Economic Theory Commons^™

Axiomatic Marxian Exploitation Theory: A Survey Of The Recent Literature, Rylan Chinnock, Roberto Veneziani, Naoki Yoshihara

Economics Department Working Paper Series

In this paper we review recent developments in axiomatic studies of Marxian exploitation theory. First, given the acute controversy over the formal definition of exploitation during the 1970-1990s, we review the study of the axiomatic frame- work, which identifies some fundamental properties – technically, domain conditions – that any definition of exploitation should satisfy. Moreover, we provide a survey on the axiomatic studies about the proper measures of exploitation which coherently preserve the basic Marxian perceptions represented by two axioms, Profit- Exploitation Correspondence Principle and Class-Exploitation Correspondence Principle. Finally, we examine the relevance of the labour theory of value in …

Can Price Controls Be Optimal? The Economics Of The Energy Shock In Germany, Tom Krebs, Isabella M. Weber

Economics Department Working Paper Series

In the wake of the global energy crisis, many European countries used energy price controls to fight inflation and to stabilize the economy. Despite its wide adoption, many economists remained skepti- cal. In this paper, we argue that price controls should be part of the policy toolbox to respond to shocks to systemically important sectors because not using them can have large economic and polit- ical costs. We put forward our arguments in two steps. In a first step, we analyze the impact on the German economy and society of the global energy crisis that followed Russia’s attack on Ukraine …

Alternative Approaches To Labor Values And Prices Of Production: Theory And Evidence, Deepankar Basu, Athanasios Moraitis

Economics Department Working Paper Series

In this paper, we discuss three approaches to estimating classical prices of production(long run equilibrium prices) in both a circulating capital model and a model that includes capital stock: the Standard Interpretation of Marx’s value theory, the New Interpretation of Marx’s value theory, and the Sraffian approach to prices of production. We add two refinements to both models: (a) allowing for differential wages rates across industries; and(b) taking account of unproductive industries in labor value calculations. We implement(a) the circulating capital models using harmonized input-output data from the World Input Output Database for 37 countries for the period 2000–2014, and …

Endogenous Business Cycles And Economic Policy, Peter Skott

Economics Department Working Paper Series

This paper examines the dynamics of Keynesian models that incorporate feedback effects from the labor market to income distribution, in- vestment, aggregate demand and output. A baseline version of the model can generate endogenous growth cycles, but cumulative divergence and economic collapse also become possible for plausible parameter values. Extensions of the model that include monetary and Öscal policy show greater robustness: the local instability of the stationary point leads to limit cycles (rather than complete collapse), even when large, destabilizing changes are made to parameters describing the private sector. The robustness of the general approach is reinforced by the …

Economic Growth In Dual And Mature Economies: Revisiting The Pasinetti And Neo-Pasinetti Theorems, Peter Skott

Economics Department Working Paper Series

This paper (i) examines the role of income distribution in the determination of the average saving rate and the growth process in dual and mature economies, and (ii) revisits the Pasinetti and neo-Pasinetti theo- rems. The profit share may influence saving because of differences in the saving rates across households (the Pasinetti theorem) or because firms retain part of their earnings (the neo-Pasinetti theorem). The two mechanisms are not mutually exclusive, and the alignment between warranted and natural growth rates in mature economies can happen through feed- back e¤ects from employment to the distribution of income.

Mmt And Policy Assignment In An Open Economy Context: Simplicity Is Useful, Oversimpliflication Not So Much, Arslan Razmi

Economics Department Working Paper Series

Modern Monetary Theory (MMT) has recently received significant attention in academic and policy circles. Critics question the sustainability of MMT-prescribed approaches to fiscal and monetary policy, especially over extended periods of time, in the presence of international financial markets, and for developing country governments that borrow in foreign currency. I formalize some of these arguments using a dynamic, open economy, Tobin-Markowitz portfolio balance environment that takes into account: (1) the role of expectations in the foreign exchange market and the feedback mechanisms between these and the exchange rate and inflation, and (2) interactions between the current account, debt accumulation, and …

A Critical Reinterpretation Of Shacklean Decision Theory, Se Ho Kwak

Economics Department Working Paper Series

Shackle was one of the representative critics of probability calculus. His alternative decision theory was mathematically reformalized by Katzner till 1990s. Following the Katzner’s reformalized framework, this paper presents a new interpretation of Shacklean theory by focusing on the common stage structure of the decision-making. This paper shows that the characteristics of Shackle-Katzner framework can be explained as: (1) the non-distributive and non-additive ordinal measure of subjective uncertainty, (2) the incomplete list of imaginable future states, (3) the valuation of “importance” reflecting various types of loss- psychology, and (4) the final choice of the action is made on the set …

