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Trust and trustworthiness are key elements, both at the micro and macro level, in sustaining the working of modern economies and their institutions. However, despite its centrality, trust continues to be considered as a "conceptual bumblebee", it works in practice but not in theory. In particular, its behavioural rationale still represents a puzzle for traditional rational choice theory and game theory. In this paper "trust responsiveness", an alternative explanatory principle that can account for trustful and trustworthy behaviour, is proposed. Such principle assumes that people can be motivated to behave trustworthily by trustful actions. The paper discusses the philosophical roots, the historical development, as well as the relational nature of this principle as well as its theoretical implications.

Discerning family resemblances in the world of theories can be useful for several reasons. For one thing, noticing that two theories share the traits of a family of theories may help us to understand each of them better. Secondly, noticing the family resemblances may help us to model them more easily. In particular, the modern software development technique of object-oriented programming leverages family resemblances among different software “objects” to increase the ease of development, and so dovetails very well with the effort to pick out “families” on a more theoretical level. In this paper, we note the large family of two-population social cycle theories, all based on a pattern of disruptions and adjustments akin to the well-known predator-prey model.

This paper presents Gary Becker's approach to conducting creative, empirically fruitful economic research. It describes the traits and methodology that made him such a productive and influential scholar.

This article offers a revisionist account of certain episodes in the development of F. A. Hayek's thought. It offers a new reading of his 1937 paper, “Economics and Knowledge,” that draws on unpublished lecture notes in which he articulated more fully the distinctions he made in the paper between a “pure logic of choice,” or the economic calculus, and an “empirical element,” which he would later call the competitive market order. Next, the essay shows that Hayek continued to try to develop his ideas about the role of the economic calculus through the 1950s and early 1960s, an effort that has been missed because it never led to any published work. Finally, the article examines Hayek's attempt to articulate a theory of the market process, one that would be at the same level of generality as the economic calculus, in lectures he gave at the University of Virginia. He never developed a full-fledged formal theory, but his failed efforts still bore fruit in leading him to his contributions on spontaneous orders and the (verbal) theory of complex phenomena. This work anticipated contributions by others who were more technically trained.

This paper discusses the potential and limitations of Bitcoin as a digital currency. Bitcoin as a digital asset has been extensively discussed from the viewpoints of engineering and security design. But there are few economic analyses of Bitcoin as a currency. Bitcoin was designed as a payments vehicle and as a store of value (or speculation). It has no use bar as money or currency. Despite recent enthusiasm for Bitcoin, it seems very unlikely that currencies provided by central banks are at risk of being replaced, primarily because of the market price instability of Bitcoin (i.e. the exchange rate against the major currencies). We diagnose the instability of market price of Bitcoin as being a symptom of the lack of flexibility in the Bitcoin supply schedule ‐ a predetermined algorithm in which the proof of work is the major driving force. This paper explores the problem of instability from the viewpoint of economics and suggests a new monetary policy rule (i.e. monetary policy without a central bank) for stabilizing the values of Bitcoin and other cryptocurrencies.

Gary Becker's classic study, ‘A theory of the allocation of time’, laid the analytical foundations for the study of household production and the allocation of time within the household. It spawned a large literature and continues to influence economics and other social sciences. The article was written when Becker was in his mid-30s, teaching at Columbia University and conducting research at the National Bureau of Economic Research, then headquartered in New York. Over the period 1958–69, Becker, along with Jacob Mincer, organised the legendary Columbia Labour Economics Workshop. Becker, Mincer and their students applied price theory to study the economics of fertility, labour supply, income inequality, education, on-the-job training, crime and punishment and the theory of irrational behaviour, among other topics. The interplay between theory and data was the hallmark of that group. From this crucible emerged the modern theory of human capital (Becker, ,) and important components of the modern economics of the family that were distilled and extended in Becker's classic A Treatise on the Family (1981, enlarged in 1991). A generation of productive and influential scholars was trained at Columbia during this period (Heckman, 2014). In his introduction to this article, Becker discusses the body of research on the economics of time that was being conducted at Columbia, to which he contributed and from which he had drawn. This article is the analytical synthesis of a body of ideas developed in that intense intellectual climate. Many scholars have tried to disentangle the contributions of Jacob Mincer from those of Gary Becker during the period of their synergistic collaboration. Attempts to do so miss the highly interactive and mutually supportive intellectual environment of the Columbia group and the ability of Becker to create clean analytical insights from diverse bodies of empirical work and to stimulate all those around him.

