Contemporary Economic Theory Research Articles

A South African national economic and environmental policyframework1

Most contemporary economic theories upon which conventional national accounting is based regard man‐made assets as productive capital to be depreciated against the value of production. Such production, without replenishment or renewal of the asset or capital stock, is not sustainable. Natural resource assets, however, are not valued in the same way. There is no accounting mechanism to reflect the decrease in potential future pro duction as the resource diminishes or deteriorates. In 1993, the United Nations adopted its guidelines for a ‘System of Integrated Environmental and Economic Accounting’ (SEEA), which allows for the adjustment of the System of National Accounts (SNA) for natural asset stripping and degradation, providing a format for national accounting which assesses the viability and sustainability of economic growth. The concept of an SEEA for South Africa was pursued in 1994 as a pilot study. The framework to be devel oped was termed the South African National Economic Environmental Planning (SANEEP) model. The framework can be used to predict the environmental impact, in terms of natural resource use and degradation, of economic growth, both nationally and at the sectoral level. In addition, it can be used to test the sectoral economic impact, and thus the desirability of certain types of environmental economic instruments such as pol lution taxes, or the imposition of royalties on mineral extraction. Hence, the SANEEP framework has the potential to become a broad‐based, integrated environmental and economic planning tool. This article describes the SANEEP model, its information requirements and applications.

What is Economic Sustainability?

It is argued in this paper that sustainability is not a major concern of contemporary economic theory even though the roots of the concept dig deep into the development literature and into nineteenth century Classical economics (sections 1 and 2). Contemporary Neo-Classical economic theory is built upon utilitarian ethics and is not at all communitarian except to the extent that an economic theory of community can be built upon an utilitarian ethics (section 3). Contrary to what some NeoClassical economists argue, it is possible to give a relatively precise definition of sustainable economic development. What has not been established yet is whether all alleged properties of sustainable economic development are non-contradictory. In other words, the economic growth literature has not provided us with an ideal model of sustainable development yet even though the latter's main characteristics are economic (section 4). Non-economists have great difficulty in accepting some of the economic methodology when applied to sustainability. The fault lies not in the economic methodology itself but rather in the assertion—made by some economists—that sustainability is only an economic problem (section S and 6). Economic-ecological sustainability should be the central and pragmatic concern for public policy even though it will necessarily have social implications. Widening sustainability to social and moral concerns can only hasten its demise as a practical ideology (section 7).

The fountain of privilege: political foundations of markets in Old Regime France and England

This text applies contemporary economic and political theory to answer long-standing historical questions about modernization. It contrasts political stability in Georgian England with the collapse of the Old Regime in France. Why did a century of economic expansion rupture France's political foundations while leaving those of Britain intact? Comparing the political and financial institutions of the two states, Root argues that the French monarchy's tight control of markets created unresolvable social conflicts whereas England's broader power base permitted the wider distribution of economic favours, resulting in more flexible and efficient markets.

Aesthetics and Economics in A Florentine Tragedy

Here I would like to take a closer look at how Wilde's play — a celebration, however tongue-in-cheek, of market society — converged with contemporary economic and aesthetic theory, for both disciplines, economics and aesthetics, were undergoing transformations in the fin de siecle that would have momentous effects in the twentieth century.

Two Sherman Act Section 1 Dilemmas: Parallel Pricing, the Oligopoly Problem, and Contemporary Economic Theory

Two Sherman Act Section 1 Dilemmas: Parallel Pricing, the Oligopoly Problem, and Contemporary Economic Theory

Beyond "The Original Affluent Society": A Culturalist Reformulation [and Comments and Reply

Beyond "The Original Affluent Society": A Culturalist Reformulation [and Comments and Reply

Background to a Mathematical Model of Price Reform in China

China is currently undergoing an extensive economic reform. The reform has provided the economists with an excellent opportunity to compare and analyze the centrally planned economy and the market economy in regard to their merits and shortcomings. Most of the analytical tools in modern economics stem from the market economy of the Western world to which many top economists have dedicated so much and on which they have developed valuable theories and practical experience over the past century. While identifying and summarizing the internal rules of the market economy, these economists also pointed out the shortcomings and faults of such an economic model. Obviously there is a big difference in the cultural background and social and economic structures between China and the West. Mechanically applying some conclusions or analysis from contemporary economic theory to explain what is happening in today's economy in China will surely lead nowhere. Economists should never overlook one fact: One-third of the wo...

