The basic income guarantee and social economics

This article introduces the Review of Social Economy symposium on the basic income guarantee (BIG). It argues that there are several ways in which the BIG is consistent with social economics. First, the BIG is an attempt to meet the minimum material needs of US citizens and contribute to the common good. Second, important arguments for a BIG move beyond the positive-normative dichotomy. Finally, the BIG would help individuals function as social citizens.     

J.A. Schumpeter and T.B. Veblen on economic evolution: the dichotomy between statics and dynamics

At present, the discussion on the dichotomy between statics and dynamics is resolved by concentrating on its mathematical meaning. Yet, a simple formalisation masks the underlying methodological discussion. Overcoming this limitation, the paper discusses Schumpeter's and Veblen's viewpoint on dynamic economic systems as systems generating change from within. It contributes to an understanding on their ideas of how economics could become an evolutionary science and on their contributions to elaborate an evolutionary economics. It confronts Schumpeter's with Veblen's perspective on evolutionary economics and provides insight into their evolutionary economic theorising by discussing their ideas on the evolution of capitalism.     

Political and Social Economics: Beyond Orthodoxy and Heterodoxy

Economists face at least two problems when they try to go interdisciplinary. One is how to adapt their theory where the original set of assumptions may fail to apply. This is a particular problem for economists who carry the “default” neoclassical model around in their heads. This paper outlines a map for keeping track of assumptions when doing interdisciplinary work. A second problem is how to take a theory designed for one discipline and turn it into something intelligible to practitioners of another. One needs a common language, and it is argued that general systems theory might help, even though it is not a complete language. The map proposed here provides a unified way to compare and contrast the approaches of different orthodox and heterodox traditions and better see what problems they are most suited to addressing.

A health economic model to assess the cost-effectiveness of OPTIFAST for the treatment of obesity in the United States

Objectives: Obesity is associated with high direct medical costs and indirect costs resulting from productivity loss. The high prevalence of obesity generates a justified need to identify cost-effective weight loss approaches from a payer’s perspective. Within the variety of weight management techniques, OPTIFAST is a clinically recognized and scientifically proven total meal replacement Low Calorie Diet that provides meaningful results in terms of weight loss and reduction in comorbidities. The objective of this study is assess potential cost-savings of the OPTIFAST program in the US, as compared to “no intervention” and pharmacotherapy.

Methods: An event-driven decision analytic model was used to estimate payer’s cost-savings from reimbursement of the 1-year OPTIFAST program over 3 years in the US. The analysis was performed for the broad population of obese persons (BMI >30?kg/m²) undergoing the OPTIFAST program vs liraglutide 3?mg, naltrexone/bupropion and vs “no intervention”. The model included the risk of complications related to increased BMI. Data sources included published literature, clinical trials, official US price/tariff lists, and national population statistics. The primary perspective was that of a US payer; costs were provided in 2016?US dollars.

Results: OPTIFAST leads over a period of 3 years to cost-savings of USD 9,285 per class I and II obese patient (BMI 30–39.9?kg/m²) as compared to liraglutide and USD 685 as compared to naltrexone/bupropion. In the same time perspective, the OPTIFAST program leads to a reduction of cost of obesity complications of USD 1,951 as compared to “no intervention”, with the incremental cost-effectiveness ratio of USD 6,475 per QALY. Scenario analyses also show substantial cost-savings in patients with class III obesity (BMI?≥?40.0?kg/m²) and patients with obesity (BMI?=?30–39.9?kg/m²) and type 2 diabetes vs all three previous comparators and bariatric surgery.

Conclusions: Reimbursing OPTIFAST leads to meaningful cost-savings for US payers as compared with “no intervention” and liraglutide and naltrexone/bupropion in obese patients. Similar results can be expected in matching healthcare settings of other countries. Moreover, OPTIFAST has additional clinical and economic advantages through very low complication and adverse events rates.     

Toward a 0th Law of Thermodynamics: Order-Creation Complexity Dynamics from Physics and Biology to Bioeconomics

The evolutionary economics part of bioeconomics has its origins in attempts to justify why only rational firms survive, or to introduce dynamics into economic orthodoxy. To the extent that these views persist, this aspect of bioeconomics appears outdated. A more recent view is that the most significant dynamics in bio- and econospheres are not variances around equilibria. Instead order is now seen to be due to the interactions of autonomous, heterogeneous agents energized by contextually imposed tensions induced by energy differentials. While Darwinian selection is still an important process at the tail end of the order-creation process, other natural forces surrounding the biosphere are seen as causing the more significant changes in biological entities over the millennia. This view is set forth within the framework of thermodynamics. It also calls for a change away from the definition of science rooted in the equilibrium mathematics of Newton's orbital mechanics. This new message from natural science is about rapid-fire dynamics calling for a fast-motion science of order-creation before the equilibria of the 1^st Law of Thermodynamics take hold. The 2^nd Law of Thermodynamics is seen to dominate the 1^st Law as the root cause of change. The possibility of a 0^th law – of agents' self-organization toward order creation – is considered. Key works by Prigogine, Ashby, Lorenz, Haken, Kelso et al., Salthe, Gell-Mann, Mainzer, Omnès, and Kauffman are reviewed. Nine premises – tracing the path toward an emerging 0^th law – are discussed, with some variance also evident. The view of Kelso et al. most easily leads to a one-sentence statement of a possible 0^th law of order creation that could offer something of value to bioeconomists.     

