47 posts categorized "Articles"

01/29/2016

Grabel, "Post-Crisis Experiments in Development Finance Architectures: A Hirschmanian Perspective on ‘Productive Incoherence’"

ROSEThe Asian and especially the global crisis of 2008 have catalyzed decentralization of the developing world’s financial governance architecture. I understand this state of affairs via the concept of “productive incoherence” which is apparent in a denser, multilayered development financial architecture that is emerging as a consequence of heterogeneous practical adjustments to changing circumstances rather than as the embodiment of a coherent doctrine. Drawing on Albert Hirschman, I argue that the absence of an encompassing theoretical blueprint for a new economic system—i.e. a new “ism” to replace neoliberalism—is in fact a vitally important virtue. If we cannot live without a new “ism,” I propose “Hirschmanian Possibilism” as a new doctrine—one that rejects an overarching theoretical framework from which to deduce the singly appropriate institutional structure of the economy. Hirschmanian Possibilism asserts instead the value of productive incoherence as a framework for pursuing democratic, ethically viable development institutions.

Ilene Grabel, "Post-Crisis Experiments in Development Finance Architectures: A Hirschmanian Perspective on ‘Productive Incoherence’", Review of Social Economy, 73/4 (2015), pp. 388-414.  

(This article is part of the special issue of Review of Social Economy on "Ethics, Global Finance, and the Great Recession," on which more here.)

01/28/2016

Arestis, Charles, and Fontana, "Power, Intergroup Conflicts and Social Stratification in the United States: What Has the Global Crisis Taught us?"

ROSEDrawing on early sociological analyses of how power and intergroup conflicts can affect the development of modern economies, this paper investigates how the recent Global Crisis (GC) has affected the stratification of the US society. The paper argues that the consumerist society has reinforced the historical stratification of social identities with white men in high-paid, high-social status managerial and financial occupations at the top, and black women in low-paid, low-status service occupations at the bottom. This paper calls for a deconstruction of the neoliberal individual into a unique combination of identities in a stratified capitalist society in order to reveal how social stratification has evolved during the GC. The paper finally concludes on the importance of heterogeneous identities in reflecting the diversity of societal and economic interests in order to address the issues of financial stability and sustainability at the corporate and societal levels.

Philip Arestis, Aurelie Charles, and Giuseppe Fontana, "Power, Intergroup Conflicts and Social Stratification in the United States: What Has the Global Crisis Taught Us?", Review of Social Economy, 73/4 (2015), pp. 370-387.  

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(This article is part of the special issue of Review of Social Economy on "Ethics, Global Finance, and the Great Recession," on which more here.)

01/27/2016

Bansak and Starr, "Distributional Costs of Housing-Price Bubbles: Who Pays the Price when Bubbles Deflate?"

ROSEIn considering whether asset-price bubbles should be offset through policy, an important issue is who pays the price when the bubble bursts. A bust that reduces the wealth of well-off households only may have small welfare costs, but costs may be sizable if broad swaths of households are affected. This paper uses micro data on millions of households from the US American Community Survey to examine how the bursting of the 1998–2006 housing bubble affected households’ employment, homeownership, home values, and housing costs. To separate dynamics of the housing bust from those of the aggregate downturn, we differentiate between metropolitan areas that did and did not experience bubbles. We find that, for most measures, deteriorations in well-being were more severe in bubble metros than elsewhere, and for several measures, differential effects on less-educated households were also more severe. This underscores the importance of leaning against broad-based housing bubbles via appropriate policies, as burdens of adjustment fall differentially on people not well prepared to bear them.

Cynthia Bansak and Martha A. Starr, "Distributional Costs of Housing-Price Bubbles: Who Pays the Price when Bubbles Deflate?", Review of Social Economy, 73/4 (2015), pp. 341-369.

(This article is part of the special issue of Review of Social Economy on "Ethics, Global Finance, and the Great Recession," on which more here.)

