Adolph Lowe on Freedom,Education and Socialization

The lifework of Adolph Lowe (1893–1995) was greatly motivated by his struggle with the problem of “freedom and order”. This paper explores Lowe's largely overlooked and under-examined writings on education and political philosophy, important components of his “political economics”. Lowe's concern with the socialization function of education is highlighted and related to his notion of “spontaneous conformity, as well as the ideas of Vygotsky on imaginative children's play and C. S. Peirce on habit-change. Taking Gorman's critique of Schutz's conception of freedom as a point of departure, and drawing on the work of C. Wright Mills, Lowe's own conception of freedom is critically examined. For Lowe, the stronger the commitment to community, the greater is the possibility for individual autonomy without the threat of social disruption.     

Degrees of Connection: A Critique of Rawls’s Theory of Mutual Disinterest

John Rawls's solution to the problem of justice between generations is premised on the idea that “a generation cares for its immediate descendants, as fathers say care for their sons” (John Rawls 1971: 288, emphasis added). This paper brings mothers into the Rawlsian social contract. I argue that, when children have more than one parent, there is a contradiction between the assumption of concern for descendants, which underpins Rawls's account of justice between generations, and the mutual disinterest assumption, which characterizes parties negotiating in the “original position.” Concern for descendants creates connections within generations as well as across generations. The critique is internal and nonradical, but its implications are subversive. It demonstrates that an “add women and stir” liberal feminist reworking of Rawls's theory cannot be successful; bringing sexual reproduction out of the realm of nature and into the social contract necessitates a radical reconstruction of Rawls's theory.     

Three macroeconomic syntheses of vintage 1937: Hicks,Haberler, and Lundberg

Abstract

The 1920s and 1930s were years of intensive debate about economic dynamics and stabilisation policies. There was a large variety of explanations of cycles and depressions, and Keynes’ General Theory of Employment, Interest and Money (1936) was pitched against them. In 1937, followed three different attempts to provide synthetic expositions of macroeconomic theory that would deal with the Keynesian challenge: Hicks’ Mr. Keynes and the “Classics”, Haberler's Prosperity and Depression, and Lundberg's Studies in the Theory of Economic Expansion. This paper compares those 1937 syntheses and contrasts them with the “Neoclassical Synthesis” and the current “New Neoclassical Synthesis”.     

Whither Keynesian probability? Impolite techniques for decision-making

The critical literature on Keynes has provided extensive analysis of why individual agents may find convenient to adopt a “conventional judgement”, and what he meant by “polite techniques” used to save their faces as “rational, economic men.” This paper concentrates instead on impolite techniques of thought suited to deal with Keynesian uncertainty. The paper suggests that the thread going from Keynes's Treatise on Probability to the General Theory and its defence provides a positive analysis of decision-making under uncertainty, and that placing emphasis on this positive analysis simply means adhering to Keynes's long-standing commitment to a (surely peculiar) probabilistic set-up.     

Using an integrated choice and latent variable model to understand the impact of “professional” respondents in a stated preference survey

Internet panels are increasingly used for stated preference research. Because members of such panels receive compensation for each completed survey, one concern is that over time this creates professional respondents who answer surveys solely for the monetary compensation. We identify professional respondents using data on panel tenure, survey response frequency, completion rate and total number of completed surveys. We find evidence of two types of professional respondents: “hyperactives” who answer surveys frequently and “experienced” who have long panel tenure and a large number of completed surveys. Using an integrated choice and latent variable model on stated preference survey data, we find that “hyperactive” respondents are less likely to choose the 'status quo’ and have a more stochastic choice process as seen from the econometrician's point of view, whereas “experienced” respondents have a relatively more deterministic choice process. Our results show that “hyperactive” respondents significantly impact estimated values.     

