nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2020‒01‒20
seven papers chosen by
Karl Petrick
Western New England University

  1. Effective Demand and Prices of Production: An Evolutionary Approach By Rotta, Tomas
  2. Michael Polanyi' Vision of Economics: Spanning Hayek and Keynes By Agnès Festré
  3. Using the Movie Joy to Teach Innovation and Entrepreneurship By Dalton, John; Logan, Andrew
  4. Ten Years On: What Have We Learned? What Have We Done? What Must We Do? By Hockett, Robert C.; Library, Cornell
  5. Irrational Expectations By Stout, Lynn; Library, Cornell
  6. World Trade and Investment Law in a Time of Crisis: Distribution, Development and Social Protection By Library, Cornell; Trubek, David M.; Santos, Alvaro; Thomas, Chantal
  7. All Keynesian Now? Public Support for Countercyclical Government Borrowing By Barnes, Lucy; Hicks, Timothy

  1. By: Rotta, Tomas
    Abstract: In this paper I develop an innovative evolutionary framework to integrate Keynes’ short-run principle of effective demand and the formation of long-run prices of production in Classical Political Economy. At the intersection of Keynes, Marx, and Kalecki, my evolutionary framework integrates effective demand, functional income distribution, profit rate equalization, technological diffusion, and the gravitation towards prices of production. My approach bridges two gaps at once: the absence of the short-run principle of effective demand in Classical Political Economy; and the absence of technological diffusion, profit rate equalization, and the formation of long-run prices of production in Keynes and Kalecki. To formalize the feedback effects between individual decisions taken at the micro level and the unintended social outcomes at the macro level I develop a simple model using replicator dynamics from evolutionary Game Theory. My approach offers a better understanding of how effective demand determines the rate of exploitation, the equalization of profit rates, and the convergence of market prices towards prices of production.
    Keywords: Effective Demand, Prices of Production, Marx, Keynes, Kalecki
    JEL: B51 C73 D20
    Date: 2020–01–01
  2. By: Agnès Festré (Université Côte d'Azur, France; GREDEG CNRS)
    Abstract: This paper analyses Michael Polanyi’s vision of economics. We stress two major features: first, the radical opposition to central planning and his defence of self-organization as a superior mechanism for coordinating individual plans that he shared with Hayek; second, the strong support for state interventionism in order to fight unemployment and limit income inequalities that he borrowed from Keynes. Polanyi blended these two apparently contradictory influences and provided an original institutionalist approach, which has unfortunately been underrated in the economics literature. We argue that this approach is consistent with Polanyi’s intellectual background and more specifically, his view on tacit knowledge and his critical approach of liberalism.
    Keywords: Michael Polanyi, Hayek, Keynes, spontaneous order, State intervention, liberalism, tacit knowledge, public liberty
    JEL: B25 B31 B41
    Date: 2019–12
  3. By: Dalton, John; Logan, Andrew
    Abstract: Film and video clips have been used in the classroom to bring economic concepts to life. We use the 2015 film Joy to animate Joseph Schumpeter's The Theory of Economic Development, a foundational text on the theory of innovation and entrepreneurship which remains relevant for students today. We outline Schumpeter's theory of innovation and entrepreneurship and connect it to various scenes in Joy that illustrate the key points Schumpeter seeks to make. Beyond its value as a teaching tool for making sense of Schumpeter's often dense prose, we argue teaching Joy can also have a positive effect for undergraduate women in economics through its strong female protagonist.
    Keywords: Innovation; Entrepreneurship; Joseph Schumpeter; Education; Movies
    JEL: A20 B31 O31 O33
    Date: 2019–12–16
  4. By: Hockett, Robert C.; Library, Cornell
    Abstract: Ten years after the financial dramas of Autumn 2008, I take stock of what we have learned, what we have done, and what we have yet to do if we would avoid a repeat performance. The primary lessons I draw are that income and wealth distribution, the endogeneity of credit-money, and finance system structure all matter profoundly not only where justice, but also where systemic stability is concerned. The longer-term tasks still before us include a much broader and financially engineered diffusion of capital ownership over our population, citizen central banking, a permanent national investment authority, continuous public open labor market operations, debt-free or low-debt education and health insurance, and an updated form of segregating capital-raising primary from asset-trading secondary markets in the financial sector. Shorter-term tasks include debt-forgiveness, a restoration of labor rights and countercyclical progressive taxation, and restored citizen-ownership of our secondary market makers in home mortgage and higher education debt. These measures will restore the nation to its erstwhile status as a productive middle class ‘yeoman republic,’ and in so doing will restore both justice and efficiency to our social and economic arrangements.
    Date: 2019–02–08
  5. By: Stout, Lynn; Library, Cornell
    Abstract: 3 Legal Theory 227 (1997) Rational expectations models have become a staple of economic theory and the basis for a Nobel Prize. This article argues that rational expectations analysis suffers from potentially fatal flaws that seriously undermine its value in understanding many market phenomena. Using the example of financial markets, the article illustrates how the rational expectations approach has worked to obscure, rather than to illuminate, our understanding of speculation and speculative markets. This misguidance raises problems for law and policy.
    Date: 2018–06–25
  6. By: Library, Cornell; Trubek, David M.; Santos, Alvaro; Thomas, Chantal
    Abstract: Anthem Press, 2019, Forthcoming World trade and investment law is in crisis: new and progressive ideas are needed. Rules that facilitated globalization and supported global economic growth are being challenged. A system of global governance that once seemed secure is now at risk as the US ignores the rules while developing countries struggle to escape restrictions. Some want to tear global institutions and agreements down while others try desperately to maintain the status quo. Rejecting both options, we convened a group of trade and investment law experts from 10 countries South and North who have proposed ideas for a new world trade and investment law that would maintain global growth while distributing costs and benefits more fairly. This essay frames the issues and introduces the volume. We look at the impact of trade and investment law on the global distribution of resources, and pay special attention to those who have suffered from trade dislocation and to restrictions that have hampered innovative growth strategies in developing countries. This perspective shapes a progressive trade and investment law agenda that is outlined in the book and summarized here. We suggest new ways to link trade with protection for labor; measures to ensure that gains from trade are used to offset losses; new rules that can protect foreign investments without hamstringing developing governments or harming local communities; innovative procedures to allow developing countries freedom to try innovative growth strategies; and methods to cope with new products like cannabis.
    Date: 2019–05–31
  7. By: Barnes, Lucy (University College London); Hicks, Timothy (University College London)
    Abstract: In the wake of the 2008 financial crisis, macroeconomic policy returned to the political agenda, and the influence of Keynesian ideas about fiscal stimulus rose (and then fell) in expert circles. Much less is known, however, about whether and when Keynesian prescriptions for countercyclical spending have any support among the general public. We use a survey experiment, fielded twice, to recover the extent to which UK respondents hold such countercyclical attitudes. Our results indicate that public opinion was countercyclical — Keynesian — in 2016. We then use Eurobarometer data to estimate the same basic parameter for the population for the period 2010-2017. The observational results validate our experimental findings for the later period, but also provide evidence that the UK population held procyclical views at the start of the period. Thus, there appear to be important dynamics in public opinion on a key macroeconomic policy issue.
    Date: 2018–10–15

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