01/26/2016

DeMartino, "Harming Irreparably: On Neoliberalism, Kaldor-Hicks, and the Paretian Guarantee"

ROSEThe global neoliberal project, which entailed inter alia financial liberalization that accelerated financialization of the world economy, was advocated by leading Austrian, Chicago School neoclassical, and New Keynesian economists, despite awareness that the project would harm many members of society even as it benefitted others. To the extent that they were efficacious in their advocacy, economists contributed to the imposition of serious harm. Often the harm befell the most vulnerable members of society. At least some of the harm was avoidable. This paper examines critically the Kaldor-Hicks compensation test, a primary criterion used in defense of the neoliberal project. The paper finds that the best existing defense of Kaldor-Hicks is Paretian rather than Benthamian in nature: it focuses on the long-run rather than on each individual policy innovation, and claims that all agents benefit by a series of Kaldor-Hicks consistent innovations even if some are harmed in each individual instance. The paper finds that the Paretian case is deficient on grounds other than those commonly invoked against Kaldor-Hicks. The critique focuses on the neoclassical consequentialist welfarism that grounds the Paretian case, and the related presumption that all harms are reparable and, indeed, compensable.

George F. DeMartino, "Harming Irreparably: On Neoliberalism, Kaldor-Hicks, and the Paretian Guarantee," Review of Social Economy, 73/4 (2015), pp. 315-340.

(This article is part of the special issue of Review of Social Economy on "Ethics, Global Finance, and the Great Recession," on which more here.)

01/22/2016

Jones and Kalmi, "Membership and Performance in Finnish Financial Cooperatives: A New View of Cooperatives?"

ROSEMany economists adopt a critical stance on cooperatives. One example is the claim that larger membership in cooperative banks is detrimental to performance. We re-examine this earlier finding by drawing from a richer and broader conceptual framework than used previously and conclude that in recent years, the relationship between membership and performance may be positive. In our empirical analysis, we use new data for Finnish cooperative banks and, compared to earlier work, develop an alternative measure for membership and employ improved estimation methods. A positive relationship between membership and performance in financial cooperatives is consistently found. We discuss our findings in light of an emerging body of theoretical and empirical work on cooperatives, especially for financial cooperatives, and argue that a new view of cooperatives is warranted.

Derek Jones & Panu Kalmi, "Membership and Performance in Finnish Financial Cooperatives: A New View of Cooperatives?", Review of Social Economy, 73/3 (2015), pp. 283-309.

01/21/2016

Potts and Hartley, "How the Social Economy Produces Innovation"

ROSESocial economics has long been concerned with the effects on human societies of market-coordinated processes of economic innovation. But the social economy also causes invention and innovation, an aspect that has received less attention. This article reviews three new approaches to the study of the growth of knowledge in economic systems as driven expressly by sociocultural mechanisms and dynamics. The first are so-called “social network markets” and “novelty bundling markets”. The second extends from “knowledge commons” to “innovation commons”. The third is a sociocultural semiotic process of group dynamics. These models represent different ways the social economy generates newness and produces innovation.

Jason Potts & John Hartley, "How the Social Economy Produces Innovation," Review of Social Economy, 73/3 (2015), pp. 263-282.

01/20/2016

Pietrykowski, "Participatory Economic Research: Benefits and Challenges of Incorporating Participatory Research into Social Economics"

ROSEParticipatory action research (PAR) and community-based participatory research (CBPR) involve traditional subjects of research in the co-creation of research design, data collection, and analysis. PAR has been used in the fields of public health, education, and geography. A case study of a local economy CBPR project will be discussed. The increasing use of field and behavioral experiments in economics together with recent critiques of the ethical commitments of economic policy raises important questions about the role of expert knowledge, indigenous knowledge, and the relationships of power and privilege involved in mainstream academic research. The applicability of the PAR method for economics will be investigated in light of the epistemological and ethical commitments of social economics.

Bruce Pietrykowski, "Participatory Economic Research: Benefits and Challenges of Incorporating Participatory Research into Social Economics," Review of Social Economy, 73/3 (2015), pp. 242-262.

01/19/2016

White, "Judgment: Balancing Principle and Policy" (2014 ASE Presidential Address)

ROSEJudgment is an element of decision-making that is of critical importance to both ethics and economics but remains underappreciated in both. In this paper, I describe one conception of moral judgment, drawn from the moral philosophy of Immanuel Kant and the legal philosophy of Ronald Dworkin, in which an agent weighs and balances the various moral duties and principles relevant to a choice situation in a way that maintains the integrity of her moral character. After explaining the foundations and uses of judgment in ethics, I discuss its importance to two areas of economic modeling, individual choice and policy-making, both of which can be enhanced by incorporating judgment alongside more basic ethical motivations and concerns.

Mark D. White, "Judgment: Balancing Principle and Policy," Review of Social Economy, 73/3 (2015), pp. 223-241.

(The video of the presidential address can be found here.)

