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Article
Publication date: 12 June 2017

Heather Richardson Bono, Charles G. Leathers and J. Patrick Raines

The purpose of this paper is to develop an analysis of the improbable events of housing market bubbles occurring in a period when US and UK central bankers were responding…

Abstract

Purpose

The purpose of this paper is to develop an analysis of the improbable events of housing market bubbles occurring in a period when US and UK central bankers were responding to perceived risks of a new deflation.

Design/methodology/approach

The methodology focuses on how the anti-deflation policies implemented by the Federal Reserve and the Bank of England contributed to the housing market bubbles. The central bankers perceived the deflation as a Keynesian short-run deficiency in aggregate demand, triggered by a financial crisis. Indications are that the deflation is in the nature of long-run aggregate-supply-driven trend as explained in Veblen’s theory of “chronic” deflation driven by cost-reducing advances in technology and globalization.

Findings

The Keynesian anti-deflation policies of the Federal Reserve and Bank of England failed to counter the deflation risks while contributing to housing market bubbles. Moreover, the policies failed to address the structural problems of unemployment and income inequality associated with long-run aggregate supply deflation.

Originality/value

Effective policies must be based on a correct theoretical understanding of the problems. The chronic nature of the new deflation points to the need for new approaches to deal with the negative income and employment effects that exclude an increasing number from the housing markets.

Details

International Journal of Social Economics, vol. 44 no. 6
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 1 June 1992

J. Patrick Raines and Charles G. Leathers

Joseph A. Schumpeter advocated a corporatist principle of economicorganization enunciated by Pius XI in the encyclical QuadragesimoAnno. Schumpeter insisted that a…

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Abstract

Joseph A. Schumpeter advocated a corporatist principle of economic organization enunciated by Pius XI in the encyclical Quadragesimo Anno. Schumpeter insisted that a corporatism of associations could provide social leadership and economic co‐ordination to ensure a stable, high employment economy, while maintaining individual freedom. To implement a corporatist system, moral reform would be necessary. Recently, economists have asserted that post‐war Japan approximates to Schumpeter′s corporatist model. Suggests that Japan′s post‐war economy is in conflict with two of the fundamental features of Schumpeter′s corporatism. First, the problem of resource allocation is often solved by bureaucratic intervention rather than by co‐ordination by private producers. Second, Japanese morals and ethics emphasize group efforts rather than Schumpeter′s requisite individual egoistic ethic. Concludes that the practicality of Schumpeter′s corporatism is not substantiated by post‐war Japan.

Details

Journal of Economic Studies, vol. 19 no. 6
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 5 April 2013

Charles G. Leathers and J. Patrick Raines

In speeches and testimonies, Alan Greenspan claimed intellectual links between his financial policies and the ideas of Milton Friedman and Joseph A. Schumpeter on banks…

Abstract

Purpose

In speeches and testimonies, Alan Greenspan claimed intellectual links between his financial policies and the ideas of Milton Friedman and Joseph A. Schumpeter on banks, central banks, and financial crises. As the financial crisis deepened in 2008, Greenspan admitted that his policies had been shockingly wrong. The purpose of this paper is to explain why his claims of intellectual links between those policies and the ideas of Friedman and Schumpeter were also wrong.

Design/methodology/approach

Beginning with representative examples of Greenspan's citations of Friedman and of Schumpeter as supporting his financial policies, the authors review the economic ideas of Friedman and Schumpeter on banks, central banks, and financial crises. In each case, we contrast Greenspan's financial policies with those ideas, demonstrating the spurious nature of his claims of intellectual links.

Findings

While expanding the role of the Federal Reserve in the financial markets, Greenspan's financial policies were based on the declaration that deregulation and financial innovations were providing flexibility and stability for the entire financial system. In his financial policies, Greenspan rejected Friedman's recommendations for changes in the powers and functioning of the Federal Reserve that featured a monetary policy rule and the 100 percent reserve requirement for deposits that would involve the separation of depository banking from loans and investments. From a Schumpeterian perspective, Greenspan's policies encouraged and facilitated the massive “reckless” finance that was responsible for the financial crisis of 2007‐2009.

Originality/value

Greenspan's legacy as Chairman of the Federal Reserve Board is one of policies that first contributed to recurring financial crises of increasing severity and were then followed by an extraordinary policy expansion of the Federal Reserve in attempts to cope with the crises. On that basis, it is important to have a clear understanding of the lack of intellectual support for those policies from the influential economists with whom he claimed intellectual links.

