Description
The discipline of economics occupies a central role in the social sciences. Its conclusions are a key reference in public discussions. From a theoretical point of view, however, the foundations of the discipline appear far from being unambiguously established. Its basic prescriptions rest on assumptions which still deserve to be more fully understood and explicitly discussed. The summer school proposes to reexamine a very classic theme in economic thought, the tension between markets and governments, from the perspective of contemporary economic theory. Our starting point will be the conceptual framework which is at the root of standard comparisons between markets and governments: Government interventions can be justified when there are market failures so that potential gains from trade cannot be exhausted. This logic has broad appeal and has been a fundamental reference point in many policy domains. Examples include (i) Market power and antitrust regulation, (ii) Externalities and policies to mitigate climate change (iii) Free-rider problems in public goods provision, or (iv) Equity-efficiency trade-offs in tax design. This approach is indeed biased both in favor of markets and in favor of governments. It is biased in favor of markets because markets are taken to be desirable - unless they are proven to fail. But even if markets work, this does not prove that other mechanisms do no work. It is conceivable that governments work as well. This “In-dubio pro markets” warrants a justification. It is biased in favor of governments because policy intervention are taken to be desirable whenever markets fail. It is conceivable that governments fail as well. Thus, “Governments work when markets fail” also warrants a justification. Recent research on market design and incentive theory puts in question the traditional dichotomy of markets and governments. Markets can be designed in a way that serves distributive objectives, fairness objectives or desires to avoid the use of money as a medium of exchange.
At the same time, market pressures stand in the way when governments seek to reform financial regulation, mitigate climate change or enforce corporate taxation. These policy challenges seem to require a degree of market taming beyond the usual confines of taxation and regulation in market-based economies.
The school aims at offering a critical review of these recent issues. We will alternate traditional lectures by academics who have contributed to different areas of contemporary economic theory, with discussions around the presentation of recently published texts. In particular, the school aims to provide an opportunity to contrast contemporary economic theory with recent developments in political philosophy.
Programme
JUNE 19th
- 9:15h-9:45h: Wake-up Coffee
- 9:45h -10:00h: Welcome
- 10:00h-11:30h: F. Maniquet (UCL Louvain) “Classic and Recent Debates on (Re)Distribution: A Social-Choice theoretical viewpoint”
- 11:30h-11:50h: Coffee break
- 11:50h-13:20h: P. Dworczak (Northwestern) “Optimal Redistribution via Income Taxation and Market Design”
- 13:20h-15:15h: Lunch
- 15:15h-16:45h: J. Eeckhout (UPF) Book “The Profit Paradox"
JUNE 20th
- 9:15h-10:00h: Wake-up Coffee
- 10:00h-11:30h: F. Ferreira (London School of Economics) “Equality of Opportunity, Meritocracy, and Public Policy”
- 11:30h-11:50h: Coffee break
- 11:50h-13:20h: R. Sethi (Columbia University) “The Economics of Group Inequality”
- 13:20h-14:45h: Lunch
- 14:45h-15:45h: Guided Tour of Villa Mondragone
- 16:00h-17:30h: O. Galor (Brown University) Book “The Journey of Humanity: The Origins of Wealth and Inequality"
JUNE 21st
- 9:15h-10:00h: Wake-up Coffee
- 10:00h-11:30h: S. Masconale (University of Arizona) “The Morality of Market Activism”
- 11:30h-11:50h: Coffee break
- 11:50h-13:20h: A. Schwartz (Yale) “The Logic of Legal Formalism”
- 13:20h-15:15h: Lunch
- 15:15h-16:45h: L. Herzog (Groningen) “The epistemic narrative about markets - and what’s wrong with it”