Fadda tridico (eds ) institutions and development after the financial crisis (2014)

Institutions and Development After the Financial Crisis The financial crash of 2007–2008 and the subsequent global economic crisis have raised questions about the viability of capitalism and the desirability of alternative types of economic system In this context, Keynesian and Marxist ideas in particular have become more popular These two approaches, along with some other heterodox perspectives, agree on the need for institutional analysis and for better institutions and governance in order to promote economic development This volume poses fundamental institutional, evolutionary and ontological questions relating to the emergence of a new mode of governance after the financial crisis The book argues that, contrary to the recent austerity policies implemented in the EU in particular, a new level of government involvement is required in order to keep aggregate demand stable, make full employment possible, and create a transparent financial sector, serving the real economy and encouraging productive investments This book will be of interest to students, researchers and policy makers working in the areas of finance, institutional economics, development economics and international political economy Sebastiano Fadda is Professor of Labour Economics and Economic Growth at the University Roma Tre, Italy He is also Director of the ASTRIL Research Centre at the University Roma Tre Pasquale Tridico is Professor of Labour Economics at the University Roma Tre, Italy, and Research Associate at Trinity College Dublin, Ireland He is currently General Secretary of the European Association for Evolutionary Political Economy Routledge frontiers of political economy Equilibrium Versus Understanding Towards the rehumanization of economics within social theory Mark Addleson Evolution, Order and Complexity Edited by Elias L Khalil and Kenneth E Boulding Interactions in Political Economy Malvern after ten years Edited by Steven Pressman The End of Economics Michael Perelman 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Christine Oughton 188 M Gambardella from various parts of the world; they received only a reimbursement of expenses for travel and accommodation (Gambardella 2012) The project Big Buck Bunny offers an ideal context to explore how user contributions can be lead and organized 4  Model: a three- phases process of innovation financing This sections demonstrates how unrestricted IPR can be used to involve user contributions The model (Figure 9.1) was created using findings on user contributions to finance and innovation in both movie (BBB) and software (Blender) production (Gambardella 2012) Phase is a vertical movement that decreases IPR restrictiveness This reduction is achieved through illegal (Haefliger et al 2010) or legal means, as with Open Source (Lerner and Tirole 2004, 2005; San Wong 2007) and CC licences (Cassarino and Geuna 2007; Gambardella 2011; Lessig 2004) The Blender Foundation has licensed Blender software under the open-source GNU/GPL licence since 2002, in order to share the property and development effort with the community Phase is a horizontal movement from one industry to another (Haefliger et al 2010), in which users provide innovation (von Hippel 1988, 2005, 2009; von Industry A (software) Industry B (movie) Blender Big Buck Bunny (new version) (a quasi-public good) Introduction of “open licenses” Direct crowdfunding/sourcing to Blender Horizontal user-innovation Direct crowdfunding/ sourcing to BBB Users’ needs and innovations Crowdfunding/sourcing Figure 9.1 A three-phase process of innovation financing Innovative Crowdfunding/sourcing Strong IPR Open IPR Users’ needs and innovations Indirect crowdfunding/sourcing to Blender Creative Commons licences 189 Hippel and Katz 2002) In 2007, the Blender Foundation decided to use the most open CC licence (CC Attribution) to attract user efforts, particularly in the form of funds and underpaid expertise We always use Creative Commons Attribution for our projects, so people can re-use our work fully free, even for commercial reasons The Blender community is our investor, so we should allow them to business with our work! (Rosendaal, respondent number 15) The foundation was able to collect around €75,000 The total budget was around €150,000, but according to Dutch law the government was obliged to participate in financing the other half The Blender Foundation organizes and sponsors a users’ team to innovate (Dahlander and Magnusson 2008; Jeppesen and Frederiksen 2006; West and Gallagher 2006) and cooperate (Jeppesen and Molin 2003) All the members of the team were selected into the Blender user community The Blender Foundation used the CC licence (BY) to attract their contributions (Gambardella 2011) Users can contribute by funding the project (Belleflamme et al 2011; Kleemann et al 2008; Lambert and Schwienbacher 2010; Ordanini et al 2011; Schwienbacher and Larralde 2010) and/or by working for little or no wage (Brabham 2008; Kleemann et al 2008; Schenk and Guittard 2009) The users’ community participates in the project in two ways First, it represents the source of underpaid experts (crowdsourcing), both artists and developers Second, it funds the project by pre-purchasing the final product (crowdfunding) Phase consists in the indirect financing of the development of Blender software in absorbing users’ innovations The users’ team was able to (Füller, Bartl and Ernst 2006) identify needs (Jaworski and Kohli 2006), innovate (Roberts et al 2005; von Hippel 1988, 2005), develop new features (Füller et al 2006; Herstatt and von Hippel 1992; Jeppesen and Molin 2003; Urban and von Hippel 1988) and transfer the innovations (von Hippel and Katz 2002) Working together, artists and developers were able to understand each other, while the Blender Foundation was able to absorb and integrate users’ experience and suggestions Discussion and conclusion An important aspect of managing innovation is how to identify and absorb external innovation (West and Gallagher 2006) and how to finance it To both the Blender Foundation attracts user contributions by sharing copyrights with them Indeed, the case studied in this chapter models the economics of free sharing of innovation-related information (von Hippel 2007) to attract user contributions Indeed, the Blender Foundation uses open licences – GNU GPL for the software and CC-BY for the movie – because they benefit from revealing the “source”, 190 M Gambardella unlike a standard property right Had the Blender Foundation used a conventional IPR, it would have been unable to collect contributions or funds from the user community Artists and developers, the two types of members that compose the Blender user communities, struggle to communicate with each other because of their different backgrounds A team of artists and developers was assembled to avoid this problem and absorb innovations The Blender Foundation was not only able to find enough funds to produce BBB, but it was also able to innovate the Blender software According to the interviews, the majority of users employ Blender software to produce a marketable final product, so they funded the project because they wanted to finance a common effort to improve and innovate the software (Gambardella 2012) This chapter has described how the Blender Foundation has used open-source licences to create and manage a user community in order to finance a movie (BBB) and software (Blender) This study could help legislators to update policies (particularly IPR) to take into account these new levers to stimulate funding, which are harder to obtain in times of crisis Notes www.wipo.int/copyright/en/overview.html www.wipo.int/treaties/en/ip/wppt/trtdocs_wo034.html#P94 9977 www.creativecommons.org www.blender.org References Belleflamme, P., Lambert, T and Schwienbacher, A 2011 “Crowdfunding: Tapping the Right Crowd”, CORE discussion paper no 2011/32: 1–39 Brabham, D C 2008 “Crowdsourcing as a Model for Problem Solving” Convergence: The International Journal of Research into New Media Technologies, 14(1): 75 Carroll, M W 2006 “Creative Commons and the New Intermediaries” Michigan State Law Review, 45: 45–65 Cassarino, I and Geuna, A 2007 “Remixing Cinema: The Case of the Brighton Swarm of Angels” ideas.repec.org Dahlander, L and Magnusson, M 2008 “How Firms Make Use of Open Source Communities?” Long Range Planning, 41: 629–649 De Vany, A 2006 “The Movies”, in V Ginsburgh and D Throsby (eds), Handbook of the Economics of Art and Culture, Vol Amsterdam: Elsevier Depoorter, B 2009 “Technology and Uncertainty: The Shaping Effect on Copyright Law” University of Pennsylvania Law Review, 157: 1831–1868 Eisenhardt, K M 1989 “Building Theories from Case Study Research” Academy of Management Review, 14(4): 532–550 Füller, J., Bartl, M and Ernst, H 2006 “Community Based Innovation: How to Integrate Members of Virtual Communities into New Product Development” Electronic Commerce Research, 6(1) (January): 57–63 Creative Commons licences 191 Gambardella, M 2011 “The Scope of Open Licenses in Cultural Contents Production and Distribution” EconomiX (EconomiX working papers, University of Paris), 26: 51–56 Gambardella, M 2012 “How to (Crowd-)Fund and Manage the (User-)Innovation The Case of Big Buck Bunny” Proceedings of the Workshop on Open Source and Design of Communication (OSDOC12): 51–56 Ginsburgh, V and Throsby, D (eds) 2006 Handbook of the Economics of Art and Culture, Vol Amsterdam: Elsevier Glaser, B and Strauss, A 1967 The Discovery of Grounded Theory Hawthorne, NY: Aldine Publishing Company Haefliger, S., Jäger, P and von Krogh, G 2010 “Under the Radar: Industry Entry by User Entrepreneurs” Research Policy, 39(9): 1198–1213 Herstatt, C and von Hippel, E 1992 “From Experience: Developing New Product Concepts via the Lead User Method: A Case Study in a ‘Low-Tech’ Field” The Journal of Product Innovation Management, 9(3): 213–221 Hess, C and Ostrom, E 2005 “A Framework for Analyzing the Knowledge Commons: A Chapter from Understanding Knowledge as a Commons: From Theory to Practice” Library and Librarians’ Publication, paper 21 http://surface.syr.edu/sul/21 Jaworski, B and Kohli, A 2006 “Co-Creating the Voice of the Customer”, in R F Lusch and S L Vargo (eds), The Service-Dominant Logic of Marketing: Dialog, Debate and Directions Armonk, NY: M E Sharpe Jeppesen, L B and Frederiksen, L 2004 “Why Firm-Established User Communities Work For Innovation” Working paper, Department of Strategic Management and Globalization, Copenhagen Business School openarchive.cbs.dk Jeppesen, L B and Frederiksen, L 2006 “Why Do Users Contribute to Firm-Hosted User Communities? The Case of Computer-Controlled Music Instruments” Organization Science, 17(1) (January/February): 45–63 Jeppesen, L B and Molin, M J 2003 “Consumers as Co-Developers: Learning and Innovation Outside the Firm” Technology Analysis Strategic Management, 15(3): 363–383 Kleemann, F., Voß, G G and Rieder, K 2008 “Un(der)paid