Antonio Genovesi and Italian economic thought: when ethics matters in economics

Abstract

The renewed interest in studies of Italian Enlightenment after the Second World War has enabled a complex new understanding of the Italian contribution to political economy. In particular, a new line of research that brings together the analysis of commercial society developed by Italian economists, and the canon of « civil life » elaborated within classical civic humanism and the natural legal tradition, has explained the deep ethical and social concerns inherent in the Italian approach to economic studies. This collection of articles takes stock of some of these achievements in scholarship and, at the same time, offers some new elements about the hermeneutical role played by these fundamental relationships between economics and ethics in identifying a more complex and multidimensional structure of scientific discourse. The articles are a selection of those presented at three conferences held in 2013, thanks to the support of the Luigi Sturzo Institute and Milan-Bicocca University, in Naples (Banco di Roma Foundation), Rome (Lumsa University) and Milan (Istituto Lombardo - Accademia di Scienze e Lettere), and they explore the thought of Antonio Genovesi as well as Eighteenth-Century Italian economic thought.     

Lombard Enlightenment and Classical Political Economy

Abstract

This paper discusses the formative steps of ‘Classical’ Political Economy under the joint influence of the Italian and Scottish Enlightenment. Pietro Verri is a leading figure of the Italian Enlightenment and he belongs to the Lombard branch of the Italian School of Political Economy (sometimes named ‘School of Milan’) during the latter half of the eighteenth century. Schumpeter's treatment of the ‘School of Milan’ describes Pietro Verri as ‘the most important pre-Smithian authority on Cheapness-and-Plenty’. A careful canvass of the texts substantiates Schumpeter's suggestion. Verri stands out as a key figure in the transition from Physiocracy to the Smithian system.     

Political economy of virtue: civil economy,happiness and public trust in the thought of Antonio Genovesi

Abstract

Amid the growing literature in English on the work of the Neapolitan political economist Antonio Genovesi (1713–1769), this paper focuses on his conception of civil economy (economia civile) as a theory of government. By contrast with existing interpretations, the argument is that for Genovesi virtue is a significant ordering device of the polity: virtue mediates between passions and reason, and the human capacity for virtue helps individuals better to realise their different talents. This, in turn, means that virtue is central to the division of labour and the right proportions between different activities, including the balance between consumption and trade.     

Evolution and development,categories of Genovesi’s economics1

Abstract

Genovesi represents the highest point of two long-lasting streams of thought. One of them criticises the hostility towards the increase in consumption, of Aristotelian origin. The other, which had starts with Petty, distinguishes more and less productive labours with an empirical approach. In both cases Genovesi provides an evolutionary view of economic development which is based on two processes: the increase in consumption and comforts, on the one hand, and the increase of intellectual labour, on the other. Genovesi’s original and decisive contribution on these themes have been always neglected.     

The plural roots of rewards: awards and incentives in Aquinas and Genovesi

Abstract

In this economic debate, incentives (material, extrinsic) and awards (symbolic, intrinsic) are conceived as two opposite tools to prompt human actions. In this article, we provide a historical argument to problematise this opposition. We investigate the idea of prizes (“premi”) in the works of civil economist Antonio Genovesi, and its seeds in Thomas Aquinas’ thought. They both discuss if material rewards can crowd-in intrinsic motivations. Aquinas considered the crowding-out risks related to honour (award). Genovesi stressed the role of private prizes (incentives) and market in fostering the development of society, and claims that crowding-in is more common than crowding-out.     

Cost Savings From Generation and Distribution with an Application to Italian Electric Utilities*

In the last decade, the European Commission promoted a new regulatory framework aiming at a gradual liberalization of the energy markets. The introduction of competition among generators implies the need to separate generation from transmission and distribution activities. However, if savings can be reached by operating at different stages, vertical separation would increase the costs of providing power. This paper tests for the presence of economies from vertical integration on a sample of Italian local electric utilities and finds evidence of both multi-stage economies of scale and vertical economies. Even if the hypothesis of global subadditivity is not supported, our evidence suggests that a complete divestiture policy would entail efficiency losses. *For helpful comments and discussions, we thank two anonymous referees, Graziano Abrate, Bruno Bosco, Diego Piacentino, and participants at the 31st Annual Conference of the European Association for Research in Industrial Economics (EARIE), Berlin, Germany, 2–5 September, 2004, the 60th Congress of the International Institute of Public Finance (IIPF), Milan, Italy, 23–26 August, 2004, and seminars held at the Bocconi University, University of Lecce, University of Naples, University of Pavia, and University of Turin, where earlier versions of this paper were presented. The financial support of MIUR (COFIN 2002) and HERMES Research Center is gratefully acknowledged. The usual disclaimer applies. **HERMES, Center for Research on Regulated Services, Fondazione Collegio Carlo Alberto, Via Real Collegio 30, 10024 Moncalieri (TO), Italy, http://www.hermesricerche.it.     

