nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2021‒02‒22
sixteen papers chosen by
Erik Thomson
University of Manitoba

  1. La Teoría del Capitalismo de Karl Marx. Exposición, Crítica y Evaluación By Escudé, Guillermo J.
  2. The Economist as Scientist, Engineer or Plumber? By Su, Huei-Chun; Colander, David; Assistant, JHET
  3. W. Stark, J.M. Keynes and the Mercantilists By Repapis, Constantinos; Assistant, JHET
  4. What Do We Know About Economic and Productivity Growth? A Review Article on Measuring Economic Growth and Productivity: Foundations, KLEMS Production Models, and Extensions By Gilbert Cette
  5. Wage labor is not an exchange relationship: the influence of Schmitt's theory on that of Jean Cartelier By Nicolas Piluso
  6. The hidden side of Jan Tinbergen’s approach to economic policy (1934-1944) By Michaël Assous; Vincent Carret
  7. Liberalism, rationality, and Pareto optimality By Shaun Hargreaves Heap; Mehmet S. Ismail
  8. The asymmetry hypothesis between entrepreneurs and employees: standard or exception in the history of economic analysis? By Nicolas Piluso; Thomas Ruellou
  9. Property Rights and Economic Freedom By Germinal G. Van
  10. In search of a suitable heuristic for evolutionary economics: from generalized Darwinism to economic self-organisation. By Foster, John
  11. Money and markets : limits of mainstream critique By Jérôme Maucourant
  12. The Golden Age of the Mathematical Finance By Jos\'e Manuel Corcuera
  14. The Social Cost of Carbon, Risk, Distribution, Market Failures: An Alternative Approach By Nicholas Stern; Joseph E. Stiglitz
  15. Graham’s Theory of International Values Revisited: A Ricardian Trade Model with Link Commodities By Sato, Hideo; Assistant, JHET
  16. How-possibly explanations in economics: anything goes? By Grüne-Yanoff, Till; Verreault-Julien, Philippe

  1. By: Escudé, Guillermo J.
    Abstract: This book gives a clear synthesis of Marx’s theory of Capitalism and its relation with economic theory as it evolved over the course of the last 300 years. It places Marx’s though in perspective, comparing it with the main aspects of the economic theories that preceded it, including not only the Classical Adam Smith and David Ricardo but also economists like Cantillon, Turgot, and Ramsay that Marx chose to ignore with respect to the crucial issue of entrepreneurship because it was incompatible with his Theory of Surplus Value. But the book also contrasts Marx’s theory with Walras’, the Neoclassical economist whose influence on contemporary mainstream economic theory was most lasting. The analytical aspects of Marx’s theory are rigorously expressed by means of the technique of Input-Output Analysis, which is explained from the most elementary level in order to make the book self-contained. Each of the multiple topics of Marx’s complex and refined theory is explained in detail, including his theory of money, the heterogeneity in kinds of labor and in productive techniques, the turnover of capital, Simple and Extended Reproduction, his theory of the economic cycle, his theory of ground rent, his theory of productive and unproductive labor, and his view of the main tendencies of capitalist society. The book is structured in accordance with the development process of Marx’s thought. Hence, it begins with the life project he generated in his youth and drove him from the study of history and philosophy to that of Political Economy, on the one hand, and political praxis, on the other. Hence, Parts I, II, and IV of the book respectively address A) the philosophical-methodological foundations of his scientific endeavor (his Historical Materialism); B) his scientific theory of capitalist society as expressed in Capital; and C) his political thought and praxis, which had enormous effects over the course of the 20th century. Part III of the book addresses our critique of Marx’s theory of Capitalism. Beyond our criticisms, however, the book shows that Marx made important contributions to the comprehension of the functioning of Capitalism in the more conventional part of his theory, which we denominate ‘exoteric’ in order to contrast it with his ‘esoteric’ Theory of Surplus Value which was the foundation of his view of the exploitation of wage labor in Capitalism. RESUMEN Este libro brinda una síntesis clara de la teoría del Capitalismo de Marx y de su relación con la teoría económica que se desarrolló en el curso de los últimos 300 años. Pone al pensamiento de Marx en perspectiva, comparándola