China’s Reform: History,Logic and Future

This paper is a brief introduction of the core content and basic concepts of the book China’s Reform: History, Logic and Future, and gives answers to questions such as why China’s reform and opening-up policy has achieved great success, why the catch-up mode, extensive and extractive development mode China adopted in the past three decades are no longer sustainable and what China’s market-oriented reforms should aim to achieve in the next stage so that readers can have a profound understanding of China’s reform. Planning ahead, from the perspective of sustainable economic development, China badly needs to transform from factor-driven growth to efficiency-driven and innovation-driven growth, the key to which is to further encourage the liberalization of thought, promote reform and opening-up, unswervingly follow the path of economic liberalization, marketization and privatization, to establish an inclusive modern market system, to allow the market to play a decisive role in resource allocation and the private economy to play a dominant role in the national economy. The market-oriented reform is a complicated project and China is faced with at least three different aspects of reform in some key areas—the main body of private economy, the liberalization of financial market and the marketization of land. Meanwhile, China needs to efficiently balance three elements of good governance, that is, the rule of law, execution and democratic supervision, so as to facilitate the modernization of state governance system and governance capability.     

Communication in dynastic repeated games: ‘Whitewashes’ and ‘coverups’

Summary. We ask whether communication can directly substitute for memory in dynastic repeated games in which short lived individuals care about the utility of their offspring who replace them in an infinitely repeated game. Each individual is unable to observe what happens before his entry in the game. Past information is therefore conveyed from one cohort to the next by means of communication.When communication is costless and messages are sent simultaneously, communication mechanisms or protocols exist that sustain the same set of equilibrium payoffs as in the standard repeated game. When communication is costless but sequential, the incentives to whitewash the unobservable past history of play become pervasive. These incentives to whitewash can only be countered if some player serves as a neutral historian who verifies the truthfulness of others reports while remaining indifferent in the process. By contrast, when communication is sequential and (lexicographically) costly, all protocols admit only equilibria that sustain stage Nash equilibrium payoffs.We also analyze a centralized communication protocol in which history leaves a footprint that can only hidden by the current cohort by a unanimous coverup. We show that in this case the set of payoffs that are sustainable in equilibrium coincides with the weakly renegotiation proof payoffs of the standard repeated game.Received: 30 September 2002, Revised: 5 August 2003, JEL Classification Numbers: C72, C73, D82.We wish to thank an Associate Editor and Dino Gerardi as well as seminar participants at Arizona State, Columbia, Duke, Georgetown, Indiana, Montreal, Princeton, Rochester, Vanderbilt, VPI, the 2001 NSF/NBER Decentralization Conference, the Summer 2001 North American Econometric Society Meetings, and the Midwest Theory Conference, 2000, for useful comments and suggestions. All errors are our own.     

Political economy and the ‘modern view’ as reflected in the history of economic thought

This paper focuses on the transition from classical political economy to ‘modern’ economics, a central aspect of which is the ascent of the conception of ‘theory’ as a mere instrument of research. We analyse how this transitional phase was perceived and interpreted in representative, more or less contemporaneous histories of economic thought: those by Luigi Cossa in 1880, by John Kells Ingram in 1915 (originally published in 1888), and by Charles Gide and Charles Rist in 1915. Despite their differences, all authors share the same conception of the structure of scientific laws, as well as the view that economics must be separated from liberalism.     

Misallocation of talent,teachers’ human capital,and development in Brazil

In this study, we investigate the allocation of talent in an economy where teachers play a critical role in developing the human capital of the workforce. To this end, we formulate a Roy model with externality in the occupational choice, as the quantity and quality of teachers are key determinants of workers’ human capital. Our analysis suggests that when individuals with greater abilities opt for teaching careers, the entire workforce benefits. However, frictions in the labor and educational goods markets may lead to a suboptimal allocation of talent and hinder economic growth and development. Our model is calibrated to the Brazilian economy, and our findings reveal a negative correlation between frictions in the teacher’s occupation and per capita output in the Brazilian states. Our results indicate that eliminating friction in the labor market could result in a 16.94% increase in Brazilian income.     

A note on the difference between human and non-human productive factors: Comments on ‘Love, war, and culture: An institutional approach to human evolution’

In this article, Professor Pagano views human relations as generally ‘(…) influenced by the prevailing features of the goods (private, public and positional) that have characterized production in different stages of the history.’ In my comment, I focus on the distinction between human and non-human productive factors. Because of their obvious relationship, some of the considerations that follow from such a distinction are already—explicitly or otherwise—in the target article’s argument; those that are not, especially with regard to the cultural determinant of value, could be easily integrated into it.     

