nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2022‒11‒21
thirteen papers chosen by
Erik Thomson
University of Manitoba

  1. The New Speak and Economic Theory or How We Are Being Talked To By Jean-Paul Fitoussi
  2. Tyranny, Blind Spot in the Humanities By Andreu Solé
  3. Louis Bachelier's Théorie de la spéculation : The missing piece in Walras' general equilibrium By Nicole El Karoui; Antoine Parent; Pierre-Charles Pradier
  4. To Be or Not to Be: The Entrepreneur in Neo-Schumpeterian Growth Theory By Henrekson, Magnus; Johansson, Dan; Karlsson, Johan
  5. The Homer economics narrative: from cognitive psychology to individual public policies By Guilhem Lecouteux
  6. Diplomatic Stance of the Japanese Business Community in the First World War: Focusing on relations with major warring nations and the concept of economic alliance, in the middle of the war (Japanese) By SAKAMOTO Masazumi
  7. Policy Advice of Economic Experts: Facts or Preferences? By Gründler, Klaus; Potrafke, Niklas
  8. Progress in Economics By Marcel Boumans; Catherine Herfeld
  9. Constructivist Grounded Theory: A New Research Approach in Social Science By Mohajan, Devajit; Mohajan, Haradhan
  10. Financialisation and the potentials for a progressive equality-, sustainability- and domestic demand-led regime: A post-Keynesian simulation approach By Hein, Eckhard; Prante, Franz; Bramucci, Alessandro
  11. Nobel and Novice: Author Prominence Affects Peer Review By Jurgen Huber; Sabiou M. Inoua; Rudolf Kerschbamer; Christian Konig-Kersting; Stefan Palan; Vernon L. Smith
  12. Misperceiving Economic Success: Experimental Evidence on Meritocratic Beliefs and Inequality Acceptance By Dietmar Fehr; Martin Vollmann
  13. Classical and Keynesian Models of Inequality and Stagnation By Codrina Rada; Daniele Tavani; Rudiger von Arnim; Luca Zamparelli

  1. By: Jean-Paul Fitoussi (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, LUISS - Libera Università Internazionale degli Studi Sociali Guido Carli [Roma])
    Abstract: This article seeks to show how the impoverishment of language has changed the course of the evolution of economic theory, much as in 1984 the Newspeak changed the order of things and the course of the political regime. At the origin of such an evolution was the stratagem to act as if neoclassical theory was subsequent to Keynesian theory. The inversion of the time arrow had far reaching consequences on the development of economics. In great part the development of a science depends of the scholars who practice it and of its teaching to the new researchers who will further develop it. Both depend on the history of thought. The consequences on economic policies have been major, especially in Europe. By cancelling most of the Keynesian concepts from the Newspeak dictionary, the relative weights of the market and the state were changed, which could only lead to a preference for liberal, market- oriented, policies.
    Date: 2022
  2. By: Andreu Solé (HEC Paris - Ecole des Hautes Etudes Commerciales)
    Abstract: What is the singularity of our society and, consequently, how to name it? We first present a critique of three terms: liberalism, capitalism and "neo-liberalism" which are associated with this society by many researchers in the humanities and social sciences. We show that the classical, non-authoritarian liberalism of Adam Smith is a utopia. As for the word capitalism, it spreads a major confusion, that between market and company. Concerning the "neo-liberalism" of Hayek and Friedman, we argue that it is not liberalism. Then, we underline that our society is organized by and for companies, allowing us to formulate the proposal to call it "Enterprise-World". Finally, we highlight the tyranny - linked to the company - specific to this society, and invite us to wonder why most researchers in the humanities seem not to "see" it.
