List of Issues
Sergio Cesaratto & Stefano Di Bucchianico
The paper is a contribution to a monetary theory of demandled growth with elements from Sraffian supermultiplier analysis, monetary circuit theory, Modern Monetary Theory and endogenous money theory. The Sraffian supermultiplier is indicated as the most promising heterodox approach to growth and instability in capitalism. This approach allows consideration of such non-capacity-creating autonomous components of aggregate demand as autonomous consumption, public spending and exports, as the ultimate sources of growth and instability in modern capitalism. Following Steindl, capital gains are included among these components. Autonomous demand and investment are typically fed by endogenous money creation. The paper articulates the relation between autonomous demand and investment on one hand, and endogenous finance on the other, in the light of Keynes’s distinction between initial and final finance.
2018 12(2) - Reprint 2014 8(2)
Aristotle and Economics. Mélanges Historical and Economical (in Greek), 2012. By Christos P. Baloglou
Ricardo's statement that the marginal capital pays no rent is at the basis of his extension of the labour theory of value to the presence of lands. That statement has been recently criticised by Fratini in the case of intensive cultivation. We defend Ricardo’s position on that point. However, the reduction of a productive system with land to a single-product system is generally impossible, and for instance the trade-off property between wages and profits does not hold in general.
Growth of aggregate demand at any given private saving rate depends on growth of private investment, export surplus and budget deficit. Slower growth of private investment in the mid-1970s has triggered stagnation trends in Europe’s developed economies, caused mainly by inadequate aggregate demand. The relation between aggregate demand and the propensity to save is analysed in the present paper using the model of ‘stunted growth’ of Josef Steindl. The decreased utilization of capacity characteristic of stagnation can be counteracted by a reduction of the propensity to save. The most important factors determining the saving rate are distribution of incomes and the progressivity of the tax system. In many countries and periods, an inverse relation between the growth of GDP and of the private saving rate has been found and presented in the study.
Riccardo Fiorentini & Guido Montani
The European Council’s decision in February 2013 to cut the EU budget to 1% of GDP was a grave error, worsening the European economic recession and tacitly admitting that a European recovery policy is impossible. In this paper the authors show that with an annual EU budget of only 1.19% of GDP, a recovery plan of 2% of GDP is possible, without deficit spending. The twofold aim of this exercise is to show that within the present legislative framework European parties and leaders can put forward an effective economic policy to overcome recession and that European fiscal imbalance is one of the major causes of the crisis of the European misgovernment. A more effective policy can be fostered with a limited federal debt.
George Economakis, Maria Markaki & George Androulakis
The Greek economy arose as the main ‘weak link’ in the global economic crisis because of the ‘extraverted’ model of Greek capitalism. It is this model that leads to systematic transfers of value to the imperialist countries forming the substratum of the current crisis. The crucial parameter of these transfers is the dissimilarity of trade-production structure between the Greek economy and the hard core of its commercial competitors (Eurozone), which is expressed in Greek terms of trade deterioration.
This paper presents a mathematical solution of the problem for financial stabilization. The exact statement of the problem is carried out in terms of the four conventional market values, involved in the famous Fisher equation of monetary circulation. The latter is subjected to sush named dynamic extension. Then, the conditions for occurrence of economic destabilization and cyclicality are deduced analytically. At the end, the final conclusion is made, that to escape the occurrence of economic crisis cycles, it is necessary to sustain sufficiently high progressive taxation and respectively enough mass consumption.
Harris Topalides & Patroklos Georgiadis
Globalization and a shift in the dominant type of capital investments from physical to knowledge forms, emerging since 70’s had a major influence on industrial development pattern. This paper examines the dynamics of their impact, aiming to derive insights about modifications in the corresponding sustainability context. Introducing changes as new operation hypotheses in a dynamic model exhibiting industrial development pattern, it accesses conceptually their effects on the functions controlling capital accumulation and regulating capital intensity level, that dominate its identity. Showing that model’s growth property alters, it induces that development pattern is changing and a new form of limits-to-growth emerges.
Chien-Hsun Chen, Chao-Cheng Mai & Jhao-Hsuan Hsu
This paper explores how the increase in income taxes in relation to foreign-funded enterprises affects the social welfare of China. The theoretical analysis indicates that increasing the income taxes levied on the foreign-funded firm tends to be beneficial to the social welfare of China. However, this tax policy may be detrimental to the social welfare of China only if the marginal cost of the domestic firm is higher than that of the foreign-funded firm, and this cost differential effect outweighs both the direct and strategic effects.
Theodore Mariolis & Lefteris Tsoulfidis
Many empirical studies indicate that the deviations of actual prices of production from labour values are not too sensitive to the type of measure used for their evaluation. This paper attempts to theorize this rather ‘stylized fact’ by focusing on the relationships between the traditional and the numéraire-free measures of deviation. On the empirical side, it provides an illustration of these relationships using input-output data from the Greek and Japanese economies.
