nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2015‒12‒12
fourteen papers chosen by
Karl Petrick
Western New England University

  1. A periodization of Latin American development in the Robinsonian tradition By Vernengo, Matías
  2. Addressing the Poverty of Mainstream Economics By Guillermo Escudé
  3. The Anomaly of U-3: Why the Unemployment Rate is Overstating the Strength of Today’s Labor Market By Nick Buffie
  4. What kind of microfoundations? Notes on the evolutionary approach By Cimoli, Mario; Porcile, Gabriel
  5. "Capitalism A Nuh' Wi Frien'": The Formatting of Farming Into an Asset From Financial Speculation to International Aid By Luigi Russi; Tomaso Ferrando
  6. Caribbean and its incomplete class structure: essay on the logic of its negotiations with the metropolitan countries By Casimir, Jean
  7. Fraud and Financial Scandals: A Historical Analysis of Opportunity and Impediment By Toms, Steven
  8. Social protection systems in Latin America and the Caribbean: a comparative view By Cecchini, Simone; Filgueira, Fernando; Robles, Claudia
  9. The Middle Muddle: Conceptualizing and Measuring the Global Middle Class By Arjun Jayadev; Rahul Lahoti; Sanjay Reddy
  10. Invention and Development : Toward Schumpeter's early innovation theory By KOBAYASHI, Daisuke
  11. Manufacturing Doubt By Yann Bramoullé; Caroline Orset
  12. Dutch social entrepreneurs in international development : Defying existing micro and macro characterizations By Helmsing, A.H.J.; Knorringa, P.; Gomez Gonzalez, D.
  13. Poverty and Psychology By Olga V. Poluektova; Maria V. Efremova; Seger M. Breugelmans
  14. Future Costs of Key Low-Carbon Energy Technologies: Harmonization and Aggregation of Energy Technology Expert Elicitation Data By Erin Baker; Valentina Bosetti; Laura Diaz Anadon; Max Henrion; Lara Aleluia Reis

  1. By: Vernengo, Matías (Comisión Económica para América Latina y el Caribe (CEPAL) United Nations)
    Abstract: This paper analyzes Joan Robinson's growth model and then adapts it in order to provide an explanatory taxonomy of Growth Eras. The Growth Eras or Ages were for Robinson a way to provide logical connections between output growth, capital accumulation, the degree of thriftiness, the real wage and illustrate a catalogue of growth possibilities. This modified taxonomy follows the spirit of Robinson's work, but it takes different theoretical approaches. which imply that some of the classifications do not fit perfectly the ones here suggested. Latin America has moved from a Golden Age in the 1950s and 1960s to a Leaden Age in the 1980s, having two traverse periods, one of which the process of growth and industrialization accelerated in the late 1960s and early 1970s, which is referred to as a Galloping Platinum Age, an one in which a process of deindustrialization and reprimarization and maquilization of the productive structure took place, starting in the 1990s, which could be referred as the Creeping Platinum Age.
    Date: 2014–11
  2. By: Guillermo Escudé (CONICET - Consejo Nacional de Investigaciones Científicas y Técnicas - University of Buenos Aires)
    Abstract: This essay develops the rudiments of a historical-analytical approach to hierarchical control in human societies. We question the adequacy of mainstream economic theory in two fundamental aspects: a) the absence of an explicit class structure and consequent interclass conflicts of interest, and b) the benevolent government or social planner approach to policy decisions. We begin with an anthropological view of the genesis of the state and class society and construct a series of simple models inspired in different phases of human development in which producers and governors face the same consumption-toil trade-off as the workers (slaves, serfs, or wage workers) at the bottom of the class hierarchy. Public goods and bads play a fundamental role in the functioning of society and in the power structure that sustains it. In most of the models the consumption-toil decision is present for all the classes involved. In the case of classes that organize production (whether in civil society or in the state sector) the planning, organizing, commanding and controlling (POCC) labor of members of the higher rank contributes to the production function along with the labor of the members of the lower rank. The fi…nal model is a stylized representation of capitalism, with three large classes: wage workers, capitalist entrepreneurs, and governors, and is based on an extension of the monopolistic competition model. The essay ends with a disquisition on the concept of exploitation.
    Keywords: Public goods, Social classes, Class conflict.
