Neoclassical Approach Research Articles

Dilemma of Individualism and Freedom in Neoliberal Understanding

There is a clear tension in the neoliberal approach to individualism and freedom. Focusing on the process of individualization and individual self-determination in markets, neoclassical approaches recognize that individuals are committed to social mobility and responsibility to act within market rules on, individual autonomy and the ability to set self-determined goals appear to be limited to market participation. The market is seen as an inherently dynamic system developed over time. According to Hayek, individualism refers to social progress and conformity to society. The aim of this paper is to respectfully examine the apparent inconsistencies and limitations of how individual freedom and choice have been conceptualized by neoliberal thinkers, through an analysis of the works of Hayek and Friedman. Neoliberal policies articulate the notion of free will and question the definition of freedom from a purely economic perspective. By further examining these nuances, the study hopes to reflect on the personal and societal political implications associated with neoliberalism’s more limited understanding of self-government and voluntarism. Finally, an examination of balanced perspectives can add to the ongoing discussion on how best to organize social policies that maximize individual dignity and collective well-being in the long run at in a constructive manner.

A Classification and Interpretation of Methodological Approaches to Pursue Natural Capital Valuation in Forest Research

This paper reviews natural capital (NC) valuation approaches in the context of woodland, forest, and riparian ecosystems, emphasising the need for participatory methods to take priority over neoclassical economics approaches. Focusing on research carried out in Scotland, the study analyses findings according to a classification of natural capital initiatives that we have developed, building on ideas proposed by the UK ENCA initiative, a guideline proposed to help researchers and practitioners understand NC and take it into account in valuation, decision-making and policy. We have found that landscape-scale initiatives that address the relationships between people and place to inform value and decision-making beyond the economic (monetary) benefits generated by ecosystem services (ES) are becoming popular. For instance, recent methods employed to capture stakeholders’ non-utilitarian preferences include the use of participatory GIS mapping, scenario planning, and other participatory methods to identify, explore and quantify less tangible cultural ecosystem services (CES). The review shows that many studies provide information relevant to the formulation of a place-based NC approach, working towards the integration of contextual and relational values into land management decisions to help formulate management strategies that maximise ES delivery. Conversely, we have not found evidence of the integration of shared values arising from an eco-centric perspective of nature valuation into the more classical, instrumental value lens. Such an approach would help inform broader, overarching aspects of woodland and forest management that may foster more effective conservation and help to manage conflicts.

A pact of iron? China’s deepening of the Sino-Russian partnership

To characterize the bilateral partnership, this paper applies the neoclassical geopolitics approach. We first measure China’s potential, and the perception of Chinese geopolitical agents, and placed within the international distribution of capabilities. This is followed by our analytical results on Sino-Russian relations in the spheres of potential, strategic culture, and geopolitical design. The paper concludes that while there is a strategic necessity for China to strengthen the partnership, the Sino-Russian relations are unlikely transforming into a traditional military alliance, due to Beijing’s self-interest to maintain trade relations with Western countries, to avoid being tainted by Russia’s deteriorating reputation, to grasp its goal of multipolar world order, and to spread positive narratives of China as a new global leader. The Sino-Russo relations has been shifting its nature from “marriage of convenience” to “marriage who pretend to be a good couple.”

Beyond Rationality: Exploring Neoclassical, Behavioral, and Austrian Approaches to Finance

Beyond Rationality: Exploring Neoclassical, Behavioral, and Austrian Approaches to Finance

Correction to: Gender gap and the labour market structure: A neoclassical approach for the case of Turkiye

Correction to: Gender gap and the labour market structure: A neoclassical approach for the case of Turkiye

Relationship between capital accumulation and production growth in the interpretation of the R. Solow's model of economic growth

