|
on Post Keynesian Economics |
| By: | Blind, Georg |
| Abstract: | Rules as devices for the analysis of economic behaviour have earned increasing recognition since Elinor Ostrom’s work was awarded the Nobel Memorial Prize in Economics in 2009. This contribution illustrates the use of such analytical device in three foundational pioneering areas of application: The sociology of Thorstein Veblen, the organisational studies of Nelson and Winter, and Elinor Ostrom’s analysis of resource governance systems. A comparison of their respective uses of the analytical concept of behavioural rules reveals their major objective: the systematic interpretation of empirical observations. While their works provide convincing evidence on the analytical power of rules, neither has realised the full potential for generalisation toward a theory of rule-based economics. Such generalisation has recently been achieved by Dopfer and Potts. Adhering to ‘instrumental realism’ their theoretical framework integrates key elements of the reasoning about rules presented here, and achieves general applicability to the analysis of the origination and diffusion of rules, and of their use for economic operations. |
| Keywords: | rule-based economics, behavioural economics, evolutionary economics, institutional economics |
| JEL: | B15 B25 B41 D03 |
| Date: | 2015–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:66866&r=all |
| By: | Leonardo Costa Ribeiro (Cedeplar-UFMG); Pedro Mendes Loureiro (Cedeplar-UFMG); Eduardo da Motta e Albuquerque (Cedeplar-UFMG) |
| Abstract: | What really matters to understand capitalist dynamics in the long run are the countertendencies to the tendential fall of the rate of profit. For researchers in 2015, with all historical and statistical information on capitalist dynamics (not available to Marx, Schumpeter or Bain), capitalism can be seen as an engine for the creation of countertendencies to the fall of the rate of profit. Since classical political economy (Smith, Ricardo, Mill) and Marx the behavior of the rate of profit is a key subject of investigation, that has been also investigated by Schumpeter, evolutionary economist and modern industrial economics. Contemporary debates on the rate of profit would have three advantages vis-à-vis previous rounds of this long-lasting discussion: 1) the MEGA Project has provided more information Marx's works; 2) there are data on the long-term behavior of the rate of profit; 3) there are new tools to investigate the logic of capitalism as a complex system - a dialogue with physics is useful for this analysis. This paper combines different approaches and methods: a short review of the history of economic thought, lessons from economic history, data analysis of the movements of the rate of profit and a simulation model to test our understanding of those movements - a model based on two very simple rules, inspired on an interpretation of Marx's insights about the contradictory interaction between the tendency and the countertendencies to the fall of the rate of profit. These different approaches and methods organize this paper. |
| Keywords: | the rate of profit, Marx, MEGA2 Project, complex systems, metamorphoses of capitalism |
| JEL: | P16 O33 B51 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td518&r=all |
| By: | Renan Pereira Almeida (PhD Candidate, Cedeplar-UFMG); Anderson Tadeu Marques Cavalcante (Cedeplar-UFMG); Roberto Luis de Melo Monte-Mór (Cedeplar-UFMG) |
| Abstract: | The theoretical and historical discussion that this paper intends to establish involves the perception that each historical moment has a suitable spatial arrangement for economic growth, for driving-industries and for the dominant techno-economic paradigm in each period, and that such arrangements are articulated and promoted by State action. More clearly and specifically, this work shares the view of many authors who state that the metropolis would have been a combined product of Fordist industrialization and the performance of the Keynesian State, while the contemporary post-metropolitan urban form is marked by post-Fordist industry and the Neoliberal State. From this perspective, Brazilian economic history during the period between 1930-1980 is present in a way of exemplifying that kind of spatial-temporal relationship. Besides offering a critical analysis covering that historical period, the paper concludes with a wider view of International Political Economy, mentioning a number of “Neo-something” phenomena that emerged in this new Era of “Something-Isation”. |
| Keywords: | State; Development; Brazilian Economic History; International Political Economy. |
| JEL: | N16 N46 O54 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td521&r=all |
| By: | Evans, Peter |