In Chapter 3 of the General Theory, Keynes sketches out what he calls the essence of the General Theory of Employment. He introduces the Keynesian expenditure-based model, his aggregate demand function and also his aggregate supply function, a concept which spawned much debate among Post-Keynesian economists but which was, for a long time, virtually ignored in mainstream macroeconomics. He sets out the Savings = Investment version of Say’s Law and outlines how an economy can settle into an equilibrium at less than full employment.

Chapter 2 is one of the most important chapters in the General Theory. Not only does it set out Keynes’ disagreements with key elements of the classical model, it lays out his own model of the working of the labour market, which underlies the analysis in the remainder of the General Theory. The issue of how labour’s response to a change in its real wage differs depending on whether the change is driven by a change in the nominal wage or in the price of consumer goods plays a key part in the way Keynes’ theoretical model is developed here. This chapter introduces Keynes’ concept of involuntary unemployment and sets out his argument about the causal relation between the real wage and the level of unemployment, and about the consequent cyclicality of the real wage. Chapter 2 also includes Keynes’ discussion of Say’s Law.

After the global financial crisis, there is greater awareness of the need to understand the interactions between the financial sector and the real economy and hence the potential for financial instability. Data from the financial flow of funds, previously relatively neglected, are now seen as crucial to the data monitoring carried out by central banks. This paper revisits earlier efforts to understand financial-real linkages, such those of Tobin and the Yale School, and proposes a modeling framework for analysing the household flow of funds jointly with consumption. The consumption function incorporates household income, portfolios of assets and debt held at the end of the previous period, credit availability, and asset prices and interest rates. In a general equilibrium setting, these all have to be endogenised and since households make consumption and housing purchase decisions jointly with portfolio decisions, there is much to be gained in modeling a household sub-system of equations. Major evolutionary structural change – namely the evolving credit architecture facing households – is handled by our ‘Latent Interactive Variable Equation System’ (LIVES) approach. A byproduct is improved understanding of the secular decline in US saving rate, as well as of the household financial accelerator. Moreover, the models discussed in this paper offer new ways of interpreting data on credit, money and asset prices, which are crucial for central banks.

In Chapter 4 of the General Theory, Keynes discusses the units of measurement he will be using in the remainder of the book, in particular his reason for measuring in nominal rather than real terms, objection to aggregate measures of real output and physical capital stock, and his concept of wage units, which is a source of difficulty in following bits of the later exposition. Chapter 5 introduces expectations and discusses the role of short run expectations in determining the behavior of firms and of economic aggregates.

This paper puts John Maynard Keynes’ "The General Theory of Employment, Interest and Money" into its historical context, both in terms of economic history and in terms of the history of economics. It discusses the post-World War I period as background to the General Theory, looks at the influence of other economists of the period on the evolution of Keynes’ thought and considers the parallels between the post-World War period and the post-Napoleonic War period, when Ricardo and Malthus were debating issues very similar to the ones with which Keynes was wrestling.

Chapter Six and its Appendix deal in some detail with the way Keynes is defining income, savings and investment in the General Theory while the appendix to Chapter 6 goes into detail on user cost. His concept of user cost at one point sparked a certain amount of controversy among Keynesians but has since virtually been forgotten. It is of interest to us because user cost is the place where Keynes sees firms taking account of the future consequences of their current production decisions. The General Theory is a theory of the short run, but firms’ cost curves, which are key to many short run decisions, contain a forward looking element. Chapter 7 returns to the concepts of saving and investment, relates Keynes’ definitions to those used by others (including his own from the Treatise) and relates aggregate investment, which refers to additions to physical capital stock, to the way the term is often used at the micro level, in the sense of investment in financial assets.

