Economic Theory Commons^™

Working Paper No. 35, The Machine Process In Industry And Society: A Veblenian Approach, Emily Pitkin

Working Papers in Economics

This inquiry considers Thorstein Veblen’s understanding of the machine process and some of its influences. In particular, this paper explores relationships between the machine process and industry, noting the powerful influences of standardization of outputs as well as inputs. In addition, this paper considers some of the implications of the machine process on workers, considering particularly the tendency of the machine process to enforce routines and some of the related effects on “habitual thinking.” Finally, the machine process and its relation to society will be discussed with a focus on its effects on value systems, examining also the ways in …

Subreption, Radical Institutionalism, And Evolutionary Economics, John B. Hall, Alexander Dunlap, Joe Mitchell-Nelson

Economics Faculty Publications and Presentations

This inquiry seeks to establish the importance of subreption as an approach to economic and social evolution that also proves integral to the tradition of radical institutionalism. We relate subreption’s etymology and appearances in Roman, Canon and Scots Law, as well as in Philosophy, to its applications found in writings advanced by Thorstein Veblen and carried on later as William Dugger details the rise of corporate hegemony. Understood as an approach derivable from selected philosophical writings of Immanuel Kant, in social science subreption is suggested to occur through the introduction of an outside value that sets off a form of …

Working Paper No. 07, Evsey Domar And The Keynesian Tradition, Cesar Maldonado

Working Papers in Economics

This inquiry seeks to establish that Evsey Domar extends Keynes’s thinking and in this manner helps to establish a post-Keynesian tradition. First, I shall consider Keynes’s ideas concerning problems facing market capitalism as appears in his book, The General Theory of Employment, Interest, and Money. Then I shall continue with this inquiry and consider Domar’s insights into expansion and employment and his concerns regarding capital accumulation, as well as his confronting a theory posited by Keynes concerning investment and employment, raising the issue of whether Keynes’s understanding is accurate. The last part of this inquiry deals with Domar’s concerns …

Working Paper No. 06, Towards A Veblenian Theory Of Economic Development: Drawing From Imperial Germany, Cesar Maldonado

Working Papers in Economics

This inquiry summarizes and analyzes Thorstein Veblen’s explanations for Imperial Germany’s rapid industrialization. In his book Imperial Germany and the Industrial Revolution, Thorstein Veblen introduces a comprehensive understanding of processes affecting economic development. Technology transfer, human capital and state intervention are the variables that transformed an agrarian feudal Germany into industrialized Imperial Germany. Instead of developing technology over time by trial and error, Germany just transferred already established technology to their country. Since Germany had no established institution they could set up the most modern technologies. The machine process of the industrial system renders it easy to train workers …

Working Paper No. 36, The Rise Of Marginalism: The Philosophical Foundations Of Neoclassical Economic Thought, Emily Pitkin

Working Papers in Economics

This inquiry examines the works of the early thinkers in marginalist theory and seeks to establish that certain philosophical assumptions about the nature of man led to the development and ultimate ascendance of neoclassical thought in the field of economics. Jeremy Bentham’s key assumption, which he develops in his 1781 work, A Fragment on Government and an Introduction to the Principles of Morals and Legislation, that men are driven by the forces of pain and pleasure led directly to William Stanley Jevons and Carl Menger’s investigation and advancement of utility maximization theory one hundred years after Bentham, in 1871. …

Working Paper No. 32, Canada And The United States: A Comparison Of Their Philosophical Bases, Lorraine M. Hutton

Working Papers in Economics

Americans and Canadians seem similar in many ways; however, their dissimilar historical experiences have shaped very different attitudes and philosophies that underpin their institutions. Canadians promote equality and collective responsibility under a restrained, parliamentary state, whilst the Americans stress self-reliance, individualism and freedom. Canadians embraced the hierarchical structure of the British and French Empires and Americans revolted against all ties to it. What appear to be minor distinctions between the two countries and cultures are actually fundamental philosophies rooted in the past.

An Assessment Of Hydroelectric Feasibility At Colonel Charles D. Maynard Dam In Tucker, Arkansas, Connor Quigley

Economics Undergraduate Honors Theses

The primary purpose of this report is to analyze the economic feasibility of converting the Colonel Charles D. Maynard Lock and Dam to a hydroelectric facility. This report takes a traditional cost-benefit analysis approach and includes a sensitivity and scenario analysis.

