nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2022‒02‒28
eight papers chosen by
Karl Petrick
Western New England University

  1. Keynes's Treatise on Probability 100 Years Later: Small vs. large worlds and closed vs. open systems By Davis, John B.
  2. "Time to Celebrate Modern Money Theory?" By Yeva Nersisyan; L. Randall Wray
  3. Structural change in the US Phillips curve, 1948-2021: the role of power and institutions By Mark Setterfield; Robert A Blecker
  4. The Knife Edge Election of 2020: American Politics Between Washington, Kabul, and Weimar By Thomas Ferguson; Paul Jorgensen; Jie Chen
  5. The Historical Racial Regime and Racial Inequality in Poverty in the American South By Regina Baker
  6. Anti-Meritocratic Economics in the Contemporary Era: The Issues with the Neoclassical Theory By Maxfield, Sean Alexander
  7. The late emerging consensus among American economists on antitrust laws in the 2nd New Deal (1935-1941) By Thierry Kirat; Frédéric Marty
  8. The Dark Side of Samsung’s Value Chain: The Human Costs of Cobalt Mining “BLOOD, SWEAT AND COBALT” By Krummel, Daniel; Siegfried, Patrick

  1. By: Davis, John B. (Department of Economics Marquette University)
    Abstract: The meaning and significance of Keynes’s Treatise on Probability has changed over the 100 years since its publication. Initially it stood on its own as an original contribution to probability theory. After The General Theory some saw the Treatise strengthening Keynes’s later arguments. Yet by the time New Classical Economics became dominant it became largely ignored. This paper attributes that later rejection to the mainstream economics’ reliance on Savage’s subjective expected utility restriction of probability thinking to what he called small worlds. It argues that his small worldslarge worlds distinction produces a small worlds-closed worlds conception of economics the mainstream employs, and that Keynesian economic thinking and the Treatise employ a large worlds-open worlds conception of economics. It frames this open-closed opposition in terms of two contrasting conceptions of science from 1930s system theory, and argues that in economics it is the basis for two conceptions of time: a static, before-after view of temporal sequences and a dynamic, past-present-future view of temporal sequences. The paper then shifts to how Sraffa explained the relationship between production and distribution as an interaction between a relatively closed production system open to distributional forces, shows an analogous view exists in the later thinking of Wittgenstein with whom Sraffa interacted, and then argues Keynes’s thinking in the Treatise employs a similar Cambridge understanding whereby our probability judgments are relatively closed but also open to fundamental uncertainty.
    Keywords: Keynes, Treatise on Probability, Savage, small worlds, closed worlds, open systems, closed systems, Sraffa, Wittgenstein
    JEL: B29 B30 C10 C11
    Date: 2022–01
  2. By: Yeva Nersisyan; L. Randall Wray
    Abstract: A recent article in the New York Times asks whether Modern Money Theory (MMT) can declare victory after its policies were (supposedly) implemented during the response to the COVID-19 pandemic. The article suggests yes, but for the high inflation it sparked. In the view of Yeva Nersisyan and Senior Scholar L. Randall Wray, the federal government's response largely validated MMT's claims regarding public debt and deficits and questions of sovereign government solvency--it did not, however, represent MMT policy.
    Date: 2022–02
  3. By: Mark Setterfield; Robert A Blecker
    Abstract: This paper provides an institutional-analytical account of changes in the structure of the US Phillips curve (PC) during the post-war period. It does so by restoring conflict and power to the forefront of macro theory and, in particular, the wage- and price-setting behaviour of workers and firms. The resulting account is consistent with the main stylized facts that characterize the evolution of the US PC since 1948: the disappearance and subsequent reappearance of a ‘standard’ PC (relating the level of the inflation rate, not the change in this rate, to the rate of unemployment); and the flattening of the PC since the 1990s.
    Keywords: Phillips Curve, inflation, unemployment, natural rate hypothesis, bargaining power, institutions
    JEL: E12 E24 E25 E31 N12
    Date: 2022–02
  4. By: Thomas Ferguson (Institute for New Economic Thinking); Paul Jorgensen (University of Texas Rio Grande Valley); Jie Chen (University of Massachusetts, Boston)
    Abstract: This paper analyzes the 2020 election, focusing on voters, not political money, and emphasizing the importance of economic geography. Drawing extensively on county election returns, it analyzes how spatial factors combined with industrial structures to shape the outcome. It treats COVID 19`s role at length. The paper reviews studies suggesting that COVID 19 did not matter much, but then sets out a new approach indicating it mattered a great deal. The study analyzes the impact on the vote not only of unemployment but differences in income and industry structures, along with demographic factors, including religion, ethnicity, and race. It also studies how the waves of wildcat strikes and social protests that punctuated 2020 affected the vote in specific areas. Trump`s very controversial trade policies and his little discussed farm policies receive detailed attention. The paper concludes with a look at how political money helped make the results of the Congressional election different from the Presidential race. It also highlights the continuing importance of private equity and energy sectors opposed to government action to reverse climate change as conservative forces in (especially) the Republican Party, together with agricultural interests.
    Keywords: political economy, voting, 2020 presidential election, Donald Trump, Populism, trade policy, farm policy, political money, Joe Biden, private equity