Liberal Jansenists and interest-bearing loans in eighteenth-century France: a reappraisal

Abstract

This article is an attempt to prove that although the liberal Jansenists – Jansenism being the most powerful Christian protest movement of the seventeenth and eighteenth centuries – were not the first and the only ones to address the prohibition of interest-bearing loans, their writings on the issue shifted and fuelled the debate during the French Enlightenment, especially among the Encyclopédistes and the economists. By refuting the very logic of “extrinsic titles” of the Scholastics and their extension later on by the Jesuits, the liberals Jansenists redefined “interest” as the price to be paid for the use of money.     

On the origin of money,or Menger’s one-sided reading of Genovesi’s Lezioni

Abstract

By examining Menger’s interpretation of Genovesi’s arguments on the origin of money, this note shows that Genovesi is a subtle theorist managing to blend the Cartalist with the Mengerian approaches to the origins of money. Far from resting exclusively on the Mengerian unattended consequences of the uncoordinated behaviours of rational agents trying to minimise their transaction costs, Genovesi shows how governments can and do create fiat money with a positive value in connexion with their ability to raise taxes. For Genvesi both trust (à la Menger) and authority (à la Cartalist) are necessary to explain the positive value of money.     

The Italian contribution to early economic dynamics

Abstract

Contrary to the prevailing literature, the study of economic dynamics began at the end of the nineteenth century, at least four decades before Hayek's and Samuelson's essays on dynamic equilibrium, as Pareto's dynamic insights prove. Throughout this early phase of the discipline, economists interested in dynamic studies put forward a wide spectrum of suggestions. This paper investigates the lines of research that sprang from the Italian debate either according to or in opposition to the Paretian mechanistic legacy, aiming to show that a growing awareness of subjective variables’ role weakened the mechanistic faith of the strictly Paretian followers, pushing them toward probabilistic analysis, anchoring dynamics to uncertainty and disequilibrium.     

Marx,Finance and Political Economy

ABSTRACT

Shortly after the publication of Volume I of Capital, the financial requirements of capitalist enterprise forced the financial innovation of bond and stock finance for joint stock companies. Marx intended to re-write Capital in order to incorporate this change. He did not achieve this. The economic analysis of capitalism with long-term finance was undertaken by Hilferding in his Finance Capital. Thereafter, a strand of economic analysis of production and distribution emerged in the work of the Austro-Marxists, Veblen, Keynes, Kalecki, Steindl and Sweezy, and the Italian Kaleckians, Joseph Halevi and Riccardo Bellofiore, which incorporated the change made to the structure and dynamics of capitalism by long-term finance. However, this shift in capitalist financing has largely been ignored in economic theory, while much of the heterodox analysis that seeks to challenge the role of finance in contemporary capitalism has not integrated finance consistently. The change from the classic capitalism to finance capital raises important questions about the meaning and relevance of Marx’s work today.     

Government size,decentralization and growth: empirical evidence from Italian regions

The aim of this study is to empirically assess the relationship among government size, decentralization and economic growth in Italian ordinary regions. The empirical analysis, based on a panel dataset on Italian regions, provides evidence in support of the existence of an inverted U-shaped relationship between public expenditure and economic growth, that depends on the degree of fiscal decentralization. In particular, according to our estimates on the specific Italian case, the optimal degree of decentralization is around 32%, while the optimal government size value is approximately 52%.     

Augusto Graziani and the Marx-Schumpeter-Keynes ‘Cycle of Money Capital’: A Personal Look at the Early Italian Circuitism from an Insider

ABSTRACT

The paper goes back to the origins of the theory of the monetary circuit in its Italian incarnation. Focus is on the evolution of Augusto Graziani's thinking between mid-1970s and mid-1980s, considering: (i) how Graziani connected (positively or polemically) with Keynesianism and Post-Keynesianism, both in its Cambridge and US incarnations; (ii) how Graziani interpreted the contributions of Keynes proposing a continuity between the Treatise on Money, the General Theory, and the articles on finance published after the 1936 book; (iii) how beneath the research programme of Italian circuitism (Graziani) we may recognise a peculiar Marxian inspiration, later on pursued for a while by some participants to the Seminar in Monetary Theory that Graziani coordinated in Naples (1981–85). Since the mid-1970s Graziani — who already had a profound knowledge of Neoclassical Theory; and who was deeply aware of the role of institutions — developed more and more his heretical stance into what we may label as a ‘structural Keynesian' approach, inserting Keynes’ views about finance to production and effective demand into a Schumpeterian vision of the capitalist process, and leading to Marxian conclusions about value and distribution. The early forays into circuitism by Graziani were not only critical towards the Neoclassical Synthesis, Monetarism, or New Classical Macroeconomics. They were also grounded in an intense confrontation with other contemporary heterodox currents. The outcome was the construction of an original scheme of thought which amounted to nothing less than a macro-monetary theory of capitalist production.     

Concordian Economics: Tools to Return Relevance to Economics

With the help of planes and solids, this paper presents an enlargement of the field of observation of economic theory. Through this transformation, the distribution of ownership rights to money and wealth assumes a central position in economic analysis. Thus social relevance is returned to economics. The validity of this operation is confirmed by the return of the millenarian field of economic justice to its traditional function as guidance to economic policy. The paper then presents four sets of economic rights and responsibilities that offer the potential of translating principles of economic justice into the complexities of the modern world.

