nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2016‒07‒02
nine papers chosen by
Karl Petrick
Western New England University

  1. Social Capital: From One-Dimensional Man to One-Dimensions Economy and Economics By Ben Fine
  2. Sraffa, Myrdal and the 1961 Söderström Gold Medal By Rogério Arthmar; Michael McLure
  3. The Transvaluation of the Theory of Economic Policy: The Lucas Critique Reconsidered By Katherine Moos
  4. The state, the market, and development By Joseph E. Stiglitz
  5. Complacency is Really Dangerous: Three Great Economic Crises By Frank Milne
  6. Financial regimes, financialization patterns and industrial performances: preliminary remarks By Giovanni Dosi; Valerie Revest; Alessandro Sapio
  7. The Big Push: Early Development Economics (1945-1975) By Kartika, Dwintha Maya
  8. The Africa Rising Narrative - Whither development? By McKenzie, Rex A.
  9. What to teach, when teaching economics as a minor subject? By Martin Kniepert

  1. By: Ben Fine (Department of Economics, SOAS, University of London, UK)
    Abstract: The evolution to dominance of neoclassical economics is reviewed in light of Marcuseís One-Dimensional Man in the wake of the fiftieth anniversary of the classicís first publication.
    Keywords: Economics Imperialism, Neoclassical economics, Marcuse
    JEL: B13 B50
    Date: 2016–06
  2. By: Rogério Arthmar (Department of Economics, Universidade Federal do Espírito Santo); Michael McLure (Business School, University of Western Australia)
    Abstract: This paper reconstructs the awarding of the 1961 Söderström Gold Medal to Piero Sraffa by The Royal Swedish Academy of Sciences. It explains why the prize was created and highlights Gunnar Myrdal’s nomination of Sraffa for the award overseen by the Academy. Primary historical documents are used to establish the amicable relationship between these two economists and to point out their differences and affinities on issues relating to the history of economic thought, particularly in connection with Ricardo’s economics. In addition, Sraffa's activities in Stockholm are detailed, including his contact with Swedish economists and his attendance at the award ceremony. Contemporary reactions in Sweden and Italy to the awarding of this prize to Sraffa are reviewed. The final remarks offer some reflection on the significance of the 1961 Söderström Gold Medal for the history of economics as a field of study.
    Date: 2016
  3. By: Katherine Moos (Department of Economics, New School for Social Research)
    Abstract: This paper entertains two distinct hypotheses about the meaning and effect of the Lucas critique. The first is that the Lucas critique represents advancement in the theory of economic policy. To accept this interpretation, we will have to find evidence that the Lucas critique is empirically valid, ontologically rigorous, and theoretically sound. In search of such evidence, we will review the writings of economists both within and outside the profession’s mainstream that engage the Lucas critique on these criteria. The alternative hypothesis considered in this paper is that in denouncing the traditional theory of economic policy, Lucas sparked an ideational shift in how macroeconomists understand the meaning and value of policy. By considering macroeconomics as a moral science with a specific ontology, we can understand the philosophical implications of the Lucas critique. This paper entertains the idea that the Lucas critique altered the aspirations of economists and policymakers by undermining belief in the ability of economists to make meaningful interventions in the economy and therefore infusing implicit policy nihilism into macroeconomics.
    Keywords: Lucas critique, macroeconomic policy evaluation, nihilism, theory of economic policy
    JEL: E17 E61 C54
    Date: 2016–05
  4. By: Joseph E. Stiglitz
    Abstract: The state has played a major role in the most important developmental successes. This paper discusses the advances in our understanding of the role of the state in the developmental process over the past thirty years, and the contribution to those advances played by changes in economics, changes in the world, and key experiences (in particular the successes in East Asia and the failures in the countries pursuing Washington Consensus policies).
    Keywords: Industrial policy, Manufacturing
    Date: 2016
  5. By: Frank Milne (Queen's University)
    Abstract: The conventional discussion of the international financial crisis that erupted in the summer of 2007 is that few professional economists saw it coming, nor anticipated its ferocity in devastating the US and European economies and financial systems, leading to civil unrest and fears of greater violence in the EU. Why weren’t the authorities and public warned before mid-2007? At the time, a tiny number of vocal Cassandras who delivered warnings in the media were roundly ridiculed. Now these prophets are lauded in the media. What is not widely appreciated is that there were far more professionals who gave private warnings to the large financial institutions, government regulators and central banks. These people tender their analysis in private because professional analyses of dangerous economic risks are subtle, and potentially incendiary in the hands of political populists, irresponsible media pundits and corrupt vested interests. The last thing any prudent professional would wish is to precipitate a panic. It is a tragedy that many of those who gave private warnings, were ignored, ridiculed, or in some cases, lost their jobs for challenging the financial and economic conventional wisdom. It may have been conventional, but it was far from wisdom. Because the economic crisis is continuing and imposing large costs on Western societies, it is crucial to listen again to the Cassandras. More importantly, there is not one, but three separate crises - International Private Debt, International Productivity and Income Distribution, and Western Fiscal Policy. These three crises appear to be quite separate in origin and have been brewing for decades, but the economic stresses they impose have interacted, greatly increasing their impact. The consequences of these crises for the Australian economy could be severe. Although many in the Australian establishment have boasted that Australia is relatively immune: it is a “Lucky Country†, and has avoided the crises through wise policy, this is at best a partial truth. Professionals within and outside Australia have been warning for years that the country is not immune: downside risks have been increasing. Complacency is really dangerous.