Innovators: The Commercial Utilization of Consumer Work through Crowdsourcing” Science, Technology & Innovation Studies, 4(1): 5–26 Lambert, T and Schwienbacher, A 2010 “An Empirical Analysis of Crowdfunding” SSRN working paper series Lerner, J and Tirole, J 2004 “The Economics of Technology Sharing: Open Source and Beyond” Harvard NOM working paper no 04–35 Lerner, J and Tirole, J 2005 “The Scope of Open Source Licensing” Journal of Law, Economics, and Organization, 21(1): 20–56 Lessig, L 2001 The Future of Ideas: The Fate of the Commons in a Connected World New York: Random House Lessig, L 2004 Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity New York: Penguin Lundvall, B 1985 Product Innovation and User-Producer Interaction Aalborg: Aalborg University Press Ogawa, S and Piller, F 2006 “Reducing the Risks of New Product Development” MIT Sloan Management Review, 47(2): 65–71 Ordanini, A., Miceli, L., Pizzetti, M and Parasuraman, A 2011 “Crowd-Funding: Transforming Customers into Investors through Innovative Service Platforms” Journal of Service Management, 22(4): 443–470 192 M Gambardella Roberts, D., Baker, S and Walker, D 2005 “Can We Learn Together?” International Journal of Market Research, 47(4): 407–427 Rossi, C and Bonaccorsi, A 2005 “Why Profit-Oriented Companies Enter the OS Field?: Intrinsic vs Extrinsic Incentives” Proceedings of the Fifth Workshop on Open Source Software Engineering: 1–5 San Wong, M W 2007 “User-Generated Content and the Open Source/Creative Common Movements: Has the Time Come for Users’ Rights?” Social Science Research Network, April http://papers.ssrn.com/sol3/papers.cfm?abstract_ id=1022395 Schenk, E and Guittard, C 2009 “Crowdsourcing: What can be Outsourced to the Crowd, and Why?” Technical report Schwienbacher, A and Larralde, B 2010 “Crowdfunding of Small Entrepreneurial Ventures”, in D Cumming (ed.), The Oxford Handbook of Entrepreneurial Finance New York: Oxford University Press, pp 1–23 Shah, S 2000 “Sources and Patterns of Innovation in a Consumer Products Field: Innovations in Sporting Equipment” Sloan Working Paper no 4105 Urban, G L and von Hippel, E 1988 “Lead User Analyses for the Development of New Industrial Products” Management Science, 34(5): 569–582 von Hippel, E 1988 The Sources of Innovation New York: Oxford University Press von Hippel, E 1994 “‘Sticky information’ and the Locus of Problem Solving: Implications for Innovation” Management Science, 40(4):429–439 von Hippel, E 2005 Democratizing Innovation Cambridge, MA: MIT Press von Hippel, E 2007 “Horizontal Innovation Networks – By and For Users” Industrial and Corporate Change, 16(2): 293–315 von Hippel, E 2009 “Democratizing Innovation: The Evolving Phenomenon of User Innovation” International Journal of Innovation Science, 1(1): 29–40 von Hippel, E and Katz, R 2002 “Shifting Innovation to Users via Toolkits” Management Science, 48(7): 821–833 von Krogh, G., Haefliger, S and Jaeger, P 2008 “User-Innovation Beyond Market Barriers: The Case of Machinima” Presentation West, J and Gallagher, S 2006 “Challenges of Open Innovation: The Paradox of Firm Investment in Open-Source Software” R&D Management, 36(3): 319–331 Yin, R K 2003 Applications of Case Study Research, 2nd edn Thousand Oaks, CA: Sage Publications Index Page numbers in italics denote tables, those in bold denote figures abstraction, power of 50 abstract microeconomics 48 accumulation, finance-dominated see financedominated accumulation accumulation regime 12, 27, 33, 34–5 Acemouglu, D 6, 16n6 adjacency matrices 58n32 administration, power of 88, 90 Advanced Washington Consensus 36 agency problems 132 aggregate demand, expanding 10 Aglietta, M 35, 37n7, 92, 95 Agreement on Trade Related Intellectual Property Rights (TRIPS), 1994 115 Ahluwalia, M S 28 Albert, M 79n12 Althusser, L 79n6 altruism 110 Amable, B 73, 79n12 American institutionalism 31, 61 American Recovery and Reinvestment Act (ARRA), 2009 (US) 141 Amin, S 27 Amsler, S 111 anti-inflation policies 2, Aoki, M 73, 79n12 aperiodic crystals problem 46, 57n8 Arestis, P 10, 143–4, 146 Argentina 3, Aristotle 71 Armin, H H von 90 ARRA (American Recovery and Reinvestment Act), 2009 (US) 141 Arrow, K Asian crisis (1997) 139, 146 Asian Tigers 4, 7, 16n3, 139 Augmented Washington Consensus 3, 4, 30, 33; see also Washington Consensus austerity policies 15, 101, 135, 140–4; TSCG as treaty for perpetual austerity 163–70 Austria 175 Austrian economics 78n4 authoritarianism 84 authoritarian populism 13 authoritarian statism 13, 90–1 Ayres, C 79n6 bailouts 99, 100, 140 Bak, P 56n4 Baker, S 184, 189 balanced budget 126, 166 balanced growth 26 Bank of England 100, 140 Barabási, I 51, 53, 58n18, 58n31 Baran, P 27 Barro, R.J 6, 141 Barroso, J M 157n1 Bartl, M 189 Bartlett, B 141 basic needs 28–9 Bastistini, A 111, 116n1, 116n3 Bear Stearns, bailout by JP Morgan 140 Becattini, G 5, 12 behaviour, institution-supported 32 Belgium 85 Bellandi, M Belleflamme, P 184, 189 Bello, W 139 Bennett, C 58n26 Berger, S 79n12 Bernestein, J 141 Bhagwati, J Big Buck Bunny (BBB) project 183, 187, 188, 190 big push (Rosenstein-Rodan) 26 Bini Smaghi, L 136 biological evolution, diachronic profile 13, 41–50 biological reductionism 68 birth and death 42 Blender Foundation 183, 187, 188, 189, 190 Blyth, M 90 194 Index Boltzmann, L 41 Bonaccorsi, A 184 bonds 10, 126, 136 bonobos 112 borders, national 123 Bosworth, B P bounded rationality 53 bourgeois class 47 Bowles, S 110, 111, 112 Boyer, R 31, 34, 53, 73, 79n12, 92 Brabham, D C 185, 189 brain, evolution 116n3 