    Date: 2014–08
  3. By: Nick Buffie
    Abstract: By examining the historical relationship between the unemployment rate and alternative measures of labor market slack, it is determined that today’s labor market has far more slack than is typically associated with an unemployment rate of 5.0 percent. It is therefore unlikely that the economy is at or near full employment.
    Keywords: employment, unemployment, unemployment rate, slack, U-3
    JEL: J E E2 E24
    Date: 2015–12
  4. By: Cimoli, Mario; Porcile, Gabriel (Comisión Económica para América Latina y el Caribe (CEPAL) United Nations)
    Abstract: The microfoundations of economic models are a hotly debated topic in the literature. The debate is important because microfoundations —the ways in which agents decide and behave— have implications that go beyond a specific firm, market or activity; they strongly condition macroeconomic outcomes. This document addresses the classical problems of rationality, uncertainty and institutions: when there is Keynes-Knight uncertainty and rationality is bounded, decision making adopts the form of conventional rules or heuristics. The hyper-rational representative agent of the rational expectations world could generate highly misleading outcomes in macro models. Section 2 applies this discussion to the study of technical change and to innovation and diffusion of technology in the international system, which transform the patterns of specialization. Section 3 discusses the forces that may trap a country in a low-growth trap and the crucial role of institutions in escaping from this trap.
    Date: 2015–01
  5. By: Luigi Russi (Institute for the study of Political Economy and Law (IPEL), International University College of Turin); Tomaso Ferrando
    Abstract: This paper deciphers the formatting of farming into an asset by tracking the modalities by which financial calculation is enabled across different sites of agency. The first focus of our analysis are commodity futures markets, which have witnessed a double spike in prices in 2008 and in 2012. In the paper, we look at these hikes as the outcome of endogenous dynamics, caused by the changing makeup of market participants after 2000, which turned futures markets into resources for hedging commodity index-linked derivative products. We subsequently analyse the increasing reliance on financial actors placed by public development agencies that channel funds through private equity initiatives to acquire and invest in farmland. To complete our analysis, we finally set our contribution alongside the alternative represented by food-sovereignty, which offers the promise of heeding to the needs engendered from within the peasant milieu, as opposed to subjugating it to extrinsic quantitative metrics.
    Keywords: futures, commodities, speculation, rural sociology, human geography, land grabbing, public-private partnership, commons, social justice, political economy of development
    JEL: O13 O16 P16 Q17 Q18
    Date: 2015–12
  6. By: Casimir, Jean (Comisión Económica para América Latina y el Caribe (CEPAL) United Nations)
  7. By: Toms, Steven
    Abstract: The paper presents a conceptual framework of financial fraud based on the historical interaction of opportunity and impediment. In the long run the character of opportunity is determined by the technical characteristics of assets and their unique, unknowable or unverifiable features. Impediment is promoted by consensus about the real value of assets, such that through active governance processes, fraudulent deviations from real value can be easily monitored. Active governance requires individuals in positions of responsibility to exercise a duty of care beyond merely being honest themselves. Taking a long run historical perspective and reviewing a selection of British financial frauds and scandals, from the South Sea Bubble to the Global Financial Crisis, the paper notes the periodic occurrence of waves of opportunity and the evolutionary response of passive governance mechanisms.
    Keywords: Financial fraud; South Sea Bubble; Railway Mania; Royal Mail Steam Packet; Slater Walker; Polly Peck; Global Financial Crisis
    JEL: M41 M42 M48 N23 N24 N83 N84
    Date: 2015–12–07
  8. By: Cecchini, Simone; Filgueira, Fernando; Robles, Claudia (Comisión Económica para América Latina y el Caribe (CEPAL) United Nations)
    Abstract: This report pursues three complementary aims. Firstly, it presents the first generation of country case studies on social protection systems in Latin America and the Caribbean, published in the ECLAC Project Documents collection; and it provides justifications for developing such systems. Secondly, it sets out a classificatory approach to social protection system in the region, which aims to provide a comparative basis for interpreting national cases. Lastly, using standardized data and case studies, it identifies major trends in the changes the region is undergoing in terms of social protection.
