Beyond market failures: the market creating and shaping roles of state investment banks

The paper develops a typological framework of the roles of state investment banks (SIBs) in the economy. The typology identifies four different roles: countercyclical; developmental; venture capitalist; and challenge-led. The paper conceptually elaborates the typology by first providing a historical overview of SIBs, and then discussing how the mainstream “market failure theory” justifies them. It then advances a different conceptualization based on insights from heterodox economics, showing that all roles of SIBs are more about market creating/shaping rather than market-failure fixing. The paper concludes with a proposal of a new agenda for research on SIBs based on our typological framework.     

Thermoeconomics: Beyond the Second Law

Physicist Erwin Schrödinger's (1945) What is Life? has inspired many subsequent efforts to explain biological evolution, especially the evolution of complex systems, in terms of the Second Law of Thermodynamics and the concepts of ‘entropy’ and ‘negative entropy’. However, the problems associated with this paradigm are manifold. Here some of these problems will be highlighted and briefly critiqued. ‘Thermoeconomics’, by contrast, is based on the proposition that the role of energy in biological evolution should be defined and understood not in terms of the Second Law but in terms of such economic criteria as ‘productivity’, ‘efficiency’, and especially the costs and benefits (or ‘profitability’) of the various mechanisms for capturing and utilizing available energy to build biomass and do work. Thus thermoeconomics is fully consistent with the Darwinian paradigm. Economic criteria provide a better account of the advances (and recessions) in bioenergetic technologies than does any formulation derived from the Second Law.     

Global slack hypothesis: evidence from China,India and Pakistan

It is widely believed that globalization has changed inflation process. The global resource capacity reduces responsiveness of inflation to domestic activity and increases responsiveness of inflation to global resource capacity. This global slack hypothesis is tested using different theoretical specifications, which also relate domestic output elasticity and foreign output elasticity to the degree of trade openness of an individual economy. The results reject this hypothesis. The global resource capacity does not drive domestic inflation. The impact of globalization has not increased in the inflation process, and the results yield important policy implications for monetary policy formulation. The global resource capacity does not affect ability of the central banks to stabilize inflation, real economic activity and also respond to the volatility of output growth.     

In-house competition, organizational slack, and the business cycle

Multiplant firms pit their facilities against each other for production assignments. The present paper studies the consequences of this practice in a model where production is limited by capacity constraints and asymmetric information allows facilities to accumulate slack. It shows the amount of slack per unit of output to be pro-cyclical. Indeed, as capacity constraints become more acute in economic booms, the power of in-house competition for quota assignments is reduced and slack per unit of output increases, while the opposite is true in downturns. Moreover, in downturns firms may use higher cost facilities even when lower cost plants are not running at capacity since this boosts X-efficiency in low-cost plants.     

Crossing the quality chasm: creating the ideal patient care experience

To create a health system that better meets patients' needs requires a fundamental redesign of our care delivery system and a new framework. Without a payment mechanism to reflect the value of care provided other than the face-to-face visit, adoption of advanced medical home principles will be challenging. The hand-off of the patient between providers and settings of care is a critical time for the patient and its effectiveness impacts patient care outcomes. The appropriate utilization of hospital and other health system resources is crucial, especially as hospitals, emergency departments, and other health care venues increasingly face capacity constraints and throughput challenges. It becomes the responsibility of the multidisciplinary team of providers to ensure that patients being discharged have an identified personal physician or team who will provide a medical home, and that the handoff to this medical home is thorough and well coordinated. An ideal patient care experience is one in which all systems and processes are geared to meet the needs of the patient: a safety-oriented system that provides standardized, evidence-based care supported by technology, but that recognizes and responds to individual needs.     

Beyond the profit motive: The post-industrial corporation

Global approaches to solving the world problematique are augmented in this paper by a grassroots approach which may encourage the business corporation to evolve into an organic post-industrial form. This post-industrial model embodies two main concepts. One involves the development of social accounting frameworks that encourage the pursuit of social welfare rather than financial profit alone. Results are presented of a computer simulation of such a framework, called the “return on resources” model. The second concept suggests that systems of corporate governance be extended to form a corporate community composed of investors, employees, customers, the public and others involved in corporate affairs in order to facilitate collaborative policy making. These two complementary principles comprise a broader equivalent of free enterprise that provides more appropriate decision-making processes for post-industrial society. This post-industrial paradigm of corporate behavior is believed to be technically feasible, and trends suggest that its adoption is quite possible. The power of business corporations could thereby be transformed into a humanitarian force for achieving sustainable increases in human welfare.     

Global slack and domestic inflation rates: A structural investigation for G-7 countries

Recent papers have argued that one implication of globalization is that domestic inflation rates may have now become more a function of “global”, rather than domestic, economic conditions, as postulated by closed-economy Phillips curves.This paper aims to assess the empirical importance of global output in determining domestic inflation rates by estimating a structural model for a sample of G-7 economies. The model can capture the potential effects of global output fluctuations on both the aggregate supply and the aggregate demand relations in the economy and it is estimated using full-information Bayesian methods.The empirical results reveal a significant effect of global output on aggregate demand in most countries. Through this channel, global economic conditions can indirectly affect inflation. The results, instead, do not seem to provide evidence in favor of altering domestic Phillips curves to include global slack as an additional driving variable for inflation.     

