Orthodox Economic Theory Research Articles

Neo-classical theory of competition or Adam Smith's hand as mathematized ideology

Orthodox economic theory (utility maximization, rational agents, efficient markets in equilibrium) is based on arbitrarily postulated, nonempiric notions. The disagreement between economic reality and a key feature of neo-classical economic theory was criticized empirically by Osborne. I show that the orthodox theory is internally self-inconsistent for the very reason suggested by Osborne: lack of invertibility of demand and supply as functions of price to obtain price as functions of supply and demand. The reason for the noninvertibililty arises from nonintegrable excess demand dynamics, a feature of their theory completely ignored by economists.

Urban Economic Development

Connecticut's welfare system under TANF is among the nation's harshest with 21 month lifetime limits for cash assistance, a strict work-first policy, and few training options. Various ideological perspectives suggest different policies to address poverty: orthodox economic theory emphasizes human capital enhancement such as training and education; an institutionalist approach emphasizes reducing labor market barriers to equality and provision of decent, stable public service employment; the radical or Marxist lens posits that labor, including those transitioning from welfare, needs to organize for economic and political power. Recent welfare reform embodies a fourth, neoliberal perspective that stresses ‘labor force attachment’ strategies. Regardless of ideology, Connecticut's welfare policy fails both the imperatives of the state economy for better trained workers, and also the needs of those transitioning from welfare. The authors argue for more training and education options, supportive services, economic development policy that incorporates former welfare recipients, union-Louise Simmons is affiliated with University of Connecticut School of Socialization of low wage workers, and strong welfare rights organizations.

Social Capital: Promise and Pitfalls of its Role in Development

The purpose of this commentary is threefold. First, to review the origins and definitions of the concept of social capital as it has developed in the recent literature. Second, to examine the limitations of this concept when interpreted as a causal force able to transform communities and nations. Third, to present several relevant examples from the recent empirical literature on Latin American urbanisation and migration. These examples point to the significance of social networks and community monitoring in the viability of grass-roots economic initiatives and the simultaneous difficulty of institutionalising such forces.Current interest in the concept of social capital in the field of national development stems from the limitations of an exclusively economic approach toward the achievement of the basic developmental goals: sustained growth, equity, and democracy. The record of application of neoliberal adjustment policies in less developed nations is decidedly mixed, even when evaluated by strict economic criteria. Orthodox adjustment policies have led to low inflation and sustained growth in some countries, while in others they have failed spectacularly, leading to currency crises, devaluations, and political instability. The ‘one-size-fits- all’ package of economic policies foisted by the International Monetary Fund and the US Treasury on countries at very different levels of development have led to a series of contradictory outcomes that orthodox economic theory itself is incapable of explaining.

Capitalism, money and banking: a critique of recent historical sociology

A conception of money as a 'neutral veil' masking a 'real' economy was adopted by orthodox economic theory after the Methodenstreit, and is also to be found, in a different form, in Marxian political economy. Both derive from an erroneous functionalist and anachronistic 'commodity' theory of money which, as Post-Keynesian economists argue, cannot explain the distinctive form of capitalist credit-money. Orthodox economic theory and classic Marxism have tacitly informed and flawed historical sociology's understanding of money's role in capitalist development. Mann and Runciman, for example, consider the 'economy' exclusively in terms of the social relations of production and imply that money is epiphenomenal and is to be explained as a response to the needs of the 'real' economy. They do not recognize the structural specificity of capitalist money and banking nor its importance. An alternative account of the autonomous historical conditions of existence of the specifically capitalist form of bank and state credit-money and its role in capitalist development is outlined.

The Assault on Benefits in Venezuela

Contrary to the predictions of orthodox economic theory, the high growth rates of the 1990s have not brought new jobs or higher wages, forcing Latin American workers to work longer hours just to make ends meet.

The Decline of the Steady Job in Latin America

Contrary to the predictions of orthodox economic theory, the high growth rates of the 1990s have not brought new jobs or higher wages, forcing Latin American workers to work longer hours just to make ends meet.

Commons and Keynes: Their Assault on Laissez Faire

(1998). Commons and Keynes: Their Assault on Laissez Faire. Journal of Economic Issues: Vol. 32, No. 4, pp. 1019-1030.

Kaldor on method: a challenge to contemporary methodology

This paper examines Kaldor's methodological critique of orthodox economic theory in the light of recent developments in the philosophy of science. Lawson has provided the most philosophically sophisticated interpretation of Kaldor's method ological work available to date from a critical realist perspective. We argue in this paper that critical realism, while clearly superior to existing orthodox approaches, is philosophically too restrictive and an alternative framework, causal holism, is developed. Causal holism, based on a synthesis of Quine's holism and van Fraassen's constructive empiricism, provides a methodological reconstruction of Kaldor that is ultimately more compatible with his 'non-monist' critique of orthodox equilibrium economics.

