nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2021‒02‒22
fifteen papers chosen by
Karl Petrick
Western New England University

  1. Peripherical Financialization and Premature Deindustrialization: A Theory and the Case of Brazil (2003-2015) By José Luis Oreiro; Carmem Aparecida Feijó; Lionelo Franco Punzo; João Pedro Heringer Machado
  2. Money and markets : limits of mainstream critique By Jérôme Maucourant
  3. The Economist as Scientist, Engineer or Plumber? By Su, Huei-Chun; Colander, David; Assistant, JHET
  4. W. Stark, J.M. Keynes and the Mercantilists By Repapis, Constantinos; Assistant, JHET
  5. COVID-19, Race, and Redlining By Graziella Bertocchi; Arcangelo Dimico
  7. Understanding the Racial and Income Gap in Commuting for Work Following COVID-19 By Ruchi Avtar; Rajashri Chakrabarti; Maxim L. Pinkovskiy
  8. In search of a suitable heuristic for evolutionary economics: from generalized Darwinism to economic self-organisation. By Foster, John
  9. What is the Impact of an Intensification of Labour on the Rate and Form of Exploitation? By Deepankar Basu; Cameron Haas; Athanasios Moraitis
  10. The evolution of debtor-creditor relationships within a monetary union: Trade imbalances, excess reserves and economic policy By Gräbner, Claudius; Heimberger, Philipp; Kapeller, Jakob; Landesmann, Michael; Schütz, Bernhard
  11. Aggregate Employment Effects of Unemployment Benefits During Deep Downturns: Evidence from the Expiration of the Federal Pandemic Unemployment Compensation By Arindrajit Dube
  12. Talking about competition? Discursive shifts in the economic imaginary of competition in public debates By Stephan Puehringer; Laura Porak; Johanna Rath
  13. Artificial Intelligence, Globalization, and Strategies for Economic Development By Anton Korinek; Joseph E. Stiglitz
  14. Political Economy of Labour Market Institutions in a Globalised Era By Bhaumik, Sumon K.; Frensch, Richard; Huber, Stephan
  15. La Teoría del Capitalismo de Karl Marx. Exposición, Crítica y Evaluación By Escudé, Guillermo J.

  1. By: José Luis Oreiro (None); Carmem Aparecida Feijó; Lionelo Franco Punzo; João Pedro Heringer Machado
    Abstract: The main objective of this paper is to discuss the concept of financialization in developing economies, arguing that the broad definition of financialization - understood as a growing role of motivations, markets and financial institutions in the operation of domestic and international economies – does not take into consideration important features of those economies, such as the hierarchy of currencies and the subordination to the principles of the so-called Washington Consensus. The latter imposed the adoption of a foreign savings-driven growth model, which mostly applied to Latin American countries. Hence, the financialization process in LDCs will be denominated peripherical financialization, since it is associated with dependence upon capital inflows from developed countries and with the reduction in the autonomy of their macroeconomic policies, even within flexible exchange rate regimes. Attraction of capital inflows to countries with a subordinate position in international financial markets, requires high interest rate differentials which have as side effect a trend to the overvaluation of real exchange rates. This creates a trap, high interest rates with an associated overvalued exchange rate. This trap reduces policy space, turning procyclical even fiscal policy. Moreover, the overvaluation of real exchange rate reduces price competitiveness of the manufacturing industry, becoming the main drive toward these countries’ premature deindustrialization. It will be shown that the macroeconomic performance of the Brazilian economy in the period 2003-2015 fits almost perfectly this model of peripherical financialization.
    Keywords: Financialization, Premature Deindustrialization, high interest rate-overvalued exchange rate trap
    JEL: O11 O14 O16
    Date: 2021–02
  2. By: Jérôme Maucourant (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - CNRS - Centre National de la Recherche Scientifique, UJM - Université Jean Monnet [Saint-Étienne])
    Abstract: A key argument of Karl Polanyi's work is that market society needs policies to emerge, develop and survive, money being an essential institution in this process. But, fictituously transforming that which was not made to be sold into commodities, such as man, money or nature, entails unexpected effects, as State interventions. This total subversion of the liberal view enables new perspectives for understanding the crisis of 2008 and the continuing crisis of the Eurozone. Furthermore, it could highlight the usual critiques of many leftwing thinkers. Actually, they were blinded by the apparent success of globalisation during the 1990's and the cosmopolitical rhetoric of neoliberalism. The case of European Union and Euro is interesting because these social machines are labs of neoliberalism. A time is coming when the consent of free trade and a single currency-which unites many neoliberals, far leftists, "socialists" and some trade union leaders-must come to an end.