    Date: 2014–11
  9. By: Arjun Jayadev (University of Massachusetts at Boston); Rahul Lahoti (Georg-August-University Göttingen); Sanjay Reddy (The New School for Social Research and Initiative for Policy Dialogue)
    Abstract: Interest in the emergence of a global middle class has resulted in a number of attempts to identify and enumerate who belongs to it . Current research provides wildly different estimates about the size and evolution of the global middle class because of a lack of consensus on appropriate identification criteria for a person to be deemed to be middle class. We identify three competing and often conflated understandings in the literature on the subject. We further argue that for at least two of these understandings, the literature has been using inappropriate thresholds for identification. Using data from the Global Consumption and Income Project, we provide estimates of the size, composition and evolution of the global middle class for three competing understandings and contrast these to existing estimates.
    JEL: D30 D31 D60 D63 E21 O50 O10
    Date: 2015–12–08
  10. By: KOBAYASHI, Daisuke
    Abstract: It has been the consensus among researchers that Schumpeter clearly distinguished the notions of innovation and invention, even neglecting the notion of invention in his work. Consequently, there has been very little effort made to tackle the relationship between Schumpeter’s development theory and the invention theories that were popular in the fields of anthropology and archaeology at that time, making it difficult to grasp how Schumpeter elaborated his own development theory. However, a close examination of his early works demonstrates that Schumpeter’s development theory can also be understood in the context of the debates surrounding the notion of invention. In Theorie der wirtschaftlichen Entwicklung, Schumpeter presented his static agent/innovator dyad with reference to ideas or terms used in the debates of invention being conducted around that time by anthropologists and archaeologists. In the present paper, the author seeks to depict the history of the concept of invention, helped by the work of Benoît Godin, and discusses how Schumpeter presented his development theory based on the ideas involved in the invention debates.
    Keywords: invention, evolutionism, diffusionism, unilinear development, psychic unity,
    Date: 2015–11
  11. By: Yann Bramoullé (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - AMU - Aix-Marseille Université - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM)); Caroline Orset (ECO-PUB - Economie Publique - Institut national de la recherche agronomique (INRA) - AgroParisTech)
    Abstract: In their persistent fight to affect regulation, firms have developed specific strategies to exploit scientific uncertainty. They have spent large amounts of money to generate and publicize favorable scientific findings, to discredit and downplay unfavorable ones and to shape the public’s perceptions through large-scale communication campaigns. We develop a new model to study the interplay between scientific uncertainty, firms’ communication and public policies. The government is benevolent but populist and maximizes social welfare as perceived by citizens. The industry can provide costly evidence that its activity is not harmful. Citizens incorrectly treat the industry’s information on par with scientific knowledge. We characterize the industry’s optimal communication policy. As scientists become increasingly convinced that the industrial activity is harmful, firms first devote more and more resources to reassure people. When scientists’ beliefs reach a critical threshold, however, the industry stops its efforts abruptly. We then study the impact of firms’ communication on scientific funding. A populist government may, perversely, want to support research to better allow firms to miscommunicate. Populist policies can entail significant welfare losses. Establishing an independent funding agency always reduces these losses and may lead to under- or over- investment in research with respect to the first-best.
    Keywords: scientific uncertainty,populist policies,indirect lobbying,research funding
    Date: 2015–11
  12. By: Helmsing, A.H.J.; Knorringa, P.; Gomez Gonzalez, D.
    Abstract: In this paper we aim to contribute to the literature on social entrepreneurship by nuancing both existing micro-level characterizations as well as its presumed macro level societal impacts. Moreover, we explore connections between the micro and macro levels of analysis to see which types of social entrepreneurs are more likely to achieve what kinds of societal impacts. We present findings from an illustrative sample of 28 interviews with Dutch social entrepreneurs working in International Development. At the micro level, our qualitative findings do not support a perception of social entrepreneurs – often found in the Anglo Saxon literature - as heroic ‘lone rangers’ who ‘go it alone’ and with ‘dogged determination’ fight for a self-defined social cause. Instead, most social entrepreneurs in our study are acutely aware of the need to cooperate with other stakeholders and often use existing ‘off the shelf’ social causes and theories of change, even when they do develop innovative ways to try and achieve these goals. At the macro level, two starkly contrasting views exist on the possible societal impacts of social entrepreneurs. The first is an, often implicit, extension of the ‘lone-ranger’ perception of social entrepreneurs as people who ‘change the world’ or at least significantly contribute to social and economic transformation. At the other end of the spectrum in the literature we find those who argue that social entrepreneurs are potentially counterproductive to international development interventions as their social mission is not the result of a ‘collective deliberative process’, their activities are likely to displace NGO and/or government interventions and might even give governments an excuse to not intervene and ignore deeper levels of political contestation and societal inequalities. The paper is structured as follows. We first explain the rise in social entrepreneurship in international development, and we introduce the central assumptions in the literature on how social entrepreneurs define their social mission and on their likely societal impact. Next we present our data to show that our interviews do not support existing assumptions about the characteristics of social entrepreneurs nor about their possible societal impacts. Finally, we explore the usefulness of the typology proposed by Zahra et al, and we conclude that this typology indeed helps to further systematize a more nuanced understanding of the characteristics and likely roles of social entrepreneurs.