Christos F. Stournaras
The dynamic effects of fiscal policy in terms of budget deficits and the concomitant implications of public debt have been the dominant issues in macroeconomic literature. Of particular concern is the choice of the life horizon (finite or infinite) of economic agents, since it remains crucial for the characterisation of the transition process towards the steady state of the economy. This paper develops a simple equilibrium model suitable to examine such issues. The first part analyses the solvency constraint of the private sector, in the presence of a government, by focusing on the dynamic behaviour of savings, consumption and asset allocation. The second part explores the steady-state effects of fiscal policy, by clarifying the role of government spending and public debt in determining interest rates. A modified index of fiscal stance is then derived that embraces the effects of current and anticipated fiscal policy, including the effects of government finance, on aggregate demand.
Natural prices, i.e., value relative prices (prices relative to the total labour required to produce each commodity) are identically equal to income equalizing prices when capital costs are proportioned to capital goods’ supplying sectors. This paper constructs natural prices as income equaling prices and they are compared to market prices. Empirical findings show that the gap between natural prices and market prices decrease over time according to one data set. According to another data set, gap between natural prices and market prices widens at times when the economy is in boom. International competition decreases the gap. Profitable industries at profitable periods increase the gap.
The current paper is a means of demonstrating our knowledge about macroeconomic theories, and its key variables, phenomena, and history. Given the pivotal role that the Non-Accelerating Inflation Rate of Unemployment (NAIRU) has in the macroeconomic theory as well as its role in determining employment theories, the need is raised for a thorough evaluation of its origins and a brief explanation of some of the claims surrounding it. On these grounds, this study aims at integrating and generalizing findings and presenting the changes within the macroeconomic field over the years by investigating theories, identifying the methodological strengths and the weaknesses in the body of the macroeconomic research about the concept of NAIRU. In order to help the reader to avoid misunderstandings we define the best descriptors and identify the best sources to use in the review literature related to our topic, we rely on primary sources in reviewing the literature, we examine all aspects of the research design and analysis, and we consider contrary findings and alternative interpretations in synthesizing quantitative literature.
Paschalis A. Arvanitidis
One of the most refreshing philosophical perspectives introduced to economics and to social sciences in general over the last twenty years or so is this of Critical Realism (CR). It presents a new way of seeing socioeconomic reality, and, on these grounds, it advances discussion in philosophy and methodology, providing guidelines of how modes of reasoning and research might be fashioned for analysis within all sciences, social and natural. The current paper aims at presenting the fundamentals of the philosophy of CR. In particular, it delineates the key ontological and epistemological premises of CR together with an outline of the methodological implications for economics.
Frederic S. Lee
In this article I argue that there is a heterodox social surplus approach that has its own account of output-employment and prices, and its own value theory. In the first two sections, the heterodox model of the economy is delineated with respect to the social surplus and social provisioning, followed in the third and fourth sections with the development of a pricing model and an output-employment model. In the fifth section the results of the previous four sections are brought together to develop a model of the economy. The article concludes with the delineation of the heterodox theory of value.
We review the main arguments put forward against the horizontalist view of endogenous credit and money and an exogenous rate of interest under the control of monetary policies. We argue that the structuralist arguments put forward in favour of an endogenously increasing interest rate when investment and economic activity are rising, due to increasing indebtedness of the firm sector or decreasing liquidity in the commercial bank sector, raise major doubts from a macroeconomic perspective. This is shown by means of examining the effect of increasing capital accumulation on the debt-capital ratio of the firm sector in a simple Kaleckian distribution and growth model. In particular we show that rising (falling) capital accumulation may be associated with a falling (rising) debt-capital ratio for the economy as a whole and hence with the ‘paradox of debt’. Therefore, the treatment of the rate of interest as an exogenous macroeconomic distribution parameter in Post-Keynesian distribution and growth models seems to be well founded.
Saverio M. Fratini
In the Principles, Ricardo defended his labour theory of value by arguing that even where all cultivated land pays rent, the last dose of capital employed on the land does not and there is therefore no rent in the price of the product of this capital. We will show, on the contrary, that the intensive differential rent paid on land of the worst quality under cultivation enters into the agricultural product price and so, even in the most favourable case, commodities are no longer exchanged at prices based on the quantities of labour they embody.
Shri Prakash & Ritisnigdha Panigrahi
The paper deals with the output effect of foreign investment (FI) in different sectors of the Indian economy. Final demand vector of I-O model has foreign investment alone as non-zero elements. FI promotes growth of output of all sectors, including those having no FI Amount of FI and linkages of sectors, receiving foreign investment, are the main determinants of output effect of FI. But output effect of FI varies sharply between sectors according to the magnitude of investment and intensity and spread of linkages. Miscellaneous manufacturing shows maximum output growth due to FI.
