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3 posts from October 2013


Conference announcement: Philosophy in the Time of Economic Crisis

The Department of Philosophy at the University of Opole, in Poland, will host, in September 2014, a conference on "Philosophy in the Time of Economic Crisis," as part of its series "American and European Values." The 2014 conference aims to bring together philosophers of economics and philosophically minded economists (i.e., social economists) from the Americas and Europe to discuss how the recent economic crisis has challenged philosophical assumptions underlying orthodox economic theory. There's special interest in American pragmatism at the University of Opole, and so there would be special interest in institutionalist perspectives. Other perspectives, however, are also welcomed.

Interested person should contact Ken Stikkers at kstikker@siu.edu.


Review of Social Economy, 71/3 (2013)

RSEFollowing are the contents (with abstracts) of Review of Social Economy (71/3, 2013).


Overcoming Household Shocks: Do Asset-Accumulation Strategies Matter?, Shoba Arun, Samuel Kobina Annim & Thankom Arun

This paper is motivated by the observation that the type and the combination of assets are associated with the likelihood of poor households' experience of shock. Focusing on the case of adivasi households in the south Indian state of Kerala, we find that the type, number and combinations of specific assets (primarily social and physical capital) yield varied magnitudes of association with households' experience of shock, which is a measure of vulnerability. Thus, going beyond mere welfare considerations, social policies that prioritise and sequence the type and combination of asset building based on contextual factors help minimise the incidence of shocks and improve livelihood choices.

Public or Private Orientation of Pension Systems in the Light of the Recent Financial Crisis, Christine Lagoutte & Anne Reimat

This paper studies the appropriateness of a public or private orientation of pension systems in the light of the recent financial crisis, which has underscored the difficulties and contradictions associated with each system. The different institutional arrangements, in which public or private pension systems are embedded, are key components when assessing their responses to the crisis. Particularly, private pension systems are intertwined with financial markets, while social insurance-based pension systems are linked to the labour market mechanisms. This paper compares the British and French pension systems, as “archetypes” of private-oriented and public-oriented systems, respectively, the first relying on the market and private pension schemes, and the second on mandatory social insurance. This paper shows that the crisis has upheld the founding principles of the public (French) and private (British) pension systems to maintain the existing institutional configurations. At the same time, both systems have strengthened the role played by means-tested benefits and minimum pensions for low-income groups to offset the weaknesses of one or the other system, as emphasised by the crisis.

To Measure is to Know? A Comparative Analysis of Gender Indices, Irene van Staveren

In this paper, I present a comparative analysis of five cross-country composite gender indices. Although there is a relatively high correlation between the indices, the overlap of underlying indicators is low. Country rankings both at the top and at the bottom have parallels but are quite distinct. The differences are explained in two ways: methodologically and theoretically. The methodological differences concern in particular weights, capping, and aggregation. The Capability Approach helps to explain the different focus of each index by distinguishing between four stages of human development, which include distinct types of indicators. The substantial differences that exist between the gender indices require a cautious selection between these for research and policy analysis. This is shown in a few examples with policy variables. Finally, I present a set of three decision trees, which enables an informed choice between the indices.

Economics: Unfit for Purpose, Ben Fine

This paper is a shortened and revised version of the Closing Plenary given to the World Congress of the Association of Social Economics, and Cairncross Lecture, University of Glasgow, June 2012. Mainstream economics is seen as unfit for purpose because of deficiencies that have long been criticised by a marginalised heterodoxy. These include the taking out of the historical and social even if bringing them back in on the basis of a technical apparatus and architecture that is sorely inappropriate. These observations are illustrated in passing reference to social capital but are particularly appropriate for understanding the weakness of ethics within mainstream economics. An alternative is offered through taking various “entanglements” (such as facts and values) as critical point of departure, leading to the suggestion that ethical systems are subject to the 10 Cs—Constructed, Construed, Conforming, Commodified, Contextual, Contradictory, Closed, Contested, Collective and Chaotic.

Speaker's Corner

The Vatican and the International Monetary System, M.G. Hayes

This paper considers the Note issued by the Pontifical Council for Justice and Peace in 2011 calling for reform of the international financial and monetary systems. Three main themes are identified: (a) the inequality of global economic growth over the last century, (b) the failings of economic liberalism as a guide for the conduct of policy and (c) the need for a degree of transfer of sovereignty from individual states to the global level. This paper articulates the meaning of these themes in economic terms and illustrates the nature of the changes in thought and practice that the Note considers necessary in the interests of the common good.