    JEL: D71 D72 G38 P16 N22 L51
    Date: 2021–11–07
  5. By: Regina Baker
    Abstract: Building on literatures on racial regimes and the legacy of slavery, this study conceptualizes and constructs a novel measure of the historical racial regime (HRR), and examines how HRR influences contemporary poverty and racial inequality in the American South. The HRR scale measures different manifestations of the U.S. racial regime across different historical periods (i.e. slavery and Jim Crow) and is based on state-level institutions including slavery, sharecropping, disfranchisement, and segregation. Using Current Population Study data from the Luxembourg Income Study 2010-2018 for 527,829 Southerners and historical state-level data from various sources, evidence is triangulated from bivariate associations, multilevel regressions, and decomposition analyses. Results show that residing in a state with stronger HRR is not significantly associated with greater poverty for all and especially not among White Southerners. Rather, a higher level of HRR worsens Black poverty and especially Black-White inequalities in poverty. Further, HRR explains a significant share of the Black-White poverty gap. These results hold even after adjusting for a wide variety of individual-level variables, many of which plausibly mediate the influence of HRR. Altogether, this study demonstrates the enduring influence of historical state institutions on contemporary poverty and inequality.
    Date: 2021–11
  6. By: Maxfield, Sean Alexander
    Abstract: No longer does society consider the full extent of the argument and consequences or benefits of a system change. All the record-breaking economic success of the last few decades simply furthers a divide between people/organizations that have money and people/organizations that need money. However, those that can view this divide assign the capitalistic system as the culprit when in fact it is the modern mutation of capitalism that is at fault. Within modern neoclassical economies, there is no form of value-based meritocracy between people and organizations.
    Date: 2021–12–18
  7. By: Thierry Kirat (IRISSO - Institut de Recherche Interdisciplinaire en Sciences Sociales - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Frédéric Marty (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal, GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po)
    Abstract: The article presents the late convergence process from American economists that led them to support a strong antitrust enforcement in the Second New Deal despite their long-standing distrust toward this legislation. It presents the path from which institutionalist economists, on the one side, and members of the First Chicago School, on the other one, have converged on supporting the President F.D. Roosevelt administration towards reinvigorating antitrust law enforcement as of 1938, putting aside their initial preferences for a regulated competition model or for a classical liberalism. The appointment of Thurman Arnold at the head of the Antitrust Division in 1938 gave the impetus to a vigorous antitrust enforcement. The 1945 Alcoa decision crafted by Judge Hand embodied the results of this convergence: in this perspective, the purpose of antitrust law enforcement does consist in preventing improper uses of economic power.
    Keywords: Economic Power,Institutional Economics,Antitrust,Efficiency,Chicago School,New Deal
    Date: 2021–06–16
  8. By: Krummel, Daniel; Siegfried, Patrick
    Abstract: Samsung has been implicitly linked to human rights abuses and wider social downgrading propagated within the Democratic Republic of Congo (DRC). Reports by different studies have shown artisanal cobalt mines (ASM) to exploit child labour and subject workers to perilous conditions. The IT multinational is dependent upon Congolese cobalt as a key element in lithiumion batteries used to produce their array of electronics. However, irresponsible cobalt sourcing practices undertaken by Tier 1 suppliers, Glencore and Huayou, have resulted in ASM operations being incorporated into Samsung’s global value chain, as Tier 2 suppliers. Analysis of the relationships underpinning Samsung’s cobalt value chain theoretical framework, highlights the presence of a relational governance structure, with captive elements among upstream Tier 1 and Tier 2 suppliers. Samsung is thereby reliant upon both Glencore and Huayou to transmit and enforce private codes of conduct down the value chain to expel human rights abuses. In conjunction, the DRC’s weak and unstable institutional environment has facilitated corruption and the improper enforcement of laws across the ASM industry. It is thereby imperative that Samsung takes ownership of the issues present within its value chain, as both Tier 1 suppliers and the Congolese government have failed to ensure responsible cobalt sourcing practices to date. This report recommends that Samsung adopt a holistic action plan, not only utilising their own resources and capabilities, but also those of critical stakeholders including Tier 1 suppliers, NGOs and the DRC and South Korean governments. Most prominently, this report suggests that supply chain transparency can be improved using certificates of origin and blockchain technology. Furthermore, it is recommended that poverty alleviation is targeted as a key measure through “Cobalt for Development”, an action plan designed to instigate both social and economic upgrading within ASM operations and the wider community. By employing a multi-scalar approach and addressing the issues inherent across multiple governance levels, Samsung can ensure a responsible source of cobalt be sustained.
    Keywords: Value Chain, Ethics, Child Labour
    JEL: A13 L6 L72 L9 L96 M11
    Date: 2021–02–26

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