con los aspectos principales de la teoría económica que le precedió, incluyendo no sólo los clásicos Adam Smith y David Ricardo sino también los de economistas como Cantillon, Turgot y Ramsay, cuya crucial cuestión del aporte del empresario Marx eligió ignorar era incompatible con su Teoría de la Plusvalía. Pero también se contrasta la teoría de Marx con la de Walras, el economista neoclásico que tuvo más perdurable influencia sobre la teoría económica contemporánea del mainstream. En lo analítico, la teoría de Marx es expuesta rigurosamente utilizando la técnica del Análisis de Insumo-Producto, que se explica desde el nivel más elemental para hacer al libro auto-contenido. Se explica cada uno de los múltiples tópicos de la refinada y compleja teoría de Marx, incluyendo su teoría del dinero, la heterogeneidad de tipos de trabajo y de técnicas productivas, la rotación del capital, la Reproducción Simple y Ampliada del capital, su teoría del ciclo económico, su teoría de la renta de la tierra, su teoría del trabajo productivo e improductivo y su visión de las principales tendencias de la sociedad capitalista. El libro está estructurado en base al proceso de desarrollo del pensamiento de Marx. Por eso parte del proyecto de vida que éste elaboró en su juventud y que lo llevó del estudio de la historia y la filosofía al estudio de la Economía Política, por un lado, y a la práctica política, por el otro. Por ello, las Partes I, II, y IV del libro encaran respectivamente A) los fundamentos filosófico-metodológicos de su quehacer científico (el Materialismo Histórico); B) su teoría científica de la sociedad capitalista, según la expresó en El Capital; y C) su pensamiento y accionar político, que tuvo enormes efectos en el curso del siglo 20. La Parte III del libro encara nuestras críticas a la teoría del Capitalismo de Marx. Más allá de nuestra crítica, sin embargo, el libro muestra que Marx hizo importantes contribuciones a la comprensión del funcionamiento del Capitalismo en la parte más convencional de su teoría, que denominamos ‘exotérica’ para contrastarla con su ‘esotérica’ Teoría de la Plusvalía, núcleo de su concepción de la explotación del trabajo asalariado en el Capitalismo.
    Keywords: Karl Marx, Theory of capitalism, Surplus value theory, Labor value theory, Historical Materialism, Entrepreneurship
    JEL: B14 B3 B4 Z13
    Date: 2021–01–11
  2. By: Su, Huei-Chun; Colander, David; Assistant, JHET
    Abstract: Some well-known economists suggest that a good economist should act like an engineer, a surgeon, a dentist, or even a plumber. These metaphors are useful in helping economists reflect the nature of economics and their role in society. But which is the most sensible one? This paper argues that economists should be playing all these roles and more, because economics is not a single entity, and each entity has separate goals, methods, and boundaries. To take this multiplicity of roles into account this paper argues that in addition to the traditional boundary that delineates the disciplinary domain of economics against other sciences, an overarching boundary between economic science and applied policy needs to be recognized. It then examines Duflo’s economist as plumber metaphor and suggests that a better metaphor for Duflo’s purpose would be “general contractor”, a metaphor that, if accepted, would suggest radical change in training applied policy economists.
    Date: 2021–02–12
  3. By: Repapis, Constantinos; Assistant, JHET
    Abstract: In this paper we investigate Werner Stark’s sociology of knowledge approach in the history of economic thought. This paper explores: 1) The strengths and weaknesses of Stark’s approach to historiography, 2) seeing how this can frame an understanding of mercantilist writings and, 3) develop a link between a pluralist understanding of economics, and the sociology of knowledge approach. The reason for developing this link is to extend the sociology of knowledge approach to encompass a pluralist understanding of economic theorising and, at the same time, clarify the link between context and economic theory. John Maynard Keynes’ practice of building narratives of intellectual traditions as evidenced in The General Theory is used to develop a position between an understanding of history of economic thought as the evolution of abstract and de-contextualized economic theorising and, the view of economic theory as only relevant within the social conditions from which it arose.
