nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2017‒05‒21
eleven papers chosen by
Karl Petrick
Western New England University

  1. The nature of the eurocrisis. A reply to Febrero, Uxò and Bermejo By Sergio Cesaratto
  2. "Pragmatism and Institutional Economics Reinterpretedï¼ An application to the analysis of modern capitalismï¼ " (in Japanese) By Tokutaro Shibata
  3. Forgotten macroeconomics in the manifesto debate By Onaran, Özlem
  4. Mentalism Versus Behaviourism in Economics: A Philosophy-of-Science Perspective By Franz Dietrich; Christian List
  5. "The Two Factors of the Phases of Business Cycle " (in Japanese) We study business cycle from the theoretical perspective of Marxian economics in this paper. Marxian economists long have been investigating the cause of the crisis without paying sufficient attention to the whole dynamics of capitalism, i.e. business cycles. This paper tries to construct theoretical apparatus to capture the image of the business cycle of the capitalist economy. In section 1, we examine the texts in Capital in relation to the business cycle in order to confirm Marx’s viewpoint on the issue. Section 2 aims at constructing the theory of business cycle as phase transitions, especially focusing on Michiaki Obata’s recent attempt (M. Obata, Critical Studies on the Marxian Theory of Crisis, University of Tokyo Press, 2014) on the basis of Japanese Marxian traditions. Here we take the rate of profit (r) and the rate of accumulation (s) as two factors that determines the phases of the business cycle. In section 3, we analyse the outside of phases. We distinguish phase transition and unstable state, the combination of which would amount to crisis phenomena. In addition, the phase transition is to be classified into two: r transition and s transition. The former is led by the dynamics of the real economy and the latter is mainly caused by that of asset market. By Kei Ehara
  6. Disobedient Things. The Deepwater Horizon Oil Spill and Accounting for Disaster By Cochrane, DT
  7. A CasP Model of the Stock Market By Bichler, Shimshon; Nitzan, Jonathan
  8. Uneven and Combined Confusion: On the Geopolitical Origins of Capitalism and the Rise of the West By Di Muzio, Tim; Dow, Matthew
  9. On the Joint Evolution of Culture and Institutions By Alberto Bisin; Thierry Verdier
  10. Theory and Praxis, Theory and Practice, Practical Theory By Debailleul, Corentin; Bichler, Shimshon; Nitzan, Jonathan
  11. What do 15-year-olds really know about money? By OECD

