How to re-establish trust in economics as a science
from Lars Syll
Students all over the world are increasingly questioning if the kind of economics they are taught — mainstream economics — really is of any value. Some have even started to question if economics is a science.
Two ‘Nobel laureates’ in economics — Robert Shiller and Paul Krugman — have lately tried to respond:
Critics of “economic sciences” sometimes refer to the development of a “pseudoscience” of economics, arguing that it uses the trappings of science, like dense mathematics, but only for show …
My belief is that economics is somewhat more vulnerable than the physical sciences to models whose validity will never be clear, because the necessity for approximation is much stronger than in the physical sciences, especially given that the models describe people rather than magnetic resonances or fundamental particles …
But all the mathematics in economics is not … charlatanism. Economics has an important quantitative side, which cannot be escaped …
While economics presents its own methodological problems, the basic challenges facing researchers are not fundamentally different from those faced by researchers in other fields.
Let’s grant that economics as practiced doesn’t look like a science. But that’s not because the subject is inherently unsuited to the scientific method. Sure, it’s highly imperfect — it’s a complex area, and our understanding is in its early stages …
No, the problem lies not in the inherent unsuitability of economics for scientific thinking as in the sociology of the economics profession — a profession that somehow, at least in macro, has ceased rewarding research that produces successful predictions and rewards research that fits preconceptions and uses hard math instead.
Economics — and especially mainstream economics — has lost immensely in terms of status and prestige during the last years. Not the least because of its manifest inability to foresee the latest financial and economic crises and its lack of constructive and sustainable policies to take us out of these. We all know that many activities, relations, processes and events are uncertain and that the data do not unequivocally single out one decision as the only ‘rational’ one. Neither the economist nor the deciding individual can fully pre-specify how people will decide when facing uncertainties and ambiguities that are ontological facts of the way the world works.
Mainstream economists, however, have wanted to use their hammer, and so decided to pretend that the world looks like a nail. But pretending that uncertainty can be reduced to risk and construct models on that assumption has only contributed to financial crises and economic havoc.
So how do we put an end to this intellectual cataclysm? How do we re-establish credence and trust in economics as a science?
Five changes are absolutely decisive.
(1) Stop pretending that we have exact and rigorous answers on everything. Because we don’t. We build models and theories and tell people that we can calculate and foresee the future. But we do this based on mathematical and statistical assumptions that often have little or nothing to do with reality. By pretending that there is no really important difference between model and reality we lull people into thinking that we have things under control. We haven’t! This false feeling of security was one of the factors that contributed to the financial crisis of 2008.
(2) Stop the childish and exaggerated belief in mathematics giving answers to important economic questions. Mathematics gives exact answers to exact questions. But the relevant and interesting questions we face in the economic realm are rarely of that kind. Questions like “Is 2 + 2 = 4?” are never posed in real economies. Instead of a fundamentally misplaced reliance on abstract mathematical-deductive-axiomatic models having anything of substance to contribute to our knowledge of real economies, it would be far better if we pursued “thicker” models and relevant empirical studies and observations.
(3) Stop pretending that there are laws in economics. There are no universal laws in economics. Economies are not like planetary systems or physics labs. The most we can aspire to in real economies is establishing possible tendencies with varying degrees of generalizability.
(4) Stop treating other social sciences as poor relatives. Economics has long suffered from hubris. A more broad-minded and multifarious science would enrich economics.
(5) Stop building models and making forecasts of the future based on totally unreal micro-founded macromodels with intertemporally optimizing robot-like representative actors equipped with rational expectations. This is pure nonsense. We have to build our models on assumptions that are not blatantly in contradiction to reality. Assuming that people are ‘lightning calculators of pleasures and pains’ is not a good — not even as a ‘successive approximation’ — modelling strategy.
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Sorry, nonsense from a respected man. Economics never has been and never will be a science. It is organically anti-uncertainty.
Models and math can be used – but only as a prelude, providing a number of candidate strategies, protected from risk as much as possible. Choosing the final (not “the best”) candidate is purely subjective, to be done by humans, chosen for that task.
Not “scientifically” but humanly, based on their proportion of “animal spirits” vs. pessimism at the moment.
Economics is not a science because it assumes anything that is called money to be an accurate measure (quantifier) of value. It is as if the hard sciences (chemistry, physics etc.) picked up any random stone at hand wrote kg on it and declared it a Kg or any random stick off of the ground and called it a meter, measured with it once, threw it down, and picked up another without any calibration to perform the next measurement Money currently exists as a unit not a standard any scientist can easily explain this.
Without trace-ability to a common standard there is no science. Science and demonstration repeat-ability require a bonafide standard calibrated to a definition. Not some misunderstood relic managed by elites for predatory purposes dragging along problems of distribution, dead-weight loss due to included debt,randomly imposed taxes and quasi-calibration manipulation.
Current money not only doesn’t work for efficient markets, it also does not work for scientific analysis. Economists need to admit their sunk costs and get back to the basis of their discipline. The problem is not getting gullible students to trust economics as science but to actually do science.
Everything starts with an accurate exchange of value between one buyer and one seller with a standardized money as the quantifier of the transaction. You know your model works when it can be repeated millions of times consistently in the real world.
That is science.
riddulin,
I really, really like everything you say in that post. The only problem is that it doesn’t recognize the shortcomings of science and the consequent necessity for wisdom/paradigm perception/the integrative ethic in order to habituate awareness of essence in pursuit of knowledge and the deeper truth.
And that recognition/tipping point in economics and money systems is where we all are presently at. We have to look for the way to change scarcity and austerity to abundance, balkiness to free flow and domination to graciousness….and the point of final exchange as you correctly point out is the place to contemplate because “you’ll know your model works when” its policy effect at a tipping/pivoting/summing/ending point “can be repeated millions of times consistently in the world” and it transforms scarcity and austerity into abundance, balkiness into free flow and domination into graciousness.
The actual operation that brought about every paradigm change has always been simple, as in an inversion of current realities, but its effects are always profound. (inversion of the position of the earth and the sun, from nomadic existence to homesteading-agriculture, from monopoly control over salvation to a direct and individual relationship with god, from handwriting to technology and machine production….or elite public or private monopoly control of money to an ethic of direct democratic distribution of same and from Debt/Burden/Additional Cost Only to Monetary Gifting within a digital debt based money system.
Well said.
Monies are units of account, not standards of value.
That goods and services can be ‘valued’ in terms of monetary units means only that money units are a standard unit of account in monetary societies. Monies are not units of account in terms of the values of benefits from the use of goods and services however. The ‘value’ of my eating a sandwich is measured by the units of nutrition it provides to replace the nutrients my body uses metabolically. These are differently measured ‘values’: e.g., vitamins, calories, proteins, et cetera each of which is a value-in-use standard of benefit value rather than a value-in-exchange value. Nor can I get these nutritional units by eating the money unit value of the sandwich as opposed to eating the sandwich itself.
All too often economists equate ‘value’ with ‘exchange-value’ as if ‘exchange-value’ has nothing to do with the distribution of income out of which economic agents can bid for goods and services. ‘Bidding’ can only create ‘value-in-exchange’. Money is only a standard of value for exchange but nothing else.
Money ‘value’ should never be conflated with ‘value-in-use’, particularly in the way that George J.Stigler did in his article “The Development of Utility Theory’ in critiquing Adam Smith and David Ricardo. [Of course, the person with two pecks of ‘corn’ is better off nutritionally than the person with only one peck, as Ricardo implied. And that observation has nothing to do with the (declining by assumption) marginal utility of corn.
Thanks Lars. The “Robert Shiller” link is a bad link.
There is one thing that holds economics down – WHEN THE TRUTH RUNS AGAINST THE INTERESTS OF THE WEALTHY AND THE POWERFUL, THE WEALTHY AND THE POWERFUL STEP ON THE TRUTH. The science is too close to wealth and power. They’re not going to sit idly by while truth undermines their position. They’re going to build a religion around themselves. All these dense theories and observations What nonsense. It’s really quite simple. Even blatant. The wealthy and the powerful have set up the system to promote their interests. If you don’t hold to their advantage, you won’t succeed.
reply to Yok correct until this problem is addressed democracy and an egalitarian society remain a distant dream, and even brilliant economic conversation remains useless.Ted
I think making economics serve well-being and fairness is the most important step in bringing credibility and respectability back to economics as a discipline. This will also help correct the the other problems Syll refers to, the errors in method–rigor, math, laws,models, and the like–as such errors would be unlikely to survive in an economics accountable to positive real-world results for human beings.
Correct Helen. There’s nothing like beneficial results for all economic agents individual and commercial, and an abundantly prosperous and free flowing system as a whole to obtain political and economic validity in the eyes of the individual.
The word ‘science’ means knowledge, but specifically: knowledge encoded in language familiar to oneself and others, such that can recalled and shared by brains decoding messages to trigger relevant memories and emotional/physical reactions. The word ‘mathematics’ means techniques of learning, suggesting it is an appropriate language for seeking and communicating knowledge.
The trap Robert Shiller has fallen into (or invited us to fall into) is a post-Descartes association of maths with quantities, such that the variability of people requires “approximation” rather than abstraction from quantification (i.e. using numbers topologically, to differentiate geometrical spaces and order rather than measure events) in economic models .
Paul Krugman blaming the sociology of the economics profession looks more promising when one recalls that Thomas Kuhn some years back was saying the same about scientists generally. Why, though, are most scientists “normal” and only a few “revolutionary”? We don’t want to be looking at “normal” sociological statistics, we’d do better looking at “revolutionary” psychological theory and what can be learned from its physiological development in terms of combinations of capabilities. (I’m referring to Chesterton, Jung, Myers-Briggs, Piaget and Sperry [i.e. split brain experiments]).
It appears Lars Syll never reads our responses to him: perhaps because our Editor posts his talks simply assuming he will. In any case, I have to agree with Vladimir (1) that his “absolutely decisive changes” are nonsense, with such respect as befits a non-responsive entity. Vladimir himself seems to miss the point that [social] sciences involve language and hence are open to lies as well as errors. If economics is to become a science it needs to be recognised as a branch of information rather than physical science, for that and the control systems based on it are all about ensuring that what was intended or aimed at is enabled to happen by making deviations (whether random or deliberate) recognisable so they can be corrected. Economics never has been an information systems science, but humanly (with the right animal spirits) it is possible that it might become one and reasonable that it should.
Not that I expect the absent Lars to change his tune. RD Dulin is more encouraging. I agree entirely with his distinction between a unit and a standard, with a unit of money not being a standard of value. The unit of information (a bit) is a standard of information capacity, not meaning, but it is a logarithmic unit: an extra option doubles the number of options you already have, so a false option doubles the number of ways in which one can go wrong, explaining the seriousness of red herrings and half-truths and mistaking the direction of motion. To know which are the members of a set one needs a couple more bits of information to define which type of set they are in, e.g., a line, a flat earth or a real one with Keynes’s non-Euclidian geometry. So yes, but with that reservation. “The problem is not getting gullible students to trust economics as a science” but to doubt everything and keep science honest by the method of actually doing logic and information science. Start by defining what economics does as an information system, considering what happens to money in that: i.e. not assuming the transactions of finance, investment, production and Craig’s retail all have the same significance.
Reacting to Lars’ “decisive” rejection of laws (3), has he never discovered that in electrical power distribution (analogous to that of money, see Copeland) it doesn’t matter which way the current flows, for power involves the square of the current? The mathematical law applies: minus times minus equals plus. Debt (or credit!) flows into and back out of bubbles like alternating current goes back and forward round electrical circuits, generating a wake which swells the takings of the book makers. Another law applies which is commonplace in electric circuit theory: the Law of Diminishing Returns in the guise of the Maximum Power Transfer Theorem. Of course I agree with Lars’ advice at (5), but reality starts for us when we are infants, and our roles in economics change as we grow up. Don’t Lars’s realistic models need to start with that?
A broadband failure having prevented me from wishing any readers a merry Christmas, may I wish you all a happy New Year, full of Eureka moments as you all grow up and start learning from the science which in a few short years was so successful that the sponsors of scientific research lost interest in it – forgetting the need to educate themselves as well as future generations – leaving few understanding the new world it has created in which simple inversion of the truth is again creating falsehood. Not that this is new: see Michael Hudson, 13 minutes into https://www.youtube.com/watch?v=od2N2b51rV4 [on “Forgive them their debts …”].
Hi Larry. Rhonda, of course you are right, but how to make economics serve well-being when those able to see economics as a game of Monopoly, which is about money making, not provisioning?
Re my para 4, see https://www.bbc.co.uk/news/business-46745742 on the automation of “1984”. Information Science was about reliably communicating truth, not burying it.
Wishing all colleagues a peaceful year ahead (including the ever absent but highly regarded Lars) I was under the impression that one must wish for something new each year? I am not sure if the above list contains new suggestions or represents familiar a regurgitation of the same old prescriptions for eternal diversion of real issues confronting us?
I continue to feel profoundly sorry for the bulk of the upcoming Economists who will have nothing to gain from us and a lot to lose due to the current worldwide economic crisis. Does it not remind you of other similar crises though?
Dear Helen, your tactful reference to Lars is appreciated (women usually say such things better) but I hope it was his list (not mine) you were referring to. If you want a New Years’ Resolution may I suggest not binning the familar prescriptions, repeated because they aren’t or are no longer being taken, and persistently trying to find the wheat among the chaff? Follow my link to Michael Hudson for a good example of what I mean.
Incidentally, the most rewarding comment my broadband failure delayed my reception of was that of Larry Motuz at
https://rwer.wordpress.com/2018/12/25/teaching-of-economics-captured-by-a-small-and-dangerous-sect/#comment-146388.
Splendid stuff, Larry.
Well, hello to you also! And Happy New Year.
I am ill today but I will come back here soon.
+reestablish” is a presumption. I never found economics of much value, so nothing to reestablish. It is a propaganda ploy.
Hear hear!
As to Dave’s comment, I believe that, under radical uncertainty, there is no truth whatsoever. And economics is not to establish or approach the truth – it is just a poor prelude to making human decisions. Or even not that.
Thank God, I am not an economist. I am an engineer-economist, a toolmaker. Somebody has not to talk about paradigms and assumptions and values but to make (pneumatic?) hammers, hoping that the age and arthritis of the decision-makers would make them sufficiently cautious.
Although my tools shift paradigms as well. Really.
Bob, “Here here!” from me too, though the propaganda ploy was to re-label Aristotle’s “chrematism” (money making) as “economics”, and Shannon’s “noise” as “radical uncertainty”.
Vladimir, thank you for triggering an interesting line of thought. I too am an “engineer-economist”, a tool-maker, but in the English sense of the word ‘engineer’: neither a Russian materialist maker of hammers nor an American driver of steam engines but “an interpreter between the philosopher and the working mechanic who needs to understand the language of both”. A comparison of American and English steam engines suggests enlarging the c.1800 definition I quoted to include art as well as functionality and reliability, and I wonder: have you not heard a writer described as a “wordsmith”?
As a child I aspired to be a writer, while more conscious of art in illustrations, poetry and music. As a youth I was taught to use not only a hammer but a soldering iron and frequency analysis, though personally my real interest was in engines, electronic circuits and mathematical patterns. In my twenties I was gifted a correspondence course in writing which I still have, though it wanted me to write what readers wanted to hear, not what needed to be said. To cut a long story short, I became a writer concerned with the experimental development of functionality, reliability and elegance in the use of computer languages, but still found managers interested only in “today’s” functionality.
In “hammer” terms, it was as if, having advanced from making horse shoes to wrought iron gates, most people saw only the gates, not works of art and reliability achieved by simplicity and ease of maintenance.
The engineering is in the design, but the product is only as good as the materials it is made of: i.e. the prior engineering of the iron works or programming language. As an “engineer-economist”, therefore, I have always tried to understand what I was doing before trying to to do it, but had to live with people pooh-poohing all I have aspired to and to a large extent achieved: an elegant, meaningful, reliable and human form of economy using honest money. “Working mechanics” may like to be told what they have to do, Vladimir, but blueprints involving new processes may be of little use without retraining.
Vladimir and Dave,
I have always enjoyed the art of your posts.
“Thank God, I am not an economist. I am an engineer-economist, a toolmaker. Somebody has not to talk about paradigms and assumptions and values but to make (pneumatic?) hammers, hoping that the age and arthritis of the decision-makers would make them sufficiently cautious.”
Yes, except I would place the word ONLY after the word values. Therefore it becomes and integration of opposites.
“Working mechanics” may like to be told what they have to do, Vladimir, but blueprints involving new processes may be of little use without retraining.
Yes, that describes the problem of new paradigm perception very well.
A paradigm change is not the end of discovery, but it is the beginning of an extremely progressive and permanent gain in human knowledge. There is no end to history only an ascension and deepening of our understanding of it via wisdom-paradigm change.
The key to wisdom-paradigm perception is developing an integrative mindset toward opposite concepts coupled with an inclusive scientific method. Iconoclasm is a good first step toward paradigm perception, but is ultimately inadequate because it keeps the mind focused on and only within the old paradigm.
It IS a monetary economy and a monetary economics can re-establish its scientific chops if it understands that the goal of FREE FLOW is best accomplished by finding the fulcrum point where the flow of costs, prices and the expression of its deepest and most chronic problems are terminally statistically expressed and STOPS for all consumer items and services, and then applying a simple accounting and mathematical operation of equal subtraction/discount and addition/rebate as a policy at that point that benefits all agents individual and commercial.
These integrations of opposites-wisdom operations (flowing and stopping) (rate of flow-calculus and final statics) (individual and commercial) are the keys to the paradigm change everyone here is desiring.
And of course the world not being an entirely rational or ethical place additional regulations will be necessary to guide and protect the resulting progressiveness of the paradigm change.
“It IS a monetary economy and a monetary economics can re-establish its scientific chops if it understands that the goal of FREE FLOW is best accomplished by finding the fulcrum point where the flow of costs, prices and the expression of its deepest and most chronic problems are terminally statistically expressed and STOPS for all consumer items and services”.
I’m sorry, Graig, but this sounds to me like a graphical description of the differentiation of a quadratic equation: a theorem useful in micro-economics and its teaching but a long way from being the goal of an economy. That, I am prepared to argue, is to provide for the physical and mental nourishment of humanity, i.e. feeding and educating the kids.
If the free flow of blood were the goal of life in the human body, how would you explain the purpose of the micro-capilliaries, and how does the blood circulate? Sure it is a necessary condition to avoid heart attacks, but the goal is to get sufficient blood to wherever it is needed, in quantities metered by the LACK of freedom of the flow, i.e. the size of the blood vessels. The purpose of THAT is so we can reliably act and think.
No Dave. Again free flow/free flowingness is an aspect of the quintessentially integrative concept of the truths in opposites, i.e. grace. In this case the integration of pragmatism and the ethical Good. And that indeed is how we can reliably think and act…ethically.
Craig, I think I see what you mean. I have expressed a similar thought in terms of people getting in each other’s way in a crowd, and “gracefully” giving each other space to move by giving way. It seemed to me Nash’s equilibrium can be interpreted that way. But I see that as a policy, not a goal. I see our goal’s shifting from growing up to caring for our families to exploring the possibilities of our human capabilities. Work first, play later?
The best way to become truly scientific is simply to apply the scientific method rigorously.
Further explanation: Acceptable theory is that which is NOT invalidated by the empirical analysis. Popper and Lakatos deal with this.
1.Economics is the study of how (scarce) value is created and distributed.
2.The economics profession craves the description of being “scientific” to be trusted for its questionable body of work without having to expend the effort to perform good work.
3.Economics can not be considered a science because it actively avoids the accurate measurement of value that it proposes to study.
4.This accurate measurement is conspicuously avoided by not having even the concept of a standard corresponding to monetary units of value,dollar, yen, peso pound, etc.
5.Monetary units historically have not had standards because, not having a standard, is of benefit to and source of income for political powers and the elites, particularly money lenders and financial product suppliers, that support them.
6. Intrinsic monetary standards such as gold, silver, grain, etc, are invalidated when borrowed money is put into circulation creating bought velocity.
7.Interest associated with borrowed money creates added cost in an economy that must be incorporated into and circulated with other prices.
8.More buying power M X V bidding for fewer goods and price increases to pass along interest costs create inflation.
9. Interest costs create a dead-weight loss causing many people not to be able to afford the price of money. The non-affordability of a societies money by a portion of it’s population excludes them from market participation and creates poverty.
10. A standardized money incorporating uniform distribution cures the problems detailed in steps 5 thru 9.
11. In the real world, measurement by comparison to a standardized unit of length,mass, volume etc is amazingly accurate, understandable, affordable to the point of being cheap, by everyone.
12. The economic “pluralists” should take note that virtually the same weights and measures standards of all units except money are recognized, if not used, by all nationalities, ethnicities, genders,capitalists, socialist and communists alike. Because the system is trusted and because it is a trustworthy system subject to correction if a defect becomes apparent
13 What I am proposing is simply a standardized (traceable to a agreed upon set of conditions) unit of value to measure value in the real world. This standard would create a reliable exchange value(price) of everything when used in exchange.
14. Economist’s holy grail is an equation that predict value without exchanges to be masters of markets.It is analogous to philosophers stone in chemistry and perpetual motion in physics.
Being a tool maker and product designer I had hoped for support from the tool makers and machinists among the readers whose CV and experience exceed mine in every way
Money is a convenient but simple indicator, which is why it is used. The classical labour theory of the value of production is valid empirically and underlies why macroeconomic analysis is partially successful when based on money which is acting as a proxy for labour-based value.
Money as a measuring tool is also very easy to corrupt. It is important to remember that money can only be used to determined an exchange value(price) of a specific item at a specific instant of time. If employed with the intention of good faith by all parties it is very accurate.
The other definitions of value (labor, use etc.) are not accurately measurable and can only be priced by extrapolation to a similar exchange value. While helpful in understanding and visualizing the factors that affect value they are no good in assigning a price to an item. Money is still necessary, Good money if you want to do business and bad money if the goal is to steal.
