Scholars In Economics Research Articles

Economic Perspectives on Free Speech

The metaphor of a ‘marketplace of ideas’ has long pervaded discussions of free speech in and beyond the United States. For early scholars of law and economics, including Aaron Director and Ronald Coase, the similarities and differences between the metaphorical marketplace for ideas and literal markets for goods and services were subjects of much attention. More recently, however, while the law-and-economics movement has flourished, economic analysis of free speech has lagged. Although law and economics has branched out from its traditional emphasis on private law to topics such as criminal law, judicial behavior, and agency structure, free speech has faded from its focus. The leanness of the law-and-economics literature on free speech should not be understood to imply that economics has little to say on the topic. Perhaps most significantly, the ‘new information economics’ for which George Akerlof, Michael Spence, and Joseph Stiglitz won the Nobel prize in 2001 carries profound implications for free speech — implications noted by a handful of legal scholars but not exhaustively explored. The new information economics challenges the faith in free markets reflected in the writings and thinking of early law and economics scholars, and — though less directly — the faith in a free marketplace of ideas reflected in much of US First Amendment jurisprudence. It suggests that under certain circumstances, the regulation of speech not only can protect individuals and societies from speech-related harms but also can promote speech itself. This chapter provides an introduction to the economic analysis of free speech, with special attention to the new information economics perspective. Section 1 critically summarizes the small law-and-economics literature on free speech. Section 2 offers an overview of the new information economics. Section 3 applies insights from the new information economics to free speech subjects.

Competition Law for the Digital Era: A Complex Systems’ Perspective

Competition Law for the Digital Era: A Complex Systems’ Perspective

Private Property Rights, Government Interventionism and Welfare Economics

Abstract We develop a critique of government interventionism based on the Misesian calculation argument against socialism. If private property rights and relative prices based on supply and demand are necessary for successful economic coordination, then conventional market failure theories cannot be sustained. Government interventionism based on the idea of correcting “market failures” is analytically just a milder form of socialist central planning. Between the two, there are only differences in degree, not in kind. We criticize several public choice and law and economics scholars for disregarding this Misesian angle in their market failure theories. In our view they are reducible to arguments based on a fallacious political economy while perpetuating false neoclassical economic analysis of market failure theorists. We claim that government interventionism is just a milder form of socialist central planning. Therefore, the traditional arguments against the efficiency of central planning also apply to government interventions aiming at fixing market failures. In particular, we maintain that governments face the “knowledge problem”, which means that they cannot determine the optimal allocation of resources. In section two of this paper we discuss market failure and economic calculation. Section three is given over to our claim that the “Nirvana fallacy” is itself fallacious. The burden of section four is to address Coase and consequences. We conclude in section five.

The Road Not Taken – Reading Calabresi’s “The Future of Law and Economics”

Abstract The publication of Guido Calabresi’s book “The Future of Law and Economics” has drawn a substantial amount of attention among law and economics scholars. We thought that the best way to devote special attention to this book was to devote a Special issue to it. This article situates Calabresi’s book among other reflections on the future of the discipline, introduces and explains the reasons behind this Special issue and discuss the organization and content of it. We emphasize how Calabresi’s historical-conceptual standpoint allows him to isolate the stakes of different future developments around the question of how could further appreciation of legal institutions that defy the standard economic assumptions help the field develop theoretically. Overall, the contributors all shared Calabresi’s attempt to restore the balance between Law and Economics and the need to better account for the “whole unanalysed experience of human race”, often neglected by the Economic Analysis of Law approach. Most disagreements are about the ‘how’. In any case, the search for the Law and Economics ‘not (yet) taken’ or for other “Law and … ” approaches is always open to the Future.

Thinking Like (Law-And-) Economists – Legal Rules, Economic Prescriptions and Public Perceptions of Fairness

AbstractUsing vignettes that are based on seminal cases in law and economics, I find that judicial decisions across different areas of the common law are considered to be fairer when they follow prescriptions for efficiency based on law-and-economic reasoning. Vignettes describe legal disputes and require respondents to rate the fairness of a judge’s resolution. For each vignette, fairness ratings are compared across a version that follows a particular economic prescription and a version that does not, with differences across versions generated by subtle changes in context that are motivated by the economic logic that either was used in the relevant case’s actual judicial opinion or has been applied to the case by scholars of law and economics. The results suggest that the economic logic that underlies the Coase theorem, the Hand rule and the foreseeability doctrine, and generates prescriptions for efficient use of strict product liability and efficient breach of contract, aligns with lay intuitions of fairness. The results also identify two areas, fugitive property and punitive damages, where law-and-economic prescriptions do not align with perceptions of fairness.