Institutional Economics and Consumption

Conventional economics has given major attention to the production process. Consumption has been given a rather minor position in the classic perception of the economy. The institutional interpretation of the economy has given consumption greater significance. As a matter of fact the first major work in what is recognized to be institutional economics, Thorstein Veblen’s Theory of the Leisure Class lends itself readily to a useful analysis of the consumption process, something of which contemporary marketing science is only too well aware. The shadow of Jeremy Bentham hangs heavily over all of this traditional consumption theory, even that of classical economics, if we mean by the statement the spirit as well as the disembodied formal ideas. The utilitarian interpretation of human consumption behavior as a quest to maximize pleasant feelings and minimize the unpleasant has been construed as rational behavior in contemporary economic theory.

Market Segmentation, Product Differentiation, and Marketing Strategy

Despite the pervasive use of the terms “market segmentation” and “product differentiation,” there has been and continues to be considerable misunderstanding about their meaning and use. The authors attempt to lessen the confusion by the use of traditional and contemporary economic theory and product preference maps.

Market Segmentation, Product Differentiation, and Marketing Strategy

Despite the pervasive use of the terms “market segmentation” and “product differentiation,” there has been and continues to be considerable misunderstanding about their meaning and use. The authors attempt to lessen the confusion by the use of traditional and contemporary economic theory and product preference maps.

Nature in Economic Theories: Hans Immler Traces Recognition of the Environment—and Its Neglect—in Various Classics

Abstract. Labor and capital are usually considered as the primary factors of production, the costs of which are of utmost importance. In contrast, nature (including all natural resources), as the essential third factor, is disregarded. She is generally assumed to be always available, self‐regenerating, and to be exploited without long‐term costs. In other words, she is more or less viewed as a constant. Hans Immler's new treatise represents an important contribution in that he emphasizes the role and function of the natural environment, and its neglect, in the formulation of theories of value and their long‐term consequences on contemporary economic theories and on the person and society. This essay traces Immler's evaluation with extensive quotations—especially with regard to Physiocracy and the classical economists— of nature's role and function, or their neglect, in the formulation of theories of value through the writings of Aristotle, St. Thomas Aquinas, William Petty, John Locke, Adam Smith, David Ricardo, Karl Marx, and others—all dealt with in Part 1 of his book—and Francois Quesnay and the Physiocrats—the topic of Part 2.

V. I. Lenin on the Dynamics of Reproduction and the Rates of the USSR's Economic Development

The Leninist legacy on the theory of reproduction contains the methodological approach to the solution of many problems in contemporary economic theory and practice. One such problem, which is becoming more and more important today, is the dynamics of reproduction and the factors of economic development.

Pesch and his Comtemporaries: Nationalokonomie Vs. Contemporary Economic Theories∗

Pesch and his Comtemporaries: Nationalokonomie Vs. Contemporary Economic Theories^∗

Toward a Theory of Bargaining: An Experimental Study in Economics

Contemporary economic theories of bargaining depend on aspects of the bargainers' preferences that are difficult to observe. This makes these theories difficult to test in natural environments. It has proved possible, however, to design experiments to test these theories in a controlled, laboratory environment. The results of these experiments reveal shortcomings and incompleteness in the descriptive power of currently available theories of bargaining. However, these results also suggest important regularities in bargaining behavior. Together with recent theoretical developments, these results suggest some directions in which a more descriptively powerful theory of bargaining might be developed.

Economic Idylls and Pastoral Realities: The “Trickster Economy” in the Kingdom of Naples

Traditional European values of noncapitalist wealth preferred “rent to profit, security to risk, tradition to innovation, and, in terms of personal goals, gentility to entrepreneurial skill and renown.” Both in the dynamic, expansive sector of the international economy and in marginal, “retrograde” economies, nonpecuniary values based upon kin, custom, religion, law, and politics openly contradicted the utilitarian assumptions of our contemporary economic theory, spurned reinvestment, and worked against development. How can we balance such premodern conceptions with economic forces that may have been imperfectly understood or not even perceived and, at the same time, give both early modern rationale and economic rationality a place in our descriptions of the old order in Europe? In other words, how can we account for the role of culture in economic decision making?

