|Institutional economics and economic organisation theory : an integrated approach
Slangen, L.H.G. ; Loucks, L. ; Slangen, A.H.L. - \ 2008
Wageningen : Wageningen Academic Publishers - ISBN 9789086860777 - 431
instellingen - economie - neo-klassieke economie - economische theorie - studieboeken - institutionele economie - economische organisatietheorie - institutions - economics - neoclassical economics - economic theory - textbooks - institutional economics - economic organization theory
This publication presents one of the first attempts to integrate two emerging bodies of economic research: institutional economics and organizational theory. It begins within the framework of neoclassical economics, and then extends the boundaries of this framework to offer answers to questions that have so far remained puzzles in neoclassical economics. The integrated approach of this publication also challenges the dominant paradigm in economics over the last 15 years that views the market as the best mechanism for carrying out transactions. The market is not the only transaction mechanism; other modes of organization are also important. However, this way of thinking does not involve a simple reintroduction of the confrontation between the 'government' and the 'market'. On the contrary, the integrated approach tries to open the 'black box' of the role of institutions in daily life and the diversity of modes of organization. Through this integrated approach, the book hopes to contribute to a better insight to real world problems.
A Great Revolution in Economics - Vienna 1871 and after
Leen, A.R. ; Houmanidis, L.T. - \ 2001
Wageningen : Cereales - ISBN 9789080572430 - 192
economie - economische theorie - consumenten - consumentengedrag - markteconomie - marktconcurrentie - neo-klassieke economie - waardetheorie - geschiedenis - economics - economic theory - consumers - consumer behaviour - market economics - market competition - neoclassical economics - value theory - history
This book contains a comprehensive perspective on both older and modern Austrian economics. The first part especially describes the older Austrian School of Economics emphasizing both its subjective feature and its theoretical feature. Both features are extensively discussed from a non-Austrian perspective. The second part, in general, describes modern Austrian economics as an extension of Menger's older static subjectivism: a consequent dynamic subjectivism. In particular it examines the question of what the calculative and entrepreneurial consumer looks like in the market process. It also gives an extensive overview of the method of Austrian economics: praxeology.
The consumer in Austrian economics and the Austrian perspective on consumer policy
Leen, A.R. - \ 1999
Agricultural University. Promotor(en): H. Folmer; W.J.M. Heijman. - S.l. : S.n. - ISBN 9789058081025 - 223
economie - economische theorie - methodologie - economische analyse - welvaartseconomie - neo-klassieke economie - markteconomie - marktconcurrentie - consumenten - beleid - overheidsbeleid - kapitalisme - productaansprakelijkheid - economics - economic theory - methodology - economic analysis - welfare economics - neoclassical economics - market economics - market competition - consumers - policy - government policy - capitalism - product liability
In this thesis I examined the place of the competitive-entrepreneurial consumer in Austrian economic thought. For a neoclassical economist, competition among consumers is hard to find. For an Austrian economist, however, it is a necessity. The introduction puts forward the problem that although an Austrian economist believes that everyone -the consumer included- acts entrepreneurially, in his elucidation of the market process he gives the role of entrepreneur to the producer only.
In Part I, "The Consumer in Austrian Economics" I looked at the questions (1) What is Austrian economics? (2) What is the Austrian methodology? and (3) What about the consumer in Austrian economics? The first chapter explains the name Austrian. Although it indeed began in Austria, today it has nothing to do with that country. The term Austrian means a way of looking at the subject and the method of economic science. The perfectly-competitive model of mainstream economics is replaced by the notion of the entrepreneurial-competitive market process. The second chapter looks at the method of Austrian economics: praxeology. It is the verbal elaboration of the logical implication that men act. The title of Mises's book "Human Action" sums it up. Purposes direct all conscious human action. Every human act exchanges something possessed for something preferred. All human action attempts to change the future. The chapter examines what this means for the Austrian perspective on some basic economic notions of human action and non-action (valuation and indifference curves), and economic laws (the law of decreasing returns). Economists use their minds to deduce conclusions; experience in human action is history and only history. There is a sharp difference between Austrian and mainstream neoclassical economics; the latter is often mathematically moulded and econometrically tested, the former never.