Why East Germany did not become a new Mezzogiorno

Economic integration is generally thought to favour convergence in the economic performance of previously separated regions; but this is far from universally true, as the experience of the members of the Eurozone testifies. The paper considers the two sharply contrasting cases of East and West German convergence following reunification and the enduring poverty of the Italian Mezzogiorno since Italian unification a century and a half ago. In both countries, political integration delivers much higher consumption in the lagging relative to the leading region than of per capita GDP. Consumption convergence can be supported by transfers but ‘production’ convergence ultimately requires catch-up in the production of tradeables. The paper demonstrates the radically different performance of the tradeable sector in the two cases, and suggests that this may be the result of differences in labour market flexibility, in investment performance and in the social norms required for the production of complex manufacturing.     

Asymmetric information and survival in financial markets

Summary. In the evolutionary setting for a financial market developed by Blume and Easley (1992), we consider an infinitely repeated version of a model á la Grossman and Stiglitz (1980) with asymmetrically informed traders. Informed traders observe the realisation of a payoff relevant signal before making their portfolio decisions. Uninformed traders do not have direct access to this kind of information, but can partially infer it from market prices. As a counterpart for their privileged information, informed traders pay a per period cost. As a result, information acquisition triggers a trade-off in our setting. We prove that, so long as information is costly, uninformed traders survive.JEL Classification Numbers: D50, D82, G14.I am deeply indebted to Luca Anderlini for his helpful guidance. I also benefited from discussion with Larry Blume, David Easley, Jayasri Dutta, Thorsten Hens, Hamid Sabourian, Klaus Reiner Schenk-Hoppé and Hyun Song Shin. Useful comments came from an anonymous referee and participants to seminars in Barcelona, Bielefeld, Cambridge, Manchester, Oxford, Rotterdam, Venice, Zurich, to the PhD Awards Italian tour in Rome, Naples, Padova and Milan, and to ESEM99 and EEA99 in Santiago de Compostela.     

Robinson Crusoe: The quintessential economic man?

The tale of Robinson Crusoe strikes a responsive chord in the imagination of many economists. This paper argues that the story of Robinson Crusoe, and the joy economists take in his example, are indicative of the way the discipline deals with issues of race and gender. Crusoe is used to represent homo economics par excellence, yet his self-sufficiency conceals the labor of others. A close reading of the novel reveals the issues of power, sexuality and race that are hidden underneath the storyline of Crusoe's relationship with Friday. The economists' portrait of equal exchange ignores the elements of domination and exploitation between Crusoe and Friday. The absence of female agency in Defoe's and the economists' story masks a narrative structure that, in fact, relies in fundamental ways on gendered representations. This process of exclusion mirrors the lack of recognition in our culture of the economic contribution of women. If Crusoe is taken to be the quintessential economic man, the economists' story imposes boundaries separating those who belong in economic discourse from those who do not. It also makes it easier for our discipline to avoid the ethical burden of addressing the disturbing issues of race and gender in our narratives.     

Ego Facing Alter: How Economists have Depicted Human Interactions

The paper analyses, in a historical perspective, how economists approached human interactions. In particular it is aimed at: (a) showing that in the beginning of economic science some economists, Genovesi and Smith in particular, analysed many dimensions of human interactions, and their account of rational economic behaviour was complex and not only instrumental; (b) analysing, through the works of Pareto and Wicksteed, the main turning point in the history of economics which reduced interactions to the sole instrumental one; (c) highlight some methodological questions and doubts on how contemporary economics approaches interactions.     

Credit demand and supply shocks in Italy during the Great Recession

In this article, we use Structural VAR analysis to disentangle credit demand and supply shocks and their effect on real economic activity in Italy during the 2008 to 2014 crisis period. The three endogenous variables considered are the loan interest rate, the loans growth rate and the employment to population ratio. The data are observed at annual frequency for each of 103 Italian provinces. The empirical evidence suggests that the variance of the shocks varies across four Italian macro-regions: North, Centre, South and Islands, and hece heteroscedasticity is used to identify (ex ante) the structural shocks. Sign restrictions are used to interpret shocks ex post. The empirical findings suggest a prominent role of credit supply shock in shaping real activity dynamics and also that credit crunch hits the North of Italy less than the remaining macro-regions, especially the South of Italy.     

RIGHT ON TARGET: EXPLORING THE FACTORS LEADING TO INFLATION TARGETING ADOPTION

This paper examines which economic, fiscal, external, financial, and institutional characteristics of countries affect the likelihood that they adopt inflation targeting (IT) as their monetary policy strategy. We estimate a panel binary response model for 60 countries and two subsamples consisting of Organization for Economic Cooperation and Development (OECD) and non‐OECD countries over the period 1985–2008. The findings suggest that past macroeconomic performance of a country, its fiscal discipline, exchange rate arrangements, as well as the structure and development of its financial system have a significant impact on the likelihood to adopt IT. However, the factors leading to IT adoption differ significantly between OECD and non‐OECD countries. (JEL E42, E52)