Heterodox Economics Newsletter - Past & future of pluralism...

Jakob Kapeller University of Duisburg-Essen

Institute for Socio-Economics &

Johannes Kepler University LinzInstitute for Comprehensive Analysis of the Economy (ICAE)

Editor: Heterodox Economics Newsletter

www.jakob-kapeller.org | www.uni-due.de | www.heterodoxnews.com

London, 31st of March 2019

Past & future of pluralism in economics: a personal outlook

http://www.jakob-kapeller.org

http://www.uni-due.de

http://www.heterodoxnews.com

Pluralism in economics: A research agenda

Jakob Kapeller

„Justifying Pluralism“ „Analyzing Pluralism“ „Doing Pluralism“

• Three main streams of pluralism-related research

Pluralism in economics: A research agenda

Jakob Kapeller

„Justifying Pluralism“ „Analyzing Pluralism“ „Doing Pluralism“

• Three main streams of pluralism-related research

• Analyzing pluralism

• Current development in economic discourse and economics as a discipline.

• Doing pluralism

• Using pluralism as a template for applied economics.

Analyzing Pluralism

Analyzing Pluralism Retrospective: Citation Patterns between Mainstream & Heterodoxy

Jakob Kapeller

97.15%'

47.58%'

2.85%'

52.42%'

0.00%'

20.00%'

40.00%'

60.00%'

80.00%'

100.00%'

120.00%'

in'top'13'orthodox' in'top'13'heterodox'

Interparadigma,c.Discourse.in.Economics.(198982008).

percentage'of'cita<ons'from'top'13'orthodox'journals' percentage'of'cita<ons'from'top'13'heterodox'journals'

• A classic findingHeterodox Econ is „open“ for mainstream ideas, while mainstream is discursively „closed“.No reciprocity - neither on the level of paradigms, nor when looking on single journals.

Analyzing Pluralism Retrospective: Citation Patterns between Mainstream & Heterodoxy

Jakob Kapeller

98.30%

69.08%

1.70%

30.92%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

orthodoxjournals(>350.000papers} heterodoxjournals(>50.000papers)

Interparadigma,cDiscourseinEconomics(1969-2013):Analyzingalarge-scalesample

percentageofcitaDonsfromorthodoxjournals(>2.1McitaDons)

percentageofcitaDonsfromheterodoxjournals(>180.000citaDons)

• A classic findingHeterodox Econ is „open“ for mainstream ideas, while mainstream is discursively „closed“.No recopricity - neither on the level of paradigms, nor when looking on single journals.

Aistleitner/Kapeller/Steinerberger (2017): Citation Patterns in Economics and Beyond. Science in Context (forthcoming)

Analyzing Pluralism Retrospective: Citation Patterns within Mainstream Economics

Jakob Kapeller

Aistleitner/Kapeller/Steinerberger (2017): Citation Patterns in Economics and Beyond. Science in Context (forthcoming)

Analyzing Pluralism Retrospective: Citation Patterns within Mainstream Economics

Jakob Kapeller

• A more recent findingMainstream discourse exhibits stronger hierarchies as other fields:

• Major role for top journals (here: Top 5, see also: Fourcade et al. (2015) in JEP)

• Top journals more self-contained as compared to other disciplines.

Jakob Kapeller

“

George Akerlof, ASSA 2017„The Curse of the Big 5“

What I am worried about most of all, is what we don't see. So, I am worried about the analysis that is never seen, that never becomes a paper and it doesn't become a paper, because it can't become a paper. And it can't become a paper, because that's not what a paper in economics is all about. I am quite worried about that and we know such vacuums exist.“

Pluralism, Openness and the economic mainstream

Analyzing Pluralism Outlook: Institutional stalemate and structural asymmetry

• Full SampleProfessors of Economics in the german-speaking

countries (~600)

• Data corpusBiographical data, research interests, publications

• Paradigmatic classification

• Based on: journal publications and

classification of journal by the Heterodox

Economics Directory

• > 90%: „Mainstream“

• ~5 % „pluralist“ (green)

• ~3% „heterodox“ (red)

Jakob Kapeller

Grimm Christian, Kapeller Jakob and Stephan Pühringer: Paradigms and Policies: The state of economics in the german-speaking countries. ICAE Working Paper #77

Jakob Kapeller

“

Heterodox Economics Newsletter, Issue 199 (2016)

Hence, from a traditional disciplinary perspective - where different disciplines are confined by distinct core areas of study - heterodox economics is really ’economics’, while from a discursive perspective heterodox economics may seem like some kind of generalist social science, ready to diffuse its ideas in a series of disciplines and traditions.