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Article
Publication date: 15 March 2011

Charles G. Leathers and J. Patrick Raines

At the 2009 Devos economic forum on the global financial crisis, David Cameron, then leader of the British Conservative Party and now Britain's Prime Minister, called for…

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Abstract

Purpose

At the 2009 Devos economic forum on the global financial crisis, David Cameron, then leader of the British Conservative Party and now Britain's Prime Minister, called for embracing a “moral capitalism.” The purpose of this paper is to consider the insights into a moral framework for the modern economic order that might be drawn from natural religions perceived by Adam Smith and Thorstein Veblen.

Design/methodology/approach

A review of the two perceptions of natural religions provide the basis for assessing their compatibilities with the type of competitive market economy that Smith observed in the eighteenth century, and with a modern market economy of large corporate enterprises and global financial markets. Particular attention is given to reforms that curb the practices that led to the global financial crisis.

Findings

Smith's “pure and rational” natural religion has been interpreted as being compatible with the type of competitive market economy that he analyzed in Wealth of Nations. Veblen's natural religion of “Christian morals” had a natural rights analogue in the ethics of a competitive market economy in which market relationships were heavily influenced by production resting heavily on personal skills of craftsmen and trade relying on the honesty of small merchants.

Research limitations/implications

The primary focus is on reforms in those aspects of the financial sector of the modern market system that have been associated with the current global financial crisis. What the two natural religions might suggest in the nature of broader socio‐economic reforms, e.g. corporate governance issues, would require a much larger study.

Social implications

While debates over a “moral capitalism” will be influenced doctrinal stances of institutional religions, sectarian differences may be bridged by considering natural religions that are rational and rest on the principle of fair play and mutual service.

Originality/value

Because of the attention that has been given to Smith's and Veblen's critical commentaries on institutional religions, the paper shows that their perceptions of natural religions and how those religions might relate to the economic order are easily overlooked.

Details

International Journal of Social Economics, vol. 38 no. 4
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 9 March 2012

Charles G. Leathers and J. Patrick Raines

During the Greenspan‐Bernanke era, the responses of Federal Reserve officials to financial crises resulted in an extraordinary involvement of the US central bank in the…

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553

Abstract

Purpose

During the Greenspan‐Bernanke era, the responses of Federal Reserve officials to financial crises resulted in an extraordinary involvement of the US central bank in the non‐banking financial sector. The purpose of this paper is to examine the informal and evolving conceptual framework that allows Federal Reserve officials to pursue a strategy of “constrained discretion” in responding to financial disturbances.

Design/methodology/approach

Behavioural economics relies on designed psychological and economic experiments to predict behavioural biases at the group level. As an analogue applicable to understanding biases in the intuitive judgments of individual policymakers, a naïve behavioural economics approach relies on intuitive or naive psychology and the interpretation of historical events as natural experiments to explain why intuitive judgments of Federal Reserve officials will contain biases.

Findings

Under the Greenspan‐Bernanke conceptual framework, Federal Reserve officials exercise “constrained discretion” in responding to disturbances arising from macro structural changes in the financial sector. The two key concepts are the Greenspan‐Bernanke doctrine on how the Federal Reserve officials respond to financial asset price bubbles and their collapses, and Bernanke's financial accelerator. Several examples are cited in which policy errors made by Alan Greenspan were attributable to identifiable biases in his intuitive judgment. In addition, Bernanke's response to the financial crisis of 2007‐2009 was based on his interpretation of the Great Depression as a natural experiment. But that interpretation was heavily biased by the influence of Milton Friedman on Bernanke's intuitive judgment. While Federal Reserve officials will need to exercise discretionary judgment in responding to financial crises, the potential for errors due to biases in that judgment can be reduced through regulatory reforms that lessen the potential for financial crises to occur.

Originality/value

While quantitative analyses of the effects of the Federal Reserve's actions on non‐bank financial institutions and the financial markets are ongoing, little attention has been given to the psychological aspects of the intuitive judgment that influences the discretionary decisions of the policymakers.

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Article
Publication date: 17 April 2007

Charles G. Leathers and J. Patrick Raines

The purpose of the paper is further clarify Veblen's views on globalization with insights derived from international trade in the alternative socio‐economic order…

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Abstract

Purpose

The purpose of the paper is further clarify Veblen's views on globalization with insights derived from international trade in the alternative socio‐economic order envisioned in Bellamy's utopian novel Looking Backward.

Design/methodology/approach

After reviewing the intellectual relationship between Veblen and Bellamy, the approach of the paper is to examine how international trade was arranged in Bellamy's utopian economy.

Findings

Bellamy's envisioned system of global trade based on providing maximum supplies of goods and services needed for high standards of living for all would be very compatible with Veblen's views on globalization.

Practical implications

The real world implications are the need for innovative institutional reforms to facilitate maximizing the potential gains from an ever expanding industrial system in a manner that that assures equitable distributions of the gains and adequate compensation for those negatively affected. On a practical basis, Veblen saw free trade under conditions of competitive markets as an improvement in that direction.

