nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2011‒07‒21
seven papers chosen by
Karl Petrick
University of the West Indies

  1. Effective Demand: Securing the Foundations By Olivier Allain
  2. A Wealth Tax on the Rich to Bring down Public Debt?: Revenue and Distributional Effects of a Capital Levy By Stefan Bach; Martin Beznoska; Viktor Steiner
  4. A credit score system for socially responsible lending By Begoña Gutiérrez-Nieto; Carlos Serrano-Cinca; Juan Camón-Cala
  5. Explaining inequality in today’s capitalism. By Maurizio Franzini; Mario Pianta
  6. Cognitive Capitalism as a Financial Economy of Production By Andrea Fumagalli; Stefano Lucarelli
  7. Social Policy and U.S. Poverty 1960-1999: An Economic History By Jaynes, Gerald D.

  1. By: Olivier Allain (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: A panel session was organised at the 5th "Dijon" Post-Keynesian Conference (Roskilde University - 13th-14th May 2011) in order to confront three recent interpretations of Keynes's principle of effective demand: that of Hartwig (2007), Hayes (2007) and Allain (2009). Allain's comments on Hartwig and Hayes articles are developed in the present contribution.
    Keywords: Keynesian economics; General Theory; macroeconomics; effective demand; short-term expectations
    Date: 2011–05–13
  2. By: Stefan Bach; Martin Beznoska; Viktor Steiner
    Abstract: The idea of higher wealth taxes to finance the mounting public debt in the wake of the financial crises is gaining ground in several OECD countries. We evaluate the revenue and distributional effects of a one-time capital levy on personal net wealth that is currently on the German political agenda. We use survey data from the German Socio-Economic Panel (SOEP) and estimate the net wealth distribution at the very top, based on publicly available information about very rich Germans. Since net wealth is strongly concentrated, the capital levy could raise substantial revenue, even if relatively high personal allowances are granted. We also analyze the compliance and administrative costs of the capital levy.
    Keywords: Capital levy, wealth distribution, microsimulation
    JEL: H24 D31 H22
    Date: 2011
  3. By: Frédéric Canard (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis)
    Abstract: W. Edwards Deming aims to contribute to the transformation of management systems which he considers responsible for losses caused the decline of our Societies. His latest book highlights the system of thought called "System of Profound Knowledge" which must lead to this transformation. The aim of our research is to explain the implicit assumptions of Deming's System of Profound Knowledge about ethics and sustainability and argues that they are related to the philosophy of pragmatism. We show how his recommendations on the role of individuals and the transformation of management systems can promote socially and sustainable responsible behaviour. Our guiding principle is the following. Finding connections between main pioneers of the classical American pragmatism movement to Deming, arguing pragmatism is an appropriate paradigm for some sustainable issues, and finally establishing a link between the System of Profound Knowledge and sustainability.
    Keywords: Deming;Quality; Management; Ethics; Pragmatism; Sustainability
    Date: 2011–03–22
  4. By: Begoña Gutiérrez-Nieto; Carlos Serrano-Cinca; Juan Camón-Cala
    Abstract: Ethical banking, microfinance institutions or certain credit cooperatives, among others, grant socially responsible loans. This paper presents a credit score system for them. The model evaluates both social and financial aspects of the borrower. The financial aspects are evaluated under the conventional banking framework, by analysing accounting statements and financial projections. The social aspects try to quantify the loan impact on the achievement of Millennium Development Goals such as employment, education, environment, health or community impact. The social credit score model should incorporate the lender’s know-how and should also be coherent with its mission. This is done by using the Analytic Hierarchy Process (AHP) technique. The paper illustrates a real case: a loan application by a social enterprise presented to a socially responsible lender. The decision support system not only produces a score, but also reveals strengths and weaknesses of the application.
    Keywords: OR in banking; Credit scoring; AHP; social banking; social impact assessment; financial ratios
    Date: 2011–07
  5. By: Maurizio Franzini (Università di Roma “La Sapienza”); Mario Pianta (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")