    Keywords: Dutch social entrepreneurs, international development, social enterprise, social entrepreneurship
    Date: 2015–12–04
  13. By: Olga V. Poluektova (National Research University Higher School of Economics); Maria V. Efremova (National Research University Higher School of Economics); Seger M. Breugelmans (Tilburg University)
    Abstract: This paper presents a study on the association between dimensions of poverty (income, subjective socioeconomic status, deprivation, and socioeconomic status in childhood) and individual psychological characteristics. In this study, our goal was to determine: 1) the differences in individual psychological characteristics between poor and non-poor people; 2) the effect of each dimension, or indicator, of poverty on individual psychological characteristics (self-esteem, life satisfaction, trust, self-efficacy, self-control, dispositional greed, and individual values); and 3) the relationship between each indicator of poverty and each individual psychological characteristic. We collected data from 157 poor (those whose incomes fall below the poverty threshold) and 140 non-poor (those whose incomes exceed the poverty threshold) participants from Moscow and the greater Moscow region by administering questionnaires containing measures of individual psychological characteristics and poverty. We analyzed the data using multivariate analysis of covariance (MANCOVA), and part and partial correlation analysis. The results obtained revealed that poverty had significant multivariate effects on individual psychological characteristics (univariate effects were significant for self-esteem, life satisfaction, Self-Transcendence values, and trust); in addition, all indicators of poverty except income had significant multivariate effects on individual psychological characteristics. Furthermore, subjective socioeconomic status was positively associated with life satisfaction, self-esteem, self-transcendence values, and trust; deprivation was positively associated with greed and self-enhancement values, and negatively associated with life satisfaction and self-esteem; socioeconomic status in childhood was positively associated with greed, self-enhancement values, life satisfaction and self-efficacy.
    Keywords: poverty, subjective socioeconomic status, relative deprivation, socioeconomic status in childhood, individual psychological characteristics
    JEL: Z
    Date: 2015
  14. By: Erin Baker (University of Massachusetts Amherst, Amherst, MA, United States); Valentina Bosetti (Fondazione Eni Enrico Mattei and Bocconi University, Italy); Laura Diaz Anadon (Harvard University, Cambridge, MA, United States); Max Henrion (Lumina Decision Systems, Los Gatos, CA, United States); Lara Aleluia Reis (Fondazione Eni Enrico Mattei, Italy)
    Abstract: In this paper we standardize, compare, and aggregate results from thirteen surveys of technology experts, performed over a period of five years using a range of different methodologies, but all aiming at eliciting expert judgment on the future cost of five key energy technologies and how future costs might be influenced by public R&D investments. To enable researchers and policy makers to use the wealth of collective knowledge obtained through these expert elicitations we develop and present a set of assumptions to harmonize them. We also aggregate expert estimates within each study and across studies to facilitate the comparison. The analysis showed that, as expected, technology costs are expected to go down by 2030 with increasing levels of R&D investments, but that there is not a high level of agreement between individual experts or between studies regarding the technology areas that would benefit the most from R&D investments. This indicates that further study of prospective cost data may be useful to further inform R&D investments. We also found that the contributions of additional studies to the variance of costs in one technology area differed by technology area, suggesting that (barring new information about the downsides of particular forms of elicitations) there may be value in not only including a diverse and relatively large group of experts, but also in using different methods to collect estimates.
    Keywords: Expert Elicitation, Energy Technology Cost, R&D Investments
    JEL: O30 O32 Q40 Q55
    Date: 2015–05

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