    Keywords: Australia, Financial Crisis, Productivity, Fiscal Policy
    JEL: G18 G28 E66
    Date: 2016–06
  6. By: Giovanni Dosi; Valerie Revest; Alessandro Sapio
    Abstract: The evolutionary taxonomy of financial systems, outlined by Dosi (1990), argued that market-based systems would be comparatively more engaged in the exploration of new technological paradigms, as an outcome of market selective pressure, whereas the more institutionalized finance allocation in credit-based systems would give them an advantage in cumulative learning. This article offers a preliminary assessment of those conjectures in light of the institutional change associated with the financialization process and the "maximizing shareholders value" principle. The available evidence suggests that financialization has de-linked the performance of firms on the financial markets from the determinants of firm-level growth and innovation. Selection among companies increasingly occurs on financial markets, along criteria of short-term returns. As such, financialization has contributed to compress and somewhat degrade the specific properties of the finance-innovation nexus of both financial system archetypes, deteriorating both static and Schumpeterian efficiency.
    Keywords: Evolutionary Theory, Financial Systems, Firm growth, Innovation, Financialization
    Date: 2016–06–15
  7. By: Kartika, Dwintha Maya
    Abstract: This article attempts to analyse the strategies, strengths and weaknesses of early development economics, commonly known as the Big Push era. The article starts with the historical analysis on what could influence the thinking of structuralist approach to development. The next section highlights the common strategies proposed by the development pioneers. This is followed by the assessment of industrialisation strategies based on their strengths and weaknesses of the strategies proposed. Finally, the conclusive comments focus on the appreciation of development economics in general.
    Keywords: development economics; economic development; big push; industrialisation; structuralist;
    JEL: O1 O10 O11 O14 O2 O20 O21 O25
    Date: 2014–11
  8. By: McKenzie, Rex A. (Kingston University London)
    Abstract: Over the last ten years the mainstream press have put together an Africa Rising narrative which tells us that because of a series of “good” governance reforms and more responsible economic management (by technocratic and not ideological leaders), African countries have managed to transform their economies into growing vibrant engines of growth. Robust growth rates that averaged 5.8% a year between 2002 and 2012 formed the basis of expectations that there was more to come. In 2011 The Economist (Dec 3rd) reported that, after decades of slow growth ‘Africa now has the real chance to follow Asia in embarking on fast growth in a very short period.’ After years of repose - Africa was rising. Basing its predictions on data from the IMF, The Economist (ibid) declared that Ghana, Mozambique, Nigeria and Zambia would be among this decade’s star performers. Recent events (like Ghana’s 2015 IMF bailout) may have dented the narrative but it persists because although Africa’s 2015 GDP declined 1.2% to 3.4% from 4.6% in 2014, it is still among the fastest growing regions in world. There is clearly a huge disconnect between the narrative and the images of African migrants risking life and limb to get away from Africa and into Europe. This article explores the sources of the disconnect and evaluates the narrative. How and why did The Economist (and others in the media and the economics profession) manage to put forward the bold claim that the 21st Century belonged to Africa?
    Keywords: Africa; growth; development
    JEL: O10 O40 O55
    Date: 2016–06–16
  9. By: Martin Kniepert (Institute for Sustainable Economic Development, University of Natural Resources and Life Sciences Vienna)
    Abstract: Over the last few years, demands from student organisations for pluralism in teaching economics gave quite a stir to neoclassical economics; at least in the media, and at some selected universities. On the other hand, university teachers show considerable inertia. Sometimes they are pointing out that economic theory was not as streamlined as asserted. But mostly they insist on mainstream teaching as a basic prerequisite, possibly to be complemented later by some elective courses. While a dispute about the adequacy of this will certainly continue, it has to be stated that the typical syllabus for economics as a minor subject leaves the respective students with a very narrow notion of economics. This paper elaborates on this aspect. It outlines specific restrictions and requirements an economics-minor syllabus has to comply with in order to have a realistic chance for a wider dissemination at universities. Taking account of this, it is shown that pluralist intentions are covered to a considerable extent by the broader perspective of (new) institutional economics as developed by North, Williamson, Ostrom, and others. At the same time it allows for a coherent and commonly shared body of economic knowledge. To circumstantiate this, this paper resorts to important steps in the history of economic thinking, to its epistemological foundations, as well as to rather practical needs of mutual recognition of exams.
    Keywords: : Institutional Economics, economics-minor syllabus
    JEL: A2 B0 B5
    Date: 2016–06

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