nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2006‒04‒08
four papers chosen by
Karl Petrick
Leeds Metropolitan University

  1. "Value, Social Capabilities, Alienation:The Right to Revolt" By Haider A. Khan
  2. Persistence of Power, Elites and Institutions By Acemoglu, Daron; Robinson, James A
  3. Learning from Other Economies: The Unique Institutional and Policy Experiments Down Under By Richard B. Freeman
  4. The Greenspan Era: Discretion, Rather Than Rules By Benjamin M. Friedman

  1. By: Haider A. Khan (GIGS, University of Denver)
    Abstract: The labor theory of value in classical political economy, particularly as developed in Marx's Capital, has been the source of a number of interpretations and controversies. The purpose of this paper is to make an analytical distinction between two types of labor theories of value that can illuminate the role of the less well known of the two different theories in understanding the dynamics of capital accumulation and of systemic changes. This qualitative theory of value can be used to explore the significance of value form in both capitalism and the concept and practices of socialism.It can also offer a new way of defending the right to revolt on the part of those who are exploited under both capitalism and socialism.
    Date: 2006–04
  2. By: Acemoglu, Daron; Robinson, James A
    Abstract: We construct a model of simultaneous change and persistence in institutions. The model consists of landowning elites and workers, and the key economic decision concerns the form of economic institutions regulating the transaction of labour (e.g., competitive markets versus labour repression). The main idea is that equilibrium economic institutions are a result of the exercise of de jure and de facto political power. A change in political institutions, for example a move from non-democracy to democracy, alters the distribution of de jure political power, but the elite can intensify their investments in de facto political power, such as lobbying or the use of paramilitary forces, to partially or fully offset their loss of de jure power. In the baseline model, equilibrium changes in political institutions have no effect on the (stochastic) equilibrium distribution of economic institutions, leading to a particular form of persistence in equilibrium institutions, which we refer to as invariance. When the model is enriched to allow for limits on the exercise of de facto power by the elite in democracy or for costs of changing economic institutions, the equilibrium takes the form of a Markov regime-switching process with state dependence. Finally, when we allow for the possibility that changing political institutions is more difficult than altering economic institutions, the model leads to a pattern of captured democracy, whereby a democratic regime may survive, but choose economic institutions favouring the elite. The main ideas featuring in the model are illustrated using historical examples from the US South, Latin America and Liberia.
    Keywords: de facto power; de jure power; democracy; dictatorship; elites; institutions; labour repression; persistence; political economy
    JEL: H2 N10 N40 P16
    Date: 2006–03
  3. By: Richard B. Freeman
    Abstract: This paper argues that detailed studies of particular economies, such as Bob Gregory’s work on Australia, are relevant to all of economics. The paper builds on the concept of a model species from biology to develop the notion of a model economy – one whose experiences illuminate fundamental economic issues; examines the criterion for an economy to serve as a model economy; and describes three areas – labour relations and the awards system of wage-setting, marketizing public services and growth through immigration and natural resources – where Australian experience provides insights into economic behaviour and the operation of markets broadly.
    Date: 2006–03
  4. By: Benjamin M. Friedman
    Abstract: What stands out in retrospect about U.S. monetary policy during the Greenspan Era is the ongoing movement away from mechanistic restrictions on the conduct of policy, together with a willingness on occasion to depart even from what more flexible guidelines dictated by contemporary conventional wisdom would imply, in the interest of carrying out the Federal Reserve System’s dual mandate to pursue both stable prices and maximum employment. Part of this change was procedural – for example, the elimination of money growth targets. The most substantive demonstration of policy flexibility came in the latter half of the 1990s, as unemployment fell below 6% (in 1994), then below 5% (in 1997), and then remained below 5% for more than four years, yet the Federal Reserve did not tighten monetary policy. This policy stance was consistent with a view of the economy, including faster productivity growth and increased exposure to international competition, that Chairman Greenspan had articulated nearly a decade before.
    JEL: E52
    Date: 2006–03

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