Author Archives: Maria Alejandra Madi

Olivier Blanchard and Lawrence Summers has recently called for a reflection about the macroeconomic tools required to manage the outcomes of the 2008 global crisis  in their paper Rethinking Stabilization Policy. Back to the Future. The relevant question they address is: Should the crisis lead to a rethinking of both macroeconomics and macroeconomic policy similar to what we saw in the 1930s or in the 1970s? In other words, should the crisis lead to a Keynesian approach to macroeconomic policy or will it reinforce the agenda suggested by mainstream macroeconomics since the 1990s?

Since the 1990s, mainstream macroeconomics has largely converged on a view of economic fluctuations that has become the basic paradigm of research and macroeconomic policy. According to this view of unexplained random underlying shocks, the fluctuations result from small shocks to components of demand and supply with linear propagation mechanisms which do not prevent the economy to return back to the potential output trend.  Considering a world of regular fluctuations:  (1) dynamic stochastic general equilibrium (DSGE) models are used to develop structural interpretations to the observed dynamics, (2) optimal policy is mainly based on monetary feedback rules- such as the interest rate rule- while fiscal policy is avoided as a stabilization tool, (3) the role of the finance is often centered on the yield curve, and (4) macro prudential policies are not considered.

As the real-world of financial crisis does not fit this representation of fluctuations, Blanchard and Summers, following the influence of Romer’s reference of the DSGE regular shocks as phlogistons, assess that the image of financial crises should be “more of plate tectonics and earthquakes, than of regular random shocks”. And this happens for a number of reasons (1) financial crises are characterized by non-linearities that amplify shocks (for instance, bank runs), (2) one of the outcomes of financial crises is a long period of depressed output followed by a permanent decrease in potential output relative to trend as the  propagation mechanisms  do not converge to the potential output trend,  (3) financial crises are followed by “hysteresis” either through higher unemployment or  lower productivity,  .

Almost ten years after the 2008 crisis, among the current “non-linearities” that led to the current deep policy challenges, Blanchard and Summers also highlight

  • The large and negative output gaps in many advanced economies,  in addition to low growth, low inflation, low nominal interest rate, reduction of nominal wages in advanced economies,
  • The interaction between public debt and the banking system, a mechanism known as “doom loops” since higher public debt might lead to public debt restructuring that might turn out to decrease the level of banks’ capital and, therefore, this situation might increase concerns about their liquidity and solvency.

Considering the current policy challenges, they suggest to avoid the return to the pre-crisis agenda or even to avoid the adoption of what they call “more dramatic proposals, from helicopter money, to the nationalization of the financial system”. In their view, there is the need to use macro policy tools to reduce risks and stabilize adverse shocks. As a result, they suggest:

  • A more aggressive monetary policy, providing liquidity when needed.
  • A more active use of fiscal policy as a stabilization macroeconomic tool, besides a more relaxed behavior in relation to fiscal debt consolidation.
  • A more active financial regulation.

Interesting to say that Blanchard and Summers mention the importance of Hyman Minsky in warning the special role of the complexity of finance in contemporary capitalism. However, in the defense of their proposal, they should have remembered the Minskyan concern:  Who will benefit from this policy agenda?

Any policy agenda  refers to forms of power: there are tensions between private money, consenting financial practices and national targets that emerge in the context of  the neoliberal global governance rules.

Indeed, almost ten years after the 2008 global financial crisis, it is time to rethink the contemporary political, social and economic challenges in a broader context and in a broader and longer perspective.  Power, finance and global governance are poweful interrelated issues that shape livelihoods.


The concept of nudge became popular after the publication of the 2008 book Nudge: Improving decisions about health, wealth, and happiness, written by Cass Sunstein and the most recent Nobel Laureate, Richard Thaler.  According to the authors, nudge refers to “any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not” (Thaler and Sunstein, 2008).

In a previous paper, Thaler and Sunstien (2003) highlighted the paternalistic intention and the libertarian tone that overwhelm the concept. As a result, while policymakers shape contexts of individual choice towards optimal policy goals, individuals are free to choose.