Braverman, H 79n9 Brazil 7, 123 Bretton Woods regime 48, 57n15, 95, 135, 145; see also Keynes, J M./Keynesianism BRIC countries (Brazil, Russia, India and China) 99, 134 Brotherton, D 94 Brown, C T 58n30 bubbles 97, 99, 134, 136; bursting of 137; dotcom 135; housing 175, 180 Budgetary Pact see Treaty on Stability, Coordination and Governance (TSCG) budget stability community 170–2 bureaucracies 88 Bursts (Barabási) 51 business cycles 66 Caballero, R 137 Caffe, F 121 Cambrian revolution 42 Camic, C 78, 79n5 Cannan, E 65 capability approach 2, 11 capital: defined 65; financial 97; interest-bearing 93, 95, 99, 101 Capital (Marx) 65, 66, 70 capitalism 4; causes of capitalist crises and credit money 64–6; commercial 83; competitive 84, 85; defined 83; and democracy 83, 84, 85, 92; development 65; political 83, 101, 102; and political democracy 84, 85; stages 45, 46, 48, 49; state monopoly 89–90; varieties, and natural state model 71–4; Veblen on 65–6 Cardoso, F H 27 Cassarino, I 182, 187, 188 Castell, M 123 Central Bank, requirement for Cesaratto, S 143 Chaitlin, G 53–4, 58n26, 58n28 Chang, H.-J 78n2, 139 chaotic systems 52–3 Chenery, H 28 Chiang, A 52 chimpanzees 107, 111–12 China 4, 7–8, 123, 140, 146; and United States 136–7 circuits of capital 92, 93 Clark, J B 72–3 class dynamics 46, 47, 75 classical economic theory 25 class struggle 86 Clelland, D A 134, 137, 144, 146 Coase, R 12, 35, 36n4 Cochrane, J 141 Cold War 88 collective action 32, 37n6 Collins, S M commercial capitalism 83 commodity fetishism 86 Common Agricultural Policy (CAP) 180 Commons, J R 13, 31, 32; and Marxism vs old-new institutionalism 61, 65, 76, 78 Communist Manifesto (Marx and Engels) 75, 76, 77 communities of users 183 competitive capitalism 84, 85 competitive wage devaluation 31 complex adaptive systems (CAS) 58n23 complexity modelling/research 53 Conceiỗóo, O A C 65 consciousness 42 contract enforcement 4, Coolen, A 53 Cooper, R 123, 137 coordinated market economy (CME) 146, 148, 152 copyright issues, Creative Commons licenses 185–7 Coriat, B 181n1 correlation default 10 Costantini, V 29 Council of European Union (European Council) 127, 131–3 Coutrot, T 181n1 Creative Commons (CC) licences 15, 182–90; case study/data collection 187–8; clauses to customize 186–7; copyright issues 185–7; Creative Commons licence Attribution (CCBY) 183, 187, 189; crowdfunding/ crowdsourcing 184–5, 189; horizontal user innovation 184; literature 184–7; model 188–9; user-innovation theory 183–4 credit money 94; causes of capitalist crises 64–6 credit-rating agencies 84 critical theory 84 Crouch, C 91–2 crowdfunding/crowdsourcing 184–5, 189 crowding out effect 141 currency, new international 144–6 current account (CA) deficit, US 136, 137 Cutler, C A 91 Dahlander, L 189 Darwin, C./Darwinian evolution 11, 42, 43, 44, 56n5, 57n6, 57n9; and Marxism vs old-new institutionalism 61, 68, 71 Index Davies, P 56n4 Davis, M 37n7 Dawkins, R 116n2 Day, R 51 debt: government debts 176–7; increase, and TSCG 167–8; money as 65; Ponzi 97, 134; reduction policy 2; sovereign debt crisis 125–6; United States 136, 136–9, 140 debt-default-deflation 98, 99 debt-to-GDP ratio 167, 168 De Gaulle, C 145 De Long, B 10 de Long, B 143 de Medeiros Carneiro, R 93 democracy: and capitalism 83, 84, 85, 92; and class fractions 87; defined 83–4; and dictatorship 85; and effectiveness 124; and globalization 115; and TSCG 170–4 De Muro, P 12 Depoorter, B 184 Derrida, J 179 Deschouwer, K 35 de Scitovsky, T 27 de-skilling 70, 79n9, 79n10 despotism 83 devaluation: competitive wage 31; internal 143, 178–9 De Vany, A 182 developing countries 5, 16n4, 16n6, 25, 27–8, 30, 73, 85–6 development: concept 23, 24, 27, 28; new indicators 28, 29; transition from underdevelopment 26 development economics, rise and fall 24–30 development policies 11, 12, 23 development theories 12; accumulation regime 34–5; and economic policies 23–40; new 35–6; new neoclassical synthesis 3, 30–3, 36; rise and fall of development economics 24–30; theoretical paradigm 33–4 diachronic profile, biological evolution 13, 41–50 dialectics 58n34 Dickson, P G M 65 dictatorship 85 disequilibrium 47, 51 division of labour 116n2 Domar, E D 25 dominant classes 87 Dore, R 79n12, 94 Dosi, G 11, 31 dot-com bubble 135 doves 108–9 Dowd, D 34 Draghi, M 128 Duménil, G 93, 94 Dunaway, W A 134, 137, 144, 146 Durand, J.-P 34 dynamic equation system 51 195 Eastern Asia 27 Eastern Europe 16n1 Eatwell, J 129 Economic and Financial Affairs Council (Ecofin) 127 Economic and Monetary Union (EMU) 2, 14, 129, 170, 171 economic development 4–8, 12; and institutions economic governance, EU 2, 127–8; limits 128–9 economic policies: coordination 168–9; and development theories 23–40; neoliberal revolution 2–4 economic rights 186 economics: Austrian 78n4; development 24–30; evolutionary 49, 50, 54; vs ideology 62; mainstream see mainstream economics; neoclassical 27, 58n21, 62–3, 78; new institutional see new institutional economics (NIE); old institutional see old institutional economics (OIE); see also macroeconomics; microeconomics Edison, T 182 Edwards, K 141 efficient institutions concept 16n10 Egypt Eichengreen, B 130 Einsenhardt, K M 187 Einstein, A 58n20 Elsner, W 94, 95, 97, 100, 102 Elster, J 62–3 employment of waged labourers 75 endogenous variables 51 Engels, F 23, 66, 76–7; Communist Manifesto 75, 76, 77; The German Ideology 70 entropy 42, 58n33 equilibrium/equilibrium models 16n11, 47, 64 Ernst, H 189 ESM (European Stability Mechanism) see European Stability Mechanism (ESM) euro 