A Functional Representation Of Potential Surprise Ordering, Se Ho Kwak

Economics Department Working Paper Series

In the history of economic thought, Shackle was one of the representative critics about probability based economic theory. Specifically, he constructed his own concept of subjective uncertainty called potential surprise to replace probability. In 1980s, the potential surprise is axiomatized by Katzner as Kolmogorov-styled measure defined on the 𝜎-field over the set of possible states. In this paper, potential surprise function is reconstructed as the functional representation of potential surprise ordering on the space of hypotheses about future called monad.

Inflation In Times Of Overlapping Emergencies: Systemically Significant Prices From An Input-Output Perspective, Isabella M. Weber, Jesus Lara Jauregui, Lucas Teixeira, Luiza Nassif Pires

Economics Department Working Paper Series

In the overlapping global emergencies of the pandemic, climate change and geopolitical confronta- tions, supply shocks have become frequent and inflation has returned. This raises the question how sector-specific shocks are related to overall price stability. This paper simulates price shocks in an input-output model to identify sectors which present systemic vulnerabilities for monetary stability in the US. We call these prices systemically significant. We find that in our simulations the pre-pandemic average price volatilities and the price shocks in the COVID-19 and Ukraine war inflation yield an almost identical set of systemically significant prices. The sectors with system- ically …

Systemic Cycles Of Accumulation And Chaos In The World Capitalist System: A Missing Link, Giorgos Galanis, Christian Koutny, Isabella Weber

Economics Department Working Paper Series

We re-examine the Systemic Cycles of Accumulation (SCA) of Arrighi (2010) and Arrighi and Silver (1999) which provide a framework for the analysis of the cyclical patterns of geographical expansion of trade and production and the related shifts of hegemonic power within the world capitalist system. Within the SCA framework, the last stage of a hegemonic cycle is characterized by what is called ‘systemic chaos’, however the drivers of these chaotic dynamics have not been explicitly analyzed. This article fills this gap by providing a link between the accumulation process, the spatio-temporal fix, and systemic chaos, in three steps. First, …

Growth Cycles In Mature And Dual Economies, Peter Skott

Economics Department Working Paper Series

Mature economies may experience fluctuations, but the average medium and long run growth rate matches the natural rate. Like Kaldor's neo- Keynesian models, the Marx-Goodwin tradition explains this outcome by endogenizing the distribution of income and assuming that the accumulation of capital is increasing as a function of the profit share. The application of Goodwin cycles to developing economies may be hard to justify, however. The modified Goodwin models in this paper include relative-wage norms as a central element of wage formation. Norms change endogenously, leading to path dependence (hysteresis) in the stationary solution for the employment share of the …

World Profit Rates, 1960-2019, Deepankar Basu, Julio Huato, Jesus Lara Jauregui, Evan Wasner

Economics Department Working Paper Series

In this paper we present estimates of the world profit rate using country-level data from the Extended Penn World Table 7.0 and industry-level data from the World Input Output Database. The country-aggregated world profit rate series spans the period from 1960 to 2019, and the industry-aggregated world profit rate series runs from 2000 to 2014. The country-aggregated world profit rate series displays a strong negative linear trend for the period 1960-1980 and a weaker negative linear trend from 1980 to 2019. A medium run decomposition analysis reveals that the decline in the world profit rate is driven by a decline …

Portfolio Adjustment And Panic Behavior Under True Uncertainty, Se Ho Kwak

Economics Department Working Paper Series

G.L.S. Shackle was one of the representative critics against probability- based economic theory, and influenced some Post-Keynesians and Austri- ans. During the 1980s and 1990s, his alternative framework was math- ematically reconstructed by Katzner. In this paper, we will reformalize the Shackle-Katzner framework to explain the financial decision-making of the individual. For this, the portfolio diversification between two non- monetary assets will be explained by the reformalized model introduced here, and then moved to the analysis about a case of money and a non- monetary asset. Based on these findings, a few possible scenarios of panic behavior in the portfolio …

The (Im-)Possibility Of Rational Socialism: Mises In China’S Market Reform Debate, Isabella M. Weber