    Abstract: Quelle est la singularité de notre société et, en conséquence, comment la nommer ? Nous exposons d'abord une critique de trois termes : « libéralisme », « capitalisme » et « néolibéralisme » qui sont associés à cette société par beaucoup de chercheurs en sciences humaines. Nous démontrons que le libéralisme classique, non autoritaire, d'Adam Smith est une utopie. Quant au mot capitalisme, il diffuse une confusion majeure, celle entre marché et entreprise. S'agissant du « néolibéralisme » de Hayek et Friedman, nous faisons ressortir qu'il n'est pas du libéralisme. Ensuite, nous soulignons que notre société est organisée par et pour les entreprises, nous permettant de formuler la proposition de l'appeler « Entreprise-Monde ». Enfin, nous mettons en lumière la tyrannie-liée à l'entreprise-, spécifique de cette société, et invitons à se demander pourquoi la plupart des chercheurs en sciences humaines semblent ne pas la « voir ».
    Keywords: Liberalism,Neoliberalism,Capitalism,Company,Tyranny,Tyrannie,Libéralisme,Néolibéralisme,Capitalisme,Entreprise
    Date: 2022–07–20
  3. By: Nicole El Karoui (LPSM (UMR_8001) - Laboratoire de Probabilités, Statistique et Modélisation - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité); Antoine Parent (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, CAC-IXXI, Complex Systems Institute); Pierre-Charles Pradier (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We propose a revisited view of Louis Bachelier's contribution to economic analysis. Conventional wisdom presents Bachelier as the founding father of modern financial theory. We show that Bachelier's work is constructed to respond to a gap in the Walrasian general equilibrium, where the options market is verbosely introduced but not modeled. By providing a price formation theory for the missing options market, Bachelier undoubtedly presents himself as the heir apparent of the mathematical economics tradition founded by Walras. Indeed, Bachelier's methodological stance is clearly formed on the "rational method" of Walras, proceeding by mathematical demonstration from postulates that we make explicit. We show additionally how Walras and Bachelier in pre-WW2 France reached to the same audience. We propose to name this augmented general equilibrium model the Walras-Bachelier model of intertemporal general equilibrium in the presence of risk. This theory prefigures the Arrow-Debreu model, with some differences which we make clear.
    Keywords: General equilibrium,Financial markets,Option pricing,Bachelier,Walras
    Date: 2022–10
  4. By: Henrekson, Magnus (Research Institute of Industrial Economics); Johansson, Dan (Örebro University); Karlsson, Johan (Jönköping University, Sogang University)
    Abstract: Based on a review of 700+ peer-reviewed articles since 1990, identified using text mining methodology and supervised machine learning, we analyze how neo-Schumpeterian growth theorists relate to the entrepreneur-centered view of Schumpeter (1934) and the entrepreneurless framework of Schumpeter (1942). The literature leans heavily towards Schumpeter (1942); innovation returns are modeled as following an ex ante known probability distribution. By assuming that innovation outcomes are (probabilistically) deterministic, the entrepreneur becomes redundant. Abstracting from genuine uncertainty, implies that central issues regarding the economic function of the entrepreneur are overlooked such as the roles of proprietary resources, skills, and profits.
    Keywords: creative destruction, economic growth, entrepreneur, innovation, judgment, Knightian uncertainty
    JEL: B40 O10 O30
    Date: 2022–09
  5. By: Guilhem Lecouteux (UCA - Université Côte d'Azur, GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, COMUE UCA - COMUE Université Côte d'Azur (2015-2019))
    Abstract: A common narrative among some behavioural economists and policy makers is that experimental psychology highlights that individuals are more like Homer Simpson than the Mr Spock imagined by neoclassical economics, and that this justifies policies aiming to ‘correct' individual behaviours. This narrative is central to nudging policies and suggests that a better understanding of individual cognition will lead to better policy prescriptions. I argue that this Homer economicus narrative is methodologically flawed, and that its emphasis on cognition advances a distorted view of public policies consisting in fixing malfunctioning individuals, while ignoring the possibly malfunctioning environment within which they evolve.