Marshall’s disciples: knowledge and innovation driving regional economic development and growth

Studies of knowledge and innovation as driving forces of regional development and growth offer a myriad of approaches. Here, questions asked, methods used and answers given are manifold. In our overview, we cover recent developments in this research area. Moreover, we explore the question as to the extent to which approaches in this research area compete with or complement one another. It turns out that the various studies are much more complementary than competitive. However, there is still much ground to be covered before we fully understand the processes underlying the creation and dissemination of knowledge and innovation leading to regional development and growth.JEL Classification: R11, O32, O33, O18 Correspondence to: Claudia WerkerThis Special Issue is the outcome of the workshop on Knowledge and Innovation in Creating and Sustaining Regional Growth in a Global Environment held at Eindhoven University of Technology, The Netherlands, July 10 ^th until 12 ^th , 2003. Financial support by the Dutch research council (NWO), the Centre for Economic Research (CfER) of the Open University Milton Keynes (UK) as well as by Eindhoven Center for Innovation Studies (ECIS, The Netherlands) is gratefully acknowledged; as is the organizational support by ECIS. We are grateful for helpful comments by Ron Boschma and Joachim Schwerin. Moreover, we would like to thank Uwe Cantner for his kind support in making this Special Issue happen. Naturally, the usual disclaimer applies.     

Hidden links in the warranted rate of growth: the supermultiplier way out

Post Keynesian models consider growth to be demand-led – a logical consequence of Keynes's principle of effective demand. After Harrod's seminal paper in 1939 Harrod, R. F. 1939. An essay in dynamic theory. Economic journal, 49, 14–33.[Crossref], [Web of Science ®] , [Google Scholar] they try to unearth the hidden variables that might allow the adaptation of the warranted rate, determined from the supply side, to demand-growth expectations that supposedly have an autonomous source. The purpose of this paper is to show that an investment function based on the accelerator and integrated in a supermultiplier is able to shape the warranted rate in consonance with the autonomous trend. The supermultiplier reveals itself as a stable and stabilising mechanism when demand is split into permanent and transient. Hopefully the paper will build bridges with other Keynesian, Kaleckian and Sraffian strands that have so far dismissed the supermultiplier solution because of its apparently inherent instability.     

An Epistemological Reflection on Social and Solidarity Economy

Social and Solidarity Economy (SSE) is emerging as life affirming solutions to the global crises through the multiple ways people locally reinvent economic life on the margins of the capitalist system based on values of solidarity, reciprocity and sustainability. Although the SSE builds on a strong foundation of real practices and institutions of economic transformation as the way forward for us, this paper argues that this world of practice is in need of its theory to frame discourses and engage with the bigger picture with confidence as an alternative to the dominant economic paradigm. The author argues that the orthodox economics, with its ontological construct of the homo economicus, Cartesian dichotomy and logical positivist epistemology severely constrains our abilities to understand and appreciate economic alternatives based on ‘other’ rationalities. Hence, there is a need for an epistemological revolution to construct a coherent theoretical framework from the wreckages of the neoclassical economics for the SSE. This paper seeks to outline the basic structure and the key elements of the ontological and the epistemological framework for this ‘science-in-the-making’ as a step to stimulate further debate for a paradigm revolution.     

Does clean air matter in developing countries' megacities? A hedonic price analysis of the Jakarta housing market, Indonesia

Despite numerous hedonic studies on the value of clean air in developed countries, the lack of similar studies in less developed countries has raised the question as to whether clean air also matters in developing countries' megacities. As an attempt to fill this gap, we apply a hedonic property value analysis, the method commonly used to infer the value of clean air in developed countries, using the combination of data on housing rental prices and their characteristics from the Indonesian Family Life Survey, and data of the ambient level of six different pollutants in Jakarta, Indonesia. The result indicates that, in the cases of lead, total hydro carbon (THC), and SO₂, air pollutants have a negative association with property value; i.e., housing rental price. The relationship is at 5% level of significance for lead and 10% level for THC and SO₂. This paper estimates that per family value of clean air in Jakarta ranges from US$28 to US$85 per μg/m³.     