I agree but a free market is necessary to determine the relative value of different products. Unfortunately non-corrupted markets simply do not seem to exist, which is the subject of the blog, “Capitalism’s deniers” 7 Jan 2019.
ridullin,
“The other definitions of value (labor, use etc.) are not accurately measurable and can only be priced by extrapolation to a similar exchange value. While helpful in understanding and visualizing the factors that affect value they are no good in assigning a price to an item. Money is still necessary, Good money if you want to do business and bad money if the goal is to steal.”
Correct. And retail sale being the aggregation of all costs for every item or service is THE macro-economic metric and significance that emerges….IF one actually looks at it. Otherwise they fall back into never ending and obscuring complexity.
Retail sale, its macro-economic significance and an integrative mindset I refer to as paradigm perception enable one to see possible policy potentialities clearly and logically.
Of course there is no end to history and the world is not an entirely rational or ethical place so some sovereign regulations and sanctions, as with any system and even for paradigm changes, will also be necessary, but cogniting on the economic and policy ramifications of the point of retail sale is the invention of the telescope, the discovery of the moons of Jupiter and of the ellipse of economics.
Friend Dulin, apologies for how long I have taken deciding how best to respond to your very lucid analysis. Perhaps with a CV being only as valuable as the person who has it?
Lots of your terminology is interesting, e.g. “buying power” as against “quantity of money” (8) and “a standardized money incorporating uniform distribution” as against “universal basic income” at (10) – which would indeed solve the problems. What you seem to be arguing, anyway, is for an equivalent of the gold standard, which contra your (4) has existed. At (5) the contrary exists now for precisely the reasons you give. Like Craig you focus on the point of retail sale being that at which exchange value exists. What you show no signs of realising is that that is the neo-Classical position, which eliminated the mass production side of Adam Smith’s Classical economy – and sight of all the injustices which had gone with it. What “uniform distribution” does not resolve is the issue of motivation of production, to which Capitalism provided a clear answer in terms of power and profit on the one hand and threat of starvation on the other. It does so by valuing commodities, whereas “uniform distribution” in effect starts by valuing human beings as such: the most marvellous things in the universe.
Let us start, then, from monetary standards as a measure of the value of a commodity. How valuable it is to the buyer depends on how much he needs it, which differs not only with people’s aims but with their location (e.g. on whether it is warm and fertile). My argument, then, is that there can be no universal “value of money”, only one local to a homogeneous context, or more broadly, “local to” particular purposes. Abstractly, this is expressed by the term “subsidiarity”. One can have distinct monetary units which are not rivals but nested one within another like the symbols for tens and units are nested within the arabic symbol for a hundred.
We move on to the value of the people who – in an urban culture – need money to obtain the necessities of life, but also to produce them, some “earning” more than others by doing more than their fair share. All three needs can be provided for if we “separate the variables”. A universal basic income can express “solidarity” in valuation of our fellow humans; business expenses can write off the costs of resources necessary for production; prizes can be offered and awarded to motivate outstanding achievements. Leadership in pursuit of worthwhile aims empowers others without need of power to enslave them.
However, leadership works by communication, not power, and the message conveyed by interest on our bank balances is that debt is bad and money is a valuable worth pursuing. Is it bad, therefore, to be a dependant child, invalid or old person? Or (looking back to your first contribution here on 3rd Jan) have we got our idea of money wrong?
My conclusion, based on what I have been able to learn about the banking system and its history, and Professor Werner’s physical observation of how it now works, is that we have. What the banks charge us for as our debts to them are credits afforded to us by our monetary system insofar as we earn our keep and retailer’s sales require restocking. What we see as money is a credit limit, given that we don’t have to acquire all the value it is a token of all at the same time, i.e. spend all our income on one item rather than several shopping lists. Mathematically the limit is not a quantity but a variable, enabling us to separate, in time (so we can grow up, survive hard times and invest for the future), consumption from work: i.e. from our participation in the regeneration and distribution of the wealth we consume.
I come back, then, to what I’ve repeatedly said on this blog: that money is a form of information, not power. The way to re-establish economics as a science is therefore to recognise it as an information science, in which money has just symbolic value, and its units – popularly defined as “a difference which makes a difference” – are measured unambiguously by the standard of the information capacity – not value – of its units (the limit to the number of differences they can distinguish). Its unit, the bit, is logarithmic, so two bits are all that is needed to distinguish where we are at from all that can happen in the past, present and the future. This is why a small percentage of interest or profit markup (as against even a generous salary) can conceal consequences which over time become overwhelming.
It remains for me to claim again that we can conduct most of our business with interest-free credit cards providing generous credit limits reflecting need and/or a good repayment history, with expenditure written off automatically at least by a citizen’s basic income and/or raised to put prizes on record. Physical money in small quantities should still be available for convenience and teaching children how to live within their earnings, but automatic write-offs and accounting for credit limits should demotivate extravagence and theft as well as getting bankers, governments and corporations off the hook of how to distribute stolen pensions.
The logical method of pricing is still effectively the classical “[labour] costs plus”, but the costs now are determined by the number of people getting their indebtedness for expenditure uniformly written off on in the various stages of production, and the “pluses” are now not percentages but drawn from a pre-determined prize fund, the size of which needs to reflect our rate of regeneration of our capital, i.e. earth’s surplus resources. The income side of the economy is thus accounted for. Its business side does not just involve retail trade but the purchase of resources throughout the whole production process. The information necessary to “restock the shelves” is already available in company accounts, which in principle form a distributed database from which researchers could form an overview if they needed to. The fact is, they have no practical need to: they can just select aspects of current significance. We are left with the thorny problem of patents and intellectual property rights. Here again the proper way of rewarding achievement is not with percentage or equivalent per item mark-ups, it is with prizes for actual achievement and in light of social value in use.
So, this is a comprehensive answer to Lars Syll’s question, “how to re-establish trust in economics as a science”, i.e. by a paradigm change in the basis of its science permitting the establishment of a trustworthy form of economics. It is, I suppose, too much to hope that he will comment on it.
January 8, 2019 at 5:52 pm Reply
DT-Friend Dulin, apologies for how long I have taken deciding how best to respond to your very lucid analysis. Perhaps with a CV being only as valuable as the person who has it?
(1) Dear Dave, your analysis and comments are truly appreciated. Let me try to answer exactly.
DT-Lots of your terminology is interesting, e.g. “buying power” as against “quantity of money”
(2) Many econ terms are very non-specific from an engineering viewpoint the concept of “buying power” is necessary to describe the process of creating “money” by re-lending the same money repeatedly.
DT- and “a standardized money incorporating uniform distribution” as against “universal basic income” at (10) – which would indeed solve the problems.
(3)- uniform distribution was a poor choice of words on my part. People with money create “buying power” by lending that money to have-nots at interest. Money should only be created by the state and distributed on a per-capita basis to everyone as necessary to calibrate the price level.Give EVERYONE of legal age a dollar. I am not referring to a “UBI” which certainly has its merits.
DT- What you seem to be arguing, anyway, is for an equivalent of the gold standard, which contra your (4) has existed. At (5) the contrary exists now for precisely the reasons you give.
(4) A gold or other intrinsic standard would certainly work. Some substance or item that was in limited production or discovery that paralleled the growth of the economy would create a stable (self calibrating) price. The problem is that when buying power is increased by the bought velocity of lending the calibration is lost to inflation.
DT-Like Craig you focus on the point of retail sale being that at which exchange value exists. What you show no signs of realising is that that is the neo-Classical position, which eliminated the mass production side of Adam Smith’s Classical economy – and sight of all the injustices which had gone with it. What “uniform distribution” does not resolve is the issue of motivation of production, to which Capitalism provided a clear answer in terms of power and profit on the one hand and threat of starvation on the other. It does so by valuing commodities, whereas “uniform distribution” in effect starts by valuing human beings as such: the most marvellous things in the universe.
(5) what I mean is to focus on is that every transaction is made accurate, fair and equitable. There are many (possibly hundreds) that culminate to produce a “retail sale”.
DT-Let us start, then, from monetary standards as a measure of the value of a commodity. How valuable it is to the buyer depends on how much he needs it, which differs not only with people’s aims but with their location (e.g. on whether it is warm and fertile). My argument, then, is that there can be no universal “value of money”, only one local to a homogeneous context, or more broadly, “local to” particular purposes. Abstractly, this is expressed by the term “subsidiarity”. One can have distinct monetary units which are not rivals but nested one within another like the symbols for tens and units are nested within the arabic symbol for a hundred.
(6)I take my inspiration from comparing and contrasting money to other units of count in the vast international system of weights and measures. I am not suggesting that all potatoes are standardized to a dollar a pound or other systems of price controls.
I believe a monetary standard is possible and very desirable. An ounce of gold is an ounce of gold anywhere. A borrowed once of gold exists in two places at one time. The poor have to currently rent their money from the rich. That has to be corrected. It is if a copy-write or patent was awarded to the process of length measurement and duty was due to the patent holder each time the process was used. Consider the problems that would create. Consider the “police state” necessary to enforce the patent owners “rights”. Compare and contrast with the enforcement of the money owners rights.
DT-We move on to the value of the people who – in an urban culture – need money to obtain the necessities of life, but also to produce them, some “earning” more than others by doing more than their fair share. All three needs can be provided for if we “separate the variables”. A universal basic income can express “solidarity” in valuation of our fellow humans; business expenses can write off the costs of resources necessary for production; prizes can be offered and awarded to motivate outstanding achievements. Leadership in pursuit of worthwhile aims empowers others without need of power to enslave them.
However, leadership works by communication, not power, and the message conveyed by interest on our bank balances is that debt is bad and money is a valuable worth pursuing. Is it bad, therefore, to be a dependent child, invalid or old person? Or (looking back to your first contribution here on 3rd Jan) have we got our idea of money wrong?
(7) Hence the per-capita distribution suggestion.
DT-My conclusion, based on what I have been able to learn about the banking system and its history, and Professor Werner’s physical observation of how it now works, is that we have. What the banks charge us for as our debts to them are credits afforded to us by our monetary system insofar as we earn our keep and retailer’s sales require restocking. What we see as money is a credit limit, given that we don’t have to acquire all the value it is a token of all at the same time, i.e. spend all our income on one item rather than several shopping lists. Mathematically the limit is not a quantity but a variable, enabling us to separate, in time (so we can grow up, survive hard times and invest for the future), consumption from work: i.e. from our participation in the regeneration and distribution of the wealth we consume.
(8) Banking or individual lending with interest are the same thing. Just different scales. Nothing “magic about banks.
Money lending is evil.
DT-I come back, then, to what I’ve repeatedly said on this blog: that money is a form of information, not power. The way to re-establish economics as a science is therefore to recognise it as an information science, in which money has just symbolic value, and its units – popularly defined as “a difference which makes a difference” – are measured unambiguously by the standard of the information capacity – not value – of its units (the limit to the number of differences they can distinguish). Its unit, the bit, is logarithmic, so two bits are all that is needed to distinguish where we are at from all that can happen in the past, present and the future. This is why a small percentage of interest or profit markup (as against even a generous salary) can conceal consequences which over time become overwhelming.
(9) Measurement and money are absolutely information.
(10)I think I have reached the size limit of this reply.
Once again many thanks for the opportunity to clarify my statements.
@riddulin “Like Craig you focus on the point of retail sale being that at which exchange value exists. What you show no signs of realising is that that is the neo-Classical position, which eliminated the mass production side of Adam Smith’s Classical economy – and sight of all the injustices which had gone with it. What “uniform distribution” does not resolve is the issue of motivation of production, to which Capitalism provided a clear answer in terms of power and profit on the one hand and threat of starvation on the other. It does so by valuing commodities, whereas “uniform distribution” in effect starts by valuing human beings as such: the most marvellous things in the universe.”
My focus on retail sale results in two policies that combined actually sets both the individual and enterprise free from the death grip of finance dominated economics with a satisfactorily guaranteed level of income. Once you’ve done that and applied Occam’s Razor on private money creation with the establishment of a national banking system and central bank guided by the same concept behind those two policies….all of the falderal of prior theorizing and obsessive calculation of complexity either dissipates entirely or aligns with the resulting new paradigm. That is what history has shown us regarding new paradigms which are moments of great advancement enabled by the all too slow scientific process of cogniting on an imminently applicable aspect or aspects of the NATURAL philosophical concept of grace to the body of knowledge at hand.
@rrdulin: “I believe a monetary standard is possible and very desirable. An ounce of gold is an ounce of gold anywhere. …(4) A gold or other intrinsic standard would certainly work”.
RDD, you make yourself very clear. Perhaps I have not made clear that I am not intending to disagree with you. Rather, I am offering you an alternative explanation of the facts so that you have a choice as to which has the more appropriate outcomes.
Briefly, then, what works in principle may not work in practice.
The gold standard did work (reducing purchase to exchange of valuables), but despite the discovery of American gold, as improvements in ships and navigation dramatically increased the amount of trade, there was rarely enough of it. In England King Henry VIII infamously added copper to make it go further. In America, Abraham Lincoln – being short of it – paid his soldiers in Greenbacks instead. To bail out the Fed in 1933 the US government confiscated all US gold, but it seems Fort Knox is now empty. Governments don’t need gold. On a credit card we can buy what we want, when we need it, with satisfaction from helping save the environment by being frugal rather than suffering pain from having austerity thrust upon us (and on the public servants we rely on).
Yes, Dave monetary standards can be created. Built on trust and some level of backing from a common center of cultural control. But once established and successful, the standard can be used for private and public transactions, including trading by actors from any and all cultures. Witness the use of the American Dollar, even by enemies of American culture. Dave, you’re incorrect on the gold standard. It did work but created so many negative externalities that continuing it hurt more people and culture than stopping its use. You list some of these. Besides the wealthy, who used gold to make themselves richer and to exert political control have invented other ways to do both that work better. High among these are neoclassical economics and the economists who have carried this form of economics propaganda around the work for over 50 years now
One problem with economists is that can’t even agree on 2+2 =4 types of issues (laws, if you will).
One important example – which has a major impact on economic policies around the world:
Most economists (including Mr. Krugman) believe that the financing of deficit spending “crowds out” private savings – and therefore reduces investment, etc. There is an identity in economics which clearly demonstrates this view is false (the identity is total private savings = investment (which is real savings) plus government deficits (which is financial savings)). Hence, private financial savings increase dollar for dollar with higher deficits (for simplicity I have left out the impact of the external sector). I have cordially presented and explained this information to many mainstream economists, often providing additional alternative ways to understand that “crowding out” does not occur. Without exception, they do not provide any logic to refute my point. They just turn silent and go on with their prior beliefs. Minds are closed. The people are the victims.
One could provide many other examples. Point being that if minds are closed to 2+2 =4 types of issues, then there is little hope for tackling the typically more complex problems of economic society. Thanks.
Dear Dave, my reference was to the original post, but I do write as an Economist (with respect to you and other colleagues) not as a woman! In fact, I confess to increasingly wondering why on earth we have very few female participants here or elsewhere for that matter? Is it because they have given up on this so-called science and become engineers and tool makers like our friend Vladimir? I hope so. However, we could perhaps ask everyone to encourage more women to take part please? One does get tired of multitasking.
Dear Helen, your being an economist does not prevent you from being a woman, nor I a man! Actually, I really miss the inputs from a fiesty Australian lady, Alice, who I chanced on recently looking back through the list of “Most Downloaded RWER Papers”. Joan Robinson, of course, made big contributions to economics. At my son’s in Australia I picked up a most interesting book on the few outstanding women contributors to mathematics. My wife of sixty years, almost totally non-numerate but far better than myself at multi-tasking, is still an engineer in the arts of scissors, needles and thread as well as catering and coping. Beside our obvious biological differences it is apt that her interest is to be in the family if mine is to be the world. On the whole, I reckon, G K Chesterton was probably right: men are valued for what they do, women for what they are (the glue which holds societies together).
Alice’s sharp tongue reminds me of him saying how “[woman’s] love is not blind: that’s the last thing it is!” His “What’s Wrong With the World”, a seriously humorous book from the time of the Suffragettes, reminded me of May and Thatcher. “There are only three things in the world that women do not understand; and they are Liberty, Equality and Fraternity. … Women speak to each other; men speak to the subject they are speaking about. … [Normal or married men] have a quite sufficient restraint on their instinctive anarchy in the savage common sense of the other sex. There is only one very timid sort of man that is not afraid of women”. Were men wise, then, not to let common sense dominate strategic discussion?
I think Chesterton’s point is that there is more than one way of “taking part” in discussion of the political economy. Women can either seek to emulate men (e.g. with more MPs in the government) or they can play to their strengths in bending the ear of their spouses and MPs. Either way they need not only encouraging but to ENABLE themselves by taking an interest in family-centred understandings of the purpose of an economic system like mine, as against the male-dominated free monetary market “goal of FREE FLOW” Craig (above) is still advocating. What they need to beware of is their loyalty being used by the fake families of party politics.
Dave,
Free flowfree/flowingness is an aspect of the natural philosophical concept of grace which is the pinnacle concept of wisdom which is the integration of opposites as in male and female of which would make it human…consequently is not gender specific.
There is no purely economic paradigm. There is a paradigm of self-preservation of mankind. Understanding that simplifies everything.
Craig,
Would you provide link that describes your theory. I can’t understand why all prices don;t have to be accurate. I have seen it in the past but have misplaced it.
Thanks in advance.
My blog is wisdomicsblog.com
It is mostly a chronicle of my postings and their evolution over the last couple years. Most of my theory of the new paradigm Wisdomics-Gracenomics can be deciphered within that non-linear course with some concentration. I am close to boiling it down into a non-tome e book that I will self publish and promote. That will include some of the insights I have garnered from my study of the signatures of paradigm changes themselves like for instance this one which is guaranteed to drive the unfortunately scientisitc nuts: Everything adapts to a new paradigm….not the other way around. That doesn’t mean that further insight within a new paradigm is not possible it simply means that a paradigm change is by definition a huge, significant and obviously progressive event…and that humanity (so far) has never regressed back and away from.
Larry Elliott, the Guardian’s economics editor verified our worst fears in a recent article. “From Adam Smith onwards, economists have recognised that trust is the glue that binds societies together. Nations in which people trust each other have stronger institutions, are more open, have less corruption, grow faster and are nicer places to live. Trust is notable by its absence in police states. So it is a matter of concern that trust has become an increasingly rare commodity. . . We don’t trust big business, we don’t trust the City, we don’t trust the newspapers – and we certainly don’t trust politicians. Nor is this simply a reaction to the financial crisis of a decade ago, although it certainly has not helped that the supposedly perfect model of free-market capitalism constructed before the crash was based on erroneous assumptions and was operated – in many cases – by self-seeking crooks. . . The link between trust and rising inequality was identified by the US political theorists Eric Uslaner and Mitchell Brown in the early 2000s. . . according to Uslaner and Brown, people’s trust in one other rests on a foundation of economic equality. ‘When resources are distributed inequitably, people at the top and bottom will not see each other as facing a shared fate. Therefore, they will have less reason to trust people of different backgrounds.’. . The financial sector was allowed to exploit an ‘anything goes’ regime to enrich itself. The recovery from the great recession was the least fair in modern history, with the bulk of the gains going to those at the top. Meanwhile, the message to the less well off was to get a better diet, pack up smoking, drink less and generally buck their ideas up. All things considered, it’s not surprising that voters in Britain did not buy George Osborne’s “we’re all in it together” shtick, nor that voters in the flyover states found Hillary Clinton a tad patronising. British regulator Andrew Bailey put it this way. ‘In essence, the system that operated from the Great Depression until the 1980s relied on the legacy of the 1930s and an almost unstated code in society that the remuneration of senior executives should not increase beyond a quite limited multiple of average pay … to breach this relationship would be viewed as ostentatious and breaking a norm that acted as a glue in society more broadly. I would go further and argue that this formed the basis of trust, with an expectation of future behaviour and a common value or ethic.’ The argument that there is a trade-off between economic dynamism and less inequality doesn’t really wash. [USA: A rising tide lifts all boats; Russia: Communist rule will one day shower you with goods and services.] Innovators came up with great new ideas when societies were more equal. What’s more, there are countries that are both highly competitive and egalitarian. Sweden is one such country. It has proved capable of growing just as quickly as the US, but with more generous welfare and longer life expectancy. It is no surprise to find that when Pew studied levels of trust across eight European countries, Sweden was the clear winner. If Britain and America want to rebuild trust and avoid shocks similar to those of the past two years, this is the model they should follow.” The United States’ overall place in the trust survey ranks halfway between the Nordics at the top and Portugal at the bottom. But public confidence in the economic elite is very low, outrun only by politicians in the race to the bottom. Economists are tied with economic elites in terms of trust. After all they play a large role in making economic elites. Work on reversing economists’ position regarding trust requires at least these two changes for economists. First, re-design economics so the work is focused on creating maximum possible economic equality. Second, remove unnecessary mathematics from economics. Haven’t looked at this in depth, but my guess that would remove 50% or more of economics’ mathematics. The other social sciences figured out sometime back that an overuse of mathematics impedes understanding by the public and fosters mistrust. In current circumstances, it seems clear economists have only three options: get on board, get out of the way, or risk being run over.
My first book was called French Legiitimists and the Politics of Moral Order in the Early Third Republic. Princeton, 1974. Politics of Moral Order is what trust is all about, and it is an old subject, dating back in the modern order to Montesquieu and in the 19th century to Tocqueville. The point usually is that one cannot make those with vested interests guardians of moral order. In most discussions the least respected guardians of moral order are businessmen and the “people” who are egoistic and subject to manipulations. Usually one finds a group or groups of specially trained people to be guardians of the moral order, a natural aristocracy perhaps, etc..
Robert, for the last 10,000 years or so there have been at least two “moral orders” contesting control of western societies. One for the elites (Church, aristocracy, monarchs, etc.) which claimed to also provide guidance for the non-elites. A second moral order or in some instances, orders created by the non-elites for themselves. Till about 500 years ago the elite order dominated the non-elite code in almost every situation from marriage to war, from learning to God. Sometimes the differences among the orders was small, as in conversation and daily routines. But in most areas the differences were large, durable, and emotional. These differences became public during the French Revolution and the multiple revolutions of the 19th century. And many led to conflict. Often violent and sometimes brutal conflict. For a time, elites were suppressed. But now they are back with a vengeance. And so are the differences in moral codes. Which may lead once again to conflict, perhaps violent and/or brutal conflict.