Analyzing Pluralism Outlook: Heterodox Economics as a ‚generalist social science‘?


Jakob Kapeller

!

14!!

collective proximity Newman (2006) proposes an unbiased measure called ‘modularity’, which will also feature in our analysis in the following and is optimally depicted in force-directed layouts which generate visual densities that denote structural densities (Noack, 2009).

The following figures show the network graphs for the three departments, where node size is ranked by Weighted In-Degree i.e. the number of direct connections (citations) directed to the respective node (journal), considering the weight of the edges (frequency of the citations).

Figure 3: Citation Network Department of Economics WU – Node size ranked by Weighted In-Degree

2 AMERICAN ECONOMIC REVIEW 20 REVIEW OF ECONOMIC STUDIES

15 REVIEW OF ECONOMICS AND STATISTICS 37 JOURNAL OF ECONOMIC PERSPECTIVES

9 QUARTERLY JOURNAL OF ECONOMICS 14 ECONOMICS LETTERS

10 ECONOMETRICA 13 JOURNAL OF PUBLIC ECONOMICS

31 JOURNAL OF FINANCIAL ECONOMICS 50 JOURNAL OF INDUSTRIAL ECONOMICS

28 JOURNAL OF FINANCE 35 JOURNAL OF ECONOMETRICS

4 EUROPEAN ECONOMIC REVIEW 38 RAND JOURNAL OF ECONOMICS

16 JOURNAL OF POLITICAL ECONOMY 39 PUBLIC CHOICE

5 ECONOMIC JOURNAL … …

51 JOURNAL OF INTERNATIONAL ECONOMICS 61 CAMBRIDGE JOURNAL OF ECONOMICS

48 JOURNAL OF ECONOMIC LITERATURE 6 JOURNAL OF ECONOMIC BEHAVIOR AND ORGANIZATION

3 INTERNATIONAL JOURNAL OF NDUSTRIAL ORGANIZATION 69 METROECONOMICA

An orthodox citation network !

17!!

Figure 6: Citation Network Department of Socioeconomics WU – Node size ranked by Weighted In-Degree

1 ECOLOGICAL ECONOMICS 123 ENVIRONMENTAL AND RESOURCE ECONOMICS

2 AMERICAN ECONOMIC REVIEW 9 QUARTERLY JOURNAL OF ECONOMICS

43 URBAN STUDIES 108 JOURNAL OF ENVIRONMENTAL ECONOMICS AND MANAGEMENT

23 REGIONAL STUDIES 127 ACADEMY OF MANAGEMENT REVIEW

34 RESEARCH POLICY 61 CAMBRIDGE JOURNAL OF ECONOMICS

30 EUROPEAN PLANNING STUDIES 15 REVIEW OF ECONOMICS AND STATISTICS

122 CLIMATIC CHANGE 171 INDUSTRIAL AND CORPORATE CHANGE

65 ENVIRONMENT AND PLANNING 178 PHOTOGRAMMETRIC ENGINEERING AND REMOTE SENSING

21 ENVIRONMENTAL VALUES 154 JOURNAL OF ECONOMIC GEOGRAPHY

68 LAND ECONOMICS 27 GLOBAL ENVIRONMENTAL CHANGE HUMAN AND POLICY DIMENSIONS

The different structure of the citation network of the DS-WU also shows in the networks statistics in Table 5. Its graph density is substantially lower reflecting the less concentrated network and the modularity value is higher, suggesting that groups of nodes are tightly connected to each other, but loosely connected to nodes outside the module. The measure is based on an algorithm by Blondel, Guillaume, Lambiotte, & Lefebvre (2008). InFehler! Verweisquelle onnte nicht gefunden werden. in the Appendix the citation network is displayed with different coloring of the modules, and a thematic categorization of the modules, which reveals that the different structure of the network is the result of the broad and interdisciplinary research agenda

A heterodox citation network

… both at Vienna University of Economics & Business

Glötzl/Aigner (2017): Pluralism in the Market of Science? A citation network analysis of economic research at universities in Vienna. Review of Political Economy (forthcoming)


Jakob Kapeller

since the middle of the 90ies: umbrella-term for alternatives to the standard economic approach.

