nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2019‒01‒21
fifteen papers chosen by
Karl Petrick
Western New England University

  1. Comparative political economy and varieties of macroeconomics By Baccaro, Lucio; Pontusson, Jonas
  2. A Macroeconomic Condition of Class Society By Nakajima, Tetsuya
  3. Piero Sraffa and the project to publish Saint-Simon’s works By Michel Bellet; Adrien Lutz
  4. The Financial Alchemy that Failed By Miller, Marcus
  5. Employment Protection, Employment and Unemployment Rates in European Union Countries During the Great Recession By Jesus Ferreiro; Carmen Gómez
  6. The capacity to confuse: rescuing the Saint-Simonian notion of ability from modern capability theories of social justice By Antoinette Baujard; Adrien Lutz
  7. On the Origins of Piero Sraffa’s Equations. New Evidence Following Pierangelo Garegnani’s Lead By Naldi, Nerio
  8. Building Less Flawed Metrics By Manheim, David
  9. The Role of Bargaining Power: How Unions Affect Income Distribution By Vincent Victor
  10. The Circular Economy: Swings and Roundabouts? By Neal Millar; Eoin McLaughlin; Tobias Börger
  11. "Macroeconomic Policy Effectiveness and Inequality: Efficacy of Gender Budgeting in Asia Pacific" By Lekha Chakraborty; Marian Ingrams; Yadawendra Singh
  12. Afrodescendent women in Latin America and the Caribbean: Debts of equality By -
  13. Fossil Fuels in Economic Theory - Back to the 19th century British Debates By Antoine Missemer
  14. Inequality and Market Concentration, When Shareholding Is More Skewed Than Consumption By Gans, Joshua S.; Leigh, Andrew; Schmalz, Martin; Triggs, Adam
  15. From Integrated Capitalism to Disintegrating Capitalism. Scenarios of a Third World War By Hanappi, Gerhard

  1. By: Baccaro, Lucio; Pontusson, Jonas
    Abstract: This paper provides a historical overview of comparative political economy as an interdisciplinary field of study anchored in political science and focused on advanced capitalist states. We argue that this field of inquiry has reached an impasse and that a more sustained engagement with macroeconomics provides a way forward. Against this backdrop, we review two distinct traditions of macroeconomics - New Keynesian and Post-Keynesian macroeconomics - and discuss their relative merits as vehicles for renewing the research agenda of comparative political economy.
    Keywords: comparative capitalisms,comparative political economy,growth models,macro-economics,varieties of capitalism,Makroökonomie,Spielarten des Kapitalismus,Vergleichende Kapitalismusforschung,Vergleichende Politische Ökonomie,Wachstumsmodelle
    Date: 2018
  2. By: Nakajima, Tetsuya
    Abstract: This paper clarifies a macroeconomic condition, under which households are divided between a working class and an asset-owner class. Constructing a Keynesian model, we find that if aggregate savings from profits exceed aggregate investment, workers cannot accumulate their assets, and consequently a class society is established.
    Keywords: Effective Demand; Keynesian; Employment Rate; Underemployment; Wage Share; Working Class
    JEL: E12 E24 E25
    Date: 2018–12
  3. By: Michel Bellet (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint- Etienne, France); Adrien Lutz (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint- Etienne, France)
    Abstract: There are three slogans in the history of Socialism that are very close in wording, namely, the famous Cabet-Blanc-Marx slogan: From each according to his ability; To each according to his needs; the earlier Saint-Simon–Pecqueur slogan: To each according to his ability; To each according to his works; and the later slogan in Stalin’s 1936 Soviet Constitution: From each according to his ability; To each according to his work. We trace the earliest occurrences of these slogans and their biblical sources and we show how the progression from one slogan to the next casts light on the development of early socialist thought.
