nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2022‒10‒10
eleven papers chosen by
Erik Thomson
University of Manitoba

  1. Jan Tinbergen and J. G. Koopmans on Multiple Equilibria and Coordination Failures By Michaël Assous; Vincent Carret
  2. Peter Howitt – a Keynesian Still in Recovery By David Laidler
  3. Classicals versus Keynesians: Fifty Distinctions between Two Major Schools of Economic Thought By Seyyed Ali Zeytoon Nejad Moosavian
  5. What analytical framework for Sovereign Money? Some insight from the 100% Money literature, and a comment on criticisms By Samuel Demeulemeester
  6. Network effects or rent extraction? Evidence from editorial board rotation. By Lorenzo Ductor; Bauke Visser
  7. Teaching Economics and Ethics By Davis, John B.
  8. Development and Interdisciplinarity: re-examining the 'economics silo' By Matthias Aistleitner
  9. The Agenda for Evolutionary Economics: Results, Dead Ends, and Challenges Ahead. By Giovanni Dosi
  10. L'imprévisibilité relative des forces économiques mondiales Une analyse du « futur du capitalisme » de Lester Thurow (1996) By Jacques Fontanel
  11. Towards extracting collective economic narratives from texts By Lange, Kai-Robin; Reccius, Matthias; Schmidt, Tobias; Müller, Henrik; Roos, Michael W. M.; Jentsch, Carsten

  1. 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); 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)
    Abstract: In a 1932 policy paper, the Dutch economist Jan Tinbergen suggested that there could be two stable equilibria in a model with two firms acting in two sectors, with one of the equilibria having more production and employment. Arguing on the basis of a diagram that firms could not get out of the "bad" equilibrium on their own, he suggested that this justified government interventions to increase employment. While he referred to the general equilibrium systems of Walras and Cassel, he did not present a fully worked out model but referred to the unpublished study of one J. G. Koopmans. The latter was spurred by Tinbergen's reference to publish his ideas on the problem of multiple equilibria. In his three-part paper, he underlined that a Walrasian system could not show Tinbergen's coordination problem, because there could be no unemployment at an equilibrium point in a Walrasian model. The examples he presented, with three equilibria, showed that they could not be ordered. After this exchange, Tinbergen moved away from Walrasian multiple equilibria, and abandoned the general equilibrium approach to economic modeling in favor of the macrodynamic approach that was developed at the same time by Ragnar Frisch and Michal Kalecki.
    Keywords: coordination,duopoly,Jan Tinbergen,multiple equilibria,J. G. Koopmans
    Date: 2022–08–17
  2. By: David Laidler (University of Western Ontario)
    Abstract: Peter Howitt is best known for his contributions to growth theory, but his work in short-run economics, which began with his Ph.D thesis and still continues, is important and deserves attention. It lies firmly in the Keynesian macro-disequilibrium tradition of Clower and Leijonhufvud, and for a long time has been overshadowed by New-classical and New-Keynesian orthodoxy. However, the development of agent based modelling and behavioural economics will perhaps give disequilibrium macroeconomics a new lease on life.
    Keywords: equilibrium, disequilibrium, money, New classical Economics, New Keynesian Economics, Keynes, Lucas, Howitt, Clower, Leijonhufud, Phelps.
    JEL: B22 B59 E12 E13 E31 E32
    Date: 2022
  3. By: Seyyed Ali Zeytoon Nejad Moosavian
    Abstract: Macroeconomics essentially discusses macroeconomic phenomena from the perspectives of various schools of economic thought, each of which takes different views on how macroeconomic agents make decisions and how the corresponding markets operate. Therefore, developing a clear, comprehensive understanding of how and in what ways these schools of economic thought differ is a key and a prerequisite for economics students to prosper academically and professionally in the discipline. This becomes even more crucial as economics students pursue their studies toward higher levels of education and graduate school, during which students are expected to attain higher levels of Bloom's taxonomy, including analysis, synthesis, evaluation, and creation. Teaching the distinctions and similarities of the two major schools of economic thought has never been an easy task to undertake in the classroom. Although the reason for such a hardship can be multi-fold, one reason has undoubtedly been students' lack of a holistic view on how the two mainstream economic schools of thought differ. There is strong evidence that students make smoother transition to higher levels of education after building up such groundwork, on which they can build further later on (e.g. Didia and Hasnat, 1998; Marcal and Roberts, 2001; Islam, et al., 2008; Green, et al., 2009; White, 2016). The paper starts with a visual spectrum of various schools of economic thought, and then narrows down the scope to the classical and Keynesian schools, i.e. the backbone of modern macroeconomics. Afterwards, a holistic table contrasts the two schools in terms of 50 aspects. Not only does this table help economics students enhance their comprehension, retention, and critical-thinking capability, it also benefits macroeconomic instructors to ...