Analyzing Pluralism Outlook: New institutional venues & the next generation

• Is the future of pluralist economics outside of economics?

• Heterodox economics as generalist social science I: Strongest heterodox departments

in the German-speaking area are now located outside of traditional economics

(Departments for Socio-Economics at WU Vienna and University Duisburg-Essen).

• Heterodox economics as generalist social science II: Support for pluralist research hubs

often comes from outside of economics (e.g. in Bremen from Business Studies, in Linz

from Sociologists.

• The increasing scope of heterodox economics

• Visible in newly founded journals like the Review of Keynesian Economics or the Review

of Evolutionary Political Economy.

• Increasing pluralism within heterodox associations

• Young researcher from the pluralism movement enter post-doctoral stage

• Heterodox economics as generalist social science III: Often work outside economics.

Jakob Kapeller

Doing Pluralism

Pluralism as ‚Integration‘: Minsky-Veblen Cycles

Jakob Kapeller

Journal of Post Keynesian Economics / Summer 2014, Vol. 36, No. 4 781© 2014 M.E. Sharpe, Inc. All rights reserved. Permissions: www.copyright.com

ISSN 0160–3477 (print) / ISSN 1557–7821 (online)DOI: 10.2753/PKE0160-3477360409

JAKOB KAPELLER AND BERNHARD SCHÜTZ

Debt, boom, bust: a theory of Minsky–Veblen cycles

Abstract: This article reflects on the economic development leading to the recent crisis and interprets this development as a series of events within a Minsky–Veblen cycle. To illustrate this claim we introduce conspicuous con-sumption concerns, as described by Veblen, into a stock-flow-consistent post Keynesian model and demonstrate that, under these conditions, a decrease in income equality leads to a corresponding increase in debt-financed consump-tion demand. Here Minskian dynamics come into play: if perceived economic stability causes banks’ margins of safety to decrease sufficiently, increased credit demand is accommodated by credit supply giving rise to a debt-financed consumption boom. As the solvency of households decreases and interest rates move up, banks reduce lending, triggering household bankruptcies and, finally, a recession. What follows is a stable period of consolidation, where past debts are repaid, financial stability is regained and conspicuous consumption motives may gradually take over again. We illustrate this approach to the current crisis and its explanatory validity by extending our stock-flow-consistent model into a dynamic simulation.

Key words: financial instability, inequality, business cycle, stock-flow consistency, Minsky, Veblen.

JEL classifications: B52, D11, E12, E20, G01.

If one were asked by an educated layperson about the best way to under-stand the “current crisis,” which has already evolved from a financial or private debt crisis to a sovereign debt crisis, we claim that one legitimate answer would be the following: first, read Thorstein Veblen’s seminal book The Theory of the Leisure Class (especially chapters 4–5), and pay

Jakob Kapeller is an assistant professor in the Department of Philosophy and Theory of Science at the University of Linz. Bernhard Schütz is an assistant professor in the Department of Economics at the University of Linz. For helpful comments, the authors would like to thank Michael Landesmann, Martin Riese, Thomas Palley, Engelbert Stockhammer, and Octavio Fernández-Amador. Furthermore, we are greatly indebted to Miriam Rehm, who started us off on Minsky, and Stefan Steinerberger,whose patient advice guided us through our first steps in Mathematica. Remaining errors are ours.

Pluralism as ‚Integration‘: Minsky-Veblen Cycles

Debt, Boom, Bust: A Theory of Minsky-Veblen Cycles

Jakob Kapeller

University of Linz

Department of Philosophy and Theory of Science

[email protected]

Bernhard Schütz

University of Linz

Department of Economics

[email protected]

The basic story

The research questions

1.) Can the recent crisis be interpreted as a part of a larger cycle?2.) Is it possible to create such cycles in a post-Keynesian, stock-flow consistent framework?3.) If yes, what assumptions are sufficient to acquire such a result?

Out

put

Debt

Expansion Compression

Panic

Consolidation

Framework and main assumptions

stock-flow-consistent closed economy model with no state

a Minskyian financial sector, where banks become more confident in stable periods and get more anxious in volatile periods

two classes (workers and capitalists)

two types of workers, where type 2 workers lose income relative to type 1 workers, which gives rise to conspicuous consumption motives that increase the demand for consumer credit and boost aggregate demand

The answer

Expansion

Compression

Panic

Consolidation

A simulation model based on these specs delivers the following cyclical behavior of aggregate output...

...which is accompanied by the expected debt-output cycle (the amount of dots indicates the duration of the respective phase).

Out

put

Debt

7.5

8.0

8.5

9.0

108 110 112 114 116 118


Panic

Consolidation 7.5

8.0

8.5

9.0

13.0 13.5 14.0 14.5 15.0 15.5

Out

put

Debt / Output

Expansion

Compression

Panic

Consolidation

Detailed simulation results

88 Scenario 1: Baseline Case Scenario 2: Inequality and contraction Scenario 3: Inequality and expansion

200

100

6

8

4

2

100 200 300 400

GDP Cw1 Cw2 Cc I

YDw2 Profits Banks Profits Firms

Mw2 Mc Mw1 Bank Equity

100 200 300 400

0.5

1.0

1.5

2.0

100 200 300 400

20

40

60

80

100


100 200 300 400

20

40

60

80

100


100 200 300 400

-200

400

200


100 200 300 400


100 200 300 4000.5

1.0

1.5

1

2

3

4

-1

100 200 300 400

GDP Cw1 Cw2 Cc I

6

8

4

2

6

8

4

2

10

100 200 300 400

GDP Cw1 Cw2 Cc I

Scenario 4a: Minsky-Veblen Cycles - Speculative Dynamics

Scenario 4b: Minsky-Veblen Cycles - Ponzi Dynamics

Scenario 4c: Minsky-Veblen Cycles - Hedge Dynamics

GDP Cw1 Cw2 Cc I

YDw2 Profits B. Profits F. Safety Margin


interest rate

GDP Cw1 Cw2 Cc I GDP Cw1 Cw2 Cc I

Mw2 Mc Mw1 Bank Equity Mw2 Mc Mw1 Bank Equity

YDw2 Profits B. Profits F. Safety Margin YDw2 Profits B. Profits F. Safety Margin

interest rate

interest rate

100 200 300 400

6

8

4

2

100 200 300 400

6

8

4

2

100 200 300 400

6

8

4

2

100 200 300 400

-1

1

2

3

100 200 300 400

-1.0

1.0

2.0

3.0

100 200 300 400

0.5

1.0

1.5

2.0

100 200 300 40020

40

60

80

100

100200 300 40020

-20

100

100 200 300 400

80

20

100

60

40

100 200 300 400

0.052

0.046

0.054

0.050

0.048

0.056

0.058

100 200 300 400

0.052

0.046

0.050

0.048

100 200 300 400

0.048

0.045

0.049

0.047

0.046

0.050

40

60

80

GDP Cw1 Cw2 Cc I

100 200 300 400

6

8

4

2

• stock-flow consistent model

• Two classes: Some share of workers loses

income.

• Emulation: Losers try to keep up with other

workers/their old living standard - Credit-Demand!

• Minskyian banks: economic stability -

increase in risk-taking: Credit-Supply!

Jakob Kapeller

basic idea


Jakob Kapeller

University of Linz


[email protected]

Bernhard Schütz

University of Linz


[email protected]

