Pick one of the essay questions included.
G003
IntroADVANCEDPRINCIPLESOFECONOMICS.pptxADVANCED PRINCIPLES OF ECONOMICS
Financial Markets and Corporate Systems
1
What is the module about?
Competing perspectives on financial and economic matters
Developing critical skills in economic pluralism
Applying theoretical perspectives to real-life problems and testing their limitations
2
Orthodoxy vs heterodoxy
Orthodox (mainstream) economics – a theory of rational choice, which assumes that individuals make decisions that will maximize their own utility, and uses statistics and mathematical models to demonstrate theories and evaluate various economic developments.
Heterodox economics – approaches to economic theory that are alternative to mainstream.
3
Key principles of orthodox economics
Key principles of orthodox (mainstream) economics:
Scarcity
Methodological individualism
Trade-offs and rationality (people think at the margins)
Markets are a good way to organise the economy
Governments can sometimes improve market outcomes
Prices rise when there is too much money printed
Inflation / unemployment trade-off
4
“Established economic theory, especially the highly mathematical theory … developed after WWII, can demonstrate that an abstractly defined exchange mechanism will lead to a coherent, if not an optimum, result” (Minsky 2008 [1986]: 4).
Yet these models abstract from corporate boardrooms, Wall Street and the City, and the messy political process.
5
In the real world
A rise in demand may not lead to increase in prices;
An increase in real wage does not lead to decline in profits
Decline in saving rate does not lead to increase in investment
Flexible price systems does not bring equilibrium
Budget deficits may not lead to inflation
A ‘corporation’ is not the ‘firm’
6
Mainstream models do not deal with:
Time
Money (finance)
Uncertainty
The ownership of capital assets
Investment
7
Key principles of heterodox economics
Economic systems are not natural systems
An economic is a social organisation created either through legislation or by an evolutional process of invention and innovation.
Money and finance are not neutral
Institutions are key to the shape and the dynamics of an economic system
Scarcity is socially and politically constructed
8
Week outline
Introduction.
Banking and the Monetary System.
Functions and Tools of Finance
Post-Keynesian Approaches to Finance
The GFC: lessons for orthodoxy and heterodoxy
The Rise of the Corporation
Transaction Cost Economics
New Institutional Economics
Legal and Sociological Theory of the Firm
Financialised Corporate Economy: a Systemic View
Essay advice session
9
| Weeks | Lecture 10:00-10:50, C318 | Tutorial, 11:00-11:50 C 300 |
| Week 1 2 September | Introduction + Banking and the Monetary System. (extended lecture in C318) | Presentations sign-up |
| Week 2 9 October | Functions and Tools of Finance | Banking and the Monetary System: competing visions |
| Week 3 16 October | Post-Keynesian Approaches to Finance | Functions and Tools of Finance: competing perspectives |
| Week 4 23 October | The GFC: lessons for orthodoxy and heterodoxy | Post-Keynesian Approaches to finance and their limitations |
| Week 5 30 October | The Rise of the Corporation | The GFC: lessons for economic doctrines |
| Week 6 | Reading week | |
| Week 7 13 November | Transaction Cost Economics | The Rise of the Corporation |
| Week 8 20 November | New Institutional Economics | Transaction Cost Economics |
| Week 9 27 November | Legal and Sociological Theory of the Firm | NIE |
| Week 10 4 December | Financialised Corporate Economy: a Systemic View | Legal and Sociological Theories of the Firm |
| Week 11 11 December | Essay advice session | In class exam |
10