Book Reviews

Approaches to the Social Economics of Well-Being: A Book Review Essay, Halcyon Louis

A review of Preference, Value, Choice, and Welfare, by Daniel M. Hausman; Human Resource Economics and Public Policy: Essays in Honor of Vernon M. Briggs Jr., edited by Charles J. Whalen; and Looking Beyond the Individualism and Homo Economicus of Neoclassical Economics: A Collection of Original Essays Dedicated to the Memory of Peter L. Danner, edited by Edward J. O'Boyle.

Measuring America: How Economic Growth Came to Define American Greatness in the Late-Twentieth Century, edited by Andrew L. Yarrow (reviewed by Daphne T. Greenwood)


Forum for Social Economics, 42/2-3 (2013)

FseFollowing are the contents (with abstracts) of the latest issue of Forum for Social Economics (42/2-3, 2013).


The Development, Equity, Diversity, and Justice Issue, Wolfram Elsner


Ethical Principles that Make the World and its Economy More Equal, Hengameh Hosseini & Hamid Hosseini

No doubt, the global economic (and political) structure is very unequal. The paper begins by demonstrating the various dimensions of this inequality as they relate to economic measures such as per capita GDP, degree of consumption and ownership, health measures, education, and power and influence in various global organizations such as the United Nations (UN), World Trade Organization (WTO), International Monetary Fund (IMF), and others. Next, the paper, supporting a more equal global economic and political structure, investigates the various instruments in welfare economies and ethics theory that can be utilized to justify a sort of distributional change that could lead to more global equality. Finding various economic and ethical instruments associated with utilitarianism, Pareto Optimality and the Hicks–Kaldor compensation test less than satisfactory in dealing with and advocating sufficient global distributional changes, we will investigate ethical principles developed by John Rawls in both his 1971 The Theory of Justice and his 1999 The Law of Peoples, Sen's capability approach, the debate between Rawls and Sen regarding their ethical principles, and whether or not those ethical principles can justify necessary global distributional changes. As we will argue, although the principles developed by Sen and Rawls can be utilized to justify global distributional changes to a degree, they cannot advocate a global difference principle that can justify sufficient global distributional changes. Attempt is made to develop a global difference principle that can justify and advocate more drastic distributional changes.

Rethinking Trade and Development: A Developmentalist Perspective, Peter Sai-wing Ho

In one of the longest lasting debates in economics, mainstream economists still basically rest their position regarding trade and development policies on the static principle of comparative advantage, while relying on fancier econometric techniques to find empirical support. This paper draws attention to dynamic considerations, first emphasizing Smith's observation that there was more scope for division of labor in manufactures than in primary production. Prebisch noted that primary products generally have lower income elasticity of demand than manufactures. In a global context where some countries undertook industrial development ahead of others, these would generate the trade patterns that Ricardo predicted. Investment would flow from the industrial center to the periphery to augment primary production as Mill anticipated. Through the dominance of backwash over spread effects, international inequalities would widen à la Mrydal. International dualism, especially in a technological sense, would be aggravated à la Singer. To counter such uneven development, developmentalists such as Hamilton, List, Prebisch, Myrdal, and Singer advocated technological acquisitions and industrial development on the part of the less-developed countries or regions. Contrary to mainstream portrayal they did not simply advocate protectionism. Instead, their policy suggestions were nuanced and sophisticated, and included both non-trade and trade instruments, means of building technological capabilities, and (for those writing after World War II) considerations of how to sensibly direct and regulate the activities of multinational corporations. These policy ideas appear to neatly link up with those drawn from case studies of East Asian development undertaken by some researchers that are outside of the economics mainstream.

Explaining Self-Declared Social Tolerance for Human Diversity in Latin America and the Caribbean, Prosper F. Bangwayo-Skeete & Precious Zikhali

Social tolerance enables heterogeneous persons to find harmony in their differences. This has been shown to reduce the likelihood of inter- and intra-group conflicts, thereby creating an environment conducive for economic and social development. This paper examines socio-economic factors that influence individual differences in social tolerance in Latin America and the Caribbean. Being mindful of the fact that there are socio-cultural differences between Latin America and the Caribbean, five dimensions of social tolerance are investigated: tolerance for racial and religious dissimilarity, homosexuals, AIDS victims and immigrants. Using the 2005 World Values Survey data, we simultaneously estimate tolerance towards these groups using multivariate probit models. Education is found to positively and significantly enhance all five dimensions of social tolerance, suggesting that policies meant to enhance social tolerance should be directed towards improving educational systems. Overall, the analysis underscores heterogeneity of factors affecting self-declared tolerance of the selected social groups. Thus, analyses of social tolerance and ensuing policies should be developed specific to a particular dimension of tolerance.

