markets should exercise their power, and where this may not be desirable. In a seminal and highly influential paper, Falk and Szech (2013) provide experimental data that seem to suggest that “market interaction erodes moral values.” Although we replicate their main treatment effect, we show that additional treatments are necessary to corroborate their conclusion. These treatments, however, reveal that repeated play and not market interaction causes the erosion of moral values. Our paper thus shows that neither Falk and Szech’s data nor our data support the claim that market interaction erodes moral values.
    Keywords: Market interaction, moral values
    JEL: C91 D02 D62 D63
    Date: 2020–08
  9. By: Assistant, JHET; Baronian, Laurent
    Abstract: The paper is dedicated to Suzanne de Brunhoff’s monetary thought and shows how her analysis of very concrete monetary and financial problems of her time led her to develop the most innovative contributions to Marxist theory of money since classical Marxism. Concepts such as noncontemporaneity of capitalism with itself, pseudo-social validation, conflict centralization or State management of money and labor power reflect her profound analysis of the ways capitalism generates very particular relationships to space and time. It is by looking at this spatio-temporal dimension of Brunhoff’s concepts that this paper aims to reveal the novelty, power and fruitfulness of her monetary analysis. The first part of the paper seeks to define the meaning of the notion of general equivalent extracting from her reading of Marx's Capital, before situating her approach in relation to Institutionalist theories of money. The second turns to Brunhoff’s analysis of the particular time-spaces of capitalism.
    Date: 2020–08–20
  10. By: Fiorito, Luca; Vatiero, Massimiliano; Assistant, JHET
    Abstract: On Simon Nelson Patten's Progressivism: A Note. By Luca Fiorito and Massimiliano Vatiero. Forthcoming in Journal of the History of Economic Thought.
    Date: 2020–08–20
  11. By: Katrin Hirte (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria)
    Abstract: Der 1953 publizierte Aufsatz 'The Methodology of Positive Economics' von Milton Friedman gilt als eine der 'einflussreichsten' Publikationen in der Oekonomik und gleichzeitig als eine der umstrittensten. Denn im genannten Aufsatz vertrat dieser die Ansicht, dass es in der Oekonomik bei der Aufstellung einer Hypothese nicht auf deren Ausgangsannahmen ankaeme, sondern dass es nur um die Aussagefaehigkeit dieser ginge. Fuer die Befuerworter*innen der friedman'schen Auffassung wirkte die behauptete Nichtrelevanz der Ausgangsannahmen wie eine Befreiung, konnten sie doch nun ohne Unbehagen Theorien verwenden, von denen sie wussten, dass diesen solch unrealistische Annahmen wie perfekte Maerkte zugrunde liegen. Kritiker*innen sahen hingegen in dieser Auffassung einen Freifahrtschein fuer Modellplatonismus. Wie anhaltend die Debatte in der Oekonomik nach wie vor gefuehrt wird, zeigt u. a. der 2009 erschienene Sammelband 'The Methodology of Positive Economics - Reflections on the Milton Friedman legacy'. Dabei konzentrieren sich diese Reflexionen wie schon zahlreiche andere hauptsaechlich auf inneroekonomische Debatten, aber kaum auf allgemeinere wissenschaftstheoretische und wissenschaftshistorische Auffassungen. Dies ist besonders bezueglich der Naturwissenschaften auffaellig, welche von Oekonom*innen gerne als 'Vorbild' herangezogen werden und was auch Milton Friedman in seinem Aufsatz tat, dort zum Gesetz des Freien Falls. Im Beitrag soll daher gezeigt werden, welche Einsichten durch Hinzuziehen der Erfahrungen aus den Naturwissenschaften gewonnen werden und hier am zentralen Beispiel eines Paradigmenwechsels in den Wissenschaften, der kopernikanischen Wende. Denn zu diesem besteht allgemein die Annahme, dass gerade dieses Beispiel gut verstaendlich und auch gut erforscht sei. Hierzu wird gezeigt, dass dies zwar zutrifft - insbesondere seit den Arbeiten von Noel Swerdlow (1973, 1976) -, aber dass die Erkenntnisse daraus kaum einen Eingang in die oekonomietheoretischen Debatten erfuhren. So blieb daher auch weitgehend unthematisiert, dass ausgerechnet das Kernanliegen von Kopernikus darin bestand, den auch damals schon bestehenden Instrumentalismus zu ueberwinden: Es ist - so Kopernikus - unzulaessig, beliebige Modelle zu entwerfen, nur um die 'Phaenomene zu retten'. Sondern umgekehrt gilt es, begruendete Ausgangsannahmen 'zu retten'. Daher findet sich der Slogan der 'Rettung der Regelmaessigkeiten', mit der Kopernikus dem damals praktizierten Instrumentalismus den Kampf ansagte, auch in der ersten Zeile seiner ersten Publikation von 1510. Und erst mit neuen begruendeten Annahmen - hier dem Heliozentrismus - wurde bekanntlich auch die Astronomie als Wissenschaft begruendet.