Working Paper No. 09, Martin Heidegger: A Compromised Man, Mark Miller

Working Papers in Economics

This inquiry seeks to establish that Martin Heidegger registered as a compromised man in his ethics and philosophy. First, through analyzing Heidegger’s roots in Aristotle and the Pre-­Socratics, this inquiry will introduce Heidegger’s philosophical compatibility with the Nazi Party. After deciphering his rectorial address in 1933 and subsequent actions during his rectorship of the University of Freiburg, this inquiry considers the level of Nazi indoctrination in Heidegger’s work. Finally, this inquiry carefully considers Heidegger’s compromised character through his actions in the post-­‐rectorate phase.

China And Global Imbalances From A View Of Sectorial Reforms, Hiro Ito, Ulrich Volz

Economics Faculty Publications and Presentations

This paper examines the impact of sectorial reforms on current account imbalances, with a special focus on China. In particular, we investigate to what extent reforms pertaining to the financial sector, social protection, and healthcare may contribute to a rebalancing of China’s persistent current account imbalances. Our forecasting results suggest that reforming the financial sector would be a significant contributor to the country’s rebalancing with an effect much larger than that of capital account liberalization. Strengthened provisions of social protection and publicly-funded healthcare are also found to contribute to a rebalancing of the Chinese economy.

The Implications Of Migration Theory For Distributive Justice, Alexander Sager

Philosophy Faculty Publications and Presentations

This paper explores the implications of empirical theories of migration for normative accounts of migration and distributive justice. It examines neo-classical economics, world-systems theory, dual labor market theory, and feminist approaches to migration and contends that neo-classical economic theory in isolation provides an inadequate understanding of migration. Other theories provide a fuller account of how national and global economic, political, and social institutions cause and shape migration flows by actively affecting people's opportunity sets in source countries and by admitting people according to social categories such as class and gender. These empirical theories reveal the causal impact of institutions regulating …

Subreption And Institutional Inquiry: Theoretical Philosophy And Evolutionary Thinking, John B. Hall, Alexander Dunlap

Economics Faculty Publications and Presentations

With this inquiry we respond to William Dugger‘s assertion that ―[s]ubreption is one of the least studied social phenomena of the twentieth century.‖ Our research seeks to fill a gap in the literature by clarifying subreption, and its origins in Philosophy to its importance in social science, and, especially, Institutional Inquiry. We conjecture that Thorstein Veblen borrows form Immanuel Kant‘s understanding of Erschleichung. In this respect, Veblen‘s understanding and use of subreption serves as conduit between its use in Roman law, through Kant‘s understanding, and on to what Veblen later introduces as an approach creatively relied upon by three other, …

Veblen’S Predator And The Great Crisis, John B. Hall, Iciar Dominguez-Lacasa, Jutta Günther

Economics Faculty Publications and Presentations

With this inquiry we attribute cause for the current and “Great Crisis” to Veblen’s predator. After summarizing origins and manifestations of this crisis we juxtapose Veblen’s emphasis upon the predator to other potential causes for crisis and crises. Noted to have emerged when our stock of human knowledge provided for the creation of surplus, Veblen’s predator is presented as capable of metamorphosis and also driving evolution of our capitalistic system: whether this means emerging as the businessman in the “era of the machine,” or the investment banker promoting a financial metaphysics in the current “era of finance.”

A Forensic Analysis Of Global Imbalances, Menzie David Chinn, Barry Eichengreen, Hiro Ito

Economics Faculty Publications and Presentations

We examine whether the behavior of current account balances changed in the years preceding the global crisis of 2008-09, and assess the prospects for global imbalances in the post-crisis period. Changes in the budget balance are an important factor affecting current account balances for deficit countries such as the U.S. and the U.K. The effect of the “saving glut variables” on current account balances has been relatively stable for emerging market countries, suggesting that those factors cannot explain the bulk of their recent current account movements. We also find the 2006-08 period to constitute a structural break for emerging market …

Systems Views Of The Economics Of Sustainable Development, Joshua Hughes

Systems Science Friday Noon Seminar Series

The mainstream economics of the 20th century (and now 21st century) has often failed to predict what will happen--or explain what has happened--in the real world, even with (or because of?) an ever-increasing reliance on quantitative and computational methods. Since the mid-20th century a number of people part of, or closely associated with, the systems community--economists among them--have provided insights about what is wrong with "traditional" economics. Systems science offers a number of alternative methods for understanding economic systems that take heed of these criticisms, especially in the context of sustainable development. Yet, while promising, few of these alternatives …

System Dynamics Implementation Of An Extended Brander And Taylor-Like Easter Island Model, Takuro Uehara, Yoko Nagase, Wayne Wakeland