| Abstract: | The neoliberal era has undermined worker’s rights and labor’s power at the national level, but has also been characterized as an era of ‘the new labor transnationalism’. Shifting fortunes at the national level have been fundamental to expanding openness to transnational alliances. An analysis of campaigns connecting U.S. labor to the Honduran CGT, the Bridgestone-Firestone workers in Liberia, the Gerdau Workers World Council, and other national unions in both North and South show how adversity at the national level has pushed U.S. labor toward transnational alliances. Conversely, the growing global role of major countries in the South has expanded their potential contribution to transnational alliances, as illustrated by Brazilian labor’s involvement with both European unions like the Dutch FNV and U.S. unions like the UAW and the USW. New connections among national labor movements are complemented by the expansion of Global Union Federations and new governance instruments like Global Framework Agreements, which articulate multi-country connections. Assessing the connections among national labor movements and the new global organizational infrastructure that have emerged under neoliberalism is a necessary foundation for building better theories of labor’s evolving contestation with global capital. |
| Keywords: | Social and Behavioral Sciences, Brazil global unions, labor transnationalism, national labor movements, neoliberalism |
| Date: | 2014–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:indrel:qt87b4t45z&r=all |
| By: | De Koning, Kees |
| Abstract: | The three main economic philosophies (Classical, Keynesians and Monetarists) did not help in preventing the 2007-2008 U.S. financial crisis. Why not? The Classical economists focus on free markets, free of government interference and free of monopolies. They missed the point that when about $10 trillion of the funding in the U.S. housing market is based on borrowed funds, the housing market is no longer free, but depend on what happened to the borrowers. The Keynesians emphasized the need for government interference to counteract recessions by increasing government spending above tax receipts. The U.S. experience over 2008-2015 has shown the fastest growth rate of government debt for a long time, but this did not help individual households to repay their mortgages. Keynesians also believe in the control of money supply but they do not link prevailing interest rates with the affordability of such rates to individual households. The Monetarists believe that banks can and should control the supply of money. It will be clear from this paper that banks did not control their mortgage lending levels in the run up to the financial crisis. Monetarist’s emphasis is on supply level of money rather than on the ability of households to repay outstanding loans, especially those of a long-term nature, out of the incomes earned. All in all a major rethink of policies is required. Why was the financial crisis not foreseen? House price inflation based on excessive lending levels was not regarded as a threat to economic growth, contrary to the threat from cost price inflation. The latter occurs when wages growth or costs of raw materials, intermediate goods and imported goods push up inflation levels. The second reason was that it was not recognized that the supply of mortgage funds as provided by the banks and the financial markets does not necessarily match the needs (or demand) of the collective of individual households. The needs are based on population growth levels, changes in family size and changes in accommodation taste patterns. In the U.S. about 1.8 million new homes are needed every year. The needs of the collective of individual households are also based on income growth, the affordability level. The latter is especially important for lower and median income families. Wall Street thinks in terms of profitability, while Main Street thinks in terms of affordability. The third reason was that the level of the Fed’s base rate sets the funding cost base for banks. Competition for customer deposits adds an additional cost level for banks. The price setting for mortgages is a one sided process whereby banks, and indirectly the Fed, decide what to charge to their customers. As set out in this paper mortgage customers need a “dynamic stability” in their mortgage obligations, one that is linked to the annual CPI level and income growth. The paper proposes a scheme to break the link between the cost of mortgages as set by the banking sector and the mortgage interest costs paid by individual households, with the latter instead being based on the CPI level plus a margin. Such a scheme will stabilize the financial position of individual households both at high and low inflation levels. In some years a surplus will be created between what individual households pay and what the banks receive; in other years there will be a shortfall. The U.S. Treasury could accommodate such temporary surplus/shortfall as a tool for creating stable economic growth, in what could amount