Corporate Governance and the Cult of Agency

Agency theory - as applied to debates in corporate governance - rests on a myth of separated ownership and control. The true separation, however, is between ownership and ownership: ownership of shares by shareholders and ownership of assets by the corporation. Shareholders are not principals; directors, officers, and managers are not shareholders' agents. Shareholders do elect directors, but directors then act according to corporate law, which rarely requires maximizing current shareholder value. To the contrary, corporate law allows - even encourages - directors to work for corporate longevity so long as directors have a plausible argument that their actions are in shareholders' long-run interests. Agency theory ignores this reality. Instead, much as early civilizations interpreted real-world phenomena by reference to their relationship with unseen deities, agency theorists tell tales of shareholders who struggle to keep peace with sacrifices (paying monitoring expenditures), managers make divine promises to behave (incurring bonding costs), but shareholders in the end are left to deal with the gods' uncontrolled whim (remaining managerial discretion). Yet despite thousands of articles, there is no evidence this battle is real. Managers are usually loyal, probably because so much of the focus of existing corporate law is on the control of managerial disloyalty and because the business world is far more competitive than most agency-cost models assume, leaving little scope for managerial slack. What evidence shows instead is that managers suffer from cognitive biases; most importantly, they are too optimistic. Managerial optimism and the flexibility of corporate law explain most arguable failures to maximize current shareholder value. Scholarship in both economics and law would improve if researchers faced these realities and left the cult of agency behind.

The Position and the Development Trends Private Property and Common Property

The issue of the relationship between private property and common property has engaged both legal and economic scholars in a long series of controversies over the meaning, the sequence of development, and the superiority of private vs. common property. The issues debated relate to the efficiency, equity and sustainability of private property as contrasted to common property. Many scholars think of contemporary examples of common property as remnants of the past, likely to disappear during the twenty-first century. Recent research, however, has challenged the presumption that private property is necessarily superior to common property.
 Keywords: Private property, common property, open access regimes.

Blockchain: Post-Quantum Security & Legal Economics

Blockchain technology is subject to security vulnerabilities resulting from recent developments in quantum computing and cryptography. All the while, the technical complexities of blockchain’s peer-to-peer system require the intervention of third-party intermediaries to facilitate financial transactions across blockchain networks. Current legal scholarship describes blockchain technology as a peer-to-peer system without a central authority, supporting the secure decentralization of economies and financial markets. Yet, with consideration to recent advancements in quantum computing, blockchain technology is not secure. Further, the technology’s legality is subject to the will of the central authorities whose economic systems it seeks to decentralize. This article contributes the first post-quantum analysis of the intersection of blockchain security and law. Additionally, this is the first piece of legal scholarship to analyze the complex relationships between Congress, the Federal Reserve, and blockchain technology in the creation of money. In doing so, this article challenges conventional assumptions relating to blockchain technology’s decentralizing economic impact. Ultimately, this article takes an interdisciplinary approach, drawing on informatics, law, and economics scholarship, to argue blockchain fails to provide a legal or secure means of establishing a peer-to-peer payment system.

Mind the Income Gaps? Experimental Evidence of Information’s Lasting Effect on Redistributive Preferences

Individuals reject economic inequality if they believe it to result from unequal opportunities. This paper argues income gaps between groups determined at birth, based on sex, race, or family background, can serve people as an indication of unequal opportunities. Findings from a survey experiment show Americans underestimate these gaps. When confronted with accurate information, participants correct their perceptions and adjust redistributive preferences. A follow-up survey finds these effects to last for over one year. In sum, this paper contributes to political economy scholarship that links individual preferences to objective characteristics of the income distribution. Focusing on income gaps offers new ways to explore the political consequences of structural economic change.

Regulatory Democratization: How Startups Help Entrepreneurs Solve Compliance Problems

Law and economics scholars agree that business regulations have a disproportionately negative impact on entrepreneurship and innovation. It would be a significant problem indeed if the very nature of regulation inhibits this kind of growth and creativity. This view of the problem suggests that the only way to increase innovation would be to decrease regulation. Yet this view is too general. When examined more closely, all regulations are not created equal. Regulations can be formulated as rules or standards, and they can be simple or complex. Moreover, some rules are easily understood by computers and are thus suitable for automated processes. Different types of rules have different impacts on entrepreneurship and innovation. This paper is based on interviews with over one hundred startups regarding the impact of regulation on innovation. It identifies six cases of startups that invented ways to make certain kinds of regulations relatively affordable for many small businesses to comply with. These new uses of technology are examples of “regulatory democratization” because they open access to regulated industries for small business. Regulatory democratization increases competition and levels the playing field between small and large firms in highly regulated industries. Regulatory democratization sheds new light on other proposals that are intended to spur entrepreneurial innovation. Regulatory sandboxes—where regulators give select companies the freedom to operate beyond regulatory boundaries—may counterintuitively inhibit innovation by preferencing large firms over small ones. Tax credits for entrepreneurs, on the other hand, can be designed to drive innovation. The key takeaway is that regulations can be smarter and more compatible with entrepreneurial innovation.

