The case for increasing returns I: ‘The Hicksian Getaway’ and ‘The Hirshleifer Rescue’

Author(s): Frederic B. Jennings Jr. / Language(s): English Issue: 1/2015

The case for increasing returns is accepted by most heterodox economists. Yet allegiance to decreasing returns in orthodox circles still endures directly and in the form of substitution assumptions. In forty short years from 1928 to 1968, beliefs shifted from Pigou calling rising cost ‘inadmissible’ to Alchian deeming decreasing returns ‘a universally valid law’ until Kaldor revived the case for increasing returns in the 1970s. How did these shifts of view occur? After dapham opened the door and Pigou defined the orthodox stand, the 1930s debates swept through imperfect competition and many other issues into Keynesian disequilibrium theory. In 1939, ‘The Hicksian Getaway’ opened an Age of Denial leading to equilibrium theories based on substitution; then during the 1960s a second challenge to rising cost based on learning and technical change was defeated by ‘The Hirshleifer Bescue’ of decreasing returns and thus substitution in neoclassical theory. Why economists' substitution assumptions still hold sway is the focus of this study. First, the paper reviews ‘The Hicksian Getaway’ in its context and with respect to equilibrium models. Second, the paper analyzes and disproves ‘The Hirshleifer Bescue’ as an invalid argument based on a non-sequitur and thus simply asserted. Third, the case for increasing returns is developed into a theory of planning horizons supporting a generalized complementarity in economics. Some methodological implications are explored at the end.

The welfare costs of rent-seeking: a methodologically individualist and subjectivist revision

Author(s): Michael Makovi / Language(s): English Issue: 1/2015

Gordon Tullock is acknowledged for being the first to recognize the true costs of rent-seeking as including not only the Harberger triangle but also the Tullock rectangle. This rectangle does not constitute merely a lossless transfer of wealth, but it causes a misallocation of resources as rent-seekers invest resources in lobbying. However, a close reading of Tullock’s writings shows that his arguments are formulated in a holistic fashion, speaking of what is efficient or inefficient for society. Rent-seeking is inefficient because it reduces societal welfare. But according to a methodologically individualist and subjectivist economics, such a claim is invalid. We must distinguish between positive economic fact and normative moral philosophy. We call for a reconstruction of utility and welfare economics based on methodological individualism and subjectivism with implications for the theories of monopoly and competition: practices which Neoclassical perfect-competition theory considers to be evidence of rent-seeking should instead be deemed as indications of genuine competition Political economy should be concerned with ascertaining which institutions will best enable individuals to pursue their individually subjective ends – or else economists should be explicit about their normative preferences and political philosophies.

Economics of paternalism: the hidden costs of self-commanding strategies

Author(s): Christophe Salvat / Language(s): English Issue: 1/2015

The paper proposes an economic assessment of paternalism by comparing different alternative responses to dynamically inconsistent behaviors consecutive to hyperbolic discounting. Two main types of action are possible, self-commanding strategies and paternalism The first category includes personal rules and pre-commitment The second can be subcategorized between coercive and non-coercive forms of paternalism, which are respectively associated (although it is debatable) with legal paternalism and with ‘nudges’. Despite being self-inflicted, self-commanding strategies are actually not cost free and can result in a dramatic cutback of people’s freedom of choice. Likewise, legal paternalism can, on occasion, be less harmful than personal rules or pre-commitment; similarly, nudges can be more invasive and less effective than their proponents want us to believe. The aim of this paper is not to propose any standardized form of response to irrational behavior (whatever that may mean) but to argue, on the contrary, that every case should be individually appraised. Individual situations can be remedied by self-commanding strategies or by paternalistic policies, either in isolation or in combination.

