Neoclassical Model Research Articles

Is tourism specialisation a trap for economic growth? The case of the Italian regions

ABSTRACT Tourism activity is a pivotal driver of global economic growth in an era of globalisation. Yet, its ecological footprints call for urgent sustainable practices. This paper enriches intricate interconnections between tourism, economic growth, and sustainability. Novel insights bridge gaps in understanding the effects of domestic and international tourism, regional heterogeneities, and spill-over effects, focusing on Italian regions (2004–2019). Based on a new neoclassical model, this study integrates key indicators beyond Gross Domestic Product and physical capital, encompassing sustainability (renewable energy) and human capital within the KLEM (Capital, Labour, Energy, Materials) specification. These frameworks assess multifaceted dynamics and raise questions about whether high tourism specialisation can lead to a trap for economic growth, development and, ultimately, socio-economic inequalities. Significantly, the research uncovers notable regional heterogeneities, and spill-over effects, shedding light on distinct economic trajectories and challenges, triggering the pursuit of resilience strategies. By highlighting intricate tourism-economy-sustainability connections, this study advances sustainable tourism understanding, urging a delicate balance between tourism's economic benefits and ecosystem concerns. It emphasises the need for eco-conscious practices and economic diversification to ensure harmonious development, aligning with the SDG agenda (UN, 2024).

The Labour Market for Immigrants: Evidence from Data

This article verifies how regular migrants are inserted into the labour markets of receiving countries. The analysis will be made with reference to the position of neo-classical economists relating to the insertion of immigrants in the labour markets of host countries. Reference will also be made to existing data on the dynamics of the integration of authorized migrants in the labour force of OECD and EU countries.

Corruption and emigration from the Western Balkans: evidence from a dynamic system GMM model (2012-2022)

According to neoclassical models, migration takes place when there is a strong probability that individuals will recoup their human capital investments. As a result, workers typically move from low-income to high-income areas and the larger the expected income gap between areas, the higher the number of migrants. In countries where corruption is endemic, jobs are often secured through political connections and bribes. This will lead to a higher unemployment level as well as to a lower return to human capital. Consequently, a significant proportion of the population considers emigration as the only path to succeed. The present study is focused on the impact of corruption on emigration from six Western Balkan countries. A System Generalized Method of Moments is estimated to analyze migrant stocks in 28 receiving countries during the period from 2012 to 2022. We suggest that corruption can directly influence migration stocks in receiving countries.

Substitution: On the Animating Spirit of Economic Rationality

The term ‘substitution’, given minimal attention in thinking, became important in modern logic, but its treatment is highly technical. After a short review of its conceptual-historical background, the article discusses two important contemporary social and cultural theorists of substitution, Roberto Calasso and Michel Serres. It then turns to William Stanley Jevons, who first took up Boole’s logic, formulated the principle ‘substitution of similars’, the presumed heart of reasoning itself, constructed the first computer, and was a founder of neoclassical economics. The coincidence of these innovations in Jevons, through ‘substitution’, captures the way the modern world was set on its current trajectory, progressing towards a ‘substitution society’. The article concludes that as the key values of human life cannot be substituted, substitution as a general principle applied to human existence is absurd; economic theory, however, as shown in the ideas of Jevons, is founded on the exclusion of such genuine and meaningful concerns.

ADAM SMITH’S THEORY OF VALUE AND THE FALLING RATE OF PROFIT: UNCOMMON CONCEPTIONS AND COMMON MISCONCEPTIONS

Smith’s theory of value and distribution, which emphasizes labor time as the determinant of prices, has been widely misunderstood. Ricardo misinterpreted it as relevant only to primitive societies, while Marx inaccurately aligned it with his own labor theory of value. In reality, Smith’s perspective oscillates between a labor-based and a labor-commanded approach to relative prices, intended for modern economies. Neoclassical economists further distorted Smith’s views by incorporating utility theory. Moreover, while Smith is often linked to the theory of a falling rate of profit due to competition, he actually attributed it to rising capital intensity. Contrary to the belief that Smith was a staunch advocate of free markets, he supported reasonable government intervention.

Paradojas dialécticas del modelo de competencia perfecta de la teoría económica neoclásica

Neoclassical economic theory holds, with apparent certainty, that the model of perfect competition is an idealized form of real markets. Although difficult to find, it is of enormous importance as a scientific concept and as a guide to practice. In this article we propose that this statement is partially incorrect. Neither is perfect competition an idealized form of real markets, nor can it serve as an adequate guide for an economic policy on the ordering of markets. Instead, perfect competition and other similar concepts are topological variants of spontaneous order. From the two previous considerations, a set of paradoxes and inconsistencies derive that, however, do not totally invalidate the search for transcendental concepts, if we correctly locate their place in the social sciences.