The EU’s Regulatory Commitment to a European Harmonized Pension Product (PEPP): The Portability of Pension Rights vis-à-vis the Free Movement of Capital

Abstract European demographic structure and age composition are currently in a state of flux—life expectancy has increased, fertility rates have dropped, and baby-boomers have reached retirement age. The implications of these changes, coupled with the fragmented market for personal pension products throughout the EU are vast and call for close scrutiny of the relationship between financial and pension markets. This article examines the current regulatory efforts aimed at creating a Pan-European Personal Pension Product (PEPP). In doing so, it pursues two primary objectives: firstly, it seeks to explain the relevance of a European harmonized pension product to the overall concept of the single market; and secondly, it aims to explore the looming regulatory challenges stemming from the portability of social and pension rights. This is done by elaborating upon established law and economics scholarship on capital markets, including the Legal Theory of Finance developed by Katharina Pistor. By assessing the costs faced by prospective pensioners against the benefits of legislative harmonization (and other policy-related alternatives), from both a normative perspective as well as a positive one, this article attempts to make a case for an effective and sustainable governance response. The article ultimately seeks to provide a well-balanced, albeit modern outlook to the regulatory endeavours that have more recently been made applicable to the EU personal pension market in virtue of the creation of the PEPP and the wide-ranging effects of such reforms on law, finance, and society.

Decolonizing the IPE syllabus: Eurocentrism and the coloniality of knowledge in International Political Economy

This pedagogical intervention examines the manifestations of Eurocentrism and the coloniality of knowledge in the teaching of IPE by analyzing an IPE Master’s program of a UK university. Advancing a decolonial reading of this program, I draw on the growing body of decolonial theories critiquing political economy scholarship and teaching. Three points of critique are centered throughout this analysis: (1) economism, (2) the absence of race and (3) the conceptualization of ‘The International’. In addition to identifying how these issues manifest in the IPE course, I suggest ways to address them, illustrating how decolonial pedagogical transformations and epistemic pluriversality can lead to better analytical frameworks, as well as contribute to epistemic and global justice. This intervention begins by outlining the IPE program in question before introducing a decolonial analytical framework that centers the coloniality of knowledge and Eurocentrism. This framework is then mobilized throughout the analysis which is divided into the three points of critique mentioned above. Afterwards, I propose some alternative bodies of knowledge as decolonial options for IPE syllabi and conclude with suggesting further research avenues. This intervention seeks to engage IPE professors and researchers who are interested in or committed to decolonizing IPE syllabi, programs and departments.

Capitalism and unfree labor: a review of Marxist perspectives on modern slavery

Contrary to the expectations of liberal and neoclassical economists, as well as many Marxists, the deepening and extension of capitalism appear to be heightening the prevalence of unfree labor. By most accounts, the forms of exploitation encapsulated within unfree labor – including those typically referred to as forced labor, human trafficking and modern slavery – are proliferating in the global economy, including in advanced capitalist societies. We evaluate these developments in light of the relationship between capitalism and unfree labor through the prism of Marxism, revealing a deep-seated divide between a neo-Smithian reading, according to which capitalism and unfree labor are incompatible, and a more faithful Marxist tradition that views forced labor as one possible form of labor control and exploitation under capitalism. Building on this second tradition, we argue that international political economy scholars who seek to shed light into the contemporary and historic dynamics of unfree labor must transcend the rigid theoretical binaries that have long characterized Marxist debates on capitalism and unfree labor.

Knowledge as growth

The purpose of this paper is to reflect and articulate the key scholarly contributions made by Cristiano Antonelli in his pathbreaking book, The Knowledge Growth Regime: A Schumpeterian Approach and why it is so important, not only to scholars of innovation and Schumpeterian economics, but also to the entirety of economic thinking. This paper highlights how this important new book breaks new and important ground paving the way for a new paradigm in economics, where knowledge takes the center stage.