This paper examines some international aspects of Ricardo’s economic theory. The theory of comparative costs is considered a special case of a more general theory of economic integration, showing that the final stage of economic integration, when capital and workers freely circulate in the global market, is a world economic union. Ricardo worked out also a theory of the international gold standard. He came to the conclusion that, when banknotes circulate alongside gold, the central bank should be entrusted to a public agency, independent of national power and with a precise target for the issue of banknotes. These “cosmopolitan” positions suggest that in the present international economy, a world governance capable of guaranteeing monetary stability and free trade should be entrusted to supranational institutions, similar to those existing in the European Union.
Rogelio Huerta Quintanilla & Ivan Mendieta Muñoz
The current paper aims to appraise the role of costs and demand in determining manufacturing prices in Mexico using modern time-series econometric techniques for the period of 1996 to 2007. Therefore, as a piece of econometric work, the paper tries to provide an insight into the dynamics of manufacturing pricing in Mexico. This might be of particular relevance since in recent years and for the Mexican economy there have been few studies dealing with the matter at issue.
Here I illustrate an original framework within which to consider the role of Corporate Social Responsibility (CSR), defined as socioeconomic innovation, on development process by a cost-benefit analysis. CSR can generate costs of implementation and some costs in terms of community development. On the other hand, CSR can generate business benefits for firm and benefits for local community both directly, by producing public goods, and indirectly by sustaining civil society and public institutions in order to promote development process oriented to individual and collective well-being.
The purpose of the paper is to provide a conceptual perspective on the potential merits of deficits as well as to assess the relevance of the NAIRU concept, by touching on the fundamental arguments for and against public deficits. In periods of economic austerity, structural deficits can have stimulating effects on economic growth. Policy makers should pursue a high-employment deficit target such that the debt-to-GDP ratio remains constant. The NAIRU is a rather antiquated notion that has to be carefully reconsidered. The existing mechanism reflected by the dominant neoliberal doctrine has put paid to any adjustment efforts to consolidate the economies; hence, adding further to the problem by transferring the entire burden of adjustment to labor markets. Instead of striving to eliminate deficit regardless of the shape of the economy, we should try and pursue a deficit that is sufficiently large to provide the effective demand for all of the goods and services the economy can generate. The effects of cumulative causation can lead to a chain reaction capable of putting the economy on the road to recovery.
Alexis Ioannides & Stavros Mavroudeas
As Marx, but also Chapman and Robbins argued, working time and labour intensity are strongly and negatively correlated. Nevertheless, the models for this interaction presented so far don’t integrate their ideas. We construct a model for the time – intensity relationship that is mainly based on the natural limitations of the human body and reflects Marx’s main theses. We explore it’s consequences on product, value and surplus value. Finally we find support for the basic assumptions of this model with the help of the results of contemporary ergo-metric experiments.
India’s recent economic success is plagued with several problems: slow structural change, little growth in labor intensive manufacturing, slowing agricultural growth, and significant debt problems. It will be argued that these problems are interlinked and are in turn related to the type of industrialization process that has unfolded. Significant investment in agriculture is the key to resolving these issues. The experience of China and Japan is used to illustrate how this resolution might unfold in India.
Purusottam Nayak & Bidisha Mahanta
The present paper is an attempt to analyze the status of women empowerment in India using various indicators based on data from secondary sources. The study reveals that women of India are relatively disempowered and they enjoy somewhat lower status than that of men in spite of many efforts undertaken by government. Gender gap exists regarding access to education and employment. Household decision making power and freedom of movement of women vary considerably with their age, education and employment status. It is found that acceptance of unequal gender norms by women are still prevailing in the society. More than half of the women believe wife beating to be justified for one reason or the other. Fewer women have final say on how to spend their earnings. Control over cash earnings increases with age, education and with place of residence. Women’s exposure to media is also less relative to men. Rural women are more prone to domestic violence than that of urban women. A large gender gap exists in political participation too. The study concludes by an observation that access to education and employment are only the enabling factors to empowerment, achievement towards the goal, however, depends largely on the attitude of the people towards gender equality.
Masudul Alam Choudhury
This paper is an introduction to the epistemological formalism of Islamic political economy and its application to the case study of socioeconomic development of the Sultanate of Oman. A relational epistemology of development planning emanating from the episteme of Oneness of God as the Islamic worldview of unity of knowledge is conceptualised and made empirically viable by combining statistical quantification and real-time simulation in the spatial dimension. These two estimation approaches and the empirical results are sequentially interconnected; showing how statistical results that are always static in nature can be dynamically represented by real-time and knowledge-induced (epistemological) graphical simulation in spatial domains. The policy implication underlying the normative issues interconnecting the statistical results and the spatial dimension simulation results is pointed out. The case study of development planning for the Manufacturing and Petroleum inter-sectoral GDP and total employment relations for the Sultanate of Oman is considered.
