The Stories That Economists Tell: Mainstream,Hyman Minsky,and Institutional Views of Consumer Behavior

The financial crisis of 2008 provided an informal test of mainstream and institutional views of consumer behavior. The test posed by the financial crisis assumes the form of a “story.” A successful story provides a reasonably coherent explanation of events, confirming our beliefs and justifying our policies. First, the article examines the failure of mainstream economics to present a coherent story of consumer behavior. Ignoring the relevance of assumptions, as Milton Friedman advocated, leads economists to hypostasize the model, filtering information central to the crisis. Second, Minsky’s discussion of consumer behavior and its effect on cash inflows to businesses represents an institutional explanation regarding why John Maynard Keynes’s long-run vision did not occur. The third section expands on some of the themes addressed by Minsky, which are found among the contributions of institutional economists, focusing on efforts to mold institutions to increase cash inflows to corporations and protect those inflows.     

我国农村机构改革存在问题及改革策略研究

我国农村机构经过了一系列的改革,总体上仍存在不少问题,主要表现为:农村机构改革的进程缓慢;农村机构改革不配套;在改革的内容上存在偏颇;乡镇政府职能的越位、缺位与错位。下一步改革的策略是:实现事权和财权的统一;推进县、乡、村联动改革;推进乡镇事业单位改革;改革干部政绩考核制度。     

Foreign direct investment and institutional reform: evidence and an application to Portugal

We examine the role of geographic, economic, and institutional factors in attracting Foreign Direct Investment (FDI) in Europe, using a cross-section of inward bilateral investments. We estimate and assess the expected benefits, the required reform efforts, and the efficiency of reform options corresponding to a convergence of Portuguese institutions to EU standards. We conclude that improving home institutions is likely to have a quantitatively very significant role in attracting FDI. Geographical and market size factors also play a role. Reforms promoting the independence of financial institutions and a leaner bureaucracy, lowering political risk and corruption, and improving the investment code may significantly affect the amount of bilateral inward FDI that is targeted to Portugal.     

Economic growth and the employer of last resort: A simple model of flexicurity capitalism

This paper presents a model of economic growth with unemployment due to labor market rigidities. The economy consists of a firm that maximizes profits, of a government and of two types of households that maximize inter-temporal utility. One household supplies skilled labor at the first labor market, the other household supplies simple labor at the second labor market. The government in the economy raises taxes and uses its revenues to employ labor receiving unemployment benefits, to finance transfers to the household in the second labor market and to finance public spending. We analyze both the version with exogenous growth as well as an endogenous growth variant, where growth is made endogenous by assuming positive externalities of capital. The exogenous growth model is characterized by global determinacy while it is locally indeterminate. The endogenous growth model can be globally indeterminate with the high balanced growth path being locally indeterminate and the low balanced growth path being locally determinate. We also study how taxation and how the speed of the wage adjustment affect the economy.     

Economic factors in the democratization of socialism and the socialization of capitalism

Part I discusses Wlodzimierz Brus' neo-Marxian theory of social change: political democratization as a necessary requirement for socialization of public means of production, and socialization necessary for economic efficiency. Then there is a short discussion of some related features of Marxian theory. Part II gives a model of technological change and of the dynamics of long-run growth. This leads to a discussion of the role of capitalism and authoritarian socialism in rapid growth. The author concludes that for “true democratic socialism” to evolve, the growth explosion of the industrial revolution should have run its course.     

福建电力公司发展新兴产业探讨

Intel公司的安迪·葛鲁夫(Andy Grove)曾说:今天只有两类公司存在,一是速度快的,一是正在死亡的。在人类进入知识经济的今天,福建电力要提升整体产业规模,增强自身的活力及对环境变化的应对能力,除了进一步加强发供电主营业务外,还应当高起点、高速度地介入新     

The business cycle of capitalism

In every business expansion the wage share declines because productivity rises faster than hourly wages. As a result, towards the end of expansion the limited wages and salaries cause an insufficient growth of consumer demand, which makes it difficult to realize profits. At the same time costs - including wage costs, material costs and interest costs - are rising, so it is difficult to produce at a profit. Therefore, at the peak of the cycle rising costs and insufficient demand squeeze profits as in a nutcracker, causing a fall in the expected rate of profit, which leads to a business contraction. In every business contraction the opposite trends tend to produce eventual recovery and a new expansion.     