Now that is the wise perspective. If we would utilize the pinnacle concept of wisdom, namely grace as in love in action/policy, we’d be on our way to not only paradigm change in economics and money systems, but psychology, anthropology, history, political science etc. etc. Why not use the full mental capabilities of homo sapiens?
Don’t get me wrong, Ken. I’m a liberal democratic American and had no sympathy with the Legitimists idea of a “moral order,” in which I would be at the bottom of their society. But, as I was to be an historian, I rather perversely decided to study what the Legitimists had in mind with their moral order – to study the opponent’s view should be necessary training for an historian. What did I discover: That their view of a moral order within the context of a corruption ridden 3rd republic, made sense, but that did not make me personally a monarchist convert. Moral order that I could subscribe to had to include a chance for my crowd as well as the directing classes. I lived with these guys for a decade as my dissertation project.
Robert, perish the thought. Never even considered that you might be a convert. My concern is with what I call “the new monarchism,” authoritarian populism. Pippa Norris of Harvard will publish her newest book in January 2019 titled “CULTURAL BACKLASH: TRUMP, BREXIT AND THE RISE OF AUTHORITARIAN POPULISM. From her book. Populism is defined as a style of discourse reflecting first order principles about who should rule, claiming that legitimate power rests with ‘the people’ not the elites. [But never clearly defining who or what are ‘the people’] It remains silent about second order principles concerning what should be done, what policies should be followed, what decisions should be made. Authoritarian values endorse the priority of tough security to protect the tribe against threats from outsiders, adherence to conventional group norms, and loyal obedience to tribal leaders. The danger of this combination is that Authoritarian-Populism corrodes principles and practices at the heart of liberal democracy. Unshackled by checks and balances, claiming to speak for ‘the people’, strongman leaders trample upon norms of live-and-let-live fair play, constraints on partisanship, the protection of civil liberties, and the value of consensus-building; the importance of a bright line clearly separating personal and political interests; the unambiguous rejection of political violence and the active defense of human rights; the value of tolerating a multicultural diversity of lifestyles, beliefs, and ideas; and the importance of cosmopolitanism, open borders, and multilateral cooperation. Over the last two decades authoritarian populists have disrupted politics in many societies, as exemplified by Donald Trump in the U.S. and Brexit in the UK. Authoritarian populist parties have gained votes and seats in many countries, and entered government in states as diverse as Austria, Italy, the Netherlands, Poland, and Switzerland. Across Europe, their average share of the vote in parliamentary elections remains limited but it has more than doubled since the 1960s and their share of seats tripled. Even small parties can still exert tremendous ‘blackmail’ pressure on governments and change the policy agenda, as demonstrated by UKIP’s role in forcing Brexit. Authoritarian populist Donald Trump was “elected” President of the USA without winning a majority of votes cast and has created crisis after crisis in both governing and maintaining liberal democracy in the USA.
Ken, there are many parallels between the breakup of the old order in WWI and the rise of faschism after WWI, and the break-up of the liberal-democratic order now and the rise of authoritarian populism today, but there are many dissimilarities, which might mean that history does not repeat itself. One is that there is no economic depression of the dimension 1929-40, so people have more of an obvious stake in the contiuation of a postWWII economic order. Although National Socialism never gained a majority in the Reichstag in the Weimar Republic, in the crisis years, (37% in the last free Weirmar election of 1932, there are no anti-democratic allies today that could bring down the German democracy like they did in 1933, e,g, Nationalists and Catholics in alliance with fascism. This hardly means that “bad” outcomes are not possible, but that if liberal-democracy fights, it has a much better chance to win, than to leave things to proto-fascists.
Robert, Pippa Norris agrees with your assessment, as do I. The important question, as illustrated by Trump’s actions (immigrant bans, military on the border, government shutdown, corruption, etc.) is how much harm to everyday people and to liberal democratic values and institutions will authoritarian populists inflict this time round before they’re defeated? And if there is active conflict, will it remain political, or involve physical violence, perhaps even armed combat?
Ken, Precisely. That is why the rule of law must be re-inforced and Trumpism be unmistakably intellectually and politically resigned to the dust bin of history.
Populist “Fourth Turnings” are the chaotic historical signatures of humanity’s chronic failure to accomplish integrative thirdness greater oneness.
Craig, that’s right. But populism will return. It’s over 4,000 years-old. So, this is not its swan song. Plus, less authoritarian versions of populism have often benefited humans and their civilizations.
Since I am an 87 year old American living with my wife on the German-Polish border (Goerlitz), I can’t do the combat in the street. But my German friends in this bastion of the German Right, think that it won’t come to that; Alternative Germany is anti-migrant but not anti-democratic. Am I reassured. Not entirely, but so far only one or two incidents. A swastika or two on my house walls.
Right, Robert. Most of the current versions of authoritarian populism are not nihilistic like those emerging out of the Great Depression and World War 1. Generally, they are not brutal or genocidal. But some actors involved in the new populism may still become violent.
Ken, your second point has occasionally been true, but as paradigm changes are supreme integrative of opposites type events populism’s impetus will be largely eliminated by the crashing realization of the significance of a 50% discount/rebate policy at retail sale.
Craig, I don’t believe populists of any variety are likely to go along with anything, economics or otherwise that doesn’t grow out of “power to the people,” even if its people power just to serve an authoritarian dictator. Think your proposals can handle that?
Ken, They can absolutely handle the deepest problems of the economy and money system. As for populists who admire and follow authoritarian leaders probably some if they’re not utterly given over to authoritarianism. Populists like everyone else have various psychological motivations. But what’s the relevance of asking?
Come to think of it though acculturating grace/graciousness, although a more psychologically complex and so necessarily longer process, could ultimately yield a much more psychologically healthy and much less irrational society. But, one paradigm change at a time.
In his book “Man for Himself” Erich Fromm speaks of “orientation of character”. He differentiates his theory of character from that of Freud by focusing on two ways an individual relates to the world. Freud analyzed character in terms of libido organization, whereas Fromm says that in the process of living, we relate to the world by: 1) acquiring and assimilating things—”Assimilation”, and 2) reacting to people—”Socialization”. Fromm asserted that these two ways of relating to the world were not instinctive, but an individual’s response to the peculiar circumstances of his or her life; he also believed that people are never exclusively one type of orientation. These two ways of relating to life’s circumstances lead to basic character-orientations.
Fromm lists four types of nonproductive character orientation, which he called receptive, exploitative, hoarding, and marketing, and one positive character orientation, which he called productive. Receptive and exploitative orientations are basically how an individual may relate to other people and are socialization attributes of character. A hoarding orientation is an acquiring and assimilating materials/valuables character trait. The marketing orientation arises in response to the human situation in the modern era. The current needs of the market determine value. It is a relativistic ethic. In contrast, the productive orientation is an objective ethic. Despite the existential struggles of humanity, each human has the potential for love, reason and productive work in life. Fromm writes, “It is the paradox of human existence that man must simultaneously seek for closeness and for independence; for oneness with others and at the same time for the preservation of his uniqueness and particularity. …the answer to this paradox – and to the moral problems of man – is productiveness.”
Love, reason, and productive work are what Fromm asks of humans in the 21st century. I’m not certain we’re up to it.
Fromm is one of my favorite authors and references. His thinking is as integrative and wise as any I’ve read. His books The Art of Loving and Escape From Freedom set the stage for the kind of personal mental integrative process we need to foster and acculturate in order to evolve.
The committee for my clinical degree (clinical psychology) was made up of an Adlerian, a Freudian, two students of Rogers, and a student of Fromm. They fought constantly. I learned a lot from the fights but took me an extra year to complete the degree because I had to satisfy each of them.
Ha! Such is the educational hazards of higher education. Congratulations on that integrative effort. :)
Ken, Through much of my life I suffered from recurring bouts of “heart hysteria,” fear of death through heart failure. My first bout happened when I was 18, in the Air Force, and I was treated in a San Francisco military hospital. I was sent to a psychologist where a very young and attractive assistant interviewed me with questions that I found quite surprising: she wanted to know about my sex life and my relations with my family of a possible intimate nature. I thought she was screwy. Then the psychologist had a few sessions with me during which he asked nothing, he simply sat in a chair, with a pencil and pad and said, “tell me what comes into your mind.” Since nothing much came into my mind not much happened in the sessions. He sent me to take physical therapy without ever giving me any explanations. Twenty years later, in a stressful time, I had another bout of heart hysteria. I visited a psychologists in the Veterans Hospital in Nebraska. He was a pill pusher mostly. I concluded that in the first case I had been treated by a Freudian and in the second by a behaviorists. Neither did much help. I just decided, when driving one day, to stop taking the Valium pills the behaviorist had prescribed, rolled down my car window and threw the prescription box out. So much for psychology.
de Toqueville clearly understood the psychology of individuals and groups. Thus, we now suffer the Soft Tyranny of the majority, the mediocracy & kleptocracy he predicted in 1831. Wells, Orwell, Huxley and EF Schumacher clearly understood psychology and predicted much our ecocidal dystopia. Unfortunately, Hitler, Lenin & Stalin also understood psychology.
Like many vets I took the clinical degree mostly to cure myself. Sort of worked out that way. Any competent therapist knows that most neuroses (95% of pathology) cure themselves with time and patience. Your neurosis just needed time and you likely just needed someone to share it with. Why the therapists you met with took these absurd actions I don’t know. As a therapist I’ve worked with 400 or 500 neurotics, and only a few dozen seriously ill patients. Most of the neurotics came through okay. Only about half of the seriously ill patients with whom I met improved. Had to send the others to psychiatrists.
Robert, Yes, an excellent example of the stupidities of psychological scientism and the commonsensical quality of wisdom which cuts through all of any extraneous complexity by simply acting in present time……with finality. It’s a perfectly reflective demonstration of the resolving power of tying a digital monetary policy directly to the point of terminal ending, summing, expression and tipping point of retail sale.
When you integrate science and wisdom you can eliminate religiosity and recognize deeper insights, and when you fail to do so you’re leaving your mind open to the creeping, creaking orthodoxies that have plagued both science and religion since time immemorial.
Robert et al, without ethics how can there ever be an upgrade of law that makes QOL & GDH more important than making profit & war? Lacking a bio-ethical paradigm supporting bio-ethical law/justice and a nontoxic, nonexploitive socioeconomic system, modern civilization’s future will not be “worth” sustaining. Yet, without ethics and values nobody would notice or care. There would only be more win/lose “political” monetary scams ensuring a lose+lose end game for all generations. That is why my alternative global community credit system (GCCS) issuing nonmonetary & monetary trust tokens & its AI enhanced system manager are based ethics, value, and biocentric legal principles. Which ones? The best, most logical, most biocentric ethics ever articulated by of humanity’s greatest leaders & jurists. Yes, imagine Watson or Alpha Go referring to a database & knowledgebase of the whole of humanity’s greatest wisdom. It could make human accounting, auditing & economics obsolete. Yet, most people are so bamboozled and mentally enslaved by the toxic plutonomy game (systemic corruption & kleptocracy), the plutonomists among you will probably be dead before the majority belong to the local/regional associations & CUs co-sponsoring the Global Community Development Alliance (GCDA) sponsoring the GCCS cultural credits/discredits & global index currencies.
A truly great post.Shares great understanding and valuable insights on the subject of public trust through careful study of history.
May I add, A public’s trust in its institutions begins with a trust in their money. Economists can drone on like they have everything figured out and under control but people can tell if the money is crooked. Inequality caused by crooked money is enforced by crooked institutions that display inconsistencies in their actions. Withholding trust is a defensive action.
Money can be made to measure accurately.
In the real world, measurement by comparison to a standardized unit of length,mass, volume etc is amazingly accurate, understandable, affordable to the point of being cheap, by everyone.
The economic “pluralists” should take note that virtually the same weights and measures standards of all units except money are recognized, if not used, by all nationalities, ethnicities, genders,capitalists, dictators, socialists and communists alike. Because the system is trusted and because it is a trustworthy system subject to correction if a defect becomes apparent
Money can be made trustworthy.
Larry Elliott’s post, Ken’s apt comments and this came through while I was still drafting the one I’ve just posted [January 8, 2019 at 5:52 pm]. I offer you further thoughts on the relation between credit and money, but more to the point, though I haven’t used the word “trust” the scheme I have outlined is all about both making the rich more equal but all of us more “trust-worthy”. If you don’t know much about information science, let me explain that Shannon was to the paradigm of radio communication as Newton was to the Copernican cosmos: he found the invariances or “laws of motion” on which his science could be based.
Yes, ideas and the experiences behind them are what guide humanity. That is why paradigms are so powerful, why it is so important to be aware of current paradigms and the signatures of new ones. Considering that the current paradigm of finance, that is, Debt/Burden/Additional Cost Only has held humanity down for the entire history of human civilization it’s way over due for a change. And if the concept behind that new paradigm is the concept behind every historical paradigm change…how powerful could that idea be?
“Yes, ideas and the experiences behind them are what guide humanity”
No serious student of history would subscribe to such a view, which is one reason I learn so little in this blog. History is not the study of ideas that guide humanity but of the unexpected and irrationality of historical outcomes that surprise the hell out of people. Nobody entering WWI expected the outcome would destroy Western civilization, except a lucky guesser. We all read them after the events not before. Napoleon said that between a battle gained and a battle lost, there are empires. Winning and losing a battle can be a close run thing, like the battle of the Marne in 1914. If the Germans had won, no fascism, no Hitler, no WWII. No new paradigm.
I might phrase it a bit differently, but Robert is spot on with this comment. The implicit, hidden, lied about, forged, mistaken, and misunderstood play much larger parts in what happens in human societies than any “paradigm,” “philosophy,” or “code of ethics.” The British have it right, except they often forget they have it right. Life is a muddle. Best we can do is “muddle through.”
Bob, I wouldn’t expect a historian to be that interested in the future, yet the ideas which guide the future are typically found unexpectedly (like the need for electric circuits) and generate a new type of rational interpretation which is validated by, not drawn from, experience
From BBC’s Yesterday in Parliament, 13.21. “The Speaker says it is, in his view, reasonable for MPs to want to amend a Business of the House motion. It might be against precedent, but, he adds, things change”.
One of the things historians do is checked out how well people in the past have predicted the future. I did this in the 1980s with a set of predictions about what the world would look like after 25 years (made in 1960) by a group of distinguished men. Result nobody got it right, not even the digital revolution, most of them predicted the triumph of atomic energy. I doubt if we come back and check out your predictions, you’ll do much better. I won’t be here, but some other historian will check you out, unless in your smugness you decide to get rid of historians because of their Unconsciousness.
With all due respect history while valuable from a rear view mirror perspective is really the study of human UN-consciousness. Wisdom/paradigm perception is the integration of history and full consciousness. It may not be perfect, what human discipline is, but it’s a damned site better than the enforced un-knowingness/unconsciousness of the paradigm of Science ONLY. The proverb applies: The wise man sees trouble and hides himself, the fool goes on and suffers for it.
Craig, I don’t thing you know anything about how historians prepare to exercise their profession. We spend a great time as history majors and PhD students examining historiography which is all about human consciousness. Guess what, we read Hegel, too, and don’t just accept his dialectic as you seem to do. Get the sort of critical perspective in historiography that historians have.
Robert,
My point is this: Is humanity largely conscious….or unconscious? By conscious I mean self aware, not what is their IQ or how scholarly they are or any other metric except aware that they ARE aware. By that measure the obvious answer is they are almost entirely UNconscious and hence history is largely the study of man’s unconsciousness, or to put it a little more euphemistically the study of his struggles and generally his failures to become fully conscious….due largely to his lack of knowledge and application of the superior (and scientifically inclusive) human mental discipline AKA wisdom. Man is very smart so far as data and logic are concerned and at best an adolescent so far as wisdom/self awareness is concerned.
This has nothing whatsoever to do with religion and everything to do with the depth and quality of our experience and our greater ability to discern truths of all kinds and act with greater rationality.
Given that naturalistic description of wisdom, Is there any reason why the scientific method and wisdom cannot operate concurrently? Of course not, especially as I have posited that wisdom is inclusive of science, and have pointed out that historically the signature of good non-orthodox and inclusive science and of scientific breakthrough has generally been as a result of the integration of the scientific method and an aspect or aspects of consciousness like imagination, creativity, comfortability with ambiguity and strategic illogic in order to exit the mental hypnosis and suffocation of old/current paradigms.
I think it was G H Hardy who said that good mathematics should be unexpected, unavoidable, and short. Pity it is not applicable to economics, including activity of wordsmiths. Otherwise, Dave, I agree.
Thanks, Vladimir. The form of mathematics I have found applicable to economics is unexpectedly not quantitative but (as a form of dynamic logic) is unavoidable and short. The pity is that economists are continuing to follow nineteenth century precedents.
Dave, please try to be a wordsmith on a diet.
Oh! You might try that on Ken and Craig, Vladimir, though with viewpoints so different from mine I personally find them interesting as well as irritating.
I’m more like RDDulin here, at least trying to be an an analyst: following Einstein’s advice to “keep things simple, though not TOO simple”, but plagued with Charles DuBois’ problem (see above) that “if minds are closed to 2+2=4 types of issues, then there is little hope for tackling the typically more complex problems of economic society”. Whether it is courage or folly for me to keep hammering my words into different shapes in the hope of opening someone’s eyes, I don’t know, but at 82 the diet I am on is one of time. I’ll get off your back if you will find me an editor able, like Einstein’s, to draw together the sense of what I’m saying in bits.
RDDulin clearly hasn’t had the gestalt experience of seeing the young lady in the face of the old – money representing our own credit-worthiness rather than the value of objects – but have you even looked at the economy with that revolutionary thought in mind?
Dave, glad I can help you. I wish I could say that economists could agree “on 2+2 =4 types of issues (laws, if you will).” Then they might come to recognize two basics about ‘so called laws.” First, that each is constructed by humans in specific cultural settings, and thus is situational. Second, that each law changes depending on the circumstances of its use, and thus is situational. Lancelot Hogben provides a wonderful and simple example that illustrates both in his book Mathematics for the Million, pp. 21-25. The book is widely available, having been read by millions. It’s not “the typically more complex problems of economic society” that economists ought to or need to focus on, but rather the everyday grammar of mathematics, one language.
I have Hogben’s trilogy, and thanks for the interesting quote. He is of course a materialist conflating with “absolute power corrupts absolutely” the point of Christians in an international world without printing using trained teachers and standard texts in Latin and Greek to avoid “Chinese whispers” distorting Christ’s teaching.
On p.20, though, he makes an interesting claim: that mathematics is the grammar of size and order. This was 1937. He has no time for geometry and doesn’t index the groups and the topological graphs and transformations which (as W W Sawyer puts it in “A Path to Modern Mathematics”) reveal “Hidden Simplicity”. It is the surprising simplicity of the graphs of interconnections between the functional groups of monetary transactions that I have been trying to share with you all.
We now have Algol68 grammar and digital computer architectures making interwined processes like the economy and the internet intelligible. Since – as you say – laws change on the circumstances of their use, Algol68 requires and enables users to define and structure programs to reveal those circumstances, which is surely a better basis for economics than using hyperspaces to disguise adding of apples and bananas.
Hogben gets to “2 + 2 = 4” on p.28, and of course he is right on the meaning and truth of this depending on the interpretation of the symbols. I could go on about two coordinates and two dimensions (degrees of freedom) generating four circuits, but this goes into evolution generating the logical foundations of mathematics: the Square of Opposition such that one has not only a proposition and its contrary but also both and neither. Algol68 distinguishes these by its four-level structure.
Sorry, Vladimir, for debating here rather than tweeting!
Dave, I’m with you on much of this. Particularly, the uncomplicated way in which mathematics expresses often complex relationships. I’ve always assumed that was one of the reasons scientists found mathematics useful. Particularly, considering how messy scientific research actors and situations are. I’m only slightly familiar with Algol68, or any of its brothers. But I’ve worked in most of the major programming languages in my career. They share the simple expressions feature of all mathematics. Hogben’s point is a simple one. All so called laws, mathematically expressed (words, letters, or other symbols) or not are just tendencies that work sometimes and sometimes not. Scientists sometimes get carried away with their “discoveries.” More humility, less eureka is needed.
It is the scientific consensus which finally arrives at a considered resolution. Individual scientists may be in error or dishonest. Unfortunately in economics there appears to be no resolution as there is no valid way at arriving at a consensus. All hypotheses remain on the table. So it is imperative for economists to accept that there really are viable methods to invalidate hypotheses. That is those which do NOT conform to the empirical evidence.
Frank, reaching such consensuses is a long and difficult process. And the consensuses are all temporary and situational. Don’t forget both hypotheses and theories are human constructions. Thus, also subject to errors and misstatements. That’s my point. But in looking at economics there are indeed fewer areas of consensus than any of the other social sciences. Sociology was in a similar state of confusion from 1950 to 1975. But during the 1980s sociologists managed to push most theories to the sidelines and began to focus on one main line of theorizing, several forms of labeling theory. Now most of the controversies are focused here, since it appears this line of theories has shown itself useful.
Ken, I believe you are looking at a worst case scenario as if it were the norm. In the physical sciences there may be varying theories about some of the esoteric suggestions but there is widespread consensus. In economics I believe there is conflation on the fact that there two aspects: one of human decision making which is both predictable and unpredictable; then when decisions are made most of the outcomes are predictable, otherwise we would not have the continuing production which is readily observed.
Frank, don’t believe so. For example, US and Canadian scientists took 14 years to reach consensus on the causes of acid rain in the upper US. And there still is not complete consensus on how tobacco affects human health after over 40 years of study. And after over 100 years there is still no consensus on whether the speed of light is a constant or not. But you are correct in saying there is “widespread consensus,” in some physical sciences in some areas. In many of these areas consensus or no consensus had little effect on the lives of people living on earth. So, much of these only matters to professional scientists. Most social scientists recognize that the object of their study (e.g., human society, human culture, human psychology, etc.) are part of the life of self-aware creatures that can and do both study themselves and create the things that are studied. So, the highest level of consensus for social scientists is “high confidence.” A great deal less predictable than the physical scientists. But still, in my view worth the efforts.