9; implosion of 174–9 euro-bonds 126 Eurogroup 127, 128, 131 EuroMemorandum 134 “Europe 2020” 126 European Association for Evolutionary Political Economy Summer School 116n1 European Central Bank (ECB) 10, 15, 100, 162, 180, 181; and financial crisis 125, 126, 128; global imbalances 140, 144 European Commission 127, 142; and TSCG 166, 167, 169, 170, 172, 173 European debt agency (EDA) 10 European Financial Stability Facility (EFSF) 10, 125, 144 European Parliament (EP) 131 European social model 146, 147 European Stability Mechanism (ESM) 125; government debts 176–7; and TSCG 175–6 196 Index European Union (EU) 2, 100, 131; aids for growth, member states in difficulties 126; austerity policies 15, 135; coping mechanisms 124–7; economic governance 127–9; federal state model 129–30; fiscal policy, limitations 127; growth policies, shortcomings 126; omitted measures 126–7; root of financial crisis 134; as supra-national organization 142; see also Troika, Europe (ECB, EU and IMF) Eurostat 142 Eurozone 9, 10, 15, 97, 101; and financial crisis 127, 130; GDP 163; global imbalances 135, 142; governance 174; and TSCG 162, 164, 166, 171, 174 evolutionary economics 49, 50, 54 evolutionary theory 11, 12, 41–60, 107; diachronic profile, biological evolution 13, 41–50; fractal structure 45–6, 49; natural selection 71, 107; political economy, feedback of methods on evolution of 55–6; synchronic profile, evolutionary methods 13, 50–5; teleology vs evolution 70–1 excessive deficit procedure (EDP), Stability and Growth Pact 164, 167 exogenous shocks 43 exogenous variables 51 expansionary policies 10, 97 exploitation 85 export-led growth 85–6 externalities 45 factory legislation, nineteenth-century 88 Fadda, S 10, 11, 14 Farhi, E 137 FDI (foreign direct investment) 4–5 Federal Reserve (US) 9, 10, 100, 140, 141 federal state model, and EU 129–30 Fei, J C H 26 Ferguson, N 84 Ferrari-Filho, F 65 fertilization systems/fertility signals 107, 108, 110–11 fetishism, commodity/political 86 feudalism 46, 47 fictitious credit 94 film production 182 finance-dominated accumulation 83–105, 96, 98; authoritarian statism 90–1; best possible political shell 13, 84–8, 102; crisis of 97, 98; political restoration 100–3; post-democracy 91–2; regulation 96; social emancipation 102–3; state monopoly capitalism 89–90 finance-led growth 92 financial capital 97 financial crisis (2007–2008) 13, 115, 122, 134, 162; economic background 1–2; European coping mechanisms 124–7; institutions for development following 8–12; recovery from 15; search for new paradigm following 134–61 Financial Crisis Inquiry Commission 151 financial innovation 94–5 financialization 92, 93, 94, 95, 101, 114, 134, 150 financial regulation, inadequacy of 126 Fine, B 94 First World War 47, 89 Fiscal Compact 125 fiscal policy, limitations 127 fitness 107 Flanders, S 61 flexible political systems 88 Fontana, W 58n29 Fordism 27, 30, 33, 34, 35, 36; financedominated accumulation 88, 89, 92, 94, 95 foreign direct investment (FDI) 3, 4–5 fractal analysis 54 fractal structure, evolutionary theory 45–6, 49 France 7, 8, 10 Frank, A G 144 Frankfurt critical theory 84 Frederiksen, L 183, 189 free/libre/open-source software (FLOSS) 186 Freeman, C 11 free markets 83 free/open source software (F/OSS) 182 French constitution (1850) 86 French Enlightenment 46, 55 Friedman, M 83, 84, 85 Fuchita, Y 135 Füller, J 189 Furtado, C 27 Furuichi, T 112 G7 (Group of Seven) 6, 122 G20 (Group of Twenty) 6, 135, 152 Galapagos Islands 56n5 Gallagher, S 182, 189 Galor, O Gambardella, M 15, 186, 187, 188, 189 Gamble, A 87, 90 game theory 53, 58n18 Gandolfo, G 58n22 GDP (gross domestic product) 8, 10, 125, 136, 149, 150 German historical school (GHS) 31, 32, 58n19 German Ideology, The (Marx and Engels) 70 Germany 7, 8, 10, 143, 152, 175 Gerschenkron, A 85 Gerstenberger, H 85 Geuna, A 182, 187, 188 Giavazzi, F 141 Ginsburgh, V 182 Gintis, H 108, 109, 113, 116n2, 116n4, 117n4 Glaser, B 187 Gleick, J 56n3, 57n8 global economic crisis global governance 123–4 global imbalances 134–61 globalization 4, 106; and democracy 115 Index 197 gluts 137, 138 GNP (gross national product) 28, 116 GNU General Public Licence (GNU GPL) 186, 188, 189 Gödel, K 58n28 Goldin, C 79n10 gold rush 115 gorillas 107 Gourinchas, P.-O 137 governance: of Eurozone 174; new 1, 146–7, 148, 149–51, 153–6 Great Depression 23, 47, 89, 90; long-run evolutionary perspective 114–16 Greece 10, 100, 143, 152, 167 Greenspan, A 138, 151 Greven, M 90 Groenewegen, J 32 grounded theory 187 group selection, and human culture 110–12 Guittard, C 189 Gunder Frank, A 27 Habermas, J 179 habitual adaptation, as knowledge 69–70 Haefliger, S 182, 183, 184, 188 Haerpfer, C Hahn, F H 64 Haken, H 58n24 Haldane, A 94 Hall, P A 73, 79n12 Hall, R 6, Hanappi, H 12, 13, 45, 53, 56n2, 57n7, 57n13, 58n18 Hanappi-Egger, E 57n7 Handelman, S 94 Harrod, R F 25 Harvey, D 93 Hayek, F A 61, 62, 76 hedonistic calculus 68 Hegel, G W F 44, 46, 50, 51 hegemony/hegemony crisis 87, 92, 134–61 Herstatt, C 189 Herzog, P 89–90 Hess, C 185 heterodox theories/policies 1, 2, 4, 49 Hirsch, F 145 Hirschman, A O 26, 27 historical specificity 63 Hodgson, G M 11, 13, 31, 78, 79n5, 107, 110; and Marxism vs old-new institutionalism 61, 62, 63, 64, 68, 76, 77, 78n1, 379n6, 79n8, 79n12 Hollande, F 162 Holloway, J 85 Hollywood, monopoly of 182 Holyst, J 59n35 Hong Kong 4, 7, 139 horizontal user innovation 184 housing bubbles 175, 180 Hoyle, R 58n27 Hudson, M 100, 102 human agency, critique of Marxist theory 66–8 human capital 27 human