Peter Flaschel, Sigrid Luchtenberg & Christian Proaño
The paper takes its point of departure from the current multifaceted financial crisis in the World economy. It considers against this background different concepts of the "Welfare States" (for short: good, bad and ugly), their recent focused reformulation of the good case through flexicurity proposals, and the modeling of such an economy in a recent issue of this Journal. It then proposes an extension of this labor-market oriented flexicurity concept towards a more balanced system, called "Social Capitalism", where households’ life-course perspectives, the educational system and elite formation are considered as the fundamental pillars of such a society. We then argue that such an ideal social architecture for a capitalist society can be an important guide for the formulation of compromises between the current status quo of a small Euro-economy (here Greece), allowing thereby for a significant alternative to the proposals that are currently debated with respect to the Greek situation. We consider the addition of such a tentative reform proposal as best scenario among the given ones. We understand the Greek economic and political crisis situation as an opportunity for significant if not radical reforms, by contrasting it with a return to the Drachma as the worst scenario.
The paper discusses parallels between the Austrian School of Economics’ teachings and the current crisis and argues for decision makers to take economic theory into consideration. Menger, putting the human being and his desires at the center of economic theory, advocates an allocation allowing utility for a maximum of individuals, excluding extra profits for only a few, thus a ‘perfect’ market. Hayek says markets will function if prices – important signals to the agents – are formed without interference. Tempering (money injection, deficit spending, fiscal expansion, interest rates lowering) distorts their informative nature, lead into malinvestment and depression. Schumpeter predicts the downfall of capitalism because the chances for extra profits through innovations create imitators until the system collapses. An “economical”, votes maximizing, behavior of politicians adds to that. And he warns of some of the very policies being applied in today’s crisis.
Kankesu Jayanthakumaran & Shao-Wei Lee
This paper examines the association between inward foreign direct investment (FDI) and exports in Taiwan and China in their economic development process by using Lumsdaine and Papell approach that allows two endogenous structural breaks. The causal relationships are studied using the Johansen and Juselius cointegration approach and Granger causality tests. Results show that the detected breaks and causal relationships in the FDI and export time series are coincided with extensive government effort, mainly in the form of export processing zones, during a transition period from import substitution to export orientation.
Education is that service which has manifold effects on the provider, the state, the receiver, the individual, his family and the environment, the society. This important position of education has become a topic of research for quite sometime now. The contribution has been measured by economists using (i) bi-variate regression-correlation analysis of linking education to income, GDP, productivity etc.; (ii) rate of return analysis; and (iii) input-output linkage effect measured using Leontief’s inverse. The first two methods have been under the cloud of criticism on methodological and data availability, but the input-output analysis has been very rarely used. This paper is an attempt to measure the linkage effects in India over four enumeration years from 1983-84 to 1998-99. This linkage analysis which includes the direct, total and residentiary for a long period enables temporal analysis of the changes that have moulded the sector post-independence and during the globalization era. It has been found that the sector has been undergoing positive changes over the period and has been contributing to each and every sector of the economy.
Special Issue: Technology and Economic Analysis
Guest Editor: PANAYOTIS G. MICHAELIDES
Joseph A. Schumpeter (JAS) is regarded as one of the most prominent economists of the 20th century. He is known as the theorist of innovation, entrepreneurship and dynamics of capitalism. JAS's view of an evolutionary economy is often summarized as a never-ending process of “creative destruction”. Less known is the diversity of JAS's writings and his truly interdisciplinary scientific approach referring to lessons of history, sociology, psychology and further disciplines. In this context, he could be regarded as pioneer of a research tradition which is commonly called socioeconomics. The paper focuses on two topics of JAS's writings: (i) the behavioural assumptions for entrepreneurial activity, and (ii) Schumpeter's methodological concerns doing economic research. In fact, JAS developed a typology of entrepreneurial motivation based on human motivation and psychological concerns which are non-economic in nature. Also, JAS created an interdisciplinary working scheme merging institutional and multidisciplinary factors which is commonly called socioeconomics.
George E. Economakis & Dimitris P. Sotiropoulos
Ricardo was rather pessimist of the development of technology in the process of capital accumulation. Due to the fact that the dynamic of technology was unable to triumph over land scarcity, landowners claims rendered totally baseless and working class demands rendered simply futile within Ricardo’s theoretical framework. This attitude cannot be easily explained given that he wrote in the middle of the Industrial Revolution. We shall argue that Ricardo’s analytical insights helped the shaping of the political strategy of the industrial capital, providing the adequate theoretical background for the foundation of its political assertions during the first phase of the Industrial Revolution.
Ioannis A. Katselidis
Sumner Slichter has been characterized as “perhaps the most influential industrial economist in America” during the first half of the 20th century. However, little attention has been paid to his works. This paper analyzes Slichter’s ideas regarding the effect of technological change on the labor market performance. Slichter, by emphasising on the role of technical change, contested the statement of Say’s law that full equilibrium would be ensured by the functioning of market forces and tried to explain the inability of the economic system to readjust and absorb the unemployed workers. Furthermore, another remarkable aspect of his investigations is his theoretical shift around 1930 which could be connected with the catastrophic consequences of the Great Depression.