to a type of individuals’ quantitative easing. As a further tool for putting the collective of individual households first, rather than the financial sector, a traffic light system can be implemented to slow down the volume of mortgage lending when needed. A future financial crash linked to the housing sector can be avoided if the separation of mortgage interest charged by the banking sector and interest levels paid (based on CPI inflation levels) by the household sector is combined with the traffic light system. ‘Collective Households Economics’ may be a new variant of economic thinking. The need for funds approach is based on the different parameters for the collective individual households than the ones that rule the banking sector. It is paramount, if one wants long-term economic growth to continue, that the need for funds approach prevails. It is based on the needs of the individual household customer base, rather than on the profit levels of the financial markets. Bridges can be built! |
| Keywords: | financial crisis, Collective Household Economics, need for funds approach, separation of interest rates, traffic light system, mortgage lending system in U.S. mortgage defaults |
| JEL: | E32 E4 E43 E44 E58 E6 E61 |
| Date: | 2015–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:66851&r=all |
| By: | Guido Montani (Department of Economics and Management, University of Pavia) |
| Abstract: | The dramatic clash between creditor and debtor countries in the EU shows that radical reforms are required. In this paper we argue that the EMU is a political project: it is a European public good, which must be provided by a legitimate democratic government. Yet during the crisis, Germany played the role of leading country, and the old dilemma between a German Europe and a European Germany cropped up again. Here we examine two interjurisdictional spillovers caused by asymmetries among the governance and size of the economies in the euro area: the bank-sovereign nexus and the internal deflation trap. In order to avoid social and economic disequilibria, we propose a European economic model for the euro area based on a long-term balance of payment equilibrium, as an alternative to the German export-led economy model. Current account surpluses and deficits are neither a virtue nor a sin. The euro area should be endowed with a federal budget, enabling the European Commission to employ European savings to spur growth, employment and public and private investments. The new European model must be coherent and compatible with the needs of the other states of the world; the stability of the international economy is also a global public good. Indeed we can look at the European model to draw some principles for reforming the old international economic order set up at Bretton Woods, but now in crisis due to global imbalances and international monetary and financial instability. |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:pav:demwpp:demwp0105&r=all |
| By: | Stephen Kaplan |
| Abstract: | Political economy theory expects that changes in macroeconomic governance are often catalyzed by institutional factors, such as partisanship or elections. I challenge and contextualize this view by incorporating the role of technocratic advisors into a domestic policymaking framework. I contend that structural and elite-level explanations are also important to understanding ideational shifts, particularly in regions like Latin America that suffer from severe economic volatility. Presidents tend to govern from the lens of their crisis past, appointing economic hawks (or mainstream economists) who embrace austerity in the shadow of inflation crises, and economic doves (heterodox economists) who drift from budget discipline following unemployment shocks. Employing an originally constructed data index, the Index of Economic Advisors, I conduct a statistical test of 16 Latin American countries from 1960 to 2011, finding support for sustained idological shifts in technocratic composition and fiscal governance, based on the nature of past shocks. |
| JEL: | B22 E31 E60 E62 E65 H30 H60 N16 O54 O57 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:gwi:wpaper:2015-13&r=all |
| By: | Leonardo Costa Ribeiro (Cedeplar-UFMG); Eduardo da Motta e Albuquerque (Cedeplar-UFMG) |
| Abstract: | This manuscript investigates how far has the post-crisis global economy navigated towards a new phase of capitalism. This question is underpinned by a conjecture: capitalism, as a dynamic and flexible economic system, has in their crises a key element for its long-term dynamics. The manuscript is organized in five sections. The first surveys the literature on the role of crises in metamorphoses of capitalism. The second section surveys the structural changes before the crises, the third section summarizes the rescue operation and movements in the epicentre of the crisis, and the fourth section asks whether or not structural reforms of capitalism are in the political agenda. The fifth section evaluates the stage of current transition towards a new phase of global capitalism. |