The study of economic growth factors is of greatest interest in modern economic science. The level of economic development is the key to solving social problems and improving the quality of life of the population. This study examines the impact of capital accumulation on economic growth. The author uses a neoclassical approach to the analysis of economic growth factors. Capital accumulation in the main sectors of the economy – mining, manufacturing, agriculture – is considered as a factor indicator. The main hypothesis of the study is that currently, the accumulation of fixed capital in important sectors of the Russian economy is not enough to significantly increase labor productivity and subsequent economic growth. This requires not only a qualitative, but also a quantitative assessment of the capital accumulation factor. Based on the results of the study, conclusions of practical importance were drawn. Firstly, an increase in capital per 1 worker by 1% leads to an increase in labor productivity by more than 1%, that is, the growth in labor productivity outpaces the growth in capital per 1 worker. Consequently, the capital-labor ratio can be considered as an important factor of economic growth. Secondly, a negative factor should be considered the lag in the pace of production renewal from the pace of withdrawal of fixed assets in industry and agriculture in some regions of Russia, which dictates the need to implement special programs in certain regions of Russia to intensify the development of manufacturing and agriculture. Thirdly, increasing the rate of capital growth per 1 worker for higher growth of labor productivity is advisable only in the manufacturing industry and agriculture, which is associated with the currently lower rates of capital growth per 1 worker in these industries compared to the mining industry.

VALUE, HISTORICITY, AND ECONOMIC EPISTEMOLOGY: AN ARCHAEOLOGY OF ECONOMIC SCIENCE, ALAIN HERSCOVICI

Value, Historicity, and Economic Epistemology: An Archaeology of Economic Science by Alain Herscovici presents a unique perspective on the History of Economic Thought (het). What distinguishes this book is its in-depth examination of epistemological considerations and their practical implications for key aspects of het. Sheila Dow, in her foreword, echoes the author’s focus on differentiating between methodology —specific to a particular paradigm— and epistemology, which analyzes the succession of paradigms over time. The het is intrinsically linked with epistemology, the central theme of this book, although it occasionally grapples with issues of meta-epistemology. Herscovici meticulously traces the historical evolution of economic thought across epochs, utilizing the concept of “episteme” or the fundamental framework of understanding. The book adeptly discerns shifts and disruptions in epistemology that have influenced the course of economic thought over time. Through this exploration, it sheds light on a range of heterodox perspectives, contrasting them with neoclassical and Hayekian approaches...

Grounding Intelligibility, Safeguarding Mystery: A Neoclassical Reading of Ernan McMullin’s Legacy

This paper suggests a “neoclassical” reading of Ernan McMullin’s thought on science and theology. McMullin’s Augustinian convictions on God and the God–world relation coincide with those of some prominent scholars from two renowned schools of neo-scholastic philosophy of the twentieth century in Louvain and Milan. The school of Milan, thanks to the work of some disciples of its leading figure, Amato Masnovo, developed a neoclassical version of neo-scholasticism, articulating a fundamental theory of knowledge, as well as an essential, rigorous path to God. We recall the main tenets of a neoclassical path to God, and we interpret this path as a possible contribution to the science–theology dialogue, in line with McMullin’s Augustinism. A neoclassical approach to science and theology, with its rediscovery and reactualization of some ideas of classic philosophy in an interdisciplinary context, grounds the intelligibility of the universe and safeguards its mystery.

Gender gap and the labour market structure: A neoclassical approach for the case of Turkiye

Gender gap and the labour market structure: A neoclassical approach for the case of Turkiye

François Perroux on plans coordination and planning

Soon after WWII, France adopted a form of economic planning which became afterwards known as “indicative planning”. François Perroux paid great attention to French planning and linked his reflections on planning to both his criticism of neoclassical approach and his proposal of some new theoretical tools for economic analysis. Perroux’s critiques of neoclassical economics involved both the kind of assumptions adopted and the neglect of some aspects that for him were crucial to economic analysis: the differences and inequalities among agents, the presence of economic and social groups, the role of power, and state activity. To contrast and overcome those shortcomings, Perroux elaborated some conceptual tools that are the pillars of his economic analysis. Main aim of this paper is to inquire into Perroux’s contribution to the debate on economic planning that rose in the light of the French experience. The focus is especially on the Fourth Plan which Perroux took particularly into consideration and critically evaluated.

