BPE: Financing Investment under Fundamental Uncertainty and Instability: A Heterodox Microeconomic View

Tae-Hee Jo. 2015. “Financing Investment under Fundamental Uncertainty and Instability: A Heterodox Microeconomic View,” Bulletin of Political Economy, Vol. 9, No. 1, pp. 33-54.


This study inquires into investment and finance decisions as they are related to other decisions within the going business enterprise embedded in the monetary social provisioning process. When it comes to investment and finance, business enterprises’ strategic decisions often escape notice by heterodox macroeconomists. In place of strategic decisions, financing and investment are mainly looked at through the operation of the financial market in which the supply of and demand for investment funds are coordinated by the prices of funds. Consequently, heterodox macroeconomic theory of investment and finance deals mainly with external financing. In this article I argue that the strategically generated internal means of finance is the main source of fixed investment, especially when the economy is in recession or economic instability is increasing. The positive empirical relationship between external finance and fixed investment is hardly discerned. Even the financialization of non-financial corporations in recent decades has not reduced the importance of internal financing over external financing.

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Tributes in Memory of Frederic S. Lee

Tributes in Memory of Frederic S. Lee, edited by Tae-Hee Jo, February 2015. [click on the link to download a pdf file]

This is a collection of tributes read at the Memorial Service on November 8, 2014 (Chapter 1), obituaries written by his family and colleagues (Chapter 2), and messages sent in after his passing (Chapter 3). Tributes appear in the Festschrift for Fred Lee, and various events, such as conference sessions in honor or memory of Fred Lee, are also included in Chapter 3.

“They say, we die twice—once when the last breath leaves our body and once when the last person we know says our name.”

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Advancing the Frontiers of Heterodox Economics: Essays in Honor of Frederic S. Lee

edited by

Tae-Hee Jo and Zdravka Todorova

Routledge Advances in Heterodox Economics

ISBN: 978-0-415-73031-0 (hardback), 358 pages, $155. August 2015, Routledge. (20% Discount code: FLR40)

[Book details at the Routledge website] [Look inside]

This collection of essays honors the life and work of one of the most prominent and fervent heterodox economists, Frederic S. Lee, who has been at the heart of the heterodox economics movements for the past three decades. Authors in this book demonstrate that heterodox economic has transcended the criticism of mainstream economics and, more importantly, that constructive developments are in the making by way of cross-communications among various heterodox economics traditions.

Frederic S. Lee’s contributions to heterodox economics are centered on three themes: the making of a history and identity of heterodox economics, heterodox microeconomics, and the heterodox analysis of social provisioning. Part I addresses the importance of history, theory, research methods, and institutions in the making of the identity of heterodox economics as an alternative to mainstream economics. Part II delves into heterodox microeconomic theories—in particular, investment, pricing, competition, markets, and market governance—as foundations of heterodox macroeconomic analyses. Part III expands the analysis of the capitalist social provisioning process with an emphasis on its subsystems and their relationships over historical time. Part IV encapsulates the life and work of Frederic S. Lee.

Throughout his intellectual life Frederic S. Lee has shown to many that the development of heterodox economics is rendered possible by unselfish and ceaseless efforts to build both theory and institutions. Essays in this book attest that establishing an alternative critical theory to the status quo is not only possible but also serviceable to the majority of the population.


Foreword by Sheila C. Dow

Foreword by John F. Henry

Introduction: Frederic S. Lee’s contributions to heterodox economics
Tae-Hee Jo and Zdravka Todorova

Part I

Making History and Identity of Heterodox Economics by Developing Theory and Institutions

  1. Heterodox economics and the history of economic thought
    Carlo D’lppoliti and Alessandro Roncaglia
  2. The Association for Heterodox Economics: past, present, and future
    Andrew Mearman and Bruce Philp
  3. Heterodox economics, distribution and the class struggle
    Bruce Philp and Andrew Trigg
  4. Qualitative data and grounded theory in heterodox economic research: insights from three Australian studies
    Therese Jefferson