    Keywords: markets,mainstream Critique,Euro,money order,Karl Polanyi,fictitious commodity,globalism,Institutional analysis
    Date: 2020
  3. By: Su, Huei-Chun; Colander, David; Assistant, JHET
    Abstract: Some well-known economists suggest that a good economist should act like an engineer, a surgeon, a dentist, or even a plumber. These metaphors are useful in helping economists reflect the nature of economics and their role in society. But which is the most sensible one? This paper argues that economists should be playing all these roles and more, because economics is not a single entity, and each entity has separate goals, methods, and boundaries. To take this multiplicity of roles into account this paper argues that in addition to the traditional boundary that delineates the disciplinary domain of economics against other sciences, an overarching boundary between economic science and applied policy needs to be recognized. It then examines Duflo’s economist as plumber metaphor and suggests that a better metaphor for Duflo’s purpose would be “general contractor”, a metaphor that, if accepted, would suggest radical change in training applied policy economists.
    Date: 2021–02–12
  4. By: Repapis, Constantinos; Assistant, JHET
    Abstract: In this paper we investigate Werner Stark’s sociology of knowledge approach in the history of economic thought. This paper explores: 1) The strengths and weaknesses of Stark’s approach to historiography, 2) seeing how this can frame an understanding of mercantilist writings and, 3) develop a link between a pluralist understanding of economics, and the sociology of knowledge approach. The reason for developing this link is to extend the sociology of knowledge approach to encompass a pluralist understanding of economic theorising and, at the same time, clarify the link between context and economic theory. John Maynard Keynes’ practice of building narratives of intellectual traditions as evidenced in The General Theory is used to develop a position between an understanding of history of economic thought as the evolution of abstract and de-contextualized economic theorising and, the view of economic theory as only relevant within the social conditions from which it arose.
    Date: 2021–02–12
  5. By: Graziella Bertocchi; Arcangelo Dimico
    Abstract: Discussion on the disproportionate impact of COVID-19 on African Americans has been at center stage since the outbreak of the epidemic in the United States. To present day, however, lack of race-disaggregated individual data has prevented a rigorous assessment of the extent of this phenomenon and the reasons why blacks may be particularly vulnerable to the disease. Using individual and georeferenced death data collected daily by the Cook County Medical Examiner, we provide ï¬ rst evidence that race does affect COVID-19 outcomes. The data conï¬ rm that in Cook County blacks are overrepresented in terms of COVID-19 related deaths since—as of June 16, 2020—they constitute 35 percent of the dead, so that they are dying at a rate 1.3 times higher than their population share. Furthermore, by combining the spatial distribution of mortality with the 1930s redlining maps for the Chicago area, we obtain a block group level panel dataset of weekly deaths over the period January 1, 2020-June 16, 2020, over which we establish that, after the outbreak of the epidemic, historically lower-graded neighborhoods display a sharper increase in mortality, driven by blacks, while no pretreatment differences are detected. Thus, we uncover a persistence influence of the racial segregation induced by the discriminatory lending practices of the 1930s, by way of a diminished resilience of the black population to the shock represented by the COVID-19 outbreak. A heterogeneity analysis reveals that the main channels of transmission are socioeconomic status and household composition, whose influence is magniï¬ ed in combination with a higher black share.
    Keywords: COVID-19, deaths, blacks, redlining, vulnerability, Cook County, Chicago.
