Interdisciplinary economics

Summary Starting from Robbins and Hennipman and with the help of Becker and Lindenberg a theoretical framework has been constructed within which the strong points of economics and sociology are combined,viz,. the formal but relatively bare-bones modelling of economics and the often so much richer, in terms of social content, analysis of sociology. This theoretical framework also appears to enable more balanced analyses of the effectiveness and efficiency of legislation and regulation than the kind of law and economics so much in fashion at the moment, which is often not devoid of economism and in whichhomo econornicus still all too often figures as the prototype of man.(Economic Institute/Centre for Interdisciplinary Research on Labour Market and Distribution Issues (CIAV)); Associate of The Netherlands Interdisciplinary Demographic Institute (NIDI) in The Hague and the Interuniversity Center for Social Science Theory and Methodology (ICS). This article is an adapted version of my inaugural lecture.     

Hennipman on economic policy and welfare economics

Summary In the article attention is paid to a volume of reprints, in which Professor Hennipman unravels many problems on the boundary lines of economic policy, welfare economics and the theory of public finance. This appears to be one of the few subjects in economics where deductive and qualitative reasoning can still do the job alone, because the aim is refinement of thinking. The sharpening of mind on these issues can be helpful in finding the way in which economic theory can be useful to economic policy.P. Hennipman,Welvaartstheorie en economische politiek, edited by J. van den Doel and A. Heertje, Samsom Uitgeverij, Alphen aan den Rijn/Brussel, 1978.     

Filosofische tijbegrippen in de economische wetenschap en het tijdaspect der economische verschijnselen

Summary In this article the author attempts to bridge the gulf between philosophy and economics by tracing the development of two philosophical time concepts in economic science. First the concept of transcendental time connected since the Greeks with ideas about natural laws is discussed and the breakthrough of this concept into economics in the works of the Thomists and the Physiocrats. Secondly the author deals with the concept of immanent time and its influence on the economic thinking of the later members of the historical school in Germany (Sombart and Max Weber). This evolution of time concepts in economics has been accompanied by different views on economic laws. Originally these were interpreted as nature-oriented, metaphysical laws, which are called transcendental apriori's. Later on, especially in the thinking of the classical economists, these laws were regarded as the ultimate starting-points of economic reasoning; in so far they have this meaning they are called cognitive apriori's. The concept of immanent time resulted in the verstehende Methode. The author emphasizes the fact that the two time concepts have always been closely related with ideas about scientific methods: that of transcendental time with the search for premises which embody the ultimate causes of economic phenomena; that of immanent time with investigations layingstress on the historically relative character of those phenomena. The immanent method contributed to the greater differentiation and subjectivation of the premises which for a long time were used in economic theory and also to the development of a specific economic time concept. This concept comprises the abstract theoreticalperiod as well as its practical counterpart, theterm, which is used in empirical analysis in order to determine the factual length of these periods.

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Op deze plaats wil ik gaarne mijn grote erkentelijkheid uitspreken jegens prof. dr. P. Hennipman, prof. mr. dr. K. Kuypers, prof. dr. H. A. J. F. Misset, mevr. drs. E. M. Barth, drs. J. H. Brussee, drs. J. P. J. Fit en drs. H. Leliveld die mij bij het schrijven van dit artikel met raad en daad terzijde hebben gestaan.     

Economic theories of leisure: Some comments and suggestions

Summary Most economic theories of leisure are concerned with valuations of leisure time related to income as an opportunity cost. After a critical discussion of these theories, leisure time as a constraint is introduced in the theory of consumer behaviour by (1) distinguishing between pleasant and unpleasant consumer activities, (2) discussing the effects on individual's welfare of changes, in the duration of both types of activities and (3) developing time-saving concepts. A theoretical framework for consumer choices under time and/or income constraints leads to suggestions for the lines along which leisure research should be developed as a basis for welfare policy in the widest sense.My thanks are due to Professors P. Hennipman, L. H. Klaassen, A. Pais and Mr. D. B. Needham for the valuable suggestions they made during the preparation of this article. Several parts of it will be presented in a more detailed form in a thesis on the subject.     

