Showing papers in "Review of Social Economy in 2013"

Individuals and Identity in Economics

Abstract: John Davis has long discussed and developed methodologies to improve the description of individuals and of identity in economics. His book, Individuals and Identity in Economics, is at an enlighten...

To Measure is to Know? A Comparative Analysis of Gender Indices

Abstract: In this paper, I present a comparative analysis of five cross-country composite gender indices. Although there is a relatively high correlation between the indices, the overlap of underlying indicators is low. Country rankings both at the top and at the bottom have parallels but are quite distinct. The differences are explained in two ways: methodologically and theoretically. The methodological differences concern in particular weights, capping, and aggregation. The Capability Approach helps to explain the different focus of each index by distinguishing between four stages of human development, which include distinct types of indicators. The substantial differences that exist between the gender indices require a cautious selection between these for research and policy analysis. This is shown in a few examples with policy variables. Finally, I present a set of three decision trees, which enables an informed choice between the indices.

Swearing to be Virtuous: The Prospects of a Banker's Oath

Abstract: In an effort to restore trust in the banking sector, the Advisory Committee on the Future of Banks in the Netherlands made a recommendation, which has since been adopted, that bank executives be required to swear an oath akin to the physician's Hippocratic Oath. This examination of the prospects of the Dutch banker's oath addresses two broad issues. One issue is the efficacy of oaths themselves as instruments for achieving the desired end. A second issue concerns the extent to which this particular oath is a useful guide to ethical banking practice. One conclusion of this study is that it would be difficult for any oath in banking to serve a role that is analogous to the Hippocratic Oath in medicine because of the many dissimilarities involved, most notably the lack in banking of a singular focus on service. Second, the Dutch oath, while admirable in its lofty exhortations, fails to provide a reliable guide through the many difficult judgments that must be made in banking.

The power of Speech Acts: Reflections on a Performative Concept of Ethicat Oaths in Economics and Business

Abstract: Ethical oaths for bankers, economists and managers are increasingly seen as successful instruments to ensure more responsible behaviour. In this article, we reflect on the nature of ethical oaths. Based on John Austin's speech act theory and the work of Emmanuel Levinas, we introduce a performative concept of ethical oaths that is characterised by (1) the existential self-performative of the one I want to be, which is (2) demanded by the public context. Because ethical oaths are (3) structurally threatened by the possibility of infelicity or failure, we stress (4) the behavioural aspect of ethical oaths in economics and business. We conclude that a performative concept of ethical oaths can contribute to more ethical behaviour in economics and business, because the performative involves action and behaviour. At the same time, it becomes clear that a radical new perspective on the nature, function and limitation of oaths is needed.

Decomposing Racial and Ethnic Differences in Small Business Lending: Evidence of Discrimination

Abstract: In this paper, we use the Blinder–Oaxaca method for nonlinear models to decompose observed differences in credit rationing of small businesses between white- and minority-owned firms in the USA. We utilize a representative dataset of small businesses from the Survey of Small Business Finances between 1987 and 2003. Our results show that minority owners, on average, have about a 24 percentage points higher loan denial rate than white-owned firms and about three quarters of the difference is attributed to discrimination in bank lending. Although the difference in the probability of getting a smaller loan than requested is only 5 percentage points, this difference is almost entirely attributed to discrimination.

The Mystery of Capital or the Mystification of Capital

Abstract: In contemporary political economic analyses of development processes, Hernando De Soto's The Mystery of Capital, has been one of the most discussed, albeit controversial, books. Although well received by global development agencies such as the World Bank, a key exponent of De Soto's work, positing that the creation and institutionalisation of individual property in housing and land revives “dead capital” and creates the conditions that will enable the poor to emerge from abject poverty, has been widely criticised. These criticisms show that (1) the thesis is flawed, (2) the flaw is due to implementational problems and (3) the practical implications arising from the thesis are largely neutral and will neither improve nor worsen poverty. Although agreeing with the first criticism, this paper argues that the second critique must be nuanced, and the third is entirely mistaken. Utilising insights from Joseph Schumpeter, Karl Polanyi and Henry George, it makes the case that applying De Soto's ideas through poli...

Starting Your Career With a Fixed-Term Job: Stepping-Stone or “Dead End”?