Currently, nudges are used to foster social policy goals, such as the so called consumer protection. The aim of the nudge approach is both to test non-coercive alternatives to traditional regulation and to enhance cooperation between the public and the private sector.  Indeed, after 2008, a Behavioural Insights Team (BIT) was created in the UK and in many others countries – like Australia, Canada, the Netherlands, Germany, U.S. and Qatar. Since 2010, the Behavioural Insights Team (BIT) in the UK has been exploring and testing policy options by means of randomised controlled trials (RCTs). Taking into account the American experience, the Obama’s administration stimulated the introduction of nudges in new regulations to generate welfare with cost effectiveness.

Considering this background, the relevant question is: which are the reasons that explain the increasing acceptance of the nudge approach to public policy?

First, the use of nudges in public policy seems to be associated to the broader processes of deregulation and privatization in the context of financialization.

Second, the focus on individual behaviour is consistent with a neoliberal agenda where the new approach to public policy enhances the illusion of free individual choice. In this respect, Ramsey (2012) highlights the real burden on individuals that actually result from labor market flexibility and increasing indebtedness. In his own words: “Deregulation and privatisation often imposed greater choices on individuals (e.g. pensions). Forced to make choices, individuals were invited to regulate themselves according to particular norms of behaviour. Thus in consumer finance markets individuals must learn the appropriate norms of credit and savings behaviour and become financially literate. More recently insights from behavioural economics have been harnessed to ‘nudge’ individuals to change their behaviour

Third, behind the partnerships between the public and the private sectors that aim at developing new forms of non-coercive regulations, there is, in truth, a set of economic and political interrelations that shape the financialization of corporate strategies in sectors that used to be related to public services. For example, in relation to the health sector, Maryon-Davis (2016) addresses: “Today’s most liberal governments tend to resist calls for regulatory approaches to health behaviour. They are averse to regulating industries such as the tobacco, alcohol and food industries for fear of interfering with companies’ rights to sell their legal products and their legal obligation to shareholders to maximise profits. They tend to be even more reluctant to pass laws directly curtailing the personal freedoms and behaviour of individuals.”

Following the nudge approach, the responsibility for public welfare is shifted to individuals. In spite of encouraging active civic engagement, this approach to public policies seems to neglect the social constraints that restrain individual autonomy. Finally, it is worth noting that, while putting emphasis on individual behaviors and choices, the nudge approach dismisses the global increasing economic, social and political challenges at national, state and local levels.



Goodwin, T. (2012) Why we should reject ‘nudge’. Politics, 32(2), pp. 85-92.

Maryon-Davis, A. (2016) Government legislation and the restriction of personal freedom. In F. Spotswood (Ed.) Beyond behaviour change: Key issues, interdisciplinary approaches and future directions. UK: University of Bristol Policy Press.

OECD (2015) OECD Regulatory Policy Outlook 2015. Geneve.

Ramsay, I. (2012) Consumer law and policy: Text and materials on regulating consumer markets. Bloomsbury Publishing.

Thaler, R. H., and Sunstein, C. R. (2008) Nudge: Improving decisions about health, wealth, and happiness. U.S.:Yale University Press.

Thaler, R. H., & Sunstein, C. R. (2003a). Libertarian paternalism. The American Economic Review, 93(2), pp.175-179.


The WEA Online Conferences, designed by Edward Fullbrook and Grazia Ietto-Gillies, makes full use of the digital technologies in the pursuit of the commitments included in the World Economics Association Manifesto: plurality, reality and relevance, diversity, openness and ethical conduct.

The current WEA Conference Economic Philosophy: Complexities in Economics, is being led by Prof. John B. Davis and Prof. Wade Hands. There is considerable interest in recent economics in the idea of complexity. However, there are also many different ideas about what complexity involves, making the subject of complexity itself a complex matter!

Thus the plural form – complexities in economics – is purposefully chosen in order to accommodate the following issues in this inaugural conference on Economic Philosophy:

  • the diversity of accounts and conceptions of complexity itself
  • how the nature and content of economics is complex
  • the complex history of economics
  • different approaches to introducing complexity into economics
  • the complex relation between the sociology of economics and its content
  • the complexity of economic philosophy as an interdisciplinary subject
  • the complex interplay between normative and descriptive pluralism

The WEA Online Conferences seek to also engage readers and commentators all around the world considering: (a) the variety of theoretical perspectives; (b) the range of human activities and issues which fall within the broad domain of economics; and (c) the study of the world’s diverse economies; (d) the increasing relevance of .the adoption and use of online discussion forums.

