nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2016‒02‒04
thirteen papers chosen by
Karl Petrick
Western New England University

  1. Lawson on Veblen on Social Ontology By Davis, John B.; Wells, Tom
  2. Not Beautiful, not Just, not Virtuous; 'And It Doesn't Deliver the Goods'. Capitalism and “Fear of Goods” in Keynes's Thought By Carabelli, Anna; Cedrini, mario
  3. TTIP - A Good Deal? By Werner Raza; Lance Taylor; Bernhard Troster; Rudi von Arnim
  4. Racially Disparate Effects of Raising the Retirement Age By Teresa Ghilarducci; Kyle Moore
  5. Veiled Repression: Mainstream Economics, Capital Theory, and the Distributions of Income and Wealth By Lance Taylor
  6. Striving for balance in economics : towards a theory of the social determination of behavior By Hoff,Karla; Stiglitz,Joseph E.
  7. The Knowledge Transmission Mechanism and Austerity By Simon Wren-Lewis
  8. Economics of food insecurity and malnutrition By Fan, Shenggen
  9. Hawtrey, Austerity, and the "Treasury View", 1918-25 By Clara Elisabetta Mattei
  10. Unified Growth Theory Contradicted by the Economic Growth in Latin America By Ron W Nielsen
  11. Aid, education policy, and development By Miguel Niño-Zarazúa
  12. Understanding Cooperative Finance as a New Common By Anaïs Périlleux; Marthe Nyssens
  13. Global economic governance and economic policy: A personal perspective By Kemal Dervis

  1. By: Davis, John B. (Department of Economics Marquette University); Wells, Tom (Leiden University)
    Abstract: Human development is meant to be transformational in that it aims to improve people’s lives by enhancing their capabilities. But who does it target: people as they are or the people they will become? This paper argues that the human development approach relies on an understanding of personal identity as dynamic rather than as static collections of preferences, and that this distinguishes human development from conventional approaches to development. Nevertheless this dynamic understanding of personal identity is presently poorly conceptualized and this has implications for development practice. We identify a danger of paternalism and propose institutionalizing two procedural principles as side constraints on development policies and projects: the principle of free prior informed consent, and the principle of democratic development.
    Keywords: human development policy, personal identity, paternalism, informed consent, autonomy, democracy, capability approach
    JEL: D63 D99 L31 O15 O29
    Date: 2016–01
  2. By: Carabelli, Anna; Cedrini, mario (University of Turin)
    Abstract: Offering a view of the other side of the liquidity-issue, the paper elaborates on the concept of “fear of goods” in Keynes’s thought. It therefore illustrates numerous evidences of “fear of goods” in his economics, and aims to show that the notion might be considered as playing a quite important role as organising concept, helping to establish connections between ideas that are apparently only weakly related. The article fosters an interpretation of the development of Keynes’s theoretical arguments and proposed policy instruments for both domestic and global economy, as reactions to the “fear of goods” of capitalism, which Keynes saw as an inborn propensity of monetary economies of production.
    Date: 2014–10
  3. By: Werner Raza; Lance Taylor; Bernhard Troster; Rudi von Arnim (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: Since mid-2013, the United States and the European Union have been negotiating a so-called free trade agreement, by now labeled “Transatlantic trade and investment partnership” or TTIP in short. The authors suggest that TTIP is a bad deal for three reasons. First, the projected economic gains amount to not more than a rounding error. Second, none of these studies account for social, environmental or economic adjustment costs. Third, available documents suggest that TTIP is intended to be a “living agreement,” which could permanently bias the legislative process in favor of multinational corporations.
    Keywords: Trade, TPP, TTIP, Free Trade
    JEL: E21 H2 H30 D63
    Date: 2014–12
  4. By: Teresa Ghilarducci; Kyle Moore (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: Advocates for raising the retirement age to 70 and beyond argue that since the "average" American is living longer, lifetime benefits are actually increasing. However, black seniors die sooner and are sick for a longer period of time than white seniors. This means that any policy to cut Social Security benefits by raising the normal retirement age will have a disparate and negative impact on Blacks. This study examines the size and growth of racial gaps in mortality and morbidity, and shows that while some groups have experienced lifetime benefit increases, others have not.
