Association for Institutional Thought

Virtual Conference Program – 2020

Super Cycles and Common Features in the U.S. Profit Rate Since the Mid-Nineteenth Century

Pedro Clavijo-Cortes, University of Utah

This study uses an asymmetric band-pass filter to decompose the US rate of profit, 1869–2015, into cyclical and trend components. This provides a new but complementary frame for investigating two central questions in Marxist profit rate long cycle studies: i) the existence and duration of super-cycles in the rate of profit and their relation to crises in general economic activity, and ii) the determination of those super-cycles. We find four super-cycles that correlate with crises in US general economic activity. In discussing the super-cycles determination, with the help of a common features methodology, we find they are endogenously determined, which is, in part, explained by the fact that smooth breaks punctuate the tendency for the rate of profit to fall.

Can the Politics-Administration Dichotomy Survive 2020?

Larry Wigger, University of Missouri at Kansas City

There is potential that policy sciences are increasingly inconsistent with democracy in the US today.  In the public interest, the state is concerned with promoting economic growth, full employment, price stability, and trade surplus.  Yet there is insufficient paid work in the US economy.  The state’s efforts to artificially constrain citizens’ access to work, in the name of cheaper consumption, should be unconscionable.  As populist US politics trend closer to democratic socialism, it brings a greater focus on equity, inclusion, and welfare, and recedes from US libertarian roots.  These populist desires increasingly find themselves in conflict with frequent outsourcing of public sector services to the private sector.  The resultant private sector profit models have the tendency to contribute to inequity in wages and wealth.  Hence, the current debates of whether to effect institutional change in employment with Universal Basic Income or Federal Job Guarantees.  The politics-administration dichotomy is a fallacy, as measures of efficacy, efficiency, equity, and performance are themselves a result of policy goals, advocated by political agents.  There can be no administration or management, without politics to establish and drive policy.  We must co-create a new model, transparent in political influence, productive in problem orientation, and effective in stakeholder engagement.  Institutions are collections of human habits, including the political machinations of our democratic process.  Hence the necessity of policy sciences in democracy today.

Economic Narratives and Enabling Myths as the Basis for Economic Policy

Dell P. Champlin, Oregon State University, and Janet T. Knoedler, Bucknell University

In his recent book, Narrative Economics, Robert Schiller explains how economists in both academia and in the business press emphasize the importance of economic “facts” or data such as the latest unemployment rate, GDP growth rate, or movements in the stock market.  The presumption is that individuals make economic decisions in their own lives based on these facts.  In contrast, many decisions are actually based on “economic narratives” defined by Schiller as “a story or representation used to give an explanation or justificatory account” (xi).  

Schiller defines an “economic narrative” as a “contagious story” that “goes viral” for some reason and becomes widely accepted by the public.  While we applaud the recognition by a prominent mainstream economist such as Robert Schiller that economic decision-making is often driven by popular “economic narratives” that may not be correct, verifiable or even plausible, we suggest that the origin of these narratives is not as random or inexplicable as a false rumor or post in social media.  Following Bill Dugger’s notion of the enabling myths of capitalism (Dugger 1998, 1996), we argue that economists and policy-makers have long intentionally promoted an economic narrative of an impartial, free-market version of capitalism that simply rewards “winners” as succeeding on their own merits and views the ‘losers’ as deserving their fates.

Game-Theoretic Analyses of US Settlement Allowing for Coercion and Activism

Chelsea Pardini and Ana Espinola-Arredondo, Washington State University

Previous game-theoretic analyses of the settlement of the United States assume that Indigenous peoples and settler colonizers either engaged in free exchange or total war for land. We reframe the model to break the binary and consider that violence, including coercion, was present in most of their interactions; that is, we allow for the settler colonizer to engage in coercion to strategically lower their appropriation costs for Indigenous peoples’ lands. We also extend the model to include activism on behalf of Indigenous peoples. Our paper provides insights for historical and ongoing land-use disputes between the state and Indigenous peoples, and acknowledges the enduring societal structure of settler colonialism. We find that the settler strategically uses violence to pay less in exchanges for Indigenous peoples’ lands, and that cost-reducing activism on behalf of Indigenous peoples reduces settler-state violence while it increases the compensation they receive for their land.

Minsky's Theory of Inflation

Hongkil Kim, University of North Carolina Asheville

This paper examines Minsky’s theory of inflation, as distinct from a monetary theory of inflation and a productivity-adjusted wage theory of inflation. Minsky’s view on money and banking will be elucidated in contrast to orthodox banking theories, drawing a causal relation from bank credit creation to aggregate demand, profits, and inflation. This paper claims that his theory is particularly relevant to modern economies in which the globalization of the production process and the decline in the power of unions have mitigated wage-led inflation while financialization has amplified the business cycle and the movement in inflation over the previous 40 years. In other words, excessive bank lending has underpinned aggregate spending, which created too much “claim” on consumer goods, thus precipitating profit-led inflation. By contrast, an unavoidable financial crisis and attempts especially by households to pay off outstanding debt dampened aggregate demand, thus causing a slowdown in profits and inflation.