Financial market crises with the threat of a subsequent debt-deflation depression have occurred with increasing regularity in the United States from 1980 through the present. Almost reflexively, when confronted with such circumstances, US institutions and the policymakers that run them have responded in a fashion that has consistently thwarted debt-deflation-depression dynamics. It is true that these "remedies," as they succeeded, increasingly contributed to a moral hazard in US and global financial markets that culminated with the crisis that began in 2007. Nonetheless, the straightforward steps taken by established institutions enabled the United States to derail depression dynamics, while European 1930s-style austerity proved as ineffective as it was almost a century ago. Europe's, and specifically Germany's, steadfast refusal to embrace the US recipe has fostered mushrooming economic hardship on the continent. The situation is gruesome, and any serious student of economic history had to have known, given European policy commitments, that it was destined to turn out this way. It is easy to understand why misguided policies drove initial European responses. Economic theory has frowned on Keynes. Economic successes, especially in Germany, offered up the wrong lessons, and enduring angst about inflation was a major distraction. At the outset, the wrong medicine for the wrong disease was to be expected. What is much harder to fathom is why such a poisonous elixir continues to be proffered amid widespread evidence that the patient is dying. Deconstructing cognitive dissonance in other spheres provides an explanation. Not surprisingly, knowing what one wants to happen at home completely informs one’s claims concerning what will be good for one’s neighbors. In such a construct, the last best hope for Europe is ECB President Mario Draghi. He seems to be able to speak German and yet act European.

Robert Triffin became famous with his trenchant analyses of the vulnerabilities of the Bretton Woods system. These are still at the center of many discussions today. This paper argues that there is a remarkable continuity in Triffin's work. From his earliest writings, Triffin developed a vision that the international adjustment process was not functioning according to the classical mechanisms. This view was based on thorough empirical analyses of the Belgian economy during the Great Depression and shaped by a business cycle perspective with an emphasis on the disequilibria and the transition period. His doctoral dissertation on imperfect competition theory and his Latin American experience further reinforced this basic view.

During the early nineteen sixties, Albert Hirschman negotiated with the International Bank of Reconstruction and Development, part of the World Bank group, the financial support that he needed for an extended visit to several WB development projects scattered throughout the poor areas of the world. The document where he reports his visit was the matter of much controversy between the IBRD staff and Hirschman. One of the major points of disagreement was the latter´s refusal to employ the technique of cost-benefit analysis, then very popular at the WB, as a measure of the success of a project. Hirschman claimed that a one-dimensional scale was unable to grasp the various indirect effects of a project, which, he argued, were so varied as to escape detection by one or even several criteria uniformly applied to all projects. The paper claims that the strong negative reaction that Hirschman found among the WB economists was a crucial factor in his decision to leave the strict realm of economics and to embrace the broader social sciences themes of his subsequent writings.

Condy Raguet (1784-1842) was the first Charg%E9 d'Affaires from the United States to Brazil and a conspicuous author of political economy from the 1820s to the early 1840s. He contributed to the era's free-trade doctrine as editor of influential periodicals, most notably The Banner of the Constitution. Before leading the free-trade cause, however, he was poised to negotiate a reciprocity treaty between the United States and Brazil, acting under the authority of Secretary of State and protectionist apostle Henry Clay. Raguet's career and ideas provide a window into the uncertain relationship of reciprocity to the cause of free trade.

This paper provides a brief exposition of financial markets in Post Keynesian economics. Inspired by John Maynard Keynes's path-breaking insights into the role of liquidity and finance in "monetary production economies," Post Keynesian economics offers a refreshing alternative to mainstream (mis)conceptions in this area. We highlight the importance of liquidity-as provided by the financial system—to the proper functioning of real world economies under fundamental uncertainty, contrasting starkly with the fictitious modeling world of neo-Walrasian exchange economies. The mainstream vision of well-behaved financial markets, channeling saving flows from savers to investors while anchored by fundamentals, complements a notion of money as an arbitrary numeraire and mere convenience, facilitating exchange but otherwise "neutral." From a Post Keynesian perspective, money and finance are nonneutral but condition and shape real economic performance. It takes public policy to anchor asset prices and secure financial stability, with the central bank as the key public policy tool.