    Keywords: socialism, utopian socialism, bible, Christianity, slogans
    JEL: B14 N00 Z12
    Date: 2018
  4. By: Miller, Marcus (University of Warwick, Department of Economics)
    Abstract: With his conception of successive Ages of Capitalism, Anatole Kaletsky provides a canvas broad enough to encompass the banking crisis of 2008 and much more. After briefly outlining the Four Ages he identifies, we focus on the period of the Great Moderation when Inflation Targeting seemed to have solved the problem macroeconomic management, until it ended in spectacular failure. The rapid growth of cross-border banking, with securitized assets funded by wholesale money, evidently posed threats to financial stability that had been ignored by a regime targeting consumer prices. We look at three: the pecuniary externalities exerted by asset price changes on investment banking; information failures leading to an exaggerated banking boom; and the risk of insolvency in the subsequent bank run. The financial system pre-crash was, it seems, flawed by two Fallacies of Composition: by regulation that reckoned making individual banks safe guaranteed systemic stability; and a business model that reckoned securitization ensured liquidity whenever necessary. Finally, we discuss how, in different countries, the law has variously been invoked to handle reckless banking.
    Date: 2018
  5. By: Jesus Ferreiro; Carmen Gómez
    Abstract: For mainstream economics, rigidities in the labour market are the primary determinants of high and persistent long-term unemployment rates, leading to the need to reform labour market institutions and make them more flexible. Flexible labour markets would not only help to smooth normal business cycle fluctuations (implying a small impact of these fluctuations on employment and unemployment) but also to reduce the negative impacts on labour market of structural shocks. If we focus on the labour market performances in the European Union during the Great Recession, we can easily detect the existence of significant differences in the impact of this common structural shock on the domestic labour markets. For mainstream economics, the countries with the best results in terms of unemployment and employment would have been those that had a more flexible labour market at the beginning of the crisis and/or those having implemented reforms to increase this flexibility. The aim of this paper is to determine the validity of this argument, that is, whether labour reforms making the labour market more flexible effectively ensure macroeconomic stability by reducing the impact on the labour market of economic shocks. Using panel data techniques, we investigate whether, as mainstream studies argue, the evolution of employment and unemployment in the EU labour markets is explained, and to what extent, by the levels and changes registered in the indicators of employment protection legislation. Conversely, we examine whether, as heterodox and post-Keynesian studies suggest, this evolution is explained by the changes registered in economic activity (i.e., GDP growth).
    Keywords: employment, unemployment, Great Recession, employment protecti on
    JEL: C23 E24 J21 J64 J88
    Date: 2019–01
  6. By: Antoinette Baujard (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Adrien Lutz (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: "To each according to his ability, to each ability according to his works" constitutes the founding slogan of the Saint-Simonian doctrine (1825-1832). A century and a half would pass before Sen and Nussbaum developed their capability approaches, designed to consider issues of human development and quality of life. Given the prominence of capability approaches in the context of modern theories of justice, and perhaps also due to the natural analogy between the words 'capacité', 'ability', and 'capability', there is a clear tendency in the literature to analyse the Saint-Simonians' contributions to justice based on the assumption that there is a conceptual link between the terms capability and ability. This paper claims, however, that the elision of these terms is unjustified, and is a source more of confusion than of enlightenment. A capability is an evaluative space for justice, while an ability is a property of individuals. The former is defined essentially in the domain of consumption and individual accomplishment, while the latter is clearly seen as a contribution to the theory of efficient production. Finally, these differences reveal a contrast in the focus values: the ability approach insists on efficiency, while the capability approach focuses on agency.
    Keywords: Social justice,Capability,Ability,Sen,Saint-Simonianism
    Date: 2018
  7. By: Naldi, Nerio (La Sapienza University of Rome)
    Abstract: The paper investigates the origins of the equations which form the structure of Piero Sraffa’s Production of Commodities by means of Commodities. Following an interpretation first developed by Pierangelo Garegnani in a paper that highlighted the importance of a manuscript headed ‘Notes Lon-don, Summer 1927 (Physical Real Costs etc.)’, we single out new evidence relevant to the reconstruction of the path which led Sraffa to conceive his equations. In particular, we stress how Sraffa came to pay special attention to the case of a subsistence economy (‘a community that produces just what is sufficient to keep it going’) and how this led him to shift his attention from the idea of reducing heterogeneous physical costs to an ‘absolutely necessary commodity’ to the determination of exchange ratios by the solution of systems of simultaneous equations.
