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on Post Keynesian Economics |
| By: | Mário Gómez |
| Abstract: | The purpose in this article is to investigate the relationship between probability and logics in order to understand the notion of expectation in Keynes, and to examine the contributions that a set of postkeynesian authors has made to clarify the sense and the meaning of the notion of expectation in the framework of both the theoretical and the economic policy. We will start by integrating Keynes`s work on the theory of the probabilities into the construction of his theoretical corpus. We will emphasise the role of the expectation as the main contribution of Keynes to the economic thought in the theoretical framework of uncertainty. The article is divided in two parts. Firstly,it will examines the contribution of Keynes to the interpretation of the meaning of the expectations in a theoretical framework of Uncertainty. Secondly, it will examine the comments of Shackle and Kregel on the role of expectations in the theory and the economic policy and will consider the appreciations of Minsky on the volatility of the expectations in a framework of finantial instability. |
| Keywords: | history of the economic ideas in Latin America, economic theory, expectations, theory of expectations. |
| JEL: | B5 O3 O4 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp152009&r=pke |
| By: | Martin Jones (University of Dundee) |
| Abstract: | Keynes's theory of probability has been studied intensively in the past few years with much discussion of its relevance to modern economics. This paper examines Keynes's ideas in light of criticisms made by other authors and comes to the conclusion that Keynes's views on rationality are critically flawed. However, it is asserted that this actually allows more freedom for investigation when it is combined with insights from behavioural economics and gives examples where this could be fruitful. One of the side-effects of this is that there is a narrowing of the gap between Keynesian and mainstream behavioural views on decision-making. |
| Keywords: | uncertainty, Keynes, behavioral economics |
| JEL: | B41 |
| URL: | http://d.repec.org/n?u=RePEc:sti:wpaper:031/2009&r=pke |
| By: | Mário Gómez |
| Abstract: | In this paper we will discuss the relation between the rationality of the agents, and the probability context that involves them in the decision process made by Keynes but considering categories such as expectation as language game, in the sense that Roger Koppl understand it as-if rationalizations. In this sense Keynes’s expectations can be understand and see as only a very particular category: cognitive expectation and the uncertain situation as a very specific circumstance in production process. If expectation theory is one of the crucial issues in economic theory, a language game theory of expectation provide a more general case that need to be re-examinate as a stimulating approach |
| Keywords: | history of the economic ideas in Latin America, economic theory, expectations, theory of expectations. |
| JEL: | B5 O3 O4 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp142009&r=pke |
| By: | Sheila Dow (University of Stirling); Matthias Klaes (Keele University); Alberto Montagnoli (University of Stirling) |
| Abstract: | With the increasing attention to how monetary policy is communicated has come a focus on the scope for diverse messages to arise from the committee making the decisions. While the existing literature sees the source of such diversity in relation to a 'correct' decision based on one 'true' model, we explore the implications of diversity as being instead the norm within a pluralist approach to knowledge. By considering judgment as the core of decision-making and uncertainty as conditioning judgment, we develop a theory of decision-making by committee under uncertainty. our case study is the Monetary Policy Committee of the Bank of England. We conclude with a hypothesis about the tendency to policy inaction in different circumstances, notably where there are confident but conflicting judgments within the committee, on the one hand, and where there is agreement that a high level of uncertainty clouds judgment, on the other. This contrasts with the conventional association of diversity of MPC opinion with uncertainty (both as cause and effect). |
| Keywords: | uncertainty, judgement, ambiguity, central bank communication, monetary policy |
| JEL: | B41 B50 E58 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:sti:wpaper:026/2009&r=pke |
| By: | Roy H Grieve (Department of Economics, University of Strathclyde) |
| Abstract: | This paper highlights and builds upon Michio Morishima’s sadly neglected thesis that multi-market economies should be envisaged, and modelled, as over-determined systems, in that the number of conditions to be satisfied for equilibrium exceeds the number of unknowns (equilibrium prices and quantities) to be discovered. This understanding undermines the comfortable supposition (underpinning both New Keynesian and New Classical theoretical approaches) that, even when the economy is not in a position of full employment, a potential equilibrium solution does exist which - if not instantly, at least eventually – will be achieved by market forces. In other words, contrary to the conventional view, observed price and wage stickiness should be considered as contributing to macroeconomic stability rather than inhibiting adjustment to full employment equilibrium. A further casualty of the Morishima perspective is the common textbook rationalisation that the Keynes theory applies only in the short run (with sticky prices) while the classical analysis comes into its own (with flexible prices) in the longer term. |