Modern Money Theory, Financialization, and Automation: How the Green New Deal Promotes Progressive Institutional Adjustment

Avraham Baranes, Elmhurst College

This paper examines the relationship between financialization and automation from the perspective of institutional economics. It is argued herein that the “problems” of automation result from ceremonial encapsulation during the process of institutional adjustment. This process, in the context of a financialized economy, concentrates the gains from technological advances in the hands of shareholders while gains to labor are tangential and minimal to the extent they exist at all. Using modern monetary theory as a lens, this paper then argues that the Green New Deal policy program will serve to promote progressive institutional adjusment in two ways: First, by not defining productivity in the context of production of surplus value, it re-evaluates how we consider a fair and equitable distribution of income. Second, by promoting innovation in green technologies financed publically, gains from these innovations - including labor-replacing ones - are not created for the purpose of enriching shareholders, but rather the community as a whole.

Money and Value: Modeling currency systems to explore the dynamics of social provisioning through applied learning 

Benjamin Wilson, SUNY Cortland, and Michael Schmidt, SUNY Cortland

The following discusses an applied and service-learning project that utilizes Modern Monetary Theory (MMT) as the core theoretical framework.  The modeling of sovereign currency issue and experimentation with digital currency platforms are effective pedagogical tools that introduce students to market failures, austerity, and monetary systems as products of design. Complementing these abstract economic concepts, implementation of the currency model emphasizes the importance of civic engagement, provides holistic-community driven experience-based learning, and exposes students to the power they possess to generate positive social change. To develop these arguments, the paper: introduces the basic concepts of MMT and recent developments in digital and community currency systems, describes the project’s community partnerships, provides quantitative, qualitative, and spatial data of student engagement and community impact, and concludes with a discussion of broader implications and scalability of this experiment to further civic and political engagement.

Peirce and Veblen: the OIE pragmatisc view of rationality and uncertainty

Artur Bento Botarelli, UFABC (Universidade Federal do ABC) - Brasil

Based on the label adopted for themselves as "hard science," many economists consider investigations into the relationship between economics and philosophy are useless or uninteresting. However, in the debates between neoclassical, institutionalists, and Keynesians about the rationality of agents and the uncertainty of economic phenomena, it is clear that different philosophical traditions strongly influence these paradigms. This paper aims to explore the philosophical roots of economic paradigms to offer an objective description of how they deal with philosophical issues and, at the same time, introduce some approaches that are usually neglected within economic thought. In this sense, this paper proposes an analysis of the approximation of concepts of the philosophical pragmatism of Charles S. Peirce and the institutionalist economists of its original aspect.

US Healthcare as Imbecile Institution

Robert Kemp

After identifying the process of instrumental valuation in the delivery of healthcare, it is possible to also identify the process whereby invidious, emulative and predatory ideas (the “ceremonial”) encapsulate technological and scientific progress which otherwise could be fully used for instrumental problem-solving in the healthcare system. Imbecile ceremonially dominated, and particularly pecuniary institutions shape technology and impede or pervert technological opportunities for instrumental problem-solving in the healthcare sector. This paper identifies some of the major causes of imbecility in the healthcare system of the USA.

The Instinct of Workmanship and the Incidence of Bullshit Jobs

Richard Dadzie, Seattle Pacific University, Xuan Pham, Rockhurst University, and Erik Dean, Portland Community College

"In the intervals of sober reflection," Veblen argued, "common sense speaks unequivocally under the guidance of the instinct of workmanship."  Anthropologist David Graeber's recent volume, Bullshit Jobs, has indicated through significant qualitative work that, on sober reflection, many workers today find themselves in jobs that do not contribute anything of value to society.  The present paper will, first, synthesize the ideas of Veblen and institutional economists with Graeber's, explaining how the evolution of modern capitalism has encouraged the proliferation of socially useless (or 'bullshit') jobs.  The paper will then formulate a series of hypotheses from this theoretical synthesis and, using data from IPUMS Higher Education dataset, explore the data through cluster analysis and evaluate our hypotheses with logit models.