Abstract: This paper uses panel data from the UK and Germany to investigate the difference in the learning effect between workers who enter the labour market with a fixed term and a permanent job. Our results verify the existence of a wage penalty for entering the labour market with a fixed-term contract for the British males (7.1%) and especially for the British females (21.2%). British females also have a very strong learning effect that is especially large for temporary starters. In Germany, the initial wage penalty for temporary starters is smaller than in the UK—4.5% for the males and 3% for the females—and is persistent only for the males. Although initial wage differences are mitigated through the accumulation of skills on the job, this process differs between temporary and permanent starters. This suggests that the type of the starting contract may be a feature of labour market segmentation.

Epistemic Aspects of Economic Practice and the Need for Professional Economic Ethics

Abstract: This paper explores ethical burdens facing the economics profession which are associated with epistemic features of economic practice. Economists exert power over those they purport to serve by virtue of epistemic asymmetry between themselves and others, i.e., the intellectual monopoly they enjoy over a vitally important body of knowledge. But they also face the problem of epistemic insufficiency, which implies that they may do substantial harm as they try to do good. The paper explores the ethical entailments of the epistemic features of economics, and argues that managing the ethical challenges requires a new field of inquiry, the field of professional economic ethics, and not just a code of conduct.

Kantian Ethics and Economics: Autonomy, Dignity, and Character

Abstract: The fields of ethics and economics often share a difficult relationship because their domains overlap, with each seeking primacy. Finding the right connection between the two disciplines demands ca...

Economics: Unfit for Purpose

Abstract: This paper is a shortened and revised version of the Closing Plenary given to the World Congress of the Association of Social Economics, and Cairncross Lecture, University of Glasgow, June 2012. Mainstream economics is seen as unfit for purpose because of deficiencies that have long been criticised by a marginalised heterodoxy. These include the taking out of the historical and social even if bringing them back in on the basis of a technical apparatus and architecture that is sorely inappropriate. These observations are illustrated in passing reference to social capital but are particularly appropriate for understanding the weakness of ethics within mainstream economics. An alternative is offered through taking various “entanglements” (such as facts and values) as critical point of departure, leading to the suggestion that ethical systems are subject to the 10 Cs—Constructed, Construed, Conforming, Commodified, Contextual, Contradictory, Closed, Contested, Collective and Chaotic.

Islam and Markets

Abstract: The field of Islamic Economics has traditionally focused on two main areas of inquiry, banking and the public sector. The objective of this paper is an attempt to fill an important gap in the Islamic Economics literature that has been surprisingly overlooked by most scholars in the field. This gap concerns the nature and role of markets in an Islamic economic system. The primary concern is to investigate the nature and structure of an Islamic formulation of markets. The paper engages in a detailed analysis of Islamic scripture, the Qur'an and Hadith, pertaining to the issues of contracts, exchange, markets, prices, regulation, usury, and competition. The paper identifies an active and comprehensive treatment of markets in Islamic scripture that questions many of the misconceptions surrounding the relationship between Islam and markets.

The State and Religion

Abstract: The proposition that the State should be separated from the Church is well accepted by students of democracy in the West. Huntington ((1996) The Clash of Civilizations and the Remaking of World Order, New York: Simon & Schuster) went so far as to claim that the separation of Church and State was a salient feature of Western Civilization, which explains why Western countries tend to be democracies, while democracy in other cultures is rare. Huntington's claim obviously presumes that the State is separated from the Church in Western democracies. A closer look at the relationships between State and Church in these countries, however, reveals considerable financial and institutional linkages between the two institutions. Democratic states in the West subsidize religious organizations and religious schools, allow or even sometimes compel religious instruction in public, supposedly secular schools, and enact laws, which advance religious agendas. This article documents and discusses these state–church...

Will the Phoenix Fly Again?: Reflections on the Efficacy of Oaths as a Means to Secure Honesty

Abstract: What kind of phenomenon is a banker's oath? The oath is a warranty added to a promise, and has a complex nature and history that is discussed. Recent research on promising is presented that indicates that there may be a desired effect on both oath taker and on the audience, even if an oath is performed reluctantly or insincerely. Based on a comparison with the oath of office, it is argued that a banker's oath is not just a professional oath sworn to peers, but rather a political oath whereby one swears to the nation. Furthermore, the oath's long history indicates possible strengths and problems with the introduction of a banker's oath. It is concluded that the moral nature of an oath has to be taken into consideration, and that it is not just a tool to try and create trust.