The meta-crisis of secular capitalism

The current global economic crisis concerns the way in which contemporary capitalism has turned to financialisation as a double cure for both a falling rate of profit and a deficiency of demand. Although this turning is by no means unprecedented, policies of financialisation have depressed demand (in part as a result of the long-term stagnation of average wages) while at the same time not proving adequate to restore profits and growth. This paper argues that the current crisis is less the ‘normal’ one that has to do with a constitutive need to balance growth of abstract wealth with demand for concrete commodities. Rather, it marks a meta-crisis of capitalism that is to do with the difficulties of sustaining abstract growth as such. This meta-crisis is the tendency at once to abstract from the real economy of productive activities and to reduce everything to its bare materiality. By contrast with a market economy that binds material value to symbolic meaning, a capitalist economy tends to separate matter from symbol and reduce materiality to calculable numbers representing ‘wealth’. Such a conception of wealth rests on the aggregation of abstract numbers that cuts out all the relational goods and the ‘commons’ on which shared prosperity depends.     

Economic performance,government size,and institutional quality

This paper studies the empirical link between government size, institutions and economic activity using a panel of 140 countries over 40 years. Our results, robust under different econometric techniques, show mostly a negative effect of government size on output, while institutional quality has generally a positive impact. Moreover, the detrimental effect of government size on economic activity is stronger the lower institutional quality, and the positive effect of institutional quality on output increases with smaller government sizes.     

Biosimilars in Germany: the emergence of a new industry in the light of the varieties of capitalism approach

ABSTRACT

Although lagging behind the USA in biologics, German firms are forging ahead in the emerging field of biosimilars. This development confirms earlier explanations of the differences in these industries given by the Varieties of Capitalism approach. With the recent differentiation in biopharmaceuticals, again, the differences in the institutional environment on both sides of the Atlantic are responsible for different dynamics. However, this time German companies are in the better position: the industry refers to a tradition of engineering capabilities in chemicals and pharmaceuticals. Additionally, European regulation introduced the world’s first regulatory framework, which moreover is designed in a progressive way concerning market admission.     

Chinese rural reform in 30 years: An analysis in terms of institutional economics

Both from history and logic, the rural reform is the starting point for China’s overall economic reform. The gradualism, inherent logical evolution and interest conflict of reform in China all have their origins in rural reform. The thirty-year’s rural reform can be viewed as the adjustment of urban-rural relations by different period. This study adopts the analytical framework of institutional economics to clearly demonstrate the whole logic process of institutional transition, then from the international comparative perspective, generalizes some basic experiences in China’s rural reform and the lessons for developing and transitional countries. On the basis of judging different stages of economic development, this paper also sums up the new challenges faced by rural reform and discusses its prospects for the next reform.     

Economic reform and interprovincial inequalities in China

This note is an attempt to explore two issues: (1) the trend of interprovincial inequality in the post-1978 reform era in China; and (2) the factors behind the dynamics of interprovincial inequality. Using recently released provincial gross domestic product (GDP) data, we have shown that interprovincial inequality decreased in the fast half of the 1980s, but started to increase in the second half of the 1980s. To understand the impact of sectoral reforms on interprovincial inequality, the overall inequality in provincial per capita GDP is decomposed into the contributions by the primary, secondary and tertiary sectors. It seems that the trend of interprovincial inequality has been largely induced by the reforms of the industrial sector which make up a large share of the secondary sector. In addition, national income data from the socialist national accounting system are used to identify the impact of interprovincial resource flows on interprovincial inequalities. The findings seem to suggest a relative decline in the role of redistributive budgetary transfers.     

Competing explanations of the Minsky moment: The financial instability hypothesis in light of Austrian theory

This paper evaluates the Minsky hypothesis. I discuss the Austrian theory of the business cycle against his theory, from the perspective of the theory and with reference to the current crisis. Minsky offers some of the theoretical details of speculation during the boom phase, which is a positive feature of his hypothesis and allows us to see more clearly how the recent financial crisis played itself out, but in the end his cycle theory remains incomplete. The Minsky moment—a feature of the recent housing bubble—is something that the Austrian theory of the cycle is already fit to explain.