Chapter Three looks at the reason why the consumer is missing from Austrian economics. By emphasizing the importance of (often hidden) dispersed knowledge and the feasibility of the producer being able to calculate -as against a government's ability to calculate and collect all the necessary data- the consumer got lost. This all took place in the so-called socialist-calculation debate that raged between the two world wars. The consumer was never to be found again in Austrian economics. He is absent in the elucidation of the market as a dynamic process of entrepreneurial discovery, as well as, in the analysis of the possibility of economic calculation in monetary terms. The latter is discussed only in terms of production, and in the former modern Austrian economics uses the methodological makeshift of an entrepreneurial producer and a non-entrepreneurial consumer. Just like the classical economists before them, the Austrians neglect the rationality of the consumer.
In Part II, "The Consumer: Entrepreneurial and Calculative", I examined the question "What does the calculative and entrepreneurial consumer look like?" I have attempted to recompose market phenomena in terms of the typical components of everyday decision making. This is done for the ordinary businessman, as well as for the average consumer. Chapter Four discusses a lesser-known theme of the Austrians. Menger in his Grundzätze , gave four characteristics of goods as answer to the question of what makes something a good. Böhm-Bawerk in his Rechte und Verhältnisse added a fifth: individuals should also know how to use a thing. I used this fifth characteristic to throw light on the consumer: his form of alertness and entrepreneurship inside the market process. With the help of Ryle, I looked at a notion of alertness that suits the producer and at one that suits the consumer. Alertness is a form of knowing-how that can be differentiated for the producer as a capacity (competence) and for the consumer as a tendency (proneness). According to Ryle, although both can be simulated, we use the abusive word 'charlatan' for the fraud who pretends to be able to bring things off, and the abusive word 'hypocrite' for the one who effects motives and habits.
Chapter Five draws on the work of Schönfeld-Illy. Kirzner distinguishes maximization inside a given ends-means framework from the determination of the framework. The Robbinsian maximizer can perform only the first role. Mises's homo agens can do both. In Kirzner's methodological makeshift, the consumer acts as a pure Robbinsian maximizer. However, inside a Robbinsian framework of given ends and means, the consumer needs the same element of alertness that Kirzner locates in the determination of the framework. The consumer avoids the problem of the immeasurability of utility and shortens the calculation process with the help of three principles. The first is the separate utility of a good. Though the consumer's aim is to reach the greatest utility, he does not and cannot calculate total utility as such, but only the changes in total utility, changes brought about by adding goods to the ones already used. These changes give the total utility of each good separately. The second principle is quid pro quo. Changes in total utility do not give the consumer numbers in which he can calculate. What he can do is compare the changes with other changes. The third is economic relevance. The price relevant for the marginal part has an economic relevance for all other units of the stock of goods. These three principles form the basis of Schönfeld-Illy's theory on the role of prices (that is alertness) in the calculation process of the consumer.
Chapter Six expands on the calculation process of the consumer addressing the question of how the maximizing process of the consumer can be described from a subjective point of view, that is in terms of the components of everyday decision-making. The mathematical mould of neoclassical theory means that for the neoclassical the problem is a mathematical one: the solving of a Lagrangean function. From a theoretical point of view, a consumer has a lot of work to do in computing the marginal utilities. First, he has to line up all the alternative combinations of goods available, then he has to assess the needs successive units of the various goods can satisfy, and finally he has to find out at what point in the row of units satisfaction breaks off. It is impossible, however, to make all the necessary calculations. In reality the consumer has to take a short-cut. The notion of taking a short-cut can be formalized inside the neo-classical model by focusing on the notion of marginal utility: the way it functions in equilibrium and disequilibrium. Saving and consumption patterns are explained for two groups of consumers: (1) the well-established consumers, the ones we know from traditional economic theory, and (2) the trendsetting consumers, who are in disequilibrium by choice. The latter are either short-sighted or far-sighted.
Chapter Seven looks at the notion of marginal utility to answer the question of how a consumer calculates the total value of a divisible amount of goods. Wieser's Multiplicationstheorem des Wertes says that to get the total value, all units of a stock of good have to be multiplied by the attained marginal utility. Böhm-Bawerk's Integrationstheorem des Wertes says that the total value of a stock of goods is the sum of the utilities of the different units. Because Wieser underestimated the total utility of a stock of goods, his formulation found few followers. Schönfeld-Illy's interpretation of marginal utility, that of the economic relevance of a margin for the whole, gives an answer as to why Wieser's description could be true. Schönfeld-Illy solves an inconsistency in the thinking of Wieser, who took the description of marginal utility from the situation in which the calculation was already completed. However, he draws the description of the function of marginal utility from the situation in which calculation begins. Schönfeld-Illy wonders whether the last stage of calculation contains all the things used during the actual calculation process and, that consequently are contained in a conceptual description grafted upon the final stage.