Geoeconomic Assumptions,Insecurity, and ‘Free’ Trade in Central America

The Central American Free Trade Agreement (CAFTA) exemplifies interconnections and contradictions between geopolitical and geoeconomic agendas, including security, democracy, and resource marketing. Central American sovereignty is selectively weakened as states are increasingly dependent on the US and must synchronise governance with the expectations of their most important trade partner or risk becoming defendants in international tribunals. Salvadoran and Costa Rican governments have been accused of upholding environmental regulations that impede the profit-earning of multinational corporations, while the Guatemalan state was charged with violating domestic labour laws. Nevertheless, criminal behaviour and impunity are widespread across the region and seldom provoke US action. Five years after CAFTA's implementation, there is evidence of the erosion of democracy, repression of civil society, and uneven distribution of trade costs and benefits. These results have led some analysts to conclude CAFTA must be renegotiated, while others recommend human and labour rights protocols accompany free trade agreements.     

Post-truth Politics,Bullshit and Bad Ideas: ‘Deficit Fetishism’ in the UK

Debates about economic policy in Britain have been dominated by claims that sovereign debt problems are due to loose fiscal policy and excessive spending rather than volatile capital flows and flawed monetary policy. There are strong grounds for believing that these stories are largely nonsense, yet they inform policy and are widely believed among mass publics, and have proved almost impossible to refute in everyday political discourse. The answer to this puzzle, we suggest, is that such claims are better thought of as bullshit (as conceptualised by Harry Frankfurt 2005) rather than outright falsehoods: in other words, as speech acts that are indifferent to the truth and proceed without effective concern for the veracity of the claim in question. In this paper, we examine the characteristics of political bullshit applied to economic policy debates since the financial crisis, and seek to explain its hold on the popular imagination. We assess what makes some particular brands of bullshit more successful than others, and argue that in a world of competing realities as well as competing theories, the power of rhetoric is more likely to settle an argument than evidence and logic.     

Cheating,emotions, and rationality: an experiment on tax evasion

The economics-of-crime approach usually ignores the emotional cost and benefit of cheating. In this paper, we investigate the relationships between emotions, deception, and rational decision-making by means of an experiment on tax evasion. Emotions are measured by skin conductance responses and self-reports. We show that the intensity of anticipated and anticipatory emotions before reporting income positively correlates with both the decision to cheat and the proportion of evaded income. The experienced emotional arousal after an audit increases with the monetary sanctions and the arousal is even stronger when the evader’s picture is publicly displayed. We also find that the risk of a public exposure of deception deters evasion whereas the amount of fines encourages evasion. These results suggest that an audit policy that strengthens the emotional dimension of cheating favors compliance.     

Sectoral Changes in Employment: An eclectic perspective on ‘good’ jobs and ‘poor’ jobs

The linkage Keynes established between the volume of employment that business firms require to make a particular number of jobs available provides an operational perspective about the way in which labor markets work. The aggregate supply or Z function is, in fact, a job offer curve. The most significant insight to derive from this curve is that job offers are inseparable from the economy's aggregate expenditure (or demand) level. This interdependency of aggregate supply and aggregate demand is necessary to understand the functioning of labor markets in the real world. This paper argues that a disaggregated model which encapsulates the economy's price-taking and price-making sectors offers a promising analytical tool to gain perspective about ‘good jobs’ and ‘poor jobs’ in post-Fordist economies. It is maintained that the sectoral deployment of workers reflects whether employing firms, as price-makers, can capture the increasing returns inherent in modern technology.     

Goals,rationality criteria and market functioning ∗

The behaviours of economic operators may be directed by goals and rationality criteria other than those postulated by neoclassical theory. Under certain conditions, the existence of deviant goals and rationality criteria, far from being eliminated by the process of ‘natural selection’, has a profound effect on market functioning. It alters the ‘natural selection’ criterion and thereby influences the market trajectory. It can also favour the development of specific mechanisms of co-ordination. Our hypothesis is illustrated by an analysis of the cultural markets.     