The Ethics of Swearing: The Implications of Moral Theories for Oath-Breaking in Economic Contexts

Abstract: Many readers will share the judgement that, having made an oath, there is something morally worse about consequently performing the immoral action, such as embezzling, that one swore not to do. Why would it be worse? To answer this question, I consider three moral-theoretic accounts of why it is ‘extra’ wrong to violate oaths not to perform wrong actions, with special attention paid to those made in economic contexts. Specifically, I address what the moral theories of utilitarianism, Kantianism and a new communitarian-relational principle entail for the wrongness of oath-breaking. I argue that the former two do not adequately capture why it is extra wrong to perform an immoral action that one swore not to do, but that the latter appeal to a morality of communal relationship offers a promising account.

Moral Sentiments, Institutions, and Civil Society: What Can Hegel Contribute to Sen's Theory of Justice?

Abstract: In his Idea of Justice, Amartya Sen compares the two basic approaches to evaluating institutions, transcendental institutionalism and realization-focused comparisons. Referring to Adam Smith's Impartial Spectator, he argues in favor of the latter and proposes the principle of open impartiality. However, this cannot solve the tension between universalism and contextualization of values that Sen has inherited from Smith. Based on recent Hegel scholarship, we argue that some of the difficulties can be resolved, considering the role Smith played in the development of Hegel's thinking. Hegel's concept of recognition plays an essential role in establishing the possibility of impartiality both on the level of consciousness and on the level of institutional intersubjectivity. Hegel's critique of Kant's formalist ethics (also considered as transcendental institutionalism by Sen) and his analysis of the civil society in the Philosophy of Right, especially his focus on associations and Estates, can serve as a model ...

Local Area Inequality and Worker Well-Being

Abstract: This paper uses General Social Survey data linked to Census data to investigate the effect of local area income and income inequality on worker well-being. Others have found a robust negative correlation between reference group income and self-reported well-being. However, in many cases the reference group is defined as a large geographic area. This paper adds to the literature in two ways. First, it considers multiple nested geographic reference groups with US data. Second, it explicitly considers income inequality in addition to the level of income. It is found that both income and income inequality are positively associated with well-being at the census tract level, but negatively associated at the county level. Further, the effect of inequality on well-being decreases as income increases at the census tract and county level, while it increases at the state level.

Public or Private Orientation of Pension Systems in the Light of the Recent Financial Crisis

Abstract: This paper studies the appropriateness of a public or private orientation of pension systems in the light of the recent financial crisis, which has underscored the difficulties and contradictions associated with each system. The different institutional arrangements, in which public or private pension systems are embedded, are key components when assessing their responses to the crisis. Particularly, private pension systems are intertwined with financial markets, while social insurance-based pension systems are linked to the labour market mechanisms. This paper compares the British and French pension systems, as “archetypes” of private-oriented and public-oriented systems, respectively, the first relying on the market and private pension schemes, and the second on mandatory social insurance. This paper shows that the crisis has upheld the founding principles of the public (French) and private (British) pension systems to maintain the existing institutional configurations. At the same time, both systems hav...

On the Natural and Economic Difficulties to Fulfilling the Human Right to Water Within a Neoclassical Economics Framework

Abstract: We present a neoclassical economic model of the human right to water using a nonrenewable resource model inclusive of a backstop technology. The right is interpreted as a minimum consumption requirement the government is obligated to fulfill in the event that any one household cannot do so independently. Differing by income levels, households maximize utility by purchasing a composite consumption good and water from two distinct, government-owned sources. Facing physical and financial constraints, the government uses fiscal policy to address potential human rights violations. Reducing the analysis to two periods, we develop a novel approach to compare total welfare levels from a joint human rights and neoclassical economics perspective. We define a human rights welfare standard and discuss cases in which traditional social welfare measures would exceed, violate, or meet this standard. We thus offer a unique way to merge economic analysis with human rights research.

Overcoming Household Shocks: Do Asset-Accumulation Strategies Matter?

Abstract: This paper is motivated by the observation that the type and the combination of assets are associated with the likelihood of poor households' experience of shock. Focusing on the case of adivasi households in the south Indian state of Kerala, we find that the type, number and combinations of specific assets (primarily social and physical capital) yield varied magnitudes of association with households' experience of shock, which is a measure of vulnerability. Thus, going beyond mere welfare considerations, social policies that prioritise and sequence the type and combination of asset building based on contextual factors help minimise the incidence of shocks and improve livelihood choices.