    Date: 2020–09
  12. By: Alexis Carlier (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Nicolas Treich (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Research in economics is anthropocentric. It only cares about the welfare of humans, and usually does not concern itself with animals. When it does, animals are treated as resources, biodiversity, or food. That is, animals only have instrumental value for humans. Yet unlike water, trees or vegetables, and like humans, most animals have a brain and a nervous system. They can feel pain and pleasure, and many argue that their welfare should matter. Some economic studies value animal welfare, but only indirectly through humans' altruistic valuation. This overall position of economics is inconsistent with the utilitarian tradition and can be qualified as speciesist. We suggest that economics should directly value the welfare of sentient animals, at least sometimes. We briefly discuss some possible implications and challenges for (environmental) economics.
    Date: 2020–04
  13. By: Assistant, JHET; Dimand, Robert; Saffu, Kojo
    Abstract: Polly Hill spent her long, productive and at times controversial career crossing and contesting disciplinary boundaries. She graduated in economics at Cambridge, but her doctorate was in social anthropology – with economist Joan Robinson as dissertation supervisor. Her thirteen years at the University of Ghana were initially in Economics, then in African Studies, and her readership at Cambridge was in Commonwealth Studies. As a woman in several male-dominated academic disciplines without a secure base in any (and with distinctive, unorthodox opinions in each), she never obtained a tenure-track appointment despite ten books and fifty scholarly articles. Her books drew attention to the underrecognized agency of indigenous entrepreneurs while her Development Economics on Trial: The Anthropological Case for the Prosecution (1986) critiqued a discipline, of disciplinary boundaries, and of outside experts, both mainstream and radical.
    Date: 2020–08–20
  14. By: Acosta, Juan; Cherrier, Beatrice; Assistant, JHET
    Abstract: In this paper, we build on data on officials of the Federal Reserve System, oral history repositories, and hitherto under-researched archival sources to unpack the tortuous path toward crafting an institutional and intellectual space for postwar economic analysis within the Board of Governors. We show that growing attention to new macroeconomic research was a reaction to both mounting external criticisms against the Fed’s decision-making process, and to the spread of new macroeconomic theories and econometric techniques. We argue that the rise of the number of PhD economists working at the Fed is a symptom rather than a cause of this transformation. Key to our story are a handful of economists from the Board of Governors’ Division of Research and Statistics (DRS) who did not hold a PhD but envisioned their role as going beyond mere data accumulation and got involved in large-scale macroeconometric model building. We conclude that the divide between PhD and non-PhD economists may not be fully relevant to understand both the shift in the type of economics practiced at the Fed and the uses of this knowledge in the decision making-process. Equally important was the rift between different styles of economic analysis.
    Date: 2020–08–20
  15. By: Claude Diebolt (BETA - Bureau d'Économie Théorique et Appliquée - UL - Université de Lorraine - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: On 16 September 2020 the 40th anniversary of the death of Jean Piaget (1896-1980) will be celebrated. This contribution pays tribute to the epistemologist, biologist and psychologist, to his systemic analysis, to his hierarchical classification of the different levels of regulation as an original source of inspiration for my own work in cliometrics of growth and economic cycles.