The basic story



Out

put

Debt


Panic

Consolidation






The answer

Expansion

Compression

Panic

Consolidation



Out

put

Debt

7.5

8.0

8.5

9.0

108 110 112 114 116 118


Panic

Consolidation 7.5

8.0

8.5

9.0

13.0 13.5 14.0 14.5 15.0 15.5

Out

put

Debt / Output

Expansion

Compression

Panic

Consolidation



200

100

6

8

4

2

100 200 300 400

GDP Cw1 Cw2 Cc I



100 200 300 400

0.5

1.0

1.5

2.0

100 200 300 400

20

40

60

80

100


100 200 300 400

20

40

60

80

100


100 200 300 400

-200

400

200


100 200 300 400


100 200 300 4000.5

1.0

1.5

1

2

3

4

-1

100 200 300 400

GDP Cw1 Cw2 Cc I

6

8

4

2

6

8

4

2

10

100 200 300 400

GDP Cw1 Cw2 Cc I




GDP Cw1 Cw2 Cc I



interest rate




interest rate

interest rate

100 200 300 400

6

8

4

2

100 200 300 400

6

8

4

2

100 200 300 400

6

8

4

2

100 200 300 400

-1

1

2

3

100 200 300 400

-1.0

1.0

2.0

3.0

100 200 300 400

0.5

1.0

1.5

2.0

100 200 300 40020

40

60

80

100

100200 300 40020

-20

100

100 200 300 400

80

20

100

60

40

100 200 300 400

0.052

0.046

0.054

0.050

0.048

0.056

0.058

100 200 300 400

0.052

0.046

0.050

0.048

100 200 300 400

0.048

0.045

0.049

0.047

0.046

0.050

40

60

80

GDP Cw1 Cw2 Cc I

100 200 300 400

6

8

4

2

simulation results

Minsky-Veblen Cycles: Results

Jakob Kapeller


Jakob Kapeller

University of Linz


[email protected]

Bernhard Schütz

University of Linz


[email protected]

The basic story



Out

put

Debt


Panic

Consolidation






The answer

Expansion

Compression

Panic

Consolidation



Out

put

Debt

7.5

8.0

8.5

9.0

108 110 112 114 116 118


Panic

Consolidation 7.5

8.0

8.5

9.0

13.0 13.5 14.0 14.5 15.0 15.5

Out

put

Debt / Output

Expansion

Compression

Panic

Consolidation



200

100

6

8

4

2

100 200 300 400

GDP Cw1 Cw2 Cc I



100 200 300 400

0.5

1.0

1.5

2.0

100 200 300 400

20

40

60

80

100


100 200 300 400

20

40

60

80

100


100 200 300 400

-200

400

200


100 200 300 400


100 200 300 4000.5

1.0

1.5

1

2

3

4

-1

100 200 300 400

GDP Cw1 Cw2 Cc I

6

8

4

2

6

8

4

2

10

100 200 300 400

GDP Cw1 Cw2 Cc I




GDP Cw1 Cw2 Cc I



interest rate




interest rate

interest rate

100 200 300 400

6

8

4

2

100 200 300 400

6

8

4

2

100 200 300 400

6

8

4

2

100 200 300 400

-1

1

2

3

100 200 300 400

-1.0

1.0

2.0

3.0

100 200 300 400

0.5

1.0

1.5

2.0

100 200 300 40020

40

60

80

100

100200 300 40020

-20

100

100 200 300 400

80

20

100

60

40

100 200 300 400

0.052

0.046

0.054

0.050

0.048

0.056

0.058

100 200 300 400

0.052

0.046

0.050

0.048

100 200 300 400

0.048

0.045

0.049

0.047

0.046

0.050

40

60

80

GDP Cw1 Cw2 Cc I

100 200 300 400

6

8

4

2


Jakob Kapeller

University of Linz


[email protected]

Bernhard Schütz

University of Linz


[email protected]

The basic story



Out

put

Debt


Panic

Consolidation






The answer

Expansion

Compression

Panic

Consolidation



Out

put

Debt

7.5

8.0

8.5

9.0

108 110 112 114 116 118


Panic

Consolidation 7.5

8.0

8.5

9.0

13.0 13.5 14.0 14.5 15.0 15.5

Out

put

Debt / Output

Expansion

Compression

Panic

Consolidation



200

100

6

8

4

2

100 200 300 400

GDP Cw1 Cw2 Cc I



100 200 300 400

0.5

1.0

1.5

2.0

100 200 300 400

20

40

60

80

100


100 200 300 400

20

40

60

80

100


100 200 300 400

-200

400

200


100 200 300 400


100 200 300 4000.5

1.0

1.5

1

2

3

4

-1

100 200 300 400

GDP Cw1 Cw2 Cc I

6

8

4

2

6

8

4

2

10

100 200 300 400

GDP Cw1 Cw2 Cc I




GDP Cw1 Cw2 Cc I



interest rate




interest rate

interest rate

100 200 300 400

6

8

4

2

100 200 300 400

6

8

4

2

100 200 300 400

6

8

4

2

100 200 300 400

-1

1

2

3

100 200 300 400

-1.0

1.0

2.0

3.0

100 200 300 400

0.5

1.0

1.5

2.0

100 200 300 40020

40

60

80

100

100200 300 40020

-20

100

100 200 300 400

80

20

100

60

40

100 200 300 400

0.052

0.046

0.054

0.050

0.048

0.056

0.058

100 200 300 400

0.052

0.046

0.050

0.048

100 200 300 400

0.048

0.045

0.049

0.047

0.046

0.050

40

60

80

GDP Cw1 Cw2 Cc I

100 200 300 400

6

8

4

2

Pluralism as ‚Diversification‘: Path-Dependency in Europe Typical trajectories and the role of the crisis