    Keywords: Retirement, Social Security, Race, Inequality
    JEL: H55 J26 J32 D63 E21
    Date: 2015–06
  5. By: Lance Taylor (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: The Cambridge UK vs USA capital theory debates of the 1960s showed that the workhorse mainstream growth model relies on unsustainable assumptions. Its standard interpretation is not consistent with the last four decades of data. Part of an estimated increase in the ratio of personal wealth to income in recent years is due to higher asset prices. The other side of the accounts reveals that financialization and growing business debt partially offset the greater net worth of households. Attempts to interpret growth in wealth principally as a consequence of capitalization of rents are misleading. An alternative growth model based on Cambridge ideas can help correct these misinterpretations.
    Keywords: Income distribution, wealth distribution, Cambridge controversies
    JEL: D3 E1
    Date: 2015–12
  6. By: Hoff,Karla; Stiglitz,Joseph E.
    Abstract: This paper is an attempt to broaden economic discourse by importing insights into human behavior not just from psychology, but also from sociology and anthropology. Whereas the concept of the decision-maker in standard economics is the rational actor and, in early work in behavioral economics, the quasi-rational actor influenced by the context of the moment of decision-making, in some recent work in behavioral economics the decision-maker could be called the enculturated actor. This actor's preferences, perception, and cognition are subject to two deep social influences: (a) the social contexts to which he has become exposed and, especially, accustomed; and (b) the cultural mental models?including categories, identities, narratives, and worldviews?that he uses to process information. The paper traces how these factors shape individual behavior through the endogenous determination of preferences and the lenses through which individuals see the world?their perception and interpretation of situations. The paper offers a tentative taxonomy of the social determinants of behavior and describes the results of controlled and natural experiments that only a broader view of these determinants can plausibly explain. The perspective suggests more realistic models of human behavior for explaining outcomes and designing policies.
    Keywords: Cultural Policy,Economic Theory&Research,Psychology,Educational Sciences,Environmental Economics&Policies
    Date: 2016–01–21
  7. By: Simon Wren-Lewis
    Abstract: How do economic policy mistakes happen? One view is that policy makers are benevolent, and errors arise because economic theories are inadequate. Another is that policy makers pursue sectional interests that may have no relation to any academic consensus on good policy. This paper examines a third alternative: policy makers want to do the right thing (although they have political preferences), and the academic consensus is correct, but policy makers do not follow it because they rely on imperfect intermediaries. I use this framework to examine the global switch to fiscal austerity in 2010.
    Date: 2015
  8. By: Fan, Shenggen
    Abstract: Despite significant progress achieved in the last two decades, global hunger and malnutrition remain big challenges. About 805 million people in the world continue to suffer from chronic hunger and more than 2 billion people suffer from micronutrient deficiencies. Moreover, overweight and obesity are on the rise in lowand middle-income countries. Hunger and malnutrition impose huge economic and social costs which can be felt at individual, household, and societal levels. For example, hunger and undernutrition cost the global economy US$1.4–2.1 trillion per year, or 2–3% of global gross domestic product, according to the FAO. The economic returns to eliminating hunger and malnutrition can also be very high. Evidence from IFPRI-led research demonstrates that there are substantial, lifetime economic benefits from reducing child undernutrition. In India, for example, every dollar spent on interventions to reduce stunting is estimated to generate about US$34 in economic returns. This paper makes the economic case for investing in the elimination of global hunger and malnutrition. It also focuses on the inefficiencies of policies and practices that add to the burden of hunger and malnutrition: such as under-investment in food security and nutrition; lack of social safety nets to protect the poorest; unsustainable natural resource use in food production; trade restrictions; and gender inequality in agriculture.
