The economics of shortage and problems of reform in Chinese industry

This paper employs the economics of shortage framework to examine post-Mao reforms in Chinese state-owned industry. Performance has been disappointing because reforms through 1985 failed to fundamentally alter economic agent behavior. The “soft” budget constraints at the enterprise and local government levels continue to generate “quantity” and “expansion” drives. The resultant inflationary pressures have necessitated administrative interventions and thwarted reform progress. The Maoist legacy of active participation by local governments in economic management is high-lighted as a major obstacle to the elimination of paternalism in state-enterprise relations.     

The role of factor substitution in the theory of economic growth and income distribution: Two examples

While much empirical evidence suggests that the Cobb–Douglas production function may be a reasonable benchmark for aggregate analysis, we argue that the practice, particularly prevalent in contemporary growth theory, of adopting the Cobb–Douglas technology, may lead to misleading implications. Using two examples, we show that key implications of the models are highly sensitive to small deviations of the elasticity of substitution from unity. The first employs the standard neoclassical model and emphasizes the sensitivity of the speed of convergence to small changes in the elasticity of substitution. This in turn has profound consequences for wealth and income distribution. The second deals with foreign aid and highlights how the relative merits of “tied” versus “untied” aid are also very sensitive to the elasticity of substitution.     

可持续发展：资源环境经济学与生态经济学的视角差异

资源环境经济学和生态经济学有不同的理论基础和研究方法,资源环境经济学运用新古典经济学的理论和方法来分析问题,生态经济学则通过多学科相关理论以及多元化方法取得研究进展。二者对于可持续发展也有不同的视角和追求,资源环境经济学强调经济增长,注重规模和效率,追求弱可持续性;而生态经济学强调发展,更重视分配和公平,追求强可持续性。深刻理解这些差异,对于经济学本身的完善以及经济发展模式选择都有重要的意义。     

Topological games at Princeton, a mathematical memoir

The games of the title are “Nash” (or Hex), “Milnor” (or Y), “Shapley” (or Projective Plane) and “Gale” (or Bridg-It) all of which were discovered (or re-discovered) in Princeton in 1948–1949. After giving the basic topological connections, I will discuss more recent ramifications related to computational complexity theory. A recurrent theme will be non-constructive proofs, or how we can know something can be done without having the slightest idea of how to do it.     

Concatenate coordination and mutual coordination

We tell of the evolving meaning of the term coordination as used by economists. The paper is based on systematic electronic searches (on “coord,” etc.) of major works and leading journals. The term coordination first emerged in professional economics around 1880, to describe the directed productive concatenation of factors or activities within a firm. Also, transportation economists used the term to describe the concatenation of routes and trips of a transportation system. These usages represent what we term concatenate coordination. The next major development came in the 1930s from several LSE economists (Hayek, Plant, Hutt, and Coase), who extended that concept beyond the eye of any actual coordinator. That is, they wrote of the concatenate coordination of a system of polycentric or spontaneous activities. These various applications of concatenate coordination prevailed until the next major development, namely, Thomas Schelling and game models. Here coordination referred to a mutual meshing of actions. Game theorists developed crisp ideas of coordination games (like “battle of the sexes”), coordination equilibria, convention, and path dependence. This “coordination” was not a refashioning, but rather a distinct concept, one we distinguish as mutual coordination. As game models became more familiar to economists, it was mutual coordination that economists increasingly had in mind when they spoke of “coordination.” Economists switched, so to speak, to a new semantic equilibrium. Now, mutual coordination overshadows the older notion of concatenate coordination. The two senses of coordination are conceptually distinct and correspond neatly to the two dictionary definitions of the verb to coordinate. Both are crucial to economics. We suggest that distinguishing between the two senses can help to clarify “coordination” talk. Also, compared to talk of “efficiency” and “optimality,” concatenate coordination allows for a richer, more humanistic, and more openly aesthetic discussion of social affairs. The narrative is backed up by Excel worksheets that report on systematic content searches of the writings of economics using the worldwide web and, using JSTOR, of Quarterly Journal of Economics, Economic Journal, Journal of Political Economy, American Economic Review, and Economica.     

National Technology Foresight Activities Around the Globe: Resurrection and New Paradigms

This contribution summarizes recent experiences in government or national technology forecasting which are now often termed “foresight.” While the methodological tool kit changed from mathematical models to more qualitative scenarios or visions, the Delphi method has become the backbone of foresight projects. Recent national activities, being dealt with in this special issue, are compared in terms of their comprehensiveness, their science versus industry orientation, and their analytic versus action-oriented targets. Although some of these are ongoing, we can discern several new foresight paradigms. From the perspectives of sociology and political sciences, foresight elements seem to be the means of communication (or the “wiring up”) for the negotiating systems of the society. From an economics and management point of view, foresight is helpful for benchmarking and for initiating feedback processes between future demand and present day investment in research and development. From a cultural point of view, the resurrection of foresight in the 1990s seems to be related to growing globalization and at the same time the recognition of national or regional innovation systems. Finally, in terms of international affairs supranational foresight seems to become a new venture.     

