The changing frequency of biblical and economics jargon

from Blair Fix

We’re now in a position to look at the changing ideological landscape that is written in the English language. To quantify ideological change, I measure how the frequency of biblical/economics jargon has changed with time in the Google English corpus.

Figure 10 shows my results. Here the blue line shows the annual frequency of biblical jargon. The red line shows the annual frequency of economics jargon. Note that the frequency is expressed per thousand words, so you can interpret it like a batting average. For example, during the 1950s, for every 1000 words contained within the Google corpus, about 130 of them were economics jargon. (If our economics jargon ‘batted’ 1000, it would mean that English writing consisted entirely of economics jargon.)

Figure 10: The changing frequency of biblical and economics jargon in the Google English corpus.

Weekend read – The cause of stagflation

from Blair Fix

In my last post, I looked at the relation between economic growth and inflation. As per usual, the evidence didn’t sit well with mainstream economics.

According to standard theory, there is a trade off between low inflation and high economic growth. The idea is that you can have one or the other, but not both. So if you want to keep inflation low, you have to ‘cool off’ the economy by slowing economic growth. (Like many things in economics, this idea comes from the totem of supply and demand.)

The trouble is, the empirical evidence shows that the opposite is true. Rather than being driven by ‘excessive’ economic growth, inflation tends to come during periods of stagnation. So despite what mainstream economists proclaim, there is little evidence for a ‘growth-inflation trade off’. Instead, ‘stagflation’ seems to be the norm.

Now, the question is why?

Soon after I published ‘Is Stagflation the Norm?’ several readers pointed out that I should take a look at causation. The idea is that we want to know what drives what. Does (low) inflation drive (high) economic growth? Or does (low) economic growth drive (high) inflation?

Well, I’ve done the math, and the results may surprise you. But before we get there, let’s take a look at what the theory of capital as power has to say about the causes of inflation.

Stagflation as sabotage

new issue of RWER

 

real-world economics review

 Please click here to support this journal and the WEA 

Issue no. 102
18 December 2022

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Ecological Economics in Four Parables
Herman Daly          2

The Paradigm in the Iron Mask:
Toward an Institutional Ecology of Ecological Economics
Gregory A. Daneke         16 

The Towering Problem of Externality-Denying Capitalism
Duncan Austin          30 

Have We Passed Peak Capitalism?
Blair Fix          55

A Probabilistic Theory of Supply and Demand
John Komlos          89

Unicorn, Yeti, Nessie, and Neoclassical Market
– Legends and Empirical Evidence
Ibrahim Filiz, Jan René Judek, Marco Lorenz, Markus Spiwoks          97

On the Efficacy of Saving
George H. Blackford          119

Occupation Freedoms: Comparing Workers and Slaves
M. S. Alam          137

Book Review: Steve Keen, (2021) The New Economics: A Manifesto
Shