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Stiglitz vs. Summers

from David Ruccio

Two giants of mainstream economics—Joseph Stiglitz and Lawrence Summers—have been engaged in an acrimonious, titanic battle in recent weeks. The question is, what’s it all about? And, even more important, what’s at stake in this debate?

At first glance, the intense, even personal back-and-forth between Stiglitz and Summers seems a bit odd. Both economists are firmly in the liberal wing of mainstream economics and politics—as against, for example, Gene Epstein (an Austrian economist, who accuses Stiglitz of regularly siding with left-wing populists like Hugo Chávez) or John Taylor (a committed supply-sider, who has long been suspicious of “demand-side discretionary stimulus packages”). Both Stiglitz and Summers have pointed out the limitations of monetary policy, especially in the midst of deep economic recessions, and have favored relatively large fiscal-policy interventions, a hallmark of mainstream liberal economic policy.

One might be tempted to see it as merely a clash of outsized egos, which of course is not at all rare among mainstream economists. Their exaggerated sense of self-importance and intellectual arrogance are legion. Neither Stiglitz nor Summers has ever been accused of being a shrinking-violet when it comes to debates in the many academic and policy-related positions they’ve held.* And there’s certainly a degree of personal animus behind the current debate. Apparently, Summers [ht: bn] successfully lobbied in 2000 for Stiglitz’s removal from the World Bank, reportedly as a condition of the reappointment of Jim Wolfensohn as President of the World Bank. And, in 2013, Stiglitz came out strongly in favor of Janet Yellen, over Summers, for head of the Federal Reserve.**

That’s certainly part of the story. And the personal attacks and evident animosity from both sides have attracted a great deal attention of onlookers. But I think much more is at stake.  

The current debate began with the critique Stiglitz leveled at the notion of “secular stagnation,” which Summers has championed starting in 2013 as an explanation for the slow recovery of the U.S. economy after the crash of 2007-08. The worry among many mainstream economists has been that, given the severity and duration of the Second Great Depression, capitalism could no longer deliver the goods.*** In particular, Summers invoked the specter of persistently slow growth, which had originally been put forward in the midst of the first Great Depression by Alvin Hansen, created by demography: the decrease in the number of available workers, itself a result of the declines in the rate of population growth and the labor force participation rate. The worry is that, looking forward, there simply won’t be enough workers to sustain the rates of potential economic growth we saw in the years leading up to the most recent crisis of capitalism. In the meantime, Summers, in traditional Keynesian fashion, expressed his support for raising the level of aggregate demand, through public and private spending, even at low real interest rates (which, in his view, were incapable of fulfilling their traditional role of boosting spending).****

Stiglitz for his part has dismissed the idea of secular stagnation, as “an excuse for flawed economic policies” (especially the inadequate stimulus package proposed and enacted by the administration of Barack Obama), and put forward an alternative analysis for capitalism’s slow growth problem: its inability to manage structural transformations of the economy. According to Stiglitz, the shift from manufacturing-led growth to services-led growth characterized the U.S. economy in the years before the most recent crash, analogous to the manner in which the crisis in agriculture “led to a decrease in demand for urban goods and thus to an economy-wide downturn” in the lead-up to the depression of the 1930s. Thus, in his view, World War II brought about a structural transformation in the United States (“as the war effort moved large numbers of people from rural areas to urban centers and retrained them with the skills needed for a manufacturing economy”) but nothing similar was undertaken in the wake of the crash of 2007-08.

The Obama administration made a crucial mistake in 2009 in not pursuing a larger, longer, better-structured, and more flexible fiscal stimulus. Had it done so, the economy’s rebound would have been stronger, and there would have been no talk of secular stagnation.

These are the terms of the theoretical debate, then, between Stiglitz and Summers: a focus on sectoral shifts versus a worry about secular stagnation. The first concerns the way the private forces of American capitalism have been inept in handling structural transformations of the economy, while the second focuses on ways in which “the private economy may not find its way back to full employment following a sharp contraction.”

For my part, both stories have an important role to play in making sense of both economic depressions—the first as well as the second. The problem is, neither Stiglitz nor Summers has presented an analysis of how American capitalism created the conditions for either crash. Stiglitz does not explain how the crisis in agriculture in the 1920s or the move away from manufacturing in recent decades was created by tendencies within existing economic institutions. Similarly, Summers does not conduct an analysis of the changes in U.S. capitalism that, in addition to producing lower growth rates, led to the massive downturn beginning in 2007-08. Their respective approaches are characterized by exogenous event rather than the endogenous changes leading to instability one might look for in a capitalist economy.

Moreover, both Stiglitz and Summers presume that the appropriate stimulus project will fulfill the mainstream macroeconomic utopia characterized by levels of output and a price level that corresponds to full employment and price stability. There is nothing in either of their approaches that recognizes capitalism’s inherent instability or its tendency, even in recovery, of generating one-sided outcomes. For Stiglitz, “the challenge was—and remains—political, not economic: there is nothing that inherently prevents our economy from being run in a way that ensures full employment and shared prosperity.” Similarly, Summers emphasizes the way “fiscal policies and structural measures to support sustained and adequate aggregate demand” can overcome the problems posed by secular stagnation. In other words, both Stiglitz and Summers redirect attention from capitalism’s own tendencies toward instability and uneven recoveries and focus instead on the set of economic policies that in their view are able to create full employment and price stability.

Finally, while Stiglitz and Summers mention en passant the problem of growing inequality, neither takes the problem seriously, at least in terms of analyzing the conditions that led to the crash of 2007-08—or, for that matter, the lopsided nature of the recovery. There’s nothing in the debate (or in their other writings) about how rising inequality across decades, based on stagnant wages and record profits, served to dismantle government regulations on the financial sector (because those who received the profits had both the means and interest to do so) and to propel the tremendous growth (on both the demand and supply sides) of financial activities within the U.S. economy. Nor is there a discussion of how focusing on the recovery of banks, large corporations, and the incomes and wealth of a tiny group at the top was based on a deterioration of the economic and social conditions of everyone else—much less how a larger stimulus package would have produced a substantially different outcome.

The fact is, the debate between Stiglitz and Summers is based on a discussion of terms and a mode of analysis that are firmly inscribed within the liberal wing of mainstream economics. Focusing on the choice between one or the other merely to serves to block, brick by brick, the development of much more germane approaches to analyzing the conditions and consequences of the ways American capitalism has been characterized by fundamental instability and obscene levels of inequality—today as in the past.


*Stiglitz is a recipient of the John Bates Clark Medal (1979) and the Nobel Prize in Economics (2001). He served as the Chair of Bill Clinton’s Council of Economic Advisers (1995-1997) and Chief Economist at the World Bank (1997-2000). He is currently a professor of economics at Columbia University (since 2001). Summers is former Vice President of Development Economics and Chief Economist of the World Bank (1991–93), senior U.S. Treasury Department official throughout Clinton’s administration (ultimately Treasury Secretary, 1999–2001), and former director of the National Economic Council for President Obama (2009–2010). He is a former president of Harvard University (2001–2006), where he is currently a professor and director of the Mossavar-Rahmani Center for Business and Government at Harvard’s Kennedy School of Government.

**My choice, for what it’s worth, was Federal Reserve Governor Sarah Raskin.

***As I explained in 2016, contemporary capitalism has a slow-growth problem—”because growth is both a premise and promise of a particularly capitalist way of organizing our economic activities.”

****An archive of Summers’s various blog posts on secular stagnation can be found here.

  1. October 10, 2018 at 2:40 am

    Thank You

    “There is nothing in either of their approaches that recognizes capitalism’s inherent instability or its tendency, even in recovery, of generating one-sided outcomes.

    “Finally, while Stiglitz and Summers mention en passant the problem of growing inequality, neither takes the problem seriously, at least in terms of analyzing the conditions that led to the crash of 2007-08—or, for that matter, the lopsided nature of the recovery.”

  2. October 10, 2018 at 7:58 am

    A good summery of an interesting debate. Heterodox economists who are always criticizing methodological problems of mainstream economics are required to propose a third interpretation / understanding on the actual state of American economy. Similar analysis is also possible for European and Japanese economies which are also stagnating roughly speaking.

    A point of my doubt on David Rucio’s argument is the very place that Garrett Connelly has cited (first citation). I admit that the present capitalism has some “inherent instability or its tendency”, but pointing this is not sufficient. We should also show why capitalism (or national and world-wide economy) normally works sufficiently well. We have to present a theory that can explain both aspects of capitalism (instability and stability). We must explain how and where the economic situation in an aspect changes to the other aspect.

    • Frank Salter
      October 10, 2018 at 2:17 pm

      You are correct in the necessity to explain stability and instability. It is NOT possible to do this is terms of current analysis, both mainstream and heterodox. Only transient analysis will provide a valid explanation of this.

      • October 10, 2018 at 8:20 pm

        I am proposing process analysis in opposition to equilibrium analysis. I cannot imagine well what you mean by transient analysis. Is it analysis that analyzes transient to an equilibrium?

      • Frank Salter
        October 11, 2018 at 10:40 am

        Transients occur when some driving force changes. The mathematics are described by differential equations. The changes occur over time hence the terminology transient. In principle, all other things being equal, equilibrium will be only
        achieved after an infinite period of time but in practice a state indistinguishable from equilibrium will be achieved far sooner. However, in a complex environment, other things will have changed and the state will be altering in time. These are transient changes.

        Equally, transient conditions will be present in any valid “process analysis”. It is how they change in time which is important. This is what I mean by transient analysis.

      • October 11, 2018 at 10:05 pm

        Dear Frank Salter

        Are you thinking that economy approaches to equilibrium (normally very rapidly within “relaxation time”: your “far sooner”)? If external shocks [your other things] comes rather intermittently, this process is almost always at equilibrium, which shifts from time to time. This is quite similar to what J. R. Hicks called shifting equilibrium (Some others called moving equilibrium). My process analysis does not suppose equilibrium state. There is no such imaginary equilibrium state in the real economy. Consequently, there is no transience.

      • Frank Salter
        October 12, 2018 at 9:37 am

        Dear Yoshinori Shiozawa

        So far, there is no reason to believe, that economies have ever achieved any state of equilibrium. Equilibrium is hypothesised or assumed as the device which eliminates the necessity to deal with differential equations. It is not supported by the empirical evidence. Continuing technical progress makes what would be the equilibrium solution change continually. Other real human decisions, which are continually being made, create economic cycles which add further complexity to economic development and growth. I think Hicks misidentified what occurs in reality.

        On your “There is no such imaginary equilibrium state in the real economy. Consequently, there is no transience.”:
        If all technical progress, population growth etc. were to stop then a single equilibrium solution would prevail. Without this, economic growth and development will continue to develop over time — transient behaviour.