    Abstract: Le 16 septembre 2020 on célèbrera le 40ème anniversaire de la mort de Jean Piaget (1896-1980). Cette contribution rend hommage à l'épistémologue, biologiste et psychologue, à son analyse systémique, à sa classification hiérarchique des différents niveaux de régulation comme source d'inspiration originale pour mes propres travaux en cliométrie de la croissance et des cycles économiques.
    Keywords: Epistémologie,Jean Piaget,Régulation,Sciences,Systèmes complexes,Systèmes sociaux,Croissance,Cycles,Histoire économique,Cliométrie
    Date: 2020
  16. By: Teupe, Sebastian
    Abstract: This paper discusses whether John Maynard Keynes' "How to Pay for the War" provided prescriptions for the policies of "financial repression" that were implemented in England, and other countries, following World War II. It focuses on contemporary understandings of inflation which has been identified as a key factor for driving down public debt levels. Keynes has been widely acknowledged as influential in the management of public debt, and "How to Pay for the War" has been cited as proof for a widely held belief in "money illusion", suggesting the possibility of using inflation for driving down real interest rates of public bonds. It seems reasonable to suppose that Keynes' writings were instrumental in translating English monetary experiences of the 1920s and 1930s into expectations of policy makers during and after the Second World War, and thus provide an important explanation for the why and when of "financial repression". The paper argues that Keynes provided only partly ammunition for a policy of "financial repression", and none for using inflation as a "tax gatherer" to the detriment of domestic savers in general. Crediting him as a source for widespread "money illusion" is also out of line with the historical record.
    JEL: B20 E31 H63 N24 N44
    Date: 2020
  17. By: Klump, Rainer; Pilz, Lars; Assistant, JHET
    Abstract: In 1564 Leonhard Fronsperger, a military expert and citizen of the Free Imperial City of Ulm in Upper Germany, publishes a booklet “On the Praise of Self-Interest” (“Von dem Lob deß Eigen Nutzen”). Using the form of a satirical poem, he demonstrates how the individual pursuit of self-interest can lead to the common good. Writing long before Bernard Mandeville and Adam Smith, Fronsperger presents a thorough analysis of all kinds of self-interested social, political and economic relations. His praise of self-interest demonstrates how over the sixteenth century the interplay of economic success (in particular in major trading cities), a more realistic conception of human behavior and some aspects of Humanism and the Reformation led to a new understanding of the origins of economic dynamics. This became the basis for what Weber (1904-05/2009) would later term “the spirit of capitalism”.
    Date: 2020–08–20
  18. By: Alain Alcouffe (UT1 - Université Toulouse 1 Capitole)
    Abstract: Among the references used by Marx when he wrote his Mathematical Manuscripts, the book of Jean-Louis Boucharlat on Calculus is remarkable by its multiple editions till 1926. It was also criticized by Herman Laurent, an actuary and one of the first disciple of Léon Walras. The paper shows that the genetic method (history of the concepts) and dialectic (Marx scrutinized the transformations of the various approaches used in the calculus) deserves attention and highlights the history of calculus till the XXth century.
    Abstract: Parmi les sources des Manuscrits mathématiques de Marx figure notamment le livre sur le calcul différentiel de Jean-Louis Boucharlat, qui connut de multiples éditions jusqu'en 1926. Ce livre fera aussi l'objet de remarques de la part de Herman Laurent, un actuaire et relation de Léon Walras. Le traitement L'article montre que la méthode génétique (histoire des concepts) et dialectique (Marx s'est intéressé aux transformations que provoquait le développement même des différentes approches du calcul différentiel) mérite de retenir l'attention et éclaire l'histoire du calcul différentiel jusqu'à ces développements du 20 e siècle.
    Keywords: Marx,Boucharlat,Laurent,calculus,methodology
    Date: 2019–08

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