Constructing Projects of National Development in Latin America?, James M. Cypher

This article analyzes technology-related development in Latin America from a heterodox perspective based in Institutionalist and Structuralist Economics. Since the 1970s, the lack of systematic national projects designed to institutionalize endogenous innovation capabilities in the region has constituted a critical structural impediment to development. Eschewing the creation of public goods, most nations in Latin America abandoned important incipient efforts to develop technological autonomy as undertaken during the state-led industrialization period. This article highlights poorly understood but relatively successful aspects of the import substitution industrialization (ISI) strategy on technological advancement in the state-led era. Recently, neoliberalism's monolithic grip has been loosened. Brazil has undergone somewhat of a paradigmatic shift while advancing toward the creation of a national innovation system (NIS), thereby offering important lessons for other Latin American nations. Mexico, in contrast, shows no indication of attaining autonomous technological capabilities. The attainment of such capabilities in highly industrialized countries, and fast developing Asian nations, partially resulted from the construction of a NIS. The creation of a NIS embodies an interactive and interdependent process: it entails the joint and combined participation of scientists and others involved in research and development (R&D) activities in (1) the public and private sectors and (2) universities. These elements combine with agents of the state empowered to finance and coordinate the construction and maintenance of the NIS. The construction of a NIS has induced “increasing returns” in production processes. As Furtado emphasized, supply-enhancing technological capacity must be met by inclusive demand-enhancing policies that embed the vast underlying population in the growth process.

Democracy, Development and Comparative Institutional Advantage in Africa, Geoffrey Schneider & Berhanu Nega

Development in Africa has been stalled for decades in a vicious cycle of poverty, underdevelopment, corruption, and conflict. In this paper, we argue that donors should focus on democracy and accountability as a first priority in development aid. We use the theory of comparative institutional advantage to identify the key institutions that are most likely to facilitate economic development in communities in the modern world. These institutions include an efficient non-corrupt government sector. Subsequently, we discuss how a lack of democracy and accountability inevitably undermines development efforts and investment, referring especially to the Ethiopian experience but also considering the experiences of other African dictatorships. Finally, we discuss how donors, by emphasizing democracy and accountability along with other policies that support democratic institutions, have a greater chance of effectively contributing to African economic development.

The Right to Organize in the Philippine Business Process Outsourcing Industry, Jason Patalinghug

There has been some concern over the past few years that nations with emerging economies are sacrificing human dignity over economic progress. An emerging market such as the Philippines has to deal with a host of economic, social, and political issues as its economy develops. One of the issues that concern those who are involved in human rights advocacy is labor rights. The purpose of this paper is to investigate the labor rights issues surrounding the Philippine business process outsourcing (BPO) industry, specifically the right to organize. It also aims to investigate how the changing structure of the Philippine economy has affected the labor rights of its people. This paper will use the BPO industry in the Philippines as a case study. This paper will also try to compare the Philippine experience with those of other countries in order to put its findings in context. Finally, the paper shall examine the effects of globalization on workers’ ability to organize and advocate for their rights.

Does ‘New Regionalism Theory’ Explain the Complementary Role of Foreign Direct Investment and Trade Activity in the Central and Eastern European Region? The Case of Bulgaria, Aristidis P. Bitzenis, Andreas Andronikidis & Pyrros D. Papadimitriou

In this paper we attempt to contribute to the ongoing debate about new and old regionalism. First, we focus on the presentation of regional initiatives in the Central & East European (CEE) region and on specific motives behind Foreign Direct Investment (FDI) and trade expansion in CEE countries. Then, through empirical research and the analysis of regional initiatives we found that FDI and trade are complementary to each other, while FDI is a characteristic of new regionalism signifying deeper integration. On the other hand, geographical proximity still plays an important role in trade and investment suggesting that elements from both old and new regionalism are apparent in the CEE region. Only a small number of advanced countries participate in a few regional initiatives. However, membership in regional initiatives - if isolated - does not directly and/or simultaneously imply deep integration (new regionalism).