Institutions and ‘Science’: The Contest about Pluralism in Economics in France

ABSTRACT

For a long time, France was a country in which various approaches to economics coexisted. This pluralism began to dwindle in the mid-1990s. Since then, France has witnessed the increasing and now overwhelming domination of mainstream economics. This article, drawing on a study of the evolution of the recruitment of professors of economics in France, documents the situation and links the observed trends to the changing institutions governing the discipline (a centralized system evolving under the influence of international norms and instruments). It is demonstrated that far from being fair and neutral devices, the rules and instruments governing economics—notably the ranking lists of economic journals—incorporate specific worldviews strongly biasing the assessment of research toward the mainstream. This article documents the tentative use of ‘voice and exit’ by the French Association of Political Economy to reform the economics discipline. Furthermore, it discusses the arguments proclaimed by Jean Tirole to prevent the French Ministry of Higher Education from creating a new university section called ‘Economy and Society’ to reinstate pluralism: they fall back on a monistic view of science that is questioned notably by developments—both factual and conceptual—in science studies and epistemology.     

Experiments,policy, and theory in development economics: a response to Glenn Harrison’s ‘field experiments and methodological intolerance’

In ‘Field Experiments and Methodological Intolerance,’ Glenn Harrison develops a criticism of randomized field experiments and denounces ‘intolerance’ for lab experiments and a ‘disconnect from theory.’ We argue that (i) lab experiments and RCTs are based on different methodological approaches and therefore fulfill different scientific objectives; (ii) key features of the RCT methodology make it highly relevant for policy-making, which accounts for a large part of its uptake; (iii) RCTs foster a convergence of interests between policy-makers and researchers around the study of economic mechanisms, which makes it possible to challenge and improve economic theory based on real-world facts; and (iv) hybrid forms of experimentation are being increasingly used and open promising avenues. In sum, economic research based on RCTs is more and more connected to theory and other forms of experiment, while also helping policy-makers tackle daunting problems of poverty and exclusion.     

Liberty,equality, and impossibility: some general results in the space of ‘soft’ preferences

This paper is concerned with examining the mutual compatibility of the ethical principles of equity and liberty in a social choice framework of ordinally formulated vague preferences. With sufficiently weakened versions of the liberty and equity principles, one can secure an existence result in a ‘relation‐functional’ setting. However, difficulties tend to re‐appear in a ‘choice‐functional’ setting, when one subscribes to the notion that while preference may be vague, choice must perforce be exact.     

Sex on the brain: some comments on ‘love, war and cultures: An institutional approach to human evolution’

Ugo Pagano provides a stimulating account of the grand sweep of human existence on this planet, relying on a few carefully-chosen analytic tools, including the role of sexual selection, brain size, public versus positional goods, and complementarities. But in his telegraphic narrative the compressed language is sometimes misleading or functionalist. Some of the details and current controversies get lost. This comment identifies some of the problems and urges that we should look more closely at the detailed mechanisms involved.     

‘Icarian Geography’: Air Power,Closed Space,and British Decolonisation

Through the first half of the twentieth century, strategists and statesmen in Britain struggled reconcile the advent of intercontinental air power with the geopolitical logic of the British Empire. This article explores how, and to what extent, their efforts might have catalysed the onset of British decolonisation.     

‘‘Isn't it time you were finishing?’’: Women's Labor Force Participation and Childbearing in England, 1860–1920

Abstract

This contribution examines the relationship between women's labor force participation (LFP) and fertility in three industrial towns of nineteenth- and early twentieth-century England from a feminist economic perspective. The study augments existing statistical approaches to demographic history by discussing women's motivations. Women's LFP influenced their likelihood of family limitation (via effects on both age at marriage and marital fertility). Where women were most likely to be in paid work, they were most likely to limit family size. It is further argued that the diversity of LFP patterns is the principal explanation for the varied patterns of fertility decline in different parts of Britain.     

Micro-behaviors and structural properties of knowledge networks: toward a ‘one size fits one’ cluster policy

The economic returns of cluster policies have been recently called into question. Based on a “one size fits all” approach consisting in boosting R&D collaborations and reinforcing network density, cluster policies are suspected to have failed in reaching their objectives. The paper proposes to go back to the micro foundations of clusters in order to disentangle the links between the long run performance of clusters and their structural properties. We use a simple agent-based model to shed light on how individual motives to build knowledge relationships can give rise to emerging structures with different properties, which imply different innovation and renewal capacities. The simulation results are discussed in a micro-macro perspective, and motivate suggestions to reorient cluster policy guidelines towards more targeted public-funded incentives for R&D collaboration.     

Reproduction and scarcity: the population mechanism in classicism in the ‘Jevonian revolution’

We argue that the shift from classicism to neoclassicism in nineteenth-century Britain can be seen as a change from a reproductive environment with internal scarcity, as in Malthus's population mechanism, towards a non-reproductive environment with external scarcity, as in Jevon's theoretical and applied economic work. We reconsider Jevon's use of seemingly classical concepts as well as the role of the population mechanism in Jevons's works.