Cosmology and economics

Abstract

Economics has become the political magic of the twentieth century, and contention over economic policy is the political lifeblood of the modern state. The glare of publicity highlights the equilibrism of economic policy, leaving in the shade diplomacy and statecraft of former days. There is a consensus in modern society and in the modern state that political debate and economic discussion are two sides of the same coin, and that “economics”, like a second law of nature, sets the limits of the political options. Economic reform, economic adjustment, economic “rescue plans” and so on are synonyms for political strategies. Politics is the management of the “economy”, and at the same time “economics” is the authority to which all appeal as the “necessity”, as the authority that governs and legitimises policy.     

The New Deal and Modern Memory

The “Great Recession,” which began at year‐end 2007, was precipitated by plunging real estate values, followed by borrower defaults and financial crisis for the public and private institutions that supplied loanable funds to the mortgage market. With economic growth not yet returned to trend, three years on more than 9% of the American labor force remains unemployed. Current macroeconomic events, perhaps inevitably, have been compared to those of the Great Depression of 1929–1933, both in terms of severity and of the efficacy of the public policies adopted ostensibly to restore prosperity. In this article, I review the literature on the New Deal, paying particular attention to modern scholarship emphasizing the role of presidential politics and antibusiness political rhetoric in deepening and prolonging the Great Depression. The parallels between then and now suggest that the two economic contractions had similar causes and elicited equally counterproductive policy responses.     

Bank Indonesia and The Recent Crisis

This paper is a personal note describing the crisis as it unfolded while the writer was a key player in Indonesia's macroeconomic management. The crisis is seen as multi-faceted. It originated externally from a shock in the currency market that triggered a downward spiral from currency depreciation to fully-fledged crisis. The currency shock that hit the rupiah in July 1997 exposed in sequence the flaws embedded in the banking sector, the economic system, the social and the political system, flaws that had been obscured by long years of good economic performance. Through a complicated process of contagion and feedback effects—market disturbances, policy responses and market reactions—Indonesia deteriorated from a relatively well managed economy to the “worst case” among the Asian crisis economies. The paper discusses this process, the IMF's role, the bank closure issue, the currency board controversy and the author's dismissal as Governor of Bank Indonesia.     

From growth studies to microhistory: Finnish economic and social history in the 1990s and early 2000s

Abstract

Economic and social history was already being practised in Finland before the Second World War, although it became established as an independent academic discipline only after the war. The terms social history or economic history were not used then; what we now recognise for instance as social history was then called “cultural history” or “history of the culture”. This approach was often characterised the collective approach to distinguish it from the individualistic approach of more historicist study. Nearly all economics research was historical before the 1950s, and practically all professors of economics were actually historians by training and had defended their dissertations in history, usually after having studied some economic problem of the past. But our discipline has also other roots. In Finnish universities the discipline called social policy, usually included in faculties of social science, has always had strong ties with social history.     

市场与政府:美国实际与中国选择

市场与政府的关系到底是二元对立抑或互补平衡?西方学界内部对之一直存在较大的分歧.本文以宏观政策为主线,通过解构中美两国经济崛起的历史,探讨市场与政府的关系.研究表明,美国政府在经济重塑、危机应对等方面,都发挥了主导作用;美国在布雷顿森林体系建立之后,才真正意义上实行了贸易自由;即使是后里根时代,政府在经济发展中的作用也...     

凯恩斯经济学的反思:全球金融危机视角

凯恩斯主义经济学的基本特征是经济危机必然性的证明和国家干预的系统分析。2008年国际金融危机以来各国政府的应对政策实质上仍然是凯恩斯主义的国家干预,不可能改变资本主义市场经济体制的核心,但政策选择表现出明显的时代特点。此次国际金融危机将促使凯恩斯主义与新自由主义经济学加速融合,并会对未来国家干预的方式和重点会产生显著影响。     

The Austrian Search for Realistic Foundations

Self-designated Austrian economists have two different views of modern neoclassical economics. Some, such as F. A. Hayek, take issue with certain aspects of neoclassical economics without disputing its fundamentals. Others, most notably Ludwig von Mises and Murray Rothbard, explicitly reject the foundations of neoclassical consumer and welfare theory and construct a systematic alternative. This paper analyzes the most distinctive features of the Mises-Rothbard alternative to the neoclassical paradigm; it also considers related positions defended by Israel Kirzner. I argue that their effort to rebuild economics on nonneoclassical foundations fails and that their critique of neoclassical foundations is wrong or strongly overstated.     