Complex Systems Faculty Publications and Presentations

We provide a system dynamics implementation of a dynamic ecological economics model. Dynamic economic models are often constrained to use functions, such as the Cobb-Douglas function, chosen “conveniently” to allow for analytic solutions. The C-D function, however, suffers from its fixed elasticity that does not allow for the substitutability between man-made capital and natural capital to change, which is vital for economic sustainability. Using system dynamics removes this constraint and enables more realistic ecological economics models containing functions not amenable to analytic solution. The base model is the natural resource and population growth model developed by Brander and Taylor (1998) …

Innovation, Markets, And Evolution, Mitch Green

Economics Undergraduate Honors Theses

This paper approaches innovation from an evolutionary perspective. Literature spanning a broad range of traditions in economics is considered, to include Institutionalist, Schumpeterian, post-Keynesian, and growth theorists. Key systemic changes are examined in the context of prevailing technological and social institutions. It is argued that expectation-fixing effects such as path-dependence in investment and innovation provide structure to a social network of market institutions that seek to validate money contracts. The institution of money is considered as a center of power in the system and affects the course of innovation. Money as the unit of account becomes the object of …

Thirlwall's Law And Krugman's 45-Degree Rule: Mathematically Identical, Mutually Exclusive, Karl Garbacik

Economics Undergraduate Honors Theses

Thirlwall's Law and the 45-degree rule, originally formulated by Krugman, are radically different interpretations of the same statistical regularity. This statistical regularity is that a country's long-run growth rate will approximate to the ratio of that country's export growth to its import elasticity of demand. Thirlwall's Law falls under a Post-Keynesian framework which is primarily a demand-side model. The 45-degree rule relies on a supply-side interpretation, a result of its neoclassical origins. This thesis seeks to answer two questions. The first is, are the members of the Post-Keynesian and neoclassical communities working on each of these theories aware of the …

Financial Illiteracy: Prevalence, Consequences, And Solutions, Gerald Matasy

Economics Undergraduate Honors Theses

As Americans have become increasingly responsible for their own financial security their ability to make financial decisions in their best interests has certainly grown in importance. The focus of this paper is to determine what role financial literacy plays in making optimal financial decisions and maintaining economic stability. Using mostly research from other studies and some original research, this paper seeks to examine the level of financial literacy among the general population and what the implications are for the general lack of literacy. What I find is that individuals who have lower levels of financial literacy generally make poorer financial …

Working Paper No. 62, Uses Of Abduction In Economic Science, Daniel Urban

Working Papers in Economics

This inquiry considers the meaning of abduction and its uses in Economic Science. Abductive logic is discussed at some length, in order to clarify how it is used in this inquiry. In addition, abduction is traced from its appearances in the writings of pragmatist philosopher Charles Sanders Peirce and how its meaning is later carried on in Thorstein Veblen’s Institutional Economics. Peirce’s influence proves foundational for Veblen’s contributions, as well as for the writings of John Roger Commons. My research suggests that after Commons, Peirce’s influence in economics wanes. Additionally, the use of retroduction in critical realism provides a contemporary …

The Emerging Global Financial Architecture: Tracing And Evaluating New Patterns Of The Trilemma Configuration, Joshua Aizenman, Menzie David Chinn, Hiro Ito

Economics Faculty Publications and Presentations

This paper investigates how the trilemma policy mix affects economic performance in developing countries. We find that greater monetary independence can dampen output volatility, while greater exchange rate stability is associated with greater output volatility, which can be mitigated by reserve accumulation; greater monetary autonomy is associated with higher inflation, while greater exchange rate stability and greater financial openness is linked with lower inflation; pursuit of exchange rate stability can increase output volatility when financial development is at an intermediate stage. Greater financial openness, when accompanied by a high level of financial development, reduces output volatility.

The Impact Of Corruption On The Timing And Mode Of Entry By U.S. Firms In China, Jacob Billings

Economics Undergraduate Honors Theses

Since 1979 when China opened its economic borders, it has seen an influx of foreign direct investment that gradually snowballed into enormous annual inflows of capital. Researchers have taken advantage of this event as an incredibly useful testing ground of theories regarding FDI. Using this new data from China, along with data from countries already open to outside investment, many variables, such as GDP, wage, and distance, have been found to consistently correlate in one way or another to particular aspects of FDI inflow, including amount, location, timing, and type.