Баланс интересов внешних и внутренних бенефициаров в условиях «неполных контрактов» ресурсной экономики

This article examines the uncertainties arising from agent interactions in interregional resource-intensive markets, particularly those prevalent in northern regions, and explores factors undermining their effectiveness Given these circumstances, the study aims to establish an optimal balance of interests between external and internal beneficiaries by taking into account interests, as well as reducing transaction uncertainty by considering their interests and mitigating transaction uncertainty through the optimization of market regulators in the context of interregional resource-intensive markets typical of northern regions. The analysis reveals that the condition of a single market equilibrium is compromised due to the influence of exogenous factors and the endogenous formation of institutional mechanisms that coordinate agent actions amid uncertain collaborations. Contrary to the neoclassical approach, which focuses on competitive pricing without altering the market structure, an alternative perspective posits that spatial externalities induce endogenous mechanisms characteristic of Chamberlin-type market structures. The study expands the understanding of uncertainty causes within the theory of incomplete contracts, incorporating social system costs into transaction costs in line with the neo-institutional concept. This conceptual framework enables the exploration of spatial entities as meso-economic systems, with a specific emphasis on the organizational and geographical characteristics of northern territories. The research evaluates four institutional zones governing economic management practices in northern regions. Through competence enhancement and optimization of market regulator design, the study demonstrates the feasibility of achieving a balance of interests between external and internal beneficiaries by strengthening institutional capital, thereby reducing social system costs. The proposed system of organizational and institutional measures enhances local institutional practices within the existing institutional matrix without violating antimonopoly legislation, as its focus is on restoring competitive conditions and reducing the costs of operating the social system.

Posner Meets Hayek: The Elements of an Austrian Law & Economics Research Program

Abstract To date, Friedrich Hayek is the only winner of the Nobel Prize in Economics who also holds a law degree. The role of law is central to Hayek’s work and prominent in the research program of the Austrian School of Economics generally. Although Hayek’s contributions to jurisprudence are manifest, as are the influence of his economics ideas, his influence on the field of law and economics has remained modest. This lecture, delivered as the Keynote Lecture at the 2023 Asian Law & Economics Association Annual Meeting, provides an introduction to the fundamentals of an Austrian Law & Economics research program in contrast to the mainstream, Chicago-school research program that has dominated the field since its early history. Compared to the neoclassical approach, Austrian thinking provides a more insightful approach to many of the key concepts generally associated with the economic analysis of law: the nature and success of the common law as a system of law, the importance of stability and simple rules in the law, and the strong preference for private ordering via contract, personal autonomy, and voluntary exchange exhibited in the common law. I identify and briefly describe six key distinguishing characteristics of the Austrian school that distinguishes it from neoclassical law and economics: (1) Methodological individualism, (2) Utility and Costs are subjective, (3) the division of knowledge, (4) spontaneous order, (5) competition as a discovery procedure, and (6) the nature of economic equilibrium. I will also highlight some of the ways in which examining law and economics through an Austrian framework provides valuable insights about law and economics.

Convergence in transport and ICT infrastructure: Evidence of EU member states

While countries' social and economic well-being depends on various factors, recent research emphasises the importance of transport and ICT infrastructure. To reduce the welfare differences among EU countries, the European Commission and governments have to ensure the convergence of this infrastructure as well. Previous studies have shown that convergence is taking place at the national level, however the situation at the regional level still needs to be determined. In light of this, the study examines transport and ICT infrastructure convergence in EU member states and NUTS 2 regions at different periods. The research methodology is based on the neoclassical approach of convergence, i.e., β-convergence model presented by Barro and Sala-i-Martin (1992). This approach is deemed most appropriate for determining whether the disparities in terms of infrastructure among EU members and regions are diminishing. Research findings present clear evidence of absolute β-convergence in infrastructure development across EU member states and NUTS 2 regions. Strong evidence of transport convergence is identified among EU member states and among NUTS 2 regions, however, it is observed only in one out of the three types of infrastructure. In contrast, the robust evidence of ICT infrastructure convergence is prominent across EU countries and NUTS 2 regions, showcasing substantial reductions in disparities.