culture, and group selection 110–12 human hypercognition see hypercognition human nature, and fate of knowledge-intensive economy 112–13 human species 44, 45, 107, 109, 110 hypercognition 113, 116n4; lethal weapons as alternative evolutionary subsidy for 14, 108–10; sexual subsidy hypothesis 107 hyper-rationality 53 IMF (International Monetary Fund) 6, 24, 122, 124 imperialism 86 import substitution 26 impossibility theorem 132 Inanova, M N 134 indexes, institutional 6, 16n5 India 4, 123 Indonesia industrial capitalism 45, 46 industrial sector 26 inflation 2, 33, 166 information asymmetries 132 Ingham, G 65, 66 innovation 94–5 innovation financing, three-phases process 188–9 input-out analysis 53, 58n32 Institute of Development Studies, University of Sussex 28 institution development 4–8, 12 institutions: defined 32; for development following crisis 8–12; and economic development 5; formal 31, 33; informal 31; Marxism vs new-old institutionalism 61–82; neoliberal revolution 2–4; sexual subsidy hypothesis 106; supra-national 14, 123 integrated capitalism 45, 46, 48, 49 intellectual monopoly capitalism 115 intellectual property rights (IPRs) 182, 188, 190 interest-bearing capital 93, 99, 101 interest rates 10, 140 internal devaluation 143, 178–9 International Bank for Reconstruction and Development (IBRD) 24 International Clearing Union (ICU) 135, 145–6 International Labour Office World Employment Conference (1976) 28–9 International Monetary Fund (IMF) 6, 24, 100, 122, 124, 125 interventionism 4, 30, 31, 85 Ireland 143, 167, 175 isolation effect 87 Italy 8, 10, 100 Ivanova, M N 134, 136, 145 198 Index Jachtenfuchs, M 130 Jaeger, P 182, 183, 184 Jäger, P 183, 184, 188 Japan 7, 10, 16n3, 143 Jaworski, B 189 Jeppesen, L B 183, 184, 189 Jessop, B 13, 14, 34, 37n7, 91, 93 Jevons, W S 47, 50 Johnson, S 6, 16n6, 100 Jones, E 6, Journal of Bioeconomics 14, 106 Joyce, R 68 JP Morgan 140 Juncker, J.-C 16n7, 144, 158n9 Jung, H 89 Kaldor, N 25 Katz, L F 79n10 Katz, R 90, 184, 185, 188–9 Kauffman, S 56n4 Keating, M 35 Keefer, P 5, Keen, S 99 Kershtholt, F 32 Keynes, J M./Keynesianism 1, 25, 30, 48, 97, 122; evolutionary economics/theory 47, 48, 50, 57n11; global imbalances 135, 138, 146; and Marxism vs old-new institutionalism 61, 66; private Keynesiansim 92, 99; and TSCG 166; see also Bretton Woods regime Kindelberger, C Kleemann, F 185, 189 Knack, S 5, knowledge, tacit 68–70 knowledge economy 14, 106; knowledgeintensive economy 112–13 Knudsen, T 61 Kohli, A 189 Kolmogorov, A 53 Kolodko, G Kornai, J 5, Krevise, I Krippner, G R 94 Krugman, P R 63, 141, 146 Kuhn, T S 24 Kuznets, S 10, 16n9, 24, 61 labour power 75 laissez-faire model 35, 85, 122 Lambert, T 184, 185, 189 Lang, D 15, 181n1 Lange, O 62 language pulsation 51 Lapavitasas, C 91, 94, 97 Larralde, B 184, 189 Laszlo, E 56n4 Latin America 4, 7, 16n1, 26, 27 law and power 74–6 Leathers, C G 66 Lee, B 94 Lehman Brothers disaster (2007) 50 Leibniz, G W 58n20 Lerner, J 182, 188 Lessig, L 182, 186, 188 lethal weapons, and human hypercognition 14, 108–10 leveraging 97 Lévy, D 93, 94 Lewis, W A 26, 27 Libecap, G 31 liberalization of capital, short-term 16n3 Liebovitch, L S 58n30 life dynamics 44 linear relationships 52 Lipietz, A 34, 37n7, 150 LiPuma, E 94 Liser, F B 28, 29 Litan, E R 135 Little, I M D 27 local governance 12 London, as financial centre 142 Lorenz, K 108, 113 Loughlin, J 35 Lowenstein, R 138, 139, 151 Lundvall, B A 11, 184 Maastricht Treaty (1991) 143, 164, 175 MacPherson, C B 84 macroeconomics 47, 58n25, 129, 130; countercyclical policies 125 macroeconomic stability 3, 4–5, 57n12 Magnusson, M 189 mainstream economics 47, 48, 49–50, 58n25, 83; vs Marxism and old-new institutionalism 63 Malaysia 4, 139 Malthus, T R 46, 50, 51 Mandel, E 85 Mandelbrot, B 58n30 marginalist school 25, 58n19 market economy 84 markets, vs nation states 122–3 Marshall, A 62 Marshall Plan 25, 126 Marx, K./Marxism 102; Capital 65, 66, 70; Communist Manifesto 75, 76, 77; contrasted with Veblen 67, 69; and Darwin 44, 57n9; development theories 23, 25; evolutionary economics/theory 44, 45, 46, 50, 57n9; finance-dominated accumulation 86, 93; The German Ideology 70; on money and capital 64–5; on power and law 74–6; socialism 79n11; strengths of Marxism 61; see also Marxism vs new-old institutionalism Marxism vs new-old institutionalism 13, 61–82; capitalism 64; complete collectivist economic planning, impossibility of 76–7; credit money and causes of capitalist crises 64–6; critique of Marxist theory of human agency 66–8; and Darwinism 61, 68, 71; differences 78; Index evaluation criteria 62–3; ideology 62–3; major points of agreement 63–4; nondeliberative action and tacit knowledge 68–70; power and law 74–6; teleology vs evolution 70–1; varieties of capitalism, natural state model 71–4 mathematical models 51, 58n28 Matzner, E 32 Mayr, E 72 Mckeen-Edwards, H 91 McMillan, J Meaning of Development, The (Seers) 28 Medicare liability, US 136 Mediterranean economies 10, 143, 144, 152 Meier, G 26, 27, 36n2 Meikle, S 71 Mendoza, E G 138 Menger, C 47, 50, 58n19 mercantilism 85 merchant capitalism 45, 46 Merkel, A 128, 143, 158n8 Merril Lynch, bailout by Bank of America 140 methodological individualism 32 Mexico 3, microbiology 41, 43, 58n29; see also biological evolution, diachronic profile microeconomics 46, 47, 57n13 Millennium Development Goals (MDG) 29, 30 Minsky, H P 146 Mises, L von 62 Mishel, L 141 Mitani, J C 111 modes of production (Marx) 44 Molin, M J 184, 189 monetarism 2, 30, 137, 138 money: credit money 64–6, 94; as