The Methods of Normative Analytics

Ely Fair, University of Missouri: Kansas City

Debates concerning the normative nature of economic inquiry have largely centered around, either, the need to remove normative judgement from scientific discourse, or the impossibility of doing so. Over time, this debate has proven increasingly fruitless and these philosophy of science issues have faded from popular economic discourse. This paper attempts to reinvigorate concerns with normativity along a different set of lines. We contend that norms are injected into social science analysis via three distinct sites, or locations: actor, system, and observer. Agent based modeling, whether it be 'rational' or 'behavioral', takes human actions as scientific inputs and naturalizes them. Human behavior is not natural or neutral, but intrinsically social and normative; extrapolations from individual actors must necessarily embed these judgments in their conclusions. System modeling similarly injects norms, but at the level of the institution. Social structures are reified and anthropomorphized, granted solidity, rationality, and emotion. A human can not act without norms and an institution analyzed as a human, must likewise behave normatively. Lastly, norms are injected by the observer themself; it is these norms which have been so contentious and with which we are therefore most familiar. This schema helps us shift away from: is this research normative?, towards: where are norms being inserted into the analysis? This latter question goes a long way towards revealing the heart of our most tenacious historical debates. When norms can be located and named, we move towards a science, which must explicitly defend its normative judgments.

The Political Economy of Hegemonic Masculinity

Sarah Small, Colorado State University

This study considers how the macro cultural dynamics of hegemonic masculinity complicate microeconomic negotiations within households. To motivate this paper, I begin by drawing connections among established microeconomic phenomena that scholars have attributed to a defense of masculinity or ‘gender deviance neutralization’. I then consider how hegemonic masculinities held by upper-income White men differ from the masculine behavior and narratives of other groups of men. Specifically, I make use of Panel Study of Income Dynamics (PSID) data to understand how men of different race and income groups respond to earning less than their female partners: an economic ‘threat’ to masculinity. Preliminary results indicate that upper-income White men have a stronger aversion to the situation in which a woman out-earns her male partner relative to lower-income White men and all groups of Black men. Using these findings, I discuss how this helps us understand the ‘hegemonic’ nature of hegemonic masculinity.

The Soul of Reason: an Argument for a New Postmodern Realism in Social Theory and Philosophy

Douglas Bowles, University of Missouri-Kansas City

The dramatic failure of global neoliberalism’s so-called ‘solution’ to the problem of distribution is giving rise to a new wave of militant traditionalism (also often referred to as authoritarianism, and/or ethnic nationalism).  Prominent neoliberal apologists such as Robert Kagan (“The Strongmen Strike Back,” The Washington Post, March 14, 2019) have undertaken to defend neoliberalism in terms of its commitment to a social and moral ontology of individual liberties and rights, while progressive critiques of neoliberalism continue to struggle with the problem of relativism: they fail to articulate an alternative conception of social and moral ontology capable of resolving the enduring tension between individual and group identity and interest.

This paper seeks to advance the argument that the problems of relativism, social ontology, and distribution can only be ultimately resolved through a solution of the problem of consciousness, presented as an accounting of the social and moral ontology of altered states of consciousness, rhetorically characterized as the soul of reason.

The Technocratic Solution: How did Thorstein Veblen and the Electrical Industry Influence Each Other

Heather Grob, Saint Martin's University

The history of the electrical industry and labor’s creation of a social management system in 1919 is worthy of investigation because of its long adherence to principles of industrial democracy and its possible applicability to “gig” and multi-employer work today. The International Brotherhood of Electrical Workers and the National Electrical Contractors Association created The Council on Industrial Relations in 1919, directly after World War I and the subsequent closure of the War Labor Board. The Council’s principles and aims were very similar to the War Labor Board and quickly adjudicated disputes between labor and management. Remarkably, the Council is now celebrating its one-hundredth year, predating the establishment of the National Labor Relations Act through the 1935 Wagner Act and 1947 Taft- Hartley Act. It also predates the Steelworkers Trilogy of 1960 which firmly established third-party alternative dispute resolution as a legal method of resolving differences in collective bargaining and handling of grievances. However, it appears that the contract language adopting the Council’s procedures was not uniformly adopted by all IBEW unions: those in larger western cities likely wished to maintain worker power evidenced by industrial unions. I begin to uncover the role that Veblen and his students and colleagues in Washington D.C. may have played in shaping the more moderate version of labor management relations embodied in the Council’s procedures and deliberations. These inquiries may shed more light on how this experiment in industrial democracy shaped Veblen’s views in The Engineers and the Price System.

Towards a Future We Can All Live With “Just In Time” Institutional Change—A Community-Based Thought Experiment

Nancy Glock-Grueneich, Within Reach Network for Strategic Citizen Action

The global disasters we can no longer avoid also open spaces for a radical reconstruction of institutions never before possible, targeted changes unique to this moment and perhaps enabling humanity to achieve at last the world we have always needed—one that brings out the best in us. We can, even as we grieve the planet-wide losses, recognize these forced transformations for what they also are: unprecedented opportunities to newly institutionalize the better ways of organizing our social lives already starting to emerge around the world. 

This essay combines those insights into an applied theory of systems transformation, from the field of social philosophy. Drawing on both social design and systems emergence, this paper points to where and how we may use breakdown to breakthrough. We first identify key institutional leverage points. Then we consider what sorts of changes at those points are most likely to tip our future towards one that we can all live with.

The result is an agenda usable in two ways both for further inquiry and for planning the actions necessary to deliver these critical changes.