Lamppost Economics?
from Peter Radford
Paul Krugman came remarkably close to giving economics a big negative review in his New York Times blog last week. To sum up his argument: economics is very good at talking about, although not resolving, issues that are tractable to formal modeling — anything else not so much. You see there’s this gigantic blind spot in modern economics. If a topic cannot be modeled then it doesn’t attract too much attention. At least in the bright lights of the mainstream version of the subject. Which, of course, begs the question: what is economics missing?
Krugman’ attention was brought to this blight by an article by Justin Fox who bemoans the early lack of interest in inequality displayed by a profession whose core focus seems to encompass such a vital topic.
Here’s what Krugman said:
“I’m a few days late on this characteristically lucid Justin Fox column on why it took so long for economists to focus on income inequality. But as one of the economists who did write about inequality — especially the rise of the one percent — pretty early, I think Fox has missed one important aspect: it’s a hard issue to model.”
Well, that’s pretty straightforward.
I may be misreading this, but what I think Krugman is telling us that only subjects that can be scrunched into models are suitable material for economic. Subjects that are unsuitable are game for analysis by lesser sorts or are just not ‘economic’.
Now I am lot more sympathetic towards Krugman than many of you are, I have a soft spot for his thinking because he is willing to lead the liberal charge, but this annoys me.
What has become of economics that it cannot deal with palpably economic topics unless they can be modeled? Why can’t we analyze them using other methods? Or are those other methods inadequate, inappropriate, of otherwise beneath us?
Has economics become so myopic and small that, like the proverbial drunk looking for his car keys, it only searches under the lamppost?
Apparently, though, times are changing. The thrust of Fox’s article is that this year’s American Economics Association meeting is inundated with papers on inequality. There are seventy of them. Feast or famine in economics, and none too soon.
Economists are unwilling to make statements about issues that they don’t have scads of data about that they can them smash through their formal method. If the data is sparse, anecdotal, or tainted by some similar insufficiency then they remain mute. Even if they all acknowledge privately that the issue might be intriguing.
Then again, many more of them are mute because they can’t see the issue to begin with. Their myopia is set in concrete by the self-referential loop of economic method being part of the section criteria by which a topic becomes ‘economic’.
I give Krugman credit for being one of the mainstream economists who did mention inequality before it became fashionable. I criticize him for being so lame about this ‘it can’t be modeled’ excuse. It undermines the discipline’s credibility when what appears to be a big and highly relevant topic can so easily be sidelined because it didn’t fit the analytical pigeonhole. Isn’t this about-face? Can’t we develop tools to take a look at topics that are untidy or messy?
Which leads me to be sympathetic to Fox’s concluding paragraph:
“Still, as I wander from presentation to presentation at this week’s economics meetings in San Francisco, I can’t help but wonder what important knowledge the economists are inadvertently suppressing today.”
Yes, indeed: just what is economics suppressing today? Worse: is that suppression ‘inadvertent’ or deliberate?
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Real-World Economics Review Blog 
If we move beyond the Hicksian nonsense of a numeraire ‘commodity’ that can be any exchangeable commodity other than money — if we simply acknowledge that exchange values are set in units of currency whose price in terms of itself is unity, I.e. that money is the numeraire in monetized economies — then one can certainly ‘model’ incomes inequality and its impacts upon the consumption and growth paths of economies.
Hicksian analysis takes budgets as fixed/invariable. So did all the ‘utilitiarians’ before him. This penchant for not examining budget formation decisions from analysis within the theoretic is what underlies Krugman’s notion that income inequality and its impacts cannot be modeled.
“just what is economics suppressing today? …is that suppression ‘inadvertent’ or deliberate?”
Cost shifting (John Maurice Clark, Karl William Kapp).
The suppression is deliberate because recognizing the incentive for shifting costs undermines the notion that price is a “built-in mechanism” for equilibrating supply and demand. Supply, demand, price and equilibrium are essential ingredients of the economists’ models. To point out that these ingredients abstract from the actual practices of firms in production, consumption and exchange is to reveal economic modeling as the cult ritual it is.
All this to say that economists might (I say might) be useful as a member of a team of problem identifiers and potential solutions creators but certainly only one member and certainly not the leader of the team. Modeling can be useful as part of a team effort. However, the knowledge base and limited experience of economists argues against them leading such a team. Historians, Anthropologists, and Philosophers (as long as not overly specialized) often have a broader background of knowledge and experience, especially outside of academia and “think tanks.” They seem better suited for the leadership role in such teams.