Histoire de l'analyse économique et économie politique. À propos des Cahiers d'économie politique

This paper aims to show the evolution in the research project pursued in the first twenty issues of the Cahiers d'économie politique (CEP). First, I stress that the coherence of this project is due to the organization in the research work and to the consequent definition of the research topics. This singles out four stages in CEP's evolution. The first three stages lead to a new conception of the history of economic analysis which becomes the fundamental tool to allow a heterodox theorizing. This new conception leaves, however, open questions. The fourth stage analyzes these open questions but does not solve them by means of a combination between the critical approach in the history of economic analysis and a number of recent results reached in the orthodox economic theory.

The Pedagogy of the Transformation

This article presents a critical analysis of economics education in Central and Eastern Europe since the 1989 revolution. The infusion of Western economics teachers and literature, while introducing a new perspective to Central and Eastern Europe, has also created problems. These problems stem from the narrow perspective and belief in the universal validity of orthodox economic theory held by these teachers and their failure to teach any other perspective. The author advocates a different type of economics education for Central and Eastern Europe. It includes a broader focus on societal problems and the integration of economic history, comparative economics, economic development, and history of economic thought into economic curricula. Finally, the author recommends that economics education be focused on giving students a perspective with which to develop their own alternative policies for their respective nations, teaching them that there is more than one economics paradigm and that there are multiple al...

Employment Structure and Poverty: Theoretical Perspectives and Conceptual Frameworks: Discussion

The Thompson and Gray manuscript is a nonexhaustive and very selective literature review of theoretical explanations of the causes of poverty in the United States. It suggests that the explanations of poverty in the United States may be codified into nine conceptual paradigms: (1) culture of poverty; (2) exploitation; (3) the time lag in the process of adjustment of technical and other changes in a dynamic economy; (4) differential power among enterprises and groups; (5) subclass theory that takes into account racism, sexism, welfare capitalism, elite rule, and geographic location; (6) status attainment; (7) orthodox economic theory; (8) human capital; and (9) economic segmentation theories, including dual labor market. Thompson and Gray further suggest that the latter two conceptual paradigms are viewed as the dominant theoretical and policy explanations of poverty as it relates to employment structure, and that they guide empirical analysis of the relationship between employment structure and poverty. The nine conceptual paradigms are presented with little effort to reconcile them, to identify how or why all but two are inadequate. Better assessment is needed of the linkages among the nine conceptual paradigms to employment structure and poverty. The purpose of introducing the nine paradigms is unclear, especially in the absence of an assessment of their merits

Wages, government policy and unemployment

In this paper we question the usefulness of what has become the new textbook orthodoxy — the 'new Keynesian' NAIRU theory. We then discuss the impact of the policy developments that follow from this orthodoxy, and argue that NAIRU theory has resulted in greater, not reduced, unemployment. Consequently, orthodox economic theory has added an upward twist to the stagnationist, high-unemployment ratchet.

The Largest Amount of Good: Quaker Relief in Ireland, 1654-1921.

The Largest Amount of Good is the first full account of Quaker relief operations in Ireland and of the evolution of the Quakers' thinking on the purposes and limitations of philanthropy and the responsibility of the state in disaster. Helen Hatton describes how the Quakers rejected orthodox economic and philanthropic theory and, without seeking profit for themselves, provided grants and unguaranteed loans to develop and revitalize Irish agriculture, fisheries, and industry. They also used publicity and political pressure to push for reform of the land-holding system. Although the power of the landowners was too entrenched to be overcome entirely, the Quakers' contribution to Ireland, Hatton demonstrates, is unquestionable. The growth of the Quaker relief service, from mutual help in the seventeenth century to an institution of international standing, has been accompanied by the gradual embodiment of their principles in the direction of the Society. Their work in the Great Irish Famine marked a turning point at which the procedures they had evolved inchoately over two centuries were formulated into a methodology that is accepted today as the basis for relief and Third World development.