Economics Department Working Paper Series

This paper investigates the long first decade of reform in China (1978-1992) to show that Mises, in particular his initiating contribution to the Socialist Calculation Debate, became relevant to the reconfiguration of China’s political economy when the reformers gave up on the late Maoist primacy of continuous revolution and adhered instead to an imperative of development and catching up. During the Cultural Revolution, Mao had rejected the notions of efficiency and rational economic management. In the late 1970s, the reformers under Deng Xiaoping’s leadership elevated these notions to highest principle. As a result, Mises’ critique that socialism could not achieve …

The Nature Of Money And The Theory Of International Trade: Thornton And Ricardo, Isabella M. Weber

Economics Department Working Paper Series

A rich recent literature reinvestigates the nature of money, but little attention has been paid to the ramifications of the ways in which we theorize money for the theory of international trade. This paper examines the logical relationship between the neutrality of money and self-balancing trade based on Henry Thornton and David Ricardo as two foundational contributions to credit and commodity money theories respectively. I show that both authors theorize trade as self-balancing whenever money is conceptualized as neutral. I distinguish two notions of the neutrality of money: ex ante and ex post neutrality. In Thornton’s Paper Credit money is …

From Lane To Lee A Quarry's Potential, Center For Economic Development

Center for Economic Development Technical Reports

In collaboration with a student team from the Department of Landscape Architecture and Regional Planning at the University of Massachusetts Amherst, the Community Development Corporation of Lee explored the potential reuse of an industrial parcel owned by Lane Construction Corporation in Lee, Massachusetts. The 243-acre property is currently in operation as a gravel and sand operation and asphalt processing plant in Lenox Dale, north of Lee center.

Identified as one of the largest industrial zoned parcels in New England, the Lane site has great economic potential in the future development of the town and the surrounding region. However, the site …

The Film Industry Cluster Development Recommendations For Western Massachusetts, Center For Economic Development

Center for Economic Development Technical Reports

California is home to the world's largest movie clusters. It grew out of the need to extend beyond New York's confined environment. The opportunities that lay ahead were carefully planned and exploited. For Western Massachusetts to learn from this example it will have to discover a niche that can be marketed as truly worthy of attracting businesses away from established clusters. This will require a top-down approach from government bodies to ensure that a successful cluster fits wit the New England lifestyle. Current opportunities exist within factory towns that have available old mill buildings and infrastructure. Unfortunately the establishment of …

Town Of Billerica, Massachusetts Master Plan Appendix A Community Socio-Economic Profile, Center For Economic Development

Center for Economic Development Technical Reports

This is Appendix A of the Town of Billerica, Massachusetts Master Plan. This Appendix contains a Community Socio-Economic Profile.

Barbara, The Market, And The State, Nancy Folbre

Economics Department Faculty Publications Series

Some reflections, in poetry and prose, on Barbara Bergmann’s contributions to economic theory.

Globalization And Local Economic Development: Intersections Between The Industrial Economy And Regional Industrial Planning, Center For Economic Development

Center for Economic Development Technical Reports

By now it is widely accepted that we live in a global economy. We are more likely to buy goods from Korea than Kansas, we may have pension funds invested in companies on the Tokyo stock market as well as New York's, and we may work for a corporation with headquarters in Brussels rather than Boston. But despite our sense of participating in a world economy, it is difficult to understand how that world's economy intersects with the national or local economies with which we are more familiar. This is particularly significant for the regional economic development planner. Despite the …

Industrial Clusters And Institutional Support: A Case Study The Plastics Cluster In The Montachusetts Region And It's Training Needs, Center For Economic Development

Center for Economic Development Technical Reports

The purpose of this research and the dual papers is to comprehensively explore industrial clusters by looking at a number of examples, and then examine in greater detail, the Montachusetts Region in north central Massachusetts where the plastics industry has a strong base. The current weakness of the plastics industry will be identified and tackled.

The shift in organizational structure from global mass producing giants to industrial clusters that focus on flexible specialization, influenced many studies throughout the 1980s and 1990s. This paper will feed from these studies and expand on the role of institutional support networks.

Reuse Of Six Industrial Mills In Easthampton, Massachusetts, Umass Amherst Center Economic Development

Center for Economic Development Technical Reports

The purpose of this report was to determine the suitability for the reuse of six turn-of-the-century industrial mills in Easthampton, Massachusetts. The mills, clustered in the center of town, are an important historic and architectural resource, providing a visual link with Easthampton’s industrial heritage.