    Keywords: Sraffa; Piero Sraffa Papers; Production of Commodities; costs; relative prices
    JEL: B24 B31 B51
    Date: 2018–12
  8. By: Manheim, David
    Abstract: Metrics are useful for measuring systems and motivating behaviors. Unfortunately, naive application of metrics to a system can distort the system in ways that undermine the original goal. The problem was noted independently by Campbell and Goodhart, and in some forms it is not only common, but unavoidable due to the nature of metrics. There are two distinct but interrelated problems that must be overcome in building better metrics; first, specifying metrics more closely related to the true goals, and second, preventing the recipients from gaming the difference between the reward system and the true goal. This paper describes several approaches to designing metrics, beginning with design considerations and processes, then discussing specific strategies including secrecy, randomization, diversification, and post-hoc specification. Finally, it will discuss important desiderata and the trade-offs involved in each approach.
    Keywords: Metrics, Goodhart's Law, Campbell's Law, Cobra Effect, Management, Control Theory
    JEL: D8 D80 I28 J48 Z18
    Date: 2018–11–26
  9. By: Vincent Victor
    Abstract: Neoclassical theory omits the role of bargaining power in the determination of wages. As a result, the importance of changes in the bargaining position for the development of income shares in the last decades is underestimated. This paper presents a theoretical argument why collective bargaining power is a main determinant of workers’ share of income and how its decline contributed to the severe changes in the distribution of income since the 1980s. In order to confirm this hypothesis, a panel data regression analysis is performed that suggests that unions significantly influence the distribution of income in developed countries.
    Keywords: bargaining power, collective bargaining, income distribution, macroeconomics, unions, wages
    Date: 2019–01
  10. By: Neal Millar (School of Geography and Sustainable Development, University of St Andrews); Eoin McLaughlin (School of Geography and Sustainable Development, University of St Andrews); Tobias Börger
    Abstract: In the last few decades the Circular Economy has increasingly been advertised as an economic model that can replace the current “linear” economy whilst addressing the issues of environmental deterioration, social equity and long-term economic growth with the explicit suggestion that it can serve as a tool for Sustainable Development. However, despite the individual prominence of the Circular Economy and Sustainable Development in the academic and wider literature, the exact relationship between the two concepts has neither been thoroughly defined nor explored. The consequent result is various inconsistencies occurring across the literature regarding how the Circular Economy can serve as a tool for Sustainable Development and an incomplete understanding of how its long-term effects differ from those of the “linear” economy. A literature review was conducted to interpret the current conceptual relationship between the Circular Economy and Sustainable Development. The review highlights numerous challenges concerning conceptual definition, economic growth and implementation that inhibit the use of the Circular Economy as a tool for Sustainable Development in its current form. The review concludes by providing suggestions for how research concerning the Circular Economy should proceed if it is to provide a potential approach for achieving Sustainable Development.
    Keywords: Circular Economy, Sustainable Development, Linear economy, Social equity, Economic growth, Environmental degradation
    JEL: O13 O44 Q01 Q53 Q56
    Date: 2019–01
  11. By: Lekha Chakraborty; Marian Ingrams; Yadawendra Singh
    Abstract: Gender budgeting is a fiscal approach that seeks to use a country's national and/or local budget(s) to reduce inequality and promote economic growth and equitable development. While the literature has explored the connection between reducing gender inequality and achieving growth and equitable development, more empirical analysis is needed on whether gender budgeting reduces gender inequality. Our study follows the methodology of Stotsky and Zaman (2016) to investigate the impact of gender budgeting on promoting gender equality across Asia Pacific countries. The study classifies Asia Pacific countries as gender budgeting or non-gender budgeting according to whether they have formalized gender budgeting initiatives in laws and/or budget call circulars. To measure the effect of gender budgeting on reducing inequality, we measure the correlation between gender budgeting and the Gender Development Index (GDI) and the Gender Inequality Index (GII) scores in each country. The data for our gender inequality variables are mainly drawn from the IMF database on gender indicators and the World Development Indicators database over the 1990-2013 period. Our results show that gender budgeting has a significant effect on increasing the GDI and a small but significant potential to reduce the GII, strengthening the rationale for employing gender budgeting to promote inclusive development. However, our empirical results show no prioritization of gender budgeting in the fiscal space of health and education sectors in the region.