The New Holy Wars: Economic Religion vs. Environmental Religion in Contemporary America

Abstract: In 1967, Lynn White, Jr., published a paper in Science suggesting that the JudeoChristian tradition was to blame for the rampant environmental degradation of the West. According to White, the root of the Judeo-Christian environmental ethic is “dominion-over-nature” as written in Genesis 1:26. While other religious traditions view nature as an end in itself, White argued, the Judeo-Christian tradition perceives nature as existing for human exploitation. Although White certainly was not the only or the first to suggest that Christianity bears responsibility for the environmental problems of Western society (e.g. Toynbee, 1974; Watts, 1958), he is perhaps best known for making this argument, and his “dominion-over-nature” thesis has spurred quite a number of researchers to empirically examine the relationship between the Judeo-Christian tradition and environmental attitudes (Hayes and Marangudakis, 2000). Robert Nelson, who teaches environmental and natural resource policy at the University of Maryland in College Park, takes this inquiry into the relationship between religion and environmentalism further, suggesting that the American environmental movement is itself a secular religion based in the traditions of Protestantism. Nelson draws on 18 years of experience working as an economist and policy analyst for the US Interior Department from 1975 to 1993. The competing land management policies and priorities that Nelson witnessed within the Department during this time inspired him to investigate the values underlying those environmental policy preferences. In The New Holy Wars, Nelson expands on his previous book, Economics as Religion (2001), to reveal how competing environmental policy preferences are based in the opposing secular religions of economics and environmentalism. REVIEW OF SOCIAL ECONOMY

The Increasing Role of Practical Reason in the Human Development Reports

Abstract: Fil: Crespo, Ricardo Fernando. Universidad Austral. Instituto de Altos Estudios; Argentina. Consejo Nacional de Investigaciones Cientificas y Tecnicas; Argentina

Oaths and codes in economics and business

Abstract: The Dutch banking sector responded relatively quickly when the financial crisis hit the country. Only 2 months after the defining moment of the crisis, the dramatic collapse of Lehman Brothers on 1...

Principles as “Rules Of Thumb”: A Particularist Approach to Codes of Ethics and an Analysis of the Dutch Banking Code

Abstract: The rise of ethical codes suggests that such codes may enhance ethical behavior. However, research on ethical codes is far from univocally positive about this. Recently, in practical philosophy, particularists have argued against the idea that principles are important for ethics because principles express reasons for or against an action, whereas what is a reason for a certain action in one situation can be a reason against, or no reason at all, in another one. Nevertheless, according to particularists, the case for principles—and thus ethical codes—is not hopeless. Even if principles cannot capture the full complexity of reasons for action, they can help as “rules of thumb” to remember possibly important reasons. This paper develops a particularist approach to codes of ethics, and presents some conclusions about the conditions under which codes of ethics may enhance ethical behavior. An analysis of the Dutch banking code shows the usefulness of a particularist approach.

Can We—and Should We—Measure Well-Being?

Abstract: In this article, I argue that recent criticisms of happiness research in economics can be extended to any conception of well-being used for scientific or policymaking purposes. These criticisms are both practical and ethical: well-being is not only impossible to define, measure, or implement, but its use also offends human dignity through unjust distribution of harm and value substitution. On this basis, I recommend the abandonment of welfare economics and urge social economists to propose new approaches to addressing social problems that are more focused and respect the dignity of persons.

Economics, Ethics and Thanatology: Lessons from the Ancients

Abstract: The normative presuppositions motivating rational choice decision-making based on optimizing objectives amount to a thin account of ethical economic behavior. Ancient thought offers insights that can provide a firmer basis both for personal, individual choice as well as for public policy. After a brief review of Epicurean and Stoic ethical principles, a comparison is made of modern economic and Hellenistic conceptions of rationality and rational behavior. These competing conceptions are then applied to an examination of a contemporary public policy problem, namely health care, particularly as this applies to “end-of-life” issues. The argument concludes that decision-making based on a eudaimonic conception of the good has the potential to provide us with a more efficient health care system as well as one that more satisfactorily addresses the needs of the chronically ill and dying patients who account for a highly disproportionate share of health care expenditures.