Students, academics and professionals who are interested in Economics & Philosophy can read the Key-note papers of Peter Söderbaum and Robert Delorme in addition to other interesting contributions organized in the following Conference Sessions:

  1. Contributions from the History of Economics
  2. Complexity and Agency
  3. Changing Economics
  4. Methodological Dimension

To see how the Discussion Forum works, click here

The Discussion Forum closes on November 30thDuring this time, we cordially invite you to visit the conference’s website, where you can read and download the conference papers, leave comments, and engage in discussion.

Please first Register to this OPEN ACCESS Conference in order to get your e-certificate!

We are looking forward to receiving your comments.


The economist John R. Commons is considered one of the founding fathers of institutional economics. He played a leading role in the developing of the labor economics field by establishing some core principles in his book Institutional Economics: Its Place in Political Economy (1934). Besides, as Kenneth Boulding (1957) stated, Commons’ ideas as a social reformer were very influential in shaping the New Deal and the American labor legislation and social security toward a welfare state.

It is worth noting that some generations of institutionalists in labor economics can be identified since then (Champlin and Knoedler, 2004). After the first generation of Commons and the Wisconsin School, the second generation emerged in the 1950s and included those economists, such as John Dunlop and Neil Chamberlain, who rejected standard economic textbooks and emphasized the role of institutional rules in structuring labor markets and industrial relations. Afterwards, the third generation focused on structural unemployment (e.g., Charles Killignsworth), segmented labor markets (e.g., Michael Piore). This generation also included post-Keynesian economists, such as Eillen Appelbaum.  From 1980 to the present, the fourth generation has been broadened in order to include contiguous fields and new methods of research. Institutionalism has been broadened further to include the new perspective of Ronald Coase and Oliver Williamson that has informed research and model building based on the concept of transaction cost.

Despite de differences between generations, which are the elements that explain the institutionalist labor approach?

  • The economic needs are culturally and historically situated.
  • The rules of economic behavior do not derived from universal laws of nature by are culturally, legally and socially situated.
  • Markets, as legal and cultural arrangements, are characterized by conflict, power relations and inequality.
  • Governments are considered major players within the markets.

Indeed, the theoretical construct in labor economics of an institutional nature considers that:

  1. The microeconomic neoclassical model of demand and supply is misleading as an explanatory device for the study of employment, wages and labor outcomes.
  2. The labor market is not self-equilibrating.
  3. Involuntary employment, interindustry and interfirm wage differentials, besides racial and gender patterns of employment are relevant features of the labor markets in the real-world.
  4. The behavioral models of human agent should consider imperfect competition, theories of market organization and structure, legal rules and social norms.
  5. The study of the labor markets should privilege both realism in economics and a multidisciplinary, social science foundation.
  6. The commitment on a normative level to welfare criteria should include ethical goals.

Considering the relevance of this topic in economics education, students should be aware of the differences bweteeen institutionalist and neoclassical economists. Neoclassical and institutional economics are not just labels, but represent different ways of conceptualizing economics and shaping economic policies.  



Champlin, D.P. and Knoedler, J. T. (2004) The institutionalist Tradition in Labor Economis. New York and London: M.E. Sharpe.

Boulding, K. (1957).  A look at Institutionalism. American Economic Review. 47:1-12.


In the book Denationalisation of Money- the Argument Refined (1976), Hayek proposed the abolition of the government’s monopoly over the issue of fiat money in order to prevent price instability. In fact, his defense of a complete privatization of money supply stemmed from his disappointment with central banks’ management, which, in his opinion, had been highly influenced by politics. Thus, the ultimate objective of the denationalisation of money advocated by Hayek was related to avoid political interference on monetary policy.