Ken, I believe that your examples might be valid but no scientist would ever recognise the logic you are representing. You appear to be demanding that all scientific theory be a binary choice of true or false. Scientists know that NO absolute truth will ever be known. In fact everything is able to be invalidated, even the law of conservation of energy. All theories may be invalidated by empirical evidence.
Unfortunately, this is NOT true of economic analysis. All hypotheses remain however they depart from empirical reality. If “high confidence” were actually required then very little of conventional analysis would remain.
Frank, consensus is not about truth. It is an agreement among scientists, arrived at mostly through tacit understandings that a fact or set of facts is for the moment the best that’s possible for scientists to achieve. Scientists do not, as you observe search for truth, as that is unattainable, since none would know it even if they saw it. I’ve said as much on this blog and in hundreds of talks, speeches, and testimony. But in this same way you need to recognize that “empirical evidence” has no more stability than truth. Evidence can change based on how, when, and where humans observe it, and which humans do the observing. What at first seemed black may later seem white. This is particularly the case for the social sciences where human actions can change not only a consensus among social scientists but the empirical data which helped establish the consensus. As to confidence, geologists use the scale, low confidence, middle confidence, and high confidence. Would this work for social science?
Ken, to see empirical evidence as volatile is something which effectively concedes that there is underlying reality. I have always distinguished between human reactions which may be irrational and measurement of physical reality. Economics purports to deal with physical reality with expectations of the ability to predict developments.
You failed to recognise that in my comment at 10:17, I explicitly stated that it is the failure of economics to reject hypotheses in the light of the empirical evidence that has allowed a body of nonsense to accumulate. If empirically invalid hypotheses were rejected than I contend that there would be little economic analysis remaining.
Frank, so far in human existence we’ve found that everything encountered by humans is uncertain. As many Anthropologists note humans live scientifically for this reason. Humans find themselves thrown into a world requiring careful and repeated observation to achieve any goal, from finding dinner to creating a civilization. It may be useful to create the dichotomy you mention between human reactions and physical things. But don’t make this dichotomy anything more than what it is, a human construction. And no more certain than any other such construction. As I said in another comment on another list human existence is a muddle. Humans can only “muddle” through it. Humans observe and based on these observations conclude that for the moment certain facts exist. But for humans no fact is complete in and for itself. And none is permanent. The observations that support the fact may fail either because of errors or misstatements in observation or new observations and/or new perspectives may show facts different from those observed earlier. We may never know why this is so. As humans we’ve learned through millennia of experience that facts can and do change, and there’s little humans can do to change this. Humans must “roll with the changes.” Thus far humans have managed to endure the rolls.
Ken, back on January 12, 2019 at 12:29 pm, what you are saying, “All so called laws … are just tendencies that work sometimes and sometimes not”, is not what Hogben was saying: that e.g. the symbol “+” refers to one procedure in quantitative arithmetic and another in algebraic geometry.
Here, agreed consensus is not about truth, but nor is truth about the adequacy of descriptions of facts. Truth refers to a proposition concerning relationship between e.g. a set and a member of it, such that if I am the father of my family, then it is true that I am father of my son. In wider terms, a program will be true in a given computer context if it produces the intended outcomes. In other words, truth is about advice on what to do, not on whether ‘black’ is a true description of white.
Dave, why do we learn the rules of mathematics, its grammar as Hogben says? We learn these rules because we don’t want others learning them and then using them in ways that may oppress us or lessen our chances to participate fully in creating the societies in which we live, including the mathematical parts. Mathematical symbols such as “+” are included in these reasons for learning the rules of mathematics. As to families, fathers, and sons, before your examples can be addressed anyone looking at them would need to know in detail the situations in which they exist. By father, for example are you referring to biology, adoption, spiritual, or just friendship? Is the family together such that the children would know their parentage, is the father one of several who serve in that role, and does the father accept that role and in what does the father accept the role. As to computer programs, as with all things humans create there are the intended purposes that are explicit, and many other implicit ones. Many times, humans create things with the belief they know what’ve done will create the result they want but find out they’re mistaken. Also, people often don’t know what will happen, so have no expectations or have the wrong expectations. In short, your little dips into logic leave out the most important part of humans creating things, the humans.
Ken (January 14, 2019 at 7:02 am), In responding to Dave Taylor, you regress into sophistry about the example Dave used of logical implication. You fail to address my comment (Jan 13, 10:17) which is reiterated in my final paragraph of Jan 14, 14:21.
You appear to be arguing that there is no possibility of ever understanding economics quantitatively while I am pointing out because of the lack of valid theory, there is no real understanding available for discussion!
Frank, sophistry, ophistry! I ask a few questions about your “logic” and you get miffed. Let me repeat what I have said continually. If you want to understand economics, study the humans who create economies and, in this instance, also those who create the discipline (faith) called economics. Also, examine what they create and what happens to it along with its effects on things around it. That’s the best route in. As for quantification, economies and economics as currently constructed are filled with quantification. Take your pick.
Ken, in no way am I miffed. I keep attempting to draw your attention to the realities of economic analysis. You keep ignoring the aspect of theoretical validity in economics, which I have continued to try to explain. Empirical data and abstract (that is theoretical) quantification are totally separate concepts. You continue to conflat the two. I agree with you that that are enormous amounts of empirical data but there is virtually no abstract quantitative analysis. I have attempted to make this specific point repeatedly to you. It is the lack of theoretical justification in conventional and heterodox economics that means that economics falls far short of scientific acceptability.
Frank, it seems our conceptions of research and theorizing are very different. Research (observation) involves observing objects of the social scientist’s interest from as many perspectives and using as many observational tools as possible. And doing this repeatedly over time. After all, economies and economics are not static. Theory is connecting the dots from these observations in the effort to describe (quantitatively if appropriate and possible) patterns in the observations. This process is also iterative. The two processes are intimately connected. When you speak of “theoretical justification” I think you’re saying there needs to be some theory of the discipline (e.g., economics) to justify its work. This certainly helps the social scientist feel better about her work but does little to guide that work. This is how I interpret your comments.
Ken, I spent many years of research in the steel industry. What you say is essentially true but you need to understand that in itself may be insufficient. After more than 250 years of doing what you describe there has been little real progress since Adam Smith. To me that is a self-evident truth.
When I speak of “theoretical justification” I mean far more than your description. Any quantitative that is theoretical description of empirical data MUST obey the rules of the mathematics of manipulating quantities, the quantity calculus. Econometrics does NOT do this. There are only a handful of economics papers which are able to be seen to achieve this necessary standard. There are millions of papers in the physical science which do this. They would NOT be published if they did not. This is why economics is NOT scientific! There is an excellent paper by de Boer, “On the History of Quantity Calculus and the International System”. which describes how scientific thinking developed over time to understand the valid use of measured quantities in developing theoretical descriptions of empirical data. That is valid theoretical descriptions. This is the necessary step for economics to progress theoretically.
I would like to emphasise that when I say there is only a handful of papers meeting this requirement, I mean this as a literal truth. It is not rhetorical!
Frank, Adam Smith was a moral philosopher turned poor historian. He presented a narrow and selected view of western history that supported his contentions about capitalism. That should have been a warning that the new “science” of economics was up to no good.
Your second paragraph is amusing. I know you didn’t mean it to be so. You say economics fails to “obey the rules of the mathematics of manipulating quantities, the quantity calculus.” I suspect many economists are guilty. But so are many who build and operate economies and all their subsidiary activities. They’re trying to do a job. Sometimes it’s the wrong job and they do it poorly, but they want to get to an end goal, even if sometimes that goal is obscure and can’t be reached. Think of bankers and hedge fund managers, or even CEO’s of large and small companies. Most understand balance sheets but don’t really understand double entry accounting as a tool for business. Economists are even more restricted in their knowledge and interests. And the mathematics of manipulating quantities is not high on their list. I know the paper you mention. It describes one way to create scientific theory. But it’s not the only way, and outside of some physical sciences (e.g., physics) it’s not used much, if at all. All one needs to build economies is high school mathematics which includes simple rules for addition, subtraction, multiplication, and division, the use of exponents and logarithms, and basic algebra. It’s instructive that the only advanced mathematics in the present world economy is used to write equations to make financial trades quickly and profitably. An activity with few if any societal benefits. You are in my view following a lost cause if it’s your intent to push economics and economies in general in this direction. And rightly so in my view.
I am utterly astounded by your comments. Economists, in NOT obeying the quantity calculus are by implication denying even the possibility of their ever producing valid quantitative theory. They are totally wrong in not doing this. As I said previously NO scientific paper would ever pass peer review if it claimed theoretical validity for relationships which did NOT conform to the quantity calculus. You appear to affirm that the understanding of the physical sciences is in error. No, it the cause you appear to be espousing that is in error. If what you say is followed (it has been for the last 250 years without producing valid theory) into the future you are condemning economics forever in its continuing failure.
You assert, without justification, that conforming to the quantity calculus is not the only method of judging whether abstract quantitative relations could be theoretically valid. You will find that no physical scientist would agree with you. You will find no support for your assertion. If you believe there is some then please cite some references. I will state that you are simply wrong!
Double entry bookkeeping only requires addition and subtraction, hardly mathematical expertise. Again you make unwarranted assertions that only basic algebra is required. That is why there has only been failure for the last 250 years. Only through calculus is it possible to move to more general solutions. I will agree that there some differential equations which can be solved algebraically. That differential equations have NOT been used is the reason for the failure of conventional and heterodox economics.
Frank, my connections with quantification by economists is limited. I’ve read enough economics papers and books to recognize that when it comes to quantification most economists pretend a level of knowledge and use skill they do not possess. For economists to use 1st and 2nd order differential equations is absurd. Designing businesses or markets, or even entire economies requires neither. They have neither enough nor data of high enough order to use such mathematics. The other social sciences’ quantification work is based on statistical analysis backed by probability theory. This fits well with the types of and levels of data available to social scientists. Unlike the physical sciences which assume that physical data does not change across the universe. An assumption that should be questioned by physical scientists. Social scientists work with sample data drawn from a population. The sample data is used to describe (descriptive statistics – mean, standard deviation, etc.) the population and infer how variables in the population are related (inferential statistics – R, R2, correlation, etc.). The latter involves testing the “null” hypothesis that the relationships statistically identified in the sample are not found in the population. It’s important to note that the assumptions required to apply inferential statistics are often violated by social researchers, making many findings questionable at best. Perhaps it be better if economics tried to model itself on the other social sciences rather than physical science, particularly physics.
Hmmm… Ken, to put it bluntly, pseudo-economical bullgas is a toxic scam, aggravating the pandemic psychospiritual illness ruining “the world” and our only habitat, Earth’s biosphere. Rite [sic]? Please forgive me if my brief summation hurts anybody’s delicate feelings. However, I am not only a successfully experienced real-world entrepreneur, holontologist, axiologist and meta-economist, I am a father. Hence, the current atmosphere of ecocidal bullgas posing as effective economical rhetoric is exceedingly dysgusting.
Michael, but you don’t run the world any more than I do. So, adapt
Ken – Surely you jest…well…maybe not. I can assure you that those who know me and something of my long history of adaptive personal & professional transformation all agree that I’m one of the most adaptive humans they’ve ever known. Hence, I’ve integrated my learning and R&D of art, architecture, engineering, community planning, construction technologies, number theory, metamathematics, philosophy, religion, psychology, economics, axiology, writing and effective business development to further my R&D of meta-economics and an alternative to ecocidal kleptocracy and grossly bloated crypto-currency ecotecture. So, Ken, if you enjoy a superior adaptation, please, tell us what you propose as a viable alternative to ecocidal kleptocracy? Thanks ~
Michael, adapt is a reminder I give everyone, including myself at least once a day. The rest of your comment is interesting, if a bit overwhelming.
Ken (Jan 15, 07:13), I am in agreement with what you say, However, there two separate issues: one is the human aspects which are NOT available to the mathematics of differential equations; the other is the physical reality of economics which is. In both cases, it is necessary to invalidate hypotheses which do not accord with the empirical evidence. It this was to be done, there would be so few not-invalidated hypotheses remaining that economic understanding would be far clearer.
On your point of the pretence of skills not fully understood, there is a seminal paper with tens of thousands of citations and
many derivative papers which contains an elementary mathematical mistake which invalidates the analysis.
Frank, differential equations are part of humanly constructed mathematics. Such equations are thus “human aspects.” I don’t really understand what you are referring to when you say “physical reality of economics.” Economics supposedly studies economic actions and actors. Which parts are the “physical” and which are not?
Ken (Jan 16, 12:44); I would commend you to watch the
BBC 4 programme Hannah Fry’s Mysterious World of Maths. She discusses whether mathematics is man made or an integral part of the universe.
In economics it is the recorded statistics which are used to describe economic reality. I would also commend you to read my analysis RWER-81. The references cited include many examples of concrete descriptions of economic data. The mathematics describing physical reality provide an explanation of the invisible hand.
Frank let’s come down to earth. Sure, Fry discusses maths. But she does not settle the question. No human can. Try this thought experiment. If the maths are still there when humans are extinct, then they may have some other origin than humans. Problem is to check this out we need human observers, of which none are left.
I know well the statistics you mention. The many versions of them. Anyone who’s involved in economic transactions knows statistics are sometimes wrong, either deliberately or because of human random errors. Statistics are also gathered and used for several possible purposes, from helping corporations, to supporting capitalism, to the pursuit of scientific research. These purposes often compete, which means the statistics compete. In my case, for years I relied on the US Energy Information Agency statistics, till Trump arrived. Now I must rely on International Energy Information statistics. They are not the same. So, I needed a year to adjust my research process to accommodate the differences. I checked out your paper in RWER-81. Well written and interesting but far as I can tell it settles nothing. Though it is a good summary of the debates.
Ken, I’ll give you a physical/empirical/temporal universe economic result. The point where production becomes consumption, i.e. retail sale for human beings and commercial agents. And as that is the ending, summing and terminal expression point of all costs and prices including profit and any and all inflation for the physical stuff of production, a simple digital ( -,+ ) monetary policy of sufficient percentage like say 50% can instantaneously double everyone’s purchasing power, potentially double the available business revenue for all enterprises and completely invert modern technologically advanced fixed capital intensive economies inflationary tendencies into painless and beneficial price deflation.
Summing, ending and terminal expression points are also tipping points which have inherent paradigmatic power, and the actual new insights and basic operations of every historical paradigm change have been simple and yet potent enough to be transformational. Like going from a nomadic hunting and gathering existence to homesteading, agriculture and city states. Like the inversion of the position of the earth and the sun. Like Debt Only for the sole form and vehicle for the distribution of money to strategically implemented Direct and Reciprocal Monetary Gifting.
Craig, While I agree that any cash disbursements will increase buying power and make everyone temporarily better off, more people will qualify for loans and borrow until increased debt destroys any gains. The lenders can always attach all surplus and let the people suffer.
Craig, how about where production becomes a recognizable product, and where that product becomes a commodity, and where that commodity is put out for sale. These seem more important to me. Craig, I agree that treating one dollar as if it were two dollars increases purchasing power, but only if this applies to the both the selling and buying ends of commodity exchange. If that’s the case, in a few months or at most years, everyone will adjust to the change in value, and commodity exchanges will go on as before.
If you’re searching for tipping points in economic transactions, try these. Forming the company or firm, choosing the products to turn into commodities, and deciding how to price the commodities. Traditional economics says in a market all participants are “price takers.” I can tell you with absolute certainty (since I’ve seen this process in action) that there are price takers and “price makers.” The latter have more than an advantage. They often control what’s sold and the price paid.
rddulin,
Not if we have a publicly administered national banking and central banking system that is fully at arms reach from the other branches of government and that is guided by the pinnacle concept of wisdom one of whose aspects is dynamic, interactive and integrative balance. As a public banking system can do everything good that a private banking system does and a helluva lot less that is destructive, and again, is guided by the supreme ethical concept of grace it is Occam’s Razor and common sense that we implement that system. And that’s why it is a major structural plank in Wisdomics-Gracenomics.
Paradigm changes are entire pattern changes and we have to think wholistically to see them while also recognizing that structures within the old paradigm that are dominating and diametrically opposed to the concept of the new paradigm will of necessity have to yield to that new paradigm. And of course history tells us that we never regress back to old paradigms after they are accomplished…because they are such obvious and generally beneficial changes. Hence everything adapts to the new paradigm….not the other way around.
@ Ken,
“how about where production becomes a recognizable product, and where that product becomes a commodity, and where that commodity is put out for sale.”
You just described retail sale.
“I agree that treating one dollar as if it were two dollars increases purchasing power, but only if this applies to the both the selling and buying ends of commodity exchange. If that’s the case, in a few months or at most years, everyone will adjust to the change in value, and commodity exchanges will go on as before.”
Not if participation in the discount/rebate policy is dependent upon raising prices at retail only on the basis of actual and valid additional costs. As I enumerated before the synergistic effect of pairing the dividend with the discount is that taxation for welfare, unemployment insurance and social security will enable enterprise to eliminate a significant amount of costs so it will be extremely difficult to justify cost increases unless something truly disastrous like loss of a large part of productive capacity for some reason. Also, fixed costs in modern technologically advanced capital intensive economies are very high and competition between and within business models does exist. So if a business wants to inflate their prices they risk losing market share. Most importantly, why would reasonable decision makers want to risk losing their participation rights in a system that doubles the potential revenue for their products and services and if they lose that right they have to get $10 for their product while their competitors only have to get $5 and yet with the rebate still get $10????
Of course as I also pointed out the world is not an entirely rational or ethical place so along with the stick of losing participation rights in the generally beneficial new system, as with any system you could have regulation like economic sin taxes to discourage arbitrary price increases (or excessive price cutting by dominant commercial actors) and tax incentives for honest cost accounting and price decisions.
Market worshiping is only for the faith based economic theorists. Wisdomics-Gracenomics is a highly sensitive ethical system based on wisdom which is the integration of the practical and the ideal….and which also knows the heart of man is basically good…but flawed.
Craig, thanks. This helps a lot. Your positions are now much clearer. Controlling prices is a difficult and potentially dangerous activity. For 30 years I’ve worked in regulation, mostly economic, environmental, and safety. Unlike Europe and Japan where economic regulation (including price) are more widely seen as beneficial, such regulation in the US is sometimes seen as inflating prices and harming consumers in other ways. Negotiating such regulation in the US is difficult at best and in bad situations is a nightmare. Keep this in mind. In my view economic regulation should not be about economics but rather about community welfare and strength. I can win this position in Europe, Japan, and even China. But not in the US. Which remains the spoiled brat among nations.
Ken (16 Jan, 08:16), One has to use the tools and data which are available. That is all that can ever be done. NO physical scientist seeks for perfection, Every measurement has a a range of possible error. At times there are apparently irreconcilable difficulties. This is when new thinking needs to be established which may lead to progress. A current example is that two value of the Hubble constant when measured by different methods differ. It is indicated therefore that new theoretical understanding needs to be developed.
Thank you for your kind remarks about my paper. If you accept its conclusions which are in accord with the empirical evidence, then I would contend that it settles a great deal. It is the only analysis which conforms to the empirical evidence. There is NO conventional analysis which can claim the same. That is a great deal.
Since we can perceive principles, including the principles of law, ethics and psychological realities, causes and effects, we can use natural language and mathematical semiotics to characterize them and their effects. In other words, as in my final edit of my work on axiology & meta-economics & metamoney, we can develop and use equations that deal with qualitative factors, causes & effects as well as quantitative data. To think otherwise requires ignoring the vast majority of factors & issues that cause and/or influence the decisions that cause sociocultural interaction–at the personal & communal levels. Thus, any theory or metatheory lacking concepts, language, semiotics & ecometrics enabling effective analysis of qualitative personal & communal causes & contributing factors is not a realistic work of real science. Science studies and works with what is, real phenomena. To deny the validity and importance of mental, psychosocial, ethical and neurolinguistic phenomena requires ignoring the realities of human intelligence, language and life. Anyone guilty of such delusional foolishness denies his own intelligence and reality. That nullifies any inherently defective theory or metatheory created by such deluded persons. If that still seems hard to accept, I suggest reading EF Schumacher’s essay on Buddhist Economics, available online @ centerforneweconomics.org/publications/buddhist-economics/
Adam Smith’s theory of moral sentiment is worth studying as well.
Frank, yes data and research tools are always limited. But I do not agree that when differences in measured values emerge, this calls for new theoretical understandings. It calls for efforts to reconcile the differences. Which can be as simple as a more inclusive set of tools or slight changes in how measurement is set up. Rushing into new concepts that don’t incorporate the old concepts is dangerous and at times moves the research in unproductive directions. Remember, science is a conservative activity.
Frank, theory is no more than a representation (as best as possible) of the patterns we believe we’ve seen in the observations. It’s the jumping off place for more observations and another presentation of theory. We only use mathematics in the research and theory presentation if it adds to the clarity or detail of the theory and helps us choose what and how we will observe afterwards. Most economics’ use of mathematics provides none of these paybacks. Most use of mathematics by social scientists is marginal on this. Even some physical scientists over use mathematics or use higher levels of functions than necessary. Again, approach mathematics conservatively.
Ken @ 11:04,
“Negotiating such regulation in the US is difficult at best and in bad situations is a nightmare. Keep this in mind. In my view economic regulation should not be about economics but rather about community welfare and strength. I can win this position in Europe, Japan, and even China. But not in the US. Which remains the spoiled brat among nations.”
I would suggest the reason it is (or appears) so difficult is because economists and pundits focus only on the complexities of their discipline and have mostly only put the tip of their toes into visualizing the new MONETARY AND FINANCIAL paradigm which is the elephant in the room and the key to cutting the Gordian knot that ties the two biggest problems that plague modern economies, namely individual monetary scarcity and yet price and asset inflation.
