General Economic Equilibrium: Purpose, Analytic Techniques, Collective Choice

Lecture to the memory of Alfred Nobel, December 12, 1972general equilibrium;

Transition from socialism

This paper discusses the changes that socialist countries, specially in Eastern Europe, are currently undergoing. It also comments on the decline all over the world of the institution of the nation-state, and, particularly, a decline in its importance in the economy.

Innovation in Large and Small Firms

This essay is intended to begin the elaboration of a theme: the interaction between the observed sizes of firms and their internal decision making procedures. This theme is a major one in the symphony of entrepreneurial activity. The entrepreneur, as the maker and changer of economic and productive life, is usually envisaged as an individual. In the neoclassical tradition, he (or, rarely, she) is the lightning calculator, the individual who rapidly scans the field of alternative productive processes and chooses the optimum any given set of prices

Evaluating Projects and Assessing Sustainable Development in Imperfect Economies

We are interested in three related questions: (1) How should accounting prices be estimated? (2) How should we evaluate policy change in an imperfect economy? (3) How can we check whether intergenerational well-being will be sustained along a projected economic programme? We do not presume that the economy is convex, nor do we assume that the government optimizes on behalf of its citizens. We show that the same set of accounting prices should be used both for policy evaluation and for assessing whether or not intergenerational welfare along a given economic path will be sustained. We also show that a comprehensive measure of wealth, computed in terms of the accounting prices, can be used as an index for problems (2) and (3) above. The remainder of the paper is concerned with rules for estimating the accounting prices of several specific environmental natural resources, transacted in a few well known economic institutions.Sustainable development, Imperfect economies

Reclaiming Virtue Ethics for Economics

Virtue ethics is an important strand of moral philosophy which normative economists have largely neglected. It underpins influential critiques of the market (as a domain in which instrumental motivation corrodes virtue) and of economics (as justifying such motivation). We explain and respond to this critique. Using the methods of virtue ethics and with reference to the writings of major economists, we propose an understanding of the ‘telos’ (purpose) of markets as cooperation for mutual benefit, and identify traits that thereby count as virtues for market participants. We conclude that the market need not be seen as a virtue-free zone

The Genuine Savings Criterion and the Value of Population

Arrow, Dasgupta and Maler demonstrate thatin any dynamic model of the economy with changing population, population should properly be one of the state variables of the system. It enters both in the maxim and, at least under total utilitarianism, and into the production function in one way or another. If population growth is exponential and there are constant returns to scale, then a simple transformation to per capita variables can be used to eliminate one state variable. However, this simple transformation cannot be made if growth is not exponential, as it obviously is not and cannot be. If the growth of population is exogenous, then introducing it into the system does not affect the optimal policy. However, if one asks whether the system is sustainable, in the sense of at least maintaining total welfare (integral of discounted utilities), then the criterion is that the value of the rates of change of the state variables is non-negative, so that the shadow price of population becomes relevant. In this paper, we derive explicit formulas in a simple model, showing that the rate of growth of per capita capital is not the correct formula but must have other terms added to it. We also study the question under an alternative criterion of long-run average utilitarianism.