Alberto Chilosi

Stakeholders vs. Shareholders in Corporate Governance

The paper is divided in two coordinate parts. The first considers in general the issue of stockholders vs. stakeholders oriented governance systems and their relative merits and demerits. The second part deals specifically with the issue of the principal-agent problem in a stakeholder context.

Entrepreneurship and Transition

The substitution of private for public entrepreneurship is a crucial aspect of the process of transition. While output and employment in the overextended and overmanned state sector decrease, it is crucial for the success of transition that private entrepreneurship builds up, increasing production and employment, in a process somewhat paralleling the dual development Harris-Lewis-Todaro model, where the state sector plays the role of the traditional sector endowed with an almost unlimited reserve of labor. The way this takes place depends to a great extent not only on the specific features of the privatization processes pursued, but also on the overall institutional and social conditions affecting the development, and the nature, of private entrepreneurship. In particular, under conditions of insufficient construction of the institutional framework of the market, and lack of prevention and punishment of fraudulent behavior and self-dealing, the development of entrepreneurship can be derailed into unproductive and destructive forms, according to Baumols distinction, with dire economic and social consequences. The different outcomes of the transition process may also be explained through the different preconditions affecting the severity of the specific impediments encountered in development of entrepreneurship. Some policy suggestions for speeding up this development, both in quantitative and qualitative terms, conclude the paper.

Coordination, Cooperation, and the Extended Coasean Approach to Economic Policy

The Coasean way to deal with the cooperation failure that is implicit in Pareto inefficiency is to remove or lessen the obstacles to cooperation through the attribution of property rights and the elimination or reduction of transaction costs. The relevance of this approach is however undermined by some intrinsic difficulties to its application in a real world context, such as those arising from the number and indeterminacy of the interested parties, as well as from the free rider problem. A way to extend the Coasean approach taking into account those real life limitations is to consider the local authorities as representatives of the interest of their local constituencies and, through the provision of an adequate institutional framework, to enhance the opportunities for cooperation through voluntary agreements involving private and public parties. Thus the extent of cooperation could be widened, as opposite to traditional remedial actions relying on non- contractual, or direct entrepreneurial action by the state. With the reduction in the appeal of direct and coercive action by the state a number of institutions emphasising the contractual cooperation between public and private parties have effectively grown of importance, as wide apart as the township and village enterprises in China, or the “programmazione negoziata” in Italy. In the final part of the paper the latter

Poverty, Population, Inequality, and Development: the Historical Perspective

Seen in historical perspective the main economic predicaments of the present world (such as poverty, inequality, backwardness) appear in a somewhat different light than in many current discussions, especially by sociologists, radical economists and political scientists. In the present paper the achievements of the modern age, and in particular of the post- World War II period, are considered in the perspective of economic and demographic history, and in their connection with the contemporary systems of production and of international relations. Some considerations concerning future possible developments conclude the paper.

Self-managed market socialism with “free mobility of labor”☆

Abstract In 1934 Breit and Lange presented a model of a socialist market economy in which workers had a right to be employed by self-managed firms. The interest of this model lies in particular in the fact that it eliminates two possible flaws of Myrian-type socialism: differentiation in per capita earnings across self-managed firms and involuntary unemployment. Analogous features can be found in Herztkas 19th-century model of market socialism. The purpose of the paper is to analyze an economy with free mobility of labor (Herztkas expression for the right of workers to employment) both from the point of view of X - as well as of allocative efficiency. Finally the possibility of a partial application of the right to employment principle in a capitalist economy is considered.

