nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2019‒01‒28
fifteen papers chosen by
Karl Petrick
Western New England University

  1. Marx and Keynes: From exploitation to employment By Helmedag, Fritz
  2. Alternative Approaches to Technological Change when Growth is BoPC By Marwil J. Dávila-Fernández
  3. Class Agency Under Conditions of Self-Enforcement: Marx on Capitalists' Common's Problem By Korkut Alp Erturk
  4. Whither the evolution of the contemporary social fabric? New technologies and old socio-economic trends By Giovanni Dosi; Maria Enrico Virgillito
  5. Intrinsic Moral Hazard By Korkut Alp Erturk
  6. Where Did Good Jobs Go? Acemoglu and Marx on Induced (Skill Replacing) Technical Change By Korkut Alp Erturk
  7. International trade, development traps, and the core-periphery structure of income inequality By Hartmann, Dominik; Bezerra, Mayra; Lodolo, Beatrice; Pinheiro, Flávio L.
  8. "On the Design of Empirical Stock-Flow-Consistent Models" By Gennaro Zezza; Francesco Zezza
  9. More is Different ... and Complex! The Case for Agent-Based Macroeconomics By Giovanni Dosi; Andrea Roventini
  10. Was ist falsch an der Arbeitswerttheorie? Wie Wert wirklich gebildet wird By Lippert, Rainer
  11. "From Each according to Ability; To Each according to Needs" Origin, Meaning, and Development of Socialist Slogans By Luc Bovens; Adrien Lutz
  12. Piero Sraffa and the project to publish Saint-Simon's works By Michel Bellet; Adrien Lutz
  13. Gender Equity as a means of Promoting National Development: A Sociological Reflection By Titilade Muyibat Ajayi
  14. Hope and Violence in Dystopia By Lima Bhuiyan
  15. Folklore By Stelios Michalopoulos; Melanie Meng Xue

  1. By: Helmedag, Fritz
    Abstract: Marx's and Keynes's analyses of capitalism complement each other well. In a rather general model including the public sector and international trade it is shown that the labour theory of value provides a sound foundation to reveal the factors influencing employment. Workers buy "necessaries" out of their disposable wages from an integrated basic sector, whereas the "luxury" department's revenues spring from other sources of income. In order to maximize profits, the wage good industry controls the level of unit labour costs. After all, effective demand governs the volume of work. On this basis, implications for economic policy are outlined.
    Keywords: Employment,Marx,Keynes,Surplus value
    JEL: E11 E12 E24
    Date: 2019
  2. By: Marwil J. Dávila-Fernández
    Abstract: Dávila-Fernández and Sordi (2018) have recently extended Goodwin's (1967) model to study the interaction between distributive cycles and international trade for economies in which growth is Balance-of-Payments Constrained. This paper examines the implications of adopting (i) Kaldor-Verdoorn's law, and (ii) classical-Marxian technical change to the main results of the model. The Kaldorian specication leaves the system with no internal equilibrium solution while the Marxian specification makes it stable. A Hopf bifurcation analysis shows that the combination of both formulations might give rise to persistent and bounded cyclical fluctuations. Given the lack in the literature of reliable estimates for the classical-Marxian case, we provide a panel-VAR estimation for a sample of 16 OECD countries between 1980-2012 that gives some support to its central argument. Our estimates were used to calibrate the models developed in the rst part of the paper
    Keywords: Growth cycle, Goodwin, Thirlwall's law, Distributive cycles, Hopf bifurcation, Technical change.
    JEL: E12 E32 O40
    Date: 2018–12
  3. By: Korkut Alp Erturk
    Abstract: Marx discussed institutional innovations in the context of a complex dynamic between inter versus intra-group opportunism, which contains clues for understanding how capacity for class agency develops. His lengthy discussion of the English Factory Acts in his Vol. I of Capital is an important case in point, which the paper revisits for its broader lessons not only for how institutions solve collective action problems but also how they become self-enforcing when third party enforcement is ineffective. The paper gives an account of how the Acts could have become self-enforcing at a time when the state enforcement capacity was rudimentary at best. The argument focuses on the dynamic between inter versus intra-class opportunism, shedding analytical light on how organized labor could help capitalists bolster their capacity for class agency.
    Keywords: Institutions, collective action problem, opportunistism, common's problem JEL Classification: B14,B55, C720
    Date: 2019
  4. By: Giovanni Dosi; Maria Enrico Virgillito
    Abstract: The reflections which follow build on two interrelated questions, namely, first, whether we are witnessing another "industrial revolution", and second, what is the impact of technological transformations upon the current dynamics of the socio-economic fabric, especially with respect to employment, income distribution, working conditions and labour relations. We argue that the processes of innovation and diffusion of what we could call "intelligent automation" are likely to change, or more likely reinforce, the patterns of distribution of income and power, which have been there well before the arrival of the technologies we are concerned about: some are indeed intrinsic features of capitalism since its inception, while others are features of the last thirtyforty years. First, we shall offer a fresco of such tendencies which certainly preceded any potential "Fourth Industrial Revolution" but are going to be amplified by the latter. Second, we discuss the features of such possible new techno-economic paradigms. Third, we examine the relationships between technology, productivity and growth, and the ensuing impact on jobs, division of labour, distribution of knowledge, power, and control. Finally, we address some policy implications.
