Volume XII Issue 1

Autumn 2018

1. Financial bubbles and their magic: asset price as a heroic journey in the financial markets

Alexandru Balasescu ; Apurv Jain.
Why do financial crises appear unprecedented in spite of being a rather regular occurrence across countries and time? There are many answers from various schools of finance and economics, including Minsky's financial instability hypothesis in which systemic stability endogenously results in instability. We explore the inclusion of observed human behavior in an endogenous framework by engaging with anthropological concepts such as myth, ritual and magic that structure and explain our behaviour, and by extending the concept of agency from human to non-human. We also point to the possibility of better understanding our position in the mythological cycle using the new social media data. The aim of the article is to offer a holistic framework of interpretation of causes and circumstances of economic crises, using the tools of economy, semiotics, and economic anthropology that would account for both the universality of these crises and for their particular occurrences that always seem unique.

2. Negative and positive liberty and the freedom to choose in Isaiah Berlin and Jean-Jacques Rousseau

Stefan Collignon.
Berlin has made the famous distinction between negative and positive liberty. For many liberals, negative liberty is modern individual liberty manifested in markets, while interference by the State is a form of positive liberty. Berlin was also repelled by Rousseau's concept of the general will, which he considered as a form of collectivist holism. The paper argues that this philosophy is a mistaken interpretation of Berlin's two concepts of liberty and of Rousseau's general will. In a simple model of individual and collective choice under conditions of bounded rationality, it is shown that positive and negative liberty are interdependent. The collective choices made under positive liberty can be modeled as the stochastic version of Rousseau's general will, provided that liberal democracy enables the conditions of free public deliberation. In that case, the individual freedom cherished by Berlin is compatible with positive liberty.

3. Classical economics must not become history

Ion Pohoată ; Delia-Elena Diaconasu ; Vladimir-Mihai Crupenschi.
This paper is meant as a clear statement that things can no longer continue the way they have gone so far. If analyzed critically, the classical heritage, enshrined in fundamental rules and theories, the result of a massive abstraction effort, has not always been consolidated and developed properly in modern times. Therefore, compared to other sciences, economics has been losing ground, exactly where it should have been reinforced by those who serve it-, the economists. Its main core, the classical heritage, has been enriched, but the additions, knowingly or not, have in fact weakened and transformed it into a loose collection of feeble causalities and verbosity. It is imperative that such deviations be stopped. We suggest a two-step solution: a) an inventory of the elements that define the hard core of Economics; b) a review of the circumstances that show what happened with said hard core. The conclusions point to a necessary return to classical ideas.

4. Ecce Homo-Economicus? The Dr. Jekyll & Mr. Hide syndrome of the economic man in the context of natural resources scarcity and environmental externalities

Panos Kalimeris.
Indeed, the artificial entity ‘Homo-Economicus’ plays a central role in modern neoclassical economic theory. Maybe an illegitimate child of markets’ self-regulation doctrine and the emerging rationalism - professed by the post-modern realms of neoliberalism and the ongoing globalization process - this theoretical abstraction is promoted as a potential prototype of human behavior. It is firmly believed, that this individualistic, self-motivated, and above all, perfectly informed ‘entity’ could, theoretically, lead the economic system into profound balance between supply and demand, consumption and production, utility maximization, and so on. The present paper consists of a criticism to the mainstream prototype of Homo-Economicus, with further extensions to the neoclassical paradigm. Placing this criticism in the context of ecological economics, the paper argues that the notorious rationality of Homo-Economicus seems to be vanished in the deadlock of a futile race towards non-renewable natural resources depletion and increasing environmental externalities. Finally, a brief review of alternative theoretical frameworks and evidence from institutional and behavioral economics, delineates an emerging pressing request for a paradigm change.

5. Critical comments on the philosophical context of Ludwig von Mises's 'Human action'

Alexandru Popovici.
Mises’s work of ‘Human action’ is analyzed in relation to the methodological conceptions of his predecessor C. Menger and of his successor F. von Hayek. Also, it is placed in the continuation of one of his previous works and in contrast to one that followed it. Some of his ideas can be better understood in such a way, while others show themselves as contradictory. It results that his attempt to combine apriorism with scientific realism explains some of major difficulties of Mises’s argumentation.

6. Review of Tavasci, Daniela and Luigi Ventimiglia (eds.), Teaching the History of Economic Thought. Integrating Historical Perspectives into Modern Economics, Edward Elgar Publishing, 2018, hb, vi+150 pages, ISBN 978-1-78811-347-2

George Serban-Oprescu.

7. Review of Max Haiven, Art after Money, Money after Art; Creative Strategies Against Financialization, London: Pluto Press, 2018, 279 pp., pb. £19,99, ISBN 978-074533824

Georgios Papadopoulos.