nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2023‒09‒18
nine papers chosen by
Erik Thomson, University of Manitoba

  1. What would be a sustainable liberalism ? By Claude Gamel
  2. Keynes and the drunkard under the lamp post: Making sense of Palley By Heise, Arne
  3. The first graduate school of Latin American economic studies (ESCOLATINA) between "autochthonous" and international logics (1956-1964) By Klüger, Elisa; Morin, Johanna Gautier; Rossier, Thierry
  4. On the Problem of the Purchasing Power of Money by A. A. Konüs and S. S. Byushgens: Translation and Commentary By Valentin Zelenyuk; Erwin Diewert
  5. Kokovtsov V.N.: life and activity By Belykh, Andrey (Белых, Андрей)
  6. The Cambridge capital controversies (CCC) as market and firm structure controversies: modern neoclassical interpretation By Review, Blind
  8. From Statistical Physics to Social Sciences: The Pitfalls of Multi-disciplinarity By Jean-Philippe Bouchaud
  9. The FOMC versus the Staff: Do Policymakers Add Value in Their Tales? By Ilias Filippou; James Mitchell; My T. Nguyen

  1. By: Claude Gamel (LEST - Laboratoire d'Economie et de Sociologie du Travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In France, liberalism is not a well-known philosophy, which is even often caricatured. After more than thirty years of personal academic research, the idea of developing a "sustainable" version of liberalism came to me slowly, which finally led to a book recently published (2021). The current text outlines the four basic components of which the book is the result (I) and the perspective adopted – Rawlsian "property-owning democracy" rather than Hayekian "rules of just conduct" (II). In fact, my (socially) sustainable liberalism is a true puzzle, in so far it aims to combine pieces borrowed from four authors – Hayek and Rawls, but also Sen and Van Parijs (III). In conclusion, such a liberalism could not be a completely sustainable one, because of course it concerns justice in society, but it is not enough to deal with other important challenges to be met in the contemporary world (IV).
    Abstract: Le libéralisme est en France une philosophie mal connue et souvent caricaturée. À l'issue de plus de trente ans de recherches universitaires personnelles, l'idée de développer une version « soutenable » du libéralisme s'est peu à peu imposée, conclue par la publication récente d'un ouvrage (2021). Le présent texte expose d'abord les quatre « ingrédients » dont cet ouvrage est le résultat (I), puis l'angle d'attaque adopté-la « démocratie de propriétaires » de Rawls, plutôt que « les règles de juste conduite » de Hayek (II). Mon libéralisme (socialement) soutenable est en fait un véritable puzzle qui cherche à emboiter des pièces empruntées à quatre auteurs-Hayek et Rawls, mais aussi Sen et Van Parijs (III). En conclusion, un tel libéralisme ne pourrait être complètement soutenable, car il aborde certes la question de la justice en société, mais cela ne suffit pas pour traiter d'autres défis importants que le monde contemporain a à relever (IV).
    Keywords: rules of just conduct, property-owning democracy, labour, capabilities, basic income, capacités, revenu de base, règles de juste conduite, démocratie de propriétaires, travail
    Date: 2023–03
  2. By: Heise, Arne
    Abstract: In a recent article, Tom Palley begins his critique of Keynesian economics with the well-known story of a drunkard who, when searching for his lost keys, looks not in the darkness of the nearby lawn where he misplaced them, but instead under the light cone of a lamp post because, when asked, he replies that's where the light is. This story serves as a metaphor for the field of economics attempting to understand the workings of the capitalist economy solely through the lens of Keynesian economics. However, this endeavour is ultimately futile as comprehending capitalism requires a different analytical approach: acknowledging social conflict as an essential component of capitalism's nature better addressed by Kaleckian macroeconomics. I attempt to illustrate that Palley is accurate in emphasizing the paradigmatic differences and even incommensurabilities between Keynes' monetary production paradigm and the Marxian-Kaleckian social conflict paradigm. This suggests that any classification under the umbrella term "post-Keynesianism" is misleading. However, Palley is mistaken in his assertion that this distinction aligns Keynes' economics with neoclassical (mainstream) economics, as the acceptance or rejection of social conflict is not the only fault line in terms of ontology. There are other ontological divisions that can exist. Or, to use the metaphor, the lamp post can be moved to different areas of the lawn, indicating different ontological perspectives.