Classical foundations of the contemporary economic theory of non-renewable resources

Classical foundations of the contemporary economic theory of non-renewable resources

Externality, efficiency and the pareto principle

This paper discusses the nature of, and relation between, the concepts of Externality and Pareto-Efficiency. The importance of these concepts in economic theory needs no introduction. The relevance of this analysis to ‘the law’ is essentially two-fold: 1. In so far as the economic analysis of the law depends upon such concepts. 2. In so far as the legal and institutional framework is often instrumental in creating what has been termed ‘market failure’ and that changes in that framework are often proposed as remedies. Coase’s seminal paper-1 developed in detail the relation between externality and the legal and institutional framework and a considerable body of literature has developed since that time. These relations are therefore not dwelt upon here, the concern being to examine the basic concepts. Morgenstern noted that Pareto Optimality was: ‘a basic concept of contemporary economic theory which has not been sufficiently explored’.2 It is argued here that different conceptions of Pareto Optimality (often implicit) are instrumental in generating different theoretical structures and different policy conclusions;3 inadequate concepts can very easily generate misleading policy prescription. It is frequently argued that a separation can be made between the positive and normative parts of theory; the ‘New’ Welfare Economics sought to build a theoretical structure from ‘minimal’ basic value judgments which were then conjoined with positive theory to provide policy recommendations. It is argued here that this is incorrect and that additional or more complex value judgments must always be made; the classical Pareto principle per se is seen to be fundamentally inoperable. The approach used is to examine the writings of the Pigovian, Paretian and so called neo-institutionahsts on ‘Externality’ with the purpose of defining, comparing, contrasting and criticizing their concepts of ‘optimality’ and ‘externality.’ Section II discusses the neo-classical concept of externality and relates it to the concept of Pareto Optimality; III examines the status of the classical Pareto principle; IV introduces the neo-institutionalist analysis of Externality; V the neoinstitutionalist concept of ‘Objective Cost’ and VI draws together the conclusions, focusing in particular upon the implications of the analysis for the practical approach to policy.

Classical foundations of the contemporary economic theory of non-renewable resources

There exists a formalized and well integrated neoclassical theory of the economics of non-renewable resources. While the classical economists did not deal with non-renewable resources as such, many of them did discuss the economics of the mining industry or of the mine. This paper reviews the theoretical aspects of the contemporary theory of the economics of non-renewable resources and contrasts them with the less formal treatment given by the classical economists. As well as affording a critical review of the classical literature this comparison indicates areas of the contemporary theory which need to be reassessed.

On the Origin of the Notion of "Intertemporal Equilibrium"

A striking feature of contemporary economic theory is the widespread use of the notion of intertemporal equilibrium, which consists of analysing short-period positions of a market economy in sequence over time.' This procedure is customarily regarded as a formalization of the notion of equilibrium adopted by Walras (see, for example, Grandmont, 1977, p. 535). Many would also claim that it was nascent in the work of Bohm-Bawerk and Wicksell. In the modern literature on general equilibrium theory, though historical sketches are rare, the names of Malinvaud, Arrow and Debreu are associated with completing the task of formalization which had been begun by the leading writers of the Swedish school and, in England, by Hicks (see Koopmans, 1957, p. 114 and Grandmont, 1977, p. 536). But in the entire period over which this formalization was undertaken, no fundamental changes in the notion of equilibrium are generally believed to have taken place. In this note it will be argued that this characterization of the development and role of the notion of intertemporal equilibrium is mistaken. Significant original developments, involving changes in the notion of equilibrium, took place in the 1920s and 1930s. It will be argued that to the three names commonly associated with developments in this period (Lindahl, Myrdal and Hicks) must be added the name of Hayek. His role in the origin of the notion of intertemporal equilibrium seems not to have been widely appreciated. Finally, it will be shown that the chief impetus towards the formulation of this notion of equilibrium resided in a growing realization among these writers, simultaneously though not entirely independently, that if the demand and supply approach to the theory of capital and interest was to be retained something would have to be done to free it from the bounds imposed by its need to work in terms of a quantity of capital.

Underdevelopment, dependence, and integration: the politics of regionalism in the Third World

Most cases of regional economic integration are among Third World countries, yet research in this field has been dominated by theory based on the European experience. The politics of integration among underdeveloped countries can be better understood within the framework of a theory designed to fit conditions in those regions. Contemporary economic theory provides a basis for such a theory. A successful integration scheme requires a high degree of political cooperation. The problem is that the type of integration scheme most likely to contribute to development is the most difficult to achieve. On the basis of the distribution of the costs and benefits of integration, the policy positions of national and sub-national actors can be predicted on a broad range of integrative measures. The ultimate success of integration depends on the ability of relevant actors to negotiate coalitions in support of policies which will contribute to the development of the region as a whole and which will assure an acceptable distribution of these benefits within the region.