If mathematicians would study mathematics the way economist study economics, every equation would be falsehood
Maybe it was one of the younger writers writing for the Paul Krugman enterprise. The last book of his I read a few years ago seemed like it must have been written by a recent grad. The basic thesis was borrow money for green jobs and boost inflation so paying back the money is either painless or pointless.
A mature economist would have noticed that one function of money is a store of value over time. A deeper thinker would have noticed that the US already borrows huge amounts of money and blows it on war rather than green jobs. Plus, the money for infrastructure maintenance went to endless war or tax breaks for the wealthy.
I built an early corporate model upon leaving college, circa 1968. My primary fields of study in graduate school were comparative economic systems and economic development. President Kennedy’s call for students of rocket science motivated this post high school student/surfer. Today I only read math as subconscious poetry.
Rocket science provided the input for instructing the programmer to call up deeper languages for more complex issues. That was enough to see the programmer called to home headquarters – a computer with cat walks and ladders – my programmer was put in charge of new products. Things were easy then. The home company went from a heavy projected loss to surprisingly large profit. Models work for abstract reduction. The greater the detail available to input, the closer one is to reproducing communication within an economic unit.
Models of a large culture are problematic for the simple reason that it is not an applied tool using mechanical computer power for digitized communication between individual biological computers, each of which has almost ridiculously huge internal information processing connectedness.
Yes. One can model the complexity of a sun forming and enhance conversation between astrophysicists. But this cannot be done for human biology organized as a living civilization. Why? Because life self heals faster than entropy. We really are cosmic powered biology evolving on the hockey stick graph. The cosmos really is expanding at an accelerating rate. Evolution has been part of it from the beginning. Evolution is accelerating with Cosmos.
When modelers of economics concentrate on practical models for limited purpose and rely on participation from those being modeled, they will discover the harness of distributed human intelligence is real democracy. No individual will know every aspect of what the model is modeling or for whom. Efficiency measured against planetary health and the well being of all life is included by decentralized intelligent design. Call it the invisible hand of real democracy.
“Practical models for limited purpose.” Yes. An excellent approach.
Supply and demand as establishing prices and equilibria. No.
Prices linked to entropy via kilocalories would fit most accepted accounting systems. This part is research for an informed market paid for by increased efficiency and a more rapidly healing Earth accompanied by a gently declining population. I am one person pointing toward what many are already working for.
Could you suggest some (simple) readings for me, since I am uncertain how this would change how exchange units of account (currencies) work; that is., how monetized economies value goods and services.
Let’s say I used kilocalories to measure human biological needs to daily replenish 2500 or 2000 kc. of energy for men and women respectively. I’ll not worry for the moment about whether those are empty of any other nutritional units. And, let’s say that there is a set of foods which could provide for such kc.s when eaten, albeit in different amounts a,b, c.
The 2500 or 2000 -aX -bY -cZ = 0 comprises an Exigency function. The prices of X,Y, and Z, in combination with budget formation constraints out of income would then determine the mix and variety of what a consumer could purchase to consume. If we started off with a budget wherein consumers could purchase all three to just meet or more than meet needs, it would be fairly simple to show that a rise in the price of any one of these goods could lead to a basket containing only the two lesser priced goods or, for that matter, a need to purchase combinations less ‘liked’ by consumers. (Not that I use MU or Indifference Analysis).
Anyway, I would like some readings about what you are talking about. And, thanks in advance.
Good metaphor Peter.
Well you can model inequality, but not with a representative agent model. Just as you can model a market crash, but not with an equilibrium model. And who, for god’s sake, says the data are limited?
The problem isn’t just that their thinking is tied to models, it’s also that the models are so extremely limited in what they can do (and pretty much irrelevant to a real-world, far-from-equilibrium, multi-agent, pure-credit-money economy).
Wouldn’t you expect scientists to work precisely on those subjects they can’t model yet ? I mean, saying that you won’t look at anything else than what you already know doesn’t sound like a successful research strategy to me …
You made me chuckle out loud. Thanks.
My readings about calorie based money are mostly from science fiction, where it always works but the details are never fully explained.
My first muse on the subject was during pamphleteer work with peace and environmental efforts about 1978. The idea came my way first from an undergraduate economics professor circa 1966. This is a subject I have accidentally encountered over the years and found interesting each time.
I am unaware of any systematic effort to establish caloric currency yet can summarize a little.
It was quite some time ago that people noticed that new kings changed measuring systems fairly regularly. This made life difficult for scientists and the general populace was quite aware that the king became richer every time the measurement basis change.