    Keywords: Keynes, social conflict, effective demand, monetary production
    JEL: A14 B40 B51 E11 E12
    Date: 2023
  3. By: Klüger, Elisa; Morin, Johanna Gautier; Rossier, Thierry
    Abstract: After World War II, international organizations and research institutes dedicated to the development of local expertise thrived in Latin America. The desire to produce appropriate knowledge to solve the region's socio-economic problems raised the question of the intellectual and material autonomy of these organizations. This article combines intellectual and social history to investigate the early years of the first Graduate School of Latin American Economic Studies (ESCOLATINA), founded in Chile in 1956. The mixture of archival research, collective biography, and sequence analysis allows us to examine the tensions between, on the one hand, the quest for epistemic autonomy and rapprochement with other social sciences, and, on the other hand, the influence of the US model of graduate schools of economics together with the dependence on foreign resources and experts. The history of ESCOLATINA also reveals how the academic and political environment in Chile shaped the school and transformed it over time.
    Keywords: academic autonomy; collective biography; ESCOLATINA; sequence analysis; transnational expertise
    JEL: J1
    Date: 2023–07
  4. By: Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia); Erwin Diewert (University of British Columbia & University of New South Wales)
    Abstract: In 1939, Econometrica published an English translation of Konüs (1924). Since then, Konüs (1924 [1939]) has become a classic work on the theory of the cost of living index, inspiring many other studies in the field. On the other hand, very few scholars have had the opportunity to read another, equally important, work by Konüs (co-authored with Byushgens) published in 1926 by the same Institute. This other paper of Konüs also pioneered several fundamental concepts and results in economics (including duality theory, the theory of inverse demand functions and the theory of exact index numbers), yet somehow it appears that it has never been translated into English (or any other language). We bridge this gap by offering a translation and a commentary on this important paper.
    Keywords: Price Index, Inflation measurement, Purchasing Power of Money
    JEL: C43 E30
    Date: 2023–01
  5. By: Belykh, Andrey (Белых, Андрей) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: This work describes life and activity of Vladimir Nikolaevich Kokovtsov, prime-minister (1911-1914) and minister of finance (1904-1905, 1906-1914) of the Russian Empire. In the history of the Russian Empire, of the USSR and of the Russian Federation, Kokovtsov was the only statesman to combine the position of minister of finance and of prime-minister. Though there are a number of works and several PhD theses devoted to Kokovtsov – a key actor of his time, a general evaluation of his personality and his influence on the economic development of Russia in the beginning of the 20th century is yet to be made. Filling this gap is the main goal of this work. The object of investigation is Kokovtsov’s political biography, his economic and financial policy, and his efforts to reasonably limit military expenditures. The work is based on both personal materials left by Vladimir Kokovtsov (memoirs, letters), and official documents. Several archived materials – memos on financial matters of military defense made up by Kokovtsov – are published for the first time. The author verifies authenticity of the sources and confirms or refutes some facts presented by Kokovtsov using an array of modern methods of historical science including the principle of historicism, principle of classification, comparative-historical method, and some others. Beyond doubt, Vladimir Nikolaevich Kokovtsov was an outstanding statesman. He was not a politician in the traditional sense. On the contrary, he served his country as an “honest bureaucrat”. Steadfast observation of laws, honesty, efficient financial policy, love for Russia – all these characteristics describe his personality.