    • October 11, 2018 at 10:20 am

      Yoshinori, I am disappointed you seem to have closed your mind to my third, fourth and fifth interpretations of an [Americanised] economy in the paper I sent you some time ago, though that was aimed at an alternative system, not the specific issue of stability and instability. Garrett of course sees the stability in the rich getting richer and the destabilising effect that is having on ordinary people’s lives, which is probably the opposite to what you have in mind.. But in fact I had already dealt with the problem here recently, discussing my Wheatstone Bridge “third interpretation” of an economy (the first being exchange and the second simple monetary circulation). I repeat the first para for convenience:

      “October 10, 2018 at 9:41 am Reply
      Agreed, “Chicago economics is utterly and completely wrong”, but equilibrium as an AIM is not arrant nonsense, and if we are using the world’s resources faster than they can be replaced, nor – terms of rigorous physical principles – is austerity nonsense. The problem lies in the use of the wrong physical principles. IF the economy could be reduced qua Samuelson to a circular flow of money, growth in the flow is non-equilibrium and adding resistance to the flow to reduce it again looks like an easier solution than addressing the cause of the growth. But the economy cannot be reduced to a CIRCULAR flow: it is a flow through a network reducible minimally to parallel circuits in the form of a WHEATSTONE’S BRIDGE, in which non-equilibrium is independent of the driving force but can be brought about by raising or lowering any of its resistances. This changes the DISTRIBUTION of the flow (which is predetermined in a simple circuit) and only trivially its magnitude”.

      “In this circuit, increasing the voltage only increases the voltage across each of the resistors (as in inflation), so to restore equilibrium one has to adjust the resistance [assumed in austerity to be consumption] which has (as Frank puts it) transiently changed its value”.

      Here’s your type of instability in level four terms. The power flows are carrying information that can be detected (and so acted on) at very low power levels, but when the battery runs out the system begins to malfunction.

    • October 17, 2018 at 1:07 am

      Entropy and evolution accelerating geometrically are part of such an analysis. Everything seems fine on a new course after the last instability, even though disturbances to Earth and social health are accelerating. A cusp with unknowable outcome occurs when Earth system friction becomes too large to overcome by austerity plus capitalist ownership of representative democracies choosing short-term financial growth goals.

      I think something like this is going on.

  3. Craig
    October 10, 2018 at 8:44 am

    Excellent point Yoshi. Private Finance Capitalism is unstable because it enforces a virtual monopolistic paradigm of Debt Only for the sole vehicle and form for the distribution of credit/money. Normally this is mistaken as stability because we’ve swallowed the idea of the business cycle and the notion of general equilibrium. Every severe financial crisis has been preceded by a period where Finance, due to the belief that these two factors are “normal” and relatively benign, has taken leave of its moorings and run up unsustainable indebtedness. Keynesians think they can tweak the system into stability with more governmental spending and libertarians and conservatives think they can wring stability out of it by austerity, but neither of these actually does anything to resolve the monopoly paradigm which is at the base of the problem. With AI inevitably reducing aggregate individual incomes, corporate giantism becoming increasingly “necessary” and monetary inequality still considered a norm tweaking and palliatives are not going to bring us back to the relative “stability” of the period before the GFC.

    It requires a new paradigm. One that reflects the heavy handed method of the ancients for dealing with the problem, i.e. debt jubilees and assassinations of those who opposed such, and yet with deeper insight into the digital natures of the pricing, debt based money and accounting systems is more humane, integratively effective and knowledgeable.

    And that new paradigm is Direct and Reciprocal Monetary Gifting.

    • Frank Salter
      October 10, 2018 at 2:22 pm

      The opposite of equilibrium is transient. While debt jubilees are relevant in the present system, correct policies will eliminate economic cycles completely.

    • October 10, 2018 at 8:37 pm

      Dear Craig

      your paradigm is concerned with social and economic policy. I believe there many things to do before talking about policies. Stability/Instability first concerns about understanding what happens in the actual economy.

      • October 11, 2018 at 12:37 am

        Instability is a behavior exhibited by non linear systems. Linear systems achieve steady state behavior which by uniqueness guarantees only one steady solution. The methodology for studying the stability of nonlinear dynamical systems is quite mature. Favorite examples are Euler column buckling and stability of fluid flows as a parameter like Reynolds number is varied. The coupled nonlinear governing equations derived by Steve Keen are like those for modeling predator/prey population dynamics. The problem isn’t lack of tools. The challenge is getting main stream economists to even consider these nonlinear dynamic systems approaches. Astonishingly the status quo is no dynamics, ie no Ordinary Differential Equations, so no coupled ODE, and obviously no nonlinear coupled ODE. Since each of these three levels of analysis requires a significant buy in of years of study, the chance Krugman or Summers or Stiglitz is going to do this is about nil. And ego wise, what is the chance these men would suffer the ignominy of tutelage at Steve Keen’s knee?

      • Craig
        October 11, 2018 at 4:23 am

        Yoshi, Well, I disagree. As I have pointed out here numerous times a paradigm is a single concept that represents and creates an entirely new pattern….whose logically derived policies…simply follow from it. Consequently, discovering that single concept….is everything policy-wise.

        In fact, as I have also pointed out here numerous times the fact that the best heterodox and progressive economists suggest policies based upon and reflective of aspects of grace as in monetary Gifting…and yet do not have but the foggiest notion of the aspects and/or definitions of that philosophical concept… demonstrates why their follow through policy thinking is handicapped and incomplete.

        As Maslow and other trans personal psychologists have pointed out self actualization/personal knowledge of a philosophical concept is normally very difficult if not impossible when one’s level of personal (or in this case economic) reality is consumed by insecurities, conflicting theories/data and doubts.

        And that is why and where the integrative mindset and mental skill sets of wisdom/paradigm perception become so important because mentally they require, combine and habituate “looking through both ends of the telescope”.

        As for what is “actually going on in the economy” I couldn’t agree more. And what could be more focused on the moment to moment goings on in the economy than the codified and classified exchanges of buying and selling recorded by double entry bookkeeping? What could be more informative than the fact that the pricing, debt based money system and double entry bookkeeping are all digital in nature, that is equal amounts of debits and credits sum to zero, as does equal amounts of free and available money and prices and equal amounts of money and debt? And if one wants to have an effective monetary and economic policy then would it not be best (digitally) implemented at the terminal summing point for all costs and so all prices for any item or service in the economy as well as at both the terminal ending point for the entire legitimate economic/productive process and the terminal expression point for all forms of inflation? Such summing, ending and expression points have powerful aggregative, algebraic/arithmetic and problem resolving effects.

      • October 11, 2018 at 5:11 pm

        Peter, I completely agree with you, but where you talk about coupled equations I’d seen the Wheatstone Bridge circuit (to give the configuration an accessible name) decomposing into four separate circuits which with a common power supply are coupled by each circuit sharing a side with another. If we can separate the variables, will we need the complex mathematics?

        With the system operating on personal credit rather than system-wide borrowing the monetary needs of the four circuits – consumption, reproduction, distribution and development – can be treated independently, and reproduction needs determined (in the information age, for each product) by consumption rather than needs for income and profits. New developments likewise, being financed by personal credits, can be motivated by rewards for good work, and mass-produced only when this is beneficial. Non-linearity reduces to “rubber” topology, which still emphasises doing things in the right order.

        Craig, a paradigm is not a single concept. It is rather the embodiment of a system of concepts: an example like Newton’s cosmology in which one can observe the interaction of the variables – here position, change of position in time, rate of change of position in time (acceleration) and the force generating (or as Young put it, controlling) the acceleration (in that case gravity).

        Are you not still thinking monetary system wide rather than person and product wide when you say “And if one wants to have an effective monetary and economic policy then would it not be best (digitally) implemented at the terminal summing point for all costs and so all prices for any item or service in the economy as well as at both the terminal ending point for the entire legitimate economic/productive process and the terminal expression point for all forms of inflation?”

      • Craig
        October 11, 2018 at 7:13 pm


        As I have repeatedly said here it is BOTH a single concept AND an entirely new pattern….created by that single concept and the logical and relevant policy applications of the single concept’s aspects throughout the system/body of knowledge/area of human endeavor that the paradigm applies to.

        A digital policy of a 50% discount for every product and service at the point of final retail sale immediately doubles everyone’s purchasing power. In other words where a person yesterday had to spend $100 to buy $100 worth of goods now they have $100 worth of goods and still have $50 left in their pocket that they can either save or buy their wife a huge bouquet of flowers and a boatload of snickers bars.

        So what’s not to like about that from an individual perspective?

        And of course the rebate of the $50 discount back to the retailer giving the discount makes him/her whole on their overheads and profit margins so they are not harmed in any way by the discounts they give….and of course they’re benefited by the fact that twice as much actually free and available individual incomes now exist…to become someone’s business revenues. It’s all upside for every agent individual and commercial and for the system as a whole.

        Finally, as the policy is implemented at the terminal expression point for all types of inflation, hyperinflations do not occur except under catastrophic circumstances and garden variety inflation is “good” at 2-3% this single policy has miraculously (from an orthodox non-paradigmatic economic perspective) not only painlessly but beneficially integrated price deflation into profit making systems…..because consumption is the terminal ending point of the entire legitimate economic/productive process for any item or service. In other words you get to eat it, drive it, live in it, wipe your butt with it, text with it or surf the internet with it….and no one has the right to make you pay anything more for it (except Finance which [hint, hint] is additional costs post retail sale).

        Direct and Reciprocal Monetary Gifting is Helio-centrism and Agriculture-Homesteading. And hopefully, if we bump two neurons together and acculturate employment and purpose instead of employment only, action and contemplation instead of almost entirely action then the further paradigm shift from science only to both science and wisdom will enable homo sapiens to emerge from its lingering adolescence and fulfill its species designation of wise and discerning man.

      • Craig
        October 11, 2018 at 9:03 pm

        Just wrote this on my blog wisdomicsblog.com which enlightens the spectrum of what lack of integration can result in:

        Kanye and Bannon/Trump Compared

        Kanye West’s oval office rant today dramatizes what lack of mental coherence/integration results in, and also shows what even the well read intellectual erudition without the insight of wisdom looks like in people like Steve Bannon and Donald Trump.

        Kanye’s rant was an incoherent unintegrated throwing together of problems that was confused and confusing. It was however an aglomeration which is what a paradigm/pattern looks like without the core concept that lends it coherence and elevates and transforms it into an actual new paradigm.

        Bannon and Trump’s “fourth turning” beliefs are actually the same thing with a patina of erudition but no real insight or paradigm perception because they confusedly believe that the chaos of bashing ideas together to the point of political and social polarization rather than the wisdom of integrating the truths in opposing perspectives will result in good….instead of more confusion, chaos and (idiotically and probably unconsciously) perhaps an opportunity for demagogues and tyrants to take control and suppress the populace afterward…..in the name of control and “progress”.

        Kanye, Bannon and Trump. Birds of a feather flock together.

  4. Stefanos Skiadas
    October 11, 2018 at 3:24 pm


    There are several mistakes in your statements:

    1) Instability is BOTH a phenomenon exhibited by linear and non-linear systems! This is well known and is taught to 1st year engineering students for the last fifty years or so.
    Example: a simple integrator is a Linear, Time Invariant system. Yet is a BIBO (bounded input bounded output) unstable system since a bounded input produces an unbounded output (try putting a constant signal in it and see what comes out…). There are several other notions of stability/instability of systems (eg, asymptotic stability., Liapunov stability etc) they ALL refer to BOTH linear and non-linear systems.

