|
on Post Keynesian Economics |
| By: | Yannis Dafermos (University of the West of England); Maria Nikolaidi; Giorgos Galanis |
| Abstract: | This paper develops a stock-flow-fund ecological macroeconomic model that combines the stock-flow consistent approach of Godley and Lavoie with the flow-fund model of Georgescu-Roegen. The model has the following key features. First, monetary and physical stocks and flows are explicitly formalised taking into account the accounting principles and the laws of thermodynamics. Second, Georgescu-Roegen’s distinction between stock-flow and fund-service resources is adopted. Third, output is demand-determined but supply constraints might arise either due to environmental damages or due to the exhaustion of natural resources. Fourth, climate change influences directly the components of aggregate demand. Fifth, finance affects macroeconomic activity and the materialisation of investment plans that determine ecological efficiency. The model is calibrated using global data. Simulations are conducted to investigate the trajectories of key environmental, macroeconomic and financial variables under (i) different assumptions about the sensitivity of economic activity to the leverage ratio of firms and (ii) different types of green finance policies. |
| Keywords: | ecological macroeconomics, stock-flow consistent modelling, laws of thermodynamics, climate change, finance |
| JEL: | E12 E44 Q54 Q57 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1612&r=pke |
| By: | Jo, Tae-Hee |
| Abstract: | The business enterprise directs and controls the social provisioning process. Enterprise decisions on price, investment, output and employment, in particular, directly affect the material basis of society as well as the material standard of living of working class households. The understanding the structure of and changes in the capitalist capitalists system thus requires a theory of the business enterprise that offers relevant and convincing explanations of business decisions and actions embedded in the wider social context. Such a theory must replace the mainstream-neoclassical theory of the firm, which is not only theoretically incoherent but also practically irrelevant since it confines itself to the hypothetical market structure and individual optimizing behavior. With this rationale this chapter attempts to build a heterodox theory of the business enterprises incorporating contributions made by various theoretical traditions in heterodox economics. |
| Keywords: | Heterodox Microeconomics; Social Provisioning Process; Business Enterprise; Going Concern; Monetary Theory of Production; Effective Demand; Surplus Approach; Strategic Enterprise Decisions |
| JEL: | B21 B51 B52 D21 |
| Date: | 2016–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72426&r=pke |
| By: | Ben Fine (School of Oriental and African Studies); Kate Bayliss (School of Oriental and African Studies); Mary Robertson (The University of Leeds) |
| Abstract: | This paper addresses the impact of financialisation on the systems of provision (SoPs) drawing on a series of case studies in housing and water – both non-financial sectors. In order to understand this more fully, the paper first considers some of the theoretical constructs connecting money, commodities and finance, exploring the theories of money, the extension of that theory to finance and the specification of the processes attaching finance to the non-financial. The paper shows that both case-study sectors have increasingly been subject to market forms with, for example, land markets in housing and cost recovery practices in water provision. However there are different forms of monetary relations across the case studies. Simply to equate financialisation with commodification would be misleading. The diversity of arrangements across sectors and locations is addressed in the paper by making the distinction between commodification (production for private profits), the commodity form (periodic payments for a good or service in the absence of a profit motive) and commodity calculation (application of a monetary logic without money changing hands). Each of these is associated with different forms of marketization and “market forces” but they are underpinned by different economic and social structures. The paper then goes on to tie these insights to financialisation and contemporary capitalism more generally with reference to the case studies. For housing there is variegation in the extent to which the expansion of finance coincides with expansion of material provision, as shown with for example the different outcomes from expanding lending for house production as opposed to mortgage lending for consumption. In water, there is diversity in the extent and nature of privatisation and this has led to differences in the extent and depth of financial intervention across the case studies. England and Wales lies at one extreme with heavily entrenched financialisation while this is considerably less significant in the case studies with less privatisation. The final section of this paper considers the implication of the different forms of financialisation for economic and social reproduction including gender. |
| Keywords: | financialisation, neoliberalism, housing, water, privatisation |
| JEL: | H4 L95 L33 R31 R38 P16 P1 P10 |
| Date: | 2016–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper156&r=pke |
| By: | Annina Kaltenbrunner (Leeds University Business School); Juan Pablo Painceira (Central Bank of Brazil) |
