The economic valuation of biodiversity as an abstract good

The notion of an economic valuation of biodiversity raises major philosophical and practical challenges, especially due to the fact that biodiversity is an abstract good. Insights from political philosophy and philosophy of language can help to clarify the reliability and scope of the current economic methods that can be used for the purpose of valuing it. The analogy with another abstract good, justice, indeed shows that thinking about abstract goods is a very specific exercise. If they do not take account of this specificity, applications of hedonic and contingent valuation methods can hardly claim to be relevant to value biodiversity. Rawls' theory of justice provides for the conceptual tools to overcome this problem. A reinterpretation, based on the theory of counterfactuals, allows generalizing this account of justice to outline a theory of thinking about abstract goods. This new framework emphasizes the importance of the institutional context in determining the reliability of thinking about abstract goods. It points toward substantial reforms of the methodology of economic valuation. Specifically, it suggests reinterpreting valuation as a dynamic expressive process, where initial steps aim at reinforcing the reliability of later steps through an institutional transformation and stabilization of preferences for abstract goods.     

A Proposed Methodological Synthesis of Post-Keynesian and Institutional Economics

Post-Keynesian and institutionalist writers have commented on the theoretical and conceptual commonalities between the two schools. Some have suggested a theoretical synthesis based on these commonalities. In spite of these theoretical and conceptual commonalities each tradition has developed significantly different methods of analysis. Instead of theoretical or conceptual synthesis we seek here to present a methodological synthesis.

Institutionalist methods have yielded "plausible" explanations, but these have been too "vague and suggestive" to be consistently used for economic policy. Post-Keynesian methods have policy necessary "rigor," but the similarity to neoclassical methods has exposed post-Keynesian theories to unwarranted synthesis with incompatible traditions.

This essay presents a synthesis of post-Keynesian and institutionalist methodology, one of "plausible rigor," combining elements of "institutional dynamics" with a heuristic framework based on John Dewey's "instrumental logic," and proposes that the resulting approach overcomes weaknesses in the methods of analysis of both schools.     

Instrumentalism and Economic Policy: The Quest for Reasonable Value

Neuroeconomics and behavioral economics (NEBE) is one of the most dynamic fields in contemporary economics. However, from the viewpoint of economic methodology there are still substantial reasons why NEBE is irrelevant for economic theory. This paper argues that they will only become an essential part of economics if they are embedded into a fully-fledged institutional and evolutionary paradigm. I develop a Neo-Veblenian theory of the individual that starts out from the observation that modern brain sciences do not support the notion of the brain to be an integrated and consistent rational decision apparatus. An evolutionary explanation is offered for this, which reinstates Veblen's distinction between adaptation as engineering optima and social selection. Individual identity does only emerge through communication and interaction among brains, in particular via language. The concept of the "extended brain" is proposed, which is applied to define human individuality as a social phenomenon. Thus, the systematic unity of neuroeconomics and institutional economics is established.     

Comments on “The Corporate State,Economic Performance,and Social Policy”

This paper provides an introduction to the Minsky-Veblen Cycles as a specific example of pluralist economic thinking in the context of the recent global economic crisis. It illustrates how pluralism can be applied to economic research. Specifically, the Minsky-Veblen Cycles combine three elements of institutional and post-Keynesian thought to explain key features of the current crisis. These elements are (1) John Maynard Keynes's postulate of effective demand, (2) Hyman Minsky's financial instability hypothesis, and (3) Thorstein Veblen's concept of conspicuous consumption. In this paper, we have a two-fold approach to them: First, we systematize the connection between the Minsky-Veblen Cycles as a theoretical argument and the epistemological rationale of a pluralist approach to economics. Second, we contrast the implications of our approach for incorporating behavioral assumptions in macroeconomic arguments to mainstream claims for a "microfoundation" of macroeconomic theory.     