Robust measures of skewness and kurtosis for macroeconomic and financial time series

ABSTRACTThe sample skewness and kurtosis of macroeconomic and financial time series are routinely scrutinized in the early stages of model-building and are often the central topic of studies in economics and finance. Notwithstanding the availability of several robust estimators, most scholars in economics rely on method-of-moments estimation that is known to be very sensitive to outliers. We carry out an extensive Monte Carlo analysis to evaluate the bias and root mean squared error of 12 different estimators of skewness and kurtosis. We consider nine statistical distributions that approximate the range of data generating processes of many macroeconomic and financial time series. Both in independently and identically distributed samples and in data generating processes featuring serial correlation L-moments and trimmed L-moments estimators are particularly resistant to outliers and deliver improvements over standard as well as alternative robust estimators of skewness and kurtosis. The application to 128 macroeconomic and financial time series sourced from a large, monthly frequency, database (i.e. the FRED-MD of McCracken and Ng, 2016) confirms the findings of the simulation study.

Islamic Economics: An Agenda for Intellectual and Institutional Reform

This article agrees with Reardon (2019), that economics finds itself in a predicament caused by the neoclassical school. The dominance of neoclassical economics and its lack of response to calls for reform has been endemic. Reform must include both the neoclassical analysis as well as the system of market capitalism it strives to defend. This paper briefly discusses both aspects of reform. It introduces the new school of analytical Islamic economics and its agenda to reform both the discipline and the economic system. The paper enumerates several advantages of Islamic economics to the economics discipline itself as well as the economy, in addition to bringing together intellectuals and scholars of economics, both from East and West, in a more communicative and inclusive group. In addition, the article makes some proposals towards opening the doors in-between the different schools of thought for positive as well as enriching intellectual interactions.

Environmental effects of GATT/WTO membership: an empirical evaluation

ABSTRACTOne of the great questions for scholars of international relations and economics concerns the relationship between the World Trade Organization (WTO) and the natural environment. Does membership in the multilateral trade regime constrain environmental regulation and increase the environmental burden of national economies? Do countries pay a heavy environmental price for trade liberalization? Although this question has been debated extensively, there is little statistical evidence to contribute the debate. We provide a comprehensive statistical analysis of the environmental effects of joining the multilateral trade regime. We collected data on a variety of environmental policies, institutions, and outcomes that should be influenced by the General Agreementon Tariffs and Trade (GATT)/WTO membership if the predictions of environmental pessimists or optimists are valid. A wide range of statistical models designed to identify the causal effect of the GATT/WTO on the environmental indicators shows that joining the GATT/WTO does not have negative effects on environmental quality.

MAZHAB PEMIKIRAN EKONOMI ISLAM KONTEMPORER

Since the 1970s, studies of the Islamic economy have developed rapidly. Various topics around Islamic economics are discussed, ranging from Islamic economic philosophy, Islamic economic system, Islamic criticism of conventional economics, Islamic economic history and thought, to the Islamic financial system. There are several factors that encourage the development of Islamic economic scholarship, some of them are: personal motivation to promote Islamic economics, sponsorship from academic and non-academic institutions as well as organizations, Muslim societies, Muslim student associations, and also the dedication of publishers. As time goes by, Islamic economics bears many figures with various Islamic economic schools. According to the writer's findings there are at least five schools of contemporary Islamic economic thought, they are (1) Baqir al-Sadr, (2) Mainstream, (3) Alternatives, (4) Hamfara, and (5) Murabitun.

The new politics of global tax governance: taking stock a decade after the financial crisis

The financial crisis of 2007–2009 is now broadly recognised as a once-in-a-generation inflection point in the history of global economic governance. It has also prompted a reconsideration of established paradigms in international political economy (IPE) scholarship. Developments in global tax governance open a window onto these ongoing changes, and in this essay we discuss four recent volumes on the topic drawn from IPE and beyond, arguing against an emphasis on institutional stability and analyses that consider taxation in isolation. In contrast, we identify unprecedented changes in tax cooperation that reflect a significant contemporary reconfiguration of the politics of global economic governance writ large. To develop these arguments, we discuss the links between global tax governance and four fundamental changes underway in IPE: the return of the state through more activist policies; the global power shift towards large emerging markets; the politics of austerity and populism; and the digitalisation of the economy.

Policy, polycentrism, and practice: Governance imaginaries in sustainability transitions

This paper foregrounds the under‐theorised figure of the policy maker in the environmental social sciences. To do so, it focuses on the case of “social practice theory” (SPT), a school of thought which has gained prominence in human geography and further afield in recent years. The paper outlines the context of environmental policy literatures and identifies a tension in many treatments of the topic by practice‐oriented scholars: while it focuses on emergent social change, the traditional policy imaginary which has circulated in this literature often portrays benign, top‐down policy makers who, given adequate information, are amenable to conducting the right policy “intervention.” A “governance on the inside” approach is proposed as an alternative imaginary, drawing from prominent work on polycentric governance and community economies in geographical and economic scholarship, as well as more recent work in SPT itself. Opportunities for a geographical mapping of policy difference and reflexive engagement are highlighted, hinting at rich future possibilities.