    Keywords: Social fabric, technology, macroeconomic development, division of labour, knowledge, inequality
    Date: 2019–01–11
  5. By: Korkut Alp Erturk
    Abstract: The paper argues that financial deregulation incentivized financial firms to take excessive risks and over-expand because it turned social insurance against systemic risk into a common pool (or open) resource. The increased size and complexity of deregulated financial markets in turn raised the social cost of imposing discipline in financial markets to prohibitive levels. Because this undermined the credibility of the regulators’ threats of sanction, their deterrence strategy was from then on subgame imperfect. This suggests that moral hazard can be explained by the market expectation that regulators would act like a rational maximizer rather than by the things they irrationally did or not do.
    Keywords: systemic risk, moral hazard, financial deregulation, coordination failure, excessive risk taking and financial crisis JEL Classification: D72, C70,G20, G18
    Date: 2019
  6. By: Korkut Alp Erturk
    Abstract: The paper lays out a hypothesis about the effect global oversupply of labor had on induced technological change, clarifying how it might have contributed to the demand reversal for high skill workers and other recent observed trends in technological change in the US. The argument considers the effect of market friendly political/institutional transformations of the 1980s on technology as they created a potential for an integrated global labor market. The innovations induced by the promise of this potential eventually culminated in the creation of global value chains and production networks. These required large set up costs and skill enhancing innovations, but once in place they reduced the dependence of expanding low skill employment around the globe on skill intensive inputs from advanced countries, giving rise to the wellobserved high skill demand reversal and sputtering of IT investment.
    Keywords: Income inequality, job polarization, skill downgrading, induced technological change, organization of work, craft economy, global production networks JEL Classification: F60, F15, 030, E10, B51
    Date: 2019
  7. By: Hartmann, Dominik; Bezerra, Mayra; Lodolo, Beatrice; Pinheiro, Flávio L.
    Abstract: Research on economic complexity has shown that a country's type of exports conditions its future path of economic diversification and economic growth. Yet little emphasis has been put on the inequality associated with the types of products traded between countries and different regions of the world. Here we analyze the income inequality associated with the imports and exports of 116 countries in the period from 1970 to 2010. Our analysis shows that methods from network science and visual complexity research can help to reevaluate old theories in economics, such as coreperiphery structures in international trade or structural development traps. Our results illustrate that the core-periphery structure of global trade affects not only the income inequality between countries, but also the income inequality within countries. Moreover, they reveal the structural constraints that developing and emerging economies face in promoting inclusive growth and benchmark their productive transformations with cases of successful catching up and developed economies. The results show that countries, such as South Korea or Germany, have benefited from outsourcing high inequality products. In contrast, some middle-income countries, such as Brazil or South Africa, face structural development constraints consisting of a large average distance of their export products to low inequality products and a "gravitational force" towards high inequality products. Finally, developing economies, such as Nicaragua or Sri Lanka face a double development trap for inclusive growth, as their economies depend on both a large share of high inequality exports and imports.
    Keywords: trade,inequality,economic complexity,development trap
    Date: 2019
  8. By: Gennaro Zezza; Francesco Zezza
    Abstract: While the literature on theoretical macroeconomic models adopting the stock-flow-consistent (SFC) approach is flourishing, few contributions cover the methodology for building a SFC empirical model for a whole country. Most contributions simply try to feed national accounting data into a theoretical model inspired by Wynne Godley and Marc Lavoie (2007), albeit with different degrees of complexity. In this paper we argue instead that the structure of an empirical SFC model should start from a careful analysis of the specificities of a country's sectoral balance sheets and flow of funds data, given the relevant research question to be addressed. We illustrate our arguments with examples for Greece, Italy, and Ecuador. We also provide some suggestions on how to consistently use the financial and nonfinancial accounts of institutional sectors, showing the link between SFC accounting structures and national accounting rules.
    Keywords: Empirical Stock-Flow-Consistent Models; Ecuador; Greece; Italy
    JEL: E12 E42
    Date: 2019–01
  9. By: Giovanni Dosi; Andrea Roventini
    Abstract: This work nests the Agent-Based macroeconomic perspective into the earlier history of macroeconomics. We discuss how the discipline in the 70's took a perverse path relying on models grounded on fictitious rational representative agent in order to try to pathetically circumvent aggregation and coordination problems. The Great Recession was a natural experiment for macroeconomics, showing the inadequacy of the predominant theoretical framework grounded on DSGE models. After discussing the pathological fallacies of the DSGE-based approach, we claim that macroeconomics should consider the economy as a complex evolving system, i.e. as an ecology populated by heterogenous agents, whose far-from-equilibrium interactions continuously change the structure of the system. This in turn implies that more is different: macroeconomics cannot be shrink to representative-agent micro, but agents' complex interactions lead to emergence of new phenomena and hierarchical structure at the macro level. This is what is taken into account by agent-based models, which provide a novel way to model complex economies from the bottom-up, with sound empirically-based micro-foundations. We present the foundations of Agent-Based macroeconomics and we discuss how the contributions of this special issue push its frontier forward. Finally, we conclude by discussing the ways ahead for the fully acknowledgement of agent-based models as the standard way of theorizing in macroeconomics.