| Abstract: | This paper analyses the recent changes in financial practices and relations in emerging capitalist economies (ECEs) on the basis of using the example of Brazil. It argues that in ECEs these financial transformations, which are akin to those observed in Core Capitalist Economies (CCEs) summarised under the heading of financialisation, are fundamentally shaped by their integration into a financialised and structured world economy. Moreover, this integration takes place in a subordinated way. The paper draws on the multidisciplinary framework of international currency hierarchies in order to analyse this subordinated financial integration and tendency toward financialisation. It shows how the existence of a hierarchic international monetary system has changed the financial behaviour of domestic economic agents as well as the structure of the domestic financial system. In doing so, the paper focuses on two specific channels. The first channel highlights the phenomenon of reserve accumulation and the changing behaviour of domestic banks. The second channel concerns the ECEs’ sustained external vulnerability and the impact of such vulnerability on the operations of Brazilian firms. The paper shows that not only have these financial transformations been shaped by ECEs’ subordinated financial integration, but also that these financialisation tendencies have contributed to cementing existing hierarchies and deepening uneven economic development. |
| Keywords: | Financialisation, Currency Hierarchy, Reserve Accumulation, External Vulnerability, Brazil |
| JEL: | F32 E52 |
| Date: | 2016–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper146&r=pke |
| By: | Jo, Tae-Hee |
| Abstract: | The social provisioning process is how heterodox economists define economics in general. Instead of having a narrow definition of what constitutes economics, such as the mainstream has with its allocation of scarce resources among competing ends via the price mechanism, heterodox economists have opted for a much more expansive definition that permits different theoretical explanations for ways in which the provisioning process can take place in different types of economies in different historical contexts. In this chapter, we first examine the changes in the definition of economics from classical political economy to neoclassical and heterodox economics. The comparison between classical political economy and neoclassical economics manifests a clear distinction in view of economy and economics. The second section substantiates the meaning of the social provisioning process. In doing so we make a case that, first, defining heterodox economics as the study of the social provisioning process positions heterodox economics as an alternative to neoclassical economics, and, second, that such an expansive definition of economics has potential to synthesize various heterodox theoretical frameworks in a constructive manner. |
| Keywords: | Social Provisioning Process; Heterodox Economics; Classical Political Economy; Neoclassical economics; Surplus approach; monetary production economy; effective demand |
| JEL: | A11 B1 B2 B5 B51 B52 |
| Date: | 2016–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72384&r=pke |
| By: | Ben Fine (School of Oriental and African Studies, University of London); Alfredo Saad-Filho (School of Oriental and African Studies, University of London); Kate Bayliss (School of Oriental and African Studies, University of London); Mary Robertson (The University of Leeds) |
| Abstract: | This paper examines the theories and practices of neoliberalism drawing upon five case studies of housing and water across Poland, Portugal, South Africa, Turkey and the United Kingdom. This examination ranges across thirteen aspects of (‘things you need to know about’) neoliberalism. They include the argument that neoliberalism is not reducible to a cogent ideology or a change in economic or social policies, nor is it primarily about a shift in the relationship between the state and the market or between workers and capital in general, or finance in particular. Instead, neoliberalism is a stage in the development of capitalism underpinned by financialisation. Neoliberalism is highly diversified in its features, impact and outcomes, reflecting specific combinations of scholarship, ideology, policy and practice. In turn, these are attached to distinctive material cultures giving rise to the (variegated) neoliberalisation of everyday life and, at a further remove, to specific modalities of economic growth, volatility and crisis. Finally, this paper argues that there are alternatives, both within and beyond neoliberalism itself. |
| Keywords: | financialisation, neoliberalism, housing, water, capitalism |
| JEL: | H4 L95 R31 R38 P16 P1 P10 |
| Date: | 2016–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper155&r=pke |
| By: | Orphanides, Athanasios |