    JEL: I14 J15 N32 N92 R38
    Date: 2020–07
  6. By: Konrad Gunesch (American University in the Emirates, College of Media and Mass Communication, Dubai, United Arab Emirates)
    Abstract: Abundance Economics, also called post-scarcity economics, increasingly attracts attention in macroeconomic research as well as in policy practice, with its relevance predicted to be ever growing. After a historical overview, this article traces that research attention, shows the need and motivation for this investigation, and then predefines and differentiates the concept. Conceptually, abundance and post-scarcity economics is discussed within the frameworks of heterodox and postKeynesian economics, before examining how writings on abundance economics confront and overcome the scarcity paradigm within economics. Hence the first conceptual contribution of this research is the systematization of abundance economics within classical, heterodox and postKeynesian economics in a concise yet comprehensive form that does not yet exist in macroeconomic literature. The second conceptual contribution is the investigation of abundance economics as a macroeconomic paradigm shift, together with this paradigm shift’s pragmatic advantages in today’s world. The third conceptual contribution is the precise definition, itemization and scrutiny of abundance economics within the global macroeconomic system, in a form also not yet existing in the literature. Methodologically, this research evaluates a range of suggested disciplines contributing to, and benefitting from abundance economics, before studying the arguments for their use and introducing its own multidisciplinary approach. Hence its methodological contribution is the consideration, combination and practical application of a coherent multidisciplinary framework for evaluating the macroeconomic potential of abundance economics in 21st century scenarios. Its final and overall contribution is the synthesis, analysis and discussion of eight distinct yet relatable solutions for conceiving and using abundance economics in economic, social, political, ecological and cultural sustainability reflections and recommendations for local practice and global policy.
    Keywords: Abundance Economics, Post-Scarcity Economics, Post-Keynesian Economics, Heterodox Economics, Wealth and Welfare.
    JEL: B55 E12 E71 O35 P46
    Date: 2019–06
  7. By: Ruchi Avtar; Rajashri Chakrabarti; Maxim L. Pinkovskiy
    Abstract: The introduction of numerous social distancing policies across the United States, combined with voluntary pullbacks in activity as responses to the COVID-19 outbreak, resulted in differences emerging in the types of work that were done from home and those that were not. Workers at businesses more likely to require in-person work—for example, some, but not all, workers in healthcare, retail, agriculture and construction—continued to come in on a regular basis. In contrast, workers in many other businesses, such as IT and finance, were generally better able to switch to working from home rather than commuting daily to work. In this post, we aim to understand whether following the onset of the pandemic there was a wedge in the incidence of commuting for work across income and race. And how did this difference, if any, change as the economy slowly recovered? We take advantage of a unique data source, SafeGraph cell phone data, to identify workers who continued to commute to work in low income versus higher income and majority-minority (MM) versus other counties.
    Keywords: essential worker; work from home; COVID-19; full time; part time
    JEL: E24 E3 I14 J20
    Date: 2021–02–09
  8. By: Foster, John
    Abstract: The generalised Darwinism heuristic for application in evolutionary economics is evaluated. Although conceptually useful, it is found to be lacking as a basis for empirical research. Instead, the economic self-organisation heuristic is offered as a viable scientific alternative which has an explicit connection with an augmented logistic diffusion methodology which can be applied directly to the modelling of historical data in phases of economic growth. It is also argued that economists cannot analyse economic evolution without the parallel involvement of researchers from other disciplines.
    Keywords: Evolutionary economics, complex economic system, generalised Darwinism, economic self-organisation, logistic diffusion
    JEL: B41 B5 B52 O3 O33
    Date: 2021–02–16
  9. By: Deepankar Basu (Department of Economics, University of Massachusetts Amherst); Cameron Haas (Department of Economics, University of Massachusetts Amherst); Athanasios Moraitis (Department of Economics, University of Massachusetts Amherst)
    Abstract: Does the intensification of labour increase the rate of exploitation? Does it produce absolute surplus value or relative surplus value? This paper develops a framework to answer these questions by incorporating intensity of labour in the widely-used linear model of production, both in its one and two department forms. We show, first, that an intensification of labour always leads to an increase in the rate of exploitation, and second, that the increase in the rate of exploitation takes the form of the production of absolute surplus value in all realistic situations. We also highlight, in the case of any model with more than one industry or sector, an interesting difference in short run and long run changes in the rate and form of surplus value.