Part II

Heterodox Microeconomics and the Foundations of Heterodox Macroeconomics

  1. Heterodox microeconomics and heterodox microfoundations
    Tae-Hee Jo
  2. Beyond foundations: systemism in economic thinking
    Jakob Kapeller
  3. Post Keynesian investment and pricing theory: contributions of Alfred S. Eichner and Frederic S. Lee
    Ruslan Dzarasov
  4. Effects of competition upon profit margins from a Post Keynesian perspective
    Jordan Melmiès
  5. Inter- and intra-firm governance in heterodox microeconomics: the case of the US software industry
    Erik Dean
  6. Analyzing actually-existing markets
    Lynne Chester

Part III

Advancing the Heterodox Analysis of Social Provisioning

  1. Advancing heterodox economics in the tradition of the surplus approach
    Nuno Martins
  2. Consumption in the context of social provisioning and capitalism: beyond consumer choice and aggregates
    Zdravka Todorova
  3. Social provisioning process, market instability, and managed competition
    Tuna Baskoy
  4. The embedded state and social provisioning: insights from Norbert Elias
    Bruno Tinel
  5. Analogies we suffer by: the case of the state as a household
    Huáscar Pessali, Fabiano Dalto, and Ramón García Fernández
  6. Technological-institutional foundations of the social economy: a framework for the analysis of change in the social provisioning process
    Henning Shwardt

Part IV

The Heterodox Economics of Frederic S. Lee

  1. Predestined to heterodoxy or how I became a heterodox economist
    Frederic S. Lee
  2. Frederic Sterling Lee (1949-2014)
    John E. King
  3. In memoriam: Frederic S. Lee, 1949-2014
    Jan A. Kregel and L. Randall Wray
  4. The Bibliography of Frederic S. Lee’s Writings
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Marx, Veblen, and the Foundations of Heterodox Economics: Essays in Honor of John F. Henry

edited by Tae-Hee Jo and Frederic S. Lee

Routledge Advances in Heterodox Economics

[Book details at Routledge website] [Look Inside the book]

ISBN: 978-1-13-879779-6 (hardback), 342 pages, $155. August 2015. (20% discount code: FLR40)

John F. Henry is an eminent economist who has made important contributions to heterodox economics drawing on Adam Smith, Karl Marx, Thorstein Veblen, and John Maynard Keynes. His historical approach offers radical insights into the evolution of ideas (ideologies and theories) giving rise to and/or induced by the changes in capitalist society. Essays collected in this festschrift not only evaluate John Henry’s contributions in connection to Marx’s and Veblen’s theories, but also apply them to the socio-economic issues in the 21st century.

In Part I leading heterodox economists in the traditions of Marxism, Post Keynesianism, and Institutionalism critically examine Marx’s and Veblen’s theoretical frameworks (and their connections to each other) that have become the foundations of heterodox economics. Chapters in Part II showcase alternative theoretical explanations inspired by Marx, Veblen, and Henry. Topics in this Part include financial crisis, financialization, capital accumulation, economics teaching, and the historical relationship between money and class society. Part III is devoted to John Henry’s heterodox economics encapsulated in his “farewell” lecture, interview, and bibliography.

Essays in this book, individually and collectively, make an important point that the history of economic thought (or historical analysis of economic theory and policy) is an integral part of developing heterodox economics as an alternative theoretical framework. Anyone who is troubled by the recurring failure of capitalism as well as mainstream economics will find this book well worth reading.