| Keywords: | crisis; metamorphoses of capitalism; systemic turbulence |
| JEL: | P16 P51 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td516&r=all |
| By: | Richard N. Langlois (University of Connecticut) |
| Abstract: | In “Max U versus Humanomics: a Critique of Neoinstitutionalism,” Deirdre McCloskey tells us that culture matters – maybe more than do institutions – in explaining the Great Enrichment that some parts of the world have enjoyed over the past 200 years. But it is entrepreneurship, not culture or institutions, that is the proximate cause of economic growth. Entrepreneurship is not a hothouse flower that blooms only in a culture supportive of commercial activity; it is more like kudzu, which grows invasively unless it is cut back by culture and institutions. McCloskey needs to tell us more about the structure of the relationship among culture, institutions, and entrepreneurship, and thus to continue the grand project begun by Schumpeter. |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2015-12&r=all |
| By: | Leonardo Costa Ribeiro (Cedeplar-UFMG); Eduardo da Motta e Albuquerque (Cedeplar-UFMG) |
| Abstract: | Metamorphoses of capitalism (Furtado, 2002) - a transition to a new phase of capitalism - impact the North-South relationship or the centre-periphery divide. Those changes in the North-South relationship are part of a broader reconfiguration of the global economy. One subject to be investigated is how far those changes in the South may affect the North itself - are there "reciprocal effects" working? There is a question about how current changes in the periphery of capitalism now impacts the capitalist core and advanced economies: this might be a new phenomenon - the boomerang effect (Marques, 2014). This manuscript, therefore, reviews evidences on the changes in the periphery, their impact upon the center and tries to include those changes and impacts within the metamorphoses of global capitalism. Therefore, metamorphoses of capitalism also affect the nature of the divide centre-periphery (Furtado, 1978). |
| Keywords: | centre-periphery; metamorphoses of capitalism; development and underdevelopment |
| JEL: | P16 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td517&r=all |
| By: | Alvarez, Sebastian |
| Abstract: | Large foreign lending and heavy indebtedness of developing countries are main features of international finance in leading to the debt crisis of the 1980s. The high exposure of the commercial banking sector from industrial countries to external debt in the developing world by the time of the Mexican default in August 1982 is well known. However, although importantly involved in foreign finance and the petrodollar recycling process, the condition of commercial banks from debtor countries themselves has been much less recognized and explored. This paper shows that the health and financial position of the Mexican commercial banking sector significantly deteriorated in the years preceding the debt crisis, and that internationalization was an exit option to domestic fundraising difficulties. Economic and financial analysis of the banks' asset and liability structure demonstrate that banks involved in international business had greater risk levels than those operating only in the domestic market, which puts international banking at the heart of the problem. The paper provides new insights into the domestic and international political economy of a lending-borrowing mechanism that led to what was perhaps the largest global financial crisis since the Great Depression. |
| Keywords: | International banking, Political economy, Euromarkets, Latin America |
| JEL: | H63 N26 N86 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gnv:wpaper:unige:55513&r=all |
| By: | U.Sankar (Madras School of Economics) |
| Abstract: | The domain of public economics is increasing as governments‘ policy goal is shifting from economic development to sustainable development. Government has to act as a trustee representing future generations, and public policies must balance and integrate the three pillars (economic, social and environmental) of sustainable development, recognizing the ecological limits to growth. As per the UN development Agenda, sustainable development goals (SDGs) are meant for the period 2015-2030.This paper reviews the global concerns about ecological limits and the need for global partnership and considers the preparatory steps for adoption of SDGs and the means of implementation. |
| Keywords: | Public economics, General, Public Goods, Environment and Development, Sustainability, Ecological Economics, Ecosystem Services, Government Policy |
| JEL: | H10 H41 Q56 Q57 Q58 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:mad:wpaper:2015-107&r=all |