Guy Routh's Heterodox Critique of Economic Methodology

Guy Routh was an outstandingly incisive and severe critic of mainstream economic theory's abstraction, class bias, and empirical irrelevance. Routh's The Origin of Economic Ideas (1975 1989), with such chapter titles as “The Preposterous Origins” and “From Propaganda to Dogma”, was described by Robert Heilbroner as “irreverent, original, controversial, and delightful” while J. K. Galbraith expressed his “utmost enjoyment” and “utmost approval” of the book. Routh's trenchant critique of mainstream theorizing and his vision of an empirically-grounded alternative have been largely forgotten since his death in 1993, but deserve the attention of heterodox and especially of institutionalist and social economists.     

EMPLOYER‐PROVIDED HEALTH INSURANCE AND JOB MOBILITY: DID THE AFFORDABLE CARE ACT REDUCE JOB LOCK?

Many have argued that concerns over health insurance reduce labor market mobility in the United States, causing a “job lock” effect. We take advantage of the novel natural experiment created by the Affordable Care Act's dependent coverage mandate to estimate the magnitude of the job lock effect for young adults. Using the 2008–2013 Current Population Survey and a difference‐in‐difference research design, we find that the expansion of dependent coverage did not increase job mobility, suggesting that job lock is not a major concern for young adults. (JEL J62, I13, I18)     

SOCIAL NORMS,LOCAL INTERACTION,AND NEIGHBORHOOD PLANNING*

This article examines optimal social linkage when each individual's repeated interaction with each of his neighbors creates spillovers. Each individual's discount factor is randomly determined. A planner chooses a local interaction network or neighborhood design before the discount factors are realized. Each individual then plays a repeated Prisoner's Dilemma game with his neighbors. A local trigger strategy equilibrium (LTSE) describes an equilibrium in which each individual conditions his cooperation on the cooperation of at least one “acceptable” group of neighbors. Our main results demonstrate a basic trade‐off in the design problem between suboptimal punishment and social conflict. Potentially suboptimal punishment arises in designs with local interactions since in this case monitoring is imperfect. Owing to the heterogeneity of discount factors, however, greater social conflict may arise in more connected networks. When individuals' discount factors are known to the planner, the optimal design exhibits a cooperative “core” and an uncooperative “fringe.”“Uncooperative” (impatient) types are connected to cooperative ones who tolerate their free riding so that social conflict is kept to a minimum. By contrast, when the planner knows only the ex ante distribution over individual discount factors, then in some cases the optimal design partitions individuals into maximally connected cliques (e.g., cul‐de‐sacs), whereas in other cases incomplete graphs with small overlap (e.g., grids) are possible.     

EU Banks Rating Assignments: Is There Heterogeneity between New and Old Member Countries?

We model EU countries' bank ratings using financial variables and allowing for intercept and slope heterogeneity. Our aim is to assess whether “old” and “new” EU countries are rated differently and to determine whether “new” ones are assigned lower ratings, ceteris paribus, than “old” ones. We find that country‐specific factors (in the form of heterogeneous intercepts) are a crucial determinant of ratings. Whilst “new” EU countries typically have lower ratings than “old” ones, after controlling for financial variables we also discover that all countries have significantly different intercepts, confirming our prior belief. This intercept heterogeneity suggests that each country's rating is assigned uniquely, after controlling for differences in financial factors, which may reflect differences in country risk and the legal and regulatory framework that banks face (such as foreclosure laws). In addition, we find that ratings may respond differently to the liquidity and operating expenses to operating income variables across countries. Typically ratings are more responsive to the former and less sensitive to the latter for “new” EU countries compared with “old” EU countries.     

GLOBALIZATION: CONTENTS AND DISCONTENTS

William Shakespeare's Tragedy of King Richard III, written approximately in 1592, is the story of evil acts by the detested and misshapen hunchback, Richard, who plots to sow discontent among his brother, the King, and others, and has his brother murdered along with other wicked deeds in order to gain the throne. It opens with the line, “Now is the winter of our discontent” (p. 111, ed. Wright 1936). “The Winter of Our Discontent” is also the title of John Steinbeck's (1961) novel of a man who trades his moral convictions to reclaim lost family wealth. “Globalization and Its Discontents” is the title of Joseph Stiglitz's (2002) book that critiques rigid adherence by major economic institutions—such as the International Monetary Fund—to economic orthodoxy in the promotion of globalization. (JEL F6, D72, D3, O23, O24, L17, K33)     