    Keywords: homo economicus,rational choice,replication crisis,behaviourally informed policy
    Date: 2022–09–29
  6. By: SAKAMOTO Masazumi
    Abstract: The history of Japan's foreign relations during the First World War can be thought of as having two currents: a diplomatic history centered on the Asia-Pacific region, mainly in terms of Chinese interests and relations with the United States connected with that history, and a trade history which is described as the term of economic growth. However, little attention has been paid to the relationship between the two, e.g., the business community's interests regarding Japan's foreign policy. The analysis of the tone of the major economic newspapers in the mid-First World War period and the trade chronology compiled by the Ministry of Finance reveal that the business community had certain diplomatic interests toward the major warring nations of the First World War, such as Britain, Russia, and Germany, depending on their trade situation. At the same time, they reveal that the business community had expressed significant concern about the concept of the inter-Allied economic alliance, including a postwar regime, and decoupling from antagonist countries, as discussed at the Economic Conference of the Allies in 1916. The results suggest that considering the intentions (interests) of the business community while determining Japan's foreign policy is significant at a time when trade and diplomacy are closely linked.
    Date: 2022–10
  7. By: Gründler, Klaus; Potrafke, Niklas
    JEL: A11 E62 H60 H63
    Date: 2022
  8. By: Marcel Boumans; Catherine Herfeld
    Abstract: In this chapter, we discuss a specific kind of progress that occurs in most branches of economics today: progress involving the repeated use of mathematical models. We adopt a functional account of progress to argue that progress in economics occurs through the use of what we call “common recipes†and model templates for defining and solving problems of relevance for economists. We support our argument by discussing the case of 20th century business cycle research. By presenting this case study in detail, we show how model templates are not only reapplied to different phenomena. We also show how scientists first develop them and how, once they are considered less useful, they are replaced with new ones. Finally, our case also illustrates that it is not only the mathematical structure that is reused but that such reuse also requires a shared conceptual vision of the core properties of the phenomenon to be studied. If that vision is no longer shared among economists, a model template can become useless and has to be replaced, sometimes against resistance, with a different one.
    Keywords: business cycle model, functional progress, model building, template, transfer of knowledge
    Date: 2022
  9. By: Mohajan, Devajit; Mohajan, Haradhan
    Abstract: This article tries to explore the constructivist grounded theory (CGT) in qualitative research. American sociologist Kathy Charmaz has developed a new qualitative research field “Constructivist Grounded Theory” for the first time in 2006. Constructivist grounded theory is a qualitative research methodology that draws comparison between the ethical principles of deontology, utilitarian and virtue ethics, and individuals seek to understand the world in which they live and work. It is a popular method for research studies mainly in psychology, education, and nursing. In social sciences, it represents culture, context, literacy, personal experiences, as well as application of knowledge. It also presents the theoretical substructures of symbolic interactionism and constructivism. Constructivism is used for research, learning, and teaching with peers. There are various types of constructivism, such as social, psychological, personal, radical, and contextual constructivism. On the other hand, symbolic interactionism is the process of human interaction that provides the meanings for the experiences through language, symbols, and social interactions. This study tries to investigate how constructivist grounded theory has developed in times from the original grounded theory of Glaser and Strauss. The paper also tries to highlight characteristics, application, and importance of constructivist grounded theory.
    Keywords: Constructivist grounded theory, Charmaz, knowledge, social science
    JEL: A2 B54 D6 I25
    Date: 2022–07–19
  10. By: Hein, Eckhard; Prante, Franz; Bramucci, Alessandro
    Abstract: In several publications, starting more than a decade ago, Peter Flaschel and co-authors have outlined the features of a 'social capitalism' as a normative alternative to the liberal and financialised capitalism of the Anglo-Saxon type, but also to the undemocratic Chinese-type of state capitalism. Theoretically and analytically, this concept has been built on a MarxKeynes/Kalecki-Schumpeter approach to macroeconomics. Our approach in this paper, based on post-Keynesian/Kaleckian foundations and making use of a two-country stock-flow consistent (SFC) simulation model, shares with Flaschel and co-authors the search for an alternative to the liberal finance-dominated capitalism which has dominated, to different degrees in different countries, since the late 1970s/early 1980s and led to the 2007-09 crises. On the one hand, our approach is narrower than the one by Flaschel and co-authors, since we are explicitly in our model only focusing on demand and growth regimes, as well as on macroeconomic policy regimes, but only implicitly on innovations and structural change. On the other hand, however, we shed light on different regimes in modern capitalism, their interaction at the global scale, and then on the changes in regimes after the 2007-09 crises. Finally, we present the main features of a progressive and more stable equality-, sustainability- and domestic demand-led regime. We believe that such a progressive regime is in the spirit of Flaschel and co-authors' concept of 'social capitalism', but we also point out some disagreements regarding the underlying model and the core policies.
