nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2020‒11‒16
twelve papers chosen by
Erik Thomson
University of Manitoba

  1. Reinterpreting the General Rules of Morality and the Corruption of Moral Sentiments in The Theory of Moral Sentiments with an Evolutionary Game Model By Takahiko Kan
  2. Influence of Karl Marx’s Political Thought in 20th Century By Anand, Sanjeev; Mishra, Mukesh Kumar
  3. Alfred Marshall, Evolutionary Economics and Climate Change: Raffaelli Lecture By Sheila Dow
  4. Milton Friedman and Exchange Rates in Developing Countries By Sebastian Edwards
  5. How Macroeconomists Lost Control of Stabilization Policy: Towards Dark Ages By Jean-Bernard Chatelain; Kirsten Ralf
  6. The Environmental Optimism of Elinor Ostrom By Jenkins, Megan E.; Simmons, Randy; Wardle, Camille
  7. Reverse Bayesianism: Revising Beliefs in Light of Unforeseen Events By Becker, Christoph K.; Melkonyan, Tigran; Proto, Eugenio; Sofianos, Andis; Trautmann, Stefan T.
  8. Reimagining a just transition By Eloi Laurent
  9. Three tribes: the uneasy relations between economics and economic history By Martina Cioni; Giovanni Federico; Michelangelo Vasta
  10. Time and Causality in the Social Sciences By Guillaume Wunsch; Federica Russo; Michel Mouchart; Renzo Orsi
  11. On Heterodox Economics By Kumar B, Pradeep
  12. Whither pluralism in economics education? New empirical evidence By Martina Cioni; Maria Alessandra Rossi

  1. By: Takahiko Kan
    Abstract: Adam Smith is the author of An Inquiry into the Nature and Causes of the Wealth of Nations. He is known mainly as a pioneer of political economy. However, he was not only an economist but also a moral philosopher. He published The Theory of Moral Sentiments (TMS) in 1759. In TMS, he explained an establishment of a social order based on sympathy between people in a society. Sympathy is sharing of sentiments with others by imaginarily swapping situations with others. People in TMS form the impartial spectator and regulate their conduct to be sympathized by the impartial spectator. The impartial spectator is often considered as an important concept in TMS. However, even if people formed the impartial spectator, this does not mean that they can always regulate their conduct. To regulate their conduct absolutely, people need general rules of morality (GRM). People can establish a social order thanks to GRM. Some preceding studies have reinterpreted TMS with various research results in contemporary economics. For example, Meardon & Ortmann (1996) reinterprets self-command by using a repeated game theory model. Ashraf et al. (2005) indicates that Smith foresaw some research findings of behavioral economics. Tajima (2007) reinterprets TMS from a perspective of institutional economics. Breban (2012) formularizes a behavior of people in TMS with a utility function, and compares this function with utility functions in behavioral economics. Khalil (2017) reinterprets TMS from a perspective of rational choice theory. These reinterpretations have shed light on modern significance of TMS. However, there is room for reinterpreting important concepts in TMS with research results in contemporary economics. Following the preceding studies, this paper reinterprets the GRM formation process and the corruption of moral sentiments (CMS) by using a replicator dynamics model, which is a basic model of evolutionary game theory. GRM are the social norms in TMS that concern what is fit and proper either to be done or to be avoided. In TMS, people form GRM through interactions with others. They continually observe conduct of others, and this can lead them to form certain GRM. This paper interprets this observation process as a trial-and-error learning process. To formularize this process, this paper uses a replicator dynamics model. The results of the model clarify the character of sympathy in the CRM. The more sympathetic players exist in a player set, the more corrupted situation is likely to be realized. This result mathematically supports an interpretation in preceding studies (Brown 1994, Griswold 1999) that sympathy involves risk that CMS is progressing. The paper is organized as follows. In the section 2, we briefly describe GRM and the CMS. In the section 3, we construct a model of replicator dynamics. In the section 4, we discuss the results of the model. In the last section, we conclude this paper.
    Date: 2020–09–11
  2. By: Anand, Sanjeev; Mishra, Mukesh Kumar
    Abstract: The task of this paper discusses the role of Marx in 20th Century and culture today. An analysis of contemporary political economy Studies works that with the new global crisis of capitalism, a new interest in Karl Marx’s works has emerged. Karl Marx—German philosopher, economist, and revolutionary—believed a just world could be achieved only through the evolution of humanity from a capitalist to a socialist economy and society. The new world economic crisis that started is the most obvious reason for the return of the interest in Marx. The paper argues that Marx’s Both a scholar and a political activist, Marx addressed a wide range of political as well as social issues, and is known for, among other things, his analysis of history. The interpretations of his theories, particularly those on political economy, have in the course of history generated decades of debate, inspired revolutions and cast him as both devil and deity in political and academic circles.