RETURN ON ASSETS IN FARMS AND THE CONTEXT OF ECONOMIC RATIONALITY IN POLAND AND SELECTED EUROPEAN UNION COUNTRIES

The main aim of the article is to evaluate the rate of return on assets in farms from the perspective of economic rationality. The research concerned farms covered by the FADN system in Poland and 25 European Union countries. The temporal scope of the analyses referred to the period 2010-2020. As a general rule, in the EU countries, the market rate of return is higher compared to that achieved on average by farms. This is especially true for smaller farms. From the perspective of the neoclassical approach, this would indicate an irrational operation. Farmers implement a multi-criteria objective function. In doing so, they agree to achieve relatively lower agricultural income in exchange for diversification of risk, an increase in asset value, or meeting household needs (not only consumption). Agricultural producers become more wealthy due to the increase in land prices. Hence, from this perspective, farmers’ actions could be seen as rational, which is more in line with the classical view in economic theory, where the aim of subjects to maximize wealth by units was emphasized. Therefore, the achievement of low rates of return by agricultural producers in a situation where agricultural income does not provide a fee for the farm family members’ own labor should not be evaluated unequivocally as a manifestation of a lack of rationality.

Specifics of consumer behavior in modern Russia

The article discusses the change in consumer behavior in the conditions of the epidemiological situation associated with the spread of the Covid-19 virus, as well as due to the aggravation of the international political situation caused by the start of a special military operation of the Russia in February 2022. These circumstances demonstrate the relevance of the study. The main purpose of the article is to identify the behavior features of the national consumer in the conditions of changing economic and foreign policy situation at the present stage. Particular attention is paid to the concept consideration of “consumer behavior” from the point of view of classical and neoclassical approaches. The article analyzes the behavior of consumers and examines the factors determining its change. The specifics of consumer behavior in the period from 2020 to 2023 are revealed. The importance of studying this topic at the present time is substantiated, as well as possible directions for changing consumer behavior and the work specifics of Russian companies in modern conditions are determined.

Liberty and the neoclassical fallacy

Does liberty matter for economics? To address this question, I distinguish among three different types of liberty: Adam Smith’s, the neoclassical, and the so-called “classical liberal.” They differ in that the neoclassical and the classical liberal perspectives presume the existence, typically without noting it, of the four conditions that comprise the foundation of liberty, namely, secure property rights, enforcement of contracts, absence of government predation, and security. In contrast, Adam Smith sought to explain these foundations. In this article—an extraliterary review of one of the central themes of Acemoglu and Robinson (2019)—I draw the implications of Smith’s approach, and I explain why neoclassical economics—which takes the foundations of liberty as given—is unable to understand the work of Smith on this topic and, hence, on economic development. I also show that the neoclassical and the classical liberal approaches rest on a foundation of magic: they both presume the foundational conditions just noted but fail to explain how they arise. Put simply, the neoclassical approach has no explanation for the origin of liberty or of the mechanisms that sustain it. If markets require the four conditions of the foundation of liberty, then a complete explanation of the origin and development of markets must include an explanation of how these conditions come to hold. The Smithian economic perspective is especially important for today’s developing countries, most of which, at best, struggle to create the four foundational assumptions of liberty.

Import substitution today: analysis methodology

Subject. The context determining state regulatory measures with regard to foreign trade depends on a number of economic, political, social, and legal factors. At the moment, they are becoming the basis for the state economic policy, which is defined as an import substitution policy (with regard to international economic ties). Objectives. The purpose of our study was to substantiate the methodological approach to the analysis of the causes and consequences of the current import substitution policy in Russia, and the way the state affected the results. Methodology. Our hypothesis is that the import substitution processes taking place in Russia since the late 1990s are a reaction of the economic system (including the state foreign economic policy) to external shocks rather than a deliberate policy of the government aimed at promoting ineffective industries of the national economy competing with foreign imports on the national market. In our study, we used the method of empirical observations based on analytical, expert, and statistical data. Results. The study substantiates the hypothesis that the import substitution policy conducted in Russia since the 1990s is a political and economic reaction to external shocks of various origin and nature, which caused an imbalance in the micro- and macroeconomic relationships of the country. The article considers the specific features of three stages of import substitution in Russia: 1998-2003, 2014-2021, and from 2022 until now. Discussion. The obtained results are compared with the conclusions made by researchers who analysed the import substitution processes in Russia in the said time periods using the neoclassical approach and made forecasts as to the prospects of technological development. Conclusions. The conducted analysis allowed us to make a conclusion that import substitution can be defined as a result of external shocks, i.e. the impact of external factors (economic, political, etc.) on the relationships established within the economic system resulting in the destruction of such relationships. Essential aspects of import substitution include the content aspect, the role of the state, the role of the global market, the conditions created for import substitution, and the technological aspect. We also analysed the specifics of import substitution in Russia during various stages, from 1998 up to the present moment.