    Keywords: post-Keynesian macroeconomics,financialisation,growth regimes,inequality,debt,social capitalism,stock-flow consistent model
    JEL: B59 E02 E11 E12 E25 E65 F41 O41
    Date: 2022
  11. By: Jurgen Huber (University of Innsbruck); Sabiou M. Inoua (Chapman University); Rudolf Kerschbamer (University of Innsbruck); Christian Konig-Kersting (University of Innsbruck); Stefan Palan (University of Graz); Vernon L. Smith (Chapman University)
    Abstract: Peer-review is a well-established cornerstone of the scientific process, yet it is not immune to biases like the status bias, which we explore in this paper. Merton described this bias as prominent researchers getting disproportionately great credit for their contribution while relatively unknown researchers getting disproportionately little credit (1). We measured the extent of this bias in the peer-review process through a pre-registered field experiment. We invited more than 3,300 researchers to review a finance research paper jointly written by a prominent author (a Nobel laureate) and by a relatively unknown author (an early-career research associate) varying whether reviewers saw the prominent author’s name, an anonymized version of the paper, or the less well-known author’s name. We found strong evidence for the status bias: more of the invited researchers accepted to review the paper when the prominent name was shown, and while only 23 percent recommended “reject†when the prominent researcher was the only author shown, 48 percent did so when the paper was anonymized, and 65 percent did when the little-known author was the only author shown. Our findings complement and extend earlier results on double-anonymized vs. single-anonymized review (2–10).
    Date: 2022
  12. By: Dietmar Fehr; Martin Vollmann
    Abstract: Meritocratic beliefs are often invoked as justification of inequality. We provide evidence on how meritocratic beliefs are shaped by economic status and how they contribute to the moral justification of inequality. In a large-scale survey experiment in the US, we show that success causes a change in beliefs about success depending on effort rather than luck. Exploiting exogenous variation in meritocratic beliefs in a two-stage analysis shows that beliefs affect how much inequality people accept. Successful people prefer to remain ignorant about the true underlying reasons for success and there is no evidence that beliefs are moderated by political orientation.
    Keywords: meritocratic beliefs, inequality acceptance, fairness, political views, survey experiment
    JEL: D31 D63 C93 H23 H24
    Date: 2022
  13. By: Codrina Rada; Daniele Tavani; Rudiger von Arnim; Luca Zamparelli
    Abstract: This paper studies two formal models of long run growth with a medium-run distributive cycle, both of which feature causal links from the rise in inequality to a deterioration of long run macroeconomic performance. Both versions feature an endogenous income-capital ratio: one through the Keynesian notion of effective demand, the other building on induced bias in technical change. A key focus of the analysis is on the assumptions necessary in both frameworks to generate policy implications consistent with the observed decline of the labor share, the income-capital ratio, and labor productivity growth during the neoliberal era. Importantly, both theories: (a) provide space for mutually reinforcing pro-labor and pro-growth policies in the long run, although they differ in the mechanisms at play in these processes; (b) imply a potential tradeoff between pro-labor policies and growth on one hand, and long-run employment on the other; (c) are consistent with the evidence on the distributive cycle at business cycle frequency.
    Keywords: Distributive cycle, induced technical change, labor share, stagnation
    JEL: E11 E12 E25 E32 O33 O41
    Date: 2022–11

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