Firms,agency, and evolution

A recent (though controversial) trend in economics has been to appeal to evolutionary theory when addressing various open questions in the subject. I here further investigate one particular such appeal to evolutionary biology: the argument that, since markets select (in a standard biological sense) firms as coherent units, firms should be seen to be genuine economic agents. To assess this argument, I present a model of firm/office selection in a competitive market, and show that there are cases where markets can select for firms/offices as collective units – and thus, as agents of their own – but also that there are cases where they do not. In this way, I try to make the evolutionary argument for the agency-based view of the firm more precise.     

Pluralism and heterodoxy in economic methodology

Economists work within models that are simplified depictions of reality. An argument for a pluralistic understanding of economics is that different approaches lend insight by looking at different phenomena from different viewpoints. While all economists can benefit from taking a pluralistic approach to understanding economics, Austrian school economists must be more pluralistic in their understanding and presentation of ideas than mainstream economists if they want their ideas to have an impact on mainstream economics. Despite the argument for a pluralistic understanding of economics, in research, as in other activities, specialization increases productivity. While Austrian school economists can benefit from taking a pluralistic approach to understanding economics, they are likely to be most productive in their research by specializing in the development of Austrian school methods and ideas.     

Confronting the science/value split: notes on feminist economics, institutionalism, pragmatism and process thought

What changes must economics undergo, if it is to become a moreadequate discipline, furthering of survival and flourishing?This essay argues that a break must be made from contemporarymainstream economics at the level of ontology (i.e., about thenature of reality). Drawing on neglected traditions of pragmatistphilosophy and process metaphysics, some elements of ‘old’institutionalist economics, and late-twentieth century naturalscience, it demonstrates that ample argument exists for a viewof the world as open, evolving and permeated with value. Furthermore,feminist scholarship offers an explanation for why such a worldviewfaces an uphill battle for acceptance.     

Socialism,Liberalism and Inequality: The Colonial Economics of the Saint-Simonians in 19th-Century Algeria

This article examines the foundations of the colonial economics of the Saint-Simonians that were developed in Algeria after the French invasion in 1830. Saint-Simonian colonial economics may be seen as a leading contributor to the development of French orientalism. This article illustrates the ambiguous position of Saint-Simonian economics in the colonial project, especially in relation to the role of equality. According to the Saint-Simonians, collective socialism was the best economic system for Algeria. This article notes, however, the contradiction inherent in the Saint-Simonians' project with regard to the racial argument they used to justify their position.     

Post Keynesianism,Heterodoxy and Mainstream Economics

After briefly presenting the concepts of orthodox, mainstream and heterodox economics, and applying them to the contemporary period, this article discusses the Post Keynesian school and its relation to contemporary orthodox and mainstream economics. While opposed to the neoclassical orthodoxy, the Post Keynesian school has some positive unifying ideas, although some internal tensions remain. There are also some overlaps between Post Keynesianism and other approaches, and a careful combination of contributions from different approaches and different disciplines is not only possible, but also necessary. Post Keynesianism is located outside current mainstream economics, although this argument partly depends on a more precise specification of the concept of uncertainty. The non-mainstream character of Post Keynesian economics has at least two types of important implications. The first involves the approach's ability to influence the economy and the danger of ‘the scholastic fallacy’; the second refers to a reproductive difficulty inside academia.     

Operationalizing the interpretive turn: Deploying qualitative methods toward an economics of meaning

In his original essay advocating the interpretive turn in economics, Lavoie makes an explicit argument favoring (1) an economics of meaning and (2) the growth of knowledge through discursive rivalry within the scientific community. This paper contends that within Lavoie's explicit argument is an implicit case for a particular mode of discovery that resists the excesses of formalism common within the economics discipline and instead puts the investigator, the investigator's theoretical lens, and the subject under investigation in close proximity to one another. With the nodal points of this triangulated relationship in closer proximity to one another, an iterative learning process emerges that is itself a source of social scientific discovery. Further, and in connection to this mode of discovery, is the implicit case favoring qualitative research methods that correct the economics discipline's excessive reliance upon quantitative analysis in its empirical investigations that distances the investigator from the subject under investigation. The goal of this paper is to make these implicit arguments explicit.     