| Abstract: | Under ordinary circumstances, the fiscal implications of central bank policies tend to be seen as relatively minor and escape close scrutiny. The global financial crisis of 2008, however, demanded an extraordinary response by central banks which brought to light the immense power of central bank balance sheet policies as well as their major fiscal implications. Once the zero lower bound on interest rates is reached, expanding a central bank's balance sheet becomes the central instrument for providing additional monetary policy accommodation. However, with interest rates near zero, the line separating fiscal and monetary policy is blurred. Furthermore, discretionary decisions associated with asset purchases and liquidity provision, as well as with lender-of-last-resort operations benefiting private entities, can have major distributional effects that are ordinarily associated with fiscal policy. In the euro area, discretionary central bank decisions can have immense distributional effects across member states. However, decisions of this nature are incompatible with the role of unelected officials in democratic societies. Drawing on the response to the crisis by the Federal Reserve and the ECB, this paper explores the tensions arising from central bank balance sheet policies and addresses pertinent questions about the governance and accountability of independent central banks in a democratic society. |
| Keywords: | central bank accountability; central bank governance; central bank independence; lender of last resort; loss sharing; monetary financing; Quantitative easing; rules vs discretion. |
| JEL: | E52 E58 E61 G01 H12 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11383&r=pke |
| By: | Bruno Bonizzi (SOAS, University of London); Jan Toporowski (SOAS, University of London) |
| Abstract: | This paper evaluates the role of emerging and developing economies as providers of finance to the European Union. In particular it explores the evolution of foreign exchange reserves accumulated in Euro, and direct investment to the European Union from emerging and developing countries. It is argued that such financial flows are unlikely to promote substantial economic development in European countries. |
| Keywords: | Foreign direct investment, foreign exchange reserves, European Union, Developing Countries |
| JEL: | F31 F23 |
| Date: | 2016–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper129&r=pke |
| By: | Luca Pareschi (Dept. of Management, Università Ca' Foscari Venice); Edoardo Mollona (Dept. of Computer Science and Engeneering, Università di Bologna) |
| Abstract: | This paper analyzes the resistance to the neoliberal discourse supporting privatizations in the Italian sociopolitical field: we address the change from a state control over economy to a situation where most of the state owned enterprises are sold and neoliberal principles are widely adopted and accepted. We focus on resistance, which builds on two frames that differ according to the period when they arise, the words they are composed of, the meanings they bear upon. The first one, which is more prevalent in the period 1984-2000, and that we called Òvalues of developmental stateÓ, opposes privatizations from a technical point of view: it is used in quotes that rationally support state intervention in economy. The second frame, that we called Òstigma privatizationsÓ, becomes prevalent starting in 2000 and appears mainly in articles that deal with societal issues, literature, movies and the wider sociocultural debate. Here influential speakers blame privatizations as something that eroded societal cohesion. To explain the transformation, we mobilize the concept of capital as described by Bourdieu: as economic capital attached to delegitimized institutions erode, discourse on resistance does not disappear but is framed within the fields that are less dependent on economic capital. As a connected contribution, the key role played by cultural capital in preserving areas of resistances revives the debate on the role of intellectuals within power dynamics as described by Antonio Gramsci. From a technical point of view, we study the evolution of the vocabulary of privatizations by analyzing almost 70.000 articles in the period 1984-2014. we use Topic Modeling, that is an automated text analysis technique that elicits topics, which are the sets of words that constitute discourses. We then reconstruct frames starting from these topics. |
| Keywords: | institutional change, privatizations, discourse, frames, topic modeling, symbolic capital, discursive struggles |
| JEL: | H82 L32 L50 M00 P00 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:vnm:wpdman:118&r=pke |
| By: | Kate Bayliss (School of Oriental and African Studies, University of London); Ben Fine (School of Oriental and African Studies, University of London); Mary Robertson (The University of Leeds) |
| Abstract: | This paper draws on a series of case studies to consider the Role of the State, using the systems of provision (SoP) approach where the state and market are not considered to be dichotomous entities (as in most orthodox literature). Rather, markets are organised by the state in ways that are continually evolving. Our coverage of this extensive topic has been delimited by focusing on three aspects of the role of the state. The first of these is social compacting which considers the ways in which economic, political and ideological interests relate to the state. This section considers the state’s role in representing different social interests with a declining influence of labour. The second aspect addressed here is the state’s role in social policy and the provision of basic services. The paper shows that this increasingly comes down to providing for the hard to serve while wider concerns of equity and redistribution are neglected. Finally the paper explores the role of the state in connection with privatisation. Using the empirical evidence of the case studies, the paper shows that implementation and outcomes have been diverse across sectors and countries but common strands are emerging. These sectors are far from competitive, and privatisation has created conditions for significant rent extraction in ways that were unintended at the time of privatisation |