    Date: 2021–02–12
  4. By: Gilbert Cette (Banque de France - Banque de France - Banque de France, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Measuring Economic Growth and Productivity is not only a book on an essential topic, namely that of "growth and productivity", it is also a fabulous ensemble, bringing together contributions from many top specialists. But, in addition, it is a tribute to Dale W. Jorgenson, who has for decades been an exceptional contributor to gaining a better knowledge of the mechanisms of growth and productivity. The volume is dedicated to him. I was present in January 2020 at the annual IPM dinner at the AEA conference, when a preprint of the book was presented to him by the editor, Barbara Fraumeni. I openly admit that it was a very emotional moment.
    Date: 2020–10
  5. By: Nicolas Piluso (CERTOP - Centre d'Etude et de Recherche Travail Organisation Pouvoir - UT2J - Université Toulouse - Jean Jaurès - UT3 - Université Toulouse III - Paul Sabatier - Université Fédérale Toulouse Midi-Pyrénées - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Wage labor is not an exchange relationship: the influence of Schmitt's theory on that of Jean Cartelier Abstract. This article attempts to highlight Schmitt's influence on Cartelier's theory of the wage relationship. The two authors question the standard conception of wage labor, which consists in analyzing the latter as a simple exchange report. They argue that the remuneration of the labor factor is not an act of purchase. To understand this, we must go back on the one hand to their criticism of the links between money and value theory in the standard approach, and on the other hand to their adherence to Keynes' idea that the relationship between entrepreneurs and employees is basically asymmetrical.
    Abstract: Cet article tente de mettre en évidence l'influence de Schmitt sur la théorie de Cartelier concernant le rapport salarial. Les deux auteurs remettent en cause la conception standard du salariat qui consiste à analyser ce dernier comme un simple rapport d'échange. Ils soutiennent que la rémunération du facteur de travail n'est pas un acte d'achat. Pour le comprendre, il faut remonter d'une part à leur critique des liens entre monnaie et théorie de la valeur dans l'approche standard, et d'autre part à leur adhésion à l'idée de Keynes selon laquelle la relation entre entrepreneurs et salariés est fondamentalement asymétrique.
    Keywords: circuit,exchange,exploitation,money,value,wage labor,valeur,salariat,monnaie,échange
    Date: 2020
  6. By: Michaël Assous (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - CNRS - Centre National de la Recherche Scientifique, UL2 UFR SEG - Université Lumière - Lyon 2 - UFR de Sciences économiques et de gestion - UL2 - Université Lumière - Lyon 2); Vincent Carret (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - CNRS - Centre National de la Recherche Scientifique, UL2 UFR SEG - Université Lumière - Lyon 2 - UFR de Sciences économiques et de gestion - UL2 - Université Lumière - Lyon 2)
    Abstract: "This article provides a comprehensive view of Tinbergen's macrodynamic models during the 1930s and early 1940s, to show how the economist's concerns evolved from problems of instability to the idea of reaching higher positions of equilibria. Starting from the ideas developed around the first meetings of the Econometric Society, we show that Tinbergen built his own macrodynamic model with the aim to consider several problems of economic policy, in particular the effects of public expenditures and changes in money wages. One of the possibilities that Tinbergen underlined throughout his models was the threat of complete or partial collapse stemming from the presence of multiple equilibria. From the mid-1930s, Tinbergen gained confidence in the power of economic policies to stabilize the economy, and his attention shifted to the final position of equilibrium, and the policies that could improve it. His most well-known models developed for the League of Nations addressed that issue and showed how the final equilibrium may be shifted by "permanent" policies. We argue that Tinbergen also considered the case that the economy could be lifted by temporary policies in the presence of multiple equilibria. Based on papers published by Tinbergen in Dutch, French and German that for the most part have never been translated, this article offers a new perspective to the development of early macrodynamic modeling. From this literature the originality, breadth and pioneering ideas of Tinbergen clearly come out and explain many of his sometimes paradoxical policy positions."