    Keywords: Karl Marx,Marxist theory,Global Economy
    Date: 2020
  3. By: Sheila Dow (Department of Economics, University of Victoria)
    Abstract: The way in which any topic is analysed in economics depends on methodological approach. The purpose here is to explore the argument that the way in which climate change is addressed depends on how economics is understood to relate to the physical environment and also to the social and ethical environment. This involves an exploration of the formation of knowledge, both in economics and in the economy. Alfred Marshall’s evolutionary approach to knowledge formation was central to his approach to economics and to his understanding of economic behaviour. Here we consider the application of Marshall’s approach to issues around climate change, through the lens of the subsequent development of evolutionary economics and ecological economics.
    Keywords: Alfred Marshall, evolutionary economics, environmental economics, ecological economics
    Date: 2020–10–19
  4. By: Sebastian Edwards
    Abstract: Milton Friedman’s famous 1953 essay, “The case for flexible exchange rates,” deals entirely with advanced nations. An interesting question is what Friedman thought about exchange rate and monetary regimes in emerging economies. In this paper I investigate how his views on the subject evolved through time. I analyze speeches, articles, and interviews. I examine his archives for correspondence and unpublished manuscripts. I show that for him flexible rates were a second best solution for middle income and poor nations. I also analyze Friedman’s role in Chile’s failed attempt, during the Pinochet regime, at using a fixed exchange rate to stabilize the economy and eliminate inflation.
    JEL: B2 B22 B3 F31 F32
    Date: 2020–10
  5. By: Jean-Bernard Chatelain (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Kirsten Ralf (INSEEC SBE - INSEEC School of Business & Economics - INSEEC Business School - Institut des hautes études économiques et commerciales Business School (INSEEC), ESCE – International Business School)
    Abstract: This paper is a study of the history of the transplant of mathematical tools using negative feedback for macroeconomic stabilization policy from 1948 to 1975 and the subsequent break of the use of control for stabilization policy which occurred from 1975 to 1993. New-classical macroeconomists selected a subset of the tools of control that favored their support of rules against discretionary stabilization policy. The Lucas critique and Kydland and Prescott's time-inconsistency were overstatements that led to the "dark ages" of the prevalence of the stabilization-policy-ine¤ectiveness idea. These overstatements were later revised following the success of the Taylor (1993) rule. J
    Keywords: Control,Stabilization Policy Ine¤ectiveness,Negative feedback,Dynamic Games Keywords: Control,Dynamic Games
    Date: 2020–10
  6. By: Jenkins, Megan E.; Simmons, Randy; Wardle, Camille
    Abstract: Elinor Ostrom was the first woman awarded the Nobel Memorial Prize in Economic Sciences. Ostrom studied the management of shared environmental resources. Her work focused on how human beings come together to solve social dilemmas such as how a resource held in common should be managed. This edited volume builds on Ostrom’s research with six chapters by renowned environmental scholars. Each chapter explores a particular issue in environmental policy by carefully analyzing how institutions impact environmental outcomes and considering what might be done to improve those outcomes. The volume begins with an examination of resource governance in the American West and how institutions developed to govern a complex and demanding landscape. It then explores the largely successful multi-stakeholder approach to the management of the greater sage grouse in the western U.S. The third chapter explores the role of American and Canadian indigenous groups in governing Pacific salmon fisheries. Chapter four examines Ostrom’s response to Garrett Hardin’s classic “Tragedy of the Commons,” which claims that unchecked human population growth is destined for tragedy. The fifth chapter bridges the work of Gary Libecap on property rights with Ostrom’s work on polycentric governance. And the sixth and final chapter explores how the development of markets for industrial byproducts helped clean up the commons. As Ostrom noted in her Nobel Lecture, “We need to ask how diverse polycentric institutions help or hinder … the achievement of more effective, equitable, and sustainable outcomes at multiple scales.” This edited volume sheds light on how allowing people to experiment with different institutional approaches results in innovative solutions to today’s most pressing environmental problems.
    Keywords: Environmental Economics and Policy, Political Economy
    Date: 2020
  7. By: Becker, Christoph K. (Heidelberg University); Melkonyan, Tigran (University of Alabama); Proto, Eugenio (University of Glasgow); Sofianos, Andis (Heidelberg University); Trautmann, Stefan T. (Heidelberg University)
    Abstract: Bayesian Updating is the dominant theory of learning in economics. The theory is silent about how individuals react to events that were previously unforeseeable or unforeseen. Recent theoretical literature has put forth axiomatic frameworks to analyze the unknown. In particular, we test if subjects update their beliefs in a way that is consistent "reverse Bayesian", which ensures that the old information is used correctly after an unforeseen event materializes. We find that participants do not systematically deviate from reverse Bayesianism, but they do not seem to expect an unknown event when this is reasonably unforeseeable, in two pre-registered experiments that entail unforeseen events. We argue that participants deviate less from the reverse Bayesian updating than from the usual Bayesian updating. We provide further evidence on the moderators of belief updating.
