Adam Ozanne

Perverse supply response in peasant agriculture: A review

The long-running debate concerning the special characteristics of peasant production in less developed countries which may lead to perverse supply responses in their agricultural sectors is explored. Four stages in the debate are identified. The first was based on casual observation and the target income or fixity-of-wants hypothesis. The second took account of peasant own-consumption and focused on the marketed surplus. The third addressed the possible effect of uncertainty and risk aversion on supply response. The fourth is embodied in modern farm household models of peasant behaviour. Although the predictions regarding supply response derived from these models vary, they all suggest that agricultural supply response may be negative. The bulk of empirical evidence, however, for both total production and marketed surplus tends to refute the notion, whether it is theoretically consistent or not, that supply response in peasant agriculture is negative.

Adoption and intensity of fertiliser and herbicide use in the central highlands of Ethiopia

Tobit and Heckman analysis is used to investigate the factors which influence the adoption and intensity of use of fertiliser and herbicide on smallholder farms growing wheat and tef in the East and West Shewa tones of the central highlands of Ethiopia. Primary data on personal, household and farm characteristics was collected from a random sample of 200 farmers. Results indicate that structural factors—in particular oxen ownership, distance to market and region—are the main determinants of adoption and intensity of use of the technologies rather than personal characteristics—such as age and gender—extension activity or attitudes to price and risk.

The West’s Aid Dilemma and the Chinese Solution?

There are currently two contrasting approaches towards aid policy in Africa: that followed by the West is well known for its conditionality and selectivity and focus on direct financial support, while the approach adopted by China eschews conditionality and concentrates on infrastructure building. The Chinese approach has been criticized for its failure to create direct employment and because, it is argued, its unconditionality hampers good governance in Africa. However, this paper argues that the West faces a dilemma in that governance and its improvements are endogenous to the economic development of a country. Making aid conditional upon governance therefore unduly penalizes countries at the bottom. The Chinese approach, in contrast, avoids this dilemma by directly targeting constraints to development; it may therefore be more effective in generating long-run growth, which may in turn foster good governance.

The Concept of Power

Various definitions and theories of power developed by philosophers, sociologists and others are reviewed to see if any could help inform thinking about economic problems, or indeed the economic problem. However, it is noted that no single definition or theory of power has been universally accepted.

Political Economics and Cooperative Game Theory

This chapter considers areas of economics, in particular so-called political economics and cooperative game theory, whose importance in research is not yet reflected in undergraduate teaching but which might offer avenues for addressing these challenges. Two concepts, political equilibria, which select from possible economic equilibria, and Nash bargaining power are seen as being particularly important.

Why Does Neoclassical Economics Ignore Power

The neglect of power by mainstream economics is traced back to the neoclassical or “marginalist” revolution of the 1870s, when “political economy” was supplanted by “economics”, a process that was reinforced by the ordinalist revolution of the 1930s and shifts in thinking about welfare economics and social choice in the 1950s. Over many decades, this has led to the current dominance of a supposedly apolitical, “positive” science of economics today.

Challenges to Mainstream Economics from PCES and Piketty

Recent challenges to mainstream economics posed by Post-Crash Economics Society (PCES) students and Thomas Piketty are reviewed. It is argued that a major part of the reason why PCES students are so frustrated with the economics taught in most higher education institutions, and why many non-economists view economics to be strangely myopic and irrelevant, is due to mainstream economics’ neglect of power. Some of the key points in Piketty’s seminal work, Capital in the 21st Century, are summarised; in particular, he argues that marginal productivity theory cannot account for burgeoning inequalities in many countries and that bargaining power is the key to understanding what is happening.

Bartlett’s Economic Theory of Power

Randall Bartlett’s theory of power, which offers perhaps the most coherent, thorough attempt by a neoclassical economist to investigate power, is reviewed, but it is noted that it has largely been ignored by the economics profession — perhaps because, in offering a brand new approach rather than building upon (or subverting) existing models, it was too radical an approach.

Power and Neoclassical Economics: A Return to Political Economy in the Teaching of Economics

List of Figures 1. Introduction 2. Why does Neoclassical Economics Ignore Power? 3. Why Power Matters for Economics 4. Challenges to Mainstream Economics from PCES and Piketty 5. Political Economics and Cooperative Game Theory 6. The Concept of Power 7. Bartletts Economic Theory of Power 8. A New Definition of Power 9. Re-envisioning the Social Welfare Function as a Political Economy Function 10. Examples of Applications of the Political Economy Function 11. Conclusion References Index

Why Power Matters for Economics

It is argued that the neglect of power means that neoclassical economists cannot fully answer the core problem they define their discipline by, since marginal productivity theory provides only a partial explanation of the distribution of income and wealth. Because standard textbooks ignore power considerations, and blur the distinction between functional and personal distributions of income, they cannot provide an adequate answer to the For Whom part of the scarcity question by which neoclassical economics defines itself. This, it is argued, is a fundamental failing and the source of much dissatisfaction with and cynicism about economics in today’s world.