Thus, people cooperated and began the metric system. One cubic centimeter of water weighs one gram and requires one calorie to raise it’s temperature one degree centigrade. The attempt to limit kingly financial wealth transfers with a kilocalorie monetary unit was interrupted by both kings and bankers. And that is why we are sitting in limbo with currencies that measure nothing and are not part of the metric system.
The closer a national currency approaches parity with one kilocalorie in the international currency markets, the more efficient will be a national ability to facilitate focus of distributed intelligence among the citizens. The further a national currency drifts from the metric system, the more scientifically discounted will be the currency.
Market based comparisons of calories in food are interesting. I hadn’t thought of that. My impression is we are attempting to give paper money a bench mark. It will still drift around as paper money does. A big difference is that studies of the calories devoted to externalities can be gradually discovered and accounted for over time. The same idea applies to unaccounted social goods. Economics expands into science by having a scientific unit in the metric system. Where will it go? Let’s get step one done first.
Thank you for your reply. Offhand, I don’t think that altering the unit of account would necessarily give us a better understanding of the mechanics of exchange, how prices are arrived at, or how budget formation are arrived at, especially given incomes/wealth inequalities.
I tend to think in terms of outcomes in real terms, i.e., units of benefit (proteins, kilocalories, profits in currency terms) arising from the use of goods that are purchased. So, I am trying to re-introduce value-in-use (or different-values-in-different-uses) back into economics, as a backdrop to the economic decisions of all users of goods.
This has me moving away from neoclassical and Austrian school divisions between firms and consumers, for both use goods (‘are consumers) to benefit in different ways.
Thanks again.
“I don’t think that altering the unit of account would necessarily give us a better understanding of the mechanics of exchange, how prices are arrived at, or how budget formation are arrived at, especially given incomes/wealth inequalities.”
Altering the unit of account has more to do with facilitating distributed human intelligence and promoting real democracy than it does understanding mechanics of exchange in a rigged and corrupted system.
The point is that there will come a day when economists will no longer be fooled into believing they are studying an economy when they are actually studying a social trajectory savaging the eco part of economics.
Many lay people instinctively know that corporatism does not generate actual economic profits that surpass natural and social destruction. The point of the current economy is to centralize the free lunch provided by Earth regardless of the cost to life on Earth.
Devotion to the study of corporatist economics is about the same as believing periodic voting is democracy.
Actually I agree with everything you’ve said here, Garrett.
I don’t eat Quinoa. The reasons why I don’t have to do with the negative impacts on diets of native populations, the destruction of lands, the encouragement of agricultural monoculture, the loss of fertile soils,the upsurge in violence surrounding ‘private’ property, et cetera {See, for instance, http://www.theguardian.com/commentisfree/2013/jan/16/vegans-stomach-unpalatable-truth-quinoa}.
We can ‘blame’ some of this on corporatism, but, historically, I think it results from the displacement of other values that results when ‘money value’ displaces all other considerations. Historically, those who bought harvests ‘low’ and sold ‘high’ made ‘serious profits’ at the expense of the health and lives of others. This led to ‘just price’ controversies.
Later, land enclosures were justified on the basis that they were more efficient (at least in terms of the monoculture that exchange prices encouraged) albeit all of the other ‘costs’ — not measured in money units and some not able to be measured in such units — were ignored. To me, corporatism is simply the latest manifestation of the phenomenology of money in economies.
Money values, in short, displace human and other values. Changing the unit of account is unlikely to alter that tendency no matter what other benefits might arise from doing so. An economic theoretic that does not take into account how money works to displace other values [including all existing theoretics] ill serves understanding.
What happened to the diets of the natives dispossessed of their main staple protein, and why it happened, can easily be modeled. And the impacts and effects of this can be empirically measured in units other than money. So, is ‘use’ for ‘profit’ superior to use for survival? [Is use to get “dollars” superior to use to get ‘proteins”?]
That is my question.
Sorry if we got off on the wrong foot here. We are looking at similar problems from very different directions.
Perhaps, “altering the unit of account” is only a measurement of the quality and quantity of wealth, as such it needs not to be used to determine a measurement of the “gaps of inequality”. The gaps are a result of the ways and means of how and when the relative
‘unit of account’ is distributed and redistributed. Capitalism demands inequality. The way that it administers the distribution of the community’s wealth,may be proven to be the culprit
in having such massive gaps n that scale of inequality (1% vs.99%).