    Keywords: rate of exploitation; absolute surplus value; relative surplus value; linear model of production
    JEL: B51
    Date: 2021
  10. By: Gräbner, Claudius; Heimberger, Philipp; Kapeller, Jakob; Landesmann, Michael; Schütz, Bernhard
    Abstract: This paper analyses the emergence of internal debtor-creditor relationships within a monetary union. Developing a stock- ow consistent model consisting of three regions - North, South, and the Rest of the World (RoW), where North and South form a monetary union - it shows how the simultaneous presence of investment booms, declining export performance and mercantilist policies within a monetary union can interact in order to create Minsky-type boom-bust cycles. Fiscal policy and an internal lender of last resort can help sustain economic life under existing structural imbalances, though without eliminating the root causes of boom-bust patterns.
    JEL: E12 F41 F45 G01 G18
    Date: 2021
  11. By: Arindrajit Dube
    Abstract: The expiration of the temporary $600 boost to weekly UI benefits under the Federal Pandemic Unemployment Compensation (FPUC) led to a sharp, unprecedented, 98 percentage point reduction (on average) in the replacement rate during a time when employment was recovering during the Covid recession. Leveraging the considerable variation in this drop across states, I use a difference-in-differences event study design to estimate the macro employment effects. I find little impact of job gains from the benefit reduction, especially when I focus on groups (non-college graduates, and those from non-high-income households) that comprise of most UI recipients. The estimates rule out job gains implied by much of the micro UI duration elasticities from the existing literature.
    JEL: E24 E62 E65
    Date: 2021–02
  12. By: Stephan Puehringer (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Laura Porak (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Johanna Rath (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria)
    Abstract: In this paper, we apply a discourse analytical framework to explore the performativity of the economic concept of competition in public policy discourses. We focus on the role of professional economists as opinion leaders to analyze how concepts of competition have entered public discourses. The main economic imaginary ascribes to competition the function of a primary mode for economic and social coordination, ensuring prosperity and wealth. Competitiveness is predominately interpreted not as a means but an end in itself. Furthermore, three partly conflicting discursive positions on how competition should be organized arise in the discourse: first, the neoliberal position interprets every non-efficient market outcome as the result of institutional intervention, hindering effective competition; second, the ordoliberal position of fair competition evaluates governance intervention positively, as long as they promote the functioning of competition; third, the Keynesian position promotes corrected competition, i.e. diverse policy intervention to compensate for market failure outcomes.
    Keywords: competition, competitiveness, media debates, consulting, economic experts, critical discourse analysis
    Date: 2021–02
  13. By: Anton Korinek; Joseph E. Stiglitz
    Abstract: Progress in artificial intelligence and related forms of automation technologies threatens to reverse the gains that developing countries and emerging markets have experienced from integrating into the world economy over the past half century, aggravating poverty and inequality. The new technologies have the tendency to be labor-saving, resource-saving, and to give rise to winner-takes-all dynamics that advantage developed countries. We analyze the economic forces behind these developments and describe economic policies that would mitigate the adverse effects on developing and emerging economies while leveraging the potential gains from technological advances. We also describe reforms to our global system of economic governance that would share the benefits of AI more widely with developing countries.
    JEL: F6 F63 O3 O32
    Date: 2021–02
  14. By: Bhaumik, Sumon K. (University of Sheffield); Frensch, Richard (University of Regensburg); Huber, Stephan (Hochschule Fresenius Köln)
    Abstract: The paper extends the literature on the political economy of labour market institutions by developing a framework in which owners of capital can benefit from both greater labour market flexibility and better rule of law. Their choice of location of manufacturing centres can, therefore, by influenced both by reduction in expropriation that is associated with better rule of law and greater bargaining power vis-à-vis workers by way of greater labour market flexibility. It follows that where owners of capital are better placed to influence government choices of these institutions, labour market flexibility is influenced by both labour market institutions intensity of exports and as well as rule of law intensity of exports. These predictions are borne out by a cross-country empirical analysis.