I must have posted a hundred times that the process of wisdom is the integration of factors, truths, etc. in opposing perspectives. Therefore a wise and winning political strategy would be integrating the best aspects of the agendas of opposing parties into a more beneficial set of programs and economic policies….and the policies and regulations of Wisdomics-Gracenomics do exactly that.
They double everyone’s purchasing power and so every business’s potential revenue. That’s a quintessential integration of the interests of opposing political constituencies.
They enable lower taxation and elimination or major downsizing of government bureaucracies while simultaneously eliminating poverty and guaranteeing greater economic democracy than any pol or economist has ever figured out.
If you’re a republican or a democrat and don’t like the hollowing out of our economy by globalization just implement the two major policies of Wisdomics-Gracenomics and then you can rapidly re-industrialize the country in the most efficient technologically advanced and ecologically sane manner possible and not have to worry about unemployment or inflation.
And if you’re EVERYONE and you hate the private banks who “own the joint” why not end their curiously anti-free enterprise monopolistic money creating powers and their equally monopolisitic and dominating paradigm of Debt/Burden/Additional Costs Only…with Abundantly Direct and Reciprocal Monetary Gifting at the summing, ending and terminal expression point of the economic process for every product and service at retail sale?
Wow, Craig, just saw your earlier comment:
“In my view economic regulation should not be about economics but rather about community welfare and strength. I can win this position in Europe, Japan, and even China. But not in the US. Which remains the spoiled brat among nations.”
MM: Bravissimo! Again, I concur completely on the only proper focus & biocentric purpose of valid cultural holonomics & ethical ecometrics. As a 70 YO US citizen, I can go further, and declare the neo-USA much worse than a spoiled teenage brat. Concurring and augmenting Ken Wilbur’s diagnosis, the USA’s “boomeritis” is actually multi-generational ecocidal mania aggravated by pandemic, normative narcissistic+psychosis.
“I would suggest the reason it is (or appears) so difficult is because economists and pundits focus only on the complexities of their discipline and have mostly only put the tip of their toes into visualizing the new MONETARY AND FINANCIAL paradigm which is the elephant in the room and the key to cutting the Gordian knot that ties the two biggest problems that plague modern economies, namely individual monetary scarcity and yet price and asset inflation.”
MM: Yes and no because, as Kohr, Schumacher and other sane, humane theorists realized, economists and most pundits have not only not dipped their toes into the emerging digital monetary/credit pool, they have been without a basis of ethical & logical integrity and a fundamental metatheory (of economics & society) for centuries. We are finally creating and articulating the principles & terms of an ethically, logically self-consistent economic paradigm now, the long-absent meta-economics required for a generally self-consistent (i.e., valid & viable) theory of cultural holonomics.
“I must have posted a hundred times that the process of wisdom is the integration of factors, truths, etc. in opposing perspectives. Therefore a wise and winning political strategy would be integrating the best aspects of the agendas of opposing parties into a more beneficial set of programs and economic policies….and the policies and regulations of Wisdomics-Gracenomics do exactly that.”
MM: “Opposing perspectives” may include valid concepts & terms, but not necessarily. In a multinational culture of corruption, delusion, dysinformation & toxic national-debt-for-profit kleptocracies, opposing notions about reality may be too unrealistic too contain any useful truths or ideas worth considering. Politically tho, I agree, and see the situation as is as our only place to begin a transition to sane, non-ecocidal civilization. I also see your use of “Wisdomics-Gracenomics” as understandable, yet less than ideally scientific and effective. Our mission may be more effectively & rapidly accomplished with terms such as meta-economics, cultural holonimcs, ethical ecometrics, holontology, etc. They may seem more unusual or exotic, yet also more secular and logically specific. The realm of wisdom is clearly the realm of the only valid principles of a metatheory that can support valid economics (i.e., cultural holonomics & ethical ecometrics). This may seem preaching to a choir but, tho it’s a very small choir, I think the mission and new paradigm deserve the best possible foundation and presentation.
Craig, I don’t believe most economists want to visualize any new theory, paradigm, or research approach. I believe most are convinced that as it is economics is the best of all possible worlds.
Ken, Yes, sad, but true. But paradigmists like myself soldier on regardless.
Most of the 32 comments since I referred to Charles DuBois’ “2 + 2 = 4” type argument have been “noise” generated by Ken and Craig, not much damped by Frank and Michael, nor helped by my own dropping out at the earlier point of logic.
In the practical terms illustrated by computer programming, the symbol ‘+’ has to be defined in terms of a method of adding appropriate to what one is adding and by who, e.g. the decimal algorithm in human quantitative terms. Before a computer can add, it has to be taught or have built in a binary algorithm, which can be carried out by switching electrical circuits. However, if one is adding forces in three-dimensional space, one is using continuous complex numbers and the result is not a quantity but an effect symbolised as a Parallelogram of Forces. (Cf. my reference to the Square of Opposition in logic).
Dave, refreshing comments as always. Perhaps we could forget about logic and programming languages for a bit and focus on people and how they actual live their lives.
Ken, we were discussing how to re-establish trust in economics as a science, and Charles’s despair of that on seeing so many economists cannot understand the implications of 2 + 2 = 4 level arguments, never mind science. “Without exception, they do not provide any logic to refute my point”.
So we already know the problem: it is precisely “how they actually live their lives”. Your going on and on about that detracts from our attempts to discuss logic capable of “refuting” their ill-informed opinions (or as I would hope, educating them: enabling some of them to see outside their little boxes; to see Asad’s young lady in the face of the old.
Dave, according to Einstein, The definition of insanity is doing the same thing over and over and expecting different results. Why should a logical examination of human actions (remember there are multiple versions of logical) help us better understand those actions when most human actions are not logical. In whatever ways they live their lives, it is the job of social scientists to study, reveal, and describe that process. Even if it does not fit the social scientist’s definition of logical. If the social scientist chooses to attempt to solve their problems, that works only if the solutions can be understood by those the social scientist studies. And why do you believe teaching them your version of logic would improve their lives? Sapiens invented the most stable and successful cultural form of its history – hunter-gatherer – 5,000 years before any form of logic was invented. In other words, humans function quite well without logic. That’s not to reject logic as useful for humans. Useful, but not a wholesale revision of the species and it’s 200,000-year history.
As to your concerns that most economists don’t understand 2 + 2 = 4 level arguments, that may be the case. But everyone with who I graduated 6th grade understood the rules for addition, subtraction, multiplication, and division and mostly applied them correctly. It’s difficult to accept that economists aren’t as clever as 6th graders.
Ken – I’m sure you must know that the hominid hunter-gatherer culture was probably not invented, but that it emerged around 5 million BCE. However, unless I misinterpret you, to think that early people lacked logic seems an outrageous symptom of hubris and/or ignorance. Wild hunting dogs, wolves, lions, orcas and porpoises use strategic logic very effectively. The most successful lines of human beings used the best logic for the most effective planning, strategy and tactics. The exception was massive over-kill. Yet, unlike us moderns, those hunters & elders of ancient primitive cultures were wise enough to realize that over-kill was counter-productive, in the long-term. So, they stopped doing it.
I think it’s now obvious that not only must the principle and forms of value be thoroughly well defined and understood for any realistic science of cultural economies, deep understanding of logic and meta-logic is clearly a necessity.
Lacking those essential understandings, there can be no understanding of monetary systems and the causal factors of personal & communal motivations.
Robert, intuition and insight tell me we need not fear Craig becoming a Napolean or Stalin.
Craig, I do see what you mean, but the dialog with RL proves my point.
For example, you both resorted to theology & philosophy without achieving any generally acceptable upgrade of economics or its fractured paradigm, meta-economics.
Theological arguments & doctrines & dogma & terms seem woefully inappropriate to the task. Any valid science is based on discovering what is, beyond mere belief & opinion.
Spirituality, religion and religious beliefs, maxims, etc., are clearly potent noetic elements and motivators of human cultural activity. Hence, they can and should be considered for realistic analysis. Yet, they cannot be determining elements of scientific theory and practice.
Ptolemaic cosmology, “physics” and astronomy and pre-Copernican science in general should motivate caution sufficient to settle this point.
Which brings up another typically ignored element of realistic analysis of human culture: history. Since economics is supposed to be a usefully realistic science of human cultural activity, the most effective practice and theory could only integrate the greatest understanding of history. The mainstream ‘economists’ of today can’t agree on what happened 5 or 10 years ago, and none of them seem to agree with Adam Smith or his predeccessors, nor with Simmel or EF Schumacher or Manfred Max-Neef, if they ever even heard of them.
Now, having said all that, with qualifications, I agree with Schumacher, that ‘economics’ without compassion is somewhat like sex without love. It seems self-evident that it’s now much worse, being more like serial rape, rampant pillaging, torture and mass-murder by ecocide.
Craig, it also seems a specious argument to say that the word “grace” is the best term for the pinnacle of wisdom, even divine wisdom. Being a Buddhist, it seems to me that “compassionate wisdom” works well enough, because nontheistic terminology requires no arguable theistic doctrine or belief in a particular religio-cultural paradigm (theology).
“Wisdom” is a psychological, phenomenological, ontological and experientially verifiable fact of healthy human life and culture. We can look it up in a dictionary, instead of scripture.
Likewise, “compassion” is a psychological reality, not an element of religious doctrine.
My 52 years of progressive study & practice of Buddhist psychology, ontology, phenomenology, cosmology, philosophy, ethics, metaphysics, epistemics and meditation convinced me that the greatest expression and practice of wisdom can be called compassionate wisdom.
Granted, without extensive knowledge and deep understanding of the history of religion and Buddhism, optimal capacity for either wisdom or compassion is unlikely.
Sadly, the unscientific discipline now called “economics” seems empty of compassionate wisdom and humanistic bio-ethics. Hence, can it realistically support ethical integrity, scientific honesty or holistic observation, study and analysis of human reality? No, that, and a holistic understanding of history, are impossible without all the essentials mentioned above.
Maybe this thread helps explain why RWER and the post-autistic economics movement that spawned it have yet to accomplish a unitive metatheory of economics–a meta-economics GUT–generally acceptable to and respected by everyone. A heterodox approach is a logical fallacy. Without a single, unitive metatheory, and a realistic record and assessment of history, all the disputant factions of ‘economics’ are like an impossible set of opposing camps of physics or maths, all lacking a unitive foundation of historical accomplishments and hard evidence. How can 4 or 5 conflicting flavors of unrealistic, anti-historic, unethical ‘economics’ ever be mashed-up into a truly helpful real science based on a valid, holotrophic foundation of valid metatheory?
One intelligent human being is an infinitely complex psychophysical reality. Each human relationship involves immeasurable complexities. Each human community is a complex relationship of relationships. So, does it not seem self-evident that truly effective study of human cultural activity requires understanding of all the basic elements of personal and communal reality? What are the most basic elements?
The most basic elements of all phenomena are the enabling/governing principles. Yet, since human culture is so complex, cultural holonomics must be an interdisciplinary endeavor. If we integrate the knowledge of history, philosophy, archeology, anthropology, psychology, zoology, biology and ecology–building on a firm foundation of metatheory & valid principles–then we could have a real science of human cultural economy. Until then, unless I am mistaken, a real science of economics is impossible. It also seems obvious that each ‘economists’ work can only be as good as his/her wisdom, knowledge and understanding of the whole of human life & culture.
Yet, as Kohr realized, replacing ethics with econometrics & unrealistic hypotheses effectively removed goodness and real human value from ‘economics’ as is. How can anyone fix that? My intuition, insight and experience convinced me that replacing economics with bio-ethical axiology, holotrophic cultural anthropology and nontheistic phenomenology–combined as cultural holonomics–is the best bet. Yet, will anyone else care? Is there anyone in the plutonomics arena really interested in a solution, systemic change for the better? Is there a potential majority of economists willing to blow the whistle on ecocidal kleptocracy and its win/lose => lose+lose end game? Who will help to replace it with a healthy global commonwealth and a debt-free, tax-free, win+win monetary/credit paradigm?
Craig, I don’t know the answers to those last 4 questions. Who knows? At this late stage of the game, there may be no cure for stupid, wisdom’s polar opposite.
Michael, I’m not referring to hominid culture, since far as we know hominids have no culture. Sapiens are unique among the genus Homo in that it does create culture. Most anthropologists attribute that to changes in the human brain and nervous system that occurred about 30,000 years ago. These changes gave Sapiens something no other species on earth has – imagination. This gave the species an evolutionary advantage over both other Homo species and over other animals on earth. Sapiens could plan hunts and food gathering without having to experience before hand the routes, times, and land for these actions. Sapiens could imagine these from similar experiences. These changes also had some negative results, but we don’t need to go into those. In terms of brain size, number of neurons, etc., other species on earth are similar to Sapiens, but they don’t have imagination. If I define logic as imagination, then it is obvious no other species has logic. This leads to a related conclusion about Sapiens. One accepted only by some anthropologists. That science was invented with the changes that gave Sapiens imagination. Which means science has existed with Sapiens for 30,000 years or more. Historian Carlo Ginzburg contends that this “may be the oldest act in the intellectual history of the human race: the hunter squatting on the ground, studying the tracks of his quarry.” Anthropologist Louis Liebenberg has extended this idea, arguing at book length that the sophisticated tracking ability of foragers constitutes “the origin of science.” According to his thesis, tracking “is based on hypothetico-deductive reasoning,” and “is a science that requires fundamentally the same intellectual abilities as modern physics and mathematics.” Whether we accept Ginzberg’s and Liebenberg’s conclusions, we must accept that Sapiens with a large and multilayered brain combined with imagination is clearly the most imposing species on earth. The so-called logic of Aristotle or Socrates makes no noticeable improvements in the evolutionary advantages of Sapiens. Sapiens had already invented and used successfully the basic ways of life that make science. This is far superior to ways of life based on theorizing and little experience. Plus, in my view Sapiens has been involved in a struggle between successful and unsuccessful evolution for nearly 15,000 years which has attempted to corrupt the scientific life created by Sapiens at least 30,000 years-ago.
With the coming of Sapiens history also arrives on the scene. Sapiens invented history from time and the ways of life requirements of culture. Culture is beliefs. We give them lots of names – norms, standards, rules, spirituality, faith, etc. Culture, like all the things that flow from it is a practical creation. Sapiens invent these for use. If they fail, then Sapiens invents replacements, if possible. If a culture is destroyed, then no one is left to change or renew it. Thousands of years of evolution and cultural adaptation have left remnants of failed cultures that are dysfunctional, creating discord among Sapiens today.
One of the inventions flowing from culture that’s always fascinated me is love, particularly sexual love. While it may seem fragile, love has served several purposes for Sapiens. It provides a safe and secure way for Sapiens to channel its emotions, to maximize benefit and minimize harm from these emotions for the community members. It strengthens community member bonds and commitment to the community. Love also provides approved routes for the release of sexual tensions. When Sapiens began to expand and focus it emotional forms, one of its inventions was compassionate love. Love that promised no benefit except the satisfaction of helping a fellow member of Sapiens. This increased even further the strength of community bonds, making Sapiens’ communities even stronger and safer. But as I indicate above compassion has been corrupted by years of communities being taken advantage of by members deluded by failed evolutionary paths. Paths that take them away from the survival of Sapiens.
“In other words, humans function quite well without logic”.
So do dumb animals.
Dave, good. Now you get it.
Michael. You wrote “Robert, intuition and insight tell me we need not fear Craig becoming a Napolean or Stalin.”
But that does not prevent people from advocating ideas that produce a N or a Stalin. You must have watched perfectly decent people support Stalinism in the West. I argued with them in West German universities in the 1960s and 1970s. I also talked with Germans who lived through the Hitler years, who believed that Christianity was compatible with National Socialism. You don’t have to be one to help one.
When I was a young man I was fired for being a soviet sympathizer. Why? Because I told my co-workers that Russia did more in WWII to defeat Germany than the US did. I was accused of being a traitor and fired. I did not stay around to argue because my life was in danger. That happened during the McCarthy era.
Michael’
“Craig, I do see what you mean, but the dialog with RL proves my point.
For example, you both resorted to theology & philosophy without achieving any generally acceptable upgrade of economics or its fractured paradigm, meta-economics.
Actually I didn’t resort to theology, but rather natural philosophy/spirituality which is Buddhist to the core. And if looked at and understood I’ve (over and over) described the concept and temporal universe effects of the new paradigm. It’s just that it’s still going splat! whenever it hits orthodoxy and mind filters created by same. But I soldier on. :)
“Theological arguments & doctrines & dogma & terms seem woefully inappropriate to the task. Any valid science is based on discovering what is, beyond mere belief & opinion.
Spirituality, religion and religious beliefs, maxims, etc., are clearly potent noetic elements and motivators of human cultural activity. Hence, they can and should be considered for realistic analysis. Yet, they cannot be determining elements of scientific theory and practice.”
I agree. However, grace (or any other word other wisdom traditions hang on it like satori-kensho, samadhi, atonement, “the friend”, moksha, etc. is referring to the same experience. Also, grace as in the dynamic, interactive, integrative flow of the cosmos (shiva’s dance etc. plug in the wisdom tradition concept) IS the most cutting edge quantum physics description of ACTUAL temporal universe reality so there’s no mere duality necessary to argue about and one can see (if they drop their own mind filters) that the ultimate reality is the integrative trinity-unity-oneness-process of the cosmic code that recognizes that all perspectives/realities and their opposites have truth in them including the existential reality of human consciousness that perceives and can unify them. After all as the zen saying goes: Wherever you go there YOU are.
Wisdom includes Science, and there is no necessary conflict between the two.
Finally, grace as in love in action is identical to the Buddhist “compassionate wisdom” so far as I can logically discern.
I sense you’ll be agreeing with me in this post.
Mike Rother in Toyota Kata notes that “Toyota’s shop floors are not connected to the IT system. Managerial accounting control systems can exacerbate the negative effects of managing from a distance via metrics, since reported data arrives late and leaders interact even less with the reality of the situation. This is why accounting control systems have little or no place on factory floors at Toyota. Factory leaders at Toyota do not refer to accounting report to get an understanding of a situation. p. 167. H. Thomas Johnson, who wrote, with Kaplan, the prize-winner book, Relevance Lost (1987) says the same thing after study Toyota’s Georgetown operations for years. So what is all this number racket versus human behavior.
Yes, and the wisdom of integrating both calculus and direct present time observation would undoubtedly lead us to a deeper understanding.
But Rother and Johnson and a host of others say they don’t integrate, point final.
So attempts to integrate observations and truths in different bodies of knowledge is impossible. Nice fragmentary, departmentalizing and ossifying “scientific” point of view that is.
“Both Mike Rother and Jeff Liker will be at KataCon5 (Savannah, GA, Feb 18-19) this year and if you haven’t heard, they are celebrating significant milestones. It was 10 years ago that Rother published Toyota Kata, 15 years since Liker published The Toyota Way, and 20 Years since Rother published Learning to See.
We’re holding a small reception the night before KataCon and will acknowledge these milestones by presenting them with notes from YOU! Follow this link and let them know what their contributions have meant to you professionally (and personally) and we’ll present it to them during the reception.”
Craig, I fear you don’t know a thing about the Kata con movement, and, therefore, do not understand attempts to base sustainable business on a scientific basis for the past 40 or so years. Don’t go outside business and industry to find a “science” that explains them, develop the science within their confines, so that the scientific methods and principles have practical application. I don’t know how old you are but I started studying sustainable management over 25 years ago, and wrote about it in my work. It’s shocking that such an important event has passed over you.
Well Robert I can only say that I’m simply taking the most basic and potent factor in a monetary economy, namely money and its current 5000 year old paradigm, and utilizing wisdom and wisdom’s process to try to decipher and apply the new one based on a study of the signatures of historical paradigm changes. I’m inclined to consider the new paradigm change a couple of mental integrations higher and of more importance than sustainable management of the the present one.
Craig, if you haven’t investigated any of this, how can you say that studying money is a couple of integrations higher than the study of the sustainability of firms, economic communities, and nations. Maybe sustainability is the new paradigm not the one you are hankering after. If you are not continually immersed in the work world you will not be able to follow sustainability as science. Knowing a scientific discipline is not a substitute for knowing work environments.
Because money is the supreme factor and deepest problem to solve in a MONETARY economy and we DO live in a monetary economy. Of course managerial problems are important and I’d be the last person to suggest we not integrate study of them into economics. As wisdom is the integrative process integration is “my thing”.
It is a much observed behavioral science and psycho-analytic phenomenon that when a neurotic confronts their most basic conflict virtually all of related and even peripheral neurotic tendencies either disappear or dissipate. As with human beings, so with human systems.
Sustainability is exquisitely important. And the only way that we are ever going to fund the research and implement the programs to accomplish it is to make sure we see past the current paradigm of private finance and its elites who tell us it is “too expensive”. As I am trying make the new paradigm of Monetary Gifting the new primary and reigning paradigm that makes it quintessentially important in that pursuit.
We do live in a monetary economy in anglo-saxonia. But if people want to sustain a manufacturing economy and the communities that accompanied them, they cannot use the tools and methods developed in a monetary economy to do so. Hegel’s dialectic in our context calls for the discontinuities inherent in finance capitalism to be the thesis, but the antithesis, sustainabilities cannot be sought in finance capitalism; they must be found somewhere else. You talk of Wisdom, which is far distant from the Shop Floor. I talk of a science rooted in the shop floor being the antithesis of finance capitalism and the way forward.
I’m the last person to affirm finance capitalism. The synthesis of finance capitalism and democratic socialism is neither of these, but the thirdness greater oneness of their truths, workabilities, applicabilities and highest ethical considerations AKA Direct Monetary Distributism. When in doubt integrate….and keep on integrating.
Craig,”I’m inclined to consider the new paradigm change a couple of mental integrations higher and of more importance than sustainable management of the the present one.”
I can’t let you get away with such ignorance.
Mike Rother in Toyota Kata wrote, “The way of thinking and acting described here has a potential beyond the business world. It shows us a scientifically systematic and constructive way of dealing with problems, uncertainty, and change, in other words , how we can work together and achieve beyond what we can see” p. xx.
