Towards Sustainability Economics: Principles and Values

Synopsis  Radical alternatives, in terms of our ideas about science in society, about economics, ideology and institutional arrangements, should be included among possibilities considered within the scope of a pluralistic philosophy. While all these aspects of our mental maps are interrelated and important, economics plays a key role in attempts to get closer to a sustainable society. Mainstream neoclassical economics is not enough. The tendency to exclusively rely on this particular theory is considered part of the problems faced. A ‘sustainability economics’ more in line with dominant ideas of democracy is proposed, emphasizing the ethical, ideological and political elements. Reference is made to institutional theory but the principles and concepts suggested are in many ways similar to other kinds of heterodox economics and developments in other social sciences. Neoclassical economics is used as a point of reference in pointing to alternative ideas about human beings, organizations, markets, decision- making, efficiency, rationality, progress in society and institutional change processes. Predilection for such an alternative conceptual framework (or for neoclassical economics) is not exclusively a scientific choice but as much a matter of political and ideological preferences. One paradigm may be dominant at a time, but because of the ideological specificity of each paradigm, competing theoretical perspectives should be accepted and even encouraged in a democratic society.      

Lachmann and the wilderness: On Lachmann's radical subjectivism

Abstract

This paper deals with the question why in the 1940s and 1950s Ludwig Lachmann (1906–1990) failed to revive Austrian economics. Lake Keynes and Hayek, Lachmann pointed out that expectations, and hence knowledge, are important determinants of (cyclical fluctuations in) investment and economic activity. He thereby emphasized that the process of knowledge acquisition is indeterminate and open‐ended. This indeterminateness is difficult to reconcile with neoclassical attempts to provide economics with internally consistent microfoundations. This fundamental difference between his and the neoclassical research agenda explains Lachmann's failure to revive Austrian economics.     

Economists,social reformers,and prophets: a feminist critique of economic efficiency

This article examines the concept of Pareto optimality, bringing to light some of its implicit assumptions about the nature of human agency, work, and gender. It explores the androcentric character of the economic agent and the gendered nature of neoclassical models in relation to the historical development of the concept of economic efficiency during the late 1930s. The thrust toward the development of Pareto optimality as a scientific criterion of economic welfare was a response to the methodological tensions between the clearly political nature of economics and the scientific aspirations of economists. An examination of the debates from this period illuminates some of the values that became embedded in neoclassical economics, and which are now hidden by the masks of mathematics and abstraction.     

The economics of ageing and the political economy of old age

Economic discussion of ageing has been largely neoclassical in approach. Ageing has become a specialism within population economics, which is itself a specialism within the neoclassical mainstream. An alternative view has come from authors in sociology and social policy, who have produced their own ‘political economy of old age’. In contrast with neoclassical individualism, sociological depictions of ageing have stressed the social construction of old age and the structured dependency of the elderly. Non-neoclassical economists have had little to say about ageing, despite some relevant work in the early days of Keynesianism. This paper argues that a combination of structural ideas from sociology and disequilibrium ideas from Keynesian and non-neoclassical economics can provide a suitable framework for the economics of ageing.     

The changing face of mainstream economics

This article argues that economics is currently undergoing a fundamental shift in its method, away from neoclassical economics and into something new. Although that something new has not been fully developed, it is beginning to take form and is centered on dynamics, recursive methods and complexity theory. The foundation of this change is coming from economists who are doing cutting edge work and influencing mainstream economics. These economists are defining and laying the theoretical groundwork for the fundamental shift that is occurring in the economics profession.     

The New Economics of Labor Migration: Beware of Neoclassicals Bearing Gifts

Abstract

Until the emergence of the New Economics of Labor Migration (NELM) in the 1980s, migration scholars were largely divided into two main theoretical camps, viz. the neoclassical and historical-structural approaches to migration. Against this background, the NELM presented itself as a theoretical ‘third way’ between the two latter approaches, and purported to reconcile agency and structure in a way previously unachieved by either of them. While those pretensions gained a fair amount of acceptance and popularity, this paper argues that they are fundamentally misleading, and that the NELM is little more than a slightly more sophisticated avatar of the neoclassical approach to migration, whose fundamental weaknesses it has not, and cannot, shed. This paper further argues that, in so doing, the NELM effectively constitutes migration theory's own instance of economics imperialism, i.e. the attempt to advance the fundamental tenets of neoclassical economics (methodological individualism and the assumption of optimizing rationality) within the context of the study and interpretation of various social phenomena. In order to put forth these arguments, this paper provides a summary presentation of the standard neoclassical theory of migration, the historical-structural heterodoxy and the NELM; highlights why it is that the NELM should be regarded as a ‘reworked’ version of the neoclassical theoretical framework and discusses its inception in the context of the ‘information-theoretic revolution’ in economics; and argues for a new and improved ‘historical-structural synthesis’ as a more satisfactory alternative to both the NELM and the standard neoclassical theory.     

