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ASE at ASSA PROGRAM, January 2018

Overview (detailed program follows):

Opening Plenary: Dani Rodrik, Ford Foundation Professor of International Political


Economy at the John F. Kennedy School of Government at Harvard University.

Title: “Is Economics Responsible for the Democratic Crisis?”

ASE Presidential Address: Quentin Wodon, Lead Economist in the World Bank's
Education Global Practice

Title: “Social Justice and Extreme Poverty: Rawls, Sen, and Wresinski”

Panels

1) Democratic Crisis and the Responsibility of Economics, I


(Joint ASE-AFEE panel)
Organizer: DeMartino
Chair: Whelan
Presenters: Galbraith, Christoforou & Adaman, Sherman, Grabel, Wolff

2) Democratic Crisis and the Responsibility of Economics, II


Organizer: DeMartino
Chair: DeMartino
Presenters: Dimand & Aigret, Folbre, Nelson, Coyle, McCloskey

3) “Financialization, Global Crisis, and Economic Stagnation”


Organizers: Arestis and Fontana
Chair: Fontana
Presenters: Arestis; Fontana & Sawyer & Rodriguez Gil , Setterfield, Szymborska,
Gushanski & Onaran

4) Post-Crisis Economic Policy in Europe and the US


Organizer: Eichacker
Chair: Eichacker
Presenters: Eichacker, Konstantinidis, Hannsgen, Herndon, Hillig

5) Solidarity and Sustainability: Full Employment, Inclusion,


and Social Justice
Organizer: Murray
Chair: Murray
Presenters: Forstater, Murray, Darity and Hamilton, Kaboub, Hossein

6) The 2008 Economic-Financial Crisis: 10 Years After


Organizer: Pressman

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Chair: Ngo
Presenters: Galbraith, Kelton, Weller, Long, Pressman and Scott

7) New Research in Applied Social Economics


Organizer: DeMartino
Chair: Wodon
Presenters: Davis & Arroyo Abad, Taylor, Wodon, Krishnan, Altman, Avsar

8) Realizing the Social Economy: Obstacles and Opportunities


Organizer: DeMartino
Chair: McIntyre
Presenters: Simiqueli and Souza Luz, Puhringer and & Ötsch, McIntyre,
Ramazzotti, Emami

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Session Details:

Panel 1: Democratic Crisis and the Responsibility of Economics, I


(Joint ASE-AFEE panel)

Organizer: George DeMartino


Chair: Charles J. Whelan, SUNY University at Buffalo
<cjwhalen@gmail.com>

Papers

1. Pecuniary Valuation and the Age of Trump

James K. Galbraith, The University of Texas at Austin


<galbraith@mail.utexas.edu>

The rise of Donald Trump reflected a victory, perhaps decisive, for the economic
perspective over its competitors. Veblen would not have been surprised.

2. Democratization of Economic Research and Policy: Public Participation for a Truly


'Social' Economics

Asimina Christoforou, Athens University of Economics and Business


<asimina.christoforou@gmail.com>
&
Fikret Adaman, Boğaziçi University
<fikret.adaman@gmail.com>

Economists talk about various groups of actors operating in the economy and
interacting with one another: consumers, producers, workers, managers and policy-
makers across different sectors, regions and administrative levels. But do
economists really talk with them? Do they openly and actively inquire about their
priorities and concerns, and jointly develop an understanding of the economy and
public policy in their real-world dimensions? The recent economic and political
crises can be read in part as rejections of the authority and privileges of experts who
advise democratic governments but tend to overlook their social responsibility. In
this article, it is argued that if economists wish to create better theories and policies
favouring both efficiency and justice, they should go into the field and open up
to public dialogue with social actors. Through the democratisation of economics
they may be able to forgo the intellectualism and paternalism that separate them
from the true economy. More importantly, they may anticipate that local economies,
especially in the post-crisis era, have generated alternative forms of consumption
and production in the so-called social economy (such as voluntary associations,
cooperatives and social enterprises), which take on the provision of social goods
and offer a voice to marginalised groups in response to the fiscal consolidation of

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governments and the monopolisation of markets. The social economy, founded on
principles of democratic participation of all those affected by its operations,
constitutes an arena that particularly favours the organisation of a deliberative
platform among experts and practitioners to discuss and determine welfare and
policy on the basis of economic and social objectives. Consequently, economics must
go beyond the traditional market-state dualism and open up to alternative social
values and structures that are in force. The truth of the matter is that a 'social'
economics cannot be built without the 'social'.

3. Commodified Attention, Commodified Speech, and the Rejection of Expertise

Zoe Sherman, Merrimack College


<shermanz@merrimack.edu>

In this paper I aim to consider some aspects of the system of communications within
which expertise may be created and accepted… or rejected. For speech to be
recognized as an expression of expertise, it has to be recognized as making a
legitimate truth claim grounded in something other than, and broader than, the
speakers’ narrow self-interest. Almost by definition, the content of the truth claims
made by an expert are difficult for the nonexpert to assess. To recognize expertise
must be an expression of trust. The communications system we inhabit has two
features that corrode that trust: commodified access to attention and commodified
speech. The advertising industry and the media that serve it treat our attention as a
commodity. Attention sellers have developed into niche marketers and attention
buyers have developed the practice of placing narrowly targeted orders for eyes and
ears. As a result, we are grouped into such different attention clusters, it is nearly
impossible for anyone to be recognized as a trustworthy speaker by members of
multiple clusters. In addition, much of what we hear is said by people who speak on
behalf of others to earn a paycheck. We are continually confronted with speech that
is untethered from any authentic speaker – it is neither fully the speech of the buyer
nor of the paid producer – and we encounter this speech as members of bundles
that are increasingly disjoint from one another. These are not conducive conditions
for the cultivation of broadly recognized expertise.