Jakob Kapeller

Total debt/GDP: sum of public debt/GDP (AMECO data) and private sector debt/GDP (OECD data)

Pluralism as ‚Diversification‘: Path-Dependency in Europe Typical trajectories and the role of the crisis

Jakob Kapeller

Total debt/GDP: sum of public debt/GDP (AMECO data) and private sector debt/GDP (OECD data)


Jakob Kapeller

University of Linz


[email protected]

Bernhard Schütz

University of Linz


[email protected]

The basic story



Out

put

Debt


Panic

Consolidation






The answer

Expansion

Compression

Panic

Consolidation



Out

put

Debt

7.5

8.0

8.5

9.0

108 110 112 114 116 118


Panic

Consolidation 7.5

8.0

8.5

9.0

13.0 13.5 14.0 14.5 15.0 15.5

Out

put

Debt / Output

Expansion

Compression

Panic

Consolidation



200

100

6

8

4

2

100 200 300 400

GDP Cw1 Cw2 Cc I



100 200 300 400

0.5

1.0

1.5

2.0

100 200 300 400

20

40

60

80

100


100 200 300 400

20

40

60

80

100


100 200 300 400

-200

400

200


100 200 300 400


100 200 300 4000.5

1.0

1.5

1

2

3

4

-1

100 200 300 400

GDP Cw1 Cw2 Cc I

6

8

4

2

6

8

4

2

10

100 200 300 400

GDP Cw1 Cw2 Cc I




GDP Cw1 Cw2 Cc I



interest rate




interest rate

interest rate

100 200 300 400

6

8

4

2

100 200 300 400

6

8

4

2

100 200 300 400

6

8

4

2

100 200 300 400

-1

1

2

3

100 200 300 400

-1.0

1.0

2.0

3.0

100 200 300 400

0.5

1.0

1.5

2.0

100 200 300 40020

40

60

80

100

100200 300 40020

-20

100

100 200 300 400

80

20

100

60

40

100 200 300 400

0.052

0.046

0.054

0.050

0.048

0.056

0.058

100 200 300 400

0.052

0.046

0.050

0.048

100 200 300 400

0.048

0.045

0.049

0.047

0.046

0.050

40

60

80

GDP Cw1 Cw2 Cc I

100 200 300 400

6

8

4

2

Pluralism as ‚Diversification‘: Path-Dependency in Europe Keynesian Macro + complexity-inspired visualization

Jakob Kapeller

highly financialized countries

path of hope

valley of d

espair

Heimberger/Kapeller (2018): The performativity of potential output. Review of International Political Economy 24(5)

Pluralism as ‚Diversification‘: Path-Dependency in Europe (+) Technological path-dependency (e.g. Kaldor, Myrdal)

Jakob Kapeller

10

15

20

25

−2.5 0.0 2.5 5.0Product complexity (weighted average over whole period)

Cha

nge

in e

xpor

t val

ue (l

og)

0.0 0.1 0.2 0.3

Greece: WLS on positive changes with recent export shares as weights

16

20

24

−2.5 0.0 2.5 5.0Product complexity (weighted average over whole period)

Cha

nge

in e

xpor

t val

ue (l

og)

0.03 0.06 0.09

Germany: WLS on positive changes with recent export shares as weights

Figure 4: The directedness of technological change in Greece and Germany. While exportexpansions in Germany are positively correlates with product complexity, the inverse holds forGreece. The size and color of the points represent the average share of the products in thecountries’ export basket in 2012-2014. The regression line stems from the WLS estimationas described above. Dashed lines illustrate the estimation errors. Data: Atlas of EconomicComplexity (2018) in its 12-2017 version (see data appendix for details); own calculations.

consistent with Kaldorian e↵ects can be identified within the Eastern European countries, where

they are rather pronounced, as well as (with a weaker intensity) among all the remaining EU

countries. Thereby, large parts of the variety in the results for the Eastern European catch-up

economies seem to be moderated by its closeness to Europe’s industrial core (Stollinger, 2016).

