nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2019‒11‒11
seven papers chosen by
Karl Petrick
Western New England University

  1. Keynesian Economics - Back from the Dead? The Godley-Tobin Lecture By Robert Rowthorn
  2. Natural Resources in the Theory of Production: The Georgescu-Roegen/Daly versus Solow/Stiglitz Controversy By Quentin Couix
  3. Game of Thrones or Game of Class Struggle? Revisiting the Demise of Feudalism and the Dobb-Sweezy Debate By Lambert, Thomas
  4. The "new" crisis of the liberal order: Populism, socioeconomic imbalances, and the response of contemporary ordoliberalism By Dold, Malte; Krieger, Tim
  5. Multisided Markets & Platform Dominance By Alleman, James; Baranes, Edmond; Rappoport, Paul
  6. Making Pollution into a Market Failure Rather Than a Cost-Shifting Success: The Suppression of Revolutionary Change in Economics By Spash, Clive L.
  7. The Depths of The Cuts: The Uneven Geography of Local Government Austerity By Mia Gray; Anna Barford

  1. By: Robert Rowthorn
    Abstract: This paper surveys some the main developments in macroeconomics since the anti-Keynesian counter-revolution 40 years ago. It covers both mainstream and heterodox economics. Amongst the topics discussed are: New Keynesian economics, Modern Monetary Theory (MMT), expansionary fiscal contraction, unconventional monetary policy, the Phillips curve, and hysteresis. The conclusion is that Keynesian economics is alive and well, and that there has been a degree of convergence between heterodox and mainstream economics.
    Keywords: Macroeconomics, Keynesian economics, Keynes
    JEL: E60 E10 E31 B22
    Date: 2019–06
  2. By: Quentin Couix (UP1 UFR02 - Université Panthéon-Sorbonne - UFR d'Économie - UP1 - Université Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper provides a theoretical and methodological account of an important controversy between neoclassical resources economics and ecological economics, from the early 1970s to the end of the 1990s. It shows that the assumption of unbounded resources productivity in the work of Solow and Stiglitz, and the related concepts of substitution and technical progress, rest on a model-based methodology. On the other hand, Georgescu-Roegen's assumption of thermodynamic limits to production, later revived by Daly, comes from a methodology of interdisciplinary consistency. I conclude that neither side provided a definitive proof of its own claim because both face important conceptual issues.
    Keywords: Nicholas Georgescu-Roegen,Robert Solow,Joseph Stiglitz,natural resources,theory of production
    Date: 2019–10–24
  3. By: Lambert, Thomas
    Abstract: In 1947, the Marxist economist Maurice Dobb published a book that attempted to outline and explain how the feudalistic economic system of medieval times gave way to capitalism. Dobb’s Studies in the Development of Capitalism (1947) started a debate among economists and historians over the following decades that has continued until this day. One of his most prominent and earliest critics was Paul M. Sweezy who, although he commended Dobb on raising the question of why feudalism gave way to capitalism, disagreed with Dobb’s conclusions on why the transition from feudalism to capitalism occurred. In general, Dobb thought that feudalism went into decline and was replaced by capitalism because of endogenous causes rooted in the class struggles between serfs and noblemen. Sweezy and others, on the other hand, thought that the factors which led to the decline of feudalism and rise of capitalism were exogenous, and these factors included the development and growth of international trade, production for markets and money, the growth and importance of cities, and the need for European monarchies to finance their wars and overseas empires. Other economists and historians, both mainstream and Marxian, also joined the debate, and a long list of articles and books have been generated on the “transition debate” since the late 1940s. In doing research for this paper, no statistical work on the Dobb-Sweezy debate and its competing hypotheses was found, and so this paper attempts to do some empirical testing of these hypotheses using data from England from the middle ages up to the late nineteenth century. The findings of this note are informative in trying to better understand the transition and provide some food for thought on how capitalism may change in the future.
    Keywords: capitalism, feudalism, Dobb-Sweezy debate, econometrics, productivity, surplus value, and transition debate
    JEL: B20 B24 B25 N3 N33
    Date: 2019–10–29
  4. By: Dold, Malte; Krieger, Tim
    Abstract: In recent years, commentators have noticed that the European liberal order is 'under attack'. Traditional parties of the center are in decline. Populist movements of the right and the left have won elections or significant shares in parliaments. In the face of this 'new' crisis of liberalism, our paper follows the spirit of Walter Lippmann's The Good Society and argues for a renewal of (ordo)liberal thinking. Similar to Lippman - who lamented, "liberalism had become a philosophy of neglect and refusal to proceed with social adaptation" -, we argue that our current liberal economic order is unfit to deal with fundamental social asymmetries. The benefits of open borders and economic integration are distributed unevenly in most societies with urban economic and political elites as main beneficiaries and supporters of the current order, while neglecting less-skilled, rural workers. In this paper, we argue for a contemporary ordoliberalism that takes up this distributional challenge. In spite of recurrent criticism of its value-laden nature, we argue that the normativity of ordoliberalism is actually an asset in the current debate on populism. Moral and ideological arguments are often at the heart of citizens' concerns. Following this rationale, we propose that contemporary ordoliberals advance their thinking in connection with the emerging field of Philosophy, Politics, and Economics (PPE).