Sustainable management is not about staying ‘in the present one,’ because in the present one, sustainability is not possible. And you are staying in the present one with your assumptions and methods about how the world works, while Rother method’s are designed for us to achieve beyond what we can see–a new paradigm. Read the book damm it, only 292 pages long.
Robert,
I don’t have to even read it…because if it is truly integrative…I know I already agree with it. I’m NOT slamming integrative managerialism. How you innovate the productive process to make it more efficient and ecologically sane is extremely important. I would completely affirm that. But Research/Data Gathering STILL REMAINS a couple of MENTAL integrations below paradigm perception/paradigm change….which will synergize not only such innovation and management, but by definition every other aspect of economics/the productive process.
I’m on the same page with you, so “Saul, Saul, why do you kick against the sticks?”
“achieve beyond what we can see,” how is that intergrative managerialism.. Learning How to See is not integrative managerialism, but understanding process, the essence of sustainability. What is the process of sustaining yourself?
Robert, reacting to your comments of Toyoto I’ve been looking at the history of Scientific Management, and it doesn’t seem to me pioneers like Taylor and Gilbreth were managing the shop floor, they were discovering problems and resolving them by process analysis and staff changes or retraining. One of my heros was Lord Stamp, sometime MD of the LMS railway, whose statistics pinpointed problems which had remained hidden for years. My own work with reliability and maintenance management was related to these.
Craig and Robert, the management pioneer Mary Parker Follett’s collected works, “Dynamic Administration”, begin with an essay on “Constructive Conflict” which considers three ways of dealing with it: domination, compromise and integration. Her example of integration features two guys who apparently want different things but find a solution which unexpectly satisfies both of them. The starting point is facing up to there being a difference. Integration requires circular behaviour in which “Employees do not respond only to their employers but to the relationship between themselves and their employer”.
So what’s the connection between this and mathematical integration? The latter adds a dimension (a degree of freedom), but loses (abstracts) some of the original information. Likewise, stepping back from the concrete problem to see the positions of both parties at the same time creates the space necessary to see the solution.
Dave, Japanese manufacturers in the 1920s were very interested in scientific management (Taylorism) and they sent delegations abroad to study it. These delegations, however, were not just composed of managers who would impose it, but of workers with managers, because the workers would have to implement it. This is not managerialism and it makes all the difference between the American and the Japanese approach to management.
That’s an excellent illustration of the process of wisdom. Now if we’d just do that on the grand theoretical and paradigmatic levels….we’d be getting somewhere instead of forever ruminating over the entrails of a goat which is the passion and obsession of the current paradigm of inquiry AKA Science ONLY.
Dave, Craig, when my wife came to Honolulu, she got a job as a salesperson at Neiman Marcus. She came home astonished, because the management told her, “if a customer asks a question, do not answer, because answering customers’ questions is a management prerogative.” Nothing like that would happen in a communist store in Poland, she said, it is the salesperson’s job to talk with the customer and there is no management staff walking around supervising salespeople in their relations with customers. Managerialism!
Wow! This may be the richest RWER thread yet. Very encouraging yet, unless I’m mistaken, there was no valid definition of value. Effective analysis & dialog require accepting the semi-transcendant, often arbitrary but always qualitative nature of the principle of “value” and all the associated causes and effects in our personal & communal realities. There will never be an understanding of any cultural “economy” without recognizing and understanding the actual qualitative issues and causal factors influencing and motivating personal decisions that determine the nature and outcomes of communal activities. Naturally, a science of cultural economies requires consideration of ethics, cultural specifics, characteristic psychosocial dymaics and, for scientifically artistic (effective) results, useful ethical ecometrics. As I’ve claimed in other comments, valid theory and successful practice also require a singular, viable foundation of meta-theory, a logically consistent meta-economics. If I am wrong about any of this, please correct me, convincingly, in sufficient detail. Thanks, sincerely.
You’re quite right, but you being a relatively new poster here you missed my defining value which is the superior and scientifically inclusive human mental discipline of wisdom and its pinnacle natural philosophical concept of grace whose relevant aspect of Gifting is not only the new monetary, economic and financial paradigm, but the concept behind every human paradigm change.
Craig > Bravo! Tho not a new commentator on RWER’s blogsite, I was new to this potent thread. So, I’m inexpressively grateful to find your approach, which is definitely axiological. However, I think that we should discuss the issues and details in personal dialog. Ok? I think that we will very soon reach a very productive, co-creative rappore, re: a practical alternative to global misrule by kleptocracy by default. Otherwise, we may as well join the Barnumite Banksters, whose motto is obviously “never give a sucker an even break.” Rite [sic]?
Heh boy, I appreciate that and you do seem to have a philosophical bent and a lot of the problems correctly identified, but it’s probably just what I don’t need. I already spend too much time trying to elicit paradigm perception and illuminate paradigm change instead of dedicating-ly working on three books at the same time. For now lets see if we truly have an integrative mindset in common via this forum. Thanks again, and after the first 35 or so years of my young adulthood not being an ambitious careerist I might have had thoughts of chucking it all and getting into finance….but I might have gone nuts from not being able to sleep due to the ethical compromise. :)
Craig – I appreciate your dilemma. Yet, I think you might appreciate comparing notes, especially if your books-in-progress involve economics and a practical alternative to ecocidal misrule-by-default. I’m 70 and finishing up a book on axiology & meta-economics metatheory in R&D since 1986. I’m not a primadonna egomaniac. I don’t mind sharing & collaborating & brainstorming new stratagems. I started getting into economics & real-world ontology because I was a frustrated real-world ecotect too far ahead of my time, not because I wanted to be a respected plutonomist. Cheers, etc. ~
This thread begin with the word trust and premise that it might be desirable for the field of economics to be beneficiary of more of it. The first question should be “What kind of trust?”
1.There is trust that is earned from a history of trustworthy actions.
2.There is trust that is forced upon people by a lack of alternatives. Poorly placed trust is a license to lie, steal, pillage and murder.
Do we have to trust the economists?
It also comes to mind that credit is trust. This corresponds to one of three types of exchange of value transactions.
1.Barter-one persons property at its perceived value directly exchanged for another persons property of equivalent perceived value at the same point in time.
a. Low efficiency.
b. Simple
2. Credit- (trust) property relinquished with the trust that the second party in the transfer will reciprocate someday. This type can work, but is subject to many problems.
a. The parties are not using the same definition of trust.
b. The present and future values are not accurately quantified.
c. Changes of perceived value with time and circumstance.
d. Low efficiency
e. No price quantification
f. Complex in practice
3. Barter exchange with a standardized(trustworthy type 1) money that quantifies the value exchanged and satisfies and negates future obligations.
a. High efficiency
b. Accurate prices
c. Requires sovereign enforcement of standardization
d. Subject to political manipulation and debasement.
Due to a historical shortage of type 1 money all societies have utilized complex hybrids of these three basic property transactions. Creating money and debt in perpetuity on type 2 trust that yields type 2 prices.
Michael M. brought forth the point of no definition of value.
There are many qualifiers of value and it is important to specify which one is being discussed.
1. Perceived value. what a person thinks a thing is worth to them.
2. Exchange value. Quantification of perceived value in an exchange.
3. Use value,labor value,etc.
Daily exchange of value between is simple. It has to be or it doesn’t work. Promises of producing the “Grand theory of value, exchange and everything” just waiting on the next order of quadratic equations to be invoked are not trustworthy.
I have learned much from everyone’s comments. Clarifying some of my concepts and discarding others. What is remarkable is the shared values displayed but hard to describe due to inaccurate definitions.Everyone wants and the majority know they benefit from equitable property exchanges.
Is this misunderstanding an externality of the “Tower of Bable” or do things just work that way?
Thanks everyone.
First few lines of this, on trust – including credit as trust – spot on. The discussion, lucid as it is, then vears onto valuation, which isn’t lucid, so I agree, “grand theories of value” are not trustworthy. However, as I was taught via production economics, that is not how quadratic equations are used. These generate a u-shaped curve, the level section of which can be interpreted as an optimum and used to indicate if production levels at a given cost will make a profit or loss. This, however, is hypothetical – before the event – and merely a rule of thumb, for the curve is quite flat, so the point chosen is not critical. In communications engineering there is a similar rule of thumb: that the resistance of a channel should be “matched” to that of its source; but in practice there is usually enough surplus energy for this to matter very little.
All we need is “near enough”.
“What is remarkable is the shared values displayed but hard to describe due to inaccurate definitions”. So? The problem surely is the” poorly placed trust” of literal minds:
“2.There is trust that is forced upon people by a lack of alternatives [as in alternative understandings]. Poorly placed trust is a license to lie, steal, pillage and murder”.
So “Do we have to trust the economists?” No. It is up to them individually to earn our trust.
RD – I include intrinsic value, natural value, maths value and monetary value. Dave et al, I agree with Leopold Khor, Ivan Illich and EF Schumacher, that removing ethics from economics killed it, making it a recipe for and an exercise of evil (as in the sense Socrates understood it). Ignoring the importance of value–in all its dimensions–prevents understanding of commerce, credit, money, monetary systems, monetary policy, politics and psychology. That deficiency prevents valid practice and teaching of economics. It also prevents creation and understanding of valid meta-economics, with logical integrity sufficient for viable economic theory. Thus, without a valid, logical, ethical foundation of meta-economic metatheory “economics” will be worse than useless, having only negative value, fraudulent, unrealistic hypotheses, conjectures and fictions.
The “discipline” of macro-economics is really just a recent obfuscatory means of avoiding looking at the paradigm of Debt Only and the almost complete coalescence of the financialization of economies….and the the resolution of that mistake is the re-retailization of same.
Craig, I suppose there’s a valid use-case for calling it merely the “Debt Only” paradigm but, tho this is a heady academic arena, I think calling it the piracy paradigm or klrptocracy paradigm or, for econometric techies, the plutonomy paradigm. It also seems worth pointing out the financialization of culture, the inherently collateral corruption of civilization and the corrupt dyseducation of human minds. Not sure what you mean by re-retailization of the same old con-game. Yet, the only possible solution I see is a new alternative that supports & sustains nontoxic, non-ecocidal culture, globally. Now, I need to get back to establishing the GCDA & GCCS as actual realities. Cheers ~
Michael,
I call it the paradigm of Debt or Debt/Burden/Additional Cost Only because that specific paradigm (there are many unconsciously bouncing around inside every individual’s head) is most problematically relevant to economics. The other labels you put on them are accurate as well, but I like focusing in the primary/operant causes. I believe its one of the aspects of what I refer to as paradigm perception and as paradigms are integrative wholistic “things” themselves (they are a single concept that describe and define entire patterns) they reflect the process of wisdom itself.
From your other post to me that’s why I call my work Wisdomics-Gracenomics because its the thing that economic theorizing is most missing, that is wisdom and its pinnacle natural philosophical concept of grace whose various aspects have actually always been behind every historical paradigm change. I’ve mentioned here many times that wisdom includes the scientific method within it. Perhaps I could call it Scientific Wisdomics-Gracenomics and now that I think of it that might be better as it is a trinity-unity-oneness mental analytic process which squares with the subject of one of my other books The Cosmic Code which emphasizes the unitary trinitarian process itself which spoken is: an integrated duality within an integrative trinity-unity-oneness-process. You could fit it into the cosmic code either as
[(Science x Wisdom) —> Gracenomics ] or
[ (Economics x Wisdom) —> Wisdomics-Gracenomics ]
At any rate trinity-unity-oneness-process is seen throughout logic, mathematics, nature, consciousness studies/spirituality, etc. etc.
[ (1 + 2) —> 3 ], [ (2 + 3) —> 5 ], —> the Fibonacci sequence
Hegel’s dialectic
[ (the symmetrical sides of a leaf) —> the stem from which they both arose ]
[ (the abreactive/irrational dualistic character of a zen koan)
—> satori ]
[ (capitalism x socialism) —> The profit making system of Direct and Reciprocal Monetary Distributism ]
*******************************
To me finance isn’t a legitimate business model at all. Money being the life’s blood of individual and commercial survival and yet it dominates everyone and every other business model….instead of serving them. Money is a great tool that I see no real reason to alter or abandon, but enabling/justifying its power to dominate is a form of negative ethics. To me it’s not real to think that finance can be/remain a profit making business model. In order to rationally and ethically control the power and necessity of finance it must become a non-profit public utility that is guided by the unimpeachable concept and ethic of grace.
By “the re-retailization” of the economy I mean doing the above with finance, realizing that the purpose of production is consumption and that retail sale is the point where the former becomes the latter and that without the 5000 year old dominating and de-stabilizing intrusion of both its private and publicly administered varieties (unless of course the latter is, again, guided by the concept of grace) we could have a stable, fair, ethical and much more abundant economy for all….by focusing on the bringing of production to the point of consumption/retail sale.
Beware of collective nouns.
Of course. But we should also seek them. Even though parochial religion is almost certainly delusive, if we do not seek the EXPERIENCES of god in order to self actualize them we live a hapless, one eyed, pitiful and potentially dangerous existence.
So you are the world historical figure through whom the experiences of god are being self actualized. Its a messy business. Hegel thought Napoleon was a world historical figure fulfilling this role and N said what are the lives of a million men to a man like myself. Start by valuing the lives of every individual, or you end up a mass murderer.
Of course I never made any such claim. I DO claim that is everyone’s adult responsibility though. The clarity of present time is a lot less messy than science or any other orthodoxy.
“The clarity of present time is a lot less messy than science or any other orthodoxy.”
Historians have the advantage, because they make the final judgments about “the clarity of a present time.” And I can assure you that people do not have much of an understanding about what is going on in the time they live. That was Hegel’s point: The owl of minerva sets flight at dusk.” A lot said about the promise of socialism after WWII is not being repeated now. The failure was not capitalism but socialism. Same is true of social science, we get religiosity today,. because of the failure of the social sciences to delivery on their promises made after WWII.
Robert, the social sciences after World War II were generally undermined and then co-opted by big science from the governments and large corporations/universities. These offered first rate research facilities, easy publication, and guaranteed esteem. Many social scientists took the pay offs. And many of those who did not were marginalized. Socialism proved no match for the money and propaganda of rich fascists and international capitalists. Not only was socialism a poverty-stricken political movement, but spies penetrated it regularly and eventually inverted its message to the one we hear today about small government, low taxes for the rich, and trickle-down tax policy. Socialism became socialism for the rich and big corporations. In this very real sense socialism has failed.
Here are two examples that illustrate your points, Ken. In the 1980s I wanted to apply for a grant from the economics section of the National Science Foundation. The section had fallen under the control of econometricians and neoclassical economists. I wanted to write the history of how they had taken over economics. I was told that the economics section would not fund research of an historical nature, only research that followed the methodologies of the econometricians and mathematical modellers. After a long telephone conversation with the economic’s section people, I was convinced not even to submit an application. My historical methods would never be approved. So I didn’t.
Earlier, I had asked the Ford Foundation to fund a political study of France. I was told that the Ford Foundation had undergone a policy change, as a result of which all its resources were devoted to upgrading the scientific content of business studies. There was no money left for the humanities. Ironically, the upgrading of the scientific content of the business school education, had led to the econometrician and mathematical modeling take over of the economic section of the national science foundation, that stopped my study of their takeover.
Robert, Daniel Bell wrote a book-length treatment of the social sciences since World War Two for Encyclopedia Britannica in 1980-1982. A few quotes from the book helps understand the direction the social sciences were moving or being moved before and after the war. ”In that towering façade, The Principles of Sociology (whose construction took two decades, from 1876 to 1896, to complete). Spencer sought to demonstrate that all social phenomena—in particular the tendency of social arrangements to come into stable equilibrium—conform to invariant laws.” “In the twentieth century the social sciences moved away from these large sweeping historical generalizations and the building of chambered ziggurats. In theory, the social sciences became ahistorical and analytical; in detail they became empirical; and in method, largely quantitative.” “The move to an analytical mode had long been evident in economics—a term that was not established until it was used by Alfred Marshall in 1890 in his Principles.” “After Marshall economics became an ahistorical ‘analytical engine,’ intent (following the example of classical mechanics) on setting forth basic relationships (e.g., supply and demand, investment and consumption, indifference curves, and opportunity costs) which , when given quantitative magnitudes would provide the coefficients of invariance that would be applicable as a set of economizing techniques to all choice and scarcity situations.” “In research, the change was away from speculative generalizations to data collection, case studies, surveys, and participant observation.” “An indicator [1980] of the spread of this mode of analysis [Samuelson’s] is that while thirty years ago [1950] graduate students in economics did little or no mathematics, a graduate student today [1980] would not be admitted unless he or she were proficient in advanced algebra and calculus; and, while Samuelson’s Foundations was difficult for his contemporaries, a graduate student is now expected to handle its mathematical reasoning with relative ease.”
Robert, since you mention the Ford Foundation, allow me to share this. In its 1952 annual report the Foundation invented the term “behavioral sciences.” The Foundation’s use of the term “behavioral sciences” is not equivalent to the usual definition of the social sciences as a certain group of academic disciplines. Rather, it denotes those intellectual activities that contribute to the understanding of individual behavior and human relations, no matter where they may be located academically. Going forward the Foundation focused on funding three areas in the behavioral sciences. Originally, two objectives were assigned to the program: to increase scientific knowledge of human behavior, and to facilitate the application of such knowledge to human affairs. In order to reach these ends, the Foundation recognizes an intermediate objective, that of supporting the technical development of the behavioral sciences. Since 1952, major emphasis was given to grants for technical development. The other major foundations followed suit, as did the National Science Foundation, and most major universities. You can see why your proposals did not fit their goals. This is equated by the foundations, etc. as the behavioral sciences becoming “hard science.”
Ken, in 1982 I was appointed to the Esso Chair at the European Institute for Advanced Studies in management. It was a mistake because, among the people who appointed me, was Marshal Robinson, former vp of the Ford Foundation program that brought science to business education. I mentioned to Robinson that the Ford Foundation had stopped financing grants in the humanities; his reply, “and rightly so.” When Marshall eventually found out that I opposed the scientization of management, he tried to get me fired from the Esso Chair and sent packing back to Hawaii, but the Belgians on the Committee stood up for me and I kept the job — challenging the scientization.
And “rightly so,” Robert. Such opposition threatened plans that had been in place and changing the world since the end of WWII. But the report points out that while behavioral science is primary, other disciplines are still important. “Of importance to the intellectual development of the behavioral sciences is the problem of improving their relationship with such disciplines as history, social and political philosophy, humanistic studies and certain phases of economics. Today this relationship is distinguished perhaps as much by recrimination and doctrinal dispute as by scholarly collaboration. In the conviction that valuable contributions to the understanding of man can be made by both sides, the Foundation announced in 1952 and put into effect in 1953 a program of support for interdisciplinary research and study.” I guess you were not sufficiently “cooperative” or “supportive.”
Right. I finished my introduction to my 1984 book, The End of the Practical Man, which Al Chandler mistakenly thought was in support of managerialism, and this made him support my appointment to the Esso Chair, with “This study should not pass theirs, as it were like two ships in the night, theirs charged with a cargo of neoclassic economic essences spiked with cliometric data, and mine laden with its burden of institutional history. Cliometric and economic deterministic studies and institutional studies should not reach different conclusions about relative entrepreneurial performance. That they have, the cliometric and economic deterministic studies claim, results from the inapplicability of institutional histories, like those on education, to the subject of entrepreneurial performance. I argue that the revisionists are wrong because, for one reason, their explanatory models and research methods have not permitted them to explore entrepreneurial performance, 1880 to 1940.” Why would they appoint me to a chair, whose purpose, I opposed? They must not have read what I had been writing.
Robert, a more important question, why would you accept the chair if you knew what it involved? Looks like both sides failed to do their homework.
Good question. The answer is not too complicated. At the European Institute for advanced studies in management, a fight was going on between two factions for control. One was the American Sponsored scientific management crowd, e.g. Marshall Robinson and Earl Cheit, who wanted to use the Esso Chair to spread US scientific management techniques into European institutions of higher education; the second group were the people actually running the EIASM, who feared the First Group would spend the Esso Chair grant on a lot of expensive trips for US delegations coming to Europe, with their wives, and nothing to show for it at the end. The in-house managers thought if I had the chair I would produce research of value on management, and not just another ream of paper for the circular file.
In 2012, I was invited to EIASM to celebrate the 7 Lustrum of its founding. I had, with Spender, in 2011, just published a book, Confronting Managerialism. The keynote speaker, to my surprise, praised Confronting Managerialism for having brought Managerialism into question. If I had not accepted that two year appointment to the Esso Chair I would never have been able to work in a managerialist milieu to learn about them and produce my subsequent critique. That work and previous publications, vindicated the faith that my support group had in me in 1982.
[ (Thesis x Antithesis) —> Synthesis/Wisdom ] ….is always the better/best progressive way.
Craig, so where did Hegel’s dialectic lead us, to Marxism, and Fascism. Give us a break from this rubbish.
Rubbish? Nonsense. Marxism and fascism are MERE reactionary non-integrated dualities as in the (Thesis x Antithesis) (Marxism x Capitalism) (Fascism x Democratic Republicanism) within the integrative trinity-unity-oneness-process….NOT actual integrations let alone the deep and transformative kind AKA paradigm change.
You’re the historian, the oft failure of human societies and civilizations to resolve their major problems and hence rejuvenate themselves ought to be a well established historical fact to you.
Marx cobbed Hegel’s dialectic in an ideological attempt to justify his labor theory of value which has been fairly well if not completely invalidated by Steve Keen. Socialism as well as capitalism have separate truths, workabilities and applicabilities that can be integrated in order to attain a thirdness greater oneness and when that thirdness greater oneness is guided by the unimpeachable NATURAL philosophical concept of grace as in monetary gifting and its
aligned policies of a universal dividend and 50% discount/rebate policy at the ending/tipping point of retail sale….there you go….paradigm change.