On the dynamic effects of using hired labor in the Kibbutz—theory and case studies

This study analyzes the effect of employing hired labor in the Kibbutz. The main motivations are the premises contained in the newly emerging “The Change” or “The New Kibbutz” approach. Using the traditional LMF model with heterogeneous labor, we show that, although using hired labor will improve the economic situation of the Kibbutz in the short-run, in the long-run Kibbutz membership will consist of only those types of labor to which the “Self Labor” principle applies.     

Dissertation Abstract: “Rationality, Minds, and Machines in the Laboratory: A Thematic History of Vernon Smith’s Experimental Economics”

This dissertation aims at elucidating the history of Vernon Smith’s experimental economics by focusing its attention upon the three themes of rationality, minds and machines that assumed significance at different (albeit overlapping) stages of the development of Smith’s experimental economics with the help of his published and unpublished papers.Chapter 1 is devoted to the scrutiny of the form of rationality incorporated into the portions of Smith’s laboratory experiments whose results have usually been taken as corroborations of his “Hayek Hypothesis.” By bringing into the foreground Smith’s definite position on demand theory and its concrete instantiations on many different occasions, we make the case that Smith has consistently imposed by means of the induced value theory certain narrowly defined preference structures that have definite implications for the form of rationality instantiated in the laboratory.     

Quasi-weightings, Trading, and Desirability Relations in Simple Games

We investigate the problem of simultaneously characterizing various classes of simple games in three different ways: (i) the existence of “quasi-weightings” in which smaller numerical values are assigned to losing coalitions than are assigned to winning ones, (ii) the robustness of “winningness” with respect to trades involving groups of players, and (iii) the acyclicity of certain strict “orderings” that intuitively correspond to the idea of one player being more desirable than another.Journal of Economic LiteratureClassification Number: C71.     

Explaining the economic trajectories of civilizations: The systemic approach

A civilization constitutes a durable social system of complementary traits. Some of the complementarities of any given civilization are between elements of “material” life and ones commonly treated as integral to “culture.” Identifying the mechanisms responsible for a civilization's observed trajectory involves, therefore, causal relationships that cross the often-postulated “cultural–material” divide. Complementarities make it difficult to transplant institutions across civilizations on a piecemeal basis. They imply that reforms designed to jump-start an economy will fail unless they are comprehensive. Civilizational analysis can benefit, therefore, from attention to institutional complementarities, including ones involving both cultural and material variables.     

Will low technology products disappear?: The hidden innovation processes in low technology industries

Political discussions and analyses have usually been devoted to an understanding of the development of high technology products, although low technology products have dominated the industrial structure of the Organization for Economic Cooperation and Development (OECD) countries. The important role of low technology products in these countries raises the question of whether we can observe a technological paradox in the industrial structure of the more advanced nations, the dominant role of this sector in spite of its competitive disadvantages because of high wages. Using the Danish packaging industry as an example, a central thesis in the article is that innovation processes are important in low technology industries. They are also often an integrated part of the marketing and production functions of the firm. The innovation processes in the low technology industries are therefore too complex for traditional R&D analyses to handle. The article points out that—especially in small firms—the “practical man” and his “tacit knowledge” play a very central role in both product and process development, and that low technology, even in the future, will play a central role in the industrial structure of the OECD countries.     

At the crossroads of “futurism” and “prospective”: Towards a Canadian synthesis?

North American “future studies” and the French concept of “prospective” have been integrated to provide the basis for an attempted “Canadian Synthesis” in the approach developed by the Montreal-based think-tank, the Gamma Institute. In this paper the founding president of Gamma outlines the four stages of the approach in a conceptual framework entitled the “Chronospace” and illustrates its applicability by referring to some of Gamma's projects in the last 12 years.     

The ghost of financing gap: testing the growth model used in the international financial institutions

The Harrod–Domar growth model supposedly died long ago. Still today, economists in the international financial institutions (IFIs) apply the Harrod–Domar model to calculate short-run investment requirements for a target growth rate. They then calculate a “financing gap” between the required investment and available resources and often fill the “financing gap” with foreign aid. The financing gap model has two simple predictions: (1) aid will go into investment one for one, and (2) there will be a fixed linear relationship between growth and investment in the short run. The data soundly reject these two predictions of the financing gap model.     