    Date: 2022–09
  4. By: Michael McLure (Economics Department, Business School, The University of Western Australia)
    Abstract: In this essay, I investigate Pareto’s understanding of classical political economy as a science, with particular emphasis on the themes of surplus, value and the cost of production. For those themes, this study reveals that Pareto considered substantive economic knowledge to have developed asymptotically. In reaching that view, and in emphasising the substantive continuity in the progress of economics from classical political economy to the economics of the Lausanne school, I attempt to clarify why Francesco Ferrara’s critical assessment of, and positive contribution to, classical political economy was important for Pareto’s appreciation of the classical approach.
    Date: 2022
  5. By: Samuel Demeulemeester (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)
    Abstract: The 2007-2008 Global Financial Crisis has brought renewed interest in the 100% Money reform idea of the 1930s', the essence of which was to require 100% reserves on transaction deposits so as separate money issuance from bank loans. A modern version of this idea, the Sovereign Money proposal, has been much discussed in recent years. Some heterodox economists have harshly criticized Sovereign Money advocates for lacking a clear analytical framework, as well as for disregarding "established" literature on such topics as the causality relationship between money and prices, the accommodation of business needs, financial instability, or the seigniorage privilege. The literature on 100% Money, however, appears to have been largely overlooked by both sides of the debate-even though, as this article shows, it could have brought valuable theoretical insight to the discussion. Building upon the arguments of the 100% Money writers, this paper concludes that many of the criticisms addressed to the Sovereign Money proposal are either inconclusive or misplaced.
    Keywords: 100% money,Sovereign Money,full reserve banking,endogenous money,financial instability B26,E30,E42
    Date: 2022–08–15
  6. By: Lorenzo Ductor (Department of Economic Theory and Economic History, University of Granada.); Bauke Visser (Erasmus University Rotterdam and Tinbergen Institute)
    Abstract: A department’s yearly publication count in a journal increases when a member of the department joins the journal’s editorial board. The common interpretation of this fact—that during the board member’s tenure, departmental colleagues publish more—is inaccurate. In a sample of 106 economics journals covering 1990-2011, we estimate that of the observed increase in the publication count, 73 per cent is (co-)authored by board members themselves. Their single-authored papers in a journal receive significantly less citations if they are on that journal’s editorial board. We find no evidence that they discover attractive papers among their colleagues that otherwise wouldn’t be published.
    Keywords: Editorial boards, Networks, Colleague, Coauthor, Rent extraction, Publishing
    JEL: A11 A14 O31
    Date: 2022–09–15
  7. By: Davis, John B. (Department of Economics Marquette University)
    Abstract: As an interdisciplinary field, economics and ethics has been taught in many different ways, including in my experience teaching the course over many years. This paper describes the challenges teaching this subject involves and the strategy I ultimately adopted for doing so after trying different approaches. This strategy was meant to address the needs of a heterogenous collection of students, many of whom had limited knowledge of economics and were likely not take many additional courses in it. The course was structured around four modules opposed to one another in two pairs: (1) Ways economics influences ethics: The market vision (2) Ways economics influences ethics: Rationality and efficiency (3) Ways ethics influences economics: Moral limits of markets (4) Ways ethics influences economics: Taming the market Each module was built around real world applications. The course finished with a fifth module in the form of a capstone exercise – Rationing health care – that required students rank who had a priority for care from four individual cases of varying life circumstances drawn from Cookson and Dolan (2000). Students used the views they had developed in the first four modules to do this, and then explained and discussed both their rankings and the overall rankings that prevailed over all students. The course was taught both in person and online and in both long and short teaching terms, emphasized student interaction and openness to different views of how economics and ethics can be connected, and argued for democratic values in pluralist societies.