Emerging Consensus on Labour Market Institutions and Implications for Developing Countries: From the Debates in India

Abstract

This paper makes a critical intervention to on-going theoretical and policy debates in the economic analysis of labour market institutions (LMIs) in the context of recent debates in India. It focuses on the internal inconsistency of mainstream economic analyses of LMIs, in particular those based on the new institutional economics (NIE) approach, and what appears to be an emerging policy consensus on LMIs within the World Bank and the International Labour Organization (ILO). The paper draws out the possible ideological parallels in these two developments, despite different intellectual origins and intentions of those engaged in these debates. A corresponding modification in policy debates in India is observed in the shifting perspectives from the Second National Commission on Labour (SNCL) to the National Commission for Enterprises in the Unorganised Sector (NCEUS). The apparent emerging consensus in both the theoretical literature and policy debates reveals the tendency for researchers to focus on labour market outcomes and phenomenal forms of LMIs rather than the structures, processes, agencies and relations that underpin them. While this can be seen as an advancement from the traditional distortionist-institutionalist dichotomy, the tendency of this consensus to explain the persistence of seemingly inefficient institutions within the micro-level choice theoretic framework and its appeal to policy agendas on good governance, social capital, trust and civil society, render it vulnerable to appropriation by the mainstream. The paper argues that the emerging consensus on LMIs is an inadequate framework to inform effective policy propositions, and highlights the scope and opportunity for a political economy alternative.     

Austrian themes,data, and sports economics

This paper uses data from Major League Baseball and themes from Moneyball by Michael Lewis to empirically illustrate Kirznerian entrepreneurship. While Kirzner envisioned competition in markets for profit, the sports economics literature shows that sporting competition has things in common with market competition. This is important because a strength of sports economics, namely, the abundant data, can help overcome a perceived weakness of Austrian economics, namely, the lack of empirical content. This paper describes and empirically confirms how certain front office decision makers of the Oakland Athletics were alert to opportunities that were being overlooked by other baseball executives.

Post-truth: an alumni economist’s perspective

ABSTRACT

Drawing upon 50 years as an academic economist, this lecture to alumni of SOAS’s Department of Economics reflects upon the continual ‘post-truth’ aspects of mainstream economics, ranging over its substantive, if shifting, content, and its treatment of methodology and interdisciplinarity. It draws upon a wide range of theory, empirical analysis, policy and anecdote to highlight both the need for alternatives and the continuing, even increased, failure of the mainstream to engage with criticism and alternatives.     

Rethinking the Foundation of the Original Institutional Economics Policy and Reform Program: Reactions to Thomas C. Leonard’s “Illiberal Reformers”

John R. Commons, among other original institutional economists, argued for the interests of the common people against the power of vested interests in politics and business. Against this backdrop, a new book by Thomas C. Leonard contends that, in fact, these same economists were actually “illiberal” and only promoted the interests of certain groups, such as Anglo-Saxon men, and were against the progression of minority populations, women, or the disabled. But Leonard’s argument that these economists were “illiberal,” and that their entire reform program related to the role of government in the economy and the creation of the administrative state, is essentially defunct. As Leonard (2016 Leonard, Thomas C. Illiberal Reformers: Race, Eugenics and American Economics in the Progressive Era. Princeton, NJ: Princeton University Press, 2016. [Google Scholar], xiv) writes in the prologue, “expertise in the service of the administrative state, what progressives call social control, has survived the discredited notions once used to uphold it.” We respond to Leonard’s book by offering a direct critique of the arguments he makes. We argue that Leonard — at least partially — takes the founders’ view on these issues out of context, and that even where some of their views would be refused by today’s institutional economists, it does not mean that the entire reform project is rejected.     

Social Economics and Evolutionary Institutionalism Today

This paper discusses theoretical and methodological elements that constitute social economics. It also considers those elements for evolutionary (Veblenian) institutional economics. It investigates how these “heterodoxies” may further converge. Such convergence would probably not trigger a complete unification, but lead to a broadly defined common research program and a strategy for joint “heterodox” survival, in face of the ranking game of the neoclassical “mainstream” and of the dominant powers supporting it as the discipline providing ideological legitimization. A common denominator of “heterodoxies” in terms of real-world orientation, direct interdependency and interaction of agents (social decision situations), appropriate complexity, and the treatment of values is drafted. Theoretical concepts discussed include complex and open systems, individual agency, institutions, embeddedness, networks, social reform, and process orientation. Formal methodological developments considered are complex modeling, game theory, or computer simulations. We arrive at a more formal common basis, which we term socio-economics. We also consider the relations of evolution and institutions, the institutional dichotomy, and the theory of institutional change. The monism of the “market” of the “mainstream” turns out to dissolve into the institutional diversity of real-world network forms, which helps explaining real-world forms of markets, hierarchies, or spatial clusters. Focuses of “heterodox” convergence will have to be the related “microfoundations” and “macrofoundations” projects, integrating an interdisciplinary “naturalistic” approach to genetic-cultural co-evolution of cooperation, and social reform. While modern socio-economics makes “heterodoxies” leading in economic research, their future still appears open between ideological cleansing and extinction through the mainstream, and proactive paradigmatic pluralism.     