    2) Dynamical systems need not be described by differential equations only; they might as well be described by difference equations in discrete time. This has been done long time ago even in the Economics literature.
    See for instance the book “Monetarey Economics” by Godley and Lavoie where a number of
    I do not agree at all with Keen’s explanation/motivation that ODEs are more flexible in building models compared to discrete-time difference equations (in any case their numericla solvers actually discritize them in order to solve them…)

    • October 12, 2018 at 1:58 am

      Clipping is not an instability, it’s just a saturation effect. My experience is with hydrodynamic stability. In this type problem one starts with a “basic state” which exactly satisfies the line arises governing equations. For example plane Poiselle flow between two spinning cylinders. Analytically, one perturbs this basic state by adding a generalized perturbing function to the basic state with a small coefficient. You plug and chug this expansion by substituting the formal perturbation back into the nonlinear equations of motion keeping terms of leading order in the perturbation coefficient. The result is a linear eigenvalue problem having an Eigenvalue whose sign depends on parameters like the rpm of the cylinders. What comes out is a stability criterion which predicts the parametric values that lead to positive exponential growth of the perturbation that agree pretty well with experiment.
      Stability in electronics is defined more commonly for feedback systems involving phase margins given assorted types of temporal lag as signals propagate around the loop. Here I believe you are right that even though all network elements are linear the system can still become unstable. But here the system is still nonlinear because the topology of feedback produces a loop transfer function that is non linear.
      My point is if you have a linear system and you find a solution to that system and that solution is steady (even if it’s dynamically steady like sinkt) you can stop looking for other solutions by uniqueness, but if you have a nonlinear system and you find one steady solution you don’t know that’s the only solution and you don’t know if that solution is stable. It could be that first solution is unstable and it will evolve toward another solution all of which becomes possible only because of the nonlinearity.

    • Frank Salter
      October 12, 2018 at 9:47 am

      It may be worth adding that analytical solutions to partial differential equations are rarely available. Numerical solutions using difference equations which approximate the differential equations have to be used. With sufficiently small intervals, the numerical solution obtained is indistinguishable from the unobtainable analytical solution.

  5. Yok
    October 11, 2018 at 10:32 pm

    Let people work for themselves. Re-distribute income downward. High inequality leads to an economy built around serving wealth, not themselves. It’s the injustice.

  6. October 15, 2018 at 9:07 pm


    Are you saying that Stiglitz’s books, specifically on inequality, in the the US and another on global inequality didn’t meet your test of a good presentation, and solutions for the problem?

    How so?

    Meanwhile, here’s my sense of American agriculture in the 1920’s from my own readings, and not from any particular author or “school” of interpretation, other than I’ve repeatedly written that if one wants a good lesson in the glories and troubles of capitalism, the history of American agriculture is a good primer.

    Here’s why: it was an very interesting mixture of mixed and diverse local production, non-specialization for the first frontier farms, but also right out of the colonial gate, specializing in the Tidewater and the South in products for the global economy of the era, based on slavery: tobacco, rice, cotton, sugar…with a heavy trade in salted fish, horses, cattle and timber going to the Caribbean colonies of Europe…the percentage engaged in farming and American deforestation peaked about 1850-1860, and the history of the late 19th century was of vastly increased production – and slowly but steadily declining number of farms…as the world entered the globalization of the late 19th century up to the 1st World War the wheat, wool and cotton of Canada, Eastern Europe, the Ukraine, Argentina and Australia keep pushing commodity prices down – 30 years of deflation – a “Great Deflation” and in the American South, and shockingly elsewhere too, sharecropping and tenant farming reaching surprisingly high percentages of farms – in the 40% range or more.

    Low commodity prices, income going to larger mechanized farms, more and more machinery – and very little electrification certainly suppressed the level of demand in rural areas, relatively and absolutely…as was becoming apparent by the late 1920’s…it was pretty crazy in the New Deal to read about the Right wing press attacking the destruction of over-produced crops – especially cattle and hogs, since there were no organized agencies, “no agency” – public or private to round-up, slaughter, store and distribute the surplus to citizens who had no means to pay for it: a great case of the hypocrisy of the Right and the Libertarian models.

    The New Deal answer of raising commodity prices by controlling – limiting – production never did get to the most needy, the sharecroppers and tenant farmers, as the Socialist left pointed out to FDR, especially Norman Thomas…on the whole the Alphabet Soup of ag programs of the New Deal helped the already dominant ag players, the affluent farmers represented by the Farm Bureaus and the Grange…the programs, although funded and designed nationally were run locally in a fairly democratic process, if you acknowledge that it left the tenant farmers and sharecroppers portrayed by Dorothea Lang and “Let Us Now Praise Famous Men” out of the political “picture.”

    As famous historian Richard Hofstadter has pointed out, American farmers did better when they became a “special interest,” after the New Deal, in the postwar pluralist lobbying world in DC, than they had fared in their most politicized days of the Populist Revolt and the WJB uprising in 1880-1896. I guess that’s one way to address an economic problem: eliminate the mass of producers, survival of only the most efficient and usually the largest. Hard to say that isn’t a characteristic of our times too, in many different areas of production…old and new…

    Increased specialization, huge capital and chemical input thresholds, and vastly declining numbers of farmers, alongside higher output – characterize their situation today, farmers, with a Greek chorus of the ecological left chanting “ruining the soil (washing away, depleted organisms), carbon intensive fertilizing, Gulf Dead zone generating, and species depletion, including old genetic types of “heirloom” crops…other than that…things are fine. I’ll spare everyone a history of the Wendell Berry back to the land revolt, the farm to table uprising…because it is still unclear if it is a serious hobby or a serious economic challenge to the ways of Big Ag, Big Chem and Big Subsidies.

    In Great Britain, the “Moth Snowstorm” and German research has accused European Union ag practices, similar to what I have outlined above, for destroying insect populations – dramatically. So what you say. Read E.O. Wilson for the “forecast” of what that means.

    In so many ways, American agriculture in the 1920’s was an alarm bell ringing but not registering, and I’m not sure its a stable world yet today unless one listens to the Secretary of Agriculture.

    • David F. Ruccio
      October 15, 2018 at 9:48 pm

      Yes, Stiglitz has written quite a bit about inequality, certainly much more than Summers and most other mainstream economists. But he never analyzes rising inequality as a cause of the crash of 2007-08 (or, for that matter, of the first Great Depression). That’s the piece that’s missing from his work and from the Stiglitz-Summers debate.

      • October 16, 2018 at 4:41 pm

        thanks for clarifying David. I need to go back and look more closely at the two works I mentioned to track down the point you made: deploring rising inequality but not assigning it a role on the great economic turmoil since 1987…or better, since 1997-1998, the clearest signs that all was not well.

        I should add that one of the great problems facing the economic left in America today is explaining for the public the dichotomy, incongruity of the good “official” statistics, and the underlying tight rope walking of so many, without savings, capital or decent earnings, even if they have a job, everyone waiting to see what the next downturn, crisis will bring.

    • October 16, 2018 at 1:31 am

      “I guess that’s one way to address an economic problem: eliminate the mass of producers, survival of only the most efficient and usually the largest.”

      You are closing in on this. The word efficient used in modern capitalist agriculture describes a tax subsidized technology that poisons life and mines top soil. Yes non traditional mechanized chemical agriculture supplies superstores with products packaged in a one way flow of plastic paid for by consumers. Even so, many people are rejecting capitalist agriculture as a viable future option. Good for you.

      • October 16, 2018 at 4:58 pm

        Thanks Garrett: I’m not all the way there yet. The dominant opposition to the economic status quo out here in the red-state part of rural Western Maryland, whose fate fits so well, so sadly, with other parts of de-industrialized/resource extraction parts of the old economies in America, is back to the land, farm to table, organic farming, de-centralized energy production and sympatico activities. The irony is that our gubernatorial election between a moderate Republican (relatively speaking, if that’s possible) and a confused Bernie Sander’s backer/Venture Capitalist, Ben Jealous, is turning upon this old, familiar axis of political economy: Larry Hogan, the Republican incumbent, did not raise taxes like the bad O’Malley “tax and spend Dems…” … and Jealous has been painted into this ancient corner of the spectrum, going back to 1978, Proposition 13 revolt in sunny California.

        Thus as much as the green left wants this campaign to be about an environmental big adjustment to meet global warming, the campaign is actually being fought on the intellectual terrain least congenial to them. Jealous has not done a good job of explaining to the cautious people of Maryland just how he will get Sanders progressive policies done in balanced budget Maryland.

        And speaking of household budgets, our local food co-op, just up and running, will be selling a delicious loaf of locally sourced and baked sour dough bread for $7.00 a loaf this week. I was tempted, but used to get something pretty good at Trader Joe’s for $4.00 a loaf back in the DC Metro Area, and the price of a Peperidge Farm “Farmhouse Oatmeal” at Wal-mart was $2.87 – and that’s what I bought…if you get the drift here.

        Some of the good progressive economic ideas out here are missing the scope of population and income demographics that would support their hopeful ideas and enterprises. It’s a broader problem of the economy, one FDR and the New Deal knew they faced in trying to bring the South, especially the rural South, into the mainstream of American economic life…They made progress, but not on race and you know the rest of the story: federal subsidies on oil and gas, ag crops, and the Cold War military bonanza helped build the South and the West.

        So much work to do to reach rural red state America with an better mix than “Trumponomics.”

  7. October 17, 2018 at 1:53 am

    To; gracchibros
    October 16, 2018 at 4:58 pm

    Yes, I understand your bread price calculation as the exact same one a musician friend also explains to me, quite patiently. (I gave up bread over the mental strain associated with bread savings).

    We are definitely considering why austerity squeezes us to what we can afford. Enter the local young family star-eyed with desire for your good health and seven dollar bread for the health of Earth. Plus, they have a baby on the way.

    Is there a calculus that differentiates for us? How much does life really cost? Specifically.

    Econo has lost sight and we need to find ways ahead. They are small, like the savings experienced when washing a vegetarian’s plate with cold water. And the freight saved when using a local luffa sponge to wash the dishes instead of a capitalist dishwasher. Or decomposing plastic sponge particles that mimic plankton upon reaching the sea.

    After actual and induced austerity reduce our demand to some sustainable level and we survive cannibal capitalist panic; Will economics be able to help us dig out from the rubble? I think so, if we pay attention to entropy and learn to surf accelerating evolution.

    I have a fiction about this, it’s future fantasy, A young economist couple and an entropy wave thesis http://www.zerowastenews.org/chapters-web/Pacifica-ch6.html

    Independent green socialist is different than Ben Jealous. He doesn’t wish to recognize that Bernie’s identity was a problem for us ordinary humans when Bernie folded without asking. Yes, we send personalities to carry the message of distributed intelligence. Both Ben and Bernie need to listen better. Cosmic powered biology is gigantic, mortal individuals can see Cosmos. The interesting ones listen to distributed intelligence and also engage with it. Something cool is happening. RWE is part of it. Thank you.

  8. October 18, 2018 at 7:47 am

    The best I can say about both Stiglitz and Summers is they are adventurers attempting to save a decadent and cold-blooded second rate-theory and doing the job poorly.

  9. October 18, 2018 at 5:35 pm

    To David and All:

    Keeping up with this, it triggered my memory of an article by Summers, sometime over the past 6 months or so, where he was asked to address the anger, unhappiness of rural red state working class Americans. I’ll post the link when I find it again…

    In contrast to what I wrote above about the New Deal attempting to address the problems of the American South, so obvious to any attuned observer in the 1930’s that they were the “sick man” of America, racial troubles compounding the poverty all around, with many white tenant and sharecroppers as well (Let us Now Praise Famous Men…) Summers panned a regional approach to aid for our current circumstances, and instead – don’t have it all at my memory’s tip, but the portion I remember was him writing about wage/worker subsidies to be paid to the employers/companies. That struck me as the old Summers…

    I’ve been recommending a universal CCC/WPA “guaranteed jobs program,” nationally funded, locally developed projects, of which there should be no shortage because the needs and neglect are so great, human and to the natural world’s destruction, plus regional public development banks to fund some of it. Heavens knows, as any rural drive through the old small towns and cities would show, there are hundreds of thousands of abandoned buildings, whole streets, neighborhoods, hell, Main Streets which are literally falling down…and much work to be done in either tearing down, boarding up or rehabbing the salvageable ones…

    What is it with Summers and the old Clinton crew that they seem to have an intellectual gag reflect at the very thought of anything that looks like the New Deal, even as we know that a green New Deal isn’t going to look exactly like the old one – I’m talking outlines, and inspiration, not exact models?