    Keywords: economics and ethics, teaching, interdisciplinary, health care
    JEL: A12 A13 A22
    Date: 2022–09
  8. By: Matthias Aistleitner (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria)
    Abstract: Recent evidence from citation analysis [Mitra, S., Palmer, M, Vuon, V. (2020). Development and interdisciplinarity: A citation analysis. World Development, 135, 105076; hereafter MPV] shows that development as a field of study hardly interacts with other disciplines – except mainstream economics. Moreover, MPV analyze the reported affiliation of each author listed in the Web of Science database and find that, in response to growing competition in the publishing process, economists tend to publish more in development studies journals. In this paper, I apply an alternative approach in identifying the disciplinary and paradigmatic background of development scholars by matching bibliometric data on articles published in World Development with the RePEc author database. The results from this analysis suggest a quite different picture regarding the share of economists that publish in the field’s flagship journal: in contrast to MPV, I report a significantly higher share of scholars with an economics research background. Considering these findings, the paper further explores non-trivial differences of the 'economics silo' (i.e. economists that publish research related to development) in World Development vis-Ã -vis research by scholars from other social science disciplines via extensive citation analysis. The overall finding of this analysis is that the lack of interdisciplinarity (as observed by MPV) is largely due to economists that publish their work in the journal.
    Keywords: Development, Interdisciplinarity, Citation Analysis, RePEc, Economic Imperialism
    Date: 2022–09
  9. By: Giovanni Dosi
    Abstract: This essay outlines the evolutionary research agenda thoroughly explored in its microeconomic aspects in the forthcoming Manual, The Foundations of Complex Evolving Economies. Part One: Innovation, Organization and Industrial Dynamics, Oxford University Press, 2023. But is there an ''evolutionary paradigm'', in the first place? And if yes, what is it? In brief, in such a paradigm, the economy is interpreted as a complex evolving system. In that, a wide set of techno-economic phenomena are understood as emergent properties - outcomes of far-from-equilibrium interactions among heterogeneous agents - characterized by endogenous preferences, most often ''boundedly rational'' - but always capable of learning, adapting, and innovating with respect to their understandings of the world in which they operate, the technologies they master, their organizational forms, and their behavioral repertoires. All that involves some crucial properties. First, if the entities are genuinely evolving, new elements, new technologies, new organizational forms, new patterns of interaction are bound to appear along the course of evolution. Second, evolution is a multi-scale phenomenon. This is a fundamental property of biological evolution, and even more so is the evolution of economies and whole societies, nested in different institutions - possibly evolving at different paces, and coupled with technological and organizational changes. Third, but relatedly, economies are complex interactive systems. Interaction generally implies emergence. There is no isomorphism between macroscopic phenomena, say, the dynamics of industries, markets, and whole economies, on the one hand, and the behaviours of individual entities, on the other. More is different (Anderson, 1972). Fourth, complexity is intimately linked with non-linearities, and thus multiple possible dynamical paths. History counts. And this, even more so, in socio-economic environments characterized by knowledge accumulation. Knowledge builds upon itself, thus involving what economists in their jargon call dynamic increasing returns. As summarized in this essays Part One of the Manual addresses in the foregoing perspective, (i) Innovation and technological evolution; (ii) The theory of the firm in evolving environments; (iii) The formalization of learning processes; (iv) the theory of production; (v) consumption patterns; (vi) economic interactions and the working of markets; and, (vii) The ensuing structures and evolution of industries. Further in this essay we sketch some fundamental topics of the macroeconomic and developmental research ahead, which we mean to explore in Part Two of the Manual, in progress. At the same time the reader is warned against multiple risks of ''normalization'' by which 'evolution' is reduced to sheer 'innovation', and the latter is handled by standard econometric instruments, which are inevitably bound to largely neglect, among other features, the emergence of novelty, coupled dynamics, profound heterogeneities at all levels, and various forms of complementarities.