A Philosopher's Comment on Philosophico-Economic Relations

Scottish philosophers in the eighteenth century interpreted the market economy as a “civil society,” a path toward freedom and a new morality, separate from monarchal government. They expected markets to be self regulating and expected them to function with ties to a moral life. The market was a civil order, but that vision was destroyed when corporations rose to power in succeeding centuries, and governments were enlarged to regulate markets. Today we see a concern about big corporations and government bureaucracy, and a return to the idea of a “civil society.” This article proposes that today's vision of “civil society” is advanced by an economy that returns to its principles of self (civil) regulation. Markets become civil and self regulating when government, business, and nonprofits cooperate to create systems of social accountability for the common good. A self-regulating market is constructed experimentally through civil associations with self-enforceable codes of conduct, civic-oriented partnerships, legislation, banking, investments, and corporations whose policies are based on stakeholder studies that reduce moral and financial costs. Modest steps toward a self-regulating economy offers a foundation for today's version of a “civil society.”     

Unequal Chances: Family Background and Economic Success

Abstract

This essay is a comment on“The Citation Impact of Feminist Economics”by Frances Woolley, which appeared in Feminist Economics, Vol. 11, No. 3, November 2005.

This contribution comments on Frances Woolley's recent Feminist Economics article, “The Citation Impact of Feminist Economics.” It points to two avenues through which Woolley's article could have better illuminated the extent of Feminist Economics' scholarly relationship with the communities of both heterodox and mainstream economists: first, she omits several important heterodox economic journals in her study, and second, she could have offered a more critical evaluation of mainstream journals and economists relative to Feminist Economics and feminist economists. This paper uses citation data drawn from ten heterodox and ten mainstream journals to identify and build on these gaps.     

Pigou,Del Vecchio,and Sraffa: the 1955 International “Antonio Feltrinelli” Prize for the Economic and Social Sciences

In 1955, the Accademia Nazionale dei Lincei awarded the inaugural International “Feltrinelli” Prize for the Economic and Social Sciences to Arthur Cecil Pigou. This paper considers Gustavo Del Vecchio's active role on the selection committee in recommending Pigou for the Feltrinelli Prize and the related correspondence between Pigou, Piero Sraffa, and Del Vecchio. One of the most significant discovery reported in this paper is Sraffa's contention, expressed in an unpublished letter to Del Vecchio, that Pigou had “never been honoured in proportion to his merits.”     

WINDOW GUIDANCE BY THE BANK OF JAPAN: WAS LENDING CONTROLLED?

Over the period 1961–1991, the Bank of Japan (BOJ) attempted to directly control the volume of commercial bank credit by providing lending targets for selected banks. This policy of “window guidance” (WG) applied to only a subset of lending institutions. The guided banks involved were under no legal obligation to heed the BOJ's requests. Using actual WG data to city banks, two questions are addressed. First, did city banks comply with WG (the “compliance hypothesis”)? Second, was WG successful in controlling economywide lending or did lending adjustments by other financial institutions simply displace the lending of guided banks (the “displacement hypothesis”)? The empirical results show a high degree of compliance in the first two decades of the program and evidence of weakening in the final years. The displacement hypothesis is rejected, particularly in the early period of highly regulated financial markets. (JEL E58, E51, E52)     