4. When Things Don’t Fall Apart: A Hirschmanian Perspective on the Global Crisis
and the Developing World

Ilene Grabel, University of Denver


Ilene.grabel@du.edu

In a paper drawn from When Things Don’t Fall Apart: Global Financial Governance
and Developmental Finance in an Age of Productive Incoherence (MIT Press,
forthcoming 2017), I challenge the dominant view that the global financial crisis had
little effect on global financial governance and developmental finance. Most
economists, including those drawing from a range of heterodox traditions, discount

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all but grand, systemic ruptures in institutions and policy. Against this narrative I
argue instead that the global crisis induced inconsistent and ad hoc discontinuities
in global financial governance and developmental finance that are now having
profound effects on emerging market and developing economies. My chief
normative claim is that the resulting incoherence in global financial governance is
productive rather than debilitating. In the age of what I term productive
incoherence, a more complex, dense, fragmented, and pluripolar form of global
financial governance is expanding possibilities for policy and institutional
experimentation, policy space for economic and human development, financial
stability and resilience, and financial inclusion. I draw on key theoretical
commitments of Albert Hirschman to cement the case for the productivity of
incoherence. The methodological prescriptions that flow from Hirschman’s work
take the form of proscriptions to reject evaluative criteria that purport to determine
ex ante or ex post whether particular policy or institutional innovations are
coherent, viable, sufficient, scalable, and significant. Inspired by Hirschman, I argue
that meaningful change often emerges from disconnected, erratic, experimental, and
inconsistent adjustments in institutions and policies as actors pragmatically manage
in an evolving world.

5. "Capitalism vs. Democracy and the (Ir)Responsibility of Economics"

Richard Wolff, DemocracyatWork.Info and New School University


<rdwolff@att.net>

The Cold War and its narrow ideological legacies kept mainstream economics from
asking let alone seriously examining the range of economic systems other than
capitalism and especially those more committed to economic democracy.

Panel 2: Democratic Crisis and the Responsibility of Economics, II

Organizer: George DeMartino, University of Denver


Chair: George DeMartino, University of Denver
gdemarti@du.edu

Papers:

1. Populism versus Economic Expertise: J. Laurence Laughlin debates William


(Coin) Harvey

Robert Dimand,
rdimand@brocku.ca
&
Constance Andre Aigret, Universite de Lyon
constanceaa@gmail.com

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The expertise and authority of academic economists came under fierce populist
attack in the 1890s, as Democrats and Populists joined to support William Jennings
Bryan for President on a bimetallist platform of free coinage of silver. The most
widely read populist critique was William Harvey's Coin's Financial School (1894),
of which over a million copies circulated. In Harvey's tract, the fictitious bimetallist
Coin debated and humiliated J. Laurence Laughlin, the hard money, pro-gold
standard founder of the U. of Chicago Economics Department and of the JPE (and
later a major influence of the creation of the Federal Reserve). On May 17, 1895,
after preliminary negotiations and disputes over the topic of the debate, Laughlin
and Harvey engaged in a real debate at the Illinois Club, published in October 1895
as a fifty-page appendix to Laughlin's Facts About Money. When able to speak for
himself, Laughlin forcefully defended the gold standard and the authority of
academic economists to pronounce on economic questions, while Harvey vigorously
made the populist case against the privileged knowledge of academic experts. This
paper examines both the fictitious Coin-Laughlin debate of 1894 and the actual
Harvey-Laughlin debate of 1895 to illuminate the populist revolt against the
authority and expertise of academic economists and the rebuttal of that critique by
leaders of the economics discipline.

2. Divided but Not Conquered: Intersectional Conflicts in the Age of Trump

Nancy Folbre, Political Economy Research Institute


nancy.folbre@gmail.com

Some social scientists and policy makers make a strong distinction between
collective identities based on cultural allegiances and collective interests based on
economic positions. This paper develops a feminist analysis of intersectionality that
challenges this binary, offering a more flexible way of analyzing collective conflict
that helps explain partisan politics in the U.S. today.

Nancy Folbre is Director of the Program on Gender and Care Work at the Political
Economy Research Institute at the University of Massachusetts Amherst.

3. The Complicity of Economics

Julie A. Nelson, University of Massachusetts, Boston


<julienelson11@gmail.com>

Economics has long promoted an image of agents who profit and consume for their
own individual benefit without any kind of responsibility for each other, and who
rationally evaluate means but not ends. This contribution explores the relationship
between the expanding influence of the homo economicus image and the rise of
Donald Trump.

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4. Whose economic welfare: AI's, humans and pigeons?

Diane Coyle, University of Manchester


<Diane.Coyle@manchester.ac.uk>

The role of rationality in economics is often in the spotlight, but this focus on the
manner of decision-making overlooks the importance of the social context for
people's choices. Welfare economics has long insisted that positive and normative
considerations can be strictly separated, but social influences make this separation
protocol inadmissible. Economists presuming to advise on public policy urgently
need to revisit the foundations of welfare economics to be consistent with what the
biological and cognitive sciences tell us about individuals' decisions.

5. How to Cause a Populist Revolution: Youth Unemployment, Labor Immobility,


and the War on Drugs

Deirdre N. McCloskey, University of Illinois, Chicago


deirdre2@uic.edu

The crisis of democracy arises from good-hearted interventions in the economy that
make young people unemployable and neighborhoods depressed.

Panel 3: “Financialization, Global Crisis, and Economic Stagnation”

Organisers: Philip Arestis (University of Cambridge, UK, and University of the


Basque Country, Spain; pa267@cam.ac.uk) and Giuseppe Fontana (University of
Leeds, UK and University of Sannio, Italy; G.Fontana@lubs.leeds.ac.uk)

Chair: Giuseppe Fontana, University of Leeds, UK and University of Sannio, Italy;


G.Fontana@lubs.leeds.ac.uk)

List of Contributors, Titles and Abstract (in bold the presenters at the ASE
meeting)

Philip Arestis (University of Cambridge, UK, and University of the Basque Country,
Spain; pa267@cam.ac.uk)
Title: The 'Great Financial Crisis' and the 'Great Recession': Origins and Economic
Policy Implications
Abstract: We locate the main causes of the recent financial crisis on three factors.
Two of them were the financial liberalisation and the distributional effects
(redistribution from wage earners to the financial sector) in the US, and elsewhere.
Both these factors gave great strides in the development and extension of new
forms of securitisation and use of derivatives. This was a financial engineering
practice, the third main factor, which led to the growth of the instruments labeled as
collateralised debt obligations, especially so in the form of collateralised mortgages.

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There were also three contributory factors, which were accentuating the process of
the main causes: the international imbalances, mainly as a result of the growth of
China; the monetary policy pursued by countries over the period leading to the
crisis; and the role played by the credit rating agencies. We discuss the economic
policy implications of the financial crisis before we summarise and conclude.