FORMALISM OF PHENOMENOLOGICAL THEORY IN MATHEMATICAL MODELING OF ECONOMIC PROCESSES

Introduction: In contrast to neoclassical economics, where agents are rational, their actions are rational, and they strive for equilibrium, complex economics proposes to consider systems as evolving, complex, and not necessarily striving for equilibrium. The application of complex economics is particularly relevant in conditions of uncertainty and rapidly changing economic conditions. To develop the tools of complex economics, it is necessary to search for new mathematical approaches; a revolutionary approach in economics could be an approach based on the formalism of phenomenological theory. Methods: The formalism of phenomenological theory is used. Results: Four economic models are considered that can be built using the formalism of phenomenological theory. Using the example of analyzing changes in economic indicators caused by external factors such as magnetic storms, a modeling algorithm was implemented using phenomenological theory. Available data: No available data Discussion: The article shows that phenomenological formalism can be used in both traditional and more modern economic paradigms, expanding the boundaries of theoretical and applied analysis. Based on observed patterns and empirical data, phenomenological models allow us to study the macroscopic characteristics of economies without delving into microscopic details. As shown above, the formalism of phenomenological theory can be used both within the framework of neoclassical economics and complex economics. The phenomenological approach is universal and applicable in various areas of economic analysis, and the use of phenomenological theory allows us to take into account the elements of randomness and irrationality inherent in real economic processes, which is especially relevant for a complex economy.

Digital transition, data-and-tasks crowd-based economy, and the shared social progress: unveiling a new political economy from a European perspective

The current unequal distribution of the benefits of digital transition and data-and-tasks crowd-based economy is directly linked to an incomplete interpretation of the behaviour of economic agents and their effects. This article proposes a new economic vision of digitalisation based on overcoming the postulates of neoclassical (automation-oriented and implemented mainly in the US) and autocratic (control-oriented and implemented mainly in China) economics. It suggests recovering the evolutionary, social, institutional, ethical and humanistic precepts of political economy. Following this more plural and European conceptual orientation, the analysis shows that current inequality arises from a digital R&D&I process plagued by network, platform, bias and polarisation effects, from business models that foster automation, and from the emergence of large superstar firms or control organisations with excessive market and political power. The redirection of technological progress towards more democratic individual values and shared social welfare requires digital governance based on new incentives and taxes, a greater strategic and political orientation towards social sustainability, and a new transformative role for the State.

Lost in Transition? Market Failure in the Implementation of the Circular Economy. A Comparative Analysis of the Netherlands and Poland

It is necessary for economies to transition to a circular economy (CE). What particularly inhibits the implementation of the CE in linear economies is market failures, whose theoretical principles are embedded in modern welfare economics and neoclassical economics. Market failures shape the functioning of different areas of the markets, including the allocation of and access to resources, competition, and cooperation, among others. Due to their presence in the market, opportunities for industrial symbiosis based on intersectoral cooperation and the creation of resource-efficient production systems are limited. It is crucial because the functioning of local actors within an industrial symbiosis significantly favours the promotion and development of a CE. The aim of the paper is to identify market failures that limit the implementation of CEs in traditional linear economies. The article is based on focus group interviews (FGI) conducted with four groups of stakeholders in the Netherlands and Poland: academia, society, business and the government. The main findings show that one of the greatest barriers in Poland is stakeholders’ low awareness of the CE, which influences their possibilities of cooperating and networking. Existing laws additionally limit opportunities to develop the CE. In contrast, in the Netherlands, where awareness is deeply embedded in the culture, education system and upbringing, the level of market failure is lower.

Fighting Smart: Living Systems Theory in the US Army's Strategic Thought

This article analyzes the relationship between living systems theory (LST) and the army's military doctrine in the 1980s. General Donn Starry, Colonel Mike Malone, and Major James Cary worked with James G. Miller, the founder of LST, to make the army more efficient at fighting a Soviet invasion of Western Europe. LST conceptualized that living organisms organized matter and energy and that its components could function because they worked as a part of the whole to adapt to their environment. The article reveals how these officers employed LST as a framework to model a reciprocal relationship between individual agency and collective unity in the army's hierarchical organization. Situating this doctrinal reform in the years after the end of the draft and the mainstreaming of neoclassical economics in the 1980s, it finds that the army officers were using LST to replace Robert McNamara's mechanical strategic paradigm used in the Vietnam War.

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.