Synergizing independent and cooperative R&D activities: the effects of organisational slack and absorptive capacity

Firms undertaking independent and cooperative research and development (R&D) activities simultaneously often have difficulties to realise their synergistic effects. This study contends that such difficulties are caused by tensions between two types of R&D activities in terms of resource competition and knowledge leakage. Moreover, organisational slack and absorptive capacity may affect these tensions and thereby play important role in synergizing independent and cooperative R&D activities. Based on a survey data of 286 firms, this study finds that such two types of R&D activities jointly have a negative impact on firm performance. Furthermore, organisational slack aids in synergizing them, while absorptive capacity has an adverse impact. These findings enrich our knowledge on the interrelation of independent and cooperative R&D activities and shed light on how firms can synergize them.     

Beyond Becker: Training in Imperfect Labour Markets

In this paper, we survey non-competitive theories of training. With competitive labour markets, firms never pay for investments in general training, whereas when labour markets are imperfect, firm-sponsored training arises as an equilibrium phenomenon. We discuss a variety of evidence which support the predictions of non-competitive theories, and we draw some tentative policy conclusions from these models.     

Beyond the manual: Practicing deliberative visioning in a Greek island

Deliberative visioning refers to processes of inclusive, multi-stakeholder deliberation over a desirable future. Methodologies include scenario workshops, future searches and community visioning. This paper looks critically at the assumptions of deliberative visioning benefiting from a case study in Greece. We argue that there are fundamental choices to be made concerning how to frame the process, who to invite and how to facilitate it. These are not just a matter of following manuals' good practice guidance. We emphasize the need for epistemological and methodological awareness of: the assumptions which frame DV itself; the assumptions of the users of DV; and the situation in which DV is deployed. We find that whereas visioning motivates participants to work together and provides a good framework to systematize discussion, it is not necessarily effective for developing systemic perspectives and plan actions. This is especially true in contexts such as that of our case study, where there is lack of a collaborative culture and there are insufficient mechanisms that integrate effectively a deliberative process with other processes of policy or social change.     

Product Liability: Beyond Class Action

Can punitive product liability enhance economic efficiency? A very simple economic theory, assuming that the probability and the degree of product dissatisfaction are functions only of the producer's not of the consumer's effort, is modelled and analysed in this paper. The qualitative conclusion hinges critically upon whether the legal liability is reflected on price determination. If the price of the product is insensitive to product liability legislation, then punitive liability beyond the class action (i.e., compensatory payments more than proportional representation of potentially dissatisfied consumers) can induce socially desirable levels of effort exerted by the producer firm. This affirmative effect disappears if the price fully reflects all the expected legal liabilities, whereby punitive liability tends to reduce economic efficiency by encouraging costly lawsuit.     

Beyond chopsticks: Symmetric equilibria in majority auction games

Majority auction games are simultaneous sealed-bid auctions of identical objects among identical bidders who each want to win a specified fraction (more than a half) of the objects. Each bidder receives no benefit from winning less than the specified fraction and no additional benefit from winning more than it. Symmetric equilibria having simple, intuitive forms are shown to exist in first-price, second-price and all-pay versions of such games when the number of bidders is sufficiently large. This contrasts with earlier results for the two-bidder “pure chopstick” majority auction games where the only known equilibria are more complicated.     

Beyond clusters: Crafting contexts for innovation

The Review of Austrian Economics - Innovation requires cooperation among multiple actors spread across different organizations in order to fund, research, develop, scale-up and bring new products...     

Beyond Materialism: A Coevolutionary Reinterpretation of the Environmental Crisis

Materialism, both as a vision of the good life and as a cosmological basis underlying epistemology and modern science, drives humanity's environmental crisis. The dominant thrust of the environmental movement has been simply to shift to a longer slower materialism. Understanding how materialism creates our environmental problems and limits our vision of the good life is a necessary step toward creating a different future. Understanding development as a process of coevolution between knowledge, technology, social organization, values, and nature provides an alternative cosmological and epistemological framing which both gives us perspective on materialism and suggests an alternative vision for the future.     

Beyond Transactions: On the Interpersonal Dimension of Economic Reality

The paper investigates the interpersonal dimension of economic reality—i.e. the reciprocal influences between interpersonal phenomena of a communicativeaffective nature and usual economic phenomena. A face-to-face interaction, or 'encounter', is depicted as a special productive process in which agents—besides exchanging ordinary goods or delivering services—create and simultaneously consume 'relational goods'. Inputs include 'relational assets'—;e.g. relation-specific information, or the social climate of a workshop—;which in turn are affected by encounters. Consideration of relational goods and assets broadens the economists' perspective in several directions.