Internationalization receives top priority in nearly any university mission state-ment. But why? What is the value of internationalization for a university? Is the purpose to improve a university’s ranking, or to explore new revenue sources by entering foreign, mostly Asian, educational markets? Internationalization is not - or better - should not be an institutional end in itself. Internationalization is a powerful means to fulfill a university’s central task “Bildung of individuals” as it significantly contributes to the learning process of students and professors within the university system. By focusing on the individual’s learning process this article provides a new perspective to internationalization and develops a different ap-proach for reaching the university’s mission of internationalization.

In this paper, we show that, in 1961 and before he had read "The Problem of Social Cost", Calabresi reached exactly the same conclusions as the one reached by Coase and summarized by Stigler as the "Coase theorem" but he believed that this result was valid only in the theoretical world of the economists. We also analyze how Calabresi's thought evolved, in particular including transaction costs in his reasoning, but nonetheless remained faithful to his conclusions about the practical validity of the Coase theorem. Calabresi's conclusions remained ignored by economists and by most of legal scholars until the early 1970s. It was only when scholars started to emphasize the unrealistic assumptions upon which rest the Coase theorem that they also started to pay attention to Calabresi. His works were quoted and essentially used to emphasize the limits of the Coase theorem. Calabresi and Coase were then put on the same footing; the works of the former presented as more complete and more practical than the works of the later.

The Industrial Institute for Economic and Social Research (IUI) was founded in 1939. In less than ten years, IUI grew from a small survey bureau to a leading research institute focused on microeconomic research relevant to industrial development. Based on a number of new commemorative essays and biographies written by or about former IUI researchers published in Henrekson (2009), this essay describes the Institute’s accomplishments and the particular research environment at IUI. It also discusses the conditions conducive to a creative, productive research environment. While most of these accounts do not extend beyond the end of the 1970s, the insights provided are highly relevant for contemporary research institutes.

In the attempt to answer three (interrelated) questions, we concentrate on a crucial step in Goodwin’s (RMG) life: his move from Cambridge, Mass. to Cambridge, UK. Why did RMG not get a permanent position at Harvard? How did RMG reach the decision to settle down in Cambridge, UK? Why was it that RMG never finished the book on economic dynamics he had started to write at Harvard? In answering these questions we show that the material available in the Goodwin Archive at the University of Siena is invaluable and adds much to the ‘known story’. Richard M. Goodwin, economic dynamics, archive, Harvard University, Cambridge University.

Professor Narmadeshwar Jha was a noted scholar on History of Economic Thought that took its shape under the influence of Alfred Marshall. His widely referred book - The Age of Marshall: Aspects of British Economic Thought, 1890-1915 – was written under the supervision of Professor A.J. Brown of Leeds (UK) and published with a commendatory foreword written by Sir Dennis H. Robertson. Professor Jha devised a methodology to conduct research in the history of economic ideas. This brief paper presents Professor Jha as a teacher, economist and scholar.

This paper proposes a general interpretation of Edgworth's thought based on the recognition of a unitary philosophical project in his contributions to ethics, economics, probability and statistics. This project consists in the search for a common epistemological foundation for the social sciences. The point is illustrated in reference to the coexistence in Edgworthian scientific programme of the 'regularity of law' with the 'impartiality of chance'. The interpretation here proposed challenges the traditional stereotypes according to which Edgeworth was a crass utilitarian, and an ingenuous advocate of a rather primitive neoclassical economics. His plea for the use of mathematics, and his choice of deterministic models for the description of the economic behaviour, appear more innovative when the role of probability is considered.

This paper argues that the Stock-Flow Consistent Approach to macroeconomic modeling can be seen as a natural outcome of the path taken by Keynesian macroeconomic thought in the 1960s and 1970s, a theoretical frontier that remained largely unexplored with the end of Keynesian academic hegemony. The representative views of Davidson, Godley, Minsky, and Tobin as different closures of the same SFC accounting framework are presented, and similarities and problems discussed.