Therefore, the denationalisation of money would be achieved by the complete abolition of the government monopoly over the issue of fiat money.  In the framework of a free market monetary regime, only those currencies that have a stable purchasing power would survive.  The basic idea is that the possibility of banks issuing different currencies would open the way to market competition. Banks could issue non-interest bearing certificates and deposit accounts on the basis of their own distinct registered trade mark and the currencies of different banks would be traded at variable exchange rates. This proposal would leave the way open for a comprehensive privatisation of the supply of money.

Hayek underlined that the main advantage of the free market competitive order is that prices will convey to the acting individuals the relevant information to make decisions to adjust their activities in face of the competition of currencies. He highlighted  the uses of money that would chiefly affect the choice among available kinds of currencies: i)  as ash purchases of commodities and services, ii)  as reserves for future needs; iii) as deferred payments, and iv) as unit of account.   In his opinion, these uses are consequences of the basic function of money as a medium of exchange and  the stability of the value of a currency as unit of account is the most desirable of all uses (Hayek, 1976: 67).

Competition and profit maximisation would lead to market equilibrium where only those banks that pay a competitive return on liabilities to their clients could survive. Since currency corresponds to non-interest-bearing certificates, the crucial requirement is the maintenance of the value of the currency.  Under Hayek’s theoretical framework, the market forces would determine the relative values of the different competing currencies. In other words, the exchange rates between the competing currencies would float freely. So, in equilibrium, only currencies guaranteeing a stable purchasing power would exist. People would not want to hold on to the currency of an issuer that was expected to depreciate relative to one that was expected to hold its value in terms of purchasing power over goods and services. The marginal costs of producing and issuing a currency (notes and coin) are rather low (close to zero) and the nominal rate of interest would be driven (close) to zero. Banks that failed to build up stability for the value of their currencies would lose customers and be driven out of financial business.

After reading this proposal, the question that arises is: are current digital currencies bringing to reality Hayek’s ideas?

In the last ten years, mainly aftyer the 2008 global crisis, the increasing digitalization of financial transactions is also related to changes in the banks’ competitive environment, where the intense growth of the startups called fintechs, especially since 2010, has revealed a new articulation between finance and technology. As a result of the advance of  new non-bank competitors (fintechs), big banks have begun to establish collaborative partnerships with selected fintechs in order to produce new technological solutions in the areas of payment systems, insurance, financial consultancy and management, besides digital currencies.

In this digital environment, new technologies – such as advanced analytics, blockchains and big data, in addition to the use of robotics, artificial intelligence, besides new forms of encryption and biometrics – have been enabling changes in the provision of financial products and services that could challenge current central banks’ patterns of policy and regulation.



HAYEK, F. A. von (1990 [1976]) Denationalisation of Money: The Argument Refined, 3rd. edition, London: Institute of Economic Affairs.

Bank transactions by internet and mobile banking have sharply increased since the 2008 global financial crisis. In this digital environment, new technologies – such as advanced analytics and big data, in addition to the use of robotics, artificial intelligence, besides new forms of encryption and biometrics – have been enabling changes in the provision of financial products and services. The current wave of financial innovations is being increasingly oriented to more friendly digital channels through apps in the context of mobile banking strategies that privilege the development of open bank softwares and the interaction with social media.

Indeed, the increasing digitalization of financial transactions is also related to changes in the banks’ competitive environment, where the intense growth of the startups called fintechs, especially since 2010, has revealed a new articulation between finance and technology. Such fintechs are companies organized as digital platforms with business models focused on costumer relationship in the areas of payment systems, insurance, financial consultancy and management, besides virtual coins. The advantages of their business models are low operating expenses, greater operational agility and the ability to generate data for the design of customized financial products and services. As a result of the advance of these new non-bank competitors, big banks have begun to establish collaborative partnerships with selected fintechs in order to produce new technological solutions and to promote the development of a culture of technological entrepreneurship among bank workers.

Taking into account the global changes in the provision of financial products and services, Central Banks have closely followed the recent expansion of fintechs. Indeed, the transformations provoked by these startups in the financial markets have raised a relevant discussion about the impacts of recent technological innovations on the financial regulation agenda- mainly focused on the Basel Accords. The intense advance of fintechs is settling new questions for regulators: How to deal with loan activities that are being performed by means of electronic platforms? How to regulate the fintechs’ activities of consultancy and financial management that are characterized by the collection, treatment and custody of information from users? Which is the scope of the Central Bank and of other financial regulators when considering the surveillance over the fintechs? Moreover, there are legal concerns related to information security practices, legal validity of electronic documents, digital signatures and data storage in the cloud.