Overall Economic Development Program For The Gardner Labor Market Area Of Massachusetts, Center For Economic Development

Center for Economic Development Technical Reports

In July of 1992 Mr. Michael D. Gerry, chairman of the Gardner Redevelopment Authority, contacted the Gardner Office of Planning and Community Development about the community's status regarding its eligibility for E.D.A. funding for a proposed industrial park. In follow-up discussion with the planning office and Mr. William Fitzhenry of the regional EDA Office, it was determined that while Gardner was within an approved area, it needed to prepare a current O.E.D.P., as the most recent one had been approved by the E.D.A. in April of 1975. In as much as the last report had been developed under the direction …

Inventory Of Industrial Property Executive Summary Franklin County, Massachusetts, Center For Economic Development

Center for Economic Development Technical Reports

It is not uncommon for cities and towns to actively seek economic and industrial development in times of economic stress. However, the desire to promote industrial activity and broaden the tax base is often left to the government or the town leaders. Town residents do not necessarily share this vision of development with town government. Industry, especially in rural Massachusetts, is still perceived as belching smokestacks creating myriad environmental problems.

Although a large number of towns wish to broaden the tax base and share the tax burden with new development, few have positioned themselves well to gain from or proactively …

Socio Economic Profile A Comparative Report Holliston, Massachusetts, Center For Economic Development

Center for Economic Development Technical Reports

This report contains a Socio Economic Profile for the Town of Holliston, Massachusetts. It includes profiles for population, housing, income, labor force, occupation, industry, and commuting.

Greenways As Vehicles For Social Expression, Center For Economic Development

Center for Economic Development Technical Reports

Traditionally, the recognized functions of greenways include water resource protection and pollution abatement, riparian habitat enhancement and biodiversity, flood hazard reduction, recreation, environmental education, noise attenuation, microclimate enhancement (cooling and pollution abatement), and the reduction of bank erosion and downstream sedimentation (Platt, 1992). Phil Lewis simply prefers to think of greenways as environmental corridors, which he dubs "E-ways," for the four main purposes of environment, ecology, education, and exercise (1990). In this paper a fifth "e" purpose of expression will be suggested.

As a beginning four different ways of promoting expression will be illustrated with examples. These means will include …

Mill Reuse Potential The Draper Mill Complex Hopedale, Massachusetts, Center For Economic Development

Center for Economic Development Technical Reports

The purpose of this study was to determine the reuse potential of the 1. 7 million square foot Draper Mill in Hopedale, Massachusetts. The study was undertaken at the request of the Hopedale Industrial Development Committee. Their goal was to develop a means of diversifying the community's tax base. When the Draper Mill was in full operation approximately sixty percent (60%) of the Town's taxes were paid by the Mill. Today, with the Mill empty, ninety percent (90%) of the Town's taxes come from residential uses. The Committee sought to develop a means to diversify Hopedale's tax base and thus …

A Comparative Analysis Fire, Police, And Public Works Departments Pelham, Massachusetts, Center For Economic Development

Center for Economic Development Technical Reports

In an ongoing effort to evaluate the effectiveness of its operations, the Town of Pelham engaged the services of the Center for Economic Development (CED) at the University of Massachusetts to examine the Highway (DPW), Police and Fire departments.

To that end, CED produced a detailed matrix comparing Pelham's three departments with those of three other communities; contacted professional and government organizations for potentially useful trends and researched additional information requested by the town. Herewith are the results of these efforts.

It was agreed that a comparative analysis of an extensive list of descriptive characteristics between Pelham's and three other …

Developing A Local Organizational Structure For Industrial Development, Center For Economic Development

Center for Economic Development Technical Reports

Many communities in Massachusetts currently utilize a variety of publicly-funded economic development organizations that help to generate and maintain economic activity and growth. Given the importance of economic development to cities and towns that are currently facing high unemployment rates, eroding tax bases and vacant space, it is crucial that these organizations operate effectively and receive the support necessary to continue their operations.

To date, however, the performance of many of these organizations has not been evaluated in a systematic manner, and the extent of their effectiveness is unknown. Only through a formal evaluation process can it be determined if …

A Revitalization Study Main Street Returns For The Future Gardner, Massachusetts, Center For Economic Development

Center for Economic Development Technical Reports

This Regional Planning studio project was undertaken for the Gardner Industrial Foundation ("the Foundation"). The Foundation requested that we make development recommendations for a 20 acre site along Main Street, adjacent to the "Central Business District" of Gardner, Massachusetts. The Site, containing mostly vacant manufacturing facilities, is a large and visually significant part of the downtown area. It is visible from Route 2, the main transportation highway in the region and is the "gateway property" to Main Street and the Central Business District after exiting Route 2 and heading downtown. The Site is fast becoming an eyesore given the recent …