Seminar

 Friday, February 15th, 2013     4:10pm-6:10pm

The Hidden Costs of Debt Market Liquidity 

Amar's Bhidé's seminar builds on the critique of mechanistic finance in his 2010 book (A Call for Judgment) but with a specific focus on liquefaction of mortgages and small loans. He argues that such liquefaction impels mechanistic lending practices to a much greater degree than the issuance of traditional corporate bonds.  It also imposes significant private and welfare costs.  He will further argue that mechanistic liquefaction of small loans has been nurtured in the US by efforts to increase home ownership and by securities, banking and pension rules.

Harold Schmitz, Chief Science Officer
Howard Shapiro, Global Staff Officer Plant Science and External Research
Margaret Peterlin, Chief Intellectual Capital Officer
Joel Harris, Program Manager for Intellectual Capital
Lloyd Timberlake, Project Consultant

March 9th, 2011     4:10-6:10

CAPITALISM AS A MIXED ECONOMIC SYSTEM

Introduction: Many factors are stimulating discussion and argument about what reforms are necessary if capitalist economies are to work effectively to meet human economic needs in the 21st century: concerns about global warming, the recent financial crisis, the continuing rise in the costs of medical care, stubborn pockets of poverty in many nations with high average incomes, and others. However, almost no one is seriously proposing that capitalism, as a kind of economic system, be abandoned, and something significantly different put in its place. That kind of argument died out with the end of the cold war. Today, there seems to be broad consensus that there are no real alternatives to capitalism.

But what is “capitalism” anyway? The now extensive literature on comparative capitalisms shows that the economies of countries that generally are considered to be capitalist differ in important ways. (Hollingsworth et al, 1997, provides a good general discussion. See also the chapters by Berglof and Odagiri in this volume.) Also, individual capitalist countries themselves obviously have changed greatly over the years.

However, there would appear to be two core characteristics broadly shared by all countries that call themselves capitalist. First, these economies make extensive use of market organization, broadly defined, to govern the production and distribution of goods and services. Second, this practice is supported by broad ideological agreement that market organization is the best way to govern economic activity.

A central argument of this essay is that, in countries that consider their economies basically capitalist, the conception that market organization is the best mode of economic governance is much simpler and more coherent than the complex and variegated way that economic activity actually is governed, which involves a wide range of non-market elements. This is both a source and a consequence of a continuing political debate about the appropriate governance of various economic activities and sectors. -Richard Nelson

November 3rd, 2010     4:10 - 6:10

Beyond Social Exclusion: Emerging Logics of Expulsion

Professor Sassen's seminar was based on a project that she is working on. The central concern is with complexity and its capacity to produce elementary brutalities.  One instance of the latter is a diverse set of cases that represent logics of expulsion of a sort that go well beyond the more familiar cases of social exclusion. (Sassen)

“Banks, Market Organization and Macroeconomic Performance: An Agent-Based Computational Analysis,” is based on ongoing work with Quamrul Ashraf of Williams College and Boris Gershman of Brown University.

This paper is an exploratory analysis of the role that banks play in supporting what Jevons called the mechanism of exchange. It considers a model economy in which exchange activities are facilitated and coordinated by a self-organizing network of entrepreneurial trading firms. Collectively these firms play the part of the Walrasian auctioneer, matching buyers with sellers and helping the economy to approximate equilibrium prices that no individual is able to calculate. Banks affect macroeconomic performance of this economy because their lending activities facilitate entry of trading firms and also influence their exit decisions. Both entry and exit have conflicting effects on performance, and we resort to computational analysis to understand how these conflicting effects are resolved. Our analysis sheds new light on the conflict between micro prudential bank regulation and macroeconomic stability; under some circumstances the economy performs better when bank regulation pays less attention to micro prudence (ie when capital adequacy ratios are lower and allowable loan-to-value ratios are higher). Related to this, our analysis draws out an important difference between "normal" performance of the economy and "worst-case" scenarios; the micro prudence conflicts with macro stability only in the worst-case scenarios. 
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