A Critique and A Proposed Reformulation of Strategic Human Resource Management

Ken Kamoche, who lectures in human resource management at Birmingham Business School, argues that flaws in the assumptions underlying our understanding of ‘strategy’ are encouraging an inappropriate conception of strategic human resource management (SHRM). the notion of strategy which emanates from orthodox economic theory ensures that SHRM is subservient to a dominant ‘organisational imperative’. This process is reinforced by key socio‐political factors which are diminishing the significance of the ‘human’ component of SHRM. He goes on to suggest how SHRM might be reconstituted to be a more useful concept

THE PEDAGOGY OF THE TRANSFORMATION: ECONOMICS EDUCATION IN CENTRAL AND EASTERN EUROPE

This article presents a critical analysis of economics education in central’ and eastern Europe since the 1989 revolutions. The infusion of Western economics teachers and literature, while introducing a new perspective to central and eastern Europe, has also created problems. These problems stem from the narrow perspective and belief in the universal validity of orthodox economic theory held by these teachers and their failure to teach any other perspective. The author advocates a different type of economics education for central and eastern Europe. It includes a broader focus on societal problems and the integration of economic history, comparative economics, economic development, and history of economic thought into economics curricula. Finally, the author recommends that economics education be focussed on giving students a perspective with which to develop their own alternative policies for their respective nations, teaching them that there is more than one economics paradigm and that there are multipl...

The Assignment of Functions to Decentralized Government: From Theory to Practice

The question of why key academic economic arguments for the assignment of functions to decentralized government have not informed the political debate in Switzerland is examined in this paper. In the first section the most relevant theoretical factors of optimal government organization for service delivery are reviewed. A catalogue of criteria that have been debated in the Swiss context at both federal–cantonal and cantonal–local levels are covered in the second section. The main point is that the discussion is focused on rather different criteria from those noted in orthodox economic theory. The analysis of the causes and discrepancies between theory and practice permits a more general conclusion, addressed to fiscal federalism. The conclusion is that there is no general answer to how functions should be assigned to a particular level of government, as the solution depends upon the relevant value-judgments of the polity as well as the resources-use required to provide given services. The outcome is a set of proposals on how better procedures for the assignment of functions might be developed.

NORMS, SOVEREIGNTY AND REGULATION

ABSTRACTIn orthodox economic theory individuals are modelled as rational economic consumers maximising their utilities given their preferences and the market prices of the commodities over which preferences are defined. This paper challenges the validity of such an approach. Commercial forces originating in the objectives of producers are likely to exert an influence on preferences and the choice set open to the individual is restricted by the requirements of the market system. Once it is established that the wants to which production is responding are determined, at least in part, within the system of production, then the whole structure of the system is invertible: adjustments can be brought about just as easily by the manipulation of preferences as by the reallocation of the budget by the individual. One implication of our analysis is that there are likely to be a wide range of contexts in which conventional market structures do not provide the most efficient form of resource allocation. The paper concludes by drawing out the implications of the analysis for the design of industrial policy.

The analytics of continuing conflict

Individuals, groups, or nations — if rational and self-interested — will be balancing on the margin between two alternative ways of generating income: (1) “peaceful” production and exchange, versus (2) ‘appropriative” efforts designed to seize resources previously controlled by others (or to defend against such invasions). Both production and appropriation, on the assumption here, are entirely normal lines of activity engaged in to the extent that doing so seems profitable. The general-equilibrium steady-state model involves a resource partition function, a social production function, a combat power function, and an income distribution equation. Solutions were obtained under thesymmetrical Cournot protocol and two alternativeasymmetrical assumptions: the familiar Stackelberg condition and a more novel hierarchical protocol called Threat-and-Promise. The analysis demonstrates that, in contrast with the harmonistic bias of orthodox economic theory, a general-equilibrium model can also encompass the hostile and destructive interactions that characterize real-world social relations.

Navajo economic behavior

“Navajo Economic Behavior” is an attempt to explain why development schemes on the Navajo Reservation have thus far failed. The main hypothesis is that these failures are the result of reliance on orthodox economic development theories of questionable relevance when applied to the Navajo. The reason such theories might not be appropriate is that they are based on assumptions regarding human behavior (maximation, and so forth) that do not apply to the Navajo with their unique cultural evolution. To illustrate the point, a brief review of the neoclassical economic model is offered and then compared to a model of Navajo economic behavior. The Navajo are shown to behave in a fashion somewhat different from the utility maximizing Anglo. The overlay of orthodox economic policy onto a unique Navajo economic system is shown to be the cause of confrontation and policy failure rather than stimulation of economic growth. The conclusion is that in an energy and resource scarce world, the Navajo with their ownership of such resources will be pushed further into the Anglo economic arena, despite cultural differences that may not make them comfortable there. Hence there exists the possibility of further failures of even the most well-intentioned economic growth schemes.

A discretionary model of industrial buying

AbstractThis paper demons!rules that product differentials exert an important influence on the demand for industrial inputs. It presents a utiliu‐maximizing model of industrial buying which integrates the empirical findings of marketing scholars with orthodox economic theory. The model receives statistical support in the form of partial correlations of industrial sourcing determinants and a factor‐analytical extraction of hypothetical constructs corresponding to features which in the model influence sourcing decisions.