The patterns of technological change as depicted in Figure 5 also allow us to emphasize

four further observations. First, there is still considerable heterogeneity within the typically

proposed country-groups: core countries di↵er in their development mirroring the fact that

some of these countries struggle to hold on to their position, while others, mostly Germany,

have managed to expand their technological dominance (e.g. Storm and Naastepad (2015a)).

In fact, Germany is the only example of the core countries that finds itself above the value

predicted by a quadratic model fitted to the data. Second, the upper panel of Figure 5 shows

that we currently cannot find a single periphery country with a decidedly positive technological

development: of all periphery countries only Portugal manages to surpass the predicted value,

albeit this country starts from a very low level of complexity. Third, we find that most of

the Eastern catch-up countries are located above, while only two catch-up economies below

the predicted value. This indicates that the economic catch-up process of Eastern European

countries is not necessarily tied to a technological catch-up process, as evidenced most forcefully

by the outliers Bulgaria and Lithuania. Fourth, the heterogeneity among financialized countries

is particularly large, but can be explained by their di↵erent financialization strategies: Ireland’s

15

Gräbner et al. (2018): Structural Change in times of increasing openness. ICAE WP #76

Pluralism as ‚Diversification‘: Path-Dependency in Europe (+) Technological path-dependency (e.g. Kaldor, Myrdal)

Jakob Kapeller

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●

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●

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●

AUT

BEL

DEU

DNKFIN

SWE

CYP

ESPFRA

GRC

ITAPRT

BGR

CZE

EST

HUN

LTU

LVA

POLROU

SVK

SVN

IRL

MLT NLD

0.0 0.5 1.0 1.5 2.0 2.5

-0.5

0.0

0.5

average country complexity in 1999

averag

eprod

uctcom

plexity

deriv

edfro

mch

ange

sinexpo

rt-c

ompo

sition

(199

5-19

99vs.201

0-14

)

The development of economic complexity in the EMU

Eastern countries:-0.51+0.66 comp***, R2=0.65

All remaining countries:-0.51+0.3 comp**, R2=0.34

● Core

● Periphery

● Eastern

● Finance

Figure 5: Technological capabilities and structural change. Data: Eurostat; Atlas of EconomicComplexity (2018) in its 12-2017 version; own calculations.

role of a corporate tax haven manifests itself in a massive technological upgrading (e.g. Regan

and Brazys (2018)), while the more asset-based strategies of the Netherlands and Malta are

associated with a tendency for deindustrialization (e.g. Visser et al (2016)).

As international competitiveness and technological capabilities are of prime importance for

assessing the future developmental trajectories within given political and institutional con-

straints (Hidalgo and Hausmann, 2009; Cristelli et al, 2015), it is important to note that we

cannot observe convergence in terms of technological capabilities in the current European frame-

work. Quite on the contrary, our results point to the possibility that some countries in Eastern

Europe will indeed manage to slowly catch-up to the core (like the Czech Republic, Hungary or

Slovakia), while others (like Bulgaria or the Baltic countries) are much more likely to join the

16

Gräbner et al. (2018): Structural Change in times of increasing openness. ICAE WP #76

Conclusion

• Pluralist approach leads to new contributions/perspectives

• Integration of different traditions: New Perspectives!

• pluralism ≠ anything goes.

• Pluralist economics in practice: the new heterodoxy?

• Post-Keynesianism + Old Institutionalism ➝ Minsky-Veblen Cycles

• + complexity economics ➝ Polarization in Europe

• + heterodox trade theory ➝ path-dependency in supply-side structures!

• (+ economic sociology ➝ Performativity! Role of models in policy-making!)

• … [many more things]

Jakob Kapeller

Many thanks for your attention!

Backup

Analyzing Pluralism Outlook: Institutional stalemate and structural asymmetry

Jakob Kapeller

1959-1965 1966-1970 1971-1975 1976-1980 1981-1985 1986-1990 1991-1995 1996-2000 2001-2009

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Research interests across cohorts: USA

Microeconomics

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Colander's Edge

Focus on (financial) crisis

1971-1980 1981-1985 1986-1990 1991-1995 1996-2000 2001-2005 2006-2012

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100%Research interests across cohorts: Germany

Microeconomics

Mainstream

Colander's Edge

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Focus on (financial) crisis

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