In Part III, "The Austrian Perspective on Consumer Policy", I looked at consumer policy in general, and advertising (the way it functions and can be used to introduce a new product) and products liability (from a neoclassical and Austrian perspective) in particular. Chapter Eight introduces the notion of consumer policy and its link with creativity and entrepreneurship. It especially addresses the question of how the Austrian vision on the market process relates to consumer policy. In other words, what the impact of consumer policy is upon the perception by consumers and producers of the available array of opportunities. To describe the ways consumer policy hampers discovery I used Kirzner's four notions of the undiscovered, the unsimulated, the stifled, and the wholly superfluous discovery process. I concluded that the Austrian notion of the market provides a novel angle for a critique of the regulated consumer. Regulatory restrictions interfere with the spontaneous discovery process the unregulated market tends to generate. Consumer policy stifles the incentive that converts a socially desirable opportunity (an opportunity that transcends an existing framework of perceived opportunities) into a personally gainful one.
Chapter Nine demonstrates that there is room for the praxeological method in economics. Empirical facts cannot discriminate between two opposing hypotheses on advertising. (1) Advertising is partly deceptive and partly manipulative. Without government regulation this situation will continue. (2) Advertising is a good like any other good. The consumer gets the type and quality of advertising he wants and is willing to pay for. Advertising is an essential part of the competition process, making the product known to the consumers. Consumers are not passive actors but by-and-large act in their own self-interest. Chapter Ten expands on advertising by looking at pricing a real novelty. Competition among consumers can be used to spread the news. Where trends are conceived consumers compete, creating the market for the producer. Trends are not sold by competing producers but are bought by competing consumers.
Chapters Eleven and Twelve look at products liability (that is harms arising from commercial products) from the mainstream neoclassical point of view and from the Austrian one respectively. For a neoclassical, costs are objective and are known to the judge, who, by using the so-called Hand Formula, balances expected accident costs against the cost of making the product safer. A defendant is guilty of negligence if P times L is greater than B. Where P is the probability, a loss will occur, L is the value associated with the loss, and B the cost associated with preventing it. For an Austrian, however, since costs are subjective and knowledge cannot be centralized, contract law seems to be the best. In other words, it is the old rule of caveat emptor, "Let the buyer and seller beware". The parties can then arrange the expected costs and benefits beforehand from their own subjective point of view and entrepreneurial insights. The utter stranger (who is no partner in the exchange) whose property rights are violated -there are so-called negative externalities- can claim compensation. The amount of compensation is for the judge on ethical grounds, and not the economist, to decide.On the basis of the first three parts of this thesis, what have neoclassicals and Austrians to say to each other? What is the outcome on the consumer in Austrian economics and the Austrian perspective on consumer policy (cp. Kirzner, 1997, and De Soto, 1998, pp. 78-79)?
The methodological analysis in Part I shows that neoclassicals and Austrians do not have much to say to each other. Theories that do not need testing and are always true are out of the question in the standard neoclassical methodology of empirical falsification. Verbal logic, aprioristic-deductive reasoning leaves room for subjectivism and entrepreneurship, both of which the market process depends on. In other words, the claim of the Austrians that prediction is impossible -because what happens depends on knowledge yet to be created in an entrepreneurial process (to find out things we are not even aware of that we don not know them: to correct genuine errors)- stands against quantitative prediction as a sought and known objective of the neoclassical. The analysis of consumer behavior in Part II shows that neoclassicals and Austrians do not have to say much to each other. For an Austrian, the consumer is a creative entrepreneur who stands in the midst of a dynamic process. For a neoclassical, he is a homo economics who makes rational choices based on constraint maximization in a given and known ends-means relation.