Perhaps each monetary sovereignty should set a scale e.g., USA Top20% would have 40% of the wealth of the nation. Administrators would tax excesses and redistribute via “General Welfare” programs to the 80%ers.(A good first start would be ‘to take the $728 billion that is in the 2016 budget as ” debt service” (really by another name is an entitlement to the top 10%, that Bernanke has proven can be reduced to zero by ZIRP)
Is there any question as to the availability of this data ?
“The gaps are a result of the ways and means of how and when the relative ‘unit of account’ is distributed and redistributed.”
Yes!
And because budget formation depends on how and when the relative unit of account is distributed and redistributed,,,and because budget formation is itself overlooked/glossed over in current theory…the existing theoretic is incapable of accounting for the impacts and effects of inequality/maldistribution upon economic activity.
I preserve your article for ever for future usage Mr. Larry
Wonderful!
There are a few matters to bear in mind.
1. In a two-good model, X and Y, the Exigency function is straightforward; I.e. Exy – Ax – By = 0, where A and B are the benefit sought from x and y respectively. Thus, if the benefit sought daily was 80 grams of protein, and A per X was 8, with B for X, Then the Exy function is 80 – 8x – 16y = 0. Cxy must take place on or above the Exy function. In some cases, like with protein consumption, adverse health effects occur with daily overconsumption, so we can add, for such cases, that there are upper and lower biological bounds to the consumption of some biologically needed goods.
2. For any given set of prices of X and Y, we can establish the budget needed to purchase any bundle {Xo,Yo} on he Exy function. For this budget is simply px*Xo + py*Yo = Bxy
3. Y = px/py*X describes a singular, unique market equivalent bundle [Xm,Ym] for all Nominal Budgets having -px/py as their slope. Thus, there is one and only one market equivalent budget [Xm,Ym] for any nominal budget with a particular slope -px/py.
Note that this bundle is what the market itself, through prices, ‘makes’ equal, irrespective of any other values.
4. What I do initially, Viswanathan, is create an example wherein I assume that all consumers have an initial budget that can purchase any bundle along the Exigency function given prevailing prices. {That is not an essential assumption, but it is useful to establish a baseline.} Say those prices are px =0.50 and py = $1.00 [-px/py = -.5], and say there are five consumers, then we can note that the bundle each is purchasing — since all can ‘afford’ any bundle — is different from the market equivalent bundle for most of all of these five consumers. This means that the implicit prices consumers are willing to pay for their bundles differ from the market equivalent prices. For any consumer, Yi/Xi = implicit px/ implicit py. Note that I am not saying anything about preferences. I am saying that the bundles bought by different consumers ‘reveal’ their likes and their dislikes {I.e. do not assume positive preferences for all goods}. Choose any five bundles you wish to. {I use U1sxy = xy -x, U2sxy = xy + y, U3sxy = xy (on the specious assumption that this consumer’s preferences are always equal to the market equivalent bundles for any price ratios), U4sxy = xy -y, and U5sxy = xy + x. These give me the initial points [4,3], [4.5,2.75], [5, 2.5, i.e. Ym = px/py Xm], [5.5, 2.25] and [6.2] respectively. [s stands for subjective likes and dislikes.*You can, if you wish, ‘create’ positive preference functions from those points, of course, but I don’t accept any part of preference theory nor indifference analysis.] Now introduce a rise in the price of X or Y, or both. You will immediately see that to continue to purchase the same amounts as before requires each consumer to budget more. But, perhaps some cannot.
5. You can aggregate these points and show that the market will clear. Or, you can take other points and show that the market won’t. [I have abandoned equilibirium analysis as at all useful for practical economic analysis.]
6. And don’t forget that ‘firms’ are ‘consumers’ with needs for inputs related to their techniques of production and expected sales at expected prices.
7.Good luck, Viswanathan. Develop this! Stay empirical always.
Yes, Larry, it is sad that discovery of quinoa by people in wealthy countries has made a staple unaffordable. Is there some reason it can’t be grown elsewhere? I didn’t see that mentioned in the article you provided a link to.
Enforced austerity for all but a few is an old system. What is being done by those at the top is gradually becoming understood as crimes against humanity and Earth. Baltasar Garzón is the Judge who arrested Pinochet for crimes against humanity. He says the legal arena of crimes against Earth’s life support systems will become a major aspect of law in less than ten years.
Crimes against Earth are against all life and thus include humanity. Interference with focus of distributed human intelligence on global ecological collapse is also a crime against the future.