Mark Setterfield (New School for Social Research, USA;


mark.setterfield@newschool.edu)

Title: Managing the Discontent of the Losers

Abstract: In the early-mid 1990s, Social Structure of Accumulation (SSA) theorists


began to identify the solidification of a neoliberal SSA. Among the complex of
institutions that make up the archetypal SSA is a “capital-citizen accord”: a set of
norms and conventions that ameliorate potential conflict between capital and the
citizenry, who expect to be involved in self-governance through mechanisms of
participatory democracy. The capital-citizen accord of the neoliberal SSA involved
“managing the discontent of the losers” – reconciling the low wage growth, re-
assertion of capitalist control of the workplace, and heightened employment
insecurity that would be visited on the majority of the working population by virtue
of the breakdown of the post-war (Golden Age) capital-labour accord with social
stability, either by coercion or non-economic conciliation. This paper argues,
however, that the neoliberal capital-citizen accord actually involved a
fundamentally material basis: the ability of households to accumulate debt in order
to limit the growth of consumption inequality in the face of burgeoning income
inequality. This debt accumulation offset broke down in the financial crisis of 2007-
09. One result of this was the exhaustion of the neoliberal growth regime. A second
was its destabilization of the capital citizen accord. Although neoliberalism appears
to be institutionally entrenched, this institutional entrenchment is incomplete. The
result is that an SSA that has resisted top-down reform despite its demonstrable
exhaustion is now threatened by bottom-up “reform” in the shape of rising
populism, of which Trumpism and Brexit are reflections. The outcomes of this
process are highly uncertain – a key characteristic of the periods of inter regnum
that separates successful SSAs.

Giuseppe Fontana (University of Leeds, UK and University of Sannio, Italy;


G.Fontana@lubs.leeds.ac.uk), Antonio Rodriguez Gil (University of Leeds, UK;
A.RodriguezGil@leeds.ac.uk), and Malcolm Sawyer (University of Leeds, UK;
M.C.Sawyer@lubs.leeds.ac.uk)

Title: Financialisation, Wage inequality and Secular stagnation

Abstract: The past three decades have been characterised as an era of


“financialisation”, namely a period where the role and power of the financial sector
in the economy has increased. The relationship between the financial and non-
financial sectors has been modified, including a rise in the share of finance in both

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GDP and employment. It is also increasingly evident that financialisation has also led
to a deterioration of the power relations between workers of the financial sector
and the rest of the labour force, which sometimes is characterised as the rise of
“financial elites”. Similarly, the bargain powering of CEO over workers and other
stakeholders has also increased (see, e.g. “World Wealth and Income Database”
project). Most of the financialisation literature has aimed to examine the rising role
and power of the financial sector in terms of the effects of different regimes of
accumulation. These effects are modelled with a class of rentiers that extract rents
from other economic sectors, mainly industrial capitalists. However, this
representation is incomplete as it does not reflect the effects of financialisation on
the labour force, and within it on different categories of workers. This paper
acknowledges that financialisation is a broad phenomenon. It offers a formal model
of aggregate spending that explicitly accounts for the distribution of income
between non-financial corporations, CEOs and finance workers, the average worker
and rent earners. It is also recognised that different social groups, receiving
different types of income, have different saving/consumption behaviours.

Hanna Szymborska (University of Leeds, UK; bnhks@leeds.ac.uk)

Title: Understanding the Rise of Populism: Financialisation, household balance sheet


structures, and inequality in USA since 1980s

Abstract: The aim of this paper is to understand how the rising polarisation of
income and wealth in USA since 1980s has contributed to the crisis of democracy
exposed by the 2016 presidential elections. It is argued that Trumpism has
resonated with American voters due to their dissatisfaction with financialised
capitalism, which has generated rampant inequality and social injustice in US
society. In this context, this paper analyses how financialisation has contributed to
inequality. We draw a hypothesis that differences in the structure of asset and debt
holdings among households have influenced the distribution of income and wealth
due to the changing nature of financial sector operations, financial deregulation,
securitisation, privatisation, and labour market liberalisation policies. The rich have
accumulated high-yielding assets while the middle/low-income groups have
suffered from high leverage due to unsustainable debt accumulation. This, coupled
with stagnating wage growth and growing demand for securitised instruments
among financial investors, has led to massive wealth disparities. This hypothesis is
examined with empirical data from the US Survey of Consumer Finances between
1989 and 2013, analysing the properties of income, wealth, asset, and debt
distributions overtime. The main contribution of this paper is to develop an explicit
transmission mechanism between wealth, inequality and macroeconomic structures
based on the Survey of Consumer Finances, focusing on the link between changes in
the nature of financial sector operations since 1980s and the growing heterogeneity
of household balance sheet composition across the distribution.

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Alexander Guschanski (University of Greenwich, UK;
a.guschanski@greenwich.ac.uk) and Özlem Onaran, University of Greenwich, UK;
o.onaran@gre.ac.uk)

Title: The political economy of income distribution: industry level evidence from 15
OECD countries

Abstract: There has been a significant decline in the share of wages in GDP in both
developed and developing countries since the 1980s. This paper analyses the
determinants of the falling wage share, captured as labour compensation as a ratio
to value added, using sectoral data. We compile a comprehensive sector-level
dataset of 14 OECD countries (Australia, Austria, Belgium, France, Finland, Germany,
Ireland, Italy, Japan, the Netherlands, Spain, Sweden, the UK, the US), for the period
from 1970 to 2014, which allows us to trace the developments in the wage share of
high and low skilled workers and within manufacturing and service industries. The
use of different databases including input-output tables allows us to obtain detailed
estimations of the effect of globalisation and union density on the wage share.
Furthermore, by taking endogeneity serious we are able to obtain new insights with
regard to the effect of technological change. Our findings lend strong support to the
Political Economy approach to functional income distribution. We confirm a
significant negative effect of globalisation, and we discover offshoring to emerging
markets and Eastern Europe to be a robust driver of this process. Technological
change had an impact which differs by skill group, but we also find a strong effect of
institutional factors such as union density and minimum wages on the wage share.