Institutional Change in Nepal: Liberalization,Maoist Movement,Rise of Political Consciousness and Constitutional Change

ABSTRACT

Contradicting the rest of the world’s promptness to discredit communism as an alternative and Francis Fukuyama’s (1992 Fukuyama, F. 1992. The End of History and the Last Man . New York: The Free Press, A Division of Macmilan Inc. [Google Scholar]) teleological account of ‘the end of history,’ Nepal witnessed a Maoist revolution between 1996 and 2006. Such a ‘deviation’ from what Fukuyama and others have viewed as the path of development raises questions about the linear progression of history and its implicit dualism of market vs. government. As several Original Institutional Economists have discussed, analytical dichotomies lead to a simplistic understanding of transformation that disregards the multilayered nature of society and, thus, concludes that history unfolds linearly to arrive at a predetermined and homogeneous end. This paper analyzes the social transformation of Nepal that preceded the Maoist revolution, through the lens of Feminist Institutionalism, utilizing a multidisciplinary approach to understand the complexity of the impacts of liberalism-protectionism political changes on Nepali institutions.     

Athletic contests and individual robberies: an analysis based on hourly crime data

Using hourly data on individual robberies, this article employs a novel approach to investigate the relationship between athletic contests and individual robberies in Memphis, Tennessee, a well-known entertainment destination, with its iconic Beale Street locale, in the US. Empirical results indicate that home basketball games hosted by the NBA’s Memphis Grizzlies and those hosted by the University of Memphis Tigers are associated with increases in individual robberies, while away games are not associated with such an increase. This finding is consistent with the hot spot theory of crime, as large numbers of individuals travel to the games, thus providing additional opportunities for crime.     

What is specific about evolutionary economics?

Ever since an “evolutionary” perspective on the economy has been suggested, there have been differing, and partly incommensurable, views on what specifically this means. By working out where the differences lie and what motivates them, this paper identifies four major approaches to evolutionary economics. The differences between them can be traced back to opposite positions regarding the basic assumptions about reality and the proper conceptualization of evolution. The same differences can also be found in evolutionary game theory. Achievements of the major approaches to evolutionary economics and their prospects for future research are assessed by means of a peer survey.

The European Union: confederation,federation or association of compound states?

The European Union of today is neither a confederation nor a federation, but rather an association of compound states. It is shown that this mixture of two forms of constitutional contracts implies inconsistencies prone to political deadlocks. A Buchanan/Tullock/Rawls approach to a reform suggests a clear choice between either a confederation or a federation. In this paper, however, it is proposed to follow a Hayekian approach in which issue fields are allocated to a confederation or to a federation, respectively depending on the revealed homogeneity of preferences of the citizens across the Member States. Hence both, Council and European Parliament, would remain the central decision makers but with separate tasks. Suggestions are made how to improve their election and their decision rules. The paper should contribute to the debate on reforming the European institutions which emerged after the rejection of the constitutional draft by the French and Dutch voters in 2005.

Economics and the Supreme Court: The Case of the Minimum Wage

In the United States, laissez-faire has been the policy advocated in good times, while social legislation has been called for during crises. One instance of this dichotomy concerns the transformation of the American understanding of minimum wage laws during the early 20^th century. During this time, the view of minimum wage laws changed from one that viewed such laws as theft, to one that saw such laws as being required for distributional justness. We examine the legal-historical debate concerning whether the Supreme Court renounced its policy of laissez-faire individualism in its 1937 ruling finding the minimum wage law constitutional, arguing that it did not. We investigate the free market standard that the Court used to find minimum wage laws unconstitutional in 1923. We demonstrate how the economic conditions of the Depression, coupled with the development of economic theory, explain how the Court eventually found the minimum wage law constitutional.     

Philosophy of Economics Rules: introduction to the symposium

ABSTRACT

Economists have long been criticized for their use of highly idealized models. In Economics rules: Why economics works, when it fails, and how to tell the difference [Oxford: Oxford University Press, 2015] Dani Rodrik responds to this criticism by offering an account of models that emphasizes the diversity of models in economics. Rodrik’s account presents a rare opportunity for economists and philosophers of economics to engage in a mutually beneficial exchange that could improve our understanding of the power and limits of economics, and the rights and wrongs of the dismal science. The symposium on Rodrik’s Economics Rules is the first attempt to seize this opportunity.