A matter of opinion—How ecological and neoclassical environmental economists and think about sustainability and economics

The differing paradigms of ecological and neoclassical environmental economics have been described in various articles and books and are also embedded in different professional associations. However, we cannot take for granted that the paradigm debates described in the literature are actually mirrored in exactly the same way in the perceptions and opinions of researchers looking at sustainability from an economic perspective. This paper presents empirical results from a German case study on how economists and others involved in sustainability research from different schools of thought think about the issues of sustainability and economics, how they group around these issues, how they feel about the current scientific divide, and what they expect to be future topics of sustainability research.We analyze the data using cluster analysis. Based on a literature survey, we generated forty sustainability economics-related statements and asked 196 sustainability researchers about their degree of agreement or disagreement with these statements. In evaluating our survey results, we discuss to what extent the clusters that we identified do—or do not—represent the two schools of thought of ecological and neoclassical environmental economics. We also propose some fields of research that can help to bridge the gaps amongst sustainability economics researchers while clearly marking others that are more suitable for a scientific ‘competition of ideas’. Key results of the study are: We identify two primary scientific clusters, one clearly confirming the existence of the ecological-economics school of thought, and the other largely capturing the neoclassical environmental view. Yet, there are some surprising exceptions: Both schools of thought share a conceptual definition of sustainability that is integrative in considering ecological, societal and economic dimensions (‘three pillar concept’) and is geared at preserving the development potentials of society. We also find a shared critique of ‘pure economic growth’ strategies in our sample. These shared opinions may provide bridging concepts between the schools of thought. Also both clusters agree with respect to a wide range of future fields of sustainability economics research. Yet, the research agenda of the ecological-economics cluster contains a large number of additional topics, primarily related to social, distributional and evolutionary aspects of sustainable development. Strong divides between the clusters that seem to be more suitable for a scientific competition of ideas are primarily related to the question of how to achieve sustainability, including appropriate environmental policies.     

Green consumers and public policy: On socially contingent moral motivation

“Green” consumers appear to accept individual responsibility for the provision of public goods. The propensity to take such responsibility may depend on beliefs about others’ behavior, even for consumers motivated by internalized moral norms, not by social sanctions. This effect can produce multiple equilibria with either high or low demand for “green” products. Permanent increases in green consumption may be achieved by imposing temporary taxes or subsidies, or through advertising that influences beliefs about others’ behavior or about external effects. If a tax is interpreted as taking responsibility away from the individual, however, taxes can reduce the influence of moral motivation.     

Noncooperative foundations of the nucleolus in majority games

This paper studies coalition formation, payoff division and expected payoffs in a “divide the dollar by majority rule” game with random proposers. A power index is called self-confirming if it can be obtained as an equilibrium of the game using the index itself as probability vector. Unlike the Shapley value and other commonly used power indices, the nucleolus has this property. The proof uses a weak version of Kohlberg's [SIAM J. Appl. Math. 20 (1971) 62] balancedness result reinterpreting the balancing weights as probabilities in a mixed strategy equilibrium.     

Leaders in change : Solar energy owners and the implications for future adoption rates

Information on the characteristics of the initial wave of homeowners who installed solar energy systems is presented and then used to anticipate future solar market penetration patterns. Surveys of these adopters reveal high education and income levels; professional and executive occupations; economic, energy saving, and environmental concern as the principal purchase motivations; and high satisfaction levels. As a group, these individuals conform to the “early adopter” type identified in innovation diffusion research rather than the “innovator” type that would be expected at this early stage of commercialization. This characteristic, the influence of economic motivations, owners' high satisfaction levels, and the findings of other surveys indicate that widespread solar system adoption is probable if the initial high cost barrier can be reduced.     

On the value of human resources

One challenge for planners is to discover conditions under which a society has a positive and growing “net worth” in terms of its human resources and to bring about and maintain those conditions. We discuss the utility and validity of the concept of people as “assets” or “liabilities”, the structure and cultural contexts for a proposed model of the dynamics of value that account for opportunity costs; and links between information technologies and human resources management, including planned development of these resources.     

Competitive capitalism and cooperative labor management in a dynamic nutshell

Competitive capitalism and co-operative labor management are both formulated as differential games: The former, as a game between capitalists and workers, and the latter as one between an elected council and workers. The two systems are compared against the background of neoclassical optimal growth theory, at their respective equilibria and in terms of their rates of approach toward these states, all within a dynamic “nutshell” model extended from the static one of Dirickx and Sertel (1979).