    Keywords: Macroeconomics, Economic Policy, Keynesian Theory, New Neoclassical Synthesis, New Keynesian Models, DSGE Models, Agent-Based Evolutionary Models, Complexity Theory, Great Recession, Crisis
    Date: 2019–01–11
  10. By: Lippert, Rainer
    Abstract: In this article it is shown that the labor value theory according to Marx is flawed in a central aspect: Neither the surplus value nor the value is produced. Value is a social relationship that is formed on the social level between exchange partners. Potential goods are produced as reference points for possible value relationships. They are shaped by manpower, machine and nature. On this basis, the description of value formation deviates from the classical interpretation of labor theory, and the value is no longer perceived as a subjective singularity (as a generated "work value", that can only be an expectation value) but as a real relationship between humans.
    Keywords: Karl Marx; labour theory of value; labor value; labor value as a social relationship
    JEL: B0 B14 B50 B51
    Date: 2019–01–02
  11. By: Luc Bovens (The University of North Carolina at Chapel Hill); 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: 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
    Date: 2019–01–08
  12. By: Michel Bellet (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)
    Keywords: Sraffa,Saint-Simonianism,continental banking,objectivism
    Date: 2018
  13. By: Titilade Muyibat Ajayi (Osun State College of Technology, Esa Oke)
    Abstract: The development of a nation entails the contributions of both men and women. However, all over the world, there are imbalances of power between men and women thus placing some obnoxious socio-cultural and political factors encouraging men's superiority over women. For example, job opportunities, recruitment strategies and political conditions have so much stereotyped the nature of women jobs and participation in nation building. This paper, therefore, looks at the sociological analysis of issues concerning women in wages, employment and politics as it is being affected by sex differential since women have been so adversely affected. The paper highlights the undesirable factors culminating to sex segregation and the aftermath effects. It also sets out to justify the need to give equal opportunity to both men and women in order to promote national development. The paper concludes that national development is a multidimensional process which can be accelerated by making efforts to bridge the socio-cultural and political gaps between the males and females in a healthy society.
    Keywords: Gender equity, Sex segregation, National development
    Date: 2018–11
  14. By: Lima Bhuiyan (Nova Southeastern University, Tampa, FL)
    Abstract: The fact that America has been plunged into a period of dystopia cannot be argued. The nation not only meets the dictionary definition of dystopia itself, but we are daily watching an Orwellian present, which includes censorship, “alternative facts,†blows to education, muzzling of scientists and constant incitement of fear. Typically, dystopian fiction offers an escape that is so farfetched; it is not a real threat to daily life. In these stories humanity always steps up to help one another and anyone can make a difference; this is what makes these stories both hopeful, and relatable. But how does this translate into real life? In the days since the election of President Trump, we have seen this hope spill into the streets in the form of resistance. This paper will argue that while we might live in a dystopian present, there is a newfound surge of hope we have seldom seen in this nation that comes in the form of protest and violence. With each march, hashtag and moment of defiance, an ally speaks for the downtrodden and as history has proved, sometimes violence is the direly needed catalyst for change. Even in the face of dystopia, like reflecting the novels we have all come to know, the average person can and in certain cases, has a duty to fight for a hopeful future.
    Keywords: Dystopia, President Trump, The Hunger Games, protest
    Date: 2018–11
  15. By: Stelios Michalopoulos; Melanie Meng Xue
    Abstract: Folklore is the collection of traditional beliefs, customs, and stories of a community, passed through the generations by word of mouth. This vast expressive body, studied by the corresponding discipline of folklore, has evaded the attention of economists. In this study we do four things that reveal the tremendous potential of this corpus for understanding comparative development and culture. First, we introduce and describe a unique catalogue of folklore that codes the presence of thousands of motifs for roughly 1,000 pre-industrial societies. Second, we use a dictionary-based approach to elicit group-specific measures of various traits related to the natural environment, institutional framework, and mode of subsistence. We establish that these proxies are in accordance with the ethnographic record, and illustrate how to use a group’s oral tradition to quantify non-extant characteristics of preindustrial societies. Third, we use folklore to uncover the historical cultural values of a group. Doing so allows us to test various influential conjectures among social scientists including the original affluent society, the culture of honor among pastoralists, the role of family in extended kinship systems and the intensity of trade and rule-following norms in politically centralized group. Finally, we explore how cultural norms inferred via text analysis of oral traditions predict contemporary attitudes and beliefs.
    JEL: N00 Z1 Z13
    Date: 2019–01

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