Over het sociaal-economische gemenebest

Summary The title of this essay reflects the responsibility that people share in today's society for the outcome of the economic process to be efficient and equitable for everybody.Overcoming both the pursuit of Economic Welfarism and the separation of Efficiency and Equity, in welfare economics one has to look to a general understanding of the maintenance and furtherance of welfare on the physical, subjective and ethical levels. For that purpose, a recognition of the pluriformity of the ingredients of welfare is necessary. External effects, ecological problems and the scale of private, mixed and public goods, fall into that pattern.Openbare les, gegeven bij de aanvaarding van het ambt van gewoon lector in de staathuishoudkunde aan de Vrije Universiteit to Amsterdam op 22 september 1972.     

Coordination

Many economic games have multiple equilibria, some of which are better than others for everyone involved. Such coordination games are of special interest to economists because they raise the possibility that a group of individuals or even a whole economy might become mired in an unfavorable situation. This paper explains how to use playing cards in the classroom to implement an economic game with multiple, Pareto-ranked equilibria. Discussion can focus on policies and institutions that promote coordination on better outcomes. Use: This experiment can be used in introductory economics to teach concepts of team production and coordination and in intermediate microeconomics to teach game-theoretic concepts of Nash equilibrium and Pareto optimality. Time required: Five minutes for reading instructions, 20 minutes for decision making, and about 15 minutes for discussion. Materials: You will need one or more decks of playing cards, each deck accommodating 26 people. One copy of the instructions should be made for each person. Payment to a randomly selected individual is optional and will require about a dollar or two.     

Market Substitution and the Pareto Dominance of Ad Valorem Taxation

Based on product homogeneity and Cournot competition, past literature has uniformly shown that ad valorem taxation welfare dominates unit taxation in noncompetitive markets. This paper allows goods in a market to be heterogeneous and firms to be Bertrand competing. We confirm the short-run findings of others that consumer welfare and overall welfare are always higher under ad valorem taxation. However, ad valorem taxation generates larger profits (hence Pareto dominates) only when market demand is elastic, perhaps explaining the persistence of unit taxation in markets with inelastic demand. The effects on ad valorem Pareto dominance of within- and between-market substitutability, number of firms in the taxed market, and the level of taxation are also investigated. In the long run, an equal-revenue substitution of ad valorem taxation for unit taxation reduces consumer price, which is welfare improving, but also reduces variety when market demand is elastic, which is welfare decreasing. Nonetheless, ad valorem welfare dominance still holds in the long run.     

Distributive Justice, Welfare Economics and Liberalism

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Stemmenhandel

Summary This article deals with some aspects of the problems raised by the use of a specific majority rule as a mechanism of decision-making, viz. (i) given some particular preference-patterns of the individual voters, the result of the voting, i.e. the social ordering of the available alternatives, lacks the property of transitivity; (2) the intensities of the preferences of the different groups of voters will not be taken into consideration by a simple majority rule as long as the possibility of a voter's strategy and of logrolling are excluded.The most important question to be answered is to which degree these objections against the use of the majority rule are overcome by introducing the possibility of (explicit) logrolling. An attempt is also made to answer the question if, from the point of view of welfare economics the result of voting after logrolling is superior to the result of voting without logrolling.To simplify the analysis the voters are supposed to be rational beings; all normative aspects of their attitude towards the result of the voting procedure or towards the decision-rule itself are eliminated.The analysis shows that the process of negotiations, meant to result in a majority-transaction for a number of winning alternatives will in many instances take a circular course, i.e. it does not, in the game-theoretic sense, produce a stable solution. If one applies the Paretian criterion for an increase in social welfare, a statement concerning the welfare aspect of logrolling is shown to be possible only in a very limited number of situations.In some cases logrolling provides a solution for the problem of intransitivity. A welfare judgment about this solution is not possible.Finally a paper on logrolling by J. S. Coleman is commented upon.     