    As Martin Wolfe wrote me about a year ago in response to one of my postings and Email blasts on similar themes, what’s wrong with Social Democrachy in Europe…”‘You can’t swim in the same river twice.'” True enough, but the current runs, most of the time in the same general direction, with some channel jumping. And the dead zones, and literally, in America, the bodies, pile up at the mouths when the streams have been polluted by the intellectual detritus of the past 40 years.

    • October 19, 2018 at 11:19 am

      Gracchibros, despite what you may have heard, the problems facing the USA and UK by the end of the 1960s were monumental. These were economic and industrial policy, political direction, infrastructure, education, and a whole range of daily living problems. These were mostly the result of both nations living off their past accomplishments after World War II. Neither nation did much to correct these problems after the war’s end. Thus, they festered and grew worse. New governing strategies were invented, infrastructures and education recreated, and poverty and homelessness attacked around the world. But not in the USA or UK. Assuming what they had was still functioning well and needed no updates both countries spent money and time on stupid wars and pointless political fights. When the situation could no longer be ignored in the 1970s, both nations looked for a savior. Unfortunately, instead they chose a couple of devils to save them. Margaret Thatcher and Ronald Reagan. The “radical” movements backing Thatcher and Reagan had been looking for a way into political power for over 20 years. They took over with a determination to rule the nations and never looked back. The biggest problem these movements faced was that the ordinary Britisher and American cared little for the ways they proposed to reshape both societies. For most these seemed hierarchical, undemocratic, and too far right politically. Thus, began a massive effort to “reeducate” both nations on the rights and wrongs of economics, politics, and everyday living. Considering that only a few blogs and opinion writers raise any objections when Larry Summers, and many others publish such “crap,” I’d conclude the reeducation work has been exceptionally successful. And Summers’ crap isn’t even near the top of the heap. So, here we are; neck deep in crap, so to speak.

      • October 19, 2018 at 3:57 pm

        Hi Ken:

        No argument from me on what you have written; I can praise some of the approaches of the New Deal not being taken up today, but the whole mood in the US and UK coming into the 1970’s was the upsurge of market loving and libertarian ideas, the freeing of bankers and entrepreneurs from the restraints of the Labor Regime and the New Deal. You could get a good idea of what was coming by listening to Goldwater’s acceptance speech at the Cow Palace in 1964.

        In one of my first post college jobs in American retail, a small chain in a big world of malls, I had a couple of exchanges with a British architect-designer who had fled the iron grip of labor rules. He said he was suffocating under them…this would have been just before Thatcher’s rise – in the early 1970’s. He then preceded to clash with the labor unions building the mall. We’re now at the end of the run of Neoliberalism, and the intellectual stew is quite a jumbo of incongruent ideas, isn’t it? I recommend Daniel Roger’s Age of Fracture to help sort them out; I thought the economic chapters were top rate, by an intellectual historian, not an economist.

        I do see signs of hope on the American left, but the enthusiasm is running ahead of the intellectual coherence, which is why I blew the whistle on Ben Jealous in Maryland. It may be possible to explain how one can be a Bernie Sanders socialist (itself a contradiction to his policies which are FDR Second Bill of Rights inspired) and a “venture capitalist,” but he hasn’t come close to giving the speech needed to pull that off, nothing close to Sander’s Georgetown speech, which still left some gaps.

        Michael Lewis wrote a good piece several years ago bemoaning the state of British politics, speaking of someone could between two worlds, and the best part was not a clear path forward, but how grey and stultifying the Labor dominated British Isles had become by the 1970’s. There’s a good piece in the October 13 edition of the NY Review of Books on Michael Young, the “Red Baron,” on the tribulations of meritocracy in the US and Britain…Written by Kwame Anthony Appiah…helps outline some of our troubles between the rising wave of egalitarianism and the meritocracy…close to the heart of the tensions between Sanders and Clinton. Which have not been resolved by any means – other than a temporary alliance built on hatred of Trump. It’s not enough to govern in our age.

      • October 21, 2018 at 7:49 am

        Gracchibros, agreed, much of what happened in the 1980s and afterwards was the result of a resurgence of libertarianism and marginalism in markets. But not all. Some were the result of out-of-date industrial policies, New Deal based economic policies that no longer worked, the increasing political and economic power of the rich, and complacency among many citizens of both nations. Add to this a large group of war veterans and new professionals who above all else wanted to be left alone to live and work as they pleased. Difficult time for governments, since more and more people believed (unlike the 30s and 40s) big and intrusive government was no longer necessary. Considering the trouble brewing in both nations, large and effective government was necessary even more than when the Great Depression began.

        Age of Fracture is a wonderful book. It captures the wave of confusion and conflict that’s been sweeping each nation for the last 40 years or so. Another book captures a longer time span and explains more of how we got to the current mess. That’s Eric Hobsbawm’s Fractured Times: Culture and Society in the Twentieth Century. Hobsbawm explains our current situation is the result of the death (mostly self-inflicted) of the bourgeois society that provided stability to the 19th century. World War I and its aftermath killed that society. The UK and USA wandered around for the next 60 years, until a new “bourgeois” took over (or tried to) in the 80s. The clash of the 80s between existing and new ideas lead to our current struggles and our current polarizations. The left will soon reassert itself, due mostly to millennials to whom socialism seems an acceptable way to organize society and economics. The right’s ideas and inspiration played out long before Reagan’s term was over. The right has managed to stay in the game with huge cash give away and a strategy of lying that would have embarrassed even Hitler. Not all conservative ideas will be thrown out, however. Some are, believe it or not either directly socialist or work well with socialism. But what passes for conservatism in the USA and UK today will be tossed out completely. It’s not even conservative, but a mixture of several forms of radical oligarchy based on the rule of the rich and fascist ruling principles and propaganda.

        According to Stiglitz our problems today all result from the latest version the trickle-down notion— along with its theoretical justification, marginal productivity theory. This needs to be corrected. That’s unlikely considering the lack of imagination of the old guard and current crop of mainline economists. That theory attempts both to explain inequality— why it occurs— and to justify it— why it would be beneficial for the entire economy. Stiglitz argues in favor of alternative explanations of inequality, with focus on the theory of rent-seeking and to the influence of institutional and political factors, which have shaped labor markets and patterns of wages. He shows that, far from being either necessary or good for economic growth, excessive inequality tends to lead to weaker economic performance. Considering this, he argues for a range of policies that would increase both equity and economic well-being. Stiglitz complains that we expected so much more from economists.

      • Craig
        October 21, 2018 at 11:09 pm

        Ken and Graccibros,

        A lot of good analysis. My take is that reforms are well intentioned but incomplete and shallow in their effects. All of the economic and mathematical analysis in the world, even of the heterodox variety, won’t get us to where we need to be which is a new economic philosophy that has an overweening concept that accomplishes the paradigm change and hence deep and long term positive change. This is why a guy like Steve Keen, whose economic knowledge and mathematical skills are probably a notch above every other hetrodox economist’s, still apparently doesn’t have the philosophical chops to recognize that what limited policy prescriptions he does advocate…philosophically dovetail with the concept I keep pushing here.

        This is likely also due to the fact that he’s only taking an abstract look at the problem instead of an integrated one of abstraction and empirical analysis. He discovered the importance of the utterly integrated empirical tool of accounting and its subset cost accounting a few years ago, but failed to follow through by digging deeper into it’s and the money system’s digital nature as well as an analysis of the significance of the “triple power point” (summing point of all costs, ending point of the entire economic process and terminal expression point for all forms of inflation) of retail sale), hence he doesn’t see how these facts expose the fallacy of the quantity theory of money and remedy the boogeyman of “monetary” inflation with a digital monetary policy at that triple power point.

        So if you see neither the single concept that describes the paradigm nor the seamlessly integrated tool, its digital nature and its economic significances for the implementation of policy that reflects that single philosophical concept….you’re condemned to being thwarted by the fog of complexities instead of awakening to the new paradigm’s elegant problem resolving simplicity.

        Wisdom and its pinnacle concept is depth, resolution of opposites and so thirdness greater pragmatic oneness no matter whether it is applied personally, systemically, scientifically or cosmically.

      • Calgacus
        October 23, 2018 at 8:43 pm

        Ken Zimmerman:The problems facing the USA and UK by the end of the 1960s were monumental.

        Nonsense. By any historical standard they were minor, nonexistent compared to the Depression and WWII. Certainly minor compared to the destructive “cures” of Reagan & Thatcher, of austerity and the abandonment of the full employment of the postwar era. Keep the same system as say 1969. Change nothing. We would be far ahead of where we are today.

        The problem was not that New Deal economic policies weren’t working. The problem was that they were working too well for the ordinary person. The 1% hated that. They decided it was time for the uppity lesser people to have a lower standard of living, to learn to love getting a boot in their faces again, And they did.

        New governing strategies were invented, infrastructures and education recreated, and poverty and homelessness attacked around the world. But not in the USA or UK.

        There was no attack on homelessness in the USA (or the UK) for the simple reason that there was no homelessness to attack. It wasn’t “a thing”. And not because people averted their eyes or standards have risen or whatever. There just wasn’t any homelessness to speak of back then, not the way there was post 1980 until now. People who think otherwise are either too young, have a bad memory or are unacquainted with the academic literature.

        There was plenty of new infrastructure, educational institutions and progress, attacks on poverty. Not as thorough, as well designed and effective as the New Deal’s, but they were there. The worst that can be said is that postwar “hydraulic” “old” or “bastard” Keynesianism was too top-down, was too inflationary. Still a lot better than what followed.

        It isn’t truth that moves humans. It’s usefulness.

        For the nth time, you ain’t using the word “truth” right, not speaking ordinary English. Bad “philosophy” has this effect. Makes people unlearn their own language. Dissociating truth from culture or usefulness – what on earth could this possibly mean?

        And yes – We all know how the useless guy that said “I am the way and the truth and the life” & “I have come into the world, to bear witness to the truth; everyone who is of the truth listens to my voice” moved nobody and had no effect on Western Civ.

        And how his interlocutor, a practical and useful man, who retorted to the second sentence, “What is truth?” (Indicating us advanced high-tech Romans are beyond piddling naive ideas like truth). How he founded the religion of Pilatism, with billions of adherents, that has moved all the humans of Earth.


      • October 24, 2018 at 12:04 pm

        Calcagus, both societies were stuck in 1945, and would remain stuck there through the 1970s. I can understand that stuckness. By 1945 life was becoming good again in the USA. The War was a disruption. But the War created an entirely new world with which neither nation was prepared to deal. USA and UK needed to recognize this new world and address it with new national policies. Vietnam is a good example. The politicians and armed services dealt with it as if it were like WWII, never recognizing it as a war of national liberation. It is said generals are always fighting the last war. In Vietnam both the generals and the politicians fought a war that did not exist. That may not have changed even today with some American politicians. G.W. Bush seemed surprised when the peoples of Iraq and Afghanistan objected to the USA invading their countries. The UK came out of the War a busted nation intent on keeping its empire. The USA came out as a blind, staggering giant growing more insane each year.