| Keywords: | role of the state, neoliberalism, social policy, privatisation, financialisation, housing, water |
| JEL: | H4 L95 L33 R31 R38 P16 P1 P10 |
| Date: | 2016–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper154&r=pke |
| By: | Parada, Jairo |
| Abstract: | Despite the deep impact of the 2008s Great Recession, Department of Economics around the world keep teaching the neoclassical paradigm as it nothing happened. Economics´ teaching, especially at the undergraduate level, does not leave room for a pluralist background, although somewhat similar process happens at the graduate level. Global dominance of approaches market oriented, based on an individualistic ontology, a methodological deductivism and the massive use of mathematical models since the last three decades, have been closing the possibilities of different approaches. In this essay, possible causes behind this phenomenon are explored, and several proposals are presented about how a more integral and plural Microeconomics could be taught, and a more grounded Macroeconomics involved with today´s problems, and a development theory that does not give up with the theoretical richness of the Latin American traditions, could be also presented to students. The main criteria would be to endow our graduates with a more versatile vision about economic thought and economic theory, aiming toward the opening of new and creative approaches about public policies that would be able to solve our structural problems. Several concrete suggestions are offered regarding curriculums and books, and mechanism to overcome the Procrustean bed that incorporates the teaching of the dominant approach only. At the end, we would have creative professionals and conscious about the myriad of possibilities that a pluralist approach of economics science brings about, and new avenues of creative ideas will be opened to implement such policies. This proposal implies a more audacious curriculum and less timid toward the critique of the dominant cathedral of the main current of thought in Economics. |
| Keywords: | economic crisis, pluralist economics, economics teaching |
| JEL: | A2 A22 A23 |
| Date: | 2016–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72224&r=pke |
| By: | Clive L. Spash; Clemens Gattringer |
| Abstract: | Human induced climate change poses a series of ethical challenges to the current political economy, although it has often be regarded by economists as only an ethical issue for those concerned about future generations. The central debate in economics has then concerned the rate at which future costs and benefits should be discounted. Indeed the full range of ethical aspects of climate change are rarely even discussed. Despite recent high profile and lengthy academic papers on the topic the ethical remains at best superficial within climate change economics. Recognising the necessary role of ethical judgment poses a problem for economists who conduct exercises in cost-benefit analysis and deductive climate modelling under the presumption of an objectivity that excludes values. Priority is frequently given to orthodox economic methodology, but that this entails a consequentialist utilitarian philosophy is forgotten while the terms of the debate and understanding is simultaneously restricted. We set out to raise the relevance of a broader range of ethical issues including: intergenerational ethics as the basis for the discount rate, interregional distribution of harm, equity and justice issues concerning the allocation of carbon budgets, incommensurability in the context of compensation, and the relationship of climate ethics to economic growth. We argue that the pervasiveness of strong uncertainty in climate science, incommensurability of values and non-utilitarian ethics are inherent features of the climate policy debate. That mainstream economics is ill-equipped to address these issues relegates it to the category of misplaced concreteness and its policy prescriptions are then highly misleading misrepresentations of what constitutes ethical action. |
| Keywords: | Climate change; economics; ethics; carbon budgets; discounting; compensation; harm; intergenerational equity; intragenerational distribution; justice; consequentialism; utilitarianism; incommensurability; risk; uncertainty; cost-benefit analysis; growth economy |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwsre:sre-disc-2016_02&r=pke |
| By: | Iain Begg |
| Abstract: | The European Union budget is small and fulfils only a limited range of functions, yet it provokes regular disputes among the Member States and institutions of the Union. This paper describes the structure of the budget and shows that standard theories, such as fiscal federalism, are not well-suited to analysing how the EU budget operates or the political economy behind it. The paper then looks at how much the UK contributes towards the EU budget and explains why some of the claims made about it in the public discourse are inaccurate. |
| Keywords: | European Union budget; fiscal federalism; UK referendum on EU; EU cohesion policy; common agricultural policy; own resources |
| JEL: | H11 H61 |
| Date: | 2016–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:67030&r=pke |