  1. By: Sergio Cesaratto
    Abstract: Febrero et al. (2017) criticise the balance of payments (BOP) view of the EMU crisis. I have no major objections to most of the single aspects of the crisis pointed out by these authors, except that they appear to underlie specific sides of the EMU crisis, while missing a unifying and realistic explanation. Specific semi-automatic mechanisms differentiate a BOP crisis in a currency union from a traditional one. Unfortunately, these mechanisms give Febrero et al. the illusion that a BOP crisis in a currency union is impossible. My conclusion is that an interpretation of the Eurozone troubles as a balance of payments (BOP) crisis provides a more consistent framework. The debate has some relevance for the policy prescriptions to solve the eurocrisis. Given the costs that all sides would incur if the currency union were to break up, austerity policies are still seen by European politicians as a tolerable price to pay to keep foreign imbalances at bay - with the sweetener of some ECB support, for as long as Berlin allows the ECB to provide it.
    Keywords: European economic and monetary union, ECB, balance of payment crisis, Target2, Euro
    JEL: E11 E12 E42 E58 F32 F33 F34 F36 N24
  2. By: Tokutaro Shibata (Faculty of Economics, University of Tokyo)
    Abstract: The purpose of this paper is to reevaluate Pragmatism and Institutionalism as the tool of analysis of modern capitalism. In the first part, we propose a new human being model that we human beings depend on the custom and rearrange it. This new model is based on the theory of C. S. Peirce. In the second part, we argue that the transaction of incorporeal property and intangible property is the main cause of the financial business cycle and financial crisis. This argument is based on the theory of J. R. Commons.
  3. By: Onaran, Özlem
    Abstract: The assessment of the impact of the policies in the election manifestos in the media is rather static as comments mostly ignore their positive impacts on growth, investment and productivity. This policy brief brings in the forgotten macroeconomic principles into this debate: Policies proposed in the Labour manifesto to provide a decent physical and social infrastructure, patient, long-term finance via the National Investment Bank, stable macroeconomic environment, incentives to remove new plant and machinery from business rate calculations and disincentives for speculation via broadening the financial transaction tax can lead to higher private investment and productivity and help to rebalance the economy. Policies encouraging a healthy growth in wages could reverse the shaky growth model in Britain driven by a massive increase in private household debt, decrease economic fragility, improve household confidence and domestic demand, which can stimulate business investment.
    Keywords: inequality; investment; productivity; National Investment Bank;
    JEL: E12 E22 E25
    Date: 2017–05–18
  4. By: Franz Dietrich (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Christian List (LSE - London School of Economics and Political Science)
    Abstract: Behaviourism is the view that preferences, beliefs, and other mental states in social-scientific theories are nothing but constructs re-describing people's behaviour. Mentalism is the view that they capture real phenomena, on a par with the unobservables in science, such as electrons and electromagnetic fields. While behaviourism has gone out of fashion in psychology, it remains influential in economics, especially in 'revealed preference' theory. We defend mentalism in economics, construed as a positive science, and show that it fits best scientific practice. We distinguish mentalism from, and reject, the radical neuroeconomic view that behaviour should be explained in terms of brain processes, as distinct from mental states.
    Keywords: scientific realism,decision theory,revealed preference,Mentalism,behaviourism
    Date: 2016
  5. By: Kei Ehara (Faculty of Economics, University of Tokyo)
  6. By: Cochrane, DT
    Abstract: Analysis of the Deepwater Horizon disaster and the accumulatory decline of BP demonstrates both the analytical efficacy of the capital-as-power (CasP) approach to value theory, and the irreducible role of objects in the process of accumulation. Rather than productivity per se, accumulation depends on control of productivity. Owners’ control is over both the human and non-human components of systems of production, which transcend the standard categories of culture/politics/economics/technology. Capitalization translates the irreducible social order, things and all, that bear on accumulation into commensurable units of capital. The decline of BP in the wake of the disaster expressed the market’s falling confidence in the obedience of the entities that bear on its profits, including the things that comprise its productive capacity.
    Keywords: Methodology,Money & Finance,Power,Production,Region - North America,Science & Technology,Agency,Value & Price,Business Enterprise,Capital & Accumulation
    Date: 2016
  7. By: Bichler, Shimshon; Nitzan, Jonathan
    Abstract: Most explanations of stock market booms and busts are based on contrasting the underlying ‘fundamental’ logic of the economy with the exogenous, non-economic factors that presumably distort it. Our paper offers a radically different model, examining the stock market not from the mechanical viewpoint of a distorted economy, but from the dialectical perspective of capitalized power. The model demonstrates that (1) the valuation of equities represents capitalized power; (2) capitalized power is dialectically intertwined with systemic fear; and (3) systemic fear and capitalized power are mediated through strategic sabotage. This triangular model, we posit, can offer a basis for examining the asymptotes, or limits, of capitalized power and the ways in which these asymptotes relate to the historical and ongoing transformation of the capitalist mode of power.
    Keywords: Money & Finance,Power,Policy,Region - North America,Resistance,Value & Price,Business Enterprise,Capital & Accumulation,Civilization & Social Systems,Class,Conflict & Violence,Crisis,Distribution,Institutions
    Date: 2016
  8. By: Di Muzio, Tim; Dow, Matthew
    Abstract: This article offers a critique of Alexander Anievas and Kerem Nişancioğlu’s "How the West Came to Rule: The Geopolitical Origins of Capitalism". We argue that while all historiography features a number of silences, shortcomings or omissions, the omissions in "How the West Came to Rule" lead to a mistaken view of the emergence of capitalism. There are two main issues to be confronted. First, we argue that Anievas and Nişancioğlu have an inadequate and misleading understanding of 'capital' and 'capitalism' that tilts them towards a theoretical stance that comes very close to arguing that everything caused capitalism while at the same time having no clear and convincing definition of ‘capital’ or ‘capitalism’. Second, there are at least three omissions -- particular to England/Britain within a geopolitical context -- that should be discussed in any attempt to explain the development of capitalism: the financial revolution and the Bank of England, the transition to coal energy and the capitalization of state power as it relates to war, colonialism and slavery. We conclude by calling for a connected histories approach within the framework of capital as power.
    Keywords: International & Global,Money & Finance,Power,State & Government,Value & Price,Capital & Accumulation,Civilization & Social Systems,Comparative,History
    Date: 2016
  9. By: Alberto Bisin; Thierry Verdier
    Abstract: Explanations of economic growth and prosperity commonly identify a unique causal effect, e.g., institutions, culture, human capital, geography. In this paper we provide instead a theoretical modeling of the interaction between culture and institutions and their effects on economic activity. We characterize conditions on the socio-economic environment such that culture and institutions complement (resp. substitute) each other, giving rise to a multiplier effect which amplifies (resp. dampens) their combined ability to spur economic activity. We show how the joint dynamics of culture and institutions may display interesting non-ergodic behavior, hysteresis, oscillations, and comparative dynamics. Finally, in specific example societies, we study how culture and institutions interact to determine the sustainability of extractive societies as well as the formation of civic capital and of legal systems protecting property rights.
    JEL: O10 P16 P48
    Date: 2017–04
  10. By: Debailleul, Corentin; Bichler, Shimshon; Nitzan, Jonathan
    Abstract: This working paper contains an intervention by Corentin Debailleul and an extended reply by Shimshon Bichler and Jonathan Nitzan. The exchange was first posted on the Capital as Power Forum in January 2016. Debailleul’s original questions are articulated at greater length here, while Bichler and Nitzan’s reply is reproduced as is.
    Keywords: Power,Production,Resistance,Revolution,Business Enterprise,Capital & Accumulation,Class,Conflict & Violence
    Date: 2016
  11. By: OECD
    Abstract: Globalisation and digital technologies have made financial services and products more widely accessible and at the same time more complex to handle. Responsibility for investing in higher education or planning for retirement is increasingly assumed by individuals. Young people are now more likely to encounter situations where they need to set their spending priorities, be aware of new types of fraud, know that some items that they want to buy will incur ongoing costs, and be alert that some purchasing offers are simply too good to be true. Financial literacy performance is strongly correlated with performance in mathematics and reading. Students should be helped to make the most of what they learn in subjects taught in compulsory education, which could also be complemented with more specific financial literacy content. Fostering the development of financial literacy skills in school could also be a way to offer students learning opportunities beyond those provided by parents and peers, to help overcome socio-economic inequalities, and to expose students to more balanced messages than those they might receive through media and advertising.
    Date: 2017–05–24

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