Saving government failure theory from itself: recasting political economy from an Austrian perspective

The economic approach to politics revolutionized the way scholars in economics and political science approached the study of political decision-making by introducing the possibility of government failure. However, the persistent and consistent application of neoclassical models of economics also seemed to suggest that once the full costs were accounted for, this failure was an illusion. This paper counters these arguments, typically associated with George Stigler, Gary Becker and Donald Wittman, by focusing on the underlying economic theory. We develop an alternative model of political economy grounded in the Austrian conception of the dynamic market process.

Emergence versus neoclassical reductions in economics

ABSTRACT

Many epistemic anomalies of the neoclassical research programme originate from its ontologically reductionist meta-axioms, which predicate how economic macro-systems are constituted from their micro-entities and how the latter behave – namely atomistic aggregativity, normative equilibration and global instrumental rationality. This paper explores the metaphysical foundations of the premise of emergence and argues that it can be a remedy to the ills of neoclassical reductions, and a foundational epistemic principle in a progressive systemic research programme in economics, which would bridge existing streams of ‘heterodox’ economic theory.     

Natural resources in the theory of production: the Georgescu-Roegen/Daly versus Solow/Stiglitz controversy

Abstract

This paper provides a theoretical and methodological account of an important controversy between neoclassical resource economics and ecological economics from the early 1970s to the end of the 1990s. It shows that the assumption of unbounded resource productivity in the work of Solow and Stiglitz–and the related concepts of substitution and technical progress–rest on a model-based methodology. On the other hand, Georgescu-Roegen’s assumption of thermodynamic limits to production, later revived by Daly, comes from a methodology of interdisciplinary consistency. I conclude that neither side provided a definitive proof of its own claim because both face important conceptual issues.     

Agency through Development: Hausa Women's NGOs and CBOs in Kano,Nigeria

ABSTRACT

Analyzing the participation of Hausa women in religiously influenced nongovernmental organizations (NGOs) devoted to development work provides critical insights into the complex intersection of gender, religion, class, culture, and politics and economics. Based on interviews with leaders and employees of various NGOs, including community-based organizations (CBOs), in Kano, Nigeria, in 2010–11, this in-depth case study provides important examples of how various types of NGOs navigate political pressures when it comes to funding; it recognizes the understudied importance of women's labor contributions in the context of the development apparatus in Africa; it highlights the role of women as progenitors rather than benefactors of economic development; and it illustrates the unique role that faith-based organizations (FBOs) can and do play in terms of reaching certain marginalized segments of the population.     

Adam Smith's Conceptualization of Power,Markets, and Politics

This paper argues that Adam Smith is a/the "founding father figure" of modern social/political economy as well as economics. Smith wrote extensively and insightfully on the subject of power , and thereby class and stratafication in society. This paper explicates four main types of power relations in Smith's analysis, notably drawing on the Wealth of Nations : wealth power, monopoly power, employer power, and political power. Smith's focus on power helps to differentiate his broader vision and rich discourse from that of many contemporary neoclassical writers and sharpens our appreciation for his contributions to social and political economy.     

A Kantian critique of neoclassical law and economics

Abstract

This paper outlines a critique of neoclassical law and economics based on the ethics of Immanuel Kant, focusing on four central topics: efficiency as the sole evaluative criterion for policy-making, hypothetical compensation in Kaldor–Hicks efficiency, the instrumental nature of rights and the assumption of reciprocal causation, and the role of punishment to both society and the individual. This overview addresses issues of concern not just to Kantians, but to anyone dissatisfied with the utilitarian foundations of law and economics and the amoral view of law upon which it is based.     

Choice and Constraint in paid work: Women from low-income households in Tehran

ABSTRACT

Based on interviews and participant observation conducted in 2009–10 in Tehran among women living in low-income communities, this contribution examines the complex ways in which women experience paid work. Most low-income Iranian women interviewed had conflicted views about paid employment. Some held up the male breadwinner as ideal, occasionally invoking Islam to limit their engagement in work they viewed as socially stigmatizing, physically difficult, or low paying. Others, particularly younger and unmarried women, had more positive views of work. Class, age, type of employment, and marital status all played roles in shaping women's experiences; but among women with similar characteristics, considerable differences were also apparent. Building off previous work that rejects simplistic dualisms such as choice versus constraint or exploitation versus empowerment, this contribution argues for more nuanced categories that allow for an emphasis on the conflicted ways women experience paid work.     

