Hayek and Keynes: From a common critique of economic method to different theories of expectations

The methodological positions of Hayek and Keynes contain striking similarities. Both authors opposed empiricist approaches to economics that assign priority to mere observation as the source of knowledge. Both emphasised intentionality, motivation and human agency. Notwithstanding this common ground, they had different conceptions of how beliefs are formed and had different explanations of thought and action in economics. Hayek grounded his explanation on an evolutionary theory of the mind, i.e. on psychological premises, whereas Keynes based his view of belief formation on probable reasoning, where probability is a logical concept. Starting from psychological premises Hayek maintained that individuals act rationally only by following rules. As a consequence, he considered conventional expectations to be the primary guide for agents in economic life. Keynes agreed that conventional expectations actually guide economic behaviour, but he maintained that they are justified only in situations of total ignorance. In conditions of limited knowledge, agents can base their action on reasonable expectations, independently of conventions. Moreover, agents?particularly those institutions responsible for economic policy?ought to shun conventional behaviour in order to counteract its negative social consequences. We argue that Keynes's theory of expectations is well grounded upon his theory of logical probability. Hence his advocacy of discretionary policy is rationally justified.     

The influence of managers' awareness of climate change,perceived climate risk exposure and risk tolerance on the adoption of corporate responses to climate change

Uncertainties posed by climate change limit companies' ability to understand implications of global warming on business and society at large, hampering the adoption of tangible organizational responses to climate change. Understanding climate action thus requires to investigate influential factors of decision-making under uncertainty, which implies acknowledging managerial interpretations and perceptions about climate issues. Drawing insights from the literature on climate inaction and from corporate sustainability literature, the present study examines awareness of climate change and perceived exposure to climate risks as antecedents of corporate responses to climate change, drawing on a survey of managers of Italian manufacturing companies. In addition, the study tests the moderation of risk tolerance on the relation between perceived climate risk exposure and climate action, suggesting that risk attitudes are a significant factor of decision-making under climate uncertainty. The results support the hypothesis of the model and thus provide several contributions to the literature on business and climate change. Managerial implications and avenues for future research are also discussed.     

International strategy and performance—Clustering strategic types of SMEs

This paper identifies different strategic types of internationalised SMEs, in so doing providing managers and entrepreneurs with a much better understanding of the main strategic options and their relationship with the international performance of firms. We provide a theoretical analysis of strategic orientations and strategic behaviour in international SMEs, followed by an empirical investigation based on a sample of Italian SMEs. The SMEs are grouped into strategic types using cluster analysis, and the link between strategic type and international performance is subsequently analysed using logistic regression. The empirical data suggest that there are four broad strategic types, namely an entrepreneurial/growth-oriented group of firms, a customer-oriented group, a product/inward-oriented cluster, and a further group of firms that lacks strategic orientation. The characteristics of the strategic clusters are discussed, and the regression results show that a clear and proactive strategic orientation and its consistency with business strategy leads to improved international performance. This confirms the positive and highly significant role of strategic types.     

Hayek and the General Theory ∗

Abstract

Hayek did not review the General Theory, but he criticized it in Profits, Interest and Investment (1939 Hayek, F. A. 1939. “Profits, interest and investment”. In Profits, Interest and Investment, London: Routledge & Sons.  [Google Scholar]) and in part IV of The Pure Theory of Capital (1941 Hayek, F. A. 1941. The Pure Theory of Capital, Chicago: The University of Chicago Press.  [Google Scholar]). First, he showed that only exceptionally does greater consumption favour investment and employment. Second, he rejected Keynes's liquidity preference and maintained that only in an ‘extreme case’ might it be said that Keynes's theory of the rate of interest is valid. Although he correctly identified the gist of Keynes's theoretical innovation, his criticisms were already implicitly answered in the General Theory.     

Identitarian passions: the overwhelming power of the human recognition need

According to Plato, thymòs—a notion denoting the human need for recognition—triggers off the most powerful and overwhelming human passions. Indeed, any action originated and nurtured by thymòtic passions places its own raison d’être in itself. The acts motivated by thymòs can either improve or (even) worsen someone’s wellness: they do not entail any pay-off in the present or future, and their nature is not influenced nor mitigated by monetary incentives. Moreover, it follows that since identity is based on the others’ recognition (both individuals and social groups), then indulging with thymòtic passions and building up someone’s own identity are exactly the same process. Indeed, thymòtic passions are identitarian passions. This paper argues the relevance of the thymòtic approach. We do propose a conceptual framework that we reckon is useful and innovative in order to study and interpret these peculiar forms of human action. We also point out the social and “environmental” conditions that stimulate their appearance.