‘The economics of singularities’ by Lucien Karpik: debts and criticisms

This article examines ‘the economics of singularities’ by Lucien Karpik, which is a sociological theory explaining the functioning of markets for a specific type of goods, labeled as ‘singularities’, defined according to three criteria: the plurality of qualities, quality uncertainty and the primacy of quality. According to Lucien Karpik, singularities complement the typology of goods traditionally used by economists, consisting of homogeneous and differentiated goods. He argues that singularities represent a ‘blind spot’ of what he calls ‘neoclassical economic theory.’ According to him, while neoclassical economic theory is adequate for studying homogeneous and differentiated goods, an autonomous framework is indispensable for studying singularities. In this article, we propose a comprehensive overview of the economics of singularities, and we formulate a critique of Karpik’s positioning in relation to neoclassical economic theory.

Government size and the effectiveness of fiscal policy: the bigger the better?

Abstract This study investigates the effect of government size, as measured by the tax revenue to gross domestic product (tax-GDP) ratio, on output responses to increases in government purchases. First, we show that in a standard static neoclassical model, the stimulus effect of fiscal expansion on output increases with the tax-GDP ratio. This finding is quantitatively confirmed using a dynamic neoclassical model with standard functional forms and parameter values. To empirically test the theoretical findings, we analyze the responses of macroeconomic variables to an unanticipated increase in government purchases for 12 Organisation for Economic Cooperation and Development (OECD) countries during 1985–2019 using a state-dependent local projection method. The estimation results reveal that while output responses to an unanticipated fiscal expansion are significantly positive when the tax-GDP ratio is high, they are statistically indistinguishable from zero when the ratio is low. Overall, our findings suggest that fiscal expansion can stimulate output more effectively at high tax rates, unlike the well-known predictions of the traditional Keynesian model.

On the limited damp-proofing of residential buildings: do social norms matter?

PurposeThis study draws on neoclassical and behavioural economics theories to provide an empirical insight into the effect of knowledge, costs, and social norms on damp-proofing residential buildings in Ghana.Design/methodology/approachThis study used the quantitative approach involving survey data. A sample size of 242 participants was involved in the study. Applying principal component analysis on the responses from the participants, an index for damp-proofing, cost, knowledge, and social norms was derived. After generating the indexes, the ordinary least squares (OLS) regression was applied to estimate the impact of knowledge, costs, and social norms on damp-proofing.FindingsThe results from the OLS regression revealed that knowledge has a significant positive effect on damp-proofing while costs and social norms have significant negative effect on damp-proofing in Ghana. This study, therefore, concludes that although neoclassical economic factors such as knowledge and cost affect behaviour (damp-proofing), behavioural factors such as social norms also matter.Practical implicationsThe outcome of this study calls for policymakers to consider putting in place measures that increase knowledge and promote the use of damp-proofing techniques during the construction of buildings. In addition, the study calls for scholars to partake in collaborative research amongst disciplines such as economics, psychology, and the construction industry in order to provide more innovative solutions, the key of which is finding innovative ways to damp proof buildings.Originality/valueThis study is original in its context as it draws on neoclassical and behavioural economics theories to provide an empirical insight into the effect of knowledge, costs, and social norms on damp-proofing of residential buildings in Ghana. This is an area that has received less attention in the areas of building biology and building pathology globally.

La ortodoxia del modelo económico clásico y neoclásico: en hombros de gigantes

The objective of this reflection article is to vindicate great thinkers in economics who shaped the main theoretical postulates, philosophy and methodology of science, exposing their conceptual and theoretical framework for a comprehensive understanding of their most relevant contributions. In the development of the article, a historical description of the evolution of orthodox economic thought is offered, within a framework of analysis of recognition of economic doctrines from their historical, institutional, political, cultural and social situation, where their contributions are still significant for the interpretation of current reality, not in an absolute way due to the limitations of the assumptions, methods and historical interpretation of the authors, but with inputs that, objectively analyzed, provide validity and usefulness to economics professionals, and in general to all social scientists, for the exercises of positive economics of description, analysis and systematization of economic phenomena and of normative economics of intervention of reality through economic policy. The historical framework of the exhibition is until the 19th century, keeping in mind that, if the economy was built from classical and neoclassical orthodoxy, the alternative and subsequent currents are necessarily heirs, direct or indirect, of these giants of thought.