    Keywords: Economic evolution; complex systems; technological and organizational innovation; heterogeneity; market processes; bounded rationality; organizational capabilities; routines and heuristics; theory of production; industrial structures.
    Date: 2022–09–21
  10. By: Jacques Fontanel (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes)
    Abstract: Forecasting is always difficult, especially the future. Economists have sought to develop a scientific infrastructure designed to improve the productive performance and living standards of consumers and citizens. However, this body of knowledge hardly allows for the development of effective instruments to fulfill these objectives. Contrary to Fukuyama's idea of the "end of history", Lester Thurow has presented an outline of the future evolution of a capitalism whose strength as well as precariousness he measures. His analysis highlights the inadequacies of capitalism, the absence of a competing economic system, the emergence of a multipolar world without a hegemonic power, the development of regional blocs, the shortcomings of the market, the development of inequalities, the rise of the grey matter industry, the threat of demographics, the crisis of work, and economic and political instability. Several elements of analysis remain relevant, but three essential elements of the political-economic situation in the world today are unfortunately absent, such as the permanence of military warfare, especially in developed countries, and the conflict of world leadership between the United States and China. Finally, the issue of global warming and pollution is never mentioned.
    Abstract: Il est toujours difficile de prévoir, surtout l'avenir. Les économistes ont cherché à élaborer une infrastructure scientifique destinée à améliorer les performances productives et le niveau de vie des consommateurs et citoyens. Cependant, l'ensemble de ces connaissances ne permettent guère de développer des instruments efficaces pour remplir ces objectifs. En contestation de l'idée de Fukuyama sur la « fin de l'histoire », Lester Thurow a présenté les grandes lignes des évolutions à venir d'un capitalisme dont il mesure aussi bien la force que la précarité. Son analyse met en lumière les insuffisances du capitalisme, l'absence d'un système économique concurrent, l'apparition d'un monde multipolaire sans puissance hégémonique, le développement des blocs régionaux, les défauts du marché, le développement des inégalités, l'essor de l'industrie de la matière grise, la menace de la démographie, la crise du travail, et l'instabilité économique et politique. Plusieurs éléments d'analyse restent d'actualité, mais trois éléments essentiels de la situation politico-économique du monde d'aujourd'hui sont malheureusement absents, comme la permanence des actions de guerres militaires, notamment dans les pays développés, et le conflit de leadership mondial entre les Etats-Unis et la Chine. Enfin, la question du réchauffement climatique et de la pollution n'est jamais évoquée.
    Keywords: Capitalism,demography,hegemony,social inequalities,wars,economic wars,global warming,Capitalisme,démographie,hégémonie,inégalités sociales,guerres,guerres économiques,réchauffement climatique.
    Date: 2022–08–19
  11. By: Lange, Kai-Robin; Reccius, Matthias; Schmidt, Tobias; Müller, Henrik; Roos, Michael W. M.; Jentsch, Carsten
    Abstract: Identifying narratives in texts is a challenging task, as not only narrative elements such as the factors and events have to be identified but their semantic relation has to be explained as well. Despite this complexity, an effective technique to extract narratives from texts can have a great impact on how we view political and economical developments. By analyzing narratives, one can get a better understanding of how such narratives spread across the media landscape and change our world views as a result. In this paper, we take a closer look into a recently proposed definition of a collective economic narrative that is characterized by containing a cause-effect relation which is used to explain a situation for a given world view. For the extraction of such collective economic narratives, we propose a novel pipeline that improves the RELATIO-method for statement detection. By filtering the corpus for causal articles and connecting statements by detecting causality between them, our augmented RELATIO approach adapts well to identify more complex narratives following our definition. Our approach also improves the consistency of the RELATIO-method by augmenting it with additional pre- and post-processing steps that enhance the statement detection by the means of Coreference Resolution and automatically filters out unwanted noise in the form of uninterpretable statements. We illustrate the performance of this new pipeline in detecting collective economic narratives by analyzing a Financial Times data set that we filtered for economic and inflation-related terms as well as causal indicators.
    Keywords: Econometrics,narrative,text mining,coreference resolution,named entity recognition,causal linking
    JEL: C18 C55 C87 E70
    Date: 2022

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