Effect of Trade Openness and Agriculture on Tax Revenue Performance in Kenya

Purpose: Taxes play a critical role for most governments around the world in funding investments in capital, infrastructure and the delivery of essential services. The study therefore sought to examine the effect of trade openness and agriculture on tax revenue performance in Kenya.
 Methodology: The study adopted correlational research design, Vector Error Correction Model (VECM) mechanism and Granger causality test to establish the relationship between the study variables. The choice of the VECM was influenced by its ability to estimate both short run and long run relationships. The theoretical framework of the study followed Heller’s neoclassical maximization utility approach. Annual time series data for the study were sourced from the World Bank Development Indicators for the period 1980-2020.
 Results: The study findings established that in the long-run agriculture share (-0.64, t-statistics = 14.57) and trade openness (-0.08, t-statistics = 3.88) have negative and significant effect on tax revenue performance in Kenya. The Pairwise Granger Causality test results indicated unidirectional causality running from tax revenue performance to trade openness. This suggests that tax rates have effect on trade openness in Kenya.
 Unique Contribution to Theory, Policy and Practice: The study adds to literature by proving the Arthur’s Laffer curve theory which advocates for lowering tax rates in order to boost productivity and encourage expansion of corporation. The findings of the study may provide the National Treasury with foundation for policy formulation and analytical framework for estimating the associated tax revenue with variables under consideration in this study. The study may be of importance to KRA in determining appropriate tax rates that are favorable in boosting revenue mobilization.

From railroad imperialism to neoliberal reprimarization: Lessons from regime-shifts in the Global Soybean Complex

Soybeans are ubiquitous in the global food system. As a major forest risk commodity, they are also at the heart of efforts to untangle the dynamics of land use change and associated impacts resulting from distant drivers. However, land system science has so far largely ignored the historically and socially embedded nature of these entanglements. This results in snapshot-like representations relying on neoclassical approaches to production and consumption. Here, we trace the evolution of the global soybean complex (GSC) since the late nineteenth century. We analyze how in the context of external developments soybeans have been channeled into different provisioning systems. This has occurred in a series of socio-ecological fixes, facilitated by socio-technological innovations and public sector interventions, motivated by different impediments to capital accumulation. Today, several emerging socio-technological practices promise to transform the GSC towards sustainability. We argue that the contemporary GSC inherits defining properties from the past, particularly the postwar strategy of using industrial animal farming to add value to surplus grains and oilseeds. The expanding GSC is therefore not merely a result of increasing demand, but rather the outcome of different provisioning systems’ continued dependence on soybeans. Future transitions will depend on public interventions and the influence of vested interest in current socio-metabolic patterns.

National Innovation Biome (NIB): A novel conceptualization for innovation development at the national level

This paper aims to investigate the similarities between the development of the “innovation process” at the national level and the evolution of a “natural biome,” and subsequently introduce a new metaphor called the “National Innovation Biome.” To this end, the metaphor research methodology has been used based on its eight principles of optimality. In this study, the national innovation biome refers to a set of ecosystems, such as technological, industrial, knowledge, and entrepreneurial, that operate within the same institutional settings of a country. Their functional result is innovation development at the national level. This novel metaphor offers several theoretical, empirical, and policy implications. These include developing a framework to analyze the multi-ecosystem space of each country based on the diversity of different sectors and technologies, integrating neoclassical and evolutionary approaches to innovation policy, and reducing the emphasis on boundaries between innovation activities in different countries. Furthermore, in comparison with existing metaphors, the new metaphor is more pertinent to the context of developing countries. It can provide an apt analytical framework to converge innovation policies and integrate them with industrial and technological innovations.