A criterion for realism, with an application to behavioral economic models

Author(s): Gustavo Marques,Diego Weisman / Language(s): English Issue: 1/2015

Many economists working within the framework of behavioral economics (BE) label the conventional way of modeling as unrealistic, and consider their own approach as more realistic than the standard practice. However, a criterion for realism is lacking in behavioral economics literature. This paper offers a simple criterion for predicating realism to economic models, and provides an illustration of such criterion at work on a particular BE model.

Review of The Anthropocene and the Global Environmental Crisis: Rethinking modernity in a new epoch, edited by Clive Hamilton, Christophe Bonneuil and François Gemenne, Routledge, London, 2015

Author(s): Valentin Cojanu / Language(s): English Issue: 1/2015

Postumanismul

Author(s): Alex Ciorogar,Robert Cincu,Vasile Mihalache,Cristina Diamant,Daniela Petroşel,Doru Pop,Radu Vancu,Laura T. Ilea,Denisa Adriana Moldovan,Laurentiu Malomfalean,Marius Puscas,Andrei Codrescu,Aurel Codoban,Daniel Clinci,Florina Ilis,Cosmina Morosan,Anca Chiorean,Ana-Maria Deliu,Laura Pavelescu,Olga Stefan,Zeltil Yigru,Ştefan Borbély,Paul Cernat,Bogdan Alexandru Stanescu,Marius Popa,Alex Cistelecan / Language(s): Romanian Issue: 03+04/2017

This sections contains a large number of interventions related to the theme of the issue, which is Posthumanism.

Doświadczenie szoku. Walter Benjamin i trauma nowoczesności

Author(s): Grzegorz Marcinkowski / Language(s): Polish Issue: 2 (12)/2018

The author of the article tries to reconstruct both the way of perceiving subjectivity in the works of Walter Benjamin and the ways in which the tension between identity and history is manifested in his writings. The article concentrates on the concept of shock, developed by the philosopher during reading Baudelaire and Kafka. With this concept, it is possible to describe the transition from the narrative conception of experience to “point experience” constituted by series of sudden unconnected impulses. The moment conducing to this transition was the I World War which for Benjamin – as well as for others significant thinkers of that time – constituted an important turning point.

Abraham Heschel i Thomas Merton – prorocze osobowości, prorocza przyjaźń

Author(s): Edward Kaplan / Language(s): Polish Issue: 31/2018

In his essay on the Jewish rabbi Abraham Heschel and his evolving correspondence with Roman Catholic monk Thomas Merton, Edward Kaplan focuses on the trope of prophetic personality, which is characterized by an emotional intensity and a heightened sensitivity to injustice. Involved in religious peace movements and motivated by compassion and the indignation caused by the brutality of war, arrogant nationalism, and consumerist addictions, Merton and Heschel represent the quintessential prophetic stance in the sphere of social action. Their friendship went through a moment of crisis when the Second Vatican Council was debating the so-called Declaration on Jews. It was then that both Merton and Heschel demonstrated, through their outspoken criticisms, the full meaning of prophetic protest against the abuse of doctrinal pronouncements. As shown by their examples, a prophet is one who respects and repairs the world which is our common home and does it in the name of God.

„Hologramy Ciemności” — Paula Celana teodycea po Shoa

Author(s): Ewa Borkowska / Language(s): Polish Issue: 1/2018

Paul Celan’s (1920–1970) poetic cartography builds on the “holograms of darkness” (thus addressed by Amy Colin, an American Celan scholar), the metaphorical constellations which map the experiences of suffering, twilight and death. The poetry “after Shoa” of the Romanian poet of Jewish descent, writing in German, constitutes a particular landscape of his musical “death fugue” in which human suffering is depicted in surrealist images that silently express of the trauma of the Holocaust. Celan’s theodicy is created as the “rhetoric of the ineffable”, a silent dialogue with the Other (Lévinas) but also the absent Other, the No one with whom the poet converses and who becomes the addressee of his “poems-prayers” or “no-poems” (noems), as he calls them. It is the absent Other the poet worships and celebrates in his “poetry of silence”. Language also experienced suffering but was “enriched by it” and now can be heard “on the other side of silence”. Celan’s poetry is firmly anchored in the memory of the Holocaust and Jewish people’s traumatic experiences. To soothe his pain, the poet constantly returns to the “Brunnenland”, his birthplace located in Bukovina where he always found the spring that fueled his poetic soul and heart. The poet’s favourite metaphor is that of the meridian which marks the reference place on the cartographic grid of all his poetic images.