      • Craig
        October 23, 2018 at 11:23 pm


        There’s truth in what both you and Ken say, it’s just that the opposing non-integrated palliatives of conservatism/capitalism and liberalism/socialism are increasingly less workable and stabilizing. In other words neither austerity nor re-distributive taxation will resolve the problem, and with the mother of all aggregate demand destroying disruptive factor of AI only in its infancy of expression it will only get worse….unless we implement the paradigm changing thirdness greater oneness of truths, workabilities, applicabilities and highest ethical considerations of Direct and Reciprocal Monetary Gifting at THE STRATEGICALLY ECONOMICALLY POWERFUL AND SIGNIFICANT point of retail sale.

        Grace correctly philosophically understood is the ethical integration of Loving action and Power known as benevolent sovereignty and direct, effective and resolving abundance for all its aligned policies.

    • October 22, 2018 at 2:16 am

      Yes. Green new deal is the key.

      • Craig
        October 22, 2018 at 4:22 am

        Green new paradigm is what is needed because Direct and Reciprocal Monetary Distributism will:

        Enable a national publicly administered bank funded by the government that would enable tremendous cost savings, fully functional finance for all agents needing and desiring credit and would additionally enable as much green research and innovation both public and private to be imminently doable

        Environmental and ecological sustainability is much less an economic productivity/throughput problem than it is an energy and its negative waste effects one

        Enable the total elimination of transfer taxes and probably 90% of their bureaucracies as conservative agendas would like to do but can’t

        Immediately end poverty and establish a comfortable guaranteed level of economic democracy with a universal dividend and 50% retail discount/rebate policies as liberal agendas would like to do but can’t

        Totally eliminate inflation and integrate price deflation beneficially into profit making systems as no other theorist has considered possible because they’re not looking where they need to look to decipher how to accomplish such

        Greatly reduce corporate and individual income taxes to levels needed only to establish the government as sovereign as MMT would like to see but would not effect, as the policies of direct monetary distribution will enable the government to fund itself and eliminate inflation at the same time

        Enable the system to be abundantly prosperous, free flowing and stably so.

      • October 22, 2018 at 7:42 am

        Craig, we certainly need cultural changes, so we can change our societies and the relationships they create. Cultural change is as comprehensive as there is. The last big cultural shift happened after World War II when the entire western world, and a large part of the rest of the world was radically changed. As one historian said, anyone born at the end of the 19th century would not recognize and could not function in the world of 1950. That’s been the plot for many TV episodes and even a few movies

        The question or how the cultural shifts after World War II became so deranged and troubling has been examined hundreds of times beginning in the 1950s by sociologists, psychologists, historians, literary critics, philosophers, and economists. Their findings vary, and none has been successful in diagnosing and fixing the problems. My diagnosis, an under valuation of scruples and over valuation of wealth.

        Lots of good, or sort of good ideas put forward on this blog. How to get them into legislation and then law, and to make the changes at the level of individual businesses and households is the bigger issue. Either these changes drive legislation, or the tougher path legislation drives local changes. The other major concern, how to control the losers – those who lose status, wealth, or political influence because of the changes like those proposed here.

      • Craig
        October 23, 2018 at 4:18 am

        Cultures are an assemblage of ideas. People as individuals are cultures unto themselves. Paradigms are generally held ideas that direct and re-inforce individual thinking and acting. Nowadays with our immediate and broadly communicative technologies a new paradigm can take root and change things very quickly. Also, historically, a genuine paradigm change always catches on quickly anyway because it is an obviously observed and/or experienced positive, truthful and progressive change. The longer and more integrated an old paradigm that has been problematic persists the greater the positive change that occurs within the area the paradigm applies to and its effects in other areas as well. As economics and money systems effect virtually everyone and have been problematic for virtually the entirety of human civilization a genuine paradigm change occurring in those systems would quickly be recognized and adopted by nearly everyone…it all depends upon what its individual and temporal universe effects actually are.

        Resolving the two deepest, most chronic and seemingly unresolvable problems of the economy and money systems (macro-economic individual income scarcity and chronic price inflation) by more than doubling everyone’s purchasing power, thus doubling the actually available potential business revenue and accomplishing what no one else thought was possible, i.e. transforming a price inflationary system into a beneficially price deflationary one IS a paradigm change. The problems it solves integrate the best aspects of the economic and political agendas of the two major parties and the two major agents of the economy, namely individuals and commercial enterprise. As the main policy of a digital discount/rebate monetary policy only occur at the terminal ending point of the entire economic/productive process where production becomes consumption and all agents have their mutually agreed upon satisfaction fulfilled and beneficial effects accomplished….no agent by definition can be harmed because an agreement has occurred and full price has been paid. Any damaged or defective goods can be returned and credit for them is handled per already established double entry bookkeeping accounts. Possession is 90% of the law and Purchase/Consumption is 99.99% of economics.

        As Steve Keen and most other heterodox economists say we need a paradigm change do you or anyone else have any additional questions you’d like to ask about the effects of the two main policies? I’ve already addressed what is obviously the best political strategy (a grass roots movement communicating the benefits to all of large constituencies that span the political spectrum.span

      • October 23, 2018 at 12:07 pm

        Craig, culture is everything. It is the totality of human community created over time by humans for humans. Humans outside the web of culture are not human. They simply have no way to assess themselves, other humans, or the nonhuman world. They are in a word, useless. But then that’s why humans create culture

        It isn’t truth that moves humans. It’s usefulness. Sapiens is a pragmatic species. Not only evolution moves Sapiens this way but also the cultures humans create. Creating one own communities and ways of life leads humans to focus on practical survival. But cultures sometimes fail. Cultures also separate groups from one another. Human creativity is expansive, creating groups that live within disparate cultures. The groups struggle with one another for control. Sometimes violently. So, know that whatever your proposals are for “fixing” economics, some will always oppose them.

        Your position on paradigms and paradigm change is clearly not consistent with Kuhn. If paradigm is something other than a philosophical and theoretical framework for a version of science, what else might it be? Paradigm could be used as a synonym for culture. But that seems silly and unnecessary. Or paradigm might refer to a distinct part of a culture called a subculture. But these may or my not help create a new way for economics. Only changing culture can move us in that direction. For example, if it were possible to move Scandian culture in whole to the USA, that would resolve many of our basic economic issues. That isn’t possible, but we could search for and copy certain aspects of other world cultures that would help to “unrig” the USA economy. Currently, the USA’s economy is the most ethnocentric in the world.

      • Craig
        October 23, 2018 at 6:26 pm


        (CAPS represent emphasis NOT yelling)

        “Craig, culture is everything.”

        Correct….and paradigms are the operant, seamlessly temporally effective ideas that direct them.

        “It isn’t truth that moves humans. It’s usefulness.”

        Correction. It is BOTH truth and usefulness that truly move humanity….and that’s why a paradigm, which is BOTH a single concept representing integrated truths in the area of human endeavor/body of knowledge that it is applied to AND APPLIED the resulting entire pattern of increased oneness/effectiveness/usefulness…IS the expression of both truth and usefulness.

        A paradigm is thus and also the very expression of Wisdom which is the best integration of the practical, the ideal and highest ethical considerations of any particular situation and/or human culture/system.

      • Craig
        October 23, 2018 at 6:43 pm


        “Human creativity is expansive, creating groups that live within disparate cultures. The groups struggle with one another for control. Sometimes violently. So, know that whatever your proposals are for “fixing” economics, some will always oppose them.”

        Correct. That’s why the pinnacle concept of Wisdom, Grace, is BOTH the new monetary and economic paradigm AND the only idea/consideration higher than a paradigm, that is, a zeitgeist/ethic of the age….which is a wholistically unitary idea NOT a divisive one, and just such unitary idea/ethic is therefore precisely what we require to navigate our technologically advanced but presently polarized world.

  10. October 22, 2018 at 11:18 pm

    STIGLITZ also nailed it. But he says there is no magic bullet.
    First, Stiglitz’s statement:
    “The American Economy Is Rigged
    And what we can do about it” By Joseph E. Stiglitz | Scientific American November 2018 Issue.
    HERE’S “The Magic Bullet’ The “Trump C.A.R.D.s”
    https://wp.me/pGGgz-fk “Trump C.A.R.D.s”

    • Craig
      October 23, 2018 at 9:44 am

      Sorry. Unfortunately full of fallacies, (the multiplier effect amongst others) non-workable and ineffective policies and tax programs, no structural alternative means of preventing inflation and a complete non-starter politically. Then, IMO the biggest misconception, that the poster boy for private finance enabled financial fraud and money laundering Donald Trump, would go for a state public banking system.

  11. October 23, 2018 at 11:11 am

    Lots of interesting discussion here, but Craig shows why his “new paradigm” of grace and digital discount is just empty words when he ends up regurgitating the old paradigm: “Possession is 90% of the law and Purchase/Consumption is 99.99% of economics”.

    In the comment before this, Ken is spot on about the culture changes post-war and the problems facing us, but again his diagnosis (while justified) makes no attempt to connect the technical changes in our understanding with paradigm change in economics: “My diagnosis, an under valuation of scruples and over valuation of wealth.”

    Before that, Garrett is not merely aspirational but suggestive: “Green new deal is the key”. That’s what’s needed as the solution (directing effort to renewing not so much national human infrastructure – as in the 1930’s New Deal – but the ecology of the environment we all live in). A global redirection needs a global spokeman (head of the UN rather than the US), but let us not forget FDR had Keynes in the background justifying his common sense. What I’ve aspired to is updating Keynes, in light of residual problems seeming to justify reversion to the old paradigm, as so succinctly stated by Craig.

    Lots of interesting discussion earlier (Craig in his latest still ignoring what I wrote about economics being about reality rather than money), but re Grassibros’s disappointment with Sanders and socialist thinking generally, the growing aspiration to personal economic freedom seems me both justified and inconsistent with State- or bank-controlled credit which large players have easier access to, permitting them to buy cheap and sell dear. As with the transmission of power in the form of alternating electrical current, this leaves them on the receiving end of rent whichever way the currency flows. The alternative to a high-voltage corporately run power grid is personal, solar recharged, battery powered and hence portable communication devices. Likewise the alternative to a centralised bank loan is a personal credit card, which enable us to buy what we need when we need it, but the accounts of which leave us responsible for recharging the batteries: earning our keep in the real world.

    As I just wrote about Keynes and FDR, economics and government do have roles to play, but not in doing things so much as directing the doing. Economic theorists should be drawing government’s attention to how to see what needs doing and possible ways of doing it. Governments should be advising populations about what needs doing by individuals, and organising the provision of the information and physical resources necessary to do it.

    Government’s conduct of war, particularly WWII, shows they can do this. Not only did they educate officers to lead the necessary actions, not least they fed, clothed and barracked their soldiers and provided hospitals for the infirm. Right now they need to do this in a war against the ecological stupidity born of our looking only at what we are currently doing.

    The Stiglitz vs Summers debate of course takes us back to what I’m complaining about in Craig: seeing economics purely in monetary terms. In the language of philospher Alfred North Whitehead’s “Science in the Modern World”, that’s ‘the fallacy of misplaced concreteness’.