农村三大改革的效率反思

农村改革30周年之际,本文基于新福利经济学检验改革效率的标准,对其间发生的三大改革进行了反思,就未来农村改革的主线——形成城乡经济发展一体化新格局,提出了相关的几点政策建议。     

On economics and technical change

Summary The article is divided into four sections. The first consists of a review of a few main lines of Heertje's thoughts on the relation between economics and technical change. It appears that Dr. Heertje has chosen to write a basically non-mathematical book dealing with the history of technology, production theories and the significance of technical development for economic growth, monopoly power and economic policy. The general comments in the second section make it clear that his study is an excellent survey of the literature on the subject. It covers an overwhelmingly large number of topics and includes copious notes at the end. However, the author's assigned task of filling a gap in the literature for a varied audience of undergraduates, post-graduate students and working economists as well as those doing research in the field of technical development inevitably proved to be too difficult. It means that many conclusions have to be accepted at their face value. On the contrary, at the end of the second section of thepresent article a CS model is constructed that allows for a more exact analysis of the important question about the absorptive power of an economic system with regard to the consequences of labour-saving technological pushes. The third section deals more fully with the author's treatment of Von Böhm-Bawerk's roundabout production theory. Improvements are suggested in this section as well as in the concluding fourth section.Review of and comments on: Arnold Heertje, Economics and Technical Change, Weidenfeld and Nicolson, London, 1977. Pp. xii + 334.     

Jelle Zilstra: A versatile economist

Summary In 1983 Dr. Jelle Zijlstra was a member of the board of editors ofDe Economist for 35 years. At the request of his co-editors, this article has been written to put in a clear light the person and work of Dr. Zijlstra. Zijlstra has been a professor of economics, a minister of economic affairs and of finance in several Dutch cabinets, and, from 1967–1981, President of the Netherlands Bank. During these activities he has made important contributions to economic theory and economic policy, both in legislative work and in various publications. In this article his valuable contributions in such different fields as economic competition, economic order, public finance, monetary theory and central banking policy are analyzed. The author comes to the conclusion that Dr. Zijlstra is an original thinker, who has been a stimulating and inspiring contributor to the different fields of economic theory and economic policy in which he has been active. The author thanks Professor P. Hennipman and Professor S. K. Kuipers for their valuable suggestions.     

Welfare States in Hard Times

Welfare states have been subject to a host of conflicting pressuresfrom high unemployment, rising income inequality, populationaging, tax competition, rising budget deficits and debts, slowgrowth, and fears that economic dynamism was being stifled byexcessive taxes and benefit levels. Nevertheless total spendingon welfare has edged up in many countries and cuts in ratesof benefit have generally been fairly modest. The generosityof the welfare state has an enormous influence on poverty andincome inequality and still appears to be popular in most ofEurope. Suggestions that society would benefit from reducedworking time must reckon with the fact that it is paid workwhich generates the tax revenue required to fund welfare spending. Footnotes ¹ E-mail addresses: donatella.gatti{at}cepremap.cnrs.fr; andrew.glyn{at}economics.oxford.ac.uk     

Trends in the development of physiocratic doctrine

Abstract

Of the two versions of Quesnay's Tableau économique, the one was constructed in 1758 and the other published in 1766. The latter derives from certain essential requirements of the former. Nevertheless they display striking differences. The earlier concept aimed solely at demonstrating the consequences for economic reproduction of different ways of spending money. Upon this was grafted the far more ambitious purpose of giving a complete picture of the annual reproduction and circulation of goods in a prosperous agricultural economy. The flexible and dynamic zigzag diagram thus developed into the rigid and static Formule du Tableau économique.* L. Herlitz, ‘The Tableau economique and the Doctrine of Sterility’, Scand. Econ. Hist, Rev. ix. (1961), passim. The change in the purpose and form of the Tableau took place precisely at the time that physiocracy grew into a well-disciplined and militant school, armed with an eschatological doctrine. The Formule, illustrating the ordre naturel, is the proper document of this school. Nevertheless the stamp of the earlier, cruder, more flexible and tentative concept still remains on the definitive Tableau; and especially does it remain on the physiocrats' own interpretations of it, making them difficult to understand when not related to the original zigzag diagram.     