One such variable that has had some attention is corruption. …

East Asia And Global Imbalances: Saving, Investment, And Financial Development, Hiro Ito, Menzie David Chinn

Economics Faculty Publications and Presentations

We investigate the role of budget balances, financial development and openness, in the evolution of global imbalances. Financial development – or the lack thereof – has received considerable attention as a possible contributing factor to the development of persistent and expanding current account imbalances. Several observers have argued that the depth and sophistication of US capital markets have caused capital to flow from relatively underdeveloped East Asian financial markets. In this paper, we extend our previous work by examining the effect of different types and aspects of financial development. Our cross-country analysis, encompassing a sample of 19 industrialized countries and …

The Science Of Persuasion In Recent Discourse On T.R. Malthus: An Exercise In The Analysis Of Rhetoric In Economics, Laila Winner

Economics Undergraduate Honors Theses

Of all the dour portraits lining the august halls of Economics, it is that of Thomas Robert Malthus which seems perhaps to scowl the most grimly. Describing an approach or policy as Malthusian in everyday conversation conjures a host of disturbing images, bare fields and squalling babies chief among them. Such allusions provoke even stronger reactions within the discipline Malthus helped to found, ranging from Keynes's fervent championship to the sneering dismissal of Samuelson. Neither the more famous Smith nor Ricardo nor even Marx can claim to have gained in their lives what the comparatively less prolific Reverend did with …

Global Current Account Imbalances: American Fiscal Policy Versus East Asian Savings, Menzie David Chinn, Hiro Ito

Economics Faculty Publications and Presentations

We consider the origins of global current account imbalances. We first discuss how the expansion of the US current account deficit and the decrease in global real interest rates can be reconciled with the widespread view that American expansionary fiscal policy is partly the source of current trends. We then investigate empirically the medium-term determinants of the current account using a model that controls for factors related to institutional development. In addition to the conventional macroeconomic factors, we examine a series of environmental factors, including the degree of financial openness and the extent of legal development. We find that for …

Current Account Balances, Financial Development And Institutions: Assaying The World “Saving Glut”, Menzie David Chinn, Hiro Ito

Economics Faculty Publications and Presentations

We critically assess several of the key assertions underlying the global saving glut hypothesis. First, we investigate whether the behavior of the U.S. current account behavior is anomalous in light of previous industrial country experience. Second, we determine whether East Asian current account balances are predictable using standard macroeconomic variables, augmented with institutional factors. Finally, we investigate whether higher levels of financial development in key East Asian economies would result in smaller current account surpluses. We find that a one percentage-point increase in the budget balance would increase the current account balance by 0.10 to 0.49 percentage-points for industrialized countries, …

An Agent-Based Model Of Trade With Distance-Based Transaction Cost, Kumar Venkat, Wayne W. Wakeland

Complex Systems Faculty Publications and Presentations

This paper describes an application of agent-based modeling to investigate the effect of a distance-based transaction cost on trade. Long-distance trade is rapidly increasing, but may ultimately be constrained by our ability to move material goods between sellers and buyers. Unlike information exchange, trade in material goods is dependent on the price of oil and vulnerable to future scarcities of oil. In addition, there are growing concerns about greenhouse gas emissions from long-distance transportation. Our purpose in this study is to take the first step in understanding the impact of a distance constraint on free global trade using a simple …

Working Paper No. 30, On The Origins Of Laissez-Faire, Thomas Breaden

Working Papers in Economics

This paper traces laissez-faire back to its French roots, and in particular, to its origins as a political philosophy evoking an economic approach. Related to his visit to France in the 1760s and his personal contacts, we suggest that Adam Smith serves as the link between selected French thinkers and what after Smith’s Inquiry would be widely accepted as a quintessentially Anglo-Saxon tradition in economics. Exploring doctrine, we offer linkages between F. Quesnay, A. Turgot, J.J. Rousseau, and Smith’s ideas. Similarities in Smith’s understanding and the French exponents regarding economic activity vis-a- vis a public sector are presented, along with …

Financial Development And Financial Liberalization In Asia: Thresholds, Institutions And The Sequence Of Liberalization, Hiro Ito

Economics Faculty Publications and Presentations

I investigate whether financial openness leads to financial development after controlling for the level of legal/institutional development, and whether trade opening is a precondition for financial opening, focusing on Asia. Utilizing a panel encompassing 87 less developed countries over the period 1980 to 2000, I find that a higher level of financial openness spurs equity market development only if a threshold level of legal development has been attained, a condition prevalent particularly among emerging market Asian countries. On the issue of sequencing, trade openness is found to be a prerequisite for successful inducement of financial development via capital account liberalization.

An Informal Review Of The Crisis Of Global Capitalism: A Letter To George Soros, Martin Zwick

Complex Systems Faculty Publications and Presentations

The author presents a review and critique of George Soros' The Crisis in Global Capiltalism, published by Public Affairs press in 1998, and attempts to draw attention to systems-theoretic ideas that pertain to the arguments proposed by Soros.