Volume 1 (2014): Issue 2 (December 2014)

The most recent phase of global capitalism has been characterised by neoliberal arguments which have supported the deregulation of large sectors of world financial markets. This phenomenon has led to so-called financialization with capital attempting to separate itself from the material base of the economy. The instability of this form of economic activity in addition to the highly attractive short-term returns the financial sector has offered has been the main driver of the current global financial crisis.

This article will seek to examine the manners in which global regulatory frameworks can be reformed to ameliorate the current crisis and create an institutional architecture that will be robust to future shocks. It will be argued that reform needs to proceed in two directions depth and breadth. During the neoliberal phase of economic development, the public discourse on economic policy has centred on arguments based solely upon economic value, it will be suggested that a reformed framework needs to take into account and admit into the space of public reasons, ethical, aesthetic and civic arguments. This is due to the highly volatile nature of economic value and the necessity to acknowledge that in addition to being producers and consumers economic agents are also people.

In a similar vein following the work of Karl-Otto Apel on the public sphere, international regulatory institutions should take into consideration and be accountable to all those effected by their policies and actions. Given the increasingly integrated nature of the European and World economies agencies need to be rendered democratic

It is very difficult to study phenomena in housing markets using conventional so-called neoclassical economics. The core problem stems from the highly unrealistic assumptions of neoclassical economics, such as homogeneous products, equilibrium markets, ceteris paribus clauses, deterministic and linear systems, rationality of economic agents, and the utility maximization principle. New Keynesian economics appears to be a more fruitful approach to housing markets since it presumes that products are differentiated, markets are in disequilibrium state and there exists imperfect competition in a marketplace. Furthermore, new Keynesian economics utilizes the concept of bounded rationality, which is a more realistic description of the actual behavior of economic agents than the theoretical notion of rationality in neoclassical economics.

One of the most important synthetist of the practical socialist theory is János Kornai. In his works he tempted to describe the working mechanism of the socialist economy in actual practice.

The first part of the paper is to gather special keywords and analytical tools of Kornai’s description. As economist, the main tool is the description of demand and supply without the mathematical formalization of demand and supply functions, and without any Marshall crosses. Instead of them, the theory is based on quantity (stock, slack, shortage, forced substitution), on friction (caused by rigidity, resistance, and information asymmetry), and on soft budget constraint.

In the second part, we investigate if the tools and keywords correspond to economic streams. The first apprehension is that economy (either capitalist or socialist) is declared to be far from Walrasian equilibrium. The conservators of this “non-equilibrium” steady-state are the different forms of friction. The rigidity is one of the main keywords of the New Keynesian theory, surpassing price rigidity that was headstone of Keynes’s General Theory. Kornai attends to the adjustment of quantity (and not, or barely price), but he applies neoclassical analytical tool set (marginal analysis, comparative statics to separate substitution and income effect, etc.) in some (but rare) formal analysis. The soft budget constraint theorem determines the impossibility of neoclassical results because under those conditions the demand theoretically is not limited, but it is in reality. The removal of this contradiction requires devices borrowed from other social sciences.

Finally, the third part sets a question: the characteristics of Kornai’s description may be interpreted as the specialty of socialism (i.e. Kornai had no choice, the practical socialism has classical, neoclassical and new Keynesian features), or it is just his own logic that made his analyses such mixed. The answer is double. As Kornai did not take on the mathematical formalization of his theory, he had not to pin down himself to any theoretical economic school. His works about the socialist economy are decisively descriptive, as a non-market economy cannot be seen through the applied neoclassical algebra.

Over the last three decades there has been a growing interest in the field of subjective wellbeing (SWB).With the emergence of happiness economics researchers have exploring the possibility of using subjective wellbeing indicators for potential policy implications. However, despite the expanding literature on the subject there is no clear definition of subjective wellbeing, or indicators such as life satisfaction or happiness.