Kalecki's Theory of Income Determination and Modern Macroeconomics

The paper, written for the centennial celebration of Kalecki’s birth, considers the legacy for modern macroeconomics of Kalecki’s theory of income determination, which is reconstructed in its analytical constituent parts, referring in detail to the original sources. Kalecki’s macroeconomics is notable for having been the first to be built, unlike Keynes’ but alike the contemporary New- Keynesian macroeconomic models, in an imperfectly competitive framework and, at the same time, for linking the theory of distribution, on the one side, and the theory of income determination, on the other. Kalecki’s theory of income distribution is based, notwithstanding the sometimes heroic simplifications on which it rests, on the basic idea that the structure of distribution in a market economy depends on the structure of market imperfections and of market power. This is an important idea which leads to a deep understanding of the way the capitalist economy actually works and which constitutes a lasting contribution to modern economics. Important pieces of Kalecki’s theoretical construction, such as the basic idea of building the theory of income determination in an imperfectly competitive framework, the implicit assumption of the isoelastic transposition of demand curves, his use of the notion of the degree of monopoly in the framework of macroeconomic models, have been a lasting legacy to the toolkit of modern economics in general and modern macroeconomics in particular. Unlike part of contemporary macroeconomic theorizing, which takes place in the framework of abstract models, following an intrinsic logical development with a momentum of its own, Kalecki was always much concerned, in his theoretical constructions, with real world data and burning real world policy issues. Yet his basic message, dating back to his contributions in the early thirties, that demand creation by governments could provide the basic solution to the unemployment issue, a solution which in capitalist economies would remain unimplemented in practice for the political difficulties it implies, has proved of non-lasting value, aside from its continuing ideological impact.

Technological condition for balanced growth: A criticism and restatement

Abstract According to prevailing opinion, only the neutral form of technological progress in the Harrod sense is consistent with balanced growth in a one-sector constant returns-to-scale economy. Though various definitions of balanced growth are in use in the literature, the above highly restrictive technological condition is believed to hold for all of them. The paper demonstrates that this belief is not correct. The condition is shown to be false if the definition of balanced growth (i) does not require the constancy of the marginal product of capital (or the interest rate), and (ii) permits the time semiinfinite or indeed any finite balanced growth path. More specifically, under (i) and (ii) there exists a balanced growth path consistent with a significantly wide class of technological changes of the capital-using (labour-saving) form in the Harrod sense. Alternatively, this condition is correct if either (i) the interest rate is required to be constant or (ii) growth is balanced if it is such for all time—that is, for both past and future. The condition is also correct if the socioeconomic institutions are such that the constancy of the savings ratio implies the constancy of the capital share.

Technical Progress and Long-Run Growth

The types of technical progress referred to in the theory of economic growth are passed in review and their relations studied in detail. Light is also shed on the dependence of the long-run rate of growth, in the presence of a constant rate of saving, on the type of technical progress taking place in the economy, both in the most general case and in that of an aggregate C.E.S. production function; what happens in this respect in the case when technical progress is Harrod neutral is well known, the same cannot be said of the case when technical progress is not Harrod neutral.

Long-Term Unemployment in the Varieties of Capitalism

Usually, when the attention is focused on the different performances of the labour market, the overall rate of unemployment is at the center stage. But this is misleading: while short term unemployment can be seen as physiological for the the working of the labour market, long-term unemployment is certainly pathological. The paper considers how the different varieties of capitalism affect the rate of long-term unemployment, rather than the aggregate rate. The liberal market variety, where employment protection is the lowest, presents lower rates of long-term unemployment than the continental European and the Mediterranean varieties. In the latter both employment protection and long-term unemployment are the highest and labour market participation the lowest. The social-democratic Scandinavian variety gets the best of both worlds: low rates of long-term unemployment, high rates of labour participation, lower degree of inequality, with relatively high levels of employment protection. However the Scandinavian model may be hardly applicable in countries, such as the Mediterranean ones, where a sizable part of public opinion apparently adheres to the various specifications of the “lump of something” economic fallacy. Low rates of long-term unemployment and high levels of labour participation are also produced by the far-Eastern Asian variety, but at the cost of a markedly dualistic labour market structure.

The economic system as an end or as a means and the future of socialism: an evolutionary viewpoint

After the demise of “real” socialism and the decline of “western” socialism, socialism can be salvaged as a social preference system oriented towards equality and social justice, to be implemented without systemic constraints in the organizational and institutional sense. At the same time there is a case for maintaining an institutional framework allowing different forms of economic organization,capitalist and non-capitalist,to compete on equal footing, in an evolutionary perspective, thus allowing the second to develop if proven efficient. Another way for a spontaneous extension of the domain of socialism could derive from the socialization of consumption, if the consumption of public goods continues to make up a growing component of real consumption.