01/15/2016

Read for free: Fontana and Sawyer, "Towards Post-Keynesian Ecological Macroeconomics"

ASE president Giuseppe Fontana and Malcolm Sawyer (both of the University of Leeds) have a new paper in Ecological Economics titled "Towards Post-Keynesian Ecological Macroeconomics" that is available to read for free:

The paper starts with a brief criticism of macroeconomic analyses of different schools of thought for their focus on economic growth and maximisation of output. This applies to the traditional Keynesian approach, which has focused on the achievement of sufficient aggregate demand to underpin full employment and full capacity utilisation, down-playing aggregate supply constraints. This also applies to the neoclassical approach, including the current New Consensus Macroeconomics approach, which asserts the dominant role of aggregate supply in the long run, and where growth is set by the so-called ‘natural rate of growth’, with no concerns over environmental and ecological issues. The paper then proposes a different approach to macroeconomic analysis. It explicitly acknowledges that economic growth is a double-edged sword. Growth can help to alleviate persistent levels of high unemployment, but it can also lead to potentially catastrophic environmental problems. Building on the Monetary Circuit theory and the Demand-led growth theory, the paper offers an analysis of the interconnections and interdependence of the economic, biophysical and social worlds and by doing it hopes to provide the building blocks for the establishment of post-Keynesian ecological macroeconomics.

Read the entire paper here.

01/12/2016

Read for free: 2015 best paper in Forum for Social Economics, Franklin Obeng-Odoom's "Africa: On the Rise, But to Where?"

Obeng-odoomThe Association for Social Economics' Patrick J. Welch Award, given to the best paper published in the Forum for Social Economics in 2015, goes to Franklin Obeng-Odoom's "Africa: On the Rise, But to Where?" As associate editor Cecilia Winters writes about the paper,

It not only addresses a part of the world that has long been neglected by economists buying in as they have to the “dark continent” image of Africa, but it is positively prescient with regard to the flurry of attention the development of Africa has gotten this past year. It is perhaps the amazing relevance has attracted the interest of our Forum readers. In July 2015 US president Obama conducted the third visit of his tenure to Africa, bringing attention to the Africa is open for business narrative. In December 2015, China pledged US$60 billion for Africa’s development over three years. Both events have fanned the flames of the neoliberal “Africa on the rise” sensation. The message is that Africa is now ready for take-off regarding its economic development and investment opportunities. The author of this notable article, however, succeeds in offering a critical perspective of the tension between the dominant neoliberal ideology and the ethical matters of jobs, poverty eradication, ecological sustainability, income inequality, well being and social justice.

During his electrifying November 2015 tour of several African countries, Pope Francis managed to echo some of the author’s analysis by decrying Western-style consumption as an indication of happiness and prosperity and condemning the historical exploitation of the continent’s mineral wealth. Our featured article and best paper not only reflects an excellent and timely explication of the tension between the objectives of neoclassical and social economists, but envisages the divergence in policy perception. Surely these public differences in interpretation of Africa’s ascendance are mirrored in the either officious or insightful impressions of visiting dignitaries; certainly they are exacerbated by China’s “offer” of development assistance. This article demystifies these public perceptions, commentaries and overtures toward Africa.

The problems with both mainstream economic analysis and the data employed suggests misleading conclusions about the “wonders” of economic growth. Attention is directed to the drawbacks of relying upon classical measures of growth to evaluate the benefits of the economic activity and changing milieu within countries on the continent. The neglect of other variables such as income share, market power, well being and happiness is a major limitation of neoclassical development analysis. To this end, the author compiles some data that show us in the case of some countries (Mauritius, Botswana) growth has been accompanied by declining unemployment and poverty with social interventions aggressively pursued in both places (237). However, other countries that have experienced growth (South Africa, Nigeria and Zambia) have experienced worsening inequality and increased poverty (ibid.).  Reliance upon the standard mainstream measures of growth does not give a complete or accurate picture of development within Africa.

The author profoundly considers the preceding facets and more. He deconstructs the neoliberal perspective of extolling the virtues of capital accumulation while at the same time neglecting the all-important ethical considerations of sustainability, well-being and social justice that reach “beyond the mainstream advocacy of bigger and more integrated markets in the name of globalisation” for the “limits to growth are real and dire” (241). The conclusive insight: the impossibility to sustain ever increasing growth remains at odds with the political impossibility to stop it. He therefore suggests moving beyond the concept of economic growth by placing less emphasis on capital accumulation and recognizing its physical and ecological limits.

You can read the paper for a limited time free of charge courtesy of Taylor and Francis.