I know simplicity is anathema to the merely scientific minded, but wisdom which includes the scientific method (a trinitarian process itself) leads to good science and scientific breakthroughs:
[ ( Hypothesis —> (dualistic process of determining empirical truth or falsity) ]
[ (Science x Wisdom) —> Wholistic/Integrative Mindset ]
“Socialism as well as capitalism have separate truths, workabilities and applicabilities that can be integrated in order to attain a thirdness greater oneness and when that thirdness greater oneness is guided by the unimpeachable NATURAL philosophical concept of grace as in monetary gifting and its
aligned policies of a universal dividend and 50% discount/rebate policy at the ending/tipping point of retail sale….there you go….paradigm change”
Marxist socialism denies all of this and Marx was one powerful thinker. Did you ever actually try to understand how Marx stood Hegel on his head to derive dialectical materialism, a concept that has been a power force in moving peoples minds.Labor theory of value was refuted by marginalists in the 19th century not Steve King, as were theories about the inevitability of proletarian revolt, Bernstein’s revisionism, for example. I’m sorry Craig, anybody with any knowledge of modern capitalism and socialism would hardly think their “truths” could be amalgamated. Its a bad idea.
Your whole post shows why you’re not understanding me: It’s reactionary and invalidative….instead of being integrative.
Of course marxists deny this….they’re more interested in being right in their own minds than pursuing the integrative greater truth.
“I’m sorry Craig, anybody with any knowledge of modern capitalism and socialism would hardly think their “truths” could be amalgamated. Its a bad idea.”
An amalgamation is NOT an integration. Mixing water and oil is an amalgamation, taking two elemental factors and combining them so that a synthesis/thirdness greater oneness is the reality….is an integration. THAT is a good idea. In fact it is the supreme scientific ethic of objectivity and pursuit of temporal universe truth….enabled by and included within wisdom which is the superior human mental discipline.
Wisdom/paradigm perception is the method and result of integrating essence (the single concept that defines a paradigm) and pattern (where the effects of essence take place).
How scientific is that? The adverbs supremely and enlightening come to mind.
Craig, I tried to get you to think outside the box, when I stressed the importance of new involvement of people in sustainability management. I’m sure you know nothing about it, but you brushed my suggestion aside as if it were unworthy of your lofty thoughts. You’re wrong but your mind is closed to learning why.
Brushing it aside is a mis-characterization. I believe in an integrative ethic. I may have said (or meant) that sustainability management as a subject was of lesser urgency and importance than deciphering and implementing the new monetary, economic and financial paradigm….so that finance
was no longer THE unnecessary stumbling block TO sustainability, but, being integrative, I would never say that they couldn’t be done concurrently.
I’m on your side, so give me a little bit of a break, ok?
Craig et al – It seems we do have a discussion of the new paradigm of what I choose to call the cultural economy of the modern civilization emerging (or dying of ethicidal/ecocidal mania). Appropriate terminology seems important, but not as important as actively using the best functional principles & concepts, systems, subsystems, component currencies/credits, and methods. It seems self-evident that the proof of which theoretical presentation will win the day (or tomorrow) will be the pudding most popular & nourishing for the target market, us losing-class 99%ers. That is my mission & prime objective.
Hence, Art Johnson and I will be hosting an evolutionary series of hybrid cyber-focus group + panel discussion + brainstorming sessions with appropriate prospective “early adopters” and strategic enterprise allies. Feel free to request access, but remember, this will not be a multi-soapbox arena for quasi-religious theoretical debate. It will be about finding out what the target market participants think they need, what they want, what they trust, what they do not trust, what they know & don’t, what they understand & don’t.
BTW, my coinage of “cultural holonomics” for use as a formal successor to “economics” is due to my respect for David Bohm’s work and intuitive insights & conjectures, re: holotrophic universe cosmology. My coining of “ethical ecometrics” enables thinking & talking about ways to use semiotics & equations to formalize the qualitative side of psychosocial & cultural interactions for more effective study & prediction of causes & effects. That’s why I prefer a scientifically secular approach to ontology and axiology that enables the least muddy phenomenology & cultural anthropology required for the best results, i.e., effective practice and a saner civilization ASAP.
Of course I’ll give you a little bit of a break, even a big bit of a break. We both agree that we are in a crisis era in our Western Civilization, and that finance investor capitalism has provoked this crisis. I just am emphasizing that it is not what economists say that matter, in their spats, but what they actually DO to defeat finance investor capitalism, and much of what they DO, although not in the US, involves working in sustainability, continuous improvement management.
Agreed.
I woould like to distance Michael Monterey’s comment at January 17, 2019 at 10:03 pm from Ken Zimmerman’s immediate “contrary Mary” trolling of it. The short answer to Ken is that animal logic is not word logic, and without words and indeed story telling or written words one does not have history. (Hence my use of the word ‘dumb’ in a comment which got separated from Ken’s reducing humans to animals).
Animals learn by example, and do share what they learn, but so do we. In short we have two types of logic, which in in the computer analogy can be seen to be low-speed (discovery) logic and high speed (indexing) logic with which to look up and correlate answers we have already found. By now it is well known that human brains are in two halves, the right half vision and the left half word oriented. Having got an index, one can index both objects and processes. One can sort out many problems quickly by simply manipulating the index and imagine known processes being applied to objects they haven’t been used on before.
Even before we invented mathematical short-hands for varying the operation of flexible processes, we were able to address in story form not just the every day question of “What shall we do tomorrow?” but Why are we here? Ken’s question is more “Why should we love each other?”, which he anwers in terms of everyday consequences. In response to Michael and Craig, Buddhism’s question is more “What are the characteristics of this world we are living in?”, Kohr, Illich and eventually Schumacher found the answer to that in the Biblical story of a Father who loves his children creating a garden for them, the problem of a hunter-gatherer who killed rather than learned from his vegetarian brother, and predatory elites who did likewise, believing “God is Dead”; then, God’s message via Christ’s resurrection that he wasn’t. So Ken’s uncertain sympathy and the grown-up Buddhist/Christian agreement that we should love our brothers are only half this story: we should also gratefully return God’s love.
Prior to the question we are addressing, then, is “Why are we needing to?” Let me recognise immediately that there was a problem of predatory elites even in medieval Christendom, so the answer to that is not doctrinal. The root problem has to be not so much in the logic as in using only parts of it. Given that we have to grow up and that our brains have two sides, there can be a problem of arrested development and the problem Ivan Illich and Chesterton before him noted: schooling which fills our heads with indexes without the corresponding experience. The arrested development arises because of the order in which we learn to use our brains: feelings triggering instinctive reactions, physical skills (like walking), mental skills (like talking and reading) and mental judgement (like discerning the evidence for trustworthiness). When people are busy earning a living by doing or communicating they often don’t have time to develop the next skill. “What is this world, if full of care, we have no time to stand and stare?
Which brings us back to the development of science based on what one can see and David Hume arresting the development of social science by relying on what little he knew about the origins of the cosmos and the operations of the brain in 1740. He trolled the Christian ethic by arguing for elite-imposed “do’s and don’t”, which reverted to pre-Christian morality: justified not by the command (advice?) of God but by irrational and in predators non-existant “sympathy”. This opened the way to Adam Smith’s economics, justifying the “farming” of industrial slave labour as well as the traditional wars and “rights” of conquest.
So, having seen fundamental problems in quantum physics in my youth and reached (I hope) Craig’s wisdom in old age, I have “integrated” Buddhist teaching into Christian cosmology by recognising oversights in the physics of process and God’s “grace” in the invisible (as in steam generated by melting ice) after a Big Bang in which “God died that we might live”.
For which, “Thanks be to God” is right and fitting.
If I am taking the Christian story (though not all nominal Christians) on trust, what would induce me to begin to trust the doctrines of economics? That they recognised people have to grow up, and what they want out of economics at different times changes, from the biological need of children to be cared for by their parents, to those with inclination and time to think developing better (or merely quicker, not necessarily better) ways of doing that. The key issue then is how does money, and the desire for it, interfere with the logic of this process? We cannot proceed without agreeing about what we are going to call “money” in future. For the sake of children it would be best to restrict that to physical coins and notes, with which they can learn that it is a credit limit indicating a trustworthyness which has to be earned.
Michael, good luck to you at 70. We’ve encountered each other before. You seem to be getting wiser and more articulate in your old age. I got a lot out of the comment referred to.
Dave, Sapiens is an animal. With its evolution and biological markers that identify it as such. Sapiens of 30,000 years-ago had language. Perhaps even a written language. As I noted some, not all anthropologists contend Sapiens of this time period was equivalent in imagination and aptitude to Sapiens of today. The evidence we have indicates that the earlier Sapiens found its way through the world with experience, acumen capable of planning and inductive reasoning. Everything after this in your comments examines various cultural forms Sapiens has tried out in answering the issues of cultural adaptation for survival and other purposes. Great for a discussion at another time and place.
Grace is dynamic love in action, a basic integration of internal experience and aligned acting. Love is openness and the willingness to relate which denotes consciousness of another to relate to.
Abundantly Direct and Reciprocal Monetary Gifting reflects and defines the dynamic nature of grace in the economic and monetary system. Could there be a better concept and aligned set of policies upon which to base these systems?
Ken, I suggest the linguistic Sapiens of 30,000 years ago didn’t come into the world fully formed, though Michael was right, we shouldn’t underestimate their powers of logic. As with each of us, we quickly learn to talk about what we can see, but it takes time to become aware of what we can’t see: to acquire the foresight necessary for wise judgement.
Craig, we agree grace is dynamic love in action, but it acts through our being aware of it, and my understanding is that the very motion of invisible energy carries the message of God’s love. (C.f. ‘spirit’ meaning [the invisible] wind).
I’ve just seen this in “The Newman”, Jan 2019, the personality differences within churches affecting attempts to reform being little different from those in political economics:
“John O’Malley, the distinuished Jesuit historian, has in a way captured the essence of the Second Vatican Council by describing it as a language event. … He contrasts two visions of Catholicism. Is it, for example, a matter of command or invitation [c.f. my use of the word ‘advice’ above]; of definition or mystery; of threat or pursuasion; of hostility or friendship? Pope Francis is trying to make a real vision of invitation, mystery, pursuasion and friendship. Those who are critical are looking for the comfort of the more secure alternative: command, definition, threat and hostility”.
I am with Pope Francis, but “loving the sinner” is not inconsistent with “hating the sin”!
Dave, the genus Homo has a 2,000,000-year evolutionary history. Sapiens was not the first species of Homo. As of today, it is however the last. As I said Anthropologists note that evolutionary path is interesting because up till about 30,000 years-ago Homo was just another prey. No better equipped than any other to survive. But at around 30,000 years-ago Sapiens changed. It gained foresight and planning. It could plan hunts, even into new lands. It could imagine a past and a future. And plan with and for both. In short, Sapiens could model and simulate. It could imagine. This allowed Sapiens to become not just a predator but also a builder of culture and ever larger communities. Anthropologists believe this resulted from changes in the Sapiens brain and nervous system, chemical or structural, or both. Religion, government, agriculture, economics, etc. sprang from the Sapiens’ imagination, as did races, oppression, slavery, classes, tribes, and war. It clearly was and is a double-edged sword. Something Sapiens continues to wrestle with today. Imagination combined with observational abilities allowed Sapiens to create itself and the earth and now perhaps to commit suicide.
Ken, Money probably came about by chance as many new inventions do. Its usefulness, growth of population and its necessary requirement of being in limited supply, quickly leads to a shortage. That shortage being manifested by either deflation or exclusion of some people from using it. There are probably many historical examples of coexisting monies trying to adapt to this problem. One other adaptation is the practice of lending (at interest of course)
that increases the velocity of the available money. There are at least five problems with this scheme.
1.A cost is included with the money and circulates with it. This cost still forces exclusion of many people and creates endemic poverty because their ability to trade is handicapped. These excluded people can not be helped in the long term by a gift of money because of the second problem.
2.If the lender(s) do not spend all of the interest the collect they eventually own all of the money (and all property).
3.If the lenders over-lend their interest profits are consumed by inflation.
4.If the lenders under lend there is not enough circulating money to make loan payments.
5. The money is therefore only calibrated to the needs of the lenders, not for the purpose of being a standard of value.
Lenders have been and are tolerated by the powers in control because they establish a target of hate that deflects hate from the sovereign. Being hated by the people and having a lot of money on hand, they are source of ready money to be snatched and used by the sovereign for wars,( to snatch the money and markets of other sovereign’s lenders), building castles,etc.
All of this is made possible( awaiting the perfection of love and trust) by the need to measure the value of things in the course of production and trade. There are many characteristics of things that are measured everyday by the current system of weights and measures without the 5 problems of lending. This is because the current system of weights and measures is not subject to a de facto patent that requires a license for its use.
If the economics profession understood money, there could be some great things expected.
rddulin, this is what we can most confirm about money’s history. Its invention goes back about 7,000 years to the area of the Fertile Crescent. It’s first use was to ensure that monarchs were able to collect taxes and in a form that was convenient (no chickens or goats). Other empires (Rome, Persia, Saracen) used money for the same or similar purposes, each following its own customs. Traders spread the notion of money, but not the actual money. The spread of money began via China (the dominant Kingdom of the world for over 3,000 years). Europeans took money along with many other things from China (science, mathematics, medicine, ways of war, accounting, etc.). The Italian trading ports became the center of banking, accounting, and money in general in Europe. Money lending in Europe grew in large part because of the Catholic Church. The Church’s ban on usury put stress first on the new and expanding businesses in Europe, then on the money needed for Crusading, and finally on the profits to be made in lending for interest. Europe ostracized money lenders, pushing them out of normal society. So many money lenders were Jews, a people already widely ostracized in Europe. Plus, many of the Jews were good at the job, inventing many of the banking techniques still used today.
As money lending and much of banking moved into and out of oligarchical arrangements, the welfare of Europe in general and the poor in particular fluctuated from tolerable to intolerable. The banks and financial houses, and insurers often took direct action in Europe. Supporting governments against one another in war and taking part in the selection and seating of governments all over Europe. World War I may have been a foolish aristocratic war, but banks did well from the war in the UK and France. Even German banks did not do poorly. The British Empire created the first truly worldwide currency. And the Euro united Europe, until it didn’t. And it seems the reign of the dollar as the current world money is about to end.
So is this discussion a strand in a thread about re-establishing trust in economics as a science on a blog sharing views about real world economics? What is Ken up to, then, drowning with opinionated history my argument about humans having to grow up and our economic system interfering with that?
RRDulin is largely to the point – though at “the need to measure the value of things in the course of production and trade” I would argue the need to measure real cost.
Despite my arguing openly as a Catholic that the problem is not religion but arrested personality, Ken sounds like a covert Jew (one of the clever rather than religious ones) when he says “Money lending in Europe grew in large part because of the Catholic Church” and “many of the Jews were good at the job”. So they are, but that doesn’t mean that the job is good. Remembering Adam blaming Eve and Cain killing Abel, the well-documented fact is that Catholic Christianity was the response to Jews indebting other Jews in ancient Israel, with “new and expanding business putting stress on” not just the Christian but the Muslim prohibition of usury.
Mass-production has certainly enabled us to improve lifestyles, though largely through better infrastructure, homecare and medicine rather than drowning the natural world with bling, paper and plastic, with over-specialisation arresting mental development. One can have too much of a good thing.
My tentative vision is of a future in which materials and many components are still mass-produced, but production, trade and maintenance are localised to minimise commuting and traffic, containing undesirable side effects. Schumacher’s intermediate technology, personal credit, time sharing and local employment allow satisfying arts, crafts and understanding to develop with efficiency sufficient to maintain rather than grow wealth.
In the real world the need for localisation is becoming obvious through gridlocked and polluting urban traffic. The motivation of it requires, I say, elimination of the love of money as power by providing the alternative of free credit as information, i.e. about how much we owe those who give us credit as family and friends, and for worthwhile work we haven’t yet done.
Dave, if you can point to what I’ve “drowned out,” I’ll try to respond.
“As to your concerns that most economists don’t understand 2 + 2 = 4 level arguments, that may be the case. But everyone with who I graduated 6th grade understood the rules for addition, subtraction, multiplication, and division and mostly applied them correctly. It’s difficult to accept that economists aren’t as clever as 6th graders.”(Ken Zimmerman
January 17, 2019 at 6:25 am)
That it is difficult to accept is not a valid reason to ignore it. When a bank, any bank enters a debit as a plus (+) in their account, surely one must ask, “Who is clever?”
Soddy, “So elaborately has the real nature of this ridiculous proceeding been surrounded with confusion by some of the cleverest and most skillful advocates the world has ever known, that it still is something of a mystery to ordinary people, who hold their heads and confess they are ‘unable to understand finance.’
It is not intended that they should.”(The Role Of Money)
Carmen, I don’t agree with Soddy. Double entry accounting was intended to be quite simple and easy to monitor, so that accounts could e verified easily and quickly. If banks are making entries such as you describe that is a matter for bank regulators and if crimes are found, then for the courts.
Ken, you are completely missing the point of Soddy’s remark. It refers to the method of accounting, not to transactions. When banks create a credit limit for us (which Werner showed costs them nothing), they sell it us as a debt to them and a credit for us. This is not spelled out: it is written into the way they do business and interpret double entry book keeping.
Dave, your comment confuses me. My comment is about the accounting method used by all firms, double entry. Which I presume, perhaps incorrectly is the focus of Soddy’s comment. If I’m incorrect, please explain. Also, you describe what banks are doing with credit limits as somehow violating double entry accounting. Could you explain that also. Thanks.
The fact that entries in double entry book keeping are simple and easy to monitor helps obscure the fact when the meaning of what is being done is the opposite of what it seems to be. You have surely heard of the phrase “smoke and mirrors”?
Dave, uncovering “smoke and mirrors” is the job of auditors. The auditors examining Enron should have revealed just such an effort by the company (in Enron’s case entering loans to the company as credits rather than debits). The fact that the accounting firm Arthur Andersen didn’t uncover it is one of the reasons Arthur Andersen is now out of business. In other words, it is not as simple as you suggest obscuring even poorly kept books.
The problem with accounting is the same as with the point of retail sale. That is people are looking only at its surface realities instead of thinking economically and paradigmatically about them. In the case of accounting it misses the fact that when private banking creates a deposit…it is ONLY as a debt and because even at 0% interest if debt continues to pile up it becomes un-repayable. Combine that with the fact that technologically advanced fixed capital intensive economies are inherently cost inflationary in the first place…and you’ve got a financially unstable system at its base, i.e. the paradigm of Debt ONLY.
Now as to the point of retail sale, the surface reality is that it is where production becomes consumption. However, if one understands the deeper economic significances of this fact like that it is the terminal expression point for any and all forms of inflation (it must be because its a terminal ending point, right?) Thus a high percentage discount to the consumer at that point BOTH inverts the economy’s inherent cost inflationary nature into beneficial price deflationary AND creates and integrates a new paradigm of Monetary Gifting into the debt based system. Oh yes, as an aside it doubles everyone’s potential purchasing power and busnesses’ potential business revenue.
Nice, huh?
Paradigms are about both essence and pattern. In this sense they are perfectly analogous to beingness which is so ever present and yet so subtle an essence that most people fail to perceive it itself….while they are looking at the pattern of whatever is in front of them in the temporal universe or what they are thinking about at any given moment in time. Not perceiving essence/paradigms also shows how easy it is to be extremely erudite about details and shallow about deeper meanings and their patterns…at the same time.
What about government contractors in times of war.
Robert, not sure I understand the question. But here goes. Contractors for governments at war have existed in large numbers only during and after World War II. Contractors like the RAND Corporation and DARPA have played an increasingly large role in US war preparations and conduct. Their budgets are mostly dark, but my friends in the business tell me they spend $20-$50 billion per year. Right now, these contractors don’t have the power to take America to war. But that’s changing quickly. All the major contractors have deep and long-term ties with banks, energy companies, and the militaries of many nations, including some not friendly to the US today or in the past.
Yes, Ken, you express very well a thought I gave up on trying to articulate at the end of my comment, immediately above. Perhaps in WW1 it wasn’t really that different. (In the UK the government commandeered factories rather than contracted out production). My thought was the contractors have acquired so much ‘money’ from war that they are now independent of banks and empowered to covertly militarise anyone.
Dave, government contractors in the defense industry and their deleterious effects on American armed forces and the capability of America to defend itself is why President Eisenhower warned Americans to guard themselves against the “military-industrial complex.” By the end of the 1950s it had become the most powerful force in American. Providing a large share of America’s jobs, helping local politicians win elections repeatedly and providing support for activities as diverse as local schools, state and national universities and colleges, and becoming basic parts of American communities. But banks had also changed. While they had directly influenced governments of all sorts for many years, they begin to take direct action to provide not just problem solving but the problems needing solutions. More and more power became focused in fewer and hands. We saw this clearly in the 2007-2008 panic. And we’ll it again soon, only worse in the 2020 panic.
Certain branches of the armies pre-1789 were contracted out, e.g., artillery, and during the Napoleonic wars private contractors supplying the armies made very large fortunes. In the midnineteenth a large mass manufactuer of iron rails, Forges and Foundries of Alais, received orders for canons for the war between France and Austria, 1859, but the CEO felt that the disruption war brought to the iron rail business could not be offset by these canon orders. So this CEO was not favorable to wars, because they disrupted business. A complicated business at all times.
Robert, similar things happened in the American Civil War. Here not only were large fortunes made by foundries, manufacturers of muskets, cannon, and ammunition, and by railroads and uniform makers and makers of other military equipment, but the quality of the products provided was so poor that at one point one musket in two was defective. Also, it was these fortunes and these industrialists who helped jump start industrialization in America that expanded rapidly after the end of the war. This led to the Gilded Age, and so on. Some say the US has been living through the second Gilded Age over the last 10 years. I tend to agree with that assessment. The first Gilded Age led to the Progressive Era, which while bringing useful and necessary reforms to business and government, mistakenly left American plutocrats and business kingpins enough power and money to reverse most of the changes put in place between 1920 and 1950. So today we find the US worse off than it was in 1880.
It is complicated, but inverting the enforced monetary scarcity we all live in within the equally enforced monopolistic paradigm of Debt Only…with the new paradigm of Abundantly Direct and Reciprocal Monetary Gifting will eliminate the most underlying reason why nation states and empires go to war….because their domestic economies are unstable due to that monetary scarcity and so require the pillaging of “enemy” nations for their resources…..in a wasteful human and monetary effort….that fails to achieve stability anyway.