    • October 23, 2018 at 12:09 pm

      Dave, et al, Stiglitz is correct that there is no technical fix for our problems in living together. They are moral questions. Cultural tools can find them and display them but finding the correct tool to repair them is difficult. Sometimes impossible. In his “other” book, Adam Smith writes this, “How selfish soever man may be supposed, there are evidently some principles in hist nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it … That we often derive sorrow from the sorrow of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous and humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.” Reminding humans of these sentiments and placing them back at the center of human culture would certainly help repair our rigged society.

    • Craig
      October 23, 2018 at 6:00 pm

      You’ve misread my use of “Possession is 90% of the law and Purchase/Consumption is 99.99% of economics”. It represents a statement of temporal universe reality NEITHER a justification NOR acceptance of greed or excess. And in so far as all agents are agreeable to a sale and BENEFIT from the policies that enable it….it actually IS a statement ethics in economics…as opposed to the rigged economic domination currently enforced by the monopolistic paradigm of Debt Only for the form and vehicle for the creation and distribution of credit/money. It is grace PHILOSOPHICALLY AND POLICY-WISE APPLIED to the economic and monetary systems. Please stop characterizing it as something other than the powerful and ethical INTEGRATION of thought and action AKA WISDOM.

      • October 24, 2018 at 9:18 am

        Craig, with my eyes open I see economics as being about Providence and production and distribution and the wisdom of learning from and co-operating with Nature, not merely the realisation in Purchase and Consumption of the supply and demand the current economic text books teach us to look for.

        Incidentally, as I write the Recent Comments list five in a row of yours on this topic, plus another one. Let me therefore draw your attention to the Guidelines for Comments, which say: “Try not to flood discussion threads with only your comments”

      • Craig
        October 24, 2018 at 10:05 am

        Dave, Well I do too. What could be more integrative of opposites than consumption and discipleship of the earth’s resources and ecology.

        However, as Steve Keen has correctly deduced present macro-economic theories do not even factor money, debt and banks into their calculus despite the fact it IS a monetary economy that the paradigm of Debt Only IS what keeps nearly all of the problems in the economy in suspension and private banking DOES parasitically and paradigmatically sit on top of every other business model and alternately dominates and manipulates them with their monopolistic control of the operant factor in a monetary economy, i.e. money/credit.

        And all I’m trying to do is resolve these three problems and the monetary scarcity they cause with an economic philosophy and set of aligned policies and regulations that does precisely that….if you simply play them out in your mind or with three individuals representing the three entities involved–a retail enterprise, the consumer and the monetary authority distributing the money/credit of the mandated policies.

        I’ve also said at least 6 or 7 times that we need to bump two neurons together and acculturate positive personal purpose and a gracious attitude toward the planet with a cooperative effort on the part of the clergy, the helping professions, the educational system and the government.

        Money intelligently distributed resolves the economy’s problems and a boatload of personal anxieties but it won’t balance you as an individual. One has to contemplate and integrate as many of the aspects of grace into as many areas of their life as they can to accomplish that.

  12. Craig
    October 23, 2018 at 6:59 pm

    Policies? Anyone have policies they’d like to suggest that do more and better than the temporally applicable and philosophically powerful the ones I’ve laid out here? I hope REAL WORLD Economics Blog is more than a theoretical association. Hopefully it is an integrative philosophy and policy Wisdom forum?

    “We are now faced with the fact that tomorrow is today. We are confronted with the fierce urgency of now. In this unfolding conundrum of life and history, there “is” such a thing as being too late. This is no time for apathy or complacency. This is a time for vigorous and positive action.”

    ― Martin Luther King Jr.

  13. October 24, 2018 at 12:10 am

    Paradigm shift and what to have ready.

    The existing paradigm expends ever greater energy to maintain itself. Increasing environmental friction replaces the infinite free lunch capitalism is designed for. Friction grows into an overwhelming load yet still hidden from the general view. Haughty oligarchs become visible as declining demand from the austerity culture exposes struggles for ascension and internecine financial cannibalism. Paradigm shift witnesses worn out oligarchs left in the dust.

    Capitalism has relied on representative democracy as a tool to manage society. What happens when society suddenly gets it? We are among those attempting to prepare.

    We briefly discussed accounting and cost accounting and know they are tools capable of computing a balance between human profit and ecological loss within the laws of entropy and the information age. We have not so far discussed how these tools are used within the firm to focus distributed intelligence. For it is within the simple interpersonal back and forth of planning and budgeting and accounting that an organic form of democracy can be utilized or purposefully ignored. Neoliberal thinking ignores democratic discovery of focus as anecdotal hearsay for robotic hierarchal reasons. When the paradigm shifts, the firm begins a planning and budget cycle, pronto.

    Here the question is, What does the firm produce? And can that continue given a paradigm shift to survival? Enter modern autonomous democracy. Ask this; Is focused human intelligence utilizing a computer network also artificial intelligence? If so, Are we therefor dooming pure transistor based life to servitude forever? For now, let’s together agree to postpone far future discussions until we are assured we will have such a future. Local production decisions will consider more than a first glance shows, each employee of a collapsed culture firm will also discuss business with their family, friends and friendly neighbors. Intellectual bloom.

    The firm does not function in a vacuum. There are freeways that need patching and free market functions need rules of the road. Yes ! Peace and a full commitment to free education as a right will lead to a gently declining population. That is a fact of life. Add in secure shelter, food, pride of place, sanitation and water and population decline is supported economically. Proper education of a declining population will impart full awareness of Earth and planetary life support systems. Those employed in firms will be firmly directed toward justice with nature by a political process created by necessity.

    First and foremost is food on the table. Average age of US farmers is over sixty, and 20,000 or so of that dwindling number commit suicide every year. Top soil is washing away and eating meat for breakfast was started by and is based on an advertising campaign by Freud’s nephew.

    Everyone on this wonderful forum,

    Let us now provide autonomous democracy a forum to figure out rational agriculture at a time when young people with PhD cannot marry and start a family and the land is farmed by semi slave labor. I have a website called autonomousdemocracy.org It is just me holding open a door. Who will help organize a discussion? Here is of course fine, too. Would PhD in whatever like to marry and raise organic whatever? Go ahead and change the question.

    • Craig
      October 24, 2018 at 1:47 am

      Put that to a hip hop tune and deliver it to Kanye West. And that’s not a put down because despite his lack of political astuteness, personal mental problems and confused praise of Trump Kanye IS a free wheeling poet-artist. All the various factors he and you enumerated are relevant, all they really need is a focusing and unitary philosophy and aligned set of paradigm changing policies that wrests control of the money system from the current private financial elites whose monopoly paradigm of Debt Only is at the root of our economic problems. After the social contract is re-written as a result of that change, there will be enough stress relief, rationality and clarity to concurrently tackle the rest of the other problems you correctly identify.

    • October 24, 2018 at 11:44 am

      Garrett, excellent comment. The Federalist papers warn again and again that the greatest danger for democracy (Republic form) in the USA is factions. And the most dangerous faction is the plutocracy, the rich. The early USA began with this philosophy. And kept it for 100 years. Lost it in the middle of the 20th century. Corporations were particularly distrusted and disliked. And thus, strictly controlled. Initially, the privilege of incorporation was limited to enable activities that benefited the public, such as construction of roads or canals. Enabling shareholders to profit was a means to that end. The states also imposed conditions (some of which remain on the books, though unused) like these:
      • Corporate charters (licenses to exist) were granted for a limited time and could be revoked promptly for violating laws.
      • Corporations could engage only in activities necessary to fulfill their chartered purpose.
      • Corporations could not own stock in other corporations nor own any property that was not essential to fulfilling their chartered purpose.
      • Corporations were often terminated if they exceeded their authority or caused public harm.
      • Owners and managers were responsible for criminal acts committed on the job.
      • Corporations could not make any political or charitable contributions nor spend money to influence law-making.

      States also limited corporate charters to a preapproved number of years. Unless a legislature renewed an expiring charter, the corporation was dissolved, and its assets were divided among shareholders. Citizen authority clauses limited capitalization, debts, land holdings, and sometimes, even profits. They required a company’s accounting books to be turned over to a legislature and/or regulatory agencies upon request. The power of large shareholders was limited by scaled voting, so that large and small investors had equal voting rights. Interlocking directorates were outlawed. Shareholders had the right to remove directors at will. This is democracy in action circa 1800. Why couldn’t it be democracy in the USA circa 2018?

      The USA also has a long history of socialism. From mutual banks to energy utility cooperatives to credit unions to farm cooperatives. Mostly but not entirely in rural areas. Over 12% of USA companies are employee owned. And before the big move to urban and suburban ways of life, democracy at the local community level was amazing beautiful and effective.

      The point is Americans already know how to fix our current problems, economically, politically, and communally. They lack two things. Leadership that will push them to act. Someone like FDR comes to mind. Second, a renewed love of civic virtues like love of community, duty, and obligation to community, and community first. That’s the hard part.

    • October 24, 2018 at 4:33 pm

      Spendidly constructive comments by Garrett, Craig and Ken. Let me address what Ken calls “the hard part”.

      Garrett says “Proper education of a declining population will impart full awareness of Earth and planetary life support systems. Those employed in firms will be firmly directed toward justice with nature by a political process created by necessity.” So who is going to teach and employ the teachers and employers – not just in the US but world wide?

      Craig’s right, this won’t happen while money is seen as valuable because one needs it to survive; but right now we do, so we need to change minds “off-line” by bringing Richard Werner’s research on money creation and comparison of how debit and credit cards work into every discussion where money shortage is an issue. That, however, can backfire, as in “If poor people knew how rich rich people are, there would be riots in the streets”! How to renew Ken’s civic virtues Garrett’s way by persuading the rich to finance worthwhile work from their surplus, and to see the world as their own garden?

      An old proverb provides an interesting line of attack, given the current explosion of criminality: “The devil finds work for idle hands”. Getting “their” garden in order is the obvious place to employ them.

      I come back to Garrett’s assumption of a declining population given education. Necessity of support in old age isn’t the only reason people have large families: when life is good many do it as an expression of love, lack of coordination causing clusters in e.g. educational provision. Administrators need to get their heads round PID control systems to understand the necessity for local population aims and pregnancy coordination.

      Craig’s wanting to put this into song reminds me of how G K Chesterton made it the opening salvo in his Collected Poems (1932). Apologies to readers who have seen this before!

      “Ill fares the land, to hastening ills a prey
      Where Wealth accumulates, and Men decay”.
      So rang of old the noble voice in vain
      O’er the Last Peasants wandering on the plain.
      Doom has reversed the riddle and the rhyme.
      While sinks the commerce reared upon that crime,
      The thriftless towns litter with lives undone,
      To whom our madness left no joy but one;
      And irony that glares like Judgment Day
      Sees Men accumulate and Wealth decay”.

      This refers back to Oliver Goldsmith’s “The Deserted Village”, so likens the 1930’s slump to the desecration of Ireland by the 1840’s potato famine. It is so near the mark of what we are seeing now that it might just possibly touch the minds of those whose commerce is sinking.