Incentives and reflective equilibrium in distributive justice debates

Author(s): Julian Lamont / Language(s): English Issue: 1/2008

For the last thirty years one of the dominant economic policies has been the cutting of the top marginal tax rates. While this policy has been partly motivated by the self-interest of high income earners, it also has had considerable theoretical support from a wide range of distributive justice theorists starting with John Rawls’ A Theory of Justice in 1971. Rawls argued that if the incentives created by inequality maximized the position of the least advantaged then they were morally justified. There have been many variants of this position since. The most common theme of them is that incentives to work harder and innovate, although creating inequality, are morally justified because of the greater good generated by the resultant increase in GDP. The main policy instrument available to governments to create such incentive has been the cutting of the top marginal income rates and this has been done systematically across all industrialized nations. The method of wide reflective equilibrium requires us to use the best consensus from economics in our reasoning about distributive justice. The systematic cutting of tax rates over thirty years has provided a reasonable experiment on the thesis that such cutting provides an overall increased labor supply and resultant increase in GDP. The suggestion of this paper is that a reasonable consensus can now be reached that, over the ranges of inequality and GDP that we have had over the last 50 years and are likely to have over the next 50 years, such incentives do not provide the claimed benefits. Hence, we are getting increased inequality for no compensating benefit.

The knowledge economy/society: the latest example of “Measurement without theory”?

Author(s): Paul Walker,Les Oxley,David Thorns,Hong Wang / Language(s): English Issue: 1/2008

The world has embraced a set of concepts (knowledge driven growth) which are seen as the ‘core of future growth and wellbeing’ without any commonly agreed notion of what they are, how they might be measured, and crucially therefore, how they actually do (or might) affect economic growth and social wellbeing. The theory of how the mechanism works lacks important detail.

„Social embeddedness”: how new economic sociology goes into the offensive and meets the own roots

Author(s): Dieter Bögenhold / Language(s): English Issue: 1/2008

The argument of social embeddedness has become one of the most celebrated metaphors in economic sociology. The attempt connected to that term is the elaboration of a solid basis for economic sociology as discipline within the concert of economics and further social sciences. The paper argues that the embeddedness argument is strategically on a necessary way to highlight the academic importance of institutional and sociological thought for debating phenomena of economic life since, as it is argued within the paper, such ambitions meet also very clearly with recent tendencies within economics which are commonly considered to be tendencies towards heterodox economics. Aim of the paper is to embed such discussion within a broader history of economic and sociological thought in order to demonstrate that recent developments meet with elements of discussion which were already used by classical authors at the beginning of the 20th century. In this respect a lot of the recent offensive of economic sociology meets with classical bases of its own academic development which seems to have become hidden or partly forgotten.

Not anything goes: a case for a restricted pluralism

Author(s): Gustavo Marques,Diego Weisman / Language(s): English Issue: 1/2008

The current discussion on theoretical and methodological pluralism is plagued with confusions and misunderstandings. Some problems arise because an appropriate framework for conducting a fruitful discussion about these issues is still lacking. Many other problems derive from the fact that a rational pluralist should be both tolerant with the many different points of view and able to discriminate among them. In the first and second sections we use some of Mäki’s ideas for developing a general framework for discussing pluralism and apply it to the ongoing debate on theoretical and methodological pluralism, showing its strong compromise with demarcationism. In the third section a looser framework for approaching pluralism is outlined, and a detailed discussion of Caldwell’s critical pluralism is conducted, pointing out its achievements and some of its shortcomings. The fourth section provides an outline of what a sound notion of restricted pluralism should encompass for avoiding “anything goes”.