| Keywords: | Price flexibility; General equilibrium (macro) models; Walras' Law and Say's Law; Over-determined systems |
| JEL: | E11 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:0910&r=pke |
| By: | Brian Loasby (University of Stirling) |
| Abstract: | This paper is intended to explore the twin propositions that the ability to create new ideas is a crucial factor in human progress, but that there is no reason why what is imagined, either as an explanation of existing phenomena or as an innovation, should be correct or feasible; indeed most products of the imagination are illusions, for some fundamental reasons to be examined almost immediately. Therefore human progress depends on both the encouragement of imagination to generate variety and on efficient selection from the products of imagination. In addition I wish to argue that illusion is not merely the opportunity cost of imagination; some illusions may have important beneficial consequences, rather than, or as well as, the undesirable or even dangerous consequences which are implied in the word 'delusion'. |
| Keywords: | imagination, illusion, delusion |
| JEL: | B41 |
| URL: | http://d.repec.org/n?u=RePEc:sti:wpaper:027/2009&r=pke |
| By: | Alexander Dow (Stirling Centre for Economic Methodology); Sheila Dow (University of Stirling) |
| Abstract: | The premise on which this paper builds is that modern economists unduly neglect history. The paper aims to support the argument that this is undesirable by looking at past episodes in the development of economic thought where economics has benefited from a historical approach. The first example to be explored is the staples approach of Harold Innis of the University of Toronto. He drew on the history of staples industries in Canada in order to formulate a theory of economic development. The second example is the stages approach as put forward in the Scottish Enlightenment and developed by later writers, whereby different episodes of economic history are categorised according to different stages of economic organisation. |
| Keywords: | history of economics, methodology of economics |
| JEL: | B41 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:sti:wpaper:029/2009&r=pke |
| By: | Roy H Grieve (Department of Economics, University of Strathclyde) |
| Abstract: | This paper looks into the question of how it can come about that, not uncommonly, contemporary macro textbooks start their exposition in Keynesian fashion, but end up presenting an essentially classical account. Using a typical textbook for illustration, our diagnosis is that when the AD/AS model is introduced into the discussion, then things go wrong. The AS analysis rehabilitates a pre-Keynesian conception of the working of the labour market, while uncritical and ill-informed use of the AD function effectively ‘tames’ aggregate demand by making it manipulable in such a way as to accord with conditions of labour supply. Not surprisingly, Keynes’s vision of the functioning of the macro system gets lost along the way. |
| Keywords: | AD/AS Model; Labour Market - Keynesian and Classical Models |
| JEL: | A22 A23 B22 E12 E13 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:0911&r=pke |
| By: | Alexander Dow (Stirling Centre for Economic Methodology); Sheila Dow (University of Stirling) |
| Abstract: | The purpose of this paper is to consider why Scottish Enlightenment thought should have generated a particular theory of economic development. Ideas about economic development in the Scottish Enlightenment period involve a certain circularity. One of the key arguments was that economic development encourages creativity and ideas, which promote productivity growth. The Enlightenment itself, as a set of ideas, can be seen in part as the outcome of earlier economic development in Scotland, particularly in the form of agricultural improvement. This process of innovation or 'art', encouraged by the division of labour, applies particularly to the fourth of the stages of economic development: commercialisation (the stages approach being a characteristic feature of Enlightenment thought). We explore further the argument that the Scottish Enlightenment was as much a product as a cause of economic development. In particular we consider whether the characteristics of prior economic development, and its cultural context, can help us understand the distinctive features of Scottish Enlightenment thought on economic development, with particular emphasis on the role of ideas. In the process, we address the current argument that this thought was directed at the Scottish Highlands, by considering how far ideas in the Scottish Enlightenment more generally were influenced by the cultural environment. |
| Keywords: | economic development, Scottish enlightenment |
| JEL: | B41 |
| URL: | http://d.repec.org/n?u=RePEc:sti:wpaper:032/2009&r=pke |
| By: | David Donald (Glasgow Caledonian University); Alan Hutton (Glasgow Caledonian University) |