The New Macro Political Economy of Alberto Alesina

The paper examines the scientific work of Alberto Alesina as leader of a new school of macroeconomic political economy which has renovated and broadened the content of this branch of the economic science. His political economy is not dominated by the axiomatic normative economics, where benevolent planners maximize the aggregate welfare dressed in simplistic neo-Keynesian clothing. After an examination of its roots in the Italian tradition of political economy and public finance the paper makes a comparison with the public choice approach, with decision-making by the electors and politicians is done. However, Alesina new macro-economic perspective incorporates the hypothesis of rational agents while the public choice approach is inherently micro economic and is generally based on limited rationally.     

Fiscal and environmental policy under monopolistic competition

Summary Keynesian demand management offsets some of the distortions caused by monopolistic competition and thus induces multiplier effects on national income and environmental damages. The cost of public funds rises with the virtual environmental tax and the degree of competition in the product market. The virtual environmental tax rises with abatement and falls with the cost of public funds. Consequently, greener preferences induce a rise in the virtual environmental tax, the cost of public funds and public abatement, and a fall in the provision of traditional public goods. A greater preference for traditional public goods harms environmental quality, since both abatement and output fall. Protecting cartels lowers the cost of public funds and may raise the provision of both traditional public goods and abatement. Environmental quality may thus rise, but other components of social welfare will fall. The paper also analyses the effects of private abatement, pollution taxes, fiscal consolidation and the progressivity of the tax system on government policy, employment, environmental quality and welfare.This paper was prepared for the OCFEB workshop Quantitative Economics for Environmental Policy held at the Tinbergen Institute Rotterdam, March 22 1994. We thank Casper van Ewijk and Jenny E. Ligthart for useful comments.     

A formal treatment of threats: A note on the economics of deterrence

Summary To discuss and clarify a theory of deterrence this article focusses on military and economic inputs of the international exchange system and uses traditional microeconomic tools. It acknowledges the stochastic character of international threat situations and the influence of the attitude towards risk. The results of this approach suggest that the impact of neither economic and military deterrents nor unconditional rewards can be established apriori and, consequently, stress the importance of minimizing the potential yield of international misconduct and the use of positive sanctions (conditional rewards) as instruments to contain undesirable behaviour amongst nations.This article communicates the opinion of the author. The views expressed herein are not necessarily shared by my employer. Comments by Jan Veenbergen, Erick Schut, Igor Kaa, Kees Eitjes, Marko Bos and two referees of this journal were very helpful. A.R. Hof made suggestions on improving my language. Any errors are mine.     

The Political and Economic Dimension of Monetary Unions

This paper investigates the relationship between the political and economic aspects of monetary unions. After illustrating the recent change in approach to the theory of optimum currency areas (section 2), the paper analyzes the momentous implications of union members maintaining political sovereignty (section 3) for the notion of currency area optimality and the viability of monetary unions (section 4).     

On the scope of hydraulic macroeconomics: Some reflections on Alan Coddington's Keynesian Economics

Summary The questions which Alan Coddington's posthumous bookKeynesian Economics brings to the fore as well as the thought-provoking (rather than fully acceptable) answers it provides make it worthy of being taken up for further analysis and discussion. This review article is intended to be one possible contribution in this respect. It focuses on the way Coddington's book deals with subjectivist approaches in economics and criticises it for going astray in this respect by adopting a mistaken view on the proper method of economics and giving a mistaken interpretation of both Keynesian economics and the economics of Keynes.I am indebted to L. H. Hoogduin, I. M. Kirzner, J. A. Kregel, S. K. Kuipers, J.A.H. Maks, J. Muysken and J. Pen for their valuable comments and discussion on an earlier version of this paper. Of course, they cannot be blamed for any remaining errors.A. Coddington,Keynesian Economics: The Search for First Principles, George Allen and Unwin, London, etc., 1983. Pp. 129. £ 9.95