4) Post-Crisis Economic Policy in Europe and the US

Organizer: Nina Eichacker, University of Rhode Island


Chair: Nina Eichacker, University of Rhode Island
<ninaqeichacker@gmail.com>

1. Food insecurity in the time of austerity: The case of Greece

Charalampos Konstantinidis; University of Massachusetts Boston

The economic crisis that has been plaguing Greece over the last decade has had
significant repercussions for the material well-being of working people in the
country. Despite international news coverage of various dimension of material
deprivation such as hunger and energy poverty among household in Greece, there
has been little empirical work analyzing the empirical determinants of various form
of material deprivation. I use Eurostat’s Social Inclusion and Living Conditions
dataset for the period 2009-2014 to examine the determinants of self-reported
measures of food insecurity in crisis-ridden Greece. I show that the passing of the
first two structural adjustment programs in 2010 and 2012 is associated with
higher degrees of food insecurity across Greece. Moreover I show that the likelihood
of being food insecure is significantly higher for (a) urban households, particularly

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those in Athens, and (b) for non-EU citizens. I argue that this result is consistent
with the significance of both formal and informal mechanisms, including social
transfers and family networks, in mitigating food insecurity among households in
Greece. Finally, I argue that the Third Structural Adjustment Program of 2015
institutes new forms of governance that constrain the Greek people’s ability to
govern their affairs democratically – undermining efforts to transform the
agricultural and food system in ways that could potentially decrease food insecurity.

2. Learning All the Wrong Lessons: The Political-Economy Response to Europe’s


Ongoing Crises

Nina Eichacker; University of Rhode Island


nina_eichacker@uri.edu

This paper explores European economic and political responses to the Global
Financial Crisis (GFC), the Eurozone Crisis, and country-level economic crises since
2008, at both the national and supra-national level. It outlines the trajectory of
economic development in the years prior to the GFC, outlines how the GFC
transformed into the Eurozone crisis, and how different European countries in the
core and periphery of Western Europe have responded to their unique and shared
challenges since. In so doing, it considers the contradiction that left-of-center
political parties have failed to capitalize on the global recessionary moment of 2009,
whether due to national hegemony of biases against activist fiscal policy, political
and economic constraints from position within the Eurozone, or some combination,
and been succeeded by center-right or farther right political parties in some cases. It
argues that the failure to implement active spending agendas in peripheral and core
Western European economies leaves the region open to election of farther-right
populist parties, with potential negative implications reaching beyond the economic.

3. Money Market Mutual Funds in the Era of Trump: A Minskyan Analysis

Greg Hannsgen; Levy Institute


hannsgen@levy.org

The administration of Donald Trump may bring an attempt to re-make money and
in particular money market mutual funds (MMMFs). Our analysis begins with a
recent regulatory overhaul in the US and an episode in which a money market fund
“broke the buck.” In essence, a monetary instrument defaulted. What will happen
next? MMMFs (a) have a very low risk of capital loss in the unit of account; and (b)
bear a “market” rate of return. The policy implications in a populist political
moment are important because those with large portfolios have access to strategies
and instruments that preserve capital. Moreover, the crisis highlighted the fragility
of the assets typically held by MMMFs. Finally, the trend toward negative interest
rates has reached MMMFs. Two alternatives seem to exist: 1) abandoning the unit-
price guarantee or 2) shoring up a recognizable system of MMMFs in part by
regulating asset structure. Competing visions for “private” monies will also be on

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the table. Something like MMMFs, I argue, are still needed. I will attempt to
construct a coherent account of recent institutional changes, present relevant
Financial Accounts data, and speculate on the next turn for money.

4. A Public Banking Option in the United States

Thomas Herndon, Loyola Marymount University;


thomas.herndon@lmu.edu
&
Mark Paul, Samuel DuBois Cook Center on Social Equity, Duke University
mark.paul@duke.edu

Basic financial services, such as access to a bank account, credit card, and the ability
to cash a check are vital for full participation in the economy, yet the United States
currently has a sizable portion of residence with inadequate access to basic financial
services. Further, many consumers are unhappy with their current banking options,
largely due to experiences associated with predatory practices and exorbitant fees,
penalties, and regulations. Households without access to basic financial services
(the unbanked) and those that rely on alternative financial services (the
underbanked) spend a disproportionate amount of their income on accessing
exploitative financial services, services which contribute to the creation and
maintenance of poverty in the United States. A public option is not a new
phenomenon; the United States a rich history of government-run or sponsored
intuitions designed to offer basic financial services to the unbanked and
underbanked. The first section of this paper will review the history of a public
option for banking in the United States. The next section will investigate
international examples of public banks, both historical and current. The final section
investigates the potential role of a public banking option in the to regulate, and
compete with, financial firms through the primary market in basic banking services.

5. The Impact of Financialization on the Everyday Life of UK Households

Ariane Hillig, The Open University


ariane.hillig@open.ac.uk

Since the start of the deregulation process at the end of the 1970s, the focus of the
UK government has been on a neoliberal agenda nurturing a ‘free’ ownership
society and shifting responsibilities from the public to the private sector. Greater
access to mortgages, pension funds, health insurance and student loans led to
finance entering the everyday life. Households are called upon to adopt financial
strategies in order to circumvent future risks. The main focus by mainstream
economists has been on how to improve households’ financial literacy with the help
of financial education which will then improve equality in the society and give
everyone the opportunity build a prosperous future. It is argued here that this focus
on finance and depicting households as utility, maximising rational agents who just
need to gain financial knowledge, have not reduced inequalities but rather

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reinforced them. With the help of a financial responsibilization discourse and
portraying finance as providing security for an uncertain future, the profit-seeking
characteristics of finance is hidden. This study emphasizes the need of pluralistic
approaches in the form of integrating qualitative research into economic studies
instead of a focus on solely quantitative statistics to depict the underlying
tendencies in growing inequalities. By drawing on an embedded mixed methods
approach including semi-structured interviews and a review of secondary sources,
it is unravelled how UK households engage with finance. It is shown that created
norms of asset accumulation intensify the capital labor relationship in the presence
and future, reinforcing existing disciplining mechanisms.

Panel 5: Murray, Solidarity and Sustainability: Full Employment, Inclusion,


and Social Justice

Organizer: Michael J. Murray


Chair: Michael J. Murray, Bemidji State University
mmurray@bemidjistate.edu

PAPER 1: Complementary Currencies in the Solidarity Economy: The Local Job


Guarantee

Mathew Forstater, U. of Missouri-Kansas City


(forstaterm@umkc.edu)

Proposals for a Job Guarantee have been put forward as national policies due to the
flexibility the federal government has in paying for the program. This flexibility
stems from the ability of the Treasury and the Central Bank to work in concert in
using fiscal and monetary policies. An alternative route to job creation at the local
level would be to use a complementary currency to pay for community service
employment. This paper examines the potential benefits of such a program in terms
of environmental sustainability and other advantages of political and economic
decentralization and localism.

