nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2020‒02‒03
seven papers chosen by
Karl Petrick
Western New England University

  2. What is Socialism Today? Conceptions of a Cooperative Economy By John E. Roemer
  3. Thorstein Veblen, Joan Robinson, and George Stigler (probably) never met: Social Preferences, Monopsony, and Government Intervention By Laszlo Goerke; Michael Neugart
  4. Perplexing Complexity Human Modelling and Primacy of the Group as Essence of Complexity By Hanappi, Hardy
  5. Political implications of economic inequality: A literature survey By Baric, Laura-Kristin; Geiger, Niels
  6. “A new type of revolution”: socialist thought in India, 1940s-1960s By Sherman, Taylor C.
  7. Technical progress, capital accumulation, and distribution By Naoki Yoshihara; Roberto Veneziani

  1. By: Kates, Steven
    Abstract: The fundamental problem discussed is the shifts in the conceptual base of economic theory that followed the publication of The General Theory, along with various technical terms being given different meanings, which have made it almost impossible for modern economists to comprehend classical theory. Yet it is in the classical theory of the cycle where the most profound understanding of the nature of recession and cyclical unemployment is found.
    Date: 2018–01–18
  2. By: John E. Roemer (Dept. of Political Science & Cowles Foundation, Yale University)
    Abstract: Socialism is back on the political agenda in the United States. Politicians and some economists who identify as socialists, however, do not discuss property relations, a topic that was central in the intellectual history of socialism, but rather limit themselves to advocacy of economic reforms, funded through taxation, that would tilt the income distribution in favor of the disadvantaged in society. In the absence of a more precise discussion of property relations, the presumption must be that ownership of ï¬ rms would remain private or corporate with privately owned shares. This formula is identiï¬ ed with the Nordic and other western European social democracies. In this article, I propose several variants of socialism, which are characterized by different kinds of property relation in the ownership of society’s ï¬ rms. In addition to varying property relations, I include as part of socialism a conception of what it means for a socialist society to possess a cooperative ethos, in place of the individualistic ethos of capitalist society. Differences in ethea are modeled as differences in the manner in which economic agents optimize. With an individualistic ethos, economic agents optimize in the manner of John Nash, while under a cooperative ethos, many optimize in the manner of Immanuel Kant. It is shown that Kantian optimization can decentralize resource allocation in ways that neatly separate issues of income distribution from those of efficiency. In particular, remuneration of labor and capital contributions to production need no longer be linked to marginal-product pricing of these factors, as is the key to efficiency with capitalist property relations. I present simulations of socialist income distributions, and offer some tentative conclusions concerning how we should conceive of socialism today.
    Keywords: Market socialism, General equilibrium, Cooperation, Kantian optimization, First theorem of welfare economics
    JEL: D3 D6 P2 P5 H4
    Date: 2020–01
  3. By: Laszlo Goerke (Universität Trier, IAAEU (Institut für Arbeitsrecht und Arbeitsbeziehungen in der Europäischen Union)); Michael Neugart (Technische Universität Darmstadt, Department of Law and Economics)
    Abstract: Wages and employment are too low in a monopsony. Furthermore, a minimum wage or a subsidy may raise employment up to its first-best level. First, we analyze whether these important predictions still hold if workers compare their income to that of a reference group. Second, we show that the undistorted, competitive outcome may no longer constitute the benchmark for welfare comparisons. Third, we derive a condition which guarantees that the monopsony distortion is exactly balanced by the impact of social comparisons. Finally, we show how wage restrictions and subsidies or taxes can be used to ensure this condition both for a welfarist and a paternalistic welfare objective.
    Keywords: social preferences, government intervention, minimum wage, monopsony, taxation, wage regulation
    JEL: D10 H21 J30 J42
    Date: 2020–01
  4. By: Hanappi, Hardy
    Abstract: This paper describes the emergence of complexity as duplicated evolutionary process. The first procedural source of complexity is the quantum jump of the evolution of the human species when it started to maintain certain brain-internal models of its environment. The second - parallel - procedural origin is the evolution of a communication structure, a language, with which an already existing group of primates could frame their internal models. In contrast to definitions of complexity which use the concept in the context of theoretical physics, this approach reveals some perplexing properties of model-building for a special subject of investigation; namely the human species: All adequate models of political economy (economics is just the sub-discipline that freezes political dynamics) have to be complex. Since today’s mainstream economic theory lends its formal apparatus from the mathematics of Newtonian physics, it misses the most essential features characterizing human social dynamics, i.e. its complexity.
    Keywords: Evolutionary Complexity, Quantum Political Economy
    JEL: B40 B5 B50 P16
    Date: 2020–01–13
  5. By: Baric, Laura-Kristin; Geiger, Niels
    Abstract: This survey documents the different arguments discussed in the academic literature on whether and how economic inequality and the emergence and stability of democratic political systems are connected. While early research in this domain has often focused on new and emerging democracies, this paper also provides an overview of the more recent literature in economics and neighboring fields that discusses democratization as well as established democracies' stability and other institutional traits. In doing so, the survey contains a critical review of both theoretical and empirical contributions on the topic. The different arguments are systematically evaluated and their core hypotheses are distilled in order to document the main lines of argumentation prevalent in the literature. Together with a summary of the theoretical arguments, the main findings of related empirical research are also documented and shortly discussed. Whereas taken together, research so far generally does not suggest any conclusive results concerning economic inequality and the emergence of democracies, the survey indicates that the stability and institutional quality of established democracies can be negatively affected by economic inequality, and it outlines the conditions for this to occur. However, additional research especially on some of the more tentative hypotheses is required to allow for a more profound understanding of the different channels and relationships. Therefore, points of departure for further research, e. g. on how to operationalize specific theoretical constructs of interest and thereby on how to get a better understanding of the relations, are also suggested.
    Keywords: economic inequality,institutions,democracy,political stability
    JEL: D63 D72
    Date: 2019
  6. By: Sherman, Taylor C.
    Abstract: Although it is often said that early postcolonial India was socialist, scholars have tended to take this term for granted. This article investigates how Indians defined socialism in the two decades after independence. It finds that there were six areas of agreement among Indian socialists: the centrality of the individual, the indispensability of work, the continued importance of private property, that the final goal was a more equal – but not flat – society, that this change had to be brought about without violence, and that the final goal of Indian socialism ought to be spiritual fulfilment. Understanding how Indians defined their version of socialism, it is argued, will help scholars re-evaluate the role of the first Prime Minister, Jawaharlal Nehru, in defining the goals India pursued after independence. It will also re-orient our understanding of the expectations and limitations of the Indian state in this crucial period in Indian history.
    Keywords: socialism; postcolonial political thought; Gandhian political thought; Nehruvian consensus; state; cooperatives
    JEL: B14 B24 P2 P3
    Date: 2018–07–22
  7. By: Naoki Yoshihara (University of Massachusetts Amherst); Roberto Veneziani (Queen Mary University London)
    Abstract: We study the effects of innovations on income distribution in cap­ italist economies characterised by a drive to accumulate. Consistent with the basic intuitions of Marx's theory of technical change, we show that there is no obvious relation between ex-ante profitable innovations and the income distribution that actually emerges in equilibrium, and individually rational choices of technique do not necessarily lead to optimal outcomes. Innovations may even cause the disappearance of all equilibria. Methodologically, it is not possible to fully understand the 'creative destruction' induced by innovations without capturing the dialectic between individual choices and aggregate outcomes, and the complex network of relations typical of capitalist economies.
    Keywords: technical change, income distribution, profit rate
    JEL: B51
    Date: 2019–11–22

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