Athena Belegri-Roboli & Maria Markaki
The aim of this paper is to examine the impact of structural determinants on employment changes in the Greek economy, over the period 2000-2008. In this context, we apply the Structural Decomposition Analysis (SDA) in an input–output analysis framework. The SDA is a technique which breaks down a variable of interest into the changes of all the relevant determinants. In this study, we apply SDA to express employment changes (employed persons) into changes of employment’s determinants. The selected determinants are: labour productivity, Leontief’s inverse matrix and final demand. The results of this study show that labour productivity and Leontief’s inverse matrix changes produce negative effects on labour changes. In contrast, final demand changes effects are positive. Finally, labour productivity and final demand are found to be the most crucial determinants for the formation of employment, while Leontief’s inversed matrix effects are not significant.
Kostas Theologou, Veneti Anastasia & Efrosyni-Alkist Paraskevopoulou-Kollia
This paper argues that Education could improve Citizenship. More precisely, since the use of New Technologies (NT) in Education is inevitable, the digital methods that are currently available (including Web & E-Learning projects, etc) could serve as important tools for cultivating European Citizenship.
Endogenous growth literature emerged from dissatisfaction with one result of the neoclassical growth model: the independence of the growth rate from the saving ratio, which is seen as a variable subject to policy influence. There are at least three generations of EGT models: the old one of the sixties; the new one of the late eighties; and the most recent one, from the second half of the nineties. EGT models of any vintage fall into one of two fields: neo-Solovian (or semi-endogenous models) or fully endogenous models. Models from the sixties would generally fall into the first class and for good reasons. Indeed, most of the early generation of fully endogenous models from the late eighties fell under the ‘Jones critique’, which pointed out some of the difficulties of these models. The most recent models have found various ways to avoid those problems. It is shown that these stratagems were anticipated by Marvin Frankel in the sixties and by Lucas in the eighties. One suspects that these devices arose in order to fix the theory rather than from, say, some ex-ante empirical observation (which is often provided ex post). More importantly, this paper indicates some problems common to all vintages of EGT models, beginning with the Cambridge capital theory critique, and suggests some alternative routes for growth analysis outside neoclassical theory.
From an economic standpoint, the globalisation process amounts to the formation of an integrated market on a world-wide scale. The aim of this paper is to show that the Ricardian theory of international trade, if correctly interpreted, can explain why an early form of global market emerged in the 19th century, and why the current process has some distinctive characteristics. To this end, the Ricardian approach will be interpreted in the light of the stages of development theory, which Ricardo was not thinking of while writing the chapter On foreign trade of the Principles, but which is an important cultural legacy of classical economic thought.
Roberto Veneziani & Naoki Yoshihara
In a recent contribution on this journal, Matsuo (2009) has provided an interesting argument to refute the Generalised Commodity Exploitation Theorem (GCET), by highlighting a potential asymmetry between labour and other commodities. In this paper, a novel characterisation of the relation between exploitation and productiveness that is at the heart of the GCET is proved. This result is interesting per se, because it is weaker and more general than the standard GCET. But, owing to the rigorous specification of all the relevant conditions, it also clarifies the structure of Matsuo’s argument, and its dubious theoretical features. It is also argued that, even if Matsuo’s formal argument were deemed convincing, a revised version of the GCET can be proved, which reinstates the symmetry between labour and other commodities in the standard Leontief setting.
Athena Belegri-Roboli, Maria Markaki & Panayotis G. Michaelides
This paper estimates ex-post the macroeconomic impacts of the high-speed toll motorway investment of Attiki Odos, in the Athens Metropolitan Area in Greece. Attiki Odos is incorporated in the Trans-European Networks and it is a priority project aimed at developing the greater area of Athens and the Greek economy as a whole. The investment vector was assembled from figures calculated ex-post. The input-output model was used to estimate relative changes in output, employment and occupations by sector of economic activity. We show that the construction of the Attiki Odos grid has significantly affected the broader area.
Peter Flaschel, Alfred Greiner & Sigrid Luchtenberg
The paper formulates for a small open economy a macrodynamic framework with an employer of ‘first’ resort, added to a competitive economic reproduction process. There is high labor mobility, with fluctuations of employment made socially acceptable through a second labor market where all remaining workers get occupation and income. We show that this economy exhibits an attracting balanced growth path, which is also viable. Moreover, pension-fund financed investment can be added to this model without disturbing this situation. We also investigate the existence of skill differentials and a corresponding educational system, which includes the equal opportunity principle.