PAPER 2. On The Reservation: Toward a Job Guarantee Program For American


Indian Nations

Michael J. Murray, Bemidji State University


mmurray@bemidjistate.edu

The paper proposes a Job Guarantee program for residents of American Indian
reservations to combat chronic poverty and unemployment. The paper furthers
research on the racial wealth and employment gap; and serves as a case-study on
the social costs of unemployment and the moral necessity of full employment. The
paper details the social and economic injustice laid upon American Indians caused
by 200 years of U.S. policy geared toward assimilation, termination, and
acculturation. This history contextualizes the failing, pro-capitalist, Euro-centric

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policies of today which struggle to combat chronic poverty and lasting
unemployment. Instead these mainstream policies further encroach on American
Indian sovereignty and fail to address the structural, spatial barriers to economic
mobility. The article makes a case for a new progressive approach to development
that centers on the non-profit nature of Job Guarantee proposals to sustain
economic growth, enrich cultural development, and strengthen American Indian
sovereignty.

PAPER 3. Full Employment and the Job Guarantee: An All-American Tradition

William Darity Jr., Duke University


william.darity@duke.edu
&
Darrick Hamilton, New School
hamiltod@newschool.edu

Enormous racial disparities persist in employment. Ninety-five percent of black


male teen dropouts are unemployed, the black unemployment rate has been roughly
double the white rate since BLS has tracked unemployment by race, and overall rate
for blacks has not been below 10 percent in over five years. In fact, over the past
forty years there has been only one year, 2000, in which the black rate has been
lower than 8.0 percent. In contrast, there have only been four years in which the
white rate has reached 8.0 percent. Education does little to explain the gaps. At
virtually every level of education, the black unemployment rate is about twice as
high as the white rate. In fact, white high school dropouts have a lower
unemployment rate than black associate degree earners., and the unemployment
rate for recent black college graduates exceeds 12 percent (Jones and Schmit, 2014).
Given the enormity of these structural barriers, we have advocated for a bold federal
job guarantee program, which would be administered through a National
Investment Employment Corps (NIEC) (see Aja, Bustillo, Darity and Hamilton, 2013;
Darity and Hamilton, 2012; Darity, 2010). There is growing public support.
According to a recent poll commissioned by the Huffington Post,47% of the US
population – a plurality -- supports “a law guaranteeing a job to every American
adult, with the government providing jobs for people who can’t find employment” in
the private sector. This idea has been relevant for close to four decades. In 1978
passage of the Full Employment and Balanced Growth Act, charged the public sector
with providing jobs directly for unemployed Americans when the private sector fails
to generate sufficient employment. Moreover, in 2013 Rep. John Conyers introduced
a new bill named the Humphrey-Hawkins Full Employment and Training Act
intended to activate the 1978 legislation. Indeed, after presenting our NEIC
proposal, many provisions of the proposals were included in the 2012
Congressional Black Caucus Budget Proposal. The paper will provide a plan for
implementation of a federal job guarantee along with it implication with regards to
employment and income inequality. The paper will include structure and content of
training opportunities and identify incentives to motivate workers to perform in
jobs where there is no threat of firing. The paper will identify the magnitude of

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reductions that can be made in existing antipoverty/entitlement programs after the
job guarantee is in place, evaluate the its impact on racial and ethnic inequality, and
its impact on the macroeconomic performance of the overall economy.

PAPER 4: A Job Guarantee for Tunisia: Undoing decades of colonialism,


neoliberalism, and exclusion.

Fadhel Kaboub, Denison University and the Binzagr Institute for Sustainable
Prosperity
kaboubf@denison.edu

The 2011 uprisings in Tunisia marked the beginning of structural transformation


that was quickly halted by a neoliberal counterrevolution. The 2011 protesters
demanded "jobs, freedom, and dignity." However, after the overthrow of the Ben Ali
regime, the public discourse was limited to a set of very important, but incomplete,
debates. Democratic elections, freedom of speech, the role of religion in society,
women's rights, human rights, security and justice system reforms, labor disputes,
etc. have, deservingly, occupied center stage in the public discourse. Yet, the very
same neoliberal economic structures that have produced mass unemployment,
poverty, exploitation, inequality, and socioeconomic exclusion have remained
unquestioned by all the major political parties. This paper aims at shifting the public
policy discourse from one based on the standard neoclassical economic growth
model (FDI, exports, tourism, remittances, and privatization of SOEs) to a discourse
based on a Job Guarantee program to address the root causes of Tunisia's economic
deficiencies. The paper will argue that a JG program focused on green energy
production, sustainable agriculture, sustainable architecture and design,
ecotourism, and youth community empowerment is an effective way to satisfy the
demands of the protesters, consolidate the democratic gains, and ensure a more
equitable, just, and sustainable economic system.

PAPER 5: A Black Perspective on Canada’s Third Sector: Case Studies on


Women Leaders in the Social Economy

Caroline Shenaz Hossein, York University


chossein@yorku.ca

The contributions of Black people in Canada’s social economy have been ignored or
forgotten. While Black Canadian women are innovating in third sector, the social
economy contributions of Black people remain largely unnoticed in the academic
literature. The social economy is a place of refuge for African- Canadians, and also
provides a way for marginalized communities to co-opt resources. In fact, it is
systemic bias and racism in the Canadian economy and society that drive racialized
Canadians to be active in the social economy. To understand the social economy
among racialized people, it is important to see that Black and racialized people are
not merely on the receiving end of aid and support, but that they lead and work
within the social services sector. This paper uses liberation theory focused on ideas

15
of self-help in analyzing the work of five Black women who are leading nonprofit
organizations that re ach thousands of people in Toronto. This study confronts the
erasure of Black women, and introduces the need to link liberation theorizing with
the social economy if we are to truly understand what the social economy means for
Black and racialized people. Key words: African-Canadian women, Third sector,
social economy, nonprofit organizations, social enterprises, bell hooks, Black
women, Toronto, case studies, Du Bois, Black feminism, Black liberation

Panel 6: The 2008 Economic-Financial Crisis: 10 Years After

Organizer: Steve Pressman


Chair: Christine Ngo, University of Denver
christine.ngo@du.edu

Papers:

The Great Financial Crisis and the End of Normal


James Galbraith, University of Texas, Austin
Galbraith@grandecom.net

As the Great Financial Crisis unfolded in late 2008 and early 2009, mainstream
economists were united in the belief that it would end with a return to the previous
growth and output trend -- a return to normal. This did not happen. To explore
why not, one must examine two possibilities. The first is that something previously
unheard-of and therefore unpredictable occurred, a possibility that would leave the
underlying ex ante structures of economic thought intact. The second is that the
previous methods of forecasting -- and therefore the underlying structures of
thought -- were flawed. This paper considers these two possibilities in light of the
evidence, partly as presented in the author's 2014 book, The End of Normal.