As a result of the new competitive digitalized and deregulated environment, the current wave of technological innovations will decisively affect the future of bank workers. Currently, one of the main cost-reducing bank strategies is centered on administrative expenses mainly labour costs that remain tightly controlled by banks in order to improve operational efficiency. In this scenario, technological strategies aimed to increase profitability will foster further organizational innovations and changes in labor relations. Thus, the future impacts on jobs in the financial sector will deepen the power of financial holdings, that is to say, of centralized blocks of financial capital that base their global expansion on the digitalization of products, services and delivey channels .


The roots of gender and poverty studies began with Pearce (1978) who coined the expression ‘feminization of poverty’. Pearce considered female-headed families, excluding poor women who live in male- headed families, based on the argument that the proportion of families headed by women among the poor has been  increasing since the 1950s. In her opinion, women have become poorer because of their gender.

The recent dynamics of the global labour market has reinforced the precariousness of women’s employment and working conditions. Among other issues, the recent global highlights about the participation of women in the labour markets are listed below:

Unemployment: Women are more likely to be unemployed than men, with global unemployment rates of 5.5 per cent for men and 6.2 per cent for women

Informal Work:      In 2015, a total of 586 million women were own-account or contributing family workers. Many working women remain in occupations that are more likely to consist of informal work arrangements

Wage and salaried jobs: Moreover, 52.1 per cent of women and 51.2 per cent of men in the labour market are wage and salaried workers.

Jobs and occupations by economic sectors:  Globally, the services sector has overtaken agriculture as the sector that employs the highest number of women and men. In the period between 1995 and 2015, women are employed in the services sector: since 1995, women’s employment in services has increased from 41.1 per cent to 61.5 per cent.

High-skilled occupations: High-skilled occupations expanded faster for women than for men in emerging economies where there is a gender gap in high-skilled employment in women’s favour.

Part-time jobs: Globally, women represent less than 40 per cent of total  employment, but make up 57 per cent of those working on a part-time basis.

Hours of work: Across the global labour scenario, one fourth of women in employment (25.7 per cent) work more than 48 hours a week, mainly in Eastern , Western and Central Asia, where almost half of  women employed work more than 48 hours a week.

Gender wage gap: Globally, women earn 77 per cent of what men earn.


Indeed, although women have been increasing their participation rate in the labor market in the last decades, they worked in more precarious occupations. This situation characterized by precarious jobs, mainly based on short-term contracts, enhances the vulnerability of workers, mainly women, as the financialization of management strategies turns out to be subordinated to economic efficiency targets, that shape employment relations, overwhelmed by longer working hours, job destruction, turnover and outsourcing. Workforce displacement and loss of rights could also be part of the spectrum of management alternatives aimed at cost reduction. In addition to the wage gap, women’s participation is stronger in the services sector where working hours are longer and wages lower.

Besides, unpaid work could also be considered an extra onus on women. In addition to women´s challenges in the labour market, the increasing weight of unpaid work is more likely when women become unemployed and return to their homes and take more responsibility for housework than men, or because the loss of family income makes it impossible to support the remuneration of domestic workers. Gender-differentiated time use patterns are affected by many factors, including:  household composition (age and gender composition of household members); seasonal considerations; regional and geographic factors; availability of infrastructure and social services. But social and cultural norms also play an important role both in defining, and sustaining rigidity in, the gender division of labour.

Building on the United Nations goals, gender equality is required for the erradication of the many dimensions of poverty and to promote sustainable human development. Taking into account a macroeconomic approach to the labour markets, the “vicious circle” of impoverishment could be surmounted if policy makers rethink employment an income policies under a gender approach to the labour markets.


Ilo (2016)—dgreports/—dcomm/—publ/documents/publication/wcms_457086.pdf

Pearce, Diana (1978). “The feminization of poverty: women, work, and welfare”. Urban and Social Change Review, Special Issue: Women and Work, Vol. 11, No. 1-2, pp. 28–36.