How long can we go on with such idiocy before we choose the new paradigm?
Referring back to the title of this discussion about establishing trust in the application of mathematics to economics, there is a dire need for this subject to become more scientific due to a need for less confusion between its various intuitive based schools of thought. We need a common logical explanation about the various aspects of it. As far as macroeconomics is concerned such an explanation is now available in my book “Consequential Macroeconomics”.
Write to me at chesterdh@hotmail.com for a free 310 page e-copy of this research-based analysis and better explanation.
DHC, short of a holonomic metatheory supported by a bioethical paradigm, there will never be a valid, realistic, unitive theory of economics with any explanatory power or predictive effectiveness. How could there be. Reality is reality, and people are plagued by dysethics as much as economics “as is” lacks ethics, goodness, and biocentric usefulness. Likewise, without a unitive, logically self-consistent, axiologically valid foundation of meta-economics metatheory, there is no way to start a new, truly viable & valid economics or its replacement (cultural holonomics). The missing majority of realistic cultural economics is all the qualitative factors causing and/or affecting human cultural activity.
The biggest problem with economics is that it refuses to deal with the ecology of planet earth and therefore is a leading cause of ecological collapse. It then ignores the implications of that ecological collapse.
Related to the first problem is that all of economics is based on the idea of infinite growth on a finite planet. When the economy shrinks it is called negative growth. The language is so biased as to make it impossible for the profession to tellthe truth.
riprosperity > Rite you are. Yet, economists refuse to deal with commercially sponsored ecocidal mania-for-profit because they refuse to acknowledge the essential importance and reality of ethics, good, evil, systemic corruption, quasi-imperialist financial empire mass-dyseducation and mass-delusion. The problem is the pandemic mass-bamboozlement + psychospiritual + psychosocial + neurolingusistic illness infecting human culture. Economists clearly do not wish to discuss that dimension of The Problem and its cause. To put it more succinctly, economics is unrealistic because, as the top tier Market Makers and Buddha saw clearly, most civilized egos are ruled by deliberate ignorance, selective inattention, denial, foolishness, greed, envy, jealousy, hostility and fear. So, on and on it goes, until the end.
Discussion of paradigms seems promising. Yet, is it not most accurate to define the commonly used version of “paradigm” simply as a mental model? It also seems wise to remember that there is the individual case and the more complicated general/communal case, especially in the case of a cultural paradigm and the multivariate, if not schizoid paradigms of “economics” and socioeconomic systems. Then, should we not consider what any such mental models are made of, the most basic elements? After long study and R&D, I realized that “principles” are the most basic elements of anything, either mental or physical phenomena. After all, since mentality and physicality are natural universal principles, even thoughts depend on principles. Thus, the essence and pattern or patterns, form, structure and functionality of any paradigm depends on enabling principles.
Never the less, a paradigm is a mental model or map, not the reality or the territory. Forgetting that, or failing to fully understand that, and not thinking, speaking and behaving accordingly prevents valid science and viable success. Therefore, it seems self-evident that deficient paradigms of invalid science fail to produce good results, benefits that enhance and/or sustain high QOL (quality of life). If the purpose and mission of a profession does not involve creating real benefits and higher QOL, then what good is it to anybody, really.
So, paradigm repair seems the only first priority for any sincerely heroic practitioner of ethical cultural holonomics. Uh…just in case: I call the new discipline “holonomics” because culture is about more than trade, commerce, monetary transactions, material exchange and quantitatively measurable phenomena. Hence, ethical ecometrics are essential for realistic assessment of the qualitative phenomena that cause and affect the vast majority of human activities.
I hope the above makes sense, and helps clarify the issues, re: paradigms, principles, sciences and what economics is and is not. BTW, your questions, critiques and suggestions are welcome. Thanks ~
There are personal paradigms and systemic/temporal universe ones that we also mostly unconsciously operate on and within. Thinking paradigmatically is thinking integratively which is also the very process of wisdom and of also garnering it. I have posted an ascending scale of integrative thinking here before where paradigm perception is second from the top, ethic/zeitgeist being the top of the scale because an ethic on the personal level is a self chosen postulate about the goodness and/or reality about oneself and/or the temporal universe, and when applied on the species level…becomes a zeitgeist/ethic of the age.
The ethic/zeitgeist of the current age is power. The new ethic/zeitgeist is grace (which is inclusive of power and is simply power redeemed by graciousness)) or any of the other words for the peak experiences and ultimate concepts for the temporal universe of the world’s major wisdom traditions. And the realization that no matter how energetically at the quantum level everything is to the temporal level which appears to be fragmented and merely dualistic to the apparently almost frozen and unmoving macro-cosmic level its all in a state of dynamic, interactive, integrative flow as in grace….will help hasten that new ethic/zeitgeist and make it more logically real for everyone to accept and align with, and viz economics and any of man’s other systems….to see its universal applicability. So be it.
Craig and Michael, just two general comments on paradigms. To understand paradigms, they must be situated within a culture or cultures. Since the end of World War II all western cultures are scientific. And remain so today, though representatives of other cultures continue to challenge. Most notably, certain radical Christian cultures and certain radical Islamic cultures. This means that every paradigm (exemplar of knowledge and understanding, and the tools that support and fulfill these) in the west today with major influence on our lives is scientific. Each paradigm is slightly different in the scientific exemplars it supports, but each is drawn from a scientific culture. Second, since the 1970s the two cultural alternatives to science listed above are exerting increasing pressure on western cultures in particular to either give up science entirely or push it to a subordinate role to either radical Christianity or radical Islam. It’s these struggles and their possible impacts on human civilization with which we need to concern ourselves today.
Radical (read dogmatic) Christianity or Islam are both the height of reactionary dualistic nonsense. I’m not advocating, and we must not surrender to such anti-integrative dogmatic nonsense. Does that mean that wisdom and the experience of grace/graciousness are not possible if you literally believe the various dogmas of those two religions? Of course not. You can, IF AND ONLY IF you contemplate and self actualize the unitary experiences BEHIND all of the dogmas. Wisdom is the deeper look, the deeper understanding, religion inevitably leads to reactionary dualism…..and scientism does exactly the same thing when it falls back into dualism by reacting to religion.
We have to “up our game” to the thirdness greater integrative oneness of wisdom and its unitary concept and experience of grace/satori-kensho/samadhi-Moksha/atonement/the Friend….and then take that deeper unitary look and mindset and apply it to economics and economic policy.
Craig, thinking and living in dualities is a major part of western culture. Dualities such as rich/poor, good/evil, etc. are useful placeholders for the complex experiences we want to study but must never be allowed to replace or obscure those experiences, even if that means long and uncomfortable times for researchers. Describing how dichotomies are created and used is one of the more difficult aspects of social scientific research. But it’s also an essential part of that research. Another issue that faces the social scientist about dichotomies is how to and with what to replace them in everyday life if the social scientist insists on removing them.
Why should we be concerned with the research problems of social sciences, when it is the real world that concerns us and social sciences despite a couple centuries of effort have not clarified very much. It a distraction we cannot afford, any more than we can afford seeking solutions in religious teaching. Don’t start with a body of religious or social science theories but with a blank mind, and fill it with what you learn directly from people engaged in the economy.
Robert, the answer is straight forward. Ordinary people (non-social scientists) create the cultures of their lives. For pragmatic reasons. Social scientists’ job is to study, reveal, write about what the non-social scientists create (the real world as you say). On religious questions, for example, social scientists study such topics if they are brought into the social scientist’s view through interactions with ordinary persons. I’m not certain it’s possible for any social scientist to begin work with a blank mind, since previous experiences influence the social scientist’s actions. But I certainly agree that questions for the social scientist to consider must usually begin in experiences, interactions with non-social scientists.
Who is blaming duality? Not me. I blame duality ONLY…..which is what most intellectuals constantly dramatize. And as I have posted on here many times what is needed is the inclusive of the truths in opposing dualities concept of a trinity-unity-oneness-wholeness-process, in other words the process and means of self actualizing wisdom and the many resolving aspects of its pinnacle concept….the NATURAL PHILOSOPHICAL concept of grace.
Just in case: I recently thought of using the “officially” reported CPI numbers for comparing the pre-Fed inflation/devaluation with the post-1912 numbers caused by the Fed.
For 106 years, from 1912 to the present, US citizens lost approximately 87.5% of their buying power. For 120 years, between 1793 and 1913, the legal US dollar lost only 12.5% of its buying power.
Now, recall that the Fed was enacted, allegedly, to prevent the catastrophic financial crashes, severe depressions, recessions and national economic disasters that had occasionally plagued the US. Yet, despite all the wild ups & downs suffered prior to control of the US monetary system by the multinational banking cartel, devaluation was only a small fraction of what they’ve orchestrated since 1913, much smaller than the “official” CPI numbers indicate.
But the officially posted average inflation rate from 1912 to 2018 (CPI calculator online), it is listed as 3.12% instead of over 25% per year. Ironically, if you calculate the average rate of inflation (devaluation) for the preceding 120 years–by hand or with Google’s calculator–you find that it is approximately 3.12% per year.
Now, we must suppose that economics and economists never mention such issues, much less explain them, because they don’t understand arithmetic. How can anyone who doesn’t know how to perform numerical addition & division do useful quantitative analysis? That can’t do it even with numbers from the Fed’s cooked books. If economists can’t do that, then how could they ever do science?
Furthermore, science not only requires intellectual integrity, but also ethical integrity. Clearly, if the priesthood of a pseudo-science disallow or refuse to accept falsifiability of their theorems & hypotheses, then they are doctines & dogma, not works of science. When the true believers, apologists & practitioners of such a pseudo-science refuse to admit their unscientific obsession, that proves they lack both intellectual & ethical integrity.
In fact, intellectual integrity clearly requires ethical integrity. So, since economics & economists ignore ethics and the nature of both value and goodness, they lack the ability to study & accurately assess the reality of human sociocultural activities. Thus, economics is not a valid social science, but it’s priests refuse to accept its falsifiability.
Without adequate awareness & consideration of ethics, goodness & fairness, what good is economics or even money? How could it possibly foster & support change for the better, for the good of all?
Naturally, science is useful and good scientific theory not only furthers understanding, it enables prediction. Economics does neither, because it is not real science.
If any economists care to rehab & legitimize economics, then I will be happy to help, re: holonomic meta-economics & ethical ecometrics. Until that project is substantially completed, economics will remain a fake emperor in invisible clothing, at least for anyone who can see reality as is. Actually, it will also keep serving the worst of kleptocracy’s fraudsters and hasten its own demise, as the house of cards becomes ever larger, ever more unsupportable & the consequences ever more unavoidable.
“I’m not certain it’s possible for any social scientist to begin work with a blank mind, since previous experiences influence the social scientist’s actions.” Ken Zimmerman
It is axiomatic for historians to approach historical contexts with a blank mind, that is (was) the essence of historiography when I studied it. It is only a truism that people’s minds are not blank. The problem that I have always faced with social science is that it is very poor dealing with the specificities of time and place, because social scientists cling to each other in a dialogue among themselves that ignores the specificities of the real world. I came to the subject of economic development when I studied great power rivalries 19th and 20th centuiries. I discovered that economics was an expression of great power rivalries, not a “science” fom which great power rivalries could be understood. And I did not learn this from social scientists, who are out of the loop, but from the constant dialogue in which historians engage to deal with the problem of the blank mind. Understanding the world is an investigative process based on interpretation of historical contexts in which the historians themselves are immersed. You understand that ken, as a cultural determinist, but economists do not; their model is monotheistic.
Robert, the historiography I studied was more hermeneutical. We considered ways to establish a link, a relationship with historical cultures and actors. Sort of like a conversation, but at a long-distance in terms of time, and sometimes in terms of place. As to how well today’s social scientists deal with the specifics of time and place, I see vast improvement among many younger social scientists in terms of place, and noticeable improvement in dealing with time. Social scientists are still too quick to apply the brand of science they have learned to “judge” past times and other places, but at least they no longer condemn these other times and places in terms of “their” science. You must realize how difficult this is for social scientists. Anthropologists have the advantage here since this sensitivity was settled in anthropology over 100 years ago. But prior to that time, anthropologists did more than just judge and condemn, they brought samples (people) of uncivilized ways of life back to “civilized” societies and displayed them like animals in a zoo. Depending on when you studied great power rivalries of the 19th and 20th centuries, social science would likely have been little help. As I note above, social scientists until the last 30 years or so assessed everything in terms of their science. Which they took to be outside their own lives so it could be applied without question as “objective.” As I’ve said previously, history is the story of the building of cultures. And we’re all rooted in at least one culture which is linked (sometimes closely, sometimes remotely) to many other cultures.
The reference point the historians use is not themselves, although they are conscious of viewpoints of the investigator having to be resisted, but the views of the people living in a particular place and time, which is why primary sources always are emphasized over secondary. Social scientists used their science as the reference point. With this information from neoclassical economics (we used Samuelsoh”s text in an economic’s course in 1954), the primary sources I was reading later from the 19th century could not be understood. Fortunately, as an undergraduate I took a semester’s course taught by Kenneth Applegate on Physical Antropology followed by a semester on Cultural Antropology, which explained a lot about our world (1954), especially a book I read by Ashley-Montagu, on Man’s Greatest Myth, the Fallacy of Race. Almost majored in antropology.
Robert, much like historians, anthropologists want to consider and locate aspects of people’s individual and collective lives, which is to say their lives and societies, in terms of how these aspects relate to one another in an interconnected, though not necessarily bounded or very orderly, whole. For example, an anthropologist might want to study how household organization among a particular set of people is related to, say, religious belief, and vice versa (in an ideal world that anthropologist would want to know how all the elements of people’s lives and societies are related to one another). As this suggests, anthropologists tend to want to see people’s lives in the round. Anthropologists also want to know about the relationship between what people think and say on the one hand, and on the other what they do. Generally, anthropologists distinguish the two as culture and culture performed. Mostly through experience, anthropologists have learned that observing people’s actions provides a profounder and more complete understanding of their culture than just listening to what people say and write. For example, in my own work with electric utilities and grid operators, there are operating manuals for almost every technical decision. But in control rooms and dispatch centers, in some situations, the instructions in the manuals don’t work. This is how I learned in the 1990s about the deep prejudice of many utility/grid engineers against solar and wind electricity. Finally, two universal features of anthropology are important, which might in some instances distinguish anthropologists from historians. First, the perspective is fundamentally empirical and naturalistic. Extended participant observation, empirical naturalism, has come to define the field. Which means in part that anthropology is only a semi-humanity. Second, in part because of the importance of extended participant observation and in part because of the concern to approach people’s lives in the round, anthropologists in general, are reluctant to think in terms of social laws and universals. Anthropologists have studied many societies in different parts of the world and have come up with almost no social laws that apply throughout specific regions, much less that apply globally. Put differently, anthropology tends to be an idiographic or particularizing discipline, rather than a nomothetic or generalizing one.
Thanks again Robert & Ken. I think this thread may be the best thing that ever happened to economics, maybe even RWER as well. FYI: I think I goofed on some of my previous numbers (sorry, slightly scrambled memory), but the percentage of overall Fed devaluation & pre-Fed CPI are OK for their numbers (which are bogus).
If we use their 1980 recipe for book cooking, the numbers would look a bit more realistic, but not really close to the damage done to us 90%ers (whose real income stayed almost flat since the late ’60s). For example, the price of US 1st class stamps rose from $0.02 in 1912 to $0.55 today, a 2750% inflation. Yet, in 1912, the average annual salary of teachers here $507 (real USD). Now it’s nearly $60,000 Fed debt-bucks, an inflation of more than 116,000%. Dividing that by 106 years gives a rate of 1097% average per year.
I suppose that relates to why the 1%ers kept real wages nearly flat since the late ’60s, while giving themselves hundreds, if not thousands of times more score (“income”). Does it also explain why kleptocratic economists worship only Mammon (god of greed) & serve only His servants.
Otherwise, they would surely recommend QE for us 99%ers.
MichaelLucasMonterey, if I understand the purposes for its existence published by the Fed, it has two purposes. The control of inflation and to control the employment/unemployment rates. The objective being, again according to the laws that created the Fed and Fed’s own publications (including the web site) to prevent major economic collapses such as the “Great Depression.” You know the data on the Fed’s performance better than I. So, has the Fed been successful in these jobs? If not, why? If yes, why? Speaking for myself I’d like to observe the Fed in daily operations for a year or so. Two economic sociologists friends did such participant observation at the Chicago Commodities Board (MacKenzie, Donald and Yuval Millo. 2003. “Constructing a Market, Performing Theory: The Historical Sociology of a Financial Derivatives Exchange,” American Journal of Sociology 109(1): 107–45.) You might also want to check out, Carruthers, Bruce G. and Arthur L. Stinchcombe. 2001. “The Social Structure of Liquidity: Flexibility in Markets, States, and Organizations,” pp. 100–39 in When Formality Works: Authority and Abstraction in Law and Organizations, Arthur L. Stinchcombe. Chicago: University of Chicago Press.
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Ken, a research scientist, in the School of Management, Trinity College Dublin, relates that his group was engaged to figure out why the power grid in a central african country performed so poorly. All the technical information used in the running was correct; the problem was cultural, in the sense that people in hiring positions,were obliged to hire their relatives to power grid jobs. And nothing could be done about it because the material existence of families depended on these hirings. Maybe some anthropoligist researchers could have found a solutiion to the problem, since the management people remained clueless about what could be done to improve power grid performance in the country. Culture trumped technology.
Robert, anthropologists have considered these questions in several cultures. First, if you’re looking at the situation from another culture, learn the culture you want to understand. For example, companies that lease out powerships know the details of every culture where their ships are used. They didn’t need anthropologists to do this for them. Second, integrate local customs and norms into electric grid decision making and performances. In a situation such as you describe, my recommendation, if consulting would be to add job slots to the electric company for relatives of employees. The details would depend on each situation. These actions show respect for the local culture, while also ensuring grid operations are technically on target. Plus, they are a template for areas of concern in the future.
Ken, re: your mention of the Fed and its stated purpose: Allegedly, the Prime Objective was and is to prevent Great Depressions after a collapsed banking system. From 1913 on, they failed and well-informed observers and analysts noticed that their policies made the Great Depression much worse, globally (for the losing-class). Then came the “Roosevelt Recession” which was the steepest decline in US financial history (very bad for the losing-class, but the winning-class aquired more real property by foreclosure). There were several post-WW2 recessions blamed on other factors, but the stagflation of the 1980s was temporarily the most devastating, aggravated by organized looting of the Savings & Loan industry (evidently by the CIA and the Bush family). Then there was the post-Reganomics recession and gutting of fairly sane banking policy. The pre- and post-millennial Dot.com crash was followed by the Meltdown-Bailout Scam not only due to the Big Short, but by the real purpose and strategic orchestration of the Fed. That has been its real job from before its beginning.
Thomas Jefferson wrote a scathingly comprehensive legal opinion on the basics of a parasitic central bank scheme that now seems like a prophecy. The language is somewhat archaic, but should be understandable to any humane economist or scholar. I feature it as the subject of a chapter of my forthcoming book on axiology, bioethical culture and meta-economics, but here is a link to Jefferson’s original text (thanks to Yale U’s law school):
> https://avalon.law.yale.edu/18th_century/bank-tj.asp
BTW, Jefferson made it clear that nonsense about a parasitic banking cartel “controlling” or stimulating job creation or employment is simply nonsensical. Sustaining a bioethical cultural paradigm, a debt-free monetary system and a fixed standard of values will enable unbridled increase of cultural creativity and productivity without any inflation, deflation, economic depressions, recessions and other normalized systematic parasitism by winning-class cheaters posing as loyal public servants of their losing-class victims, us.
Michael, the stock market crash of 1929, which marked the beginning of the Great Depression of the United States, came directly from wild speculation which collapsed and brought the whole economy down with it. But, as John Galbraith says in his study of that event (The Great Crash), behind that speculation was the fact that “the economy was fundamentally unsound.” He points to very unhealthy corporate and banking structures, an unsound foreign trade, much economic misinformation, and the “bad distribution of income” (the highest 5% of the population received about one-third of all personal income). A socialist critic of the time goes further, claiming the capitalist system was by its nature unsound. A system driven by the one overriding motive of corporate profit and therefore unstable, unpredictable, and blind to human needs. The result of all that is permanent depression for most of its people, and periodic crises for almost everybody. Capitalism, despite its attempts at self-reform, its organization for better control, was still in 1929 a sick and undependable system. Nothing’s changed about capitalism since 1929.
At no other time in American history has the true face of capitalism been stripped away so completely as during the Great Depression. With 15 million out of work, industrial production down by 50%, 5,000 banks closed, and thousands of other businesses shut down, all President Hoover could manage to say is, “When more and more people are thrown out of work, unemployment results.” And in early 1931, “This country is not in good condition.” Plainly, those in charge of shaping the economy had no idea what had happened or how to fix it, but still refused to accept that capitalism had failed. Any other cause could be discussed but not that one. Not long before the collapse, Herbert Hoover said, “We in America today are nearer to the final triumph over poverty than ever before in the history of any land.” Henry Ford, in March 1931, said the crisis was here because “the average man won’t really do a day’s work unless he is caught and cannot get out of it. There is plenty of work to do if people would do it.” A few weeks later he laid off 75,000 workers. There were millions of tons of food around, but it was not profitable to transport it, to sell it. Warehouses were full of clothing that most people could not afford to purchase. Thousands of houses stood vacant because people couldn’t pay the rent, and thus were evicted, and now lived in shacks in quickly formed “Hoovervilles” built on garbage dumps.
Jefferson would have been disgusted with what the United States had become, particularly the Presidency.
When I asked my dad what it was like living as a working man in the depression, he gave a terse answer: “hard times, Bob, hard times.” and he was not prone to complain.
My father was orphaned in 1918 at 4 years of age. At 16 he ran away from farm labor to join the Navy. Better than living in the depression, he said. Other than a few stories about the orphanage where he lived till age 10, he never said anything else about the that period.