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on Post Keynesian Economics |
| By: | Robert J. Barbera |
| Abstract: | Perhaps the most indictable offense that mainstream economists committed, from 1988 through 2008, was to retrace Keynes's path of discovery from 1924 (A Tract on Monetary Reform) through 1936 (The General Theory). Wholesale deregulation of finance and categorical confidence in a reductionist role for central banks came into being as the conventional wisdom embraced the 1924 view that free markets and stable prices alone give us the best chance for economic stability. In the aftermath of the grand asset market boom-and-bust cycle of 2008-9, we are jettisoning Keynes circa 1924 for the Keynes of 1936. In effect, we study business cycles but seem incapable of extricating the economics profession from reciting its assigned lines as the play unfolds. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levyop:op_42&r=pke |
| By: | Zinn, Jesse |
| Abstract: | In this paper I employ Imre Lakatos's methodology of scientific research programs to scrutinize the idea that stagflation in the 1970s falsified the Keynesian research program. I point out that Keynesian models were able to account for stagflation once they included inflation expectations, so the essential tenets of the Keynesian research program are consistent with the would-be anomaly of stagflation. Furthermore, Keynesian economics exhibited both theoretical and empirical progress by evolving in a way that rendered stagflation a logical consequence of Keynesian assumptions. The transition to new classical economics did not yield such progress. Also, as Keynesian economics tends to adopt novel findings and research methods, new classical economics does not have excess theoretical or empirical content relative to the Keynesian research program. In summary, I find that the falsification of the Keynesian program is unwarranted. |
| Keywords: | Keynesian Economics, New Classical Economics, Monetarism, Scientific Revolutions, Scientific Research Programs, Imre Lakatos |
| JEL: | B22 B41 |
| Date: | 2013–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50536&r=pke |
| By: | Dimitri B. Papadimitriou; Michalis Nikiforos; Gennaro Zezza |
| Abstract: | Greece's unemployment rate just hit 27.6 percent. That wasn’t supposed to happen. Why has the troika--the European Commission, International Monetary Fund (IMF), and European Central Bank--been so consistently wrong about the effects of its handpicked policies? The strategy being imposed on Greece depends in large part on the idea of "internal devaluation": that reducing wages will make its products more attractive, thus spurring a return to economic growth powered by rising exports. Our research, based on a macroeconomic model specifically constructed for Greece, indicates that this strategy is not working. Achieving significant growth in net exports through internal devaluation would, at best, take a very long time--and a great deal of immiseration and social disintegration would take place while we waited for this theory to bear fruit. Despite some recent admissions of error along these lines by the IMF, the troika still relies on a theory of how the economy works that badly underestimates the negative effects of austerity. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levyop:op_41&r=pke |
| By: | C. J. Polychroniou |
| Abstract: | Unemployment in Greece has climbed to a new record of 27.9 percent and the country is headed toward a third bailout. The obsession with reducing the budget deficit is crippling the Greek economy. Extreme fiscal consolidation in the midst of a major depression can only have extreme effects on output, leading to greater unemployment, widening poverty, massive loss of faith in political and social institutions, and the potential for political violence. This is precisely what has been taking place in Greece since 2010, as fiscal brutality intensifies from one year to the next. Offering Greece yet another bailout package is not the answer. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levyop:op_43&r=pke |
| By: | Cavalieri, Duccio |
| Abstract: | This essay provides a critical Marxist reformulation, internal to the cultural tradition of Western Marxism, of Marx’s theoretical treatment of value and capital. It implies the abandonment of the ‘pure’ labour theory of value of the young Marx in favour of a ‘mixed’ labour-and capital theory of value reflecting the different theoretical perspective shown by the mature Marx, after his epistemological break described by Althusser. The accounting practice of defining and measuring income and capital is criticized, for its disregard of the financial cost of invested capital. Foley’s ‘New Interpretation’ of Marx’s theoretical system and its main variants are refused for their acritical endorsement of Marx’s assumption of a ‘new-value equality’ between the net product of the economy and the living labour employed in the production of gross output. A different method for converting quantities of labour-time in terms of money, which accounts for explicit and implicit costs, is proposed. |
| Keywords: | value; labour; capital; money; income; capital theory; Marx; critical Marxism; scientific Marxism; surplus approach; net value equality; new interpretation; single-system interpretations; MEV; MELT. |
| JEL: | B12 B22 B51 D24 D4 D46 E11 E22 E41 G00 G31 |
| Date: | 2013–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50527&r=pke |
| By: | Le Garrec, Gilles |
| Abstract: | In mainstream economics individuals are supposed to be driven only by their self-interest. By contrast, surveys clearly show that people do care about fairness in their demand for redistribution. In this article, in the spirit of the new synthesis in moral psychology (Haidt, 2007: The new synthesis in moral psychology) the author proposes to modelize the voting behavior over redistribution as the interaction between (a) an automatic cognitive process which quickly generates intuitions on the fair level of redistribution, (b) a rational self-oriented reasoning which controls the feeling of guilt associated with fair intuitions. In addition, considering that guilt aversion depends on the cultural context, the author shows that the model exhibits a multiplicity of history-dependent steady states which may account for the huge difference of redistribution observed between Europe and the United States. -- |
| Keywords: | redistribution,voting behavior,fairness,behavioral economics |
| JEL: | D03 D64 D72 H53 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201353&r=pke |
| By: | Roger Bate |