金融危机下中国经济振兴政策——兼评凯恩斯的需求理论和供应学派的经济主张

在此次由美国次贷危机引发的金融危机中,我国政府前后推出了一系列政策,这些政策无不是为了稳定金融市场,遏制经济恶化。这些政策方案充分体现了凯恩斯经济学所阐述的需求理论和供应学派经济学所阐述的供给理论,以及与这两种理论相适应的政策建议,对我们具有特别的借鉴意义——因为所有经济问题都可以归结为需求与供给的均衡。     

Between micro and macro — what economic history can learn from modern economics

Abstract

The aim of this paper is to discuss the role of economic history to modern economic theory. Taking my point of departure from the division that still haunts economic history — between micro and macro approaches — the paper argues that economic theory today is significantly different from what it was only twenty or thirty years ago. Hence, for example, the division between micro and macro has been upset in modern economics. Also the development of institutional economics, the use of concepts like “bounded rationality” or “path dependence” makes it necessary for economic historians to learn from and confront modern economic theorizing. Many economic historians criticise a version of (neo-classical) economics) that belongs rather to the past than to the present.     

The Mundane Economics of the Austrian School

The Austrian School of economics—the causal-realist, marginalist, subjectivist tradition established by Carl Menger in 1871—has experienced a remarkable renaissance over the last five decades. It is not always clear, however, exactly what distinguishes the Austrian School from other traditions, schools of thought, approaches, or movements within economics and its sister disciplines. This paper argues that Austrian economics, while part of a broader tradition emphasizing the coordination of the market order, is nonetheless a distinct kind of economic analysis, and that its essence is not subjectivism, the market process, or spontaneous order, but what I call “mundane economics”—price theory, capital theory, monetary theory, business-cycle theory, and the theory of interventionism. Call this the “hard core” of Austrian economics. I argue that this hard core is (1) distinct, and not merely a verbal rendition of mid-twentieth-century neoclassical economics; (2) the unique foundation for applied Austrian analysis (political economy, social theory, business administration, and the like); and (3) a living, evolving body of knowledge, rooted in classic contributions of the past but not bound by them. Most Austrian economists from Menger to Rothbard devoted their energies to developing and communicating the principles of mundane economics, not because they failed to grasp the importance of time, uncertainty, knowledge, expectations, institutions, and market processes, but because they regarded these issues as subordinate to the main task of economic science, namely the construction of a more satisfactory theory of value, production, exchange, price, money, capital, and intervention.     

Proxies for Economic Freedom: A Critique of the Hanson Critique

Economic freedom indicators have become quite popular recently as a useful tool to quantify the relationship between a country's institutions and its prosperity. In a recent article, Hanson (2003) criticizes these types of studies for: (i) failing to adequately distinguish between different proxies for economic freedom, (ii) not considering the potential for endogeneity, and (iii) accepting significance of economic freedom's ability to promote prosperity even though regression analysis generates “nonsensical” results. Closer inspection reveals that most of his arguments are questionable, do not apply to much of the literature, or are not original, and that he is guilty of misinterpreting his own econometric evidence relating freedom to the level of GDP.     

市场经济的危机与化解——马克思经济危机理论的当代意义

经济危机作为市场经济的伴生物,它并不是资本主义社会独有的,而是市场经济社会必须共同面对的经济问题。在经济危机之后,当我们重新审视马克思主义经济学的理论价值时,我们不仅要承认马克思的经济危机成因论的理论价值,更要重视马克思在分析资本主义经济危机过程中所给出的走出危机的理论路径。因为,在新的历史条件下,依据马克思主义经济学的基本思想,研究当代经济的现实问题,形成化解经济危机的新的马克思主义经济学理论,应是后危机时期马克思主义经济学的首要任务。     

After Shleifer,who needs Mises?

The demise of socialism in Eastern Europe and the transition to a market economy in China and India marked the end of traditional comparative economics as a field. The debate between capitalism and socialism was settled. The economic calculation argument of Ludwig von Mises seemed no longer relevant. In its place, the new comparative economics (NCE) arose. The NCE focuses on the institutional differences that affect the protection of contract and property rights. The research program of Andrei Shleifer has provided numerous insights into how markets operate. This paper examines the Shleifer-inspired program in comparative economics in light of the economic calculation argument Mises made. Although the recent developments in comparative economics have extended and complemented the contributions of Mises, it has not displaced them. An account of the economic calculation problem is still missing in the new comparative economics.     