Planning and Urban Growth: An Anglo-American Comparison

Understanding the complexity of institutional change is a necessary step in gaining deeper knowledge of economic performance over time, and it is one of the main challenges in the research agenda of institutionalism. Institutional change can be studied using a variety of theoretical approaches. We study some of the main approaches to institutional change in original economic institutionalism and new institutional economics. First, after comparing the approaches of Émile Durkheim and Thorstein Veblen, we focus on the contributions of the instrumental value theory and other original institutional traditions in the study of institutional change. Second, new institutional economics improved on the weak points of rational choice institutionalism regarding institutional change and incorporated the “institutions-as-rules” approach (Douglass North) and the “institutions-as-equilibria” approach (Avner Greif, Masahiko Aoki). We analyze both approaches to institutional change. Furthermore, we present an updated nonintegral overview of approaches to institutional change, show several interconnections between original and new institutionalisms, and conclude that the dialogue between the different theories of institutional change is relevant and beneficial.     

Japanese Consumption,External Disequilibrium and their Statistical Measurement

Georgescu-Roegen's work is usually divided into two categories, his earlier work on consumer and production theory and his later concern with entropy and bioeconomics beginning with his 1966 introductory essay to his collected theoretical papers published in the volume Analytical Economics. Most economists usually praise his earlier work on pure theory and ignore his later work which is highly critical of neoclassical economics. Those economists sympathetic to his later work usually take the position that he “saw the light” and gave up neoclassical theory some time in the 1960s to turn his attention to the issues of resource scarcity and social institutions. It is argued here that there is an unbroken path running from Georgescu's work in pure theory in the 1930s, 1940s, and 1950s, through his writings on peasant economies in the 1960s, leading to his preoccupation with entropy and bioeconomics in the last 25 years of his life. That common thread is his preoccupation with “valuation.” The choices our species makes about resource use and the distribution of economic output depends upon our valuation framework. Georgescu-Roegen's work begins in the 1930s with a critical examination of the difficulties with the hedonistic valuation framework of neoclassical economics, moves in the 1960s to the conflict between social and hedonistic valuation, and culminates in the 1970s and 1980s with his examination of the conflict between individual, social, and environmental values. This paper traces the evolution of Georgescu-Roegen's thought about valuation and the environmental and social policy recommendations which arise out of his bioeconomic framework.     

Focus Groups: Contributing to a Gender-Aware Methodology

A focus group is an open group interview from which research hypotheses can be derived. It enables economic research to step down from its narrow theoretical assumptions and to embed research questions in a life context. It also can contribute to strong objectivity and when done in women's groups and/or on gender issues, focus groups can contribute to a feminist methodology. Experience from a focus group by the author held in Africa has indicated how diverse and enriching economic notions can become, when discussed in a group, before the research has started.     

Heterogenesis of ends: Herbert Spencer and the Italian economists

The influence of Spencer's ideas is now generating a good deal of analysis. The aim of this paper is to highlight the importance of Spencer's work on economic thought. It also analyses the way in which this work was interpreted by the Italian economists. In particular, it investigates the influence of Spencer's theory of evolution on the thought of Pantaleoni (1857–1924) and Nitti (1868–1953). These two representative Italian scholars were on opposite sides for their economic methodology and the issue of government intervention in the economy. The paper clarifies whether their two divergent visions on social change could both be in accordance with Spencer ideas.     

诺斯制度变迁理论方法论探析:修正的新古典经济学范式

关于诺斯制度变迁理论的方法论，有观点认为它以新古典经济学的“理性人”范式为基点。笔者不同意这种观点，笔者认为它属于修正的新古典经济学范式。这主要表现在三个方面：一、修正的经济人假设；二、非零交易成本假设；三、新古典经济学分析工具的继承。     

Thomas DeGregori’s “Back to the Future”: A Comment

A fundamental principle of Karl Polanyi's institutional outlook is that any economic system has to be considered as a whole and as a historically specific social organization. This principle implies a comparative method and a critique of conventional economics. Besides, the problem of the interrelation between the economic system and other aspects of social life cannot be avoided. On this basis, Polanyi points out the peculiar "economic" nature of the market-capitalist society and explains the institutional transformations characterizing its history. The opposition "embedded/disembedded," used by Polanyi to distinguish pre-modern economies from the market economy, has been widely adopted in recent times, particularly by economic sociologists, as a key for understanding current complex economic phenomena. However, the reference to Polanyi often presupposes a distorted interpretation of his theory, and a different kind of institutional approach.     