Austrian economics at the cutting edge

Austrian economists today have a valuable opportunity to rejoin the mainstream of the economics profession. As Colander, Holt, and Rosser have argued, neoclassical orthodoxy is no long mainstream. What I call the “heterodox mainstream” is an emerging new orthodoxy. The five leading characteristics of the emerging new orthodoxy are bounded rationality, rule following, institutions, cognition, and evolution. When listed in this order, they suggest the acronym BRICE. The Austrian school is also an example of BRICE economics. The shared themes of BRICE economics create an opportunity for intellectual exchange between Austrians and other elements of the heterodox mainstream. Although Austrians should engage the heterodox mainstream energetically, they should also defend the essential elements of an early version of neoclassical economics, elements at risk of becoming half-forgotten themes of an earlier era. These elements are supply and demand, marginalist logic, opportunity-cost reasoning, and the elementary theory of markets. JEL Codes A14, B50, B53 This text is an edited version of a talk given in Washington, D.C. on 19 November 2005 at the SDAE annual dinner. I thank persons present at that time for a helpful discussion. I also thank William Butos, Roger Garrison, Steven Horwitz, and Peter Lewin for useful comments on an earlier draft.     

Economic importance and statistical significance: Guidelines for communicating empirical research

Abstract

A critical objective for many empirical studies is a thorough evaluation of both substantive importance and statistical significance. Feminist economists have critiqued neoclassical economics studies for an excessive focus on statistical machinery at the expense of substantive issues. Drawing from the ongoing debate about the rhetoric of economic inquiry and significance tests, this paper examines approaches for presenting empirical results effectively to ensure that the analysis is accurate, meaningful, and relevant for the conceptual and empirical context. To that end, it demonstrates several measurement issues that affect the interpretation of economic significance and are commonly overlooked in empirical studies. This paper provides guidelines for clearly communicating two distinct aspects of “significance” in empirical research, using prose, tables, and charts based on OLS, logit, and probit regression results. These guidelines are illustrated with samples of ineffective writing annotated to show weaknesses, followed by concrete examples and explanations of improved presentation.     

Integration of and Deliveries among the World Zionist Organization,Israel, and Diaspora Countries: System Articulation with the Social Fabric Matrix

Abstract:

The religious economics (not economics of religion) concern here is the relationship between the World Zionist Organization (WZO) and Israel, which is known as a geopolitical power in its region and which is also known as an economic success story. Joseph Schumpeter and Karl Polanyi explained how the political economy of medieval Europe was influenced and guided by Christian morality. This paper extends the analysis of religious economics by using the social fabric matrix of original institutional economics to define and structure the integration of the WZO, Israel, and the Diaspora countries. This allows us to observe how to conduct such work and to learn how Israel is guided and influenced by the WZO. It also helps to explain Israel’s “risk of tearing itself apart” as noted in a recent article in the New York Times.     

Competition, knowledge, and local government

This paper applies the insights of Austrian economics to an important issue in local political economy. Basic economic theory holds that greater competition produces superior outcomes in private goods markets. The same should be true in the ??markets?? for the output of local government. Brennan and Buchanan (1977, 1980) show that interjurisdictional competition may serve as a potential restraint on the monopoly powers of local Leviathan and Tiebout (1956) shows that it may help lead to the production of efficient quantities of local public goods. However, other potential virtues of competition in the market for local collective goods have been largely ignored. This paper explores those other virtues as well as the neoclassical theoretical foundations of the Tiebout (1956) model, upon which much of this literature is based. This has public policy implications for local governments, which have taken on increased importance given the recent global movement towards more decentralized government.     

Off the Record: Reconstructing Women's Labor Force Participation in the European Past

Abstract

Conventional histories of women's labor force participation in Europe conceptualize the trends in terms of a U-shaped pattern. This contribution draws on historical research to challenge such an account. First, it demonstrates that the trough in participation is in part statistically manufactured by uncritical reliance on official sources that systematically undercount women workers. Second, it exploits nonstandard sources to construct alternative estimates of women's participation. Third, it analyzes the reconstructed rates to determine their congruence with neoclassical economics and modern empirical studies. Not all posited relationships time travel. Supply-side factors such as marital status and number and age of children are major determinants of modern women's decision to enter the labor force, yet appear less prominent in historical contexts. Instead, the demand for labor seems decisive. Finally, the U-shaped curve is not entirely a statistical artifact, but appears to evolve at higher levels of participation than usually suggested.     

自生能力、经济转型与新古典经济学的反思

现有的新古典经济学理论体系把企业具有自生能力作为暗含的前提。但是 ,转型中国家和其他许多发展中国家的企业却因政府的赶超愿望 ,进入不具比较优势的产业而不具自生能力。当经济中大量企业缺乏自生能力时 ,实行根据新古典经济学所制定的改革或转型政策 ,往往达不到预期效果 ,而且 ,可能给社会带来巨大痛苦。本文主张 ,在分析社会主义经济、转型经济和发展经济问题时 ,放弃现有的新古典经济学体系中企业具有自生能力的暗含前提 ,把企业是否具有自生能力作为一个具体的考虑变量 ,这是新古典经济学理论的必要发展。