Book review: Gilles Dostaler, Keynes and his battles, Edgar Elgar, Cheltenham, UK, Northampton, MA, USA, 2007, 384 pages

Author(s): Mircea Teodor Maniu / Language(s): English Issue: 1/2008

Book review: Cristina Neesham, Human and social progress: projects and perspectives, VDM Verlag, Saarbrücken, 2008, 220 pages

Author(s): James Moulder / Language(s): English Issue: 1/2008

Book review: Akop P. Nazaretyan, Anthropology of violence and culture of self-organization. Essays in evolutionary historical psychology, 2nd edition, Moscow, URSS, 2008, 256 pages (in Russian)

Author(s): Andrey Korotayev / Language(s): English Issue: 1/2008

Antropologia New Age

Author(s): Paweł Murziński / Language(s): Polish Issue: 4/2018

This article examines New Age anthropology in light of important changes that are taking place in western culture. These changes are undoubtedly due to many factors, but primarily to a crisis of Christianity, scientific revolution, and postmodern man’s search for alternative answers. The first two points of this article discuss the foundations of this anthropology, which are rooted in new scientific theories and their metaphysical interpretation in light of the concept of Eastern religions such as Hinduism and contemporary gnosis. According to these Eastern ideas and religions, man is an emanation of the Divine Absolute, who is an incarnate particle. This holistic outlook identifies the Creator with creation and is connected with an evolutionary (and not a creationist) worldview. The following point of the article discusses the concept of so-called “transformation of consciousness,” meaning the need to discover one’s true divine identity. This concept asserts that man’s rational identity is an “illusory I.” The final two points of this article present the consequences of this kind of human perception, or the cognitive process based on inner human experience, meaning so-called “enlightenment” (and not on objective Truth), and of the absolutization of the subjective conscience as the supreme tribunal based on having reached enlightenment. In this way, man’s divine identity, which blurs the boundary between that which is divine and that which is human, is the basis of New Age anthropology. In addition, New Age anthropology’s evolutionary understanding of the cosmos, including of man, leads one to conclude that human nature is subject to the processes of change that makes it possible for man to go beyond the limit within which he is understood as being a homo sapiens.

Godność ludzi wykluczonych, na peryferiach i... W 100-lecie odzyskania niepodległości przez Polskę

Author(s): Andrzej Proniewski / Language(s): Polish Issue: 4/2018

The dignity of a man who fits into his subjective existence is imperishable and irreducible. It implies awareness of subjectivity, the ability to reflect, identity, historicity, freedom, autonomy of the relationship. In individual dignity, man experiences belonging to a group whose functioning is often dictated by national dignity. A hundred years of Poles’ independence showed that the history of the nation affects the maintenance of the sense of individual dignity and the changing circumstances of life, often dictated by persecution or life on the periphery of this dignity, can not threaten. In order to show the dignity carried out in the period of one hundred years of independence, the following problems have been emphasized: the principle of human dignity (1), dignity as the basis of social life (2.), dignity crippled and trampled – exile, exile, emigration, periphery (3.) in defense of dignity (4.).

Review of Colin White, A History of the Global Economy. The Inevitable Accident, Edward Elgar Publishing, 2018, hb, ix+495 pages, ISBN 978-1-78897-197-3

Author(s): George ŞERBAN-OPRESCU / Language(s): English Issue: 2/2019

Review of Venkat Venkatasubramanian, How Much Inequality is Fair? Mathematical Principles of a Moral, Optimal, and Stable Capitalist Society, New York, Columbia University Press, 2017, xxi+279 pp., hb, ISBN 978-0-231-18072-6

Author(s): Valentin Cojanu / Language(s): English Issue: 2/2019