A review of Personalist Economics

The recent focus on sustainability as guiding principle for economic activity has generated many (often conflicting) definitions of sustainable economic development. Yet while the terminology may be new, the discussion is not. It parallels the discussion about biases of economic valuation concepts that have led to the neglect of the domestic and subsistence contributions relegated to the "informal" or household sector. This paper argues that the narrow definition of economic theory, methodology, and valuation concepts has led to the detrimental neglect of sustaining functions without which economic activity is impaired. To move toward sustainability it is imperative to regain a broader understanding of economics. Three principles are identified as essential for this conceptual expansion of economics. They are: concreteness rather than abstraction, connectedness rather than isolation, and diversity rather than homogeneity. All three are informed by feminist theory. Thus it is argued that the voices of women who have gone largely unheard in economics are essential to reconceptualizing economics as sustainable.     

Assessing the Legitimacy of Stem Cell Research: An Instrumental Valuation Principle Approach

Research on embryonic stem cells has elicited much public and political debate. By promoting the use of the Instrumental Valuation Principle, it is argued here that institutionalists can offer a framework for policy analysis that ensures that the debate on stem cell research is informed by the instrumental use of knowledge and that it is not controlled by upper-level hegemonic powers. Our contention is that the first decade following the initial harvesting of human embryonic stem cells (1998-2008) in the United States was characterized by institutional and policy responses that created a non-deliberative environment that hindered the process of instrumental valuation of stem cell research. This paper concludes that the current conditions of limited corporate involvement are favorable toward a democratic discussion of the legitimacy of stem cell research, but this will require overt challenges to political elites' attempts to control the creation and flow of instrumental knowledge on stem cell research.     

Household responsibility system and China's agricultural Growth revisited: Addressing endogenous institutional change

The rise of the Household Responsibility System has been widely viewed as a significant contribution to China's agricultural growth. However, this empirical conclusion is rested upon a convenient but doubtful presumption that the process of institutional change, also known as decollectivization, is exogenous. We contribute to this literature by explicitly recognizing the endogeneity of institutional changes, and exploit exogenous variations in lagged weather shocks and initial fixed assets for consistent estimation. With improved data on irrigation, mechanization, weather and institutional changes in a provincial panel data during 1970–1987, the results of panel instrumental estimations reveal that the Household Responsibility System had a significantly positive effect on China's agricultural growth, which was larger than indicated by OLS estimates that suffer from adverse selection and attenuation biases.     

基于诺思制度变迁框架的中国近代企业史研究——以荣家企业制度变迁为例

从20世纪90年代起,中国经济史学研究引入了新制度经济学理论,这是传统经济史学研究方法上的突破。但这些研究大多集中于正式制度对近代企业的影响和运用交易成本或产权理论分析近代企业制度变迁。文章在诺思产权—国家—意识形态的制度变迁理论框架的基础上,以企业代替国家为制度变迁的主体,重点从意识形态视角进行研究,并通过对荣家企业的案例分析,为近代企业史研究提供了一个内在逻辑一致的理论框架。     