    Keywords: economic policy,Tinbergen,equilibria,macrodynamics,stability
    Date: 2021–02–05
  7. By: Shaun Hargreaves Heap; Mehmet S. Ismail
    Abstract: Rational players in game theory are neoliberal in the sense that they can choose any available action so as to maximize their payoffs. It is well known that this can result in Pareto inferior outcomes (e.g. the Prisoner's Dilemma). Classical liberalism, in contrast, argues that people should be constrained by a no-harm principle (NHP) when they act. We show, for the first time to the best of our knowledge, that rational players constrained by the NHP will produce Pareto efficient outcomes in n-person non-cooperative games. We also show that both rationality and the NHP are required for this result.
    Date: 2021–01
  8. By: Nicolas Piluso (CERTOP - Centre d'Etude et de Recherche Travail Organisation Pouvoir - UT2J - Université Toulouse - Jean Jaurès - UT3 - Université Toulouse III - Paul Sabatier - Université Fédérale Toulouse Midi-Pyrénées - CNRS - Centre National de la Recherche Scientifique); Thomas Ruellou (PHARE - Philosophie, Histoire et Analyse des Représentations Économiques - UP1 - Université Paris 1 Panthéon-Sorbonne)
    Abstract: The purpose of this article is to show that from a history of economic thought perspective, the institutional hypothesis of asymmetry between entrepreneurs and employees, which implies that the employment level is determined by entrepreneurs alone, is particularly common. It would therefore constitute a standard, far from what orthodox economists and most economics textbooks suggest by presupposing that the level of employment would be jointly determined by supply and demand.
    Abstract: L'objet de cet article est de montrer que du point de vue de l'histoire de la pensée économique et des différents courants théoriques qui la composent, l'hypothèse institutionnelle d'asymétrie entre entrepreneurs et salariés, qui implique d'affirmer que le niveau d'emploi est déterminé par les seuls entrepreneurs, est particulièrement fréquente. Elle constituerait donc une norme, bien loin de ce que laissent penser les économistes orthodoxes et la plupart des manuels d'économie qui présentent l'hypothèse selon laquelle le niveau d'emploi est déterminé conjointement par l'offre et la demande comme normale.
    Keywords: unvoluntary unemployment,restricted Say law,wage,asymetric salary relationship.
    Date: 2020
  9. By: Germinal G. Van
    Abstract: The purpose of this paper is to establish a positive correlation between property rights and economic freedom. It seeks to demonstrate that property rights lead to economic freedom. From a purely theoretical perspective, it has been assumed that greater access to property rights leads to economic freedom, consequently to a sustainable economic growth. To establish this correlation in the case of Africa, we applied the use of statistical tools to substantiate the validity of our economic theory. We mainly used a simple linear regression to ascertain our hypothesis.
    Keywords: Economic freedom, property rights, econometrics, macroeconomics, development economics, economic growth
    JEL: C33 C49 E22 O43 N27
    Date: 2020–10–10
  10. By: Foster, John
    Abstract: The generalised Darwinism heuristic for application in evolutionary economics is evaluated. Although conceptually useful, it is found to be lacking as a basis for empirical research. Instead, the economic self-organisation heuristic is offered as a viable scientific alternative which has an explicit connection with an augmented logistic diffusion methodology which can be applied directly to the modelling of historical data in phases of economic growth. It is also argued that economists cannot analyse economic evolution without the parallel involvement of researchers from other disciplines.
    Keywords: Evolutionary economics, complex economic system, generalised Darwinism, economic self-organisation, logistic diffusion
    JEL: B41 B5 B52 O3 O33
    Date: 2021–02–16
  11. By: Jérôme Maucourant (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - CNRS - Centre National de la Recherche Scientifique, UJM - Université Jean Monnet [Saint-Étienne])
    Abstract: A key argument of Karl Polanyi's work is that market society needs policies to emerge, develop and survive, money being an essential institution in this process. But, fictituously transforming that which was not made to be sold into commodities, such as man, money or nature, entails unexpected effects, as State interventions. This total subversion of the liberal view enables new perspectives for understanding the crisis of 2008 and the continuing crisis of the Eurozone. Furthermore, it could highlight the usual critiques of many leftwing thinkers. Actually, they were blinded by the apparent success of globalisation during the 1990's and the cosmopolitical rhetoric of neoliberalism. The case of European Union and Euro is interesting because these social machines are labs of neoliberalism. A time is coming when the consent of free trade and a single currency-which unites many neoliberals, far leftists, "socialists" and some trade union leaders-must come to an end.