Repairing Household Balance Sheets and Restoring Economic Growth: What


Fiscal Policy Can Do

Stephanie Kelton, Stony Brook University


keltons@umkc.edu

Employing a Minsky/Godley/Kalecki framework, this paper will look at household


debt before and after the crisis. Its main focus will be on the public policies that can
facilitate household deleveraging and the repair of household balance sheets
following financial crises or large debt buildups, such as the one that preceded the
great financial crisis. The paper will also focus on the role of the public sector
balance sheet in facilitating private (household) deleveraging.

16
No End in Sight? The Widening Racial Wealth Gap Since The Great Recession

Christian Weller, University of Massachusetts, Boston


christian.weller@umb.edu

The difference in wealth between African-Americans and Hispanics, on the one


hand, and whites on the other hand, has remained persistently high for decades. It
even increased in the immediate aftermath of the Great Recession -- through 2013 --
as African-Americans and Hispanics had larger shares of their wealth tied up in
residential real estate and owed more money on their houses than was the case for
whites and thus suffered larger losses in the housing market crash. The racial
wealth gap likely continued to stay high and possibly widen through 2016, largely
because African-Americans and Hispanics were much less likely to own houses than
was the case for whites and thus were less likely to see improving houses wealth.
They also were also less likely to own stocks and thus possibly did not benefit as
much from the stock market boom after the Great Recession And, there is some
indication that costly installment debt, especially student and car loans, rose faster
for African-Americans and Hispanics than for whites in the years since the Great
Recession. All of these trends suggest that the racial wealth gap may even have
further worsened after 2013. This paper will use the latest data from the Federal
Reserve's triennial Survey of Consumer Finances to document the racial wealth gap
from 2007 through 2016 with particular emphasis on the years after the Great
Recession ended in 2009.

Reexamining U.S. Women’s Access to Credit Pre- and Post-Crisis: Evidence


from the 1983 to 2013 Surveys of Consumer Finance

Melanie Long, Colorado State University


Melanie.long@colostate.edu

Theory suggests that marginalized groups in credit markets will be the first to be
credit rationed in the event of a credit crunch. A growing body of empirical evidence
from the small business literature has proposed that women may be
disproportionately subject to such credit constraints. Women are more likely to face
self-rationing and possibly bank rationing when applying for business credit,
independent of firm and entrepreneur characteristics. This analysis uses Survey of
Consumer Finance data to explore whether women have faced disproportionately
high rates of credit rationing in consumer credit markets as well and how these
constraints have developed between 1983 and 2013. Particular attention is paid to
the 2008 Financial Crisis using the 2007/2009 Panel SCF. A two-stage, recursive
bivariate probit model is used to account for both rejected and discouraged
borrowers while addressing selection bias due to the credit application decision.
Single-headed households are analyzed separately to account for attenuation bias
that results from gendered definitions of household heads. The analysis suggests
that women are particularly likely to engage in self-rationing, ceteris paribus, and

17
that the magnitude of both self-rationing and bank rationing have changed over
time.

Income Inequality Before and After the Great Recession: A Tale of Two
Surveys

Steven Pressman, Colorado State University


pressman@monmouth.edu
&
Robert H. Scott, III, Monmouth University
rscott@monmouth.edu

This paper studies the changes in income inequality since the Great Recession in
2008. Using data from the Federal Reserve’s Survey of Consumer Finance and data
from the Luxembourg Income Study we see what effect the economic downturn had
on the financial well-being of households and how these changes varied among
households. While by most measures a majority of households (regardless of
income level) were negatively affected by the Great Recession, lower-income
households fared worse than higher-income households. In addition, higher-income
households recovered more quickly from the downturn than lower-income
household. The effects of consumer debt, bankruptcy and unemployment
exacerbated the rate of income inequality and continues to have lasting effects on
the macroeconomy and means that we are not yet out of the woods.

Panel 7: New Research in Applied Social Economics (Sat 12:30)


Organizer: DeMartino
Chair: Wodon
<qwodon@worldbank.org>

1: Democratizing savings? The Postal Savings System in the early 20th century
United States

Leila Davis, Middlebury College


ldavis@middlebury.edu
&
Leticia Arroyo Abad, Middlebury College
larroyoabad@middlebury.edu

Borne out of the recurrent banking crises of the late 19th and early 20th centuries,
the U.S. Postal Savings System offered access to banking services for small-scale
depositors from 1911 to 1968. One important rationale for the implementation of
this system emphasized the provision of low-cost banking services to those
excluded from or unwilling to utilize the formal banking system. In this paper, we
look to this episode in U.S. banking history to explore the efficacy of the Postal
Savings System in attracting deposits from small savers and expanding access to

18
banking services. We compile branch-level deposit data for post office branches,
state banks, and national banks in New York state (an early leader in total postal
savings deposits) between 1900 and the Great Depression. This time frame allows
us to look before and after the implementation of both the Postal Savings System
and the Federal Reserve. To establish scope of access, we augment this deposit data
with county-level demographic information from the Census. We use this data to
analyze the efficacy of the Postal Savings System in expanding access to banking
services vis a vis a comparison with state and national banks. This historical
episode, also, offers insight into contemporary issues regarding financial inclusion
in the U.S., where rising inequality and the high cost of banking services faced by the
poor have raised questions regarding institutional mechanisms that may increase
access to financial services among the un- or under-banked.