My impression is of a need to establish base line data. What would be the change in negative social and environmental impacts from, say, changing advertising from a business expense to free speech. What are the social economic changes of this one little step toward rational organization?
It could be urban legend, yet I have read that eliminating most meat from our diet is more positive environmentally than driving an electric car.
We know that a modern fully educated society experiences a gentle population decline. Even so, most economists are not thinking about how a successful economy with declining population and resource use per capita might function. Why aren’t economists explaining the benefits of eco bounce back from reduced Earth stresses that would be shared by fewer and fewer as Earth’s bounty returns to past glory.
Do economists think that rich corporatists are the only way into space?
Intellecually churning reding
It’s meant to be a start towards a scientifically, properly empirical economics.
I am not sure why people insist on empirical aspects so strenuously. An experienced human brain can look at the arch of a bridge or roof and pick the strongest by beauty. An engineer can spend many hours proving the human brain picked correctly. Yes, it is a good idea to check empirically on things like bridges and roofs, even so, verbal logic describing almost instantaneous brain calculation remains important even to astrophysicists.
I do insist on verbal logic, Garrett.
Take ‘utility’ for example. Utility as a percept amounts to an ambiguous vagary :: a syncretic notion rather than a concept :: that we get ‘something’ when we consume goods and that this getting ‘something’ from consumption means that we must be ‘better off’ after getting ‘it’ than we were ‘before’ our having gotten ‘it’ whatever ‘it’ is. Mathematizing this ambiguity serves to operationalize getting ‘it’ and maximizing ‘it’, whatever that ‘it’ may be.
‘It’ is not only undefined, but tries to identify as equal any benefits from the use of goods to provide for needs and wants with obtaining some level of satisfaction with having any benefits at all from use. ‘Utility’ is then very liquid, having one meaning at one time and another at another time. Such a vague notion is not a concept. It occupies no conceptual space whatsoever.
Utility cannot be both a benefit and a satisfaction if ‘satisfaction’ has anything to do with having obtained a benefit. Not can we say that a starving person who can only purchase a grain of rice will be ‘satisfied’ with the level of benefit that grain of rice provides.
Benefit or satisfaction? Well, Henderson and Quandt, for instance, talking about utility and its maximization, talk about having open heart surgery as beneficial though it is clearly not a ‘satisfying’ experience in itself. “The assertion that a consumer derives more satisfaction or utility from an automobile than from a suit of clothes means that if he were presented with the alternatives of receiving as a gift either an automobile or a suit of clothes, he would choose the former. Things that are necessary for survival—such as a vaccine when a smallpox epidemic threatens— may give the consumer the most utility, although the act of consuming such a commodity has no pleasurable sensations associated with it.” (p.5, Microeconomic Theory: A Mathematical Approach, McGraw Hill Co., 1980).
Note here that Henderson and Quandt have removed exchange itself by introducing the automobile and the suit of clothes as ‘gifts’. The implication is that the preferences of consumers are ‘stand alone’ and independent of market prices per se. That may be the case, but exchange values very much affect what can be purchased irrespective of one’s ‘preferences’ about what one would like to have.
In reality, both the kind of automobile or suit that can be afforded very much depends upon what one can afford to budget–which is related to one’s income or wealth on which abilities to borrow also rest. So items purchased by consumers might not accord with their preferences whatsoever, especially when having to purchase and having the ability to purchase come into play. Markets do not ‘gift’. Whereas a choice between an automobile and a suit of clothes might show a preference for one relative to the other if one is choosing between gifts, Henderson and Quandt’s removal of exchange at market prices glosses over the impact of having to formulate budgets with which to purchase out of income, not to mention other factors which enter into budget formation decisions. In other words, they gloss over ‘ability to pay’, and the impacts and effects of ‘inabilities to pay’ for one’s preferences in monetary economies.
Not everyone thinks like Henderson and Quandt, however. The late Milton Friedman has written some impressive gobbledygook writing about ‘utility’. This is what he had to say:
“[We] shall suppose that the individual in making those decisions [choices about what goods to buy] acts as if he were pursuing and attempting to maximize a single end. This implies that different goods have some common characteristic that makes comparisons among them possible. This common characteristic is usually called utility. Utility is sometimes confused with usefulness, which is a misunderstanding of the concept. +We observe that people choose; if this is to be regarded as a deliberative act, it must be supposed that the various things among which choice is made can be compared; to be compared they must have something in common.+ Because we name this common characteristic utility, it does not follow that the common characteristic is to be identified with desirability. The function that enables us to predict how a consuming unit does behave is not necessarily that same as the function that would tell us what was desirable.”/[ Milton Friedman, Price Theory, 2008 edition, p. 35.]