    Keywords: labour market institutions, political economy, globalisation
    JEL: D72 J41
    Date: 2021–02
  15. By: Escudé, Guillermo J.
    Abstract: This book gives a clear synthesis of Marx’s theory of Capitalism and its relation with economic theory as it evolved over the course of the last 300 years. It places Marx’s though in perspective, comparing it with the main aspects of the economic theories that preceded it, including not only the Classical Adam Smith and David Ricardo but also economists like Cantillon, Turgot, and Ramsay that Marx chose to ignore with respect to the crucial issue of entrepreneurship because it was incompatible with his Theory of Surplus Value. But the book also contrasts Marx’s theory with Walras’, the Neoclassical economist whose influence on contemporary mainstream economic theory was most lasting. The analytical aspects of Marx’s theory are rigorously expressed by means of the technique of Input-Output Analysis, which is explained from the most elementary level in order to make the book self-contained. Each of the multiple topics of Marx’s complex and refined theory is explained in detail, including his theory of money, the heterogeneity in kinds of labor and in productive techniques, the turnover of capital, Simple and Extended Reproduction, his theory of the economic cycle, his theory of ground rent, his theory of productive and unproductive labor, and his view of the main tendencies of capitalist society. The book is structured in accordance with the development process of Marx’s thought. Hence, it begins with the life project he generated in his youth and drove him from the study of history and philosophy to that of Political Economy, on the one hand, and political praxis, on the other. Hence, Parts I, II, and IV of the book respectively address A) the philosophical-methodological foundations of his scientific endeavor (his Historical Materialism); B) his scientific theory of capitalist society as expressed in Capital; and C) his political thought and praxis, which had enormous effects over the course of the 20th century. Part III of the book addresses our critique of Marx’s theory of Capitalism. Beyond our criticisms, however, the book shows that Marx made important contributions to the comprehension of the functioning of Capitalism in the more conventional part of his theory, which we denominate ‘exoteric’ in order to contrast it with his ‘esoteric’ Theory of Surplus Value which was the foundation of his view of the exploitation of wage labor in Capitalism. RESUMEN Este libro brinda una síntesis clara de la teoría del Capitalismo de Marx y de su relación con la teoría económica que se desarrolló en el curso de los últimos 300 años. Pone al pensamiento de Marx en perspectiva, comparándola con los aspectos principales de la teoría económica que le precedió, incluyendo no sólo los clásicos Adam Smith y David Ricardo sino también los de economistas como Cantillon, Turgot y Ramsay, cuya crucial cuestión del aporte del empresario Marx eligió ignorar era incompatible con su Teoría de la Plusvalía. Pero también se contrasta la teoría de Marx con la de Walras, el economista neoclásico que tuvo más perdurable influencia sobre la teoría económica contemporánea del mainstream. En lo analítico, la teoría de Marx es expuesta rigurosamente utilizando la técnica del Análisis de Insumo-Producto, que se explica desde el nivel más elemental para hacer al libro auto-contenido. Se explica cada uno de los múltiples tópicos de la refinada y compleja teoría de Marx, incluyendo su teoría del dinero, la heterogeneidad de tipos de trabajo y de técnicas productivas, la rotación del capital, la Reproducción Simple y Ampliada del capital, su teoría del ciclo económico, su teoría de la renta de la tierra, su teoría del trabajo productivo e improductivo y su visión de las principales tendencias de la sociedad capitalista. El libro está estructurado en base al proceso de desarrollo del pensamiento de Marx. Por eso parte del proyecto de vida que éste elaboró en su juventud y que lo llevó del estudio de la historia y la filosofía al estudio de la Economía Política, por un lado, y a la práctica política, por el otro. Por ello, las Partes I, II, y IV del libro encaran respectivamente A) los fundamentos filosófico-metodológicos de su quehacer científico (el Materialismo Histórico); B) su teoría científica de la sociedad capitalista, según la expresó en El Capital; y C) su pensamiento y accionar político, que tuvo enormes efectos en el curso del siglo 20. La Parte III del libro encara nuestras críticas a la teoría del Capitalismo de Marx. Más allá de nuestra crítica, sin embargo, el libro muestra que Marx hizo importantes contribuciones a la comprensión del funcionamiento del Capitalismo en la parte más convencional de su teoría, que denominamos ‘exotérica’ para contrastarla con su ‘esotérica’ Teoría de la Plusvalía, núcleo de su concepción de la explotación del trabajo asalariado en el Capitalismo.
    Keywords: Karl Marx, Theory of capitalism, Surplus value theory, Labor value theory, Historical Materialism, Entrepreneurship
    JEL: B14 B3 B4 Z13
    Date: 2021–01–11

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