Complementarity, Instability and Multiplicity

A multiplicity of equilibria, steady states, cycles, etc., feature prominently in models with complementarities. Multiplicity suggests the instability of an economic system and the sensitive dependence of the equilibrium behaviour on the environment. In this paper I discuss some methodological questions concerning the economics of complementarity, with special emphasis on instability and multiplicity. A series of monopolistic competition models are developed to illustrate the argument.
JEL Classification Numbers: B41, E32, O00     

McCloskey, economics as conversation, and Sprachethik

In writing about the 'rhetoric of economics' - particularlyabout the standards which prevent situations where 'anythinggoes' in argument - McCloskey takes an eclectic approach totwo philosophical positions, based on Rorty and Habermas respectively.But these positions, despite sharing some common aspects, alsodifferentiate themselves from each other sharply in importantways. In this paper, it is argued that this eclecticism of McCloskeyis not coherent, as a result of her not completely graspingthe fundamental differences between these two positions, andthat this incoherence has damaging implications for her projectof the rhetoric of economics.     

Institutionalism,Critical Theory,and the Administered Society

Paul Krugman recently suggested that John Maynard Keynes helped economists study and resolve mass unemployment at a time when few of them could understand the problem and institutionalists seemed unable to articulate a clear policy strategy. This article responds by outlining John R. Commons' case for full employment with liberty and his three-part strategy (addressing money, people and politics) for curing joblessness while saving capitalism. Commons' argument and recommendations offer insights that extend beyond Keynesian economics in important ways, and his contributions have special relevance today in light of the recent global financial crisis and still ongoing Great Recession.     

Normative economics and paternalism: the problem with the preference-satisfaction account of welfare

The normative turn of behavioral economics has led to a reconsideration of paternalism in normative economics. This article argues however that the preference-satisfaction account of welfare that still dominates welfare economics makes impossible to account for all the dimensions of the debate over paternalism. The laundered preferences approach and the alternative selves approach are two available frameworks to reconcile the consumer sovereignty principle that underlies the preference-satisfaction account with the fact that preferences are endogenous and context-dependent. I show however that neither of them is able to account for autonomy-related issues which are central in current debates over “soft” or “libertarian” paternalism. I suggest that a justification of paternalism compatible with liberal principles depends on the ability for reasonable persons to voluntarily consent to a collective choice rule with paternalistic tendencies. This argument relies on a distinction between preferences (which can be attached to other entities than persons) and values which is unknown to welfare economics.     

Futurity,Pro-cyclicality and Financial Crises

Nearly a century ago, one of the leading forefathers of the school of evolutionary economics, John R. Commons, coined the term ‘futurity’ to describe an epochal change in the late nineteenth-century advanced economies. Futurity refers to the reorientation of economies towards the future, and specifically to the fledgling practice of treating businesses as ‘going concerns’ and measuring its value in terms of their anticipated future profits. Curiously, the implication of such epochal changes on the performance of the financial system had rarely been discussed, let alone addressed. This article presents a theoretical argument that suggests that futurity encourages pro-cyclical dynamics that are pulling the financial systems in ever more violent and disastrous swings.     

Whither Monetary Economics?

I argue that monetary economics should be pursued by applying implementation theory to models which contain explicit frictions that make money essential. The argument has two parts. First, I argue that models in which real balances are assumed to be productive—models with money in utility or production functions or with cash-in-advance constraints—contain hidden inconsistencies. Second, I argue that the approach advocated is capable of providing new insights about some of the main issues in monetary economics: the effects of monetary shocks, the welfare cost of inflation, and the roles of inside and outside money.     