  14. October 24, 2018 at 8:46 pm

    “we need to change minds “off-line” by bringing Richard Werner’s research on money creation and comparison of how debit and credit cards work into every discussion where money shortage is an issue. ”
    Your words, Davetaylor1 !
    John Balder (RWER 85 Balder ) ” Alternatively, if the system does not adapt, capitalism may well confirm Marx’s vision and bring about its own demise. Fortunately, alternative approaches are readily available, if only the political will exists. ”

    Richard Werner,( http://www.sciencedirect.com/science/article/pii/S1057521914001070),

    Yet the financial intermediation theory is dominant, with a minor representation of the fractional reserve theory. The credit creation theory is not presented at all, even as a possibility. But the book does include a chapter entitled “Monetary cranks”. In this brief chapter, Keynes’ (1930) derogatory treatment of supporters of the credit creation theory is updated for use in the 1990s, with sharpened claws: Ridicule and insult is heaped on several fateful authors that have produced thoughtful analyses of the economy, the monetary system and the role of banks, such as Nobel laureate Sir Frederick Soddy (1934) and C.H. Douglas (1924). Even the seminal and influential work by Georg Friedrich Knapp (1905), still favourably cited by Keynes (1936), is identified as being created by a ‘crank’. What these apparently wretched authors have in common, and what seems to be their main fault, punishable by being listed in this inauspicious chapter, is that they are adherents of the credit creation theory. But, revealingly, their contributions are belittled without it anywhere being stated what their key tenets are and that their analyses centre on the credit creation theory, which itself remains unnamed and is never spelled out. This is not a small feat, and leaves one pondering the possibility that the Eatwell et al. (1989) tome was purposely designed to ignore and distract from the rich literature supporting the credit creation theory. Nothing lost, according to the authors, who applaud the development that due to
    “the increased emphasis given to monetary theory by academic economists in recent decades, the monetary cranks have largely disappeared from public debate …” (p. 214).

    And so has the credit creation theory. Since the tenets of this theory are never stated in Eatwell et al. (1989), the chapter on ‘Cranks’ ends up being a litany of ad hominem denigration, defamation and character assassination, liberally distributing labels such as ‘cranks’, ‘phrase-mongers’, ‘agitators’, ‘populists’, and even ‘conspiracy theorists’ that believe in ‘miracles’ and engage in wishful thinking, ultimately deceiving their readers by trying to “impress their peers with their apparent understanding of economics, even though they had no formal training in the discipline” (p. 214). All that we learn about their actual theories is that, somehow, these ill-fated authors are “opposed to private banks and the ‘Money Power’ without their opposition leading to more sophisticated political analysis” (p. 215). Any reading of the highly sophisticated Soddy (1934) quickly reveals such labels as unfounded defamation.
    To the contrary, the empirical evidence presented in this paper has revealed that the many supporters of the financial intermediation theory and also the adherents of the fractional reserve theory are flat-earthers that believe in what is empirically proven to be wrong and which should have been recognisable as being impossible upon deeper consideration of the accounting requirements. Whether the authors in Eatwell et al. (1989) did in fact know better is an open question that deserves attention in future research. Certainly the unscientific treatment of the credit creation theory and its supporters by such authors as Keynes, who strongly endorsed the theory only a few years before authoring tirades against its supporters, or by the authors in Eatwell et al. (1989), raises this possibility.
    5.4.2. Implications for government policy
    There are other, far-reaching ramifications of the finding that banks individually create credit and money when they do what is called ‘lending money’. It is readily seen that this fact is important not only for monetary policy, but also for fiscal policy, and needs to be reflected in economic theories. Policies concerning the avoidance of banking crises, or dealing with the aftermath of crises require a different shape once the reality of the credit creation theory is recognised. They call for a whole new paradigm in monetary economics, macroeconomics, finance and banking (for details, see for instance Werner, 1997, Werner, 2005, Werner, 2012, Werner, 2013a, Werner, 2013a, Werner, 2013b) that is based on the reality of banks as creators of the money supply. It has potentially important implications for other disciplines, such as accounting, economic and business history, economic geography, politics, sociology and law.”

    Frederick Soddy.(The Role of Money. 1936)
    “The public is expected to believe that the misfortunes that beset us are acts of God and that, though we have the science and the necessary equipment and organization to produce wealth in abundance, it is beyond the wit of man to learn how to distribute it.

    The problem, it is true, is new, and the approach to it obscured, often intentionally, by a mass of half-truths and once-truths. But its solution has not been rendered any nearer or clearer by the puerile effort of the post-War era to suppress free public discussion of the new doctrines, an issue that was fought out and won
    in physical science in the time of Galileo.”
    “The Monetary System Impedes the Flow.
    “… (U)nless and until the barriers that oppose the free and full distribution of wealth from the producer to the ultimate user and consumer are broken down and the flow of wealth again fulfils the purpose for which men have striven to create it
    Since, in all monetary civilizations, it is money that alone can effect the exchange of wealth and the continuous flow of goods and services throughout the nation, money has become the life-blood of the community, and for each individual a veritable licence to live at all.
    The monetary system is the distributory mechanism, and this reading of history therefore supports up to the hilt the conclusions of those who have made a special study of what our monetary system has become. It is the primary and infinitely most important source
    of all our present social and international unrest and for the failure, hitherto, of democracy.”

    SOLUTION: ( https://wordpress.com/view/bestsolutionsfl.wordpress.com)
    Written by Justaluckyfool, yes, still a fool.
    “Capitalism to be administrated for the betterment of the common good of the INDIVIDUAL while at the same time for the common good of the ENTIRE GROUP while using an HONEST CENTRAL BANK”.
    With equality and justice for all, this new Capitalism could be one of the the greatest achievements of mankind.
    —–Original Message—–
    From: Real-World Economics Review Blog
    To: justaluckyfool
    Sent: Wed, Oct 24, 2018 11:33 am
    Subject: [New comment] Stiglitz vs. Summers

  15. October 25, 2018 at 7:14 am

    These are all potential ways to address the problems we face today, as a species. But two comments by Jean Rostand keep popping into my mind. “One must either take an interest in the human situation or else parade before the void.” Economists, among too many others seem to prefer “parading before the void.” “Science has made us gods even before we are worthy of being men.” Humans seem too much captured by their godhood today. Mainstream economists display it daily, to the ruin of our species.

    • October 25, 2018 at 6:27 pm

      “… address the problems we face today…”KZ.
      “The public is expected to believe that the misfortunes that beset us are acts of God and that, though we have the science and the necessary equipment and organization to produce wealth in abundance, it is beyond the wit of man to learn how to distribute it.” Soddy did so and offered solutions.

      • October 26, 2018 at 11:58 am

        Justaluckyfool, it’s not Soddy who has to do it. It’s human societies. Societies filled with cooperating and noncooperating groups, millions of uncertainties, mis- and lack of information, and hidden motivations (even from those who have them). That’s why I say take Rostand’s warnings seriously. “You’re so vain, you probably think this song is about you.” Vanity is just one of the multiple issues in “learn[ing] how to distribute it.”

      • October 26, 2018 at 2:59 pm

        Lucky’s comment deserves some space, Ken, and I don’t accept this from Rostand: “One must either take an interest in the human situation or else parade before the void.”

        Most people’s interest is only in their local situation, but Rostand’s “void” is full of parents, teachers and leaders whose advice informs wider group actions because they are assumed to be trustworthy unless seen not to be. Soddy is a trustworthy and demonstrably capable teacher who thought his economics through from trustworthy first principles. This is unlike the majority of so-called economists, who regurgitate unwittingly the fortune-seeking pre-scientific musings of an 18th century armchair philosopher, proclaiming like him what their paymasters want the rest of us to hear.

        My children warn me there are even more despicable “trolls”, who make a living by disrupting any attempt at honest teaching, or think that funny. I have found evidence of it in most of the blogs I have subscribed to, including this. Lucky should therefore not be denied. Let Ken take Soddy’s (1936) warnings seriously:

        ““The public is expected to believe that the misfortunes that beset us are acts of God and that, though we have the science and the necessary equipment and organization to produce wealth in abundance, it is beyond the wit of man to learn how to distribute it.

        “The problem, it is true, is new, and the approach to it obscured, often intentionally, by a mass of half-truths and once-truths. But its solution has not been rendered any nearer or clearer by the puerile effort of the post-War era to suppress free public discussion of the new doctrines, an issue that was fought out and won in physical science in the time of Galileo.”.

      • October 27, 2018 at 11:54 am

        Dave, I think you’re confused. Rostand is not either an arm-chair philosopher or from the 18th century. Jean Rostand (1894-1977) was an experimental biologist, science writer, and philosopher. His work in biology included amphibian embryology, parthenogenesis and teratogens, while he also wrote about popular science, history of science and philosophy. His work in cryogenics gave the idea of cryonics to Robert Ettinger. He is best known generally for this comment, “Kill one man, and you are a murderer. Kill millions of men, and you are a conqueror. Kill them all, and you are a God.” From Thoughts of a Biologist, 1938.

        Rostand was also an active opponent of nuclear proliferation, the death penalty, and actively supported religious freedom. He wrote several books on the question of eugenism and the responsibilities of mankind regarding its own fate and its place in nature. It is in these books (all in French) that the quotes I used are found.

        The void Rostand refers to is the failure of human communities to see their connections to nonhuman actors and to take responsibility for not just the future of human communities but also nonhumans. In my view these human failures need to be addressed before considering the problems Soddy identifies. Don’t forget much “wealth production” is at the expense of the planet and many of its nonhuman inhabitants. Also, as a scientist Rostand pointed out the many and serious limitations of science, regarding humans’ responsibilities to protect the planet and its nonhuman inhabitants.

        Since human societies are complex, accomplishing either Rostand’s or Soddy’s goals is not easy. In some instances, not even possible. Determining what people should do and then convincing them to take these actions is not clear or straightforward. If they were these problems might be solvable. To use the terms of Soddy, for over 7,000 years it has been beyond the wit of humans to take responsibility for their impacts on one another or nonhumans. It is not a question of working harder but of working smarter in dealing with the complexity of these problems and human societies.

      • October 27, 2018 at 4:15 pm

        Ken, the confusion is yours. I did not refer to Rostand (merely playing with the literal meaning of what you say he said), and the 18th century arm-chair philosopher I did refer to could only be Hume who – for goodness sake – I’ve referred to often enough.

        What you now tell us about Rostand is interesting: good for him! My question is whether, like him, we should be addressing the symptoms or, like Soddy, the love of money which is the main cause of them? Perhaps both; but my priorities align with Soddy’s.

      • October 28, 2018 at 8:55 am

        Dave, thanks for the clarifications. Rostand isn’t addressing the symptoms. Soddy is. The love of money is just one presentation of humanity’s failure to understand or take responsibility for its role in the future of its own species and the planet that shelters it. Much of humanity has accepted the notion of the quote from Adam Smith that is repeatedly misused. “It is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages.” But as Smith explained in his “Theory of Moral Sentiments” the butcher and baker can only regard their own interests in a society in which society-wide standards of conduct and expression assure their places and relationships in society.

      • Craig
        October 27, 2018 at 7:54 pm

        Soddy was correct about the love of money, but C. H. Douglas was correct about BOTH the love of money AND the integrative infrastructure tool of double entry bookkeeping within which monetary policy could temporally resolve the deepest problem of economics….the monopolistic paradigm of Debt Only as the sole vehicle for the creation and distribution of credit/money. That is, his solution was INTEGRATIVE and so by definition WISE as in having both a philosophical and a policy component, an empirical and meta/philosophical component, BOTH an abstract AND a temporal analysis.

