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Methodology in Heterodox Economics

Paper Session

Sunday, Jan. 6, 2019 10:15 AM - 12:15 PM

Hilton Atlanta, Crystal F
Hosted By: Association for Evolutionary Economics
  • Chair: Thomas Kemp, University of Wisconsin-Eau Claire

Circular Economy Business Models: A Critical Examination

Katherine A. Whalen
,
Lund University
Charles J. Whalen
,
State University of New York-Buffalo Law School

Abstract

In a recent paper, we outlined the circular economy (CE) perspective and its compatibility and complementarity with institutional economics. We traced the CE notion to Kenneth Boulding’s emphasis on the need for humans to live in harmony with an ecosystem that has a finite quantity of raw materials and limited capacity to sustain itself in the face of pollution. And we suggested that a dialogue among CE researchers and institutionalists could help humanity move in the direction Boulding described.

But our paper also observed that some CE proponents give so much attention to the business case for alternatives to the linear economy perspective (of “take, make, and dispose”) that they have decoupled the CE notion from its attention to ecosystem sustainability. In this follow-up paper, we highlight the decoupling through a critical examination of CE business models, drawing on our review of over 250 enterprise cases discussed in the CE literature. These models include pay-per-use (while the product remains enterprise property), product-life extension (via repair or refurbishment and resale), and recycling.

Such business models have the potential to yield enterprise success. On their own, however, the models say nothing about ecological sustainability—and an enterprise’s aim instead becomes profitability and business growth by means of increased production efficiency, risk mitigation, and pursuit of new revenue opportunities. What’s needed is attention to what institutionalists call “higher efficiency,” and that requires strategic action and systemic changes at the societal level by means of public policy.

Modeling System Complexity in the Context of Geopolitics Related to Climate Change

F. Gregory Hayden
,
University of Nebraska-Lincoln

Abstract

Due mainly to the evolution of science and technology, ontic systems have continuously become more complex. Thus, original institutional economics has adopted and advanced the concepts of complex systems. This paper further develops complexity concepts and relates them to problems of climate change. Systems complexity is combined with concepts from geopolitics in order to introduce geopolitical analysis about boundaries/borders into complex systems. The addition of geopolitical ideas allows for systems to focus on a designated social and ecological context that fits the problem of interest. The social and ecological components of open geopolitical systems lead to processes that are dynamic and complex. Thus, complex-systems modeling needs the assistance of geopolitical concepts and geopolitical models need to be embedded in complex systems. Each section of the paper clarifies its meaning with examples of climate change concerns.

The Place of Uncertainty in Heterodox Economics: A Bibliometric Study

Felipe Almeida
,
Federal University of Paraná

Abstract

In general lines, heterodox economics relies on a non-methodological individualism approach which takes into consideration something named by John Davis as "institutions–history–social structure nexus". There are some common themes among heterodox approaches, such as social issues, ethics, development, ecology… Among those themes, we find uncertainty. In the beginning of the 20th century, Lord Keynes highlighted uncertainty as a key concept for economics. Years later, John Kenneth Galbraith gave the concept another analytical meaning in his “The Age of Uncertainty”. Those are the major heterodox contributions about uncertainty. Forty years have passed since Galbraith’s book; therefore, the way in which heterodox economics is dealing with uncertainty nowadays reveals an important issue about the evolution of the heterodox approaches. This paper proposes to investigate how heterodox approaches have been dealing with the concept of uncertainty throughout the last forty years. This paper relies on a bibliometric analysis to identify the concept of uncertainty in heterodox journals and the genealogy of different heterodox meanings of uncertainty. The heterodox journals studied by this paper follow Fred Lee and Bruce Cronin’s heterodox economics rankings of economic journals. This study relies on the top seven of that ranking: Cambridge Journal of Economics, Journal of Economic Issues, Journal of Post Keynesian Economics, Review of Radical Political Economics, Economy and Society, Development and Change and Review of Political Economy.

Indicators, Constructs, and Latent Variables in Institutional Research

Richard V. Adkisson
,
New Mexico State University

Abstract

Institutional economists are typically concerned with a wide array of social issues related to the provisioning process. Environmental impacts, inequality, discrimination, cultural values, power, governance, and discrimination are just of few of the things thought to influence economic outcomes. Because these things are difficult to measure/quantify, it becomes difficult to monitor variation through time or across social contexts. The social indicators movement (with roots in original institutionalist work) has been working for over 50 years to construct meaningful indices to quantitatively capture difficult to measure concepts. However, concerns about the validity of such indices means that institutionalists are often reluctant to incorporate them into their analyses. This paper explores the methods used to validate constructed variables and the ways that institutional economic analysis could be enriched if properly validated indicators/constructs were to find wider acceptance in institutional work.

Economic Assessment Toolkit for Local NGOs Serving Low-Income Communities

James I. Masters
,
Center for Community Futures
Allen C. Stansbury
,
Center for Community Futures

Abstract

We all know that a good paying job gets people out of poverty. The unemployment rate is low, but 50 million people have trouble making a living. What is going on here? For the past 35 years, the national trends about the ability to earn a living are mostly negative for most wage earners. The reasons are: automation; globalization; negative behaviors of employers; rising income and asset inequality and the failure of public policy. The new Toolkit for Local Economic Analysis provides step-by-step methods to discover the characteristics of jobs in your local serving area. Examples include the numbers of people who: dropped out of the workforce; went on disability; are working as temps; are working only part-time; or are working full time but are below poverty wages. These are just five of the 37 dimensions of the job market that NGO service providers can use to “show the facts” about their area to their stakeholders.

Beyond GDP: Alternative Measures of Progress and Sustainable Development Goals as Institutional Adjustments to Uncertainty

Charles M. A. Clark
,
St. John’s University
Catherine Kavanagh
,
University College Cork

Abstract

4. The three major developments of the 20th Century economy (large corporation; the Welfare State; and macroeconomic policy) were institutional adjustments to the problem of uncertainty. All were tied closely to Gross Domestic Product growth for their success. National economic policies centered on promoting GDP as the primary public policy goal with the hope that the increased wealth provided by GDP growth would solve all problems. By the last two decades of the 20th century however, GDP growth started to become decoupled with improvements in well-being. This coincided with a push for evidence-based public policy formation to counter excessive ideology-based policy and the adoption of a business approach to accountability. Starting with community and environment activists and in the field of development and poverty research, numerous alternatives of GDP sprang up to challenge the economic statistic that ruled all others. Instead of promoting economic growth with the hope that a rising tide would lift the specific boat one was advocating for, attention shifted to improving health, or gender, environmental, or any other in a long list of other outcomes directly. Instead of GDP as a “means to an end”, they advocated to improve the ends directly. By 2015 a thousand points of light started to illuminate economic policy formation, with the brightest being the Sustainable Development Goals. Our paper will look at this new development in economics measurement and critically assess the future development, potential traps and challenges to economic policy formation of a world not ruled by GDP.
Discussant(s)
Daphne T. Greenwood
,
University of Colorado-Colorado Springs
JEL Classifications
  • B4 - Economic Methodology
  • B5 - Current Heterodox Approaches