Introduction: Marx, Veblen, and Henry


Part I

Radical Ideas of Karl Marx and Thorstein Veblen

  1. The Marxian and Veblenesque elements in the way I do economics
  2. Karl Marx, Thorstein Veblen, and the global financial crisis
    J. E. KING
  3. The contemporary relevance of Karl Marx’s heterodox political economy
    P. A. O’HARA
  4. Veblen, Instincts and Exchange
  5. A further Veblenian articulation of a monetary theory of production
  6. Is conspicuous consumption a weak concept? An historical perspective on the French Revolution and capitalism
  7. Veblen on economic method: a critical note

Part II

Heterodox economics: alternative critical theory to the status quo

  1. The “illusion” or “paradigm blindness” of economics: ethical challenges to economic thought from the financial crisis
  2. Economics and history: why economists and policy makers need to understand the latter
  3. Speculative financial capitalism wacking out over an “impossible” profit rate: the infeasibility of a “usual” real average profit rate, considering fictitious capital, and its implications
  4. Shaping the social determinants of value through economic ghostmanagement: an institutionalist approach to capital accumulation
  5. The rise of money and class society: the contributions of John F. Henry

Part III

The heterodox economics of John F. Henry

  1. Property and the limits to democracy
  2. A conversation with John F. Henry
  3. The bibliography of John F. Henry’s writings
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Las contribuciones de Frederic S. Lee a la economía heterodoxa

Tae-Hee Jo y Zdravka Todorova, “Las contribuciones de Frederic S. Lee a la economía heterodoxa,” Revista de Economía Crítica, 19, primer semestre 2015, pp. 215-230. [link to the article]

La comunidad de los economistas heterodoxos ha perdido a Fred Lee, uno de sus líderes más entusiastas y que estuvo en el centro del movimiento de la economía heterodoxa durante las últimas tres décadas. Este artículo describe el amplio espectro de las contribuciones que Fred Lee realizó a la economía heterodoxa, y se centra en sus aportaciones a la formación de la historia e identidad de la economía heterodoxa, a la teoría microeconómica heterodoxa, y al análisis del proceso de aprovisionamiento social. ¿Cuál es el significado de estas contribuciones para la economía heterodoxa? Fred Lee nos ha legado teorías heterodoxas, instituciones y buena voluntad que continuarán desarrollándose en el trabajo de aquellos economistas preocupados por establecer una teoría crítica alternativa al statu quo.

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JEI: The Business Enterprise in the Age of Money Manager Capitalism

The Business Enterprise in the Age of Money Manager Capitalism,” with John F. Henry, Journal of Economic Issues, 49 (1): 23-46. March 2015.

Thorstein Veblen’s going concern theory of the business enterprise has been widely received by heterodox economists. Since Veblen’s era, the capitalist social provisioning process has evolved toward money manager capitalism in a dialectical fashion. At the heart of the transformation are changes in the behavior of the business enterprise. In this paper, we make a threefold argument. First, while the going concern theory of the business enterprise is still important in the account of the economy as a continuing process of social provisioning, since a viable economy requires continuing business over historical time, more and more of the economy is being directed toward financial concerns. Second, as a consequence, the social provisioning process becomes more unstable and people’s welfare becomes more vulnerable. Third, the concept of a going concern is, therefore, to be modified in order to put the business enterprise in the context of money manager capitalism.

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Frederic S. Lee’s Contributions to Heterodox Economics

Jo, Tae-Hee and Todorova, Zdravka (2015) “Frederic S. Lee’s Contributions to Heterodox Economics.” MPRA Working Paper 62568; This paper is the Introduction to Advancing the Frontiers of Heterodox Economics: Essays in Honor of Frederic S. Lee. Edited by Tae-Hee Jo and Zdravka Todorova. London and New York: Routledge (forthcoming in 2015).

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Dr. Tae-Hee Jo

Economics and Finance Department
SUNY Buffalo State
1300 Elmwood Ave.
Buffalo, NY 14222

o: Classroom Building B230
t: 716-878-6933
e: taeheejo [at] gmail.com
e: joth [at] buffalostate.edu

Essays in Honor of Frederic S. Lee

Advancing the Frontiers of Heterodox Economics: Essays in Honor of Frederic S. Lee (2015)

Marx, Veblen, and Foundations of Heterodox Economics

Marx, Veblen, and the Foundations of Heterodox Economics: Essays in Honor of John F. Henry (2015)