    Keywords: markets,mainstream Critique,Euro,money order,Karl Polanyi,fictitious commodity,globalism,Institutional analysis
    Date: 2020
  12. By: Jos\'e Manuel Corcuera
    Abstract: This paper is devoted, mainly, to show that the last quarter of the past century can be considered as the golden age of the Mathematical Finance. In this period the collaboration of great economist and the best generation of probabilists, most of them from the Strasbourg's School led by Paul Andr\'e Meyer, gave rise to the foundations of this discipline. They established the two fundamentals theorems of arbitrage theory, close formulas for options, the main modelling approaches and created the appropriate framework for the posterior development.12
    Date: 2021–02
  13. By: Christophe Salvat (GRANGER - Centre Gilles-Gaston Granger - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This article questions the articulation between John Stuart Mill's initial project of creating a new science dedicated to the means of improving individual character, a science named ethology, and the treatise of political economy that he published instead. My claim is that his defence of free competition as well as some of the arguments he opposes to it, and which have often puzzled his readers, actually reveal the moral agenda of his political economy and of some of his political principles, specifically his ambivalent position towards paternalism.
    Keywords: Mill,political economy,paternalism,character,Ethology
    Date: 2020
  14. By: Nicholas Stern; Joseph E. Stiglitz
    Abstract: Designing policy for climate change requires analyses which integrate the interrelationship between the economy and environment, including: the immense risks and impacts on distribution across and within generations; the many failures, limitations or absences of key markets; and the limitations on government, both in offsetting these failures and distributional impacts. Much of the standard economic modelling, including Integrated Assessment Models, does not embody key aspects of these essentials. We identify fundamental flaws in both the descriptive and normative methodologies commonly used to assess climate policy, showing systematic biases, with costs of climate action overestimated and benefits underestimated. We provide an alternative methodology by which the social cost of carbon may be calculated, one which embraces the essential elements we have identified.
    JEL: H0 Q0
    Date: 2021–02
  15. By: Sato, Hideo; Assistant, JHET
    Abstract: F. D. Graham (1890–1949) presented an innovative multi-country, multi-commodity trade model that attached great importance to link commodities and quantity adjustments, not perfect specializations and price adjustments as emphasized by J. S. Mill and A. Marshall. However, due of some shortcomings, this model was not sufficiently understood and has been forgotten. This study reconstructs Graham’s theory of international values by rectifying the shortcomings. Through this reconstruction, the following is clarified. First, in multi-country, multi-commodity trade models, the existence of link commodities is general and perfect specializations seldom appear; therefore, quantity adjustments are normally performed in the face of demand shifts. Second, notwithstanding unchanging sectoral productivity at a national level, national wage rates can vary greatly according to the patterns of the international division of labor. Third, while the domestic relative wage rate increases with an increase in a home country’s productivity of link commodities, it does not increase with an increase in the productivity of commodities produced only in the home country.
    Date: 2021–02–12
  16. By: Grüne-Yanoff, Till; Verreault-Julien, Philippe
    Abstract: The recent literature on economic models has rejected the traditional requirement that their epistemic value necessary depended on them offering actual explanations of phenomena. Contributors to that literature have argued that many models do not aim at providing how-actually explanations, but instead how-possibly explanations. However, how to assess the epistemic value of HPEs remains an open question. We present a programmatic approach to answering it. We first introduce a conceptual framework that distinguishes how-actually explanations from how-possibly explanations and that further differentiates between epistemic and objective how-possibly explanations. Secondly, we show how that framework can be used for methodological appraisal as well as for understanding methodological controversies.
    Keywords: epistemic; explanation; how-possibly; modal; models; possibility; 2018- 0135
    JEL: B40 B41
    Date: 2021–01–20

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