The analysis of consumer policy in Part III shows that neoclassicals and Austrians do not have to say much to each other. For an Austrian, the knowledge the government should act on is subjective, dispersed, and changes all the time. Objective scientific knowledge alone is not enough; there is also the practical and purely subjective knowledge of place and time. For an Austrian, the government's role is to protect the property rights of the individual. If his property rights are involved, the judge decides on ethical grounds; economics is not involved. For a neoclassical, however, there is a complete knowledge of means and ends, though decorated with known uncertainty. Costs are objective and can be measured by a third party.
But is there nothing positive to be said about the neoclassical-Austrian connection? The Austrian revolution was and still is part of a larger tradition (see Chapter 1). It not only started in the 1870s with Menger, but with Jevons and Walras too. All three wanted to theorize. All three wanted to explain market regularities as the outcome of the rational choices of individuals subject to constraints. All endorsed the existence of economic laws showing systematic consequences to our actions. For Mises the notion of economic law is not only the core of classical economics but of neoclassical economics too. All neoclassicals want to explain the undesigned regularities of the market order as the outcome of the meaningful choices of individuals. Therefore Austrians are still part of the economic orthodoxy of neoclassical economics, although they are no longer part of the mainstream Walrasian and Marshallian branch. In other words, to a certain extent we can say that the language differs: formalistic precision in mainstream neoclassical versus verbal elaboration in Austrian economics. The latter reinforces most of the former's conclusions. I would argue that it is partly a difference in methodology: a different road is taken to reach the same conclusions (see for instance the law of decreasing returns in Part I). Of course, an Austrian would say that it is not only the language that differs, but the problem situation too. For him, subjective assessment and entrepreneurship are part of the richness of the empirical world. Both, however, crowd out formalism with its implied form of narrow rationalism and supposition of full availability of information, whether deterministic or probabilistic. Subjectivism and entrepreneurship cannot be analyzed with formal tools without transforming their essence. Simplification has its price.
Therefore, what the neoclassical can learn from the Austrian is that there is more in the world of the theoretical economist than only the economics of perfect competition. There is the competitive-entrepreneurial process of discovery (see Part I). A neoclassical tends to underestimate the learning capacity of individuals (see Part II), while, at the same time, overestimating the economic knowledge of the government. Negative externalities for instance are part of ethics not economics (see our Part III). Nevertheless, a neoclassical economist would counter this by saying that although what an Austrian says on subjectivism and entrepreneurship is very interesting, unless it is stated in formal proof it remains just that -an interesting idea and no more.
Applied welfare analysis (see Part III), however, unlike theoretical economics does not belong to a field where the Austrian and mainstream economist meet all that easily. For the Austrian, if subjective value and the open-ended market process are taken seriously, individual rankings cannot be fused together, and there is no end-state to mimic. There is no norm (taken from a pattern of imagined omniscience) for assessing policies. For the Austrian since sheer ignorance is not incorporated, mainstream welfare economics has no place for those acts of entrepreneurship the equilibrative discovery process depends on. Not only allocative efficiency but speed and accuracy with which the economy identifies and overcomes waste and discoordination are important too. However, compared to more heterodox forms of economics, Austrians and neoclassicals share the importance both give to laissez faire . The Austrian belief in it, compared to mainstream neoclassical economics, is strong. This study's emphasis on subjectivism and entrepreneurship reinforces this belief. The tendency towards greater awareness that leads to equilibrium is fuelled by producers as well as consumers (see Part II). Profit opportunities provide the incentive for both. There is a tendency for entrepreneurial errors to be corrected -not to be made. There is a tendency to be right. There is more to gain from greater awareness than from diminishing awareness; a tendency a changing government policy often frustrates. A certain environment of stability is necessary to overwhelm the forces of disequilibrium.
In other words, Austrian economics reinforces the mainstream belief in a spontaneous equilibrium. Not to the extreme of there always being an equilibrium, but certainly more than there never being an equilibrium. The consumer corrects errors too. Since the consumer is no producer, the Kirznerian notion of entrepreneurship as something correcting an already existing situation waiting to be discovered, fits him. He too gets his "profit" for overcoming ignorance through alertness.
If the just-said is true, the biggest problem for the Austrians is not that their theory is unrealistic or irrelevant, that it gives an inaccurate description of the social world or misunderstands the forces at work. No, their biggest problem is to explain why economists disagree. If theorizing is based on apodictally true premises, only to be stated to be seen as true, the rest being pure deduction, why do not all economists -including the neoclassicals- agree? But even Austrians differ. This is one problem the neoclassicals and Austrians share. As the former emphasize prediction and the latter verbal logic, both have questions to answer. The neoclassical has to explain why if he is so clever in making predictions, he is not rich. And the Austrian has to show why, someone so clever at making deductions does not have all economists agreeing with him.