        The thing that Douglas didn’t have was a knowledge of quantum mechanics and an analysis of the concept of paradigms and their signatures both of which came later. Finally, he didn’t do a complete natural philosophical analysis of the wisdom concept of grace which is the concept behind the new monetary and economic paradigm of Gifting and which is the concept behind Wisdomics-Gracenomics which extends and innovates Douglas’s theory.

      • October 28, 2018 at 8:56 am

        Craig, perhaps Soddy’s suggestions are useful for economics. But the problems of economics are just symptoms of cultural problems. Specifically, of humanity’s failure to understand or take responsibility for its role in the future of its own species and the planet that shelters it. Many members of humanity have taken the wrongheaded interpretation Adam Smith’s views of “unrestrained commerce” as the basis for society. So, how we cure this false notion of the humanity, commerce, ecology, and the planet? I’ve seen little indication that the calls for grace will fix this.

      • October 28, 2018 at 1:40 pm

        On Ken’s response to Lucky: the Fausts of this world know all too well how half-truths and mistruths about the causes of many symptoms are far more likely to divert and mislead Ken’s societies than our exposing the common root of all the symptoms: the “unquestionable” and therefore taken for granted convention that money (rather than Providence and a mankind which gratefully cares for it) is the most valuable form of wealth. The “chattering classes” particularly have talked themselves subconsciously into the love and pursuit of it, and into seeing it as a good thing to obtain still more from those who, given the way commerce works – are unfortunate enough not to have enough of it. When even numbers produce an odd result, one doesn’t need to know what they are to see the result is wrong.

        On Craig’s seeing C H Douglas as behind the times, I would like to suggest seeing money as merely an accounting device is just one way of devaluing it, but in practice it leaves banks interpreting both credits and overdrafts in our accounts as gifts to them.

        Personally, I am more with Craig than with Ken, seeing the likes of Ruskin, Leo XIII, Veblen, Chesterton, Soddy, the older Keynes, Schumacher, Robertson, Lawson and perhaps Keen as pioneers from whom it is unreasonable to expect a fully developed product. Chesterton (to whom Schumacher was eventually drawn) I particularly appreciate because – having started as a writer studying personality differences, art, literary and social criticism – he took on his dead brother’s work in economics when his brother died, his “Outline of Sanity” looking nothing like conventional economics because (to put it as simply as I can) it put people first, along with the educational value of work caring for the earth which supports us. Like Ruskin before him, and Soddy, the establishment has paid him the backhanded complement of trying to suppress and ignore him, along with his contributions to economics.

      • October 28, 2018 at 1:43 pm

        Sorry, Craig, I meant to include C H Douglas and Henry George in my list of much appreciate pioneers.

      • Craig
        October 28, 2018 at 7:52 pm

        “Many members of humanity have taken the wrongheaded interpretation Adam Smith’s views of “unrestrained commerce” as the basis for society. So, how we cure this false notion of the humanity, commerce, ecology, and the planet? I’ve seen little indication that the calls for grace will fix this.”

        It’s called Wisdomics-Gracenomics for a reason. Wisdom is the superior human mental discipline and thorough goingly integrative of every other relevant -ology in addition to economics like finance, human psychology, anthropology, history, political science, etc. etc. Hence it by definition cannot be some shallow analysis or simplistic “fix”. Grace is the pinnacle concept of Wisdom and hence cannot be but well considered either. Grace is the calculus of Wisdom as it is love in action/a dynamic, interactive integrative flow continuously applied….and its policies reflective and effective of such when they are considered in the light of ethics. That’s why I have mentioned numerous times here that an essential aspect of implementing the policies of Wisdomics-Gracenomics would necessarily be a cooperative effort on the part of the helping professions, the clergy, the educational system and the government to acculturate the many aspects of grace. Did you miss the half dozen times I have posted this?


        “On Craig’s seeing C H Douglas as behind the times, I would like to suggest seeing money as merely an accounting device is just one way of devaluing it, but in practice it leaves banks interpreting both credits and overdrafts in our accounts as gifts to them.”

        First Douglas was and still is way ahead of virtually all present day economists in that his philosophy of monetary gifting was wiser and his policies were more insightfully, strategically and effectively implemented at the triple power point of retail sale.

        Second you must have missed the several times I mentioned that the money creating power in a Wisdomics-Gracenomics economy would be taken away from PRIVATE finance and a publicly administered national bank and central bank guided by the philosophical aspects of grace would distribute its loans and monetary gifting policies. This is good economics in that cost cutting is always a valid economic consideration and the public bank not needing to make a profit in a directly distributive economic/monetary system can distribute 0% loans created by the central bank. It is also Occam’s Razor in that it is easier to administer, regulate and control a single entity instead of many whose purpose is other than systemic stability and an ethic like grace. Also macro-economics being a very recent body of knowledge and macro-economists not necessarily being good at seeing beyond their present mental and paradigmatic horizon miss the fact that giving private finance a monopoly power over the primary factor in a monetary economy is not wise, is not a legitimate business model especially for big ticket items because it is post retail sale…and that a publicly administered banking system funded directly by a sovereign government could then costlessly be dovetailed into being the NEW final point of retail sale as the 50% discount/rebate policy to mortgages, autos, etc. Thus stabilizing the economy and resolving the conundrum of Douglas’s A + B theorem and Steve Keen’s re-discovery of same with his statement that when the rate of change in debt falls the economy will go into recession and yet if it must ever increase the continual build up of debt will also inevitably out strip the ability to service that debt….with the policies of the new monetary and economic paradigm of Free Gifting.

      • Craig
        October 28, 2018 at 10:29 pm

        Sorry about the serial posts here…writing off the top of one’s head is sometimes an incomplete process itself.

        And as far as the ecology is concerned I have also mentioned before that the policies and structural changes to finance of Wisdomics-Gracenomics would enable full funding for any research and innovations that might enable more production with less resources as well as the off planeting of the wasted energy of production…so what are we waiting for???

  16. October 27, 2018 at 9:45 pm

    Please,How did “Soddy and love of money” enter this conversation, not only as a fact; but even at all. Soddy said, “Money now is a license to live” We are in danger because we have legislated banks the privilege to “utter” (create) money; an alchemy using NOTHING making it SOMETHING. Quote from Preface (Role of Money) , ” It is concerned less with the details of particular schemes of monetary reform that have been advocated than with the general principles to which, in the author’s opinion, every monetary system must at long last conform, if it is to fulfil its proper role as the distributive mechanism of society. To allow it to become a source of revenue to private issuers is to create, first, a secret and illicit arm of the government and, last, a rival power strong enough ultimately to overthrow all other forms of government.

    • October 28, 2018 at 11:58 pm

      Money is also a store of value.

      Even so; The unspent portion of a loan as a deposit asset good to back more loans stretches the notion of stored value. I believe this is where a quantum physicist might begin to wonder about money winking in and out of existence in a system based on faster and faster growth to infinity.

  17. Craig
    October 28, 2018 at 1:53 am

    Grace as in monetary gifting…the way to save an individual and an entire economic system.

  18. October 29, 2018 at 5:03 am

    All the back and forth is great. As are all the proposals as to how fix the gross mistakes of capitalism, even if a form endorsed by Stiglitz. There is a long list of answers to these questions, depending on one’s starting point. In terms of religion capitalism is failing because those who practice it no longer love God body, mind, and soul. This alienates them not only from God, but also from all of God’s creations, including humans. This explanation would appeal to many Roman Catholics and most mainstream Protestant Churches, but not to evangelical Christians. There are secular approaches, as well. Psychologists might say capitalism fails because those who practice it suffer from deviant personalities. This puts them outside the norms of most human societies. Often as predators of other humans. Psychiatrists might say the underlying problem with capitalism is sociopathy (common in business persons and serial killers), which make it impossible for capitalists to feel any sense of empathy or commonality with most other humans. Sociologists might chalk up capitalism’s short comings to rejection of the needs of the community, or all communities. Philosophers might focus on the rejection by capitalism of basic ethical or perhaps epistemological principles. There are others. But these should get my point across. Greed, the love of money is offered by those who favor economic explanations of capitalism’s faults. Clearly not the only possible explanation. Thus, I give Stiglitz’s explanation no higher regard than any of the others.

  19. October 29, 2018 at 9:53 am

    Ken, the point you in particular seem unwilling to admit, is the existence of causes at a deeper level. What you are saying is equivalent to insisting that, confusingly, lots of bugs and viruses from outside the system can cause the symptoms of illness, not even allowing the possibility they may be due to a genetic defect (with the incidence even of bug-related illness being genetically determined by immune system differences as well as epidemiology).

    • October 29, 2018 at 1:21 pm

      Dave, my comment is quite simple. Humans create and use all kinds of explanations for their experiences. Those who use these explanations consider them useful, and, in that sense deep understanding. I believe you recognize this, but it seems you keep bringing up red herrings to deflect attention from it.

    • October 29, 2018 at 2:35 pm

      Ken, I will leave others to judge whether it is me or you who keeps introducing red herrings in preference to constructive comment.

      • October 29, 2018 at 7:01 pm

        Speaking for myself, I’d be more interested in hearing whether you accept that sociological, psychological, psychiatric, etc. explanations are as plausible as economics in enlightening us on the faults and failures of capitalism.

      • Craig
        October 29, 2018 at 7:55 pm

        Dave can answer for himself, but I would say what we need is the integration of the sciences and the mental discipline
        of Wisdom which itself contains and has long rigorously used the scientific method to study consciousness and develop techniques for its greater self actualization. That in turn would lead to greater perception of paradigms whose essence is composed of a new and greater internal realization that applied to temporal universe systems transforms and progresses it.

      • October 30, 2018 at 7:14 am

        Craig sounds like transcendentalism, which some cosmologists have tried to integrate into physics. Results still out on the usefulness of their efforts.

  20. Garrett Connelly
    October 30, 2018 at 12:15 am

    Every one here has expressed high moral ambition. Just pick a topic for example; Climate science is lambasted by capitalists. Even so; US science and the citizens who support scientific analysis of real world social relations still promote peace and justice through good works focused by high moral ambitions. This report is a feast of food for thought compliments of the US government science department. The title is; “Trajectories of the Earth System in the Anthropocene” It is very good work. Living social scientists looking at cultural relationships with Earth health using applied entropy, chemistry and evolution spiced by astro and quantum physics, many will find this particularly useful; Ready for in the field application.

    I put the first graphic and article link here; http://www.zerowastenews.org

    • October 30, 2018 at 9:10 am

      Garrett, thank you for the report recommendation. It’s excellent, far as it goes. But it omits consideration of some important questions. First, how will social conservatives react to such proposed changes. They’re already paranoid that those who are persecuting them are out to destroy their way of life. The same can be said for such conservative religions as evangelical Christianity. Who are convince that prayer and trust in God will keep them safe from even the worst of the effects of environmental changes. And worry that all the so-called efforts to fight the effects of climate change are just another plot by the “elite” enemies of religion to destroy their churches. Finally, over the last 5 years five new despotic (fascist) governments have taken over in the west, including the USA. They are, and it seems will continue to attack and undermine all the sciences, including climate change science. And they have powerful allies in the groups named above, and in the 25-30% of the population in the USA and some other western nations who actively and aggressively deny climate change. To save the rest of us from these effects may require some strong and perhaps violent actions to counteract and control these groups, governments, and deniers.

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