debt 65; functions of 64 Monni, S 12, 29, 30 Moore, S W 85 moral rights 185–6 Morris, D M 28, 29 motivation 68 Mountford, A multilateralism 135 multinational companies 34 Myrdal, G 31, 61 NAFC (North Atlantic financial crisis) 88, 92, 94, 95, 97, 99, 101 Nagelkerke, A 32 Naim, M 121 nation states, vs global markets 122–3 natural catastrophes 43 natural governing parties 87, 90 natural sciences 43, 52, 58n21, 64 natural selection 71, 107 natural state model, capt 71–4 Naughton, B Nayyar, D 7, 16n3 needs theory 28–9 199 Nelson, R 57n17 neoclassical economics 27, 58n21, 62–3, 78, 78n3 neoliberalism 35, 57n14, 88; finance-dominated accumulation 93, 93–4, 95, 99; neoliberal revolution, institutions and policies during 2–4 Netherlands, The 85 network analysis 51, 53, 58n31 network state model 123 Neumann, J van 56n1 neutral state, belief in 87 new combination concept 57n7 new institutional economics (NIE) 10–11, 16n10, 30, 31, 32, 36n3 new institutionalism 2, 31, 32, 36n5 New Labour, UK 95 newly industrializing countries 27 Newman, M 53, 58n32 new neoclassical synthesis 3, 30–3, 36 new-old institutionalism 77; defined 61; devising of label 78n2; versus Marxism see Marxism vs new-old institutionalism new policy paradigm requirement 1, 12, 134–61; austerity policies 140–4; incorrect policy tendency 140–4; new governance 146–7, 148, 149–51, 153–6; new international currency requirement 144–6; US debts and international conflicts 136–9, 140 Newton, I 52, 58n20 Nigeria Nölke, A 94 non-deliberative action 68–70 non-material factors 5, non-optimal currency area (OCA) 143 North, C D 10, 11, 32 North Atlantic financial crisis (NAFC) 88, 92, 94, 95, 97, 99, 101 Norway Nurske, R 27 Nuti, D M 4, 16n2 Nyland, C 79n10 Obama, B 134, 141, 143, 157n4 objectives, common 4–5 Obstfeld, M 135, 136 Ogawa, S 185 oil crisis 49 old institutional economics (OIE) 11, 30, 31, 32 Olson, M 5, 6, 8, 9, 16n5 O’Neill, J 71 open licences 182 open-source films 182 Ordanini, A 184, 185, 187, 189 Organisation for Economic Cooperation and Development (OECD) 24 Ostrom, E 5, 185 OTC (over the counter) transactions 126 Overseas Development Council 29 200 Index ownership 75, 76 Pagano, M 141 Pagano, U 14, 110, 111, 116n3, 116n4 Pallottino, M 29, 30 Pansini, R 117n4 paradigms/paradigm shifts 24, 30; see also new policy paradigm requirement parliament 90 Pasinetti, L 25 pattern recognition 53 Peck, J 34 Pelagidis, T 10, 143–4, 146 Performances and Phonograms Treaty (WIPO) 185–6 Petit, P 34, 134 physical quality of life index (PQLI) 29 Picciotto, S 85 Piller, F 185 planned economy sectors Poland political capitalism 83, 101, 102 political economy, evolution and feedback of methods 55–6 political fetishism 86 political restoration: and social emancipation 102–3; and social restoration 100–1 Pontusson, J 146 Ponzi debt 97, 134 population thinking, and natural state model 72 Porter, T 91 Portugal 10, 152, 167 Posner, R A 134, 150 post-democracy 13; finance-dominated accumulation 88, 91–2 post-Enlightenment 69 post-Fordism 33, 34, 35, 92 post-Keynesianism 2, 25, 35 post-neoliberalism 99 post-Taylorism 35–6 Poulantzas, N 87, 90–1, 92 power: and law 74–6; politics of 87 PQLI (physical quality of life index) 29 pragmatic macroeconomics 48 primates 107, 108, 111–12 ‘private’ state monopoly capitalism 89 probability theory 41, 57n11 profit, modes of orientation to 83 property rights 4, 5, 74; paradox 113, 114 prosecutions, distrust institutionalized through 172–3 protectionism 4, 99 public sustainable development banks (PSDBs) 180 Qian, Y Quadrini, V 138 quality of life (QoL) 28 quantitative easing 99, 100 quantum electrodynamics 41, 55 quantum jumps 41, 42, 58n33 Quesnay, F 46 R&D (research and development) racism 79n8 Raines, J P 66 Raiser, M 5, randomness 43 Ranis, G 26 Rasmus, J 94, 99, 134, 135 rational trade 83 Reagan, R./Reaganomics 2, 30, 122 Rebérioux, A 92, 95 recurrent economic crises redistribution with growth 28 regulation theory 53, 58n24 religious fundamentalism 57n16 representational crisis 87 research and development (R&D) residual growth 6, resource allocation 23, 26 reversed qualified majority, rule of 173 revolutionary dynamics 44, 45, 46, 51, 55 Ricardo, D 25, 46 Rider, K 185, 189 Rios-Rull, J.-V 138 Roberts, D 184, 189 Robinson, J V 6, 16n6, 25 Rodrik, D 3, 4–5, 6, 7, 11, 16n4, 30, 36, 117n5 Roemer, J 62–3 Rogoff, K 135, 136 Romer, C 141 Roosevelt, F D 23; New Deal 141 Rosenstein-Rodan, P N 26 Rossi, C 184 Rostow, W W 26, 27 Rueff, J 145 rule of law 85, 91 ruling class 23, 48 rural sector 26, 27 Russian Federation 3, 6, 7, Ryan, J G Sabatini, F Saez, E 95 Saillard, Y 53 Sala-i-Martin, X Samuelson, P 57n14 San Wong, M W 188 Sarkozy, N 162 Saudi Arabia savings 137–8 Scandinavian institutional school 31 Schenk, E 189 Schmoller, G 58n19 Schrödinger, E 41, 46, 56n3, 57n8 Schultz, T 27 Schumpeter, J A 50, 55, 57n7, 83, 90 Schuster, P 58n29 Schweitzer, F 59n35 Index Schwienbacher, A 184, 185, 189 science: closed and open 113, 116; see also natural sciences; social sciences Scott, M F G 27 Scott, W R SDR (Special Drawing Rights) 145 Second World War 24, 25, 48, 89, 136, 141 Seers, D 27, 28, 36n2 Sen, A 8, 11 separation of powers 88 Seven Sisters cartel 48 sexual subsidy hypothesis 14, 106–8; and group selection 110, 111 Shaban, R A Shah, S 183 Shierolz, H 141 Simon, H 53, 56n6, 57n6 Singapore 4, 7, 139 “Six-Pack” 15, 162 Skidelsky, R 136, 147, 151 small and medium-sized enterprises (SMEs) 48 SMC (state monopoly capitalism) 89–90 Smith, A 23, 25, 64, 78; Wealth of Nations 65 Smith, G 121 