Finally, is there really no point where Austrians and neoclassicals fully meet as far as the consumer goes? Yes there is. If the neoclassical is right, it follows that with the appropriate policy, consumers can be satisfied. Full knowledge excludes errors in buying: the consumer's nirvana. However, if the Austrian is right, this would mean the end of human action (and economics). The basic premise of the Austrians is "man act". We act if we are dissatisfied; when satisfied, action stops. "Some people sometimes say that they would like to know [...] what the prices are going to be in the stock market next weak. Actually, we do not want to know the future. If you, or I, or anyone could know the future, this would mean it was set and we could no longer act to change it. All human activity is an attempt to change the future. [...] if we had everything we wanted, there would be no reason to live. When the day comes that you have everything you want, let me know, I shall make arrangements to come to your funeral, because you will be dead" (Greaves, 1984, p. 6).
A perfect public policy would therefore solve the problem of the consumer for both neoclassical and Austrian. Either he would be in the consumer's nirvana or be vegetating in a state of non-action like a plant. Which does not make much of a difference: in both cases he would be dead.
We are back at the essence of Austrian economics I began with: the subjectivistic character of choice. For a neoclassical, a fully informed and satisfied consumer is possible. For an Austrian, since choice is essentially purposeful and entrepreneurial, it is an impossibility. Human choices, if real (that is inherently creative) could have been different and have different effects. A situation of full knowledge, a given framework of ends and means, excludes. "[I]ndividual choice," says Kirzner, "is always made with one's antennae alertly switched on to notice opportunities (that already 'exist', or that may be created) worth pursuing even through the mists of an uncertain future" (1982, p. 21).
|Austrian economics: Roots and ramifications reconsidered.
Krabbe, J.J. ; Nentjes, A. ; Visser, H. - \ 1989
Bradford : MCB University Press - ISBN 9780861764341
economische analyse - economische theorie - economie - methodologie - neo-klassieke economie - welvaartseconomie - begrippen - politieke economie - economic analysis - economic theory - economics - methodology - neoclassical economics - welfare economics - concepts - political economy
The idea of environmental welfare economics.
Krabbe, J.J. - \ 1989
Wageningen : Pudoc (Wageningse Economische Studies 12) - ISBN 9789067541442 - 73
conservering - schade - destructie - ecologisch evenwicht - econometrische modellen - econometrie - economische ontwikkeling - economische theorie - economie - milieu - milieueffect - innovaties - mens - wiskundige modellen - neo-klassieke economie - kwaliteit - recycling - sociologie - technische vooruitgang - technologie - theorie - afvalverwerking - afval - welvaartseconomie - begrippen - milieuwetenschappen - menselijke invloed - natuur - politieke economie - conservation - damage - destruction - ecological balance - econometric models - econometrics - economic development - economic theory - economics - environment - environmental impact - innovations - man - mathematical models - neoclassical economics - quality - recycling - sociology - technical progress - technology - theory - waste treatment - wastes - welfare economics - concepts - environmental sciences - human impact - nature - political economy
|Valuation methods and policy making in environmental economics.
Folmer, H. ; Ierland, E.C. van - \ 1989
Amsterdam [etc.] : Elsevier - ISBN 9780444873828 - 259
luchtverontreiniging - basisproducten - kosten-batenanalyse - econometrische modellen - econometrie - economische evaluatie - economisch beleid - economische theorie - economie - milieu - milieuwetgeving - milieubeheer - milieubeleid - milieubescherming - overheidsbeleid - investering - wiskundige modellen - neo-klassieke economie - kwaliteit - bodemverontreiniging - theorie - waarden - waterverontreiniging - welvaartseconomie - milieuwetenschappen - air pollution - commodities - cost benefit analysis - econometric models - econometrics - economic evaluation - economic policy - economic theory - economics - environment - environmental legislation - environmental management - environmental policy - environmental protection - government policy - investment - mathematical models - neoclassical economics - quality - soil pollution - theory - values - water pollution - welfare economics - environmental sciences