    Keywords: history of Russia, V.N. Kokovtsov, economic policy, finances, 20th century, military expenditures
    JEL: N13 N23 O23
    Date: 2021–11
  6. By: Review, Blind
    Abstract: How dynamic stochastic general equilibrium (DSGE) models, widely used in mainstream macroeconomics, revive neoclassical capital theory parables and the uniform rate of interest is analyzed. While Arrow-Debreu-McKenzie (ADM) general equilibrium models disallow such a revival, DSGE has agents re-optimizing at each period, along with separate intra-period budget constraints, which then result in first-order conditions that lead to the resurrection of capital aggregation and the traditional neoclassical capital theory. Despite these initially positive results for neoclassicals, the Cambridge capital controversies (CCC) can be re-cast in form of market and firm structure: quasi-complete contract versus incomplete contract and ADM-style complete market versus DSGE-style incomplete market. In both a theory of the firm and 'ADM versus DSGE, ' the question is: why do agents choose the inferior market structure (incomplete contract and DSGE-style incomplete market) that leads to lower expected time-discounted utility? In this sense, CCC is alive even in neoclassical macroeconomics.
    Date: 2023–08–09
  7. By: Matveev, Ilya (Матвеев, Илья) (The Russian Presidential Academy of National Economy and Public Administration); Konovalov, Ilya (Коновалов, Илья) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: Economic inequality is often portrayed as an objective fact that can only be changed by redistributive policies. This leads economists to link inequality to other strictly economic factors – first and foremost, economic growth. This approach is based on Simon Kuznets’ famous hypothesis on the association between growth and inequality. This association has long been treated as economic in nature: after a certain level of economic development is reached, inequality begins to decline. However, in this paper, we deal with theories that refuse to consider inequality to be a purely economic phenomenon. We focus on Daron Acemoglu and James Robinson’s model that indicates the Kuznets curve having a political nature. This model treats inequality as a result of the conflict between masses and elites, and suggests searching for a strategic compromise by building democratic institutions. We investigate the model’s assumptions and through studying empirical works we indicate possible ways to advance Acemoglu and Robinson’s theory. We conclude that the model’s basic structure is sound, however, its development requires detailed case studies, not just general econometric analysis. We also claim that Acemoglu and Robinson’s model should involve a more nuanced understanding of the causes and effects of collective action both before and after democratization.
    JEL: D31 H23 D74
    Date: 2021–11–11
  8. By: Jean-Philippe Bouchaud
    Abstract: This is the English version of my inaugural lecture at Coll\`ege de France in 2021, available at I reflect on the difficulty of multi-disciplinary research, which often hinges of unexpected epistemological and methodological differences, for example about the scientific status of models. What is the purpose of a model? What are we ultimately trying to establish: rigorous theorems or ad-hoc calculation recipes; absolute truth, or heuristic representations of the world? I argue that the main contribution of statistical physics to social and economic sciences is to make us realise that unexpected behaviour can emerge at the aggregate level, that isolated individuals would never experience. Crises, panics, opinion reversals, the spread of rumours or beliefs, fashion effects and the zeitgeist, but also the existence of money, lasting institutions, social norms and stable societies, must be understood in terms of collective belief and/or trust, self-sustained by interactions, or on the contrary, the rapid collapse of this belief or trust. The Appendix contains my opening remarks to the workshop ``More is Different'', as a tribute to Phil Anderson.
    Date: 2023–08
  9. By: Ilias Filippou; James Mitchell; My T. Nguyen
    Abstract: Using close to 40 years of textual data from FOMC transcripts and the Federal Reserve staff's Greenbook/Tealbook, we extend Romer and Romer (2008) to test if the FOMC adds information relative to its staff forecasts not via its own quantitative forecasts but via its words. We use methods from natural language processing to extract from both types of document text-based forecasts that capture attentiveness to and sentiment about the macroeconomy. We test whether these text-based forecasts provide value-added in explaining the distribution of outcomes for GDP growth, the unemployment rate, and inflation. We find that FOMC tales about macroeconomic risks do add value in the tails, especially for GDP growth and the unemployment rate. For inflation, we find value-added in both FOMC point forecasts and narrative, once we extract from the text a broader set of measures of macroeconomic sentiment and risk attentiveness.
    Keywords: monetary policy; sentiment; uncertainty; risk; forecast evaluation; FOMC meetings; textual analysis; machine learning; quantile regression
    JEL: F31 G11 G15
    Date: 2023–08–30

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