TOWARD BRIDGING THE GAP BETWEEN THEORY AND EMPIRICAL REALITY

Introductory (i.e. first year) undergraduate learners often perceive economics to be remote from reality and overly theoretical, leading to a lack of motivation and enthusiasm to study economics. A general survey of curriculum practice reveals that lecture materials and the pedagogic approach to teaching introductory economics often do not place the current “mainstream” economic theory into its philosophical context. The result being that the learners are unable to bridge the gap between abstract economic theory and empirical reality. This paper argues that research into effective teaching and learning should focus not only on learner characteristics but also on curriculum content and its philosophical underpinnings, in order to research why students hold these negative perceptions. The paper recommends that introductory undergraduate teaching needs to engage in a critical examination, with the learner, of the philosophical underpinnings of “mainstream” economic theory and to introduce debates about the implications of these into the curriculum. This would create exciting new opportunities for teachers and learners to explore the connections between economic theory and social science in general and should come a long way in changing the negative perceptions of introductory undergraduate economics.     

Use of Input–Output Approach for Supporting Decisions in the Field of Economic Policy

This article presents basic guidelines of “input–output” approach for decision-making in the field of economic policy. Special attention is given to modern approaches to the analysis and forecasting of economic development by using a cross-sectoral approach. The paper discusses the limitations of structural development of the Russian economy and describes the capabilities of modern interindustry models in the field of macrostructural forecasting.     

State,capital, and the transformation of dependence: The Brazilian computer case

Brazil's policy of reserving the lower end of the computer market for indigenous firms has been controversial since its introduction 10 years ago. This paper examines the implications of the Brazilian computer case for the “dependency approach” and for current thinking on the role of the state in development. The case is considered to demonstrate that dependence is a dynamic condition whose character is continually being transformed and that the state, while it may play a crucial role in the initiation of new industries, is limited in its ability to act autonomously once an industry is established.     

An introduction to problems of economic development in the CMEA countries

Through the Asian financial crisis, many key international economic issues have come to the forefront the stability of the international financial system under the IMF, “Asian values”, the universal validity of the Asian Economic Development Model, China's leadership in the regional world economy, Japan's role in the region, and the immunity of Greater China from the current financial crisis. Currently, most Asian countries seem eager to redress structural problems involving the government sector, banking, and corporate governance. In the process of this full scale restructuring, Korea must reevaluate its economic relationship with Central Asia. This paper argues that Korean financial crisis stems basically from the system failure. Furthermore, since a small open economy carries with it intrinsic vulnerabilities, the government should be more careful in securing optimal foreign exchange, opening capital markets based on the economy's absorption capacity. In this respect, the banking industry should be run based on the profitability of capital. Once banking industries are distorted by the practice of government‐led policy loans, it is more difficult to correct those customized distortions. The banking industry should play a larger role as the “brain of the economy”, sensing abnormalities of the economy. Moreover, in today's increasingly interdependent global economic system, no single country can solve its problems without close coordination of its policy with the outside world. An early warning system to signal financial instability would help developing economies in modernizing and strengthening their domestic financial institutions and would also work as a supplement to the IMF standby fund. Also, human resource management has proven too important to be neglected. Central Asia could derive lessons from the above Asian “failure”, not the Asian “miracle”, to avoid inappropriate policies and to deepen its economic development.     

What＇s So Special about China＇s Exports？ A Comment

Dani Rodrik argues that China's exports are unusually sophisticated for a country at its income level. He also claims that China's export sophistication reflects the government's successful industrial policy and has been instrumental in the recent acceleration of its economic growth. Although Rodrik's interpretation of China's economic growth is broadly correct, the accuracy of his empirical analysis is questionable. This note identifies several problems regarding the “export sophistication” index used in his empirical work and casts doubt on his analysis.     

Beyond privatization: Institutional innovation and growth in China's large state-owned enterprises

This article demonstrates that China's large state-owned enterprises (SOEs) are not stagnant fossils waiting to die. Under economic reform policies this sector has undergone large change due to enhanced enterprise autonomy, the impact of market forces, rapid growth of domestic demand for upstream products, strategic integration with the world economy and the state's policy to promote large businesses. China's large SOEs are developing new institutional forms that do not neatly fit into existing patterns. China is experimentally changing its institutions through a combination of central policy, local initiative and interaction with international investment. This presents a challenge to the “transitional orthodoxy” and to ideas concerning property rights in development economics. There is not a universal model of property rights and government action that works best in all circumstances. China's experience with the reform of large SOEs shows the diverse possibilities for effective industrial institutions.     

2004年国家宏观调控政策与股市走势的联动性分析

在现代经济发展条件下,股市是国民经济的晴雨表,经济运行中的变化会迅速、放大反映在股市的涨跌变动中。我国股市现在是典型的政策市,受国家宏观经济政策影响巨大,每次有较大政策出台时,都会带来股市的大幅波动。文章通过对近十几年来我国宏观调控政策变动引起的变动的分析,以