Dimitri B. Papadimitriou
It has been shown that unemployment has far-reaching effects all leading to an inequitable distribution of well-being. On the other hand, many economists assume that unemployment tends toward a natural rate below which it cannot go without creating inflation. The paper considers a particular employment strategy of a government job creation program, such as employment guarantee scheme or employer of last resort that would satisfy the non-inflationary criteria. The paper examines the international experience of government job creation programs and pays a particular emphasis to the more successful programs instituted in Argentina and India. The conclusion drawn is that the application of an employer of last resort policy fosters economic development and in addition becomes a vehicle to meeting the Millennium Development Goals.
Shri Prakash, Shalini Sharma & Arvind Bagati
This paper has developed two hierarchical models to determine the impact of final demand for consumer durables, particularly purchases with finance, on Indian economy. Model of demand for consumer durables with or without finance is encompassed in revealed preference theory and stochastic framework Logit form of Engel consumption function is used. This is illustrated geometrically to incorporate twin threshold income levels for purchases with or without finance. This model supplements I-O model of impact of consumer durables on the economy. Concept of ‘Static Leontief Trajectory’ is formulated. Two complementary theorems, empirically supported, are its base. This paper has endogenised private final consumption expenditure in input output model. Results show that the purchase of consumer durables with or without finance considerably affects output of all sectors. Output effect varies greatly between sectors but it is maximum for the sectors final demand for the output of which is nonzero. Output effect depends, a great deal on the pattern and strength of backward, forward and residentiary linkages.
Christos P. Baloglou & Anastassios D. Karayiannis
The paper analyses the various views of ancient Greek writers about the stages of the evolution of society and shows its impact on the relevant views developed by some Romans. More than their similarities and differences is shown that the stage theory of the evolution of society has its roots to the ancient world.
The present paper examines the validity of the Generalized Commodity Exploitation Theorem (GCET) as a criticism against the Fundamental Marxian Theorem (FMT). The FMT showed the equivalence between positive profit and positive exploitation of labor, but the GCET claims that positive profit is equivalent with exploitation of every commodity. The present study focuses on the net-production concepts, which accompany with the exploitation concepts, and shows that the sole exploitation concept, which is equivalent with positive profit combined with the ordinary physical net-production condition, is the exploitation of labor, not the exploitation of any other commodity. The exploitation of another commodity needs another net-production condition to be equivalent with positive profit. It is pseudo net-production condition, which is not purely physical condition but contains social distribution condition. This pseudo net-production concept contains inputs for the production such as fertilizer for banana trees, but it does not contain workers’ consumption goods. Thus we will confirm that the exploitation concept of any commodity other than labor is not appropriate for the economic analysis based on the ordinary net-production concept, which considers that net-products are used for human.
The paper investigates the determinants of the average profit rate using the framework outlined by Farjoun and Machover (1983) and developed in Cottrell and Cockshott (2006). A dynamic equilibrium rate is derived that predicts the trend of the average profit rate. Long-run trends in the trajectory of capitalist economies are considered using empirical data from several countries.
Discussions about possibilities of calculation in socialism have always been on the agenda between different economists-theorists. A deep and fundamental criticism of socialism is expounded in the voluminous work of famous Austrian economist Ludwig von Mises. As calculations in the capitalist system are based on market prices, the impossibility of calculations is not a threat in this case. But even in the capitalist system there may appear another threat – if economic indicators are expressed only in monetary terms, the measurement of goals may be questionable from the point of view of sustainable development. The idea of welfare maximization in non-monetary terms can be found in works of the only one Nobel Prize winner in Economics among the Soviet economists – Leonid Kantorovich and his disciple Ivan Siroyezhin. It is possible to set up a non-monetary objective function even at a macro level – maximization of bundles of necessities. The modern mathematical approach in economics gives a possibility to consider a set of objective functions. It may turn out that ideas of Kantorovich and Siroyezhin are still unappreciated and up-to-date from the point of view of sustainable development.
This paper reviews the available methods used to convert Supply and Use Tables of actual economic systems to Symmetric Input-Output Tables. It is argued that all conversion methods rest on the unrealistic assumption that single production, and not joint production, characterizes the economic structure of the real world. Finally, a straightforward treatment, based on general joint-product models inspired by von Neumann (1945) and Sraffa (1960), of the Supply and Use Tables is proposed as a way out of the inconsistencies of the conversion methods.
Emmanuel Agis & German Feldman
This paper provides a critical review of alternative orthodox and heterodox theories about the role of monetary policy in the long period and develops the Classical-Sraffian approach to the subject. Our analysis supports the view that monetary conditions influence income distribution via the relationship between the long-term interest rate, which is exogenously fixed by the Central Bank, and the ‘normal’ profit rate. Moreover, we show that inflation emerges as a consequence of distributive conflicts between workers and capitalists for the surplus product. Finally, we briefly characterize some possible transmission channels of monetary policy to the real economy, which allow establishing potential ‘bridges’ between the price system and the dynamics of quantities.