Contemporary Capitalism as a New Monetary Economy of Production: The Logic of Conventions,M&A,and LBOs

Social interaction models, i.e. the changing sequence of actions between individuals who modify their behavior under the influence of their peers, have rarely enjoyed as high a profile in economic analysis as they do today. However, the literature growth has not been accompanied by a process of academic consolidation. The difficulties encountered in research are largely but not entirely the result of data constraints. The main argument of this article is that the source of problems may be traceable to the lack of a complementary approach between economics and other disciplines. The difficulties presented by the deficit in academic exchange among social scientists are compounded by the current analytical framework, which still concentrates on the fundamental, but mutually exclusive, traditions of thought: homo oeconomicus and homo sociologicus. In spotlighting these ideas, this article reviews the economic body of literature on social interactions and their effect on individual unemployment status. Two directions in current research are analyzed: the impact of social (work) norms on unemployment and the role of social networks in the job search process. The theoretical and methodological challenges encountered in research suggest that the future of social interactions models might be found at the crossroads of economics and other social sciences.     

Using Psychology to Reinforce the Austrian Argument for Freedom: The Case of Loan Decisions

The emphatic statements of F. A. Hayek, and other members of the Austrian school of economics, in advocacy of a free society have produced much misgivings among the economics profession. The paper aims to make the Austrian views more intelligible by tracing them back to a theory of the mind that Hayek develops in The Sensory Order. More generally, the paper argues that Austrian economics would greatly benefit from extending itself from a pure logic of choice toward psychological analysis. The argument is illustrated throughout the paper by examples taken from the loan decision process of a banker.     

Forecasting Job Placements of Economics Graduate Students

An argument is made for the offering of an undergraduate course consisting of a broad series of topics in advanced economics.     

Economics for substantive democracy

In this paper, I sustain that the discourse of economics has become one of the most substantial contributors to the erosion of the democratic ideal. The first argument used in this case against economics concerns its attempt to be considered a neo-naturalistic science; the second, the fact that economics considers democracy contradictory to the expression of its scientific rationality and; the third, the fact that economics crowds out people from decision-making processes by pushing them into the hands of experts. Because partisan political programmes have essentially become economic programmes, economics should contribute to substantive democracy. In order to do so, an alternative discourse to mainstream economics must be proposed. An economics favourable to substantive democracy should, thereby, be political rather than naturalistic, pluralist rather than monist and, instead of crowding out people from decisions processes, should aim at the co-production of economic knowledge with those concerned by the outcome of economic decisions.     

The exchange paradigm of constitutional economics: implications for understanding the third sector

This paper reconsiders the exchange paradigm of constitutional economics from the perspective of the theory of the division of labor. According to this theory, human wants can be satisfied by two basic mechanisms—exchange and self-sufficiency. The exchange paradigm of constitutional economics emphasizes the former mechanism while neglecting the latter. Building on major economic theories of the third sector, it is argued that the latter mechanism is more helpful than the former in explaining the existence of third sector organizations. The paper concludes by discussing implications of this argument for the further development of constitutional economics.      

Contrived desires,affluence, and welfare: J.K. Galbraith's Pigovian redistribution argument reconsidered

I argue that John Kenneth Galbraith's theory of the “dependence effect” in The Affluent Society provides a way to rescue A.C. Pigou's argument for wealth redistribution from a powerful objection. The objection is based on the unprovability of statements making interpersonal comparisons of utility. Galbraith's dependence effect theory allows him to present a version of the Pigovian argument that requires no such statements to be made. I argue that Galbraith's main piece of advocacy in The Affluent Society was for income redistribution, despite the fact that he claimed to be in favour of greater spending in the public sector rather than redistribution as such. I then show how my reading of the dependence effect theory helps to defend it against objections from Hayek and Rothbard. I end by discussing what improvements in economics a proper test of the theory would require and showing how my reading of it helps to reveal the ongoing importance of The Affluent Society to the understanding of political economy.