Copyright (c) 2008 Berkeley Electronic Press All rights reserved. http://www.bepress.com/cas Recent documents in Capitalism and Society en-us Sun, 26 Oct 2008 07:10:40 PDT 3600 http://www.bepress.com/cas/vol3/iss2/art7 http://www.bepress.com/cas/vol3/iss2/art7 Fri, 24 Oct 2008 11:58:17 PDT The recent article in Capitalism and Society by Dosi et al., as well as the accompanying discussion by William Lazonick, misunderstand and mischaracterize the argument of my 2003 paper "The Vanishing Hand." More importantly, some of the central claims these articles make about the organization of the so-called New Economy do not withstand careful scrutiny. Richard N. Langlois L2 N8 http://www.bepress.com/cas/vol3/iss2/art6 http://www.bepress.com/cas/vol3/iss2/art6 Fri, 24 Oct 2008 11:58:16 PDT Kenneth J. Arrow http://www.bepress.com/cas/vol3/iss2/art5 http://www.bepress.com/cas/vol3/iss2/art5 Fri, 24 Oct 2008 11:58:12 PDT This essay examines the economics of patronage in the production of knowledge and its influence upon the historical formation of key elements in the ethos and organizational structure of publicly funded `open science.' The emergence during the late sixteenth and early seventeenth centuries of the idea and practice of `open science' was a distinctive and vital organizational aspect of the Scientific Revolution. It represented a break from the previously dominant ethos of secrecy in the pursuit of Nature's Secrets, to a new set of norms, incentives, and organizational structures that reinforced scientific researchers' commitments to rapid disclosure of new knowledge. The rise of `cooperative rivalries' in the revelation of new knowledge, is seen as a functional response to heightened asymmetric information problems posed for the Renaissance system of court-patronage of the arts and sciences; pre-existing informational asymmetries had been exacerbated by the claims of mathematicians and the increasing practical reliance upon new mathematical techniques in a variety of `contexts of application.' Reputational competition among Europe's noble patrons motivated much of their efforts to attract to their courts the most prestigious natural philosophers, was no less crucial in the workings of that system than was the concern among their would-be clients to raise their peer-based reputational status. In late Renaissance Europe, the feudal legacy of fragmented political authority had resulted in relations between noble patrons and their savant-clients that resembled the situation modern economists describe as `common agency contracting in substitutes' -- competition among incompletely informed principals for the dedicated services of multiple agents. These conditions tended to result in contract terms (especially with regard to autonomy and financial support) that left agent client members of the nascent scientific communities better positioned to retain larger information rents on their specialized knowledge. This encouraged entry into their emerging disciplines, and enabled them collectively to develop a stronger degree of professional autonomy for their programs of inquiry within the increasingly specialized and formal scientific academies (such the Académie royale des Sciences and the Royal Society) that had attracted the patronage of rival absolutist States of Western Europe during the latter part of the seventeenth century. The institutionalization of `open science' that took place within those settings is shown to have continuities with the use by scientists of the earlier humanist academies, and with the logic of regal patronage, rather than being driven by the material requirements of new observational and experimental techniques. Paul A. David http://www.bepress.com/cas/vol3/iss2/art4 http://www.bepress.com/cas/vol3/iss2/art4 Fri, 24 Oct 2008 11:58:10 PDT George A. Akerlof http://www.bepress.com/cas/vol3/iss2/art3 http://www.bepress.com/cas/vol3/iss2/art3 Fri, 24 Oct 2008 11:58:07 PDT The 2008 U.S. financial upheaval raises important questions about the sources of household consumption and debt growth, along with their macroeconomic effects. We argue that spending and financial preferences evolve as social norms interact with both cultural trends and institutional changes in household finance. We identify historical forces that raised consumption and debt over the past quarter century and interpret these events with Hyman Minsky's financial cycle framework. Strong consumption helped moderate recessions and boost growth since the mid 1980s. But unprecedented household debt has now culminated in a financial crisis that threatens to cause a deep recession. Barry Z. Cynamon http://www.bepress.com/cas/vol3/iss2/art2 http://www.bepress.com/cas/vol3/iss2/art2 Fri, 24 Oct 2008 11:58:05 PDT Michael Clements and David Hendry make realistic assumptions about the nature of the economy and the models used to forecast it. Under those assumptions, Clements and Hendry clarify why forecasting models work when they do, and why they don't work when they don't. Their research also suggests how to improve the forecasting abilities of existing models.A taxonomy of the sources of forecast error underpins Clements and Hendry's analysis. In my comments, I summarize their taxonomy; illustrate several implications, including for predictable and unpredictable forecast uncertainty; and re-examine forecast criteria, focusing on how mean square forecast errors can mislead. Neil R. Ericsson http://www.bepress.com/cas/vol3/iss2/art1 http://www.bepress.com/cas/vol3/iss2/art1 Fri, 24 Oct 2008 11:58:02 PDT This article explains the basis for a theory of economic forecasting developed over the past decade by the authors. The research has resulted in numerous articles in academic journals, two monographs, Forecasting Economic Time Series, 1998, Cambridge University Press, and Forecasting Nonstationary Economic Time Series, 1999, MIT Press, and three edited volumes, Understanding Economic Forecasts, 2001, MIT Press, A Companion to Economic Forecasting, 2002, Blackwells, and the Oxford Bulletin of Economics and Statistics, 2005. The aim here is to provide an accessible, non-technical, account of the main ideas. The interested reader is referred to the monographs for derivations, simulation evidence, and further empirical illustrations, which in turn reference the original articles and related material, and provide bibliographic perspective. Michael P. Clements