I have been asked to ‘reflect’ on Marx after Sraffa (1977) after some twenty-five years. My reflection falls into three parts. In the first, certain major themes of the book are recalled and emphasized. In the second part some brief thoughts are offered on certain subsequent approaches to Marx’s value and exploitation theory, in particular the so-called ‘new solution’. The third and most substantial part turns to a major gap in Marx after Sraffa (and in many other approaches), namely the matter of international trade and how it affects Marx’s theory.
This paper argues that Marx’s analysis of interest could form the basis for a monetary and institutional analysis of the effective demand, unemployment and macroeconomic instability problems in capitalist countries with conflicting intra-capitalist relationships. The analysis pinpoints the barriers set by money capitalists’ income on industry’s accumulation. A monetary-distributive mechanism is conceptualised as an endogenous source of demand deficiencies that limit the expansion of output and employment. This mechanism is essential to the construction of an approach to the Marxian monetary macroeconomic theory, which will be helpful for us to better understand some of the contradictions of contemporary capitalism.
Anastassios D. Karayiannis
A dynamic factor in Keynes’ economics is that of entrepreneurial investment decision-making. Although Keynes did not develop a distinct entrepreneurial theory, as the present paper demonstrates, he described important behavioural explanations regarding the entrepreneur. Also, he examined the entrepreneurial role in various forms of firms’ organization and in different economic systems.
Shri Prakash & Brinda Balakrishnan
The study evaluates criticism of New Economic Policy (NEP) that it has led to employment-less growth and examines the role of productivity in growth and employment creation by means of the Computable General Equilibrium Input Output Model. It covers data of one-decade after the adoption of reforms policy. Empirical results synthesize productivity and employment effects of growth. The sectoral productivity is estimated from IO Tables of 1988-89, 1993-94 and 1998-99 in 1993-94 producer prices. The paper combines production function and aggregation approaches as its methodological-theoretical framework. The partial approach impounds technology and final demand turn by turn. The model results are supplemented by statistical analysis of inter-sectoral variation and inter-relations between educational development and qualifications of workforce. Results show productivity to be the pivot of growth of most sectors. The study highlights realism/unrealism of the paradigms of employment-less, employment-neutral and employment augmenting growth under NEP.
William R. Dipietro & Emmanuel Anoruo
One of the most essential consequences of public policy is its potential effect on income inequality. Individuals with high incomes tend to have a conservative disposition and to adhere to a conservative philosophy. In the United States, in recent times, the conservatives have been advocating smaller government, lower taxes, and high levels of defense spending. This paper uses regression analysis on annual data to evaluate whether some of the major features of the U.S. conservative agenda favor the concentration of income in the very highest income groups in the U.S.
A majority of economists had returned to the use of production functions, in spite of the Cambridge critique, while a minority continues to believe that the construction has definitively been shown to be illegitimate. The paper proposes to work towards a reconciliation between these points of view by showing that the wage curves of some families of economic systems are nearly linear so that an approximate surrogate production function seems justified, while other families of economic systems lead to strong curvatures. Random systems approach linearity.
Carlo Benetti, Christian Bidard & Edith Klimovsky
We consider reproduction in the classical tradition and elaborate ‘reproduction prices models’ with a common formalization to equilibrium and disequilibrium. The accumulation of capital is the driving variable, and the capitalists’ decisions are socially evaluated by the actual rates of profit. Apart from taxes levied by Government, the non-accumulated part of production is devoted to capitalists’ consumption. Two models are distinguished depending on the hypothesis retained on capitalists’ consumption. It is shown that the rates of profit and prices are positively correlated to the relative accumulation rates. The rates of profit admit a physical interpretation: they are the accumulation rates of a ‘core economy’, obtained by isolating the production of capital by means of capital.
The study attempts a succinct review of Indian contribution to Leontief’s input-output economics. The review has been organized along the thematic lines, since review of individual contributions would have made it difficult to take a holistic view. The review highlights the enormity of Indian contribution to theory, methodology and empirical applications of input-output models to practically every branch of economic analysis. It may safely be concluded that Indian contribution to this area of economics is comparable to the American and Dutch contribution.
Dimitris P. Sotiropoulos
This article deals with the particular connection between the cumulative process in the writings of Knut Wicksell and John Stuart Mill. Although, the idea of the cumulative process is mainly attributed to Thornton, J.S. Mill was the first to emphasize that the discrepancy between the market rate of interest and the expected yield of investment were the reason why the prices generally increased during the first stages of the business cycle. Thus, he stressed the crucial role of investment, regarding the cumulative process as a disequilibrium situation, in which the net investment is positive and constantly increasing as a result of future expectations for profits. The connection between J.S. Mill’s and Wicksell’s argumentations points out that the introduction of money and credit into a barter economy in no way serves to discredit Say’s Law.