Let me translate into plain English. Friedman says, “Let’s start with a supposition: namely that people buy things as if they were pursuing a single end. If so, this implies that goods have a common characteristic: utility; er, a common characteristic which we infer exists. This utility is not to be confused with usefulness. Furthermore, it ought not to be confused with desirability.”
No one, including economists, has ever found this common characteristic that all goods, by implication from his supposition, must have.
Friedman continues: “Let’s now say that we can presume that there are mathematical functions connected with this common characteristic. These functions enable us to predict how a consuming unit does behave.”
This entails imagining that such mathematical functions could exist apropos this common characteristic which Friedman presumes exists. This is a presumption about a presumption. It serves to quantify the presumption that the individual acts as if he were pursuing and trying to maximize a single end.
I’ve never noticed that people buy things as if they were pursuing a single end. I think they have different ends in mind when they purchase a hamburger, a bus pass, a birth control pill, a camera, an i-phone or a rowboat. I could be wrong, of course. There might be some common characteristic between these, one that only Chicago school economists can quantify because of their training. But, I doubt it.
I think people have different purposes or goals or ends in mind when they decide to purchase such different things. I think it’s foolhardy to presume otherwise.
So, I agree with you about abstraction and its use in science … but subjective preference theory based upon a vague impression of ‘utility’ is not even verbally logical. We cannot base any useful economic theory on it.
With respect to my quoting’ Friedman as gobbledygook.
Note also, Garrett, that Mr. Friedman took pains not to tell his readers what utility ‘was’; only what it “wasn’t”. It is a common characteristic about which we have no description nor definition. And, interestingly, although he begins his paragraph with an individual–a ‘he’ who makes choices– he ends it with a consuming unit whose behavior can be described by mathematical functions which enable us to predict how this ‘consuming unit’ behaves.
He is no longer talking about how people behave. He is talking about how his ‘consuming unit’ behaves. He hasn’t proposed that any mathematical function might exist to enable us to predict people’s choices about buying food, a bus pass, a birth control pill, a camera, an i-phone or a rowboat as if they are maximizing a single end. That would be ridiculous.
Instead, he has fabricated a consuming unit out of his imagination. These can ‘behave’ any way one wishes them to, so he’s perfectly entitled to imagine that mathematical functions apply to the behavior of his creations which act as if they maximize a single end: namely, an imaginary common characteristic he’s deemed all goods to have.
Consuming units can go awry without full information. One can tell by simply looking around. So we see price and budget informed by real cost communicated via scientific currency as leading in a healthy direction for scientific inquiry?
Vivir bien is a term for this in latin america. Balance with Earth and live well. Autonomous democracy is part of the information age, we are going where no human has ever gone and finding what we already know. Vivir bien.
“Prices are often not the rational result of the activities of rational market participants but rather the expression of power relations.” -Christian Felber (I don’t know where I copied this from. And, clearly, I felt it useful to copy.)
Why do I think this is important?
Well, in part, because I regard economic rationality in much the same way as the Greeks: As managing to provide for one’s needs individually and together, in a manner that deliberately plans for the best possible outcomes given one’s resources while trying to avoid worse outcomes.
Money is one of those resources. But, if prices often express power relations, so does the distribution of income. And I infer from this that simply changing the unit of account doesn’t necessarily change prices, power relations, or the distribution of income.
In short, more than merely the unit of account has to change.
That’s where I think we differ. There’s a movie “In Time” 2011 where units of time are the unit of account but where power relations determine prices. I recommend it not for its quality as a movie, but for its message. I think you might enjoy it as the science fiction with a social message that it is.
I, too, would like to see a scientific currency that takes into account benefits and costs both to individuals and society. But, frankly, I don’t see economists understanding money as a medium of exchange or store of value or standard of deferred payments. They mostly don’t have a clue about how money alters exchange systems, how budgets are formed out of income, or about how how money itself can operate to disguise the true costs of production and consumption in non-monetary units of account. This means that, until we have developed a better understanding of how ‘any’ money operates, and until we start taking into account non-monetary units of account for measuring individual and socio-economic welfare, we won’t necessarily be changing much merely by changing the unit of account.
I’ve enjoyed our discussion, Garrett. Thank you.
Thank you, too, Larry. With respect for your clarity, I include a source you may enjoy. from the Salk Institute and UT Austin. http://zerowastenews.org