Performance management in the prosocial market economy: a new paradigm for economic performance and sustainability

Purpose The purpose of this multi-voiced paper is to propose a prosocial paradigm for the field of performance management and management control systems. This new paradigm suggests cultivating prosocial behaviour and prosocial groups in organizations to simultaneously achieve the objectives of economic performance and sustainability. Design/methodology/approach The authors share a common concern about the future of humanity and nature. They challenge the influential assumption of economic man from neoclassical economic theory and build on evolutionary science and the core design principles of prosocial groups to develop a prosocial paradigm. Findings Findings are based on the premise of the prosocial paradigm that self-interested behaviour may outperform prosocial behaviour within a group but that prosocial groups outperform groups dominated by self-interest. The authors explore various dimensions of performance management from the prosocial perspective in the private and public sectors. Research limitations/implications The authors call for theoretical, conceptual and empirical research that explores the prosocial paradigm. They invite any approach, including positivist, interpretive and critical research, as well as those using qualitative, quantitative and interventionist methods. Practical implications This paper offers implications from the prosocial paradigm for practitioners, particularly for executives and managers, policymakers and educators. Originality/value Adoption of the prosocial paradigm in research and practice shapes what the authors call the prosocial market economy. This is an aspired cultural evolution that functions with market competition yet systematically strengthens prosociality as a cultural norm in organizations, markets and society at large.

Comments on David McNally’s “Marx on Colonization and Bonded Labor”

These are comments on David McNally’s 2024 David Gordon Memorial Lecture. In this response, I point to the immanent critique present in Professor McNally’s remarks. I then show the potential usefulness of immanent critique for an engagement with neoclassical economics, and I consider the consequences for Marxist economics of characterizing the critique of political economy as a critical theory of economic categories. JEL Classification: B14, B51, B24

Neoclassical Realism and Armenia’s International Orientation: An Attempt to Determine Patterns or Mechanisms of their Application?

The article examines neoclassical realism and Armenia’s international orientation as one of the directions in the transformation of the theory of international relations of small states. In this article, neoclassical realism is analyzed from the point of view of subjective aspects of policy formation and the influence of domestic political features of a small state on its foreign policy. Taking into account that neoclassical realism is a completely independent development of neorealism with a complementary elemental level of analysis of international politics. In terms of content, neoclassical realism of Armenia clarifies such concepts as resilience, national security, balance of power, balancing policy and others. The neoclassical model of Armenia’s foreign policy as a small state allows us to study the conditions under which great powers and small states deviate from the policy of balancing. From this point of view, the article proposes to analyze international politics through the prism of a global rollback to state-centric politics. The article takes into account that globalization presents new challenges for small countries such as Armenia, which risks being marginalized as a result of the restructuring of both global and regional economic relations.

The Human Conception of Neuroeconomics: Homo-Neurobiologicus

One of the fundamental assumptions of neoclassical economics is the concept of the homo-æconomicus. This model assumes that individuals are rational, pursue personal interests, and aim to maximize their utility or profits based on choices determined by external factors. Neuroeconomics, however, challenges this idealized human model and focuses on understanding how people actually behave in the real world. By examining human decision-making processes and behaviors through laboratory studies and field analysis, neuroeconomics seeks to understand the neurobiological processes behind economic decisions. This approach suggests that people make decisions not only based on external factors or rationality but also influenced by emotions, thoughts, and their neurobiological structures. In this context, neuroeconomics points to a completely different nature of humans, contrary to the homo-æconomicus model: This human model, whose behavior is influenced by its social and economic nature and its neurobiology, is termed as homo-neurobiologicus. In this a person's economic decisions are largely determined by their neurobiological structure. The purpose of this study is to examine the homo-neurobiologicus which is the human understanding of neuroeconomics, and to highlight the differences and similarities between it and homo-æconomicus.

The impact of minimum wage increases on unemployment in the V4 countries: Assessing the recommendations of the European Commission

The European Commission has recently implemented legislative measures to improve worker protection through an adequate minimum wage set by national laws or collective agreements. A recommended benchmark for minimum wage calculation is 60% of the gross median wage or 50% of the mean wage. However, the Kaitz index, a ratio indicator, shows lower values in most EU countries, raising concerns about potential negative impact on the labour market. This study aims to identify the impact of the Kaitz index and several other selected variables on unemployment in the V4 countries. Using multiple linear regression, we concluded that the Kaitz index’s growth does not uniformly impact unemployment in the V4 countries. Specifically, in Slovakia and the Czechia, the Kaitz index growth appeared to increase unemployment, in line with neoclassical economic theory. In contrast, Hungary and Poland did not register significant effects. Gender differences were also noted, with the Kaitz index affecting female unemployment in the Czechia and Hungary, and male unemployment in Slovakia. The research results suggest that increasing the minimum wage in the V4 countries is feasible if its growth rate is higher than that of unemployment benefits and the living minimum, but lower than the average wage growth, and if it is supported by economic growth.