nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2011‒01‒03
five papers chosen by
Karl Petrick
University of the West Indies

  1. Heterodox production and cost theory of the business enterprise By Lee, Frederic; Jo, Tae-Hee
  2. "Money" By L. Randall Wray
  3. Social surplus approach and heterodox economics By Lee, Frederic; Jo, Tae-Hee
  4. Economic Behavior - Evolutionary vs. Behavioral Perspectives By Ulrich Witt
  5. Harvard meets the crisis: U.S. fiscal policy in the 1930s and the political economy of Lauchlin B. Currie, Jacob Viner, John H. Williams and Harry D. White By Michele Alacevich; Pier Francesco Asso; Sebastiano Nerozzi

  1. By: Lee, Frederic; Jo, Tae-Hee
    Abstract: Heterodox economists long complained about having no systematic alternative to neoclassical production and cost theory. This paper deals with this complaint. That is, it presents a theory of production and costs of the business enterprise that is a complete alternative to the neoclassical theory of production and costs of the firm.
    Keywords: heterodox theory; accounting rules; structure of production and costs; segmented plants; direct costs; shop expenses; enterprise expenses
    JEL: D2 B5
    Date: 2010–12
  2. By: L. Randall Wray
    Abstract: This paper advances three fundamental propositions regarding money: (1) As R. W. Clower (1965) famously put it, money buys goods and goods buy money, but goods do not buy goods. (2) Money is always debt; it cannot be a commodity from the first proposition because, if it were, that would mean that a particular good is buying goods. (3) Default on debt is possible. These three propositions are used to build a theory of money that is linked to common themes in the heterodox literature on money. The approach taken here is integrated with Hyman Minsky’s (1986) work (which relies heavily on the work of his dissertation adviser, Joseph Schumpeter [1934]); the endogenous money approach of Basil Moore; the French-Italian circuit approach; Paul Davidson’s (1978) interpretation of John Maynard Keynes, which relies on uncertainty; Wynne Godley’s approach, which relies on accounting identities; the “K” distribution theory of Keynes, Michal Kalecki, Nicholas Kaldor, and Kenneth Boulding; the sociological approach of Ingham; and the chartalist, or state money, approach (A. M. Innes, G. F. Knapp, and Charles Goodhart). Hence, this paper takes a somewhat different route to develop the more typical heterodox conclusions about money.
    Keywords: Money; Credit; Debt; Uncertainty; Default; Unit of Account; Heterodox; Circuit Approach; Godley; Minsky; Knapp; Schumpeter; Endogenous Money
    JEL: E4 E5 E6 E11 E12 B5 B15 B22
    Date: 2010–12
  3. By: Lee, Frederic; Jo, Tae-Hee
    Abstract: Given the emphasis on social provisioning in heterodox economics, two of its central theoretical organizing principles are the concepts of the total social product and the social surplus. This appears to link heterodox economics to the social surplus approach associated with the classical economists and currently with Sraffian economists. However, heterodox economics connects agency with the social surplus and the social product, which the Sraffians reject as they take the level and composition of the social product as given. Therefore the different theoretical approach regarding the social surplus taken in heterodox economics may generate a different but similar way of theorizing about a capitalist economy. To explore this difference is the aim of the paper. Thus the paper is divided into four parts and a conclusion. In the first section social provisioning and the social surplus is introduced. In the second section, the Sraffian social surplus approach is delineated while in the third section the heterodox social surplus approach is delineated. In the fourth section of the paper, some of the implications emerging from the differences between the two approaches are discussed. The paper is concluded in the final section.
    Keywords: social surplus; social product; social provisioning; agency; Sraffian economics; heterodox economics
    JEL: B51 B50 B5
    Date: 2010–10
  4. By: Ulrich Witt
    Abstract: An evolutionary perspective on economic behavior has to account for the influences that the human genetic endowment has on the choices the agents make. Likely to have been fixed in times of fierce selection pressure, this endowment is presumably adapted to the living conditions of early humans. If at all, behavioral economics accounts for its influences on economic decision making in a way similar to the approach taken by evolutionary psychology, i.e. by focusing on decision heuristics and their tensions with modern rationality standards. In an evolutionary perspective, that focus needs to be extended so as to also embrace the motivational underpinnings of economic behavior. In the language of economics this means to inquire into the agents' preferences and to explain how they relate to the human genetic endowment and how they change over time. The paper discusses several implications of such an extension.
    Keywords: behavioral economics, evolutionary economics, Darwinism, decision heuristics, preferences, development, growth, welfare Length 21 pages
    JEL: A12 B25 B52 D01 D63 O10
    Date: 2010–12
  5. By: Michele Alacevich (Center for European Studies, Harvard University); Pier Francesco Asso (Università degli Studi di Palermo, Dipartimento di Scienze Economiche); Sebastiano Nerozzi (Università Cattolica, Milano)
    Abstract: The paper aims to describe the contribution of four Harvard economists to the interpretation of the Great Depression and the policy decision making from 1933 to 1938. Lauchlin B. Currie, Jacob Viner, John H. Williams, Harry D. White, eminent scholars in the field of monetary and international economics, were deeply involved in policy decisions during the New Deal. In our synoptic analysis we will benefit from extensive scholarly work that has been provided in the last few years. We shall examine the extensive biographical connection between Currie, Viner, White and Williams with special regard to their common training at Harvard. Then we shall compare their interpretations of the causes of crisis and their proposals in fiscal, monetary and banking policy. Finally, we shall describe their advisory activity in the Roosevelt administration and try to assess their influence.
    Keywords: Great Depression; Monetary Theory; Monetary Policy; Fiscal Policy, Keynesism
    JEL: B22 E32 E58 E63 N12
    Date: 2010

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