Inequality, Development, and Growth

Abstract: One could argue that the reduction of intergroup inequalities is important on intrinsic grounds alone, however Inequality, Development, and Growth goes beyond that starting point and focuses on explicit linkages between inequality and growth. The empirical nature of this book showcases recent trends in feminist macroeconomic research in developed and developing regions; at the same time, the book reads like an academic primer on the feminist macroeconomic perspective. The edited volume contains 11 chapters that originally formed a 2009 special issue in the journal Feminist Economics. The book should appeal to scholars with a variety of exposure to the feminist perspective. In particular, anyone with a broad understanding or curiosity of this framework—but perhaps struggles to lucidly describe it to colleagues— should be rewarded with greater insight and clarity on the specific, but important, details. The book begins by outlining some of the central tenets of the feminist perspective and is followed by several empirical applications. A thorough description of each chapter is out of the scope of this review, so I will attempt to describe some of the central themes that emerge from the book alongside references to intermittent chapter highlights. The first two chapters form the foundation for the later empirical chapters, and this organization is perhaps the greatest strength of the book because it introduces the feminist conceptual framework rather than simply over-viewing the ensuing chapters. Setting the tone in the first chapter, the editors outline the premise ‘that macroeconomic theory and policy should be constructed within the broader framework of human well-being, rather than being solely concerned with how economies function and the achievement of macroeconomic fundamentals such as price stability and robust growth rates’ (p. 2). They then clarify the connectedness of well-being and income inequality by arguing that the latter translates into unequal political and social power. The first two chapters take a comparative approach by describing the central features of feminist and mainstream perspectives. The most salient distinction is that the feminist approach goes beyond arguing for equality of opportunities to equality in outcomes as defined as a condition of similar group distributions such that no one group is systematically disadvantaged. Chapter 2 by Diane Elson follows the introduction with an in-depth examination of how gender equality features in the World Bank’s World Development Report 2006: Equity and Development. REVIEW OF SOCIAL ECONOMY

The Vatican and the International Monetary System

Abstract: This paper considers the Note issued by the Pontifical Council for Justice and Peace in 2011 calling for reform of the international financial and monetary systems. Three main themes are identified: (a) the inequality of global economic growth over the last century, (b) the failings of economic liberalism as a guide for the conduct of policy and (c) the need for a degree of transfer of sovereignty from individual states to the global level. This paper articulates the meaning of these themes in economic terms and illustrates the nature of the changes in thought and practice that the Note considers necessary in the interests of the common good.

The Pursuit of a Measure of Happiness

Abstract: Three new books contribute to the growing economic literature on happiness, each offering a unique perspective on the issue and speaking to different audiences. Briefly, Hirata's book is an academi...

Trading Stories: Experiences with Gender and Trade

Abstract: In Trading Stories, Marilyn Carr and Mariama Williams present 24 chapters representing 23 contributors, all addressing the links between gender, trade, and economic development. Trade policy is often formulated without considering the gender-differentiated socioeconomic outcomes that often result from so-called “gender-neutral” policy. Even when inequitable outcomes become apparent to policymakers, it can be challenging to figure out exactly how to compensate for these inequalities, how to reformulate policy to avoid such outcomes in the future, and how to fully engage women as participants in and beneficiaries of ongoing processes of trade liberalization. In response to these important and highly complex issues, Carr and Williams aim to add to the growing body of evidence that will help governments to effectively mainstream gender in their trade policy. Trading Stories is published by the Commonwealth Secretariat—a voluntary association of 54 countries from six continents, working together and supporting each other toward shared goals in democracy and development. The book is “part of a wider Commonwealth Secretariat programme that has worked systematically to build capacity at national and regional level with the key government ministries and private sector institutions involved with trade policy formulation, implementation, and negotiations” (pp. vii–viii). To this end, the editors have compiled 20 regional and country case studies, written by a combination of academicians; researchers and analysts in international organizations, policy institutes, non-governmental organizations, and international networks; activists; and directors/managers/ owners of private enterprises. Most of the contributors have extensive experience working and living in the developing world (which is the focus of this book). Trading Stories is divided into two parts; each has an introductory chapter, ten case studies, and a concluding chapter discussing the lessons learned. Part 1 focuses on the ways that gender is impacted by trade policy; the case studies in this section are divided into four categories: import liberalization, preference gain and loss, service liberalization, and non-tariff trade barriers. Part 2 addresses various ways of linking women to export markets in three main product groups (traditional primary products, new export markets, and manufactured exports). Both sets of case studies deal with wide-ranging topics and geographic areas of emphasis. The first ten address the effects of tariff reductions on sugar in Kenya, trade liberalization on the Jamaican poultry industry, the Multifibre Arrangement BOOK REVIEWS