nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2021‒01‒25
eleven papers chosen by
Erik Thomson
University of Manitoba

  1. The incommensurability, incompatibility and incomparability of Keynes's and Walrasian economics By Heise, Arne
  2. Michael Polanyi's vision of economics: Spanning Hayek and Keynes By Agnès Festré
  3. The death of welfare economics: history of a controversy By Herrade Igersheim
  4. Kirzner and Rothbard on an Austrian theory of entrepreneurship: the heirs of both Menger and Mises discuss action and the role of institutions. By Gilles Campagnolo; Christel Vivel
  5. Homo moralis goes to the voting booth: coordination and information aggregation By Ingela Alger; Jean-François Laslier
  6. Weaknesses of MMT as a Guide to Development Policy By Adam Aboobaker; Esra Nur Ugurlu
  7. The Role of Historical Malaria in Institutions and Contemporary Economic Development By Elizabeth Gooch; Jorge Martinez-Vazquez; Bauyrzhan Yedgenov
  8. Happier lives: exploring what matters By Christian Krekel; Jan-Emmanuel De Neve; Daisy Fancourt; Richard Layard
  9. Michael Polanyi on creativity in science By Agnès Festré; Stein Østbye
  10. A critique of modern theories of trade By Uddin, Godwin
  11. Ecological contradictions of Labour's Green New Deal By Neal, Luke