    JEL: B25 B31 B41
    Date: 2019
  5. By: Alleman, James; Baranes, Edmond; Rappoport, Paul
    Abstract: The internet giants - Facebook, Amazon, Netflix and Google, among others - have transformed society with both positive and negative effects. The negative effects have been stark. There have been huge disruptions caused by e-commerce. More recently, subtler, but even more serious negative effects are only now being recognized: threats to democracy, violations of privacy, and monopolistic behavior. By traditional measures Facebook and Google are highly concentrated. Each has obtained de facto monopolistic or oligopolistic power with little concern on the part of government. Facebook and Google and other internet giants are multisided markets (MSM); their economic rents are "hidden" from the public. On the user-side of the market, prices are zero - "free." On the other side of the market, Facebook's and Google's revenues are derived from advertising which appears when the users click on advertiser's web sites. Facebook and Google can extract exorbitant prices for ads, since they are virtually the only source that can target ads directly to potential customers. This is where the economic rents are not so obvious. This paper addresses the monopolistic/monopsony aspect of the internet giants. In the singlesided market, monopoly pricing is well defined - as well as tests for predatory behavior; not so with multisided markets. Since the definition of markets is central to the legal enforcement of antitrust statutes, the paper examines non-transactional multisided markets for their potential for determining consumers' harm and welfare effects, as well as defining monopoly and predatory pricing in this context. Initial estimates of Google's and Facebook's social cost in terms of consumers' welfare loss are $54 and $33 billion, respectively and increasing cost to consumers at least $87 billion dollars. It demonstrates and quantifies that dominate internet platforms can create three major harms to consumers: - Increasing prices to consumers via added costs to the products being advertised, - Elimination (or non-emergence) of competition in markets to the products being advertised, - Increasing prices to consumers beyond the cost of advertising via the market power of the remaining firms in the market of the products being advertised The paper outlines potential remedies to ameliorate the problems.
    Keywords: Advertising,Antitrust,Consumers' Surplus,Internet,Platform Economics,Regulation,Two-Sided/Multisided Markets
    JEL: D42 D43 K21 L12 L13 L22 L51 L96
    Date: 2019
  6. By: Spash, Clive L.
    Abstract: This paper explores core failures of environmental economics as a scientific attempt to understand the ecological crises. The case of environmental pollution is used to show how neoclassical externality theory evolved to establish commitment to, and dogmatic support for, an elitist ethics and liberal market ideology. The public policy response to pollution then recommended is to internalise externalities by correcting market prices based on monetary valuation of the social costs (i.e., damages). Pollution as a market failure is deemed a correctible error of the price system. This is contrast with an alternative theory of pollution based on a classic institutional economic theory of cost-shifting that instead requires a public policy response involving regulation and planning. Reflection on the history of thought related to these two theories of pollution reveals how environmental economics became a marginalised field supporting the neoclassical economic orthodoxy with full commitment to its core paradigms. Why the critical and realist institutional approach had to be suppressed is explained as denying the potential for a revolutionary paradigm shift in economic price theory.
    Keywords: environmental economics; externalities; cost-shifting; price theory; pollution; Arthur C Pigou; K William Kapp; paradigm shift; neoclassical economics; orthodoxy; institutional economics
    Date: 2019
  7. By: Mia Gray; Anna Barford
    Abstract: Austerity, the sustained and widespread cuts to government budgets, has characterised Britain’s public policy since 2010. The local state has undergone substantial restructuring, driven by major budget reductions from central government. Hitherto, few studies of austerity in the UK have considered the interplay of national and local policies. We contribute a fine-grained spatial analysis of local authority budgets, highlighting their socioeconomically- and geographically-uneven impacts. We identify substantial variations between authorities in terms of funding, local tax-base, fiscal resources, assets, political control, service-need and demographics. We argue that austerity has actively reshaped the relationship between central and local government in Britain, shrinking the capacity of the local state, increasing inequality between local governments, and exacerbating territorial injustice.
    Keywords: Urban Austerity, State Rescaling, Great Recession, Territorial Injustice, Local Government Restructuring, Fiscal Disciplining
    JEL: H1 H7 H12
    Date: 2018–12

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