‘My Own Utopia’. The economics of Bentham's Panopticon

The paper analyses Bentham's theory of the economic management of the Panopticon prison he projected in 1786 and which was approved by the British Parliament in 1794, but never constructed. Its focus is on the economic arguments employed to justify the principles of management, most of which amount to the modern economic notions of market policies and principal-agent relationships. Bentham's way of conceiving these notions can be summarized in the problem of the junction of interest and duty. This paper shows that many modern notions concerning the economics of organizations and public economics are clearly foreshadowed, and sometimes even explicitly formulated, in Bentham's writings on prison management. Bentham was conscious of the important economic dimension of the Panopticon scheme and was persuaded, albeit illusorily, that an accurate economic theory of its management could favour its approval. Well before Charles Babbage's On the Economy of Machinery and Manufactures (), he went into a detailed theoretical analysis of the requirements and dilemmas of a complex economic organization oriented towards the joint fulfilment of the goals of a variety of stakeholders: taxpayers, the government, contract managers, keepers, taskmasters, subcontractors and prisoners. He also recognized that some institutional limits must be opposed to profit-oriented management in order to preserve the life, health and mental equilibrium of subordinates.     

Technological change and institutional inertia: a game-theoretic approach

In this paper, we study a co-evolutionary model of economic change at two hierarchical levels. At the lower level, institutions are given and the focus is on how resources are allocated and innovation produced in response to the pay-off structure induced by prevailing institutions. At the higher level, it is the institutions themselves that change as the outcome of a process of social bargaining. The main objective of the paper is to study the interaction between these two levels of change, attempting to provide some insight on issues like technological/institutional divergence, technological dead-end, institutional inertia, etc.It appears that evolutionary economics must be the theory of a process of cultural growth as determined by the economic interest, a theory of a cumulative sequence of economic institutions stated in the terms of the process itself. Thorstein Veblen (1898, p. 393).This work was undertaken while the author was a Research Fellow at the Institute for Advanced Studies of the Hebrew University of Jerusalem.     

A Thoroughly Embodied Economics: A Review of Personalist Economics by Edward J. O'Boyle

In a debate on the future of monetary policy and the displacement of money, Woodford argued that, even if innovations should lead to a situation in which the banks' demand for reserves at the central bank is zero, the central bank can still influence the economy's interest rates because its liability is the economy's unit of account. This paper deals with these topics by considering the implications of emphasizing the function of money as unit of account. In the analysis of money from this perspective, social, institutional and economic factors play a crucial role. Money is a social and historical relation. Therefore, the displacement of money and central banks, though possible, is a complex process involving economic, social and political factors, not merely the result of innovations. The paper also looks at some aspects of Kaldor's theory, which is centered on the fundamental importance of money as unit of account.     

Why China's approach to institutional change has begun to succeed

In the constantly changing modern economic environment, a country's ability to implement institutional reforms is crucial to maintain economic growth and to promote the welfare of its citizens. Unfortunately, it can be difficult to persuade institutional stakeholders that the change is necessary, and as a result, efforts at institutional change often fail. To avoid situations in which change is sudden and disruptive, China has chosen a more cautious approach of gradual institutional change leading to smooth reform, which Deng Xiaoping referred to as “crossing the river by stepping from stone to stone” — a metaphor that translates into doing a careful experiment before broad application of an approach for which you lack prior experience. This approach allows adaptation to local conditions during subsequent broader adoption of a new approach, and can thereby decrease the risks and costs of adopting a new strategy by first testing the change and then demonstrating the potential benefits to local residents and governments. This innovative approach has been a key component of China's economic reforms since 1978, and the Chinese experience shows how adapting programs to local natural and social conditions can help to motivate change and sustain the implementation of new institutions.     

New techniques for estimation of rational expectation models and Volcker deflation

Multivariate autoregressive moving average models are used to form the “reduced forms” of Muth's rational expectation models. One implication of the modern macroeconomic theory is that economic agents' expectations should change in the presence of major policy changes. This paper proposes a simple method for directly comparing the formulation of expectations, and illustrates it by considering the impact of a recent policy change in the US under Paul Volcker of the Federal Reserve Bank. Many new interpretations are based on transfer functions, “gain” calculations, Green's function matrices from solutions of difference equations, and complex conjugate roots to measure cyclical phenomena. Furthermore, the traditional distributed lag models are criticized for arbitrarily assuming that the gain is unity. We provide an equation for minimum mean squared error regulation, and indicate the role played by rational two-step ahead speculations made by economic agents, along with changes therein emanating from the policy change.