  1. By: Heise, Arne
    Abstract: The Cambridge Journal of Economics witnessed an important debate between Mark Pernecky and Paul Wojick on the one side and Rod Thomas on the other about the usefulness of Thomas Kuhn's sociology and philosophy of science in explaining why Keynes's revolutionary ideas exposed in the General Theory have been 'lost in translation'. This brief note is an attempt to reconcile Pernecky and Wojick's claim that Keynes's new economics of the General Theory and Walrasian General Equilibrium are incommensurable paradigms in a Kuhnian understanding and Thomas's critique that - if they were incommensurable - Pernecki and Wojick's appraisal of Keynes's paradigm as a better approximation to the 'real world' than Walsrasian General Equilibrum is inconsistent within that very Kuhnian framework.
    Keywords: Keynes,Kuhn,Paradigm,Incommensurability
    JEL: B2 B40 B5
    Date: 2021
  2. By: Agnès Festré (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur)
    Abstract: This paper analyses Michael Polanyi's vision of economics. We stress two major features: first, the radical opposition to central planning and his defence of self-organization as a superior mechanism for coordinating individual plans that he shared with Hayek; second, the strong support for state interventionism in order to fight unemployment and limit income inequalities that he borrowed from Keynes. Polanyi blended these two apparently contradictory influences and provided an original institutionalist approach, which has unfortunately been underrated in the economics literature. We argue that this approach is consistent with Polanyi's intellectual background and more specifically, his view on tacit knowledge and his critical approach of liberalism.
    Keywords: Michael Polanyi,Hayek,Keynes,spontaneous order,State intervention,liberalism,tacit knowledge,public liberty B25,B31,B41
    Date: 2020–12–02
  3. By: Herrade Igersheim (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: The death of welfare economics has been declared several times. One of the reasons cited for these plural obituaries is that Kenneth Arrow's impossibility theorem, as set out in his path-breaking Social Choice and Individual Values in 1951, has shown that the social welfare function-one of the main concepts of the new welfare economics as defined by Abram Bergson (Burk) in 1938 and clarified by Paul Samuelson in the Foundations of Economic Analysis (1947, ch. VIII)-does not exist under reasonable conditions. Indeed, from the very start, Arrow kept asserting that his famous impossibility result has direct and devastating consequences for the Bergson-Samuelson social welfare function (1948, 1950, 1951a, 1963), though he seemed to soften his position in the early eighties. On his side, especially from the seventies on, Samuelson remained active on this issue and continued to defend the concept he had devised with Bergson, tooth and nail, against Arrow'
    Keywords: welfare economics JEL Codes. B21,social choice theory,Samuelson,Arrow,Social welfare function
    Date: 2019–10–01
  4. By: Gilles Campagnolo (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.); Christel Vivel (Esdes Business School of the Catholic University of Lyon, France.)
    Abstract: This paper is the last part of a trilogy on the theory and history of entrepreneurship in Austrian school of economics. The triptych ends with contemporary members by comparing Israel Kirzner and Murray Rothbard. The migration of the Austrian school induced a new assessment of Austrian traits in a new setting. While we do not focus on the history of the Austrian school in America as such, we will stress how Kirzner focused his view of entrepreneurship on the concepts of alertness, discovery by opportunity and the equilibrating action of the entrepreneur – while Rothbard’s contribution was more ideologically engaged.
    Keywords: Austrian School of Economics, entrepreneurship, institutions, Kirzner (Israel), methodology, Rothbard (Murray)
    Date: 2021–01
  5. By: Ingela Alger (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, Institute for Advanced Study Toulouse); Jean-François Laslier (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, 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)
    Abstract: This paper revisits two classical problems in the theory of voting-viz. the divided majority problem and the strategic revelation of information by majority vote-in the light of evolutionarily founded partial Kantian morality. It is shown that, compared to electorates consisting of purely self-interested voters, such Kantian morality helps voters solve coordination problems and improves the information aggregation properties of equilibria, even for modest levels of morality.
    Keywords: Condorcet jury theorem,divided majority problem,voting,Homo moralis,Kantian morality,social dilemmas
    Date: 2020–11
  6. By: Adam Aboobaker (University of Massachusetts Amherst, USA); Esra Nur Ugurlu (University of Massachusetts Amherst, USA)
    Abstract: This paper addresses the limitations of Modern Money Theory (MMT) as a guide to development policy. We explore two central questions on this topic: whether MMT policies 1) ought to be implemented in low- and middle-income economies and 2) can be implemented. In relation to the first question, we argue that the MMT literature mischaracterizes the essence of the development challenge for low- and middle-income economies. Our argument is that the chief long-run growth challenge faced by developing countries concerns structural transformation rather than general aggregate demand insufficiency. We use several formal representations of the consumption-investment trade-off in growth theory, found in the Harrod-Domar growth model, Kalecki’s 1963 growth model, and Feldman-Mahalanobis model, to illustrate this point. Concerning the second question, we argue that even if MMT had the correct diagnosis of the principal growth challenge faced by developing countries, its chief policy recommendations would likely be counter-productive if implemented outside of select advanced economies. We draw from the international economics literature on currency hierarchy and exchange rate volatility to illustrate this point.
    Keywords: MMT, structural change, macro policy, growth models, history of economic thought.
    JEL: O10 O41 E0 B0
    Date: 2020
  7. By: Elizabeth Gooch (Naval Postgraduate School, Monterey, CA, USA); Jorge Martinez-Vazquez (International Center for Public Policy, Georgia State University, USA); Bauyrzhan Yedgenov (International Center for Public Policy, Georgia State University, USA)
    Abstract: This research examines the causal impact of institutional quality on economic development from a novel perspective. At the country level, we exploit variation in the malaria prevalence in 1900, just before vector-control methods were developed, to instrument for institutional quality using a two-stage least squares instrumental variables framework. Our instrument is a population-weighted average of malaria endemicity estimates for the year 1900 developed by the WHO in the 1960s. We argue that this measure of historical malaria offers more expansive geographic information about the disease environment than other metrics, and our baseline IV estimates reveal that greater institutional quality causes greater contemporaneous economic growth. Next, we investigate the robustness of these baseline results to alternative explanations, including the role of geography and early colonizers’ experiences, as the causal link between the early disease environmental, institutional quality and contemporary growth. As an additional test of the explanatory power of malaria endemicity, we replace our instrument for settler mortality and replicate the core results from the seminal study on the colonial origins of comparative development by Acemoglu et al. (2001). In summary, we propose that malaria endemicity, estimated for 1900, holistically explains the legacy of early disease on institutional quality development and contemporary economic development.
    Date: 2021–01
  8. By: Christian Krekel; Jan-Emmanuel De Neve; Daisy Fancourt; Richard Layard
    Abstract: Can we teach people to live happier and more pro-social lives? Are there cost-effective and scalable interventions? And could the effects be sustained over time? Christian Krekel and colleagues have evaluated the impact of Exploring What Matters - a local community course that aims to promote mental wellbeing.
    Keywords: wellbeing, pro-social behaviour, communities, intervention, rct
    Date: 2020–11
  9. By: Agnès Festré (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur); Stein Østbye (UiT - The Arctic University of Norway)
    Abstract: We can know more than we can tell. In this paper we discuss how Polanyi applies his tacit knowledge concept to approach creativity in science. We argue that Polanyi not only is a theoretician on creativity, but also a very creative educator aiming to communicate widely, thereby, increasing legitimacy of science. In order to make tacit knowledge and other concepts and ideas more accessible to the general public, he extensively used analogies alluding to visual representations and even made use of new innovative media like film to complement written expositions.
    Keywords: methodology,Michael Polanyi,creativity JEL Classification
    Date: 2020–12–02
  10. By: Uddin, Godwin
    Abstract: This article recapitulates some of the trade theories reputed to be of the twentieth century. Here, the Heckscher-Ohlin theory (with some of its variants), endogenous growth theory, product cycle theory, and new trade theory were considered. This review thereof, amidst others, highlight some of the assumptions of these theories and thus present some critique of the same theories.
    Keywords: Trade; Critique; Heckscher-Ohlin theory; endogenous growth theory; product cycle theory; new trade theory
    JEL: F0 F00 F1 F10
    Date: 2021–01–07
  11. By: Neal, Luke
    Abstract: This paper offers an analysis and critique of the Green Industrial Revolution proposed by the Labour Party in 2019. It identifies this policy as a variant of the Keynesian Green New Deal, which has been interpreted favourably by many socialists as a programme for climate stabilisation and an ecologically restorative, egalitarian organisation of the economy. The Green Industrial Revolution pointed towards a hybrid mixed economy whose main features would have been state policy orientation towards and large investments in renewables, efficiencies and retrofitting; as well as a renewed public sector and reforms to corporate ownership. This was predicated on a contradictory policy of green growth. On the contrary, this paper develops a concept of the critical energy constraints to growth, which highlights how, in terms of its focus on "the national economy" and aversion to major infrastructural changes to reduce energy use, Labour's programme was insufficient. Nonetheless, its openings and advantages are considered alongside and in light of these contradictions. They suggest the need for economic and ecological policies that recognise both the critical energy constraints to growth and the antagonistic relation between capital and labour internationally.
    JEL: Q58 Q43 F52 B51
    Date: 2021

This nep-hpe issue is ©2021 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.