2: Working out the kinks: Challenges in evaluating the Millennium Development


Goals and their indicators

Sara Rose Taylor, The Balsillie School of International Affairs


<staylor@balsillieschool.ca>

The Millennium Development Goals (MDGs) have been set up for measurability and
accountability. With their deadline now passed, empirical evaluation can take
advantage of the indicators and the data they provide, especially since the MDGs
have been structed in such a way to compare pre- and post-treatment results.
However, statistical constraints in the form of availability, quality, and predictive
ability all create roadblocks. This paper explores the possibilities and challenges of
evaluating the MDGs using MDG 5, gender equality and women’s empowerment, as
its focus. It starts by using the MDGs as a natural experiment in sub-Saharan Africa,
testing for structural breaks and kinks, showing that although geared towards this
purpose, the MDG architecture falls short of its goal. It then addresses the statistical
roadblocks for doing so and separates the theoretical from the practical uses of the
MDGs’ indicator-based structure. It argues that while MDG indicators are built to be
measurement tools, they are in effect framing devices that have important
implications for empirical evaluation. Value judgements obscured by the indicators
resulting in these frames also have important implications, particularly for
knowledge production and policy approaches.

3. Why Do Adolescent Girls Drop Out of School in Niger? A Combined Quantitative


and Qualitative Analysis

Quentin Wodon, World Bank


Quentin Wodon <qwodon@worldbank.org>

This article examines community-level factors that negatively impact girls’


educational attainment and often lead them to marry early in Niger. The focus is on
rural areas where girls tend to have especially low levels of educational attainment,
and are also more likely to marry as children (before the age of 18). Using both

19
quantitative and qualitative data, we discuss the root causes leading girls to drop
out of school in the country as a whole for the analysis based on national surveys,
and in the Maradi region more specifically for the qualitative fieldwork. The
sociocultural factors that influence education opportunities at the local level include
child marriage and expectations about gender role, as well as the distance to
secondary schools, the cost of schooling (both out-of-pocket and opportunity costs),
and perceptions regarding the low quality of the education provided in schools.

4. Capital Flows and Socio-Economic Development: Reputation, Outcomes and


Circular Causalities

Rajaram Krishnan, Earlham College


<krishra@earlham.edu>

This paper applies a new index of development based on the Human Development
Index (HDI), called the Dynamic HDI (DHDI) to understand the relationship between
capital flows (aid and foreign direct investment) and socio-economic development.
Unlike the HDI and its variants which generate rankings based on how well-
off/developed a country is terms of development indicators, the DHDI generates
rankings based on how well a country is improving relative to its potential room for
improvement across development indicators. As such the DHDI is a more robust
measure of how well countries are developing/improving. The DHDI rankings are
very different from the HDI rankings. Furthermore the rankings of the DHDI change
from year to year in contrast to the rather stable HDI rankings. After introducing the
DHDI the paper investigates two aspects of the relationship between capital flows
and socioeconomic development. Specifically, it: i. Asks, how are capital flows
influenced by HDI rankings? Such an analysis reverses the dominant causal link
between capital flows being the cause and their effect on development being the
effect, in the literature ii. Asks, what is the relationship between capital flows and
DHDI performance? This follows the dominant analysis in the literature with the
new index of development. Such an analysis will help understand how capital flows
are affected by the perception of socio-economic development (do those who are
seen as good keep getting more), and in turn how socio-economic development is
affected by capital flows.

5. Social, Psychological, and Informational Costs of Being Ethical: There Ain’t No


Categorical Imperative to Becoming Ethical

Morris Altman, University of Newcastle


<morris.altman@newcastle.edu.au>

I argue that ethical business behaviour is not a categorical imperative, given free
and unbridled free market forces and also against the view that free markets are
incompatible with ethical business practices. An important starting point for this
this discussion is Adam Smith’s argument that ‘masters’ will drive the working

20
conditions of ‘servants’ to well below subsistence levels, if they can get away with it.
If ethical practices include improving working conditions and environmental
standards, then one can model the probability of adopting ethical business practices
using a number plausible behavioural, inclusive of institutional variables. One can
predict, if individuals are typically narrowly ‘selfish’ that ‘capitalists’ will veer
towards unethical business practices, especially when decision-makers gain utility
by being positioned above others, even if this causes harm to others and to society
at large. Such behaviour would be contravened by strong labour markets or if
psychological, sociological, informational and institutional factors intervene. Of
particular importance is improved models and improved information on when and
how improved ethical behaviour is consistent with the economic viability of the
firm. Also, critical, are the institutional parameters that strengthen the bargaining
power of labour and social changes that make unethical behaviour less profitable
and technological changes that allow consumers to confidently identify unethical
behaviour and respond accordingly on and off the market place.

6. Social norms as a basis for policy

Rojhat Avsar, Columbia College


<ravsar@colum.edu>

We make the case that the human nature should be considered in policy debates as
it has been in the making for millions of years. The “blank-slate” conception is as
inadequate as the rationality assumption. More specifically, the excessive emphasis
on “financial incentives” misses miserably what may actually lie at the center of
human motivation. In certain instances, markets could function to the extent that
they can co-opt social instincts such as loyalty. For instance, in the achievement
organizational objectives, pride in work and organizational identification (rooted in
“us-them” distinction) may become key instincts to tap along with financial
incentives. Generally speaking, social/moral sanctions may prove to be more
effective as basis for regulatory policy. For instance, diffusing information about
exemplary cases of successful energy conservation by households in the face of risks
posed by climate change might be effective in eliciting the desired response. In fact,
some experiments demonstrated that social incentives (“A lot of other people are
trying to do it.”) may be much more effective than economic ones. for encouraging
energy conservation. Similarly, printing carbon footprints on products may prove to
be more effective than any market-based solution such as cap-and-trade in reducing
greenhouse emissions as it shifts the focus from the realm of pure “exchange” to that
of social norms (e.g. public shaming). Markets are beyond the pure domain of
disinterested and calculated exchange. Instead, they presuppose and facilitate
various forms of human sociality--a significant finding that could potentially
improve the effectiveness of public policies.

