The "solitude of the reformist" Public Policy and Value Judgments in the Work of Federico Caffè

Caffè's pursuit of a more humane society is strictly related to his view of the economy as a human construction within a more encompassing historical process. Based on this view, he conceives of economics as a policy-oriented social science where value judgments play a crucial role. They frame the questions that need to be answered in order to carry out purposeful change. They also structure the analysis, thus the way questions are answered. A commonly shared understanding of the economy is, therefore, unlikely. Although this would seem to undermine Caffè's view that a "reasonable core" in economic thought exists, the paper -based on methodological premises that differ, to some extent, from those of Caffè- contends that disciplinary dialogue remains possible provided economists acknowledge the need to make their methodological value judgments explicit.

Policymaking and Learning Actors, or Is A ’Double Movement’ In Cognition Possible?

  One of the key issues in K. Polanyi’s (1944, 1957) work is that capitalist markets may be inconsistent with societal values. This (external) inconsistency eventually leads to a reaction against the rationale of the market, what Polanyi refers to with the notion of the double movement. The double movement, in turn, may disrupt the (internal) consistency of the market, thereby leading to dramatic consequences for society, as was the case with fascism and nazism. A crucial question therefore is how to achieve a protective response without undermining society. The paper contends that the two types of (in)consistency basically depend on the shared knowledge available in a given society. It therefore discusses how that knowledge arises and how actors may favor or prevent change by acting on learning processes. The aim is to stress that a policy for change not only requires a scientific perspective that is not restricted within disciplinary boundaries, it also requires a dialogue between social scientists, policy-makers and all those sections of society who can be affected by a change in the status quo.

Industrial Districts and Economic Decline in Italy

� The paper argues that the so-called canonical view of the Italian industrial district (ID) depicts it as a system whose economic and social vitality requires the interaction between two major sub-systems: a community of people and a community of firms. A range of circumstances - including insufficient aggregate demand, competition from low-cost coun- tries and technological change - have determined inconsistencies between the rationales of these two sub-systems. As a result, lead firms have emerged that substitute the ID as coordinating instances. In the pursuit of their goals, they tend to prefer cost scrapping to quality enhancement, thereby determining a competition that further undermines the ID as a system. The paper contends that this outcome is not the only possible one. An alternative would require the regulatory - as opposed to merely permissive - action of pub- lic actors in that it would have to change the incentive system that leads firms to choose short-sighted strategies.

Labour market flexibility and technological innovation or, desperately seeking a trade-off

    Lack of labour market flexibility has often been accounted for the low growth rates in the European Union. A recent report on ”An Agenda for a Growing Europe”, better known as the Sapir Report, discussed this issue and clearly stated the terms of the trade off between growth and lack of flexibility. The Report acknowledges that flexibility involves a range of social and economic drawbacks. Nonetheless it contends that ”At a time of very rapid change and a need to adjust both production and skills quickly, flexibility comes at a premium.”. In this paper I focus on a range of microeconomic issues, involving the conceptual plausibility of the claimed trade off and the implications that a policy based on such a trade off may have in terms of both growth and social welfare. I argue that the assumptions underlying the trade off are not clear because the notion of innovation in the Report is rather confused. Contrary to what the Report claims, flexibility turns out to be irrelevant for the innovation it purports. Flexibility might produce some effects but only with innovations that the Report neglects. I contend that the effects of flexibility may be to reduce innovation and the potential for growth. Truly, flexibility may allow firms to introduce new technology, but it may also lead firms away from innovation in so far as it allows them to pursue profit through other means, i.e. through cost scrapping. My final argument is that the notion of trade off that the Report refers to is misleading in that it in no way takes account of the social costs that flexibility would determine. I conclude my discussion by drawing a few implications for economic policy.

Unemployment as a social cost

Over the last decade, workfare programmes provided support to the unemployed only insofar as they were willing to accept a job. The theoretical underpinnings of these programmes are that institutional constraints prevent labour supply from adjusting to the technologically determined requirements of labour demand. We contend that when individuals look for a job, they generally want to take into account non-monetary features such as occupational status. Status cannot be traded, it usually is complementary to income, it determines lifestyles and life possibilities. As for labour demand, its requirements do not reflect efficient behaviour and technical constraints because business ”efficiency” cannot be taken to be a measure of social efficiency and technology cannot be used as a benchmark to assess the efficiency of business conduct. We suggest that Sen’s notion of capabilities may constitute an appropriate benchmark to assess the social efficiency of the economic system. This leads us to a few policy implications. The ”capabilities benchmark” leads us to stress the importance of freedom to choose how to conduct one’s life. Acting in favour of freedom involves the understanding of how business strategies affect learning patterns and available choice sets. It also involves the assessment of policy issues - such as cooperation between the scientific community and business, scientific freedom, educational goals and their institutional implementation, and unemployment relief systems - which may influence the relation between business strategies and social learning.

Alla ricerca del metodo perduto. L\u2019insegnamento di Federico Caff\ue8

Caff\ue8 \ue8 pi\uf9 che la somma di un attento studioso, di un acuto polemista e di un valente didatta. L\u2019enfasi su singoli tratti della sua personalit\ue0 umana e scientifica rischia di far travisare la sua visione generale della realt\ue0 in cui viviamo e del modo per comprenderla e cambiarla. Questa visione \ue8 centrata sulla forte interdipendenza delle relazioni economiche con quelle di carattere sociale e naturale, cosicch\ue9 risulta impossibile \u2013 se non per ragioni euristiche - una demarcazione netta fra discipline scientifiche diverse. Ne consegue un approccio problematico al pensiero economico, del quale Caff\ue8 valorizza la variet\ue0 e l\u2019irriducibilit\ue0 ad una chiave di lettura univoca. Bench\ue9, a prima vista, una visione del genere sembri precludere la possibilit\ue0 di una interpretazione scientifica della realt\ue0 economica, la tesi qui proposta \ue8 che, coerentemente con sviluppi epistemologici recenti e con intuizioni gi\ue0 presenti in Keynes, Caff\ue8 prospetta una concezione della conoscenza che prende atto dell\u2019incertezza su cui poggia ogni sapere e pone al centro dell\u2019analisi i giudizi di valore cognitivi, quelli relativi a come si intende inquadrare l\u2019indagine economica

Themes in an institutionalist theory of economic policy

The paper discusses the ends and scope of economic policy from an evolutionary and institutionalist perspective. I focus on how complexity and dierent types of coordination characterize the economy we live in. I then discuss how public coordination and change can be conceived of. I point out that the means to adequately deal with economic complexity depend on which social priorities prevail and on how the economy is conceptually framed in relation to those priorities. This requires the combined formulation of moral and cognitive value judgments and the non-separability of economic theory from the ends of economic policy

Prices, institutions and the coordination of economic growth

The paper discusses two approaches to growth. The first one focuses on price-centered coordination. The economy boils down to the market, with institutions merely complementing prices. The alternative view is that coordination of the economy does not and cannot occur only through prices. The economy is an open system and institutions do not merely complement prices: they regulate the way they function. These two different approaches reflect different views of the economy and of society. They lead to different views with regard to what growth involves, thus also with regard to the actions that governments can and should take. Ultimately, they lead to different conclusions with regard both to what pattern of growth is possible and required and to how such a growth can be pursued