Originality/value

The paper offers points of interest to all who recognize that economic and political institutions are constantly under pressure to change to accommodate the ever expanding and changing global industrial system.

Details

International Journal of Social Economics, vol. 34 no. 5
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 13 April 2015

Charles G. Leathers, J. Patrick Raines and Heather R. Richardson-Bono

The role of debt in episodes of financial stability is a topic of increasing important as the global economy struggles to recover from the worst crisis since the Great…

Abstract

Purpose

The role of debt in episodes of financial stability is a topic of increasing important as the global economy struggles to recover from the worst crisis since the Great Depression of the 1930s. The purpose of this paper is to examine the mortgage finance booms of the 1920s and 2000s as natural experiments, new insights into debt-driven financial crises are gained.

Design/methodology/approach

The general methodology is interpreting anomalous historical events as natural experiments. The specific methodology is the approach to natural experiments provided by Joseph A. Schumpeter and Milton Friedman. The hypothesis tested is that laxity in lending standards was the prime contributor to the mortgage debt booms. In each case, we explain why factors other than laxity in lending standards would be secondary factors, with the pre-boom and post-boom lending standards providing the control groups of natural experiments. The two episodes of mortgage debt booms occurring under very different general economic and financial conditions provide an especially strong test of the hypothesized functional relationship.

Findings

The results of the two natural experiments support the hypothesis that lax lending standards were the prime contributors to the two episodes of debt-driven financial crisis.

Originality/value

From a social economics perspective, the insights gained are important because a major social goal has been to encourage greater opportunities for home ownership. The results of these natural experiments provide guidance for policymakers in the search for a viable balance between achieving that social goal and maintaining financial stability.

Details

International Journal of Social Economics, vol. 42 no. 4
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 7 January 2014

Charles G. Leathers and J. Patrick Raines

Because belief in a supernatural agent with extraordinary power is rooted in psychology, Veblen's instinct psychology was the essential basis for his evolutionary…

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657

Abstract

Purpose

Because belief in a supernatural agent with extraordinary power is rooted in psychology, Veblen's instinct psychology was the essential basis for his evolutionary economics of religion. The innate behavioral traits that Veblen called instincts in human nature are now recognized in evolutionary psychology as domain-specific mechanism that evolved as adaptations to enable human survival and reproduction. The authors aim to explain how the modern evolutionary psychology of religion provides a modern psychological basis for Veblen's evolutionary economics of religion.

Design/methodology/approach

First, the authors review how Veblen's theory of an evolved human nature of instincts was applied to explain the origins of religion in primitive societies and remained a resilient force despite evolutionary erosion of institutional religion as science advanced. Second, the authors note how evolutionary psychology explains the origins of religion in terms of the functioning of domain-specific psychological mechanisms that evolved as adaptations for purposes other than religion.

Findings

The similarities between Veblen's instinct psychology and the explanation of religion as by-products of domain-specific psychological mechanisms are sufficient to allow the conclusion that the evolutionary psychology of religion provides a modern psychological basis for Veblen's evolutionary economics of religion.

Originality/value

An evolutionary economics of religion has a great social value if it provides credible explanations of both the origins of religious belief and innate tendency for religious belief to continue even as science refutes elements of religious doctrines. With a modern psychological basis, Veblen's evolutionary economics of religion accomplishes that purpose.

Details

International Journal of Social Economics, vol. 41 no. 2
Type: Research Article
ISSN: 0306-8293

Keywords

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Book part
Publication date: 5 September 2018

Karen Landay and Rachel E. Frieder

Stress and the military go hand-in-hand, particularly in combat environments. While some personality traits or types weaken relationships between stress and performance…

Abstract

Stress and the military go hand-in-hand, particularly in combat environments. While some personality traits or types weaken relationships between stress and performance, others, such as psychopathy, may strengthen them. In the present chapter, we consider the ramifications of individuals with high levels of psychopathy or psychopathic tendencies in the military with regard to both their own stress and performance and that of those around them. We discuss different reactions to psychological and physical stress, as well as the implications of psychopathic tendencies as they relate to current military issues, including gender, leadership, teamwork, turnover, post-traumatic stress disorder, and suicide. By juxtaposing relevant research findings on stress and psychopathy, we conclude that psychopathic tendencies should have neither uniformly negative nor positive effects on stress and performance in the military. Rather, effects on such individuals and the peripheral others with whom they interact will likely vary greatly depending on numerous factors.

Details

Occupational Stress and Well-Being in Military Contexts
Type: Book
ISBN: 978-1-78756-184-7

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Book part
Publication date: 21 October 2014

Robert H. Blank

Abstract

Details

Politics and the Life Sciences: The State of the Discipline
Type: Book
ISBN: 978-1-78441-108-4

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