Hysteresis means literally “that which comes later,” being derived from the Greek verb ύστερέω. Thus, hysteresis effects, generally defined, are those that persist after the initial causes giving rise to the effects are removed. During the course of the 1980s, it became increasingly fashionable to invoke hysteresis effects to explain economic phenomena. Two of the main areas of application were to unemployment and international trade. In the case of unemployment, distinctive features of labor markets, such as social norms that rule (...) out wage-cutting in the face of rising unemployment, imply that “increases in unemployment have a direct impact on the ‘natural’ rate of unemployment”. The implication for macroeconomic systems is that “temporary shocks can have a permanent effect on the level of employment”. In the case of international trade, hysteresis effects arise from the industrial economics of sunk costs: “the argument is that firms must incur sunk costs to enter new markets, and cannot recoup these costs if they exit.… thus foreign firms that entered the U.S. market when the dollar was high do not abandon their sunk cost investments when the dollar falls.” The implication for trade flows is “an effect which persists after the cause that brought it about has been removed”. (shrink)

One of the fundamental components of the concept of economic rationality is that preference orderings are “complete,” i.e., that all alternative actions an economic agent can take are comparable. The idea that all actions can be ranked may be called the single utility assumption. The attractiveness of this assumption is considerable. It would be hard to fathom what choice among alternatives means if the available alternatives cannot be ranked by the chooser in some way. In addition, the efficiency criterion makes (...) sense only if one can infer that an individual's choice reflects the best, in expected welfare terms, among all choices that individual could have made. The possibility that a rearrangement of resources could make someone “better off” without making others “worse off” can be understood only if the post-rearrangement world is comparable with the pre-rearrange-ment world. (shrink)

We examine the maximal-element rationalizability of choice functions with arbitrary domains. While rationality formulated in terms of the choice of greatest elements according to a rationalizing relation has been analyzed relatively thoroughly in the earlier literature, this is not the case for maximal-element rationalizability, except when it coincides with greatest-element rationalizability because of properties imposed on the rationalizing relation. We develop necessary and sufficient conditions for maximal-element rationalizability by itself, and for maximal-element rationalizability in conjunction with additional properties of a (...) rationalizing relation such as reflexivity, completeness, P-acyclicity, quasi-transitivity, consistency and transitivity. (shrink)

From a pre-publication review by the late Austrian economist, Don Lavoie, of George Mason University: -/- "The book's radical re-interpretation of property and contract is, I think, among the most powerful critiques of mainstream economics ever developed. It undermines the neoclassical way of thinking about property by articulating a theory of inalienable rights, and constructs out of this perspective a "labor theory of property" which is as different from Marx's labor theory of value as it is from neoclassicism. It traces (...) roots of such ideas in some fascinating and largely forgotten strands of the history of economics. It draws attention to the question of "responsibility" which neoclassicism has utterly lost sight of. It is startlingly fresh in its overall approach, and unusually well written in its presentation. ... It constitutes a better case for its economic democracy viewpoint than anything else in the literature." . (shrink)

This dissertation shows how initial conditions play a special role in the explanation of contingent and irregular outcomes, including, in the form of geographic context, the special case of uneven development in the social sciences. The dissertation develops a general theory of this role, recognizes its empirical limitations in the social sciences, and considers how it might be applied to the question of uneven development. The primary purpose of the dissertation is to identify and correct theoretical problems in the study (...) of uneven development; it is not intended to be an empirical study. Chapter 1 introduces the basic problem, and discusses why it has become especially salient in debates concerning uneven development. Chapter 2 develops an argument for the importance of initial conditions in the philosophy of science, developed specifically in the context of the Bhaskar/Cartwright ‘open systems’ (and by extension, ‘exogenous factor’) emphasis on the ubiquity of contingency in the universe and rejection of explanation based on laws of nature (regularity accounts) of causation. Chapter 3 makes three claims concerning the concept of contingency, especially as related to the study of society: 1) that there are eight distinct uses of the word contingency, and its many meanings are detrimental to clarity of discussion and thought in history and the social sciences; 2) that it is possible to impose some order on these different uses through developing a classification of contingency into three types based on assumptions concerning possible worlds and determinism; 3) that one of the classes is a special use of the word without relevance to the social sciences, while the two remaining classes are nothing more than a variety of the ‘no hidden factors’ argument in the debate on indeterminism and determinism (and thus related to the concept of spacetime trajectories caused by initial conditions and the interference of these in the form of ‘exogenous factors’ with ‘open systems’). Chapter 4 The concept of explanation based on initial conditions together with laws of nature is widely associated with determinism. In the social sciences determinism has frequently been rejected due to the moral dilemmas it is perceived as presenting. Chapter 4 considers problems with this view. Chapter 5 considers attitudes among geographers, economists, and historians towards using geographic factors as initial conditions in explanation and how they might acceptably be used, in particular their role in ‘anchoring’ aspatial theories of social processes to real-world distributions. Chapter 6 considers the relationship of the statistical methods common in development studies with the trend towards integrating geographical factors into econometric development studies. It introduces the statistical argument on ‘apparent populations’ that arrives at conclusions concerning determinism consistent with Chapters 2 and 3 of the dissertation. The need for the visual interpretation of data with descriptive statistics and maps and their utility in the study of uneven development is discussed with a number of examples. Chapter 7 applies these concepts to the ‘institutions versus geography’ debate in development studies, using Acemoglu, Johnson and Robinson’s 2002 ‘reversal of fortune’ argument as a primary example. Chapter 8 considers possible directions for future work, both theoretical and empirical. Chapter 9 concludes with a discussion of additional possible objections to the use of initial conditions as exogenous factors in explanation. (shrink)

The purpose of this paper is twofold: -/- 1) to highlight the widely ignored but fundamental problem of ‘superpopulations’ for the use of inferential statistics in development studies. We do not to dwell on this problem however as it has been sufficiently discussed in older papers by statisticians that social scientists have nevertheless long chosen to ignore; the interested reader can turn to those for greater detail. -/- 2) to show that descriptive statistics both avoid the problem of superpopulations and (...) can be a powerful tool when used correctly. A few examples are provided. -/- The paper ends with considerations of some reasons we think are behind the adherence to methods that are known to be inapplicable to many of the types of questions asked in development studies yet still widely practiced. (shrink)