    Keywords: Food Consumption/Nutrition/Food Safety, Food Security and Poverty,
    Date: 2014–08
  9. By: Clara Elisabetta Mattei
    Abstract: In Great Britain the seven years following WWI were marked by rigorous austerity policies. From 1918 to 1925 the main objectives were budget cuts and monetary deflation. Certainly, being the central department for financial policies, the British Treasury had decisive authority in setting such economic agenda. In particular, the official who had the greatest weight with chancellors of the Exchequer was the Controller of Finance, Basil P. Blackett (1917-1922), followed by Sir Otto Niemeyer (1922-1927). Their papers in the Treasury files reveal that the economist Ralph Hawtrey was the primary source of economic knowledge for Blackett and especially for Niemeyer. This work proves that Hawtrey's original economic theory provided solid theoretical justifications for the austerity policies. Hawtrian economics refined and strengthened the economic stance of the senior officials of the British Treasury. This study draws on Hawtrey's most important scientific works together with his press articles and copious Treasury papers to unravel the conceptual building blocks of Hawtrey's austerity doctrine. It emerges that his policy prescriptions ensued directly from his economic model. Hawtrey advocated monetary stabilization through the management of the bank rate, budgetary rigor, and rejection of public investment, all of which became widely established goals among other orthodox economic institutions, from the Bank of England to the League of Nations. This paper reveals that, in the early post WWI years, economic theory had clear operative force on policymaking.
    Keywords: Ralph Hawtrey, Austerity, Treasury View, Interwar Years, Deflation, Savings
    Date: 2016–01–29
  10. By: Ron W Nielsen
    Abstract: Historical economic growth in Latin America is analysed using the data of Maddison. Unified Growth Theory is found to be contradicted by these data in the same way as it is contradicted by the economic growth in Africa, Asia, former USSR, Western Europe, Eastern Europe and by the world economic growth. Paradoxically, Unified Growth Theory is repeatedly and consistently contradicted by the same data, which were used, but never properly analysed, during the formulation of this theory. Unified Growth Theory does not explain the mechanism of the economic growth because it explains features contradicted by data. This theory is based fundamentally on the unfortunate lack of understanding of the properties of hyperbolic distribution and on the unscientific analysis of data. There was no transition from stagnation to growth at the end of the alleged Malthusian regime because the economic growth was hyperbolic. There was no escape from Malthusian trap because there was no trap. There was no takeoff. On the contrary, at the time of the alleged takeoff economic growth started to be diverted to a slower trajectory. Unified Growth Theory is dissociated from the reality. This theory needs to be revised or replaced. In its present form, it is a collection of irrelevant stories based on impressions and on the unscientific use of data.
    Date: 2016–01
  11. By: Miguel Niño-Zarazúa
    Abstract: This paper discusses the recent history of education aid policy. It highlights an important shift in policy thinking in the international aid architecture that has dominated the global education aid agenda since the early 1990s. It argues that Rawlsian principles of social justice, human rights perspectives, and advancements in economic theory that emphasize the role of human capital in development have been central in that process.
    Keywords: aid, education policy, developing countries, Sustainable Development Goals
    Date: 2015
  12. By: Anaïs Périlleux (UNIVERSITE CATHOLIQUE DE LOUVAIN, Centre Interdisciplinaire de Recherche Travail, État et Société (CIRTES), Institut de Recherches Economiques et Sociales (IRES) and CERMi); Marthe Nyssens (UNIVERSITE CATHOLIQUE DE LOUVAIN, Centre Interdisciplinaire de Recherche Travail, État et Société (CIRTES) and Institut de Recherches Economiques et Sociales (IRES))
    Abstract: The emerging field of common good socio-economics is promising not only for the preservation of common natural resources but also for common goods created by people through collective action, the importance of which has been emphasized by the recent financial and economic crisis. Based on the case of cooperative finance, this paper’s outcomes are threefold. First, it demonstrates that financial cooperatives can be understood as a human-made common. Second, it shows that while the boundaries between the nature and property regime of goods may be relatively clear for natural common goods, they appear much more interlinked for human-made goods, where commons are embedded in intergenerational reciprocity. Third, the paper proposes a new way of thinking about public policies and shows the need to recognize financial cooperatives as human-made commons so as to design adequate legislation to protect these commons from isomorphism, privatization and destruction.
    Keywords: Common, Financial Cooperative, Property Regime, Demutualization
    Date: 2016–01–06
  13. By: Kemal Dervis
    Abstract: The policy advice given by economists in international institutions is influenced by their prior academic work. In my case, applied general equilibrium work resulted both in a belief in the necessity of decentralized markets and in a distrust of their ability to be stable. A career in international institutions can also create a global outlook that can be a public good when trying to achieve collective action while accommodating legitimate but narrower national interests. Finally, even if an underlying economic strategy is well designed, emphasis on communications with multiple audiences is crucial for both national and international policy success.
    Keywords: global economic governance, international institutions
    Date: 2015

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