    Keywords: Gender Budgeting; Fiscal Policy; Gender Equality; Asia Pacific
    JEL: H00 I3 J1
    Date: 2019–01
  12. By: -
    Abstract: The multiple inequalities historically experienced by women of African descent in Latin America and the Caribbean form part of a complex system of structural discrimination handed down from the colonial era of slavery. Analysis of the effects of intersecting forms of discrimination in the region shows that most Afrodescendent women still lack the socioeconomic resources and power they need to attain physical, economic and decision-making autonomy. In order to link up efforts to combat racism with endeavours to end gender discrimination and achieve Afrodescendent women’s autonomy, society must assume the major challenges involved in ensuring the individual and collective recognition of Afrodescendent women as bearers of rights.
    Date: 2019–01–09
  13. By: Antoine Missemer (CNRS - Centre National de la Recherche Scientifique, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The interest of economists in fossil fuel exhaustion dates back to the mid-19th century, when, in Great Britain, W. Stanley Jevons published his 1865 essay on coal. In the subsequent decades, fossil fuels were considered with ambivalence: sometimes as a new theoretical and practical priority, sometimes as a secondary issue to be studied in standard frameworks. This paper explores, through the example of the mining rent, how fossil fuels were (partially) incorporated into economic theory at the time. It also explains why the original British view was finally relegated to the background in the early 20th century, when American economists took part in the discussions.
    Keywords: marginalism,Jevons,mining rent,history of economic thought,fossil fuels
    Date: 2018
  14. By: Gans, Joshua S. (University of Toronto); Leigh, Andrew (Australian National University); Schmalz, Martin (University of Michigan); Triggs, Adam (Australian National University)
    Abstract: Economic theory suggests that monopoly prices hurt consumers but benefit shareholders. But in a world where individuals or households can be both consumers and shareholders, the impact of market power on inequality depends in part on the relative distribution of consumption and corporate equity ownership across individuals or households. The paper calculates this distribution for the United States, using data from the Survey of Consumer Finances and the Consumer Expenditure Survey, spanning nearly three decades from 1989 to 2016. In 2016, the top 20 percent consumed approximately as much as the bottom 60 percent, but had 13 times as much corporate equity. Because ownership is more skewed than consumption, increased mark-ups increase inequality. Moreover, over time, corporate equity has become even more skewed relative to consumption.
    Keywords: monopoly, market power, inequality
    JEL: D42 D43 D61 D63
    Date: 2018–12
  15. By: Hanappi, Gerhard
    Abstract: In the last decade significant changes in capitalism are appearing, it entered a new stage. After the political breakdown of Feudalism in World War 1 a stage of capitalism that aimed at integration of all parts of society was slowly developing. 15 years later the authoritarian regimes of national socialism, Fascism, intermitted the evolution of Integrated Capitalism. Since 1945 it flourished again, though its political governance on a global level in recent decades ran into more and more contradictions. After the deep economic crisis of 2008 a turning point towards authoritarian governance of capitalism - in particular in the USA - is evident. Since this type of new nationalist authoritarian capitalism destroys global integration it is called Disintegrating Capitalism. An immediate consequence of the global contradiction between worldwide interwoven production processes and rivalries between nationalist regimes is a rapidly rising danger of a third World War. The second, more speculative part of the paper explores possible forms, which this WW3 could take on. A conclusion provides some ideas on possibilities to react to war tensions.
    Keywords: Capitalism, World War
    JEL: B00 P16 P48
    Date: 2019–01–07

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