| Abstract: | Free trade zones possess many attributes of capitalist economies and can attract foreign companies, foreign investment in domestic companies, industrial production, and wealth generation. However, such zones are also troubling; they can produce several negative results including a strong mafia presence, massive counterfeit operations, tax evasion, money laundering, and even terror financing. |
| Keywords: | Hezbollah,Free Trade zone,Counterfeit pharmaceuticals,China |
| JEL: | A F |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:aei:rpaper:39077&r=pke |
| By: | Andrews, Matt (Harvard University) |
| Abstract: | International organizations like the International Monetary Fund and World Bank have been supporting reform initiatives in developing country governments since at least the 1980s. Various authors have criticized this support, arguing that international organizations use their influence to impose common models of government on developing countries--infringing on the sovereignty of these nations and frustrating domestic processes of finding and fitting government structures to local contexts. Some suggest that a modern new public management model of government is being imposed on developing countries, whereas others claim that developing countries are being forced to adopt a broad-brush neoliberal script. Such claims are seldom reinforced by empirical evidence showing the extent or nature of this influence, however. This leaves one asking, "Do international organizations really shape government solutions in developing countries?" This article explores such question and finds that international organizations do have a major (and growing) influence on government structures in developing countries and that this influence does impose a common model on these countries. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp13-032&r=pke |
| By: | Timothy C. Johnson |
| Abstract: | This paper argues that the fundamental principle of contemporary financial economics is balanced reciprocity, not the principle of utility maximisation that is important in economics more generally. The argument is developed by analysing the mathematical Fundamental Theory of Asset Pricing with reference to the emergence of mathematical probability in the seventeenth century in the context of the ethical assessment of commercial contracts. This analysis is undertaken within a framework of Pragmatic philosophy and Virtue Ethics. The purpose of the paper is to mitigate future financial crises by reorienting financial economics to emphasise the objectives of market stability and social cohesion rather than individual utility maximisation. |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1310.2798&r=pke |
| By: | Yann Giraud (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise) |
| Abstract: | Over the past two decades, numerous contributions to the history of economics have tried to assess Paul Samuelson's political positioning by tracing it in the subsequent editions of his famous textbook Economics. This literature, however, has provided no consensus about the location of Samuelson's political ideas. While some authors believe that Samuelson has always had inclinations toward interventionism, others conclude that he more often acted as a pro-business advocate. The purpose of this paper is not to argue for one of these two interpretations but to depict the making of Economics itself as a political process. By 'political' it is not meant the conduct of party politics but the many political elements that a textbook author has to take into account if he wants to be published and favorably received. I argue that the "middle of the road" stance that Samuelson adopted in the book was consciously constructed by the MIT economist, with the help of his home institution and his publishing company, McGraw-Hill, to ensure both academic freedom and the success of the book. The reason for which the stance developed is related to pre-McCarthyist right-wing criticisms of the textbook and how Samuelson and the MIT department had to endure the pressures from members of the Corporation (MIT's Board of Trustees), who tried to prevent the publication of the textbook and threatened Samuelson's tenure at MIT as soon as 1947 - when early manuscripts were circulated. As a result, it was decided in accordance with both the Corporation and McGraw-Hill that the Readings volume would be published to balance conflicting ideas about state intervention. Following these early criticisms, the making of the subsequent editions relied on a network of instructors and referees all over the US in order to make it as successful and consensual as possible. This seemed to work quite well in the 1950s and for a good portion of the 1960s, until Economics became victim of its own success and was seen, in an ironical twist of fate, as a right wing text by younger, radical economists. From now on, Samuelson will try to have his book sent as often as possible to the radicals for referring process, with mixed results. Eventually, the book became criticized from both its left and its right. |
| Date: | 2013–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00870494&r=pke |
| By: | Adrian Hille; Jürgen Schupp |
| Abstract: | Despite numerous studies on skill development,we know little about the causal effects of music training on cognitive and non-cognitive skills. This study examines how long-term music training during childhood and youth affects the development of cognitive skills, school grades, personality, time use and ambition using representative data from the German Socio-Economic Panel (SOEP). Our findings suggest that adolescents with music training have better cognitive skills and school grades and are more conscientious, open and ambitious. These effects do not differ by socio-economic status. Music improves cognitive and non-cognitive skills more than twice as much as sports, theater or dance. In order to address the non-random selection into music training, we take into account detailed information on parents, which may determine both the decision to pursue music lessons and educational outcomes: socio-economic background, personality, involvement with the child’s school, and taste for the arts. In addition, we control for the predicted probability to give up music before age 17 as well as the adolescent’s secondary school type. We provide evidence that our results are robust to both reverse causality and the existence of partly treated individuals in the control group. |
| Keywords: | Music, cognitive and non-cognitive skills, educational achievement, SOEP |
| JEL: | I21 J24 Z11 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp591&r=pke |