    Abstract: Inequality within advanced countries has returned to levels typical of a century ago. At the global level it remains extremely high despite the rapid growth of major developing countries such as China, India and Brazil. This makes inequality a major economic issue, social problem and political challenge in today’s capitalism. However, economic inequality is the object of limited research efforts and attracts modest attention in the political arena.This is the result of several factors. Mainstream approaches view inequality as a necessary condition – or, at best, an unfortunate side effect - for achieving the more general objectives of economic growth and market efficiency. Most studies emphasise that inequality is to a large extent the consequence of international forces laying beyond the reach of policies by nation-states. More importantly, today’s inequality is the result of a variety of processes that have seriously increased its complexity, with major changes in its nature and mechanisms, compared to past decades. To the fundamental divide between capital and labour in the distribution of income between social classes and groups, new mechanisms have been added, that have fuelled income inequalities among individuals, rooted in the rise of top incomes, technological change, international production, labour markets, influence of families of origin and lack of intergenerational mobility. In this paper we propose an overall interpretation of the trajectory of inequality. The functional income distribution that leads to inequalities in factor incomes, with an increasing divide between the growing share of profits and financial rents – free to move across national borders, escape taxation and search for speculative gains – and the dwindling share of wages, nation-bound and unable to escape taxes. The specificity of top incomes – that combine rents, profits and “superstar” labour compensation complicates this picture with the effects of pro-rich policy changes. Inequalities have also strongly increased within wages, resulting from several factors. Education has an obvious influence, but plays a much smaller role than mainstream views would expect. Skill differences are increasingly important, and need to be examined in the context of specific professional groups, rather than with wide generalisations. Industry specificities, technology and international production do play a role, but in complex ways, depending on the nature of innovative strategies, local competences, market power and demand dynamics. Labour market arrangements – unionisation, presence of minimum wages or national contracts, diffusion of temporary or part-time labour contracts, etc. – are increasingly important factors in explaining the low pay of many young and low-skilled workers. Outside labour markets and the opportunities for social mobility promised by education, the family of origin remains a major determinant of individuals’ education and incomes, with an increasingly strong persistence of inequality across generations. The interpretation we provide offers a new explanation of the nature of today’s economic inequalities, of its consequences, and possible remedies.
    Keywords: Inequality, Distribution, Welfare.
    JEL: D31 D33 E24 I38
    Date: 2011
  6. By: Andrea Fumagalli (Department of Economics and Quantitative Methods, University of Pavia); Stefano Lucarelli (Department of Economics “Hyman P. Minsky”, University of Bergamo)
    Abstract: The structural changes that occurred in the last 30 years have substantially modified the capitalistic organization of society, both at national and international level. A new regime of accumulation devoid of a stable mode of regulation and centred on financial valorisation of new socio-economic growth perspectives has been consolidating. Conditions imposed by financial markets in order to create the shareholder's value consisted of promoting downsizing, reengineering, outsourcing and M&A processes. The flexibilization of labour force and precarization of existence has thus been the result of the established valorization norm. But why should the corporate restructuring sustain the enterprise value by creating income stock ? The definition of a new regime of accumulation involves a research on the criteria of valorisation and the prevailing technological paradigm. The main changes of new capitalism concern mainly two spheres: the role played by knowledge in the new technological paradigm and valorisation process and the importance of finance. The dominant technological paradigm and the role played by knowledge within it are not enough to explain the evolution of the accumulation regime. It is needed to introduce further elements necessary to explain the expectations that sustain the investment choices made by capitalists; these are the conventions or collective beliefs. Then, after describing the main features of the accumulation paradigm that many scholars have not hesitated to name as Cognitive Capitalism , we shall attempt to provide a theoretical framework of it intended as a financial economy of production. We shall therefore proceed to the reformulation of the schemes of monetary circuit (Graziani 2003).
    Date: 2010–10
  7. By: Jaynes, Gerald D. (Yale University)
    Abstract: Interrogates poverty debate (growth versus redistribution) reignited by underperforming poverty reductions during 1980s' social spending austerity compared to 1960s' "War on Poverty." Growth and inequality explain 75% 1959-1999 poverty variation; census measurement changes 17%. Significantly, census measurement changes plus overestimated inflation biased-up 1980s measured poverty (deflated 1960s) partly explaining eighties' underperformance. Growth's poverty effect remained constant; rising inequality required 1980's growth 50% higher (1960s) for equivalent poverty reductions. Counterfactual simulations 1959-1999: absent rising earnings inequality, growth drives poverty to 5.4%; increased workerless households offset two-thirds poverty reduction from cash transfers; had Carter and Reagan redistributed like predecessors, poverty reduced one-half.
    JEL: N12 N32
    Date: 2011–05

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