Dimitris Keramidas, Charalambos Economidis & Nikos Stromplos
This paper presents an effort to estimate the participation of migrants in the Greek Economy with the help of the Input-Output Analysis. Several characteristics were estimated, relating mainly to the number, income, expenditure, savings and investments of migrants, along with the corresponding data for Greeks. The study reveals some aspects about the economic status of migrants in terms of consumption patterns, compared to that of Greeks, and their distance from the poverty threshold. Moreover, within the context of the Social Accounting Matrix (SAM) model, we split the household column for the year 2005 into two sub-columns, one for migrants and one for Greek households. The general conclusion of the paper is that migrants make a positive contribution to the Greek economy, mainly through their contribution to production.
William R. Dipietro
Two potential attributes of the government that may be important for the maintenance of political stability and for the degree of polyarchy within a nation are the scope of government religious regulation and the effectiveness of the government. This paper uses cross-country regression analysis to assess the effect of government religious regulation and overall government effectiveness on polyarchy and political stability, and the effect of polyarchy and political stability on country risk.
Demand-led growth is an alternative to the dominant supply-determined approach to growth theory. The main open problem is to show in which way demand matters also in the long run. For that reason it is of particular relevance the question of the growth of demand, therefore of the rise of new markets, and its relationship to structural change. Building on the theory of Transformational Growth, the paper presents a conceptual framework that brings together autonomous investment, structural change and demand structure, therefore focusing on the Consumption-Growth relationship. In particular, the structural dynamics of market creation is the result of the effort to build the market by firms aiming at exploiting the potential implicit in the development of needs.
Sobei H. Oda
This paper describes non-proportionally growing economies with changing technology and consumption demand. Specifically, this paper gives a new expression of the quantity system of nonproportionally growing economies without assuming anything about the types of technical progress or the dynamics of consumption demand, as well as some mathematical analysis and simulations as examples of its applications. The new expression can be regarded as a generalisation of Pasinetti’s formulation of non-proportionally growing economies in terms of vertically hyper-integrated sectors, because both formulations based on the same economic model while the former can analyse properly what the latter cannot express: non-labour-augmenting technical progress, seasonal change in consumption and production, traverse for changing technology and consumption demand, etc.. The new expression of non-proportionally growing economies, which pays a special attention to the time structure of production, strengthens the analytical power of the multi-sectorial production model and Pasinetti’s analysis of structural change, deepening our understanding of real economies, where technology and consumption demand never cease to change. This paper provides the following: 1. The derivation of the new expression of non-proportionally growing economies as well as its application to non-labour-augmenting technical progress and other examples mentioned above with their mathematical analysis and numerical simulations. 2. Some discussion about the time structure of production in the von-Neumann model as well as some implications of non-proportional growth to the Keynesian policies.
Christian Bidard & Hans G. Ehrbar
This paper surveys, extends and illustrates recent results on the movement of relative prices of production when distribution changes.
This paper looks at the economic trajectory of Britain from the late 19th century to help understand how China is going to develop and what the future may hold for capitalism after globalization. Although history does not repeat exactly in different countries one can see in British history the effects that followed from the demographic transition. These same processes will come into operation in China with major effects on the evolution of global capitalism.
Zhang Yu & Zhao Feng
This paper extends the empirical analysis of the movement of the rate of profit in the case of Chinese economy for the period 1978-2004. The rate of profit of manufacturing displays a declining tendency from the year 1978 to 1988, which precipitates in the period 1989-1998, and the tendency of the rate of profit becomes rising during the period 1999-2004. The rate of profit is viewed as the fundamental determinant of the rhythm of capital accumulation, and in the case of the Chinese economy the empirical evidence lends support to the idea that the movement of the rate of profit is consistent with the growth rate of output.
Stavros D. Mavroudeas & Demophanes Papadatos
The ‘Washington Consensus’ analysis and policies are being disputed both analytically and for their effectiveness. This paper surveys first the debate on the definition of the ‘Washington Consensus’ vis-à-vis its apparent developmental shortcomings. Then it surveys the major areas where the ‘Washington Consensus’ is judged as a failure (with particular emphasis on the crises of the 1990s). In the next part it presents the main responses to the ‘crisis’ of the ‘Washington Consensus’. Its supporters are categorised in the fundamentalists and the reformists whereas its opponents are divided in the post-Washington Consensus adherents and the Marxist critics. It is argued that the Marxist perspective offers a superior understanding and critique of the ‘Washington Consensus’.
This paper estimates, on the basis of traditional and modern methods, the intersectoral linkages and the key sectors in the Greek economy for the years 1988 and 1998. It finds remarkable changes in the ranking of the sectors, according to the strength of their linkages, and a downward trend in the key sectors number.
Constantinos Alexiou & George Anastasiadis
This paper aims at exploring the endogenous money hypothesis as this is implied by the Post Keynesian tradition. Turkey serves as the platform on which the undertaken empirical analysis is conducted. The inconclusive cointegration results obtained reflect the turbulent economic environment that Turkey has experienced over the last decades. The causal dimension however, appears to be in line with the Post Keynesian hypothesis.