Editorial

Original Papers

Editorial     

Where Schumpeter was nearly right – the Swedish model and Capitalism, Socialism and Democracy<--RID="*"-->

In Capitalism, Socialism and Democracy Joseph A. Schumpeter concluded that socialism would eventually displace capitalism in Western democracies. This would come about as a result of the superior performance of capitalism. We extract six “stylized” propositions that are essential elements of Schumpeter's prediction about the fate of capitalism. These propositions are confronted with the development of the Swedish economy. The three main results of the analysis are: (1) The evolution of the Swedish economy closely followed Schumpeter's predictions until about 1980: Large firms became increasingly predominant in production and innovative activity, ownership of firms became more and more concentrated, individual entrepreneurship waned in importance, the general public grew increasingly hostile towards capitalism, and by the late 1970s explicit proposals for a gradual transfer of ownership of firms from private hands were launched. (2) Design of tax and industrial policies fueled a development of the economy along the lines predicted by Schumpeter. In general, the policies discouraged private wealth accumulation. In particular, the policies favored concentration of firms and concentration of private ownership. (3) The turning point away from the path to socialism coincides with real world developments that disclosed two major flaws in Schumpeter's analysis. First, the ever more obvious failure of socialism in Eastern Europe went against Schumpeter's assertion that socialism can work. Second, Schumpeter, who thought that modern technology would make the giant corporation increasingly predominant, did not foresee the revival of entrepreneurship that took place in the Western countries around 1980.     

Decision‐making in the pharmaceutical industry: analysis of entrepreneurial risk and attitude using uncertain information

The main purpose of this study was to investigate judgments made by employees from the pharmaceutical industry and allied health‐care sectors in a set of four different drug discovery and development cases derived from real scenarios. Each case study related to go/no‐go decisions taken from various steps in drug discovery through preclinical and clinical development (investigational new drug) on to market introduction (new drug application) and treatment of the target population. Using a web‐based questionnaire, 52 respondents made five sets of judgment within each drug case whether to continue or halt further project development. For each case, additional details of the developmental scenario were disclosed to the respondent after completion of each judgment response. We also assessed to what extent the individual judgments given by the respondents were influenced by work experience and functional role, education, or their perceived entrepreneurial character. Our study demonstrates that health‐care employees differ substantially in their individual intuitive judgments of benefit and risk in go/no‐go decisions during the drug discovery and development process. This lack of coherence and wide variability with respect to the drug development cases selected may reflect judgment in the real world. Such judgments are usually taken from incomplete information, and individual decision‐making rules vary substantially between experts in the field. Further knowledge about this inherent human functional judgment variability may be helpful to form a better understanding of individual decision‐making in relation to inherent uncertainties. Additional research may also clarify how personal experience within drug discovery and development influences judgment and help to optimize decision outcomes in the drug development sector. Importantly, a deeper insight of the fundamentals and rules that shape individual and group decision‐making of everyday drug discovery and development may help to optimize the decision processes in the pharmaceutical industry.     

African Americans’ pursuit of self-employment

We examine causes of black/white gaps in self-employment entry rates in the United States by recognizing that industry context heavily shapes impacts of owner resource endowments on the likelihood of successful entry. Barriers to entry, briefly stated, are high in some lines of business and low in others. We therefore proceed by explaining self-employment entry into separate subgroups of high- and low-barrier industries. Higher entry rates typifying whites, relative to African Americans, are traditionally interpreted as reflections of the former group’s greater personal wealth and human-capital resources. This consensus view, however, is simplistic: personal wealth holdings have no positive explanatory power for predicting entry into low-barrier lines of business. Our findings demonstrate, furthermore, that high educational attainment is a strong, positive predictor of entry into high-barrier fields, but not into low-barrier industries. Because industry context indeed shapes entry patterns, “one-size-fits-all” econometric models commonly used to predict entry into self-employment fall short.     

The Geography and Concentration of Authorship in the Top Five: Implications For European Economics

We study to what degree authors who publish in the five most prestigious journals in economics have previously published there and in which world region they are based. Although still high, the concentration of United States‐based and previously published top‐five authors has decreased. This trend is driven by increased co‐authorship between USA and non‐USA scholars and between scholars with and without previous top‐five articles. Only around 5% of all articles each year are written solely by first‐time authors from outside the United States, and this share has not increased since the mid‐1990s. Against this background, we argue that European institutions should be wary of putting too much emphasis on publishing in these five journals. Both the advancement and diversity of the economics discipline may otherwise suffer.     

Welfare Capitalism in Post-Industrial Times: Trilemma or Power Over Rents?

The structure of ‘post-industrial’ economies is widely held to be problematic for welfare capitalism, because of inherent limits to productivity growth in services compared to manufacturing. The so-called post-industrial trilemma is suggested to allow only two of relative earnings equality, high levels of employment and fiscal balance, and has resulted in the widespread policy belief that greater earnings inequality and welfare state retrenchment are unavoidable. This article challenges the micro foundations of this understanding, that the production of economic value is technologically determined by the physical properties inherent in goods and services. In contrast, we argue theoretically, and demonstrate empirically, that production, allocation and distribution are contingent processes better conceived in terms of ‘power over rents’ with associated externalities between sectors. Our analysis suggests that the post-industrial trilemma thesis may have unduly distracted research from the potential for redistributive politics to achieve sustainable levels of productivity growth, fiscal balance and higher levels of earnings equality.     

Linking Individual‐Level Knowledge Sourcing to Project‐Level Contributions in Large R&D‐Driven Product‐Development Projects

This paper focuses on the link between individuals’ knowledge sourcing and their creative contributions, such as new ideas and solutions in R&D‐driven product‐development projects; creative contributions were both self‐ and peer‐assessed. The paper reveals that, for individuals, knowledge sources internal to the organization were generally regarded as more important than external knowledge sources. However, external parties such as customers, partners, and suppliers constitute the knowledge source that best predicted creative contributions at the project level. Informal external contacts were deemed the least important knowledge source by individuals; however, this was positively related to self‐assessed creative contributions. The paper thus finds that there is a discrepancy between the knowledge sources deemed important by individuals and the sources that are associated with creative contributions at the project level.     

On levies to reduce the nitrogen surplus: The case of Dutch pig farms

Pig farms in the Netherlands pay a zero or low price for using the environment. As a consequence, the environment is overused. The Dutch government wants to reduce the emissions of nitrogen and phosphorus. Possible instruments are regulation and levies. In this study a levy on feed and a levy on the nitrogen surplus are investigated, by incorporating a bad output in the production model. The model is estimated using panel data of Dutch pig farms over the period 1975–1989. Levies on nitrogen turn out to be more cost-effective than levies on feed.     

Monetary Union and the Transatlantic and Social Dimensions of Europe's Crisis

With a comparative case study of the social welfare systems of an urban and a rural county in the United States, I explore variation in local welfare implementation by examining organisational strategies. Service provision in the rural county is less diverse and less effective than in the urban county due to place-based factors; however, in the urban county more financial resources and capacity translates into more regulation of the clientele as well as resistance to neoliberal practices. Organisations whose existence depends upon benevolent elites adapt to their funding requirements by regulating clients of social services, including tactics of surveillance, elaborate verification, and restriction. The enforcement of low-wage work that is bracketed by national policy is highly constraining, but can be challenged through a welfare organisation when the right conditions are present for an empowered grassroots approach. These findings are situated within the more general literature on the changing governance of welfare.