| Abstract: | Those who practice economics have moral responsibilities in their professional capacity. An alternative economics literature advances the discipline as both a "moral science" (e.g. Boulding, 1969) and "necessarily ideological" (eg. Heilbroner, 1988). We suggest why, in present circumstances, ethics and ideology should - and probably will - be given greater weight in economic practice. In particular we perceive both ecological threats and international tensions as sources of new realignments in economic thought and action. This contention has implications for methods: social economists must be concerned with the manner in which "values are authoritatively allocated" - eschewing what Boulding described as "the immaculate conception of the indifference curve"; and, with even greater generality, they should be aware of the moral and political import of the gestalt which their systemic presentation of the world promotes. In summary they must consider the ways in which their own work creates, reinforces and / or transmits values. Such ethical concerns are intrinsic to the notion of 'a profession'. |
| Keywords: | ethics, social economics |
| JEL: | B41 |
| URL: | http://d.repec.org/n?u=RePEc:sti:wpaper:030/2009&r=pke |
| By: | Sheila Dow (University of Stirling) |
| Abstract: | The purpose of the paper is to consider Adam Smith's ideas on rhetoric in relation to his philosophy and his economics, against the background of the Scottish Enlightenment. For Smith, communication was important partly as a vehicle for persuasion in the absence of scope for argument by demonstrable proof. He distinguished between the derivation of (provisional) knowledge by the Newtonian experimental method, and the communication of that knowledge as if it were based on derivation from first principles. Subsequent misinterpretation of Smith's economics can be understood as stemming from mistaking the rhetoric for the method, and interpreting first principles as axioms. |
| Keywords: | Adam Smith, Scottish enlightenment, rhetoric |
| JEL: | B41 |
| URL: | http://d.repec.org/n?u=RePEc:sti:wpaper:028/2009&r=pke |
| By: | Piet Keizer (Utrecht School of Economics) |
| Abstract: | This paper wants to answer the following question: can economics contribute to a morally decent life? Economics as a science originates from modern moral philosophy. This discipline analyses human nature and its consequences for the way in which social order is maintained. But as economics developed from the morally embedded economic analyses of Adam Smith to the morally neutral neoclassical economics, it became increasingly independent of its moral philosophical roots. The paper shows a way out of this moral indifference. Firstly, it discusses a more realistic economic approach, in which social and psychic processes play a significant role in the shaping of interpretations of the world. Secondly, it places humans in an ecological context. Ecology is about the interrelationship between entities and their environment. In our analysis ecology is about the relationship between humans and non-humans. We can, if morally necessary, consider particular non-humans, such as animals or plants, as independent identities, having value in their own right. In this way a multidisciplinary economic analysis appears to be a more efficient map in the hands of morally motivated people. A last problem analysed by the paper is the question: how do people get morally motivated? They do if they discover which virtues of persons and organisations lead to a maximum of utilities for all and when they place themselves in situations, where moral sentiments are aroused. Then people will listen to a voice inside themselves that says: you ought to develop these virtues. |
| Keywords: | ethics, economic methodology |
| JEL: | B41 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:sti:wpaper:025/2008&r=pke |
| By: | Owen Barder |
| Abstract: | There is a healthy debate about how to achieve poverty reduction in developing countries, but not enough discussion of what we mean by “poverty reduction.” “Poverty reduction” is often used as a short-hand for promoting economic growth that will permanently lift as many people as possible over a poverty line. But there are many different objectives that are consistent with “poverty reduction,” and we have to make choices between them. There are trade-offs between tackling current and future poverty, between helping as many poor people as possible and focusing on those in chronic poverty, and between measures that tackle the causes of poverty and those which deal with the symptoms. Because donors focus on just one dimension of poverty reduction (growth) they marginalise other legitimate objectives such as reducing chronic poverty or providing social services in countries that cannot otherwise afford them. Because donor agencies do not recognize these different objectives explicitly, there are important negative consequences for the choice and management of individual aid programmes, and for donors’ ability to make transparent and evidence-based decisions about the composition of their portfolio. Aid could be more effective if there were greater recognition of the different dimensions of poverty reduction and if this was recognized in the objectives for and incentives in aid agencies. There is an ethical case for a global system of social justice that provides long-term, redistributional transfers of resources to the world’s poor, to enable them to lead better lives while their country is developing, even if there is no expectation that these transfers will accelerate economic development. Reasonable people can disagree about whether this is desirable but the existing hegemonic definition of poverty reduction does not sufficiently acknowledge this as a legitimate goal or permit a meaningful discourse about how it might be achieved. |
| Keywords: | poverty reduction, growth, donors |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:170&r=pke |