Credible communication in dynastic government

This paper studies information disclosure in a model of dynastic government. When information about past policy choices comes exclusively from the reports of previous administrations, each administration has an incentive to choose its (suboptimal) one-shot expenditure policy, and then misrepresent its choice to its successor. Consequently, it has been suggested that “horizontal accountability,” i.e., a system of governance where auditing functions lie outside the executive branch, can ensure credible disclosure of a government's activities. This paper suggests a cautious approach to that view.The baseline model examines the reporting incentives of an external auditor who can independently verify the information each period. Even with auditing, credible disclosure is shown to be problematic. Various extensions to this baseline model are examined. In one extension, “liberal” (i.e., those prefering larger government expenditures) and “conservative” (those prefering smaller expenditures) regimes and auditors evolve over time. It is shown that “conservative” (“liberal”) auditors are not credible when the current regime is also “conservative” (“liberal”). Moreover, because information transmission stops when the auditor's and the regime's biases coincide, effective deterrents even in the “good” periods (when the auditor's and the administration's biases differ) are difficult to construct. In all periods the equilibrium requirement of auditor neutrality constrains the dynamic incentives for efficient policy choices. These constraints are shown to bind away from optimal policies in standard constructions of equilibrium. Various ways in which auditing protocols can overcome these problems are discussed.     

Social Welfare Functionals on Restricted Domains and in Economic Environments

Arrow's “impossibility” and similar classical theorems are usually proved for an unrestricted domain of preference profiles. Recent work extends Arrow's theorem to various restricted but “saturating” domains of privately oriented, continuous, (strictly) convex, and (strictly) monotone “economic preferences” for private and/or public goods. For strongly saturating domains of more general utility profiles, this paper provides similar extensions of Wilson's theorem and of the strong and weak “welfarism” results due to d'Aspremont and Gevers and to Roberts. Hence, for social welfare functionals with or without interpersonal comparisons of utility, most previous classification results in social choice theory apply equally to strongly saturating economic domains.     

Adding links,adding persons,and adding structures: Using Sen's frameworks

Abstract

This essay is a comment on “Sen on Freedom and Gender Justice,” by Mozaffar Qizilbash, which appeared in Feminist Economics Volume 11, Number 3, November 2005.

Building on the 2003 double special issue of Feminist Economics entitled “Amartya Sen's Work and Ideas,” this paper responds to the review essay by Mozaffar Qizilbash. It identifies and illustrates various possible evaluations of a theoretical system, including that it has acknowledged strengths, unrecognized strengths, remediable gaps or failings, or structural faults. The paper then looks at Sen's system as a theoretical basis for “human development”– in particular in relation to personhood, emotions, and psychological interdependence – and argues that it points in directions required for economic and social analysis, including towards theories of care, but is not itself a sufficient treatment. The paper suggests deepening Sen's system by connecting to other important languages of analysis concerning the structuring of attitudes, emotions, felt well-being, public reasoning, and politics.     

Global monitor

Until recently, theories of war in Africa and other underdeveloped social formations have foundered on notions of ‘poverty=war” and vice versa. Newer thinking, however, asks questions in line with classical Marxist perspectives veering away from dependencia, relating war in the ‘dark continent’ to issues of class formation and (“primitive”) accumulation. Christopher Cramer's Civil War is not a Stupid Thing in particular raises historically and comparatively grounded questions about the relationship between coercion and ‘development’ that challenge both dependency and liberal thinking. Yet, as assessments of contemporary writing on similar issues (including ‘post-conflict studies’) illustrate, the quality of this type of thinking in no way guarantees its intellectual hegemony.     

Adam Smith: From Propriety and Sentiments to Property and Wealth

“Why return to Adam Smith?” Because we learn that he had fresh-for-today insights, derived from a modeling perspective that was never part of economic analysis. Smith wrote two classics: The Theory of Moral Sentiments (1759; hereafter Sentiments); and An Inquiry into the Nature and Causes of the Wealth of Nations (1776; hereafter Wealth). In Sentiments it is argued that human sociability in close-knit groups is governed by the “propriety and fitness” of conduct based on sympathy. This non-utilitarian model provides new insights into the results of 2-person experimental “trust” and other games that defied the predictions of traditional game theory in the 1980s and 90s, and offers testable new predictions. Moreover, Smith shows how the civil order of “property” grew naturally out of the rules of propriety. Property together with what I call Smith's Discovery Axiom then enabled his break-through in Wealth that defined the liberal intellectual and practical foundation of two centuries of Western economic growth.