    Keywords: reverse Bayesianism, unforeseen, unawareness, Bayesian Updating
    JEL: C11 C91 D83 D84
    Date: 2020–10
  8. By: Eloi Laurent (Observatoire français des conjonctures économiques)
    Abstract: Transitions have a bad name. Rob Hopkins, who arguably introduced the word ‘transition’ into the environmental lexicon, is said to have chosen the most neutral expression possible, so that reluctant consumers and businesses would not be frightened by the hard choices and sacrifices entailed by living in harmony with the biosphere (as opposed to blindly destroying it). Transitions are supposed to be painless. What is worse, the French historian Jean-Baptiste Fressoz has convinc- ingly argued that ‘energy transition’ is an expression coined by indus- trial lobbies in the mid-1970s to prevent the idea of ‘energy crisis’ from taking hold in western minds. Transitions are supposed to never really happen (and remain, forever, ideas for tomorrow). And yet, the concept of transition is actually a very powerful tool to think about what we should be doing in the face of worsening ecolog- ical crisis—and to act upon it. Imagining a transition means having to answer three fundamental questions: why is the world we live in not desirable anymore, what world do we want and how to get from here to there?
    Keywords: Transition juste; Economie de l'environnement; Economie écologique
    Date: 2020–05–28
  9. By: Martina Cioni; Giovanni Federico; Michelangelo Vasta
    Abstract: We argue that economic history still remains a distinct field in economics. We rely on a new database of almost 3,300 economic history articles published from 2001 to 2018 in top economic history journals and in ten leading economics journals. The share of economic history articles in economics journals has increased very little, cross-citations are limited and only few authors publish in both economics and economic history journals. As expected, publishing in top five economic journals yields many more citations than in top field journals, but this is not necessarily true for other prestigious economic journals
    Keywords: bibliometric analysis, citations, economic history, economics journals
    JEL: A12 N01
    Date: 2020–10
  10. By: Guillaume Wunsch; Federica Russo; Michel Mouchart; Renzo Orsi
    Abstract: This article deals with the role of time in causal models in the social sciences, in particular in structural causal modeling, in contrast to time-free models. The aim is to underline the importance of time-sensitive causal models. For this purpose, it also refers to the important discussion on time and causality in the philosophy of science, and examines how time is taken into account in demography and in economics as examples of social sciences. Temporal information is useful to the extent that it is placed in a correct causal structure, and thus further corroborating the causal mechanism or generative process explaining the phenomenon under consideration. Despite the fact that the causal ordering of variables is more relevant for explanatory purposes than the temporal order, the former should nevertheless take into account the time-patterns of causes and effects, as these are often episodes rather than single events. For this reason in particular, it is time to put time at the core of our causal models.
    JEL: B41 C01 C18 C30 C40 C51 H30 J10
    Date: 2020–09
  11. By: Kumar B, Pradeep
    Abstract: In the literature of Economics itself, branches have evolved thanks to different positions held by economists on different economic issues, and most importantly, on the efficacy and desirability of economic policies to address such economic issues. The so-called Classical and Keynesian poles apart positions have stood as the firm foundation for the germination of a couple of developments in economics. But, it may be reiterated that these positions have been premised upon several assumptions which often go diametrically opposite to real-world circumstances. The growing concern of the disconnect of the mainstream economics from the conditions of the real world has made a vacuum. The attention that heterodox economics has been receiving should be regarded as a response to this fill this vacuum. Heterodox economics has grown to occupy an important place in modern economic thinking, and in the years to come, in the field of teaching as well, the elements discussed in heterodox economic will have an indisputable place. In the field of policy making, too, the principles of heterodox have been used. Nevertheless, mainstream economics does not seem to have been shaken by the claims of heterodox economics. For economics to continue as rigorous social science, much celebrated neo-classical tools and its ideas are still more important.
    Keywords: Neo-classical economics, Keynesian economics, Margin Concepts, Mainstream economics, Phillips Curve, Rationality assumption, Economic Policy, Orthodox economics, Marxian economics, Behavioral economics
    JEL: B50
    Date: 2020–09–08
  12. By: Martina Cioni; Maria Alessandra Rossi
    Abstract: In the past two decades, dissatisfaction for the state of introductory economics teaching and standard textbooks has grown among economists, students and employers alike. The collective project under the acronym “CORE” – Curriculum Open-access Resources in Economics – has proposed a prominent alternative, fiercely criticized mostly by heterodox economists, which broadens the range of topics featured in the textbook, but presents them without emphasizing controversy and disagreement within the discipline (an approach their proponents have described as “pluralism by integration”). This paper provides preliminary empirical evidence on the question whether this approach leads to “indoctrination effects” similar to those the literature has highlighted for standard introductory economics courses. It finds evidence of these effects and identifies some students’ features associated with them. Overall, the results point to the need for a variant of pedagogical pluralism that places greater emphasis on the comparison of alternative perspectives without falling prey to “paradigm tournament”.
    Keywords: Economics Education, Pluralism, Mainstream and Heterodox Economic Approaches
    JEL: A22 B41 B50
    Date: 2020–10

This nep-hpe issue is ©2020 by Erik Thomson. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.