Smith, Y 94 Smithin, J 66 Sober, E 71, 72 social capital 8, social class 46, 47, 68 social emancipation 102–3 social infrastructure 5, socialism, Marxist notion 79n11 Socialist Appeal (British Marxist group) 79n13 social market economy 48 social restoration 100–1 social sciences 55, 64, 68 Social Security liability, US 136 social structure 67 sociology 58n35 soft monetary policies Solow, R M Soskice, D 73, 79n12 South Korea 4, 16n3, 27, 139 sovereign debt crisis 125–6 sovereignty, national 123 Soviet Republic countries, former Spain 10, 167 specialization 73 species 42, 43; human 44, 45, 107, 109, 110 speculation/speculative debt 83, 97, 99, 138, 176–7 spending, encouraging 137 Stability and Growth Pact (SGP), 1999 15, 167, 170; failure 164–5 stagflation 33 state: and capitalist development 85; features of 87–8; interventionism 4, 30, 31, 85; natural state model (capitalism varieties) 71–4; role of 26 state monopoly capitalism (SMC) 89–90 201 ‘statist’ state monopoly capitalism 89 Statute of Anne (1709) 185 Steele, D R 76, 78n4 steel industry 26 step-by-step theory (Rostow) 26 Sterdyniak, H 181n1 Stiglitz, J 3, 4, 6, 7, 16n3, 124, 135 stochastic relationships 41, 42 Stockhammer, E 93 Strauss, A 187 structural adjustment structural balance 169 structural change theory 26 structural deficit concept 169–70 subaltern classes 87, 88 Sub-Saharan Africa 4, 16n1 Sum, N.-I 34 Summers, L supra-national institutions 14, 123 “survival of the fittest” 44 sustainability 29 Switzerland synchronic profile, evolutionary methods 13, 50–5 Systemic Risk Board 126 tacit knowledge, and non-deliberative action 68–70 Taiwan 4, 7, 139 TARP Act (Troubled Asset Relief Program), 2008 (US) 140 taxation 84; fiscal policy limitations 127 Taylor, J 141 Taylorism 33 technological knowledge 69 teleology, vs evolution 70–1 texts, writing of 50 Thailand Thatcher, M 2, 122 theory production 55 thermodynamics 42, 57n10 ‘Third Way’ 95 Throsby, D 182 Tickell, A 34 time 42 Tirole, J 182, 188 totalitarianism 84, 85 Toye, J 10 trade unions 31, 86 transaction costs 11, 31–2 Treasury Committee, US 142 Treaty of Lisbon (2009) 127 Treaty on Stability, Coordination and Governance (TSCG), 2012 15, 162–81; automatic coercion 173; ‘budget stability community,’ reviving 170–2; coordination of economic policies 168–9; debt increase and implementation of 167–8; democratic issues 170–4; erroneous implicit assessment 163–4; “golden rule of public finance” 166, 202 Index Treaty on Stability continued 177; internal devaluation 178–9; prosecutions, distruste institutionalized through 172–3; radicalization of previous treaties 165–7; structural deficit concept 169–70; as treaty for perpetual austerity 163–70 Tremonti, G 16n7, 158n9 “trickling-down” mechanism 24 Tridico, P 8, 12, 15, 78n1, 116n1, 134 Troika, Europe (ECB, EU and IMF) 100, 128, 177 Troubled Asset Relief Program (TARP), 2008 (US) 140 trust 5, TSCG see Treaty on Stability, Coordination and Governance (TSCG) two-sector model (Lewis) 26 Tymoigne, E 65 underdevelopment 26 UNDP (United Nations Development Programme) 29 unification effect 87 United Kingdom (UK) 8, 10, 85, 95; central banks 180; coalition government 142–3 United Nations Development Programme (UNDP) 29 United Nations Research Institute for Social Development (UNRISD) 29 United States (US) 7, 24, 85, 123; austerity policies 15, 135; central banks 180; and China 136–7; compensation 151; debts, and international conflicts 136–9, 140; Federal Reserve 9, 10, 100, 140, 141; as hegemonic borrower 144; labour market 147; root of financial crisis 134, 136 Urban, G L 184, 189 user-innovation theory 183–4 utilitarianism 68 U-turns 87 value theory 25 van Treeck, T 93 variation-test mechanism 42 Veblen, T 11, 13, 31, 32; on capitalism 65–6; contrasted with Marx 67, 69; on knowledge 69–70; and Marxism vs old-new institutionalism 61, 65–73, 78, 78–9n5, 79n7 Venezuela Vietnam Vining, R 66 violence, intra-specific 108 Voß, G G 185, 189 von Hippel, E 183, 184, 185, 188, 188–9, 189 von Krogh, G 182, 183, 184, 188 wage-led growth 92 Wahl, P 142 Walker, D 184, 189 Walker, T S Wallerstein, I 146 Walras, L 46, 50, 58n19, 62 Walter, A 139 wars 111, 113 Washington Consensus 3, 4, 7, 12, 16n2, 30, 33, 36, 95, 99 Watts, D 59n35, 111 Wealth of Nations (Smith) 65 Weber, M 83, 101, 102 Wedel, J 92 welfare state 35 West, J 182, 189 Westbrook, D A 135 Whalen, C J 65 Whitley, R 79n12 Wicksteed, P 62 Will, S 94 Williams, E O 116n2 Williams, G C 110 Williamson, J 3, 16n1, 30 Williamson, O E 31, 32, 36n4, 61 Winter, S 57n17 Wolff, R 134, 136, 142, 144, 147 Wood, S 79n10 working classes 68 World Bank (WB), Development Research Centre 28 world economy, integration in 4, World Employment Conference 27–8, 36n3 World Intellectual Property Organization (WIPO), Performances and Phonograms Treaty 185–6 World Trade Organization (WTO) 115, 116 Wray, L 66, 143 Xiaochuan, Z 135, 137, 144, 145 Yeager, J T Yin, R K 187 Zhang, W 58n24 .. .Institutions and Development After the Financial Crisis The financial crash of 2007–2008 and the subsequent global economic crisis have raised questions about the viability of capitalism and. .. Profitability and the Great Recession The role of accumulation trends in the financial crisis Ascension Mejorado and Manuel Roman 179 Institutions and Development After the Financial Crisis Edited... regard to the character and depth of the financial sector crisis, as well as to the impacts of the financial crisis on the real sector of the economy Presumably, the most financially open and deregulated