Panel 8: Realizing the Social Economy: Obstacles and Opportunities

21
Organizer: DeMartino
Chair: Ric McIntyre, University of Rhode Island
<mcintyre@uri.edu>

1. Conservatism and Change in the Brazilian June Journeys: an exercise in


institutional political economy

Roberto Simiqueli, State University of Campinas


<rrsimiqueli@gmail.com>
&
Manuel Ramon Souza Luz, Universidade Federal do ABC
manuelramon06@gmail.com

In recent Brazilian history, June 2013 is remembered as the heyday of popular


demonstrations after the turn of the century. Initially directed against increases in
bus fares in São Paulo, the rallies quickly took an unusual turn to the right; middle-
class citizens saw the gigantic acts as a valid proxy for voicing their concerns on
education, corruption, and the Federal Government's economic and social policies.
What is peculiar is that Brazil faced extremely favorable economic conditions, at the
time. Unemployment rates were close to a historical minimum, real wages had
experienced noticeable raises and inflation was almost a non-issue. Then, what
prompted the "wellborn" to take to the streets and voice their discontent? What is
implied in the agenda of these mobilizations, now led by right wing propagandists?
Our aim is to assess this specific period of Brazilian history through the tension
between change and conservatism in institutional political economy. By revisiting
Thorstein Veblen's insights on the leisure class' interest in defending status quo and
privilege, our paper seeks to provide an explanation of the inherently conservative
claims for change issued by the Brazilian middle-class.

2. The anti-democratic logic of right-wing populism and neoliberal market-


fundamentalism

Stephan Puhringer, Johannes Kepler University


<stephan.puehringer@jku.at>
&
Walter Ötsch
Cusanus Hochschule Bernkastel-Kues University
walter.oetsch@cusanus-hochschule.de

The proposed article compares neoliberal market-fundamentalism and right-wing


populism based on its core patterns of thinking. Based on an analysis of the work of
important founders of market-fundamental economic thinking (particularly Mises,
and Hayek) and the arguments brought forward by leading right-wing populist we
find many similarities of these two concepts in their “inner/mental images” (Bergen
2012): Both show a world that is split into only two countervailing parts. Right-wing
populism shows a society split into two groups, fighting against each other (“the

22
good people”, like Trump’s “forgotten man” versus “the corrupt elite”). In a similar
vein, neoliberal market-fundamentalism shows only two possible countervailing
economic and societal orders (like “the market” or “the spontaneous order” versus
socialism or welfare state or even the state). Thus, we develop a scheme of the
similar dual social worlds of right-wing-populism and market-fundamentalism and
offer examples from the history of the Republican Party and recent European
developments, where these concepts mutually reinforced each other or served as
gateways for each other. One example in this context is the influence of the Heritage
Foundation (HF) on Republican governments. The HF which is closely connected to
the inner core of the “neoliberal thought collective” (Mirowski 2013, 43) provided
influential blueprints for Reagan’s reform agenda in 1980 as well as for Trump’s
transition team in 2016. The main aim of this article is to show that neoliberal
market-fundamentalism and right-wing populism can be perceived as two mutually
reinforcing and radicalizing threats to democracy in the 21st century.

3. The development of social economics in France since World War II


Richard McIntyre, University of Rhode Island
<mcintyre@uri.edu>

The theory and practice of social economy has a long history in France. Inspired by
both Marxism and Christianity social economics has often been distrusted by certain
groups in both of those traditions, even though the practice of social economics is
embedded and specifically and legally defined in French society. After briefly
situating social economics in France along these lines, this paper will focus on two
moments in the post World War II period. The first is 1945-47 when the Communist
party was part of the government and it successfully ended support for research on
and technical support for social economics because of its association with
Christianity. While the specifically French practices of social economy continued to
some extent, research atrophied. The second is the 1980s when support for social
economy was revived by groups associated with Michel Rocard who held several
positions under Mitterand. In his first post as minister of territorial development
Rocard was especially zealous in suggesting that cooperatives, social enterprises,
non-profits, and foundations could complement the essentially Keynesian program
of Mitterand. While communists were also in the first Mitterand government and
Mitterand himself was uninterested, Rocard was successful despite the general
failure of the first Mitterand program. Today there is a thriving social economy
along with a growing research program, especially in the West of France (Brittany
and the Loire) where the research for this paper was conducted, although this
program is not always well connected to the history of French social economy.

4. Teaching & Learning Moral Imagination


Zohreh Emami, Alverno College
<zohreh.emami@alverno.edu>

23
As a feminist social economist I understand moral imagination as having two
dimensions. First, it is the ability for reasoned judgment necessary to take account
of the values embedded in knowledge, structures, conventional wisdom and
contemporary narratives about social economic realities and possibilities. Second, it
is the equanimity to imagine possibilities and build consensus based on scholarship
grounded in values of abundance vs. scarcity, communitarianism vs. individualism,
cooperation vs. competition, sustainability vs. short-termism. For me teaching for
moral imagination, therefore, is an attempt to learn and practice a holistic approach
which includes the ethics of care and integrates lessons from multiple movements
(e.g. civil rights and other nonviolent movements, women’s movement), traditions
and economic literature (e.g. feminism, social economic as well mainstream
economics) to imagine, devise, and implement alternatives. In this paper I discuss
what I have learned as a designer and facilitator of learning experiences in which
students investigate the nature of social economic structures and the value and
assumptions on which they are constructed. I explore how as teachers of economics
we might begin to imagine students as catalysts for change by teaching a pluralist
history of economic conversations and debates and by helping them value, explore,
and express their own experiences in larger contexts and develop communitarian
visions for the good life.

5. Ideologues, Counselors of the Prince and Participant Observers. Reflections on the


Economics Profession

Paolo Ramazzotti, University of Macerata


<ramazzotti@unimc.it>

The paper provides a few reflections on how economists deal with different policy
stances. It argues that mainstream arguments in favor or against public action do
not lead to straightforward conclusions. The “Second Best Theorem” suggests that
reducing market failures need not raise efficiency; Arrow’s “Impossibility Theorem”
contends that a consistent social choice function cannot be attained. The market is
nonetheless claimed to provide the metric for efficiency, so that policy makers must
take its constraints into account when they pursue social goals. Given these
premises, a great deal of policy discussion boils down to value judgments
concerning the relative importance of market and non-market failures. Critics of the
mainstream point out that: “efficiency” is value-laden and actual markets do not
achieve it anyway; profitability and serviceability need not match; social issues
require policies that appositely structure markets. While these contentions suggest
that “another world is possible” they raise the issue of what restrictions can prevent
policy makers from setting the required rules of the game. The paper therefore
discusses the relevance of strictly political constraints, institutional entanglement
and the characterizing features of a capitalist market economy on the grounds that,
depending on specific historical circumstances, each type of restriction affects single
policies in a more or less important way. The suggested conclusion is that a proper
understanding of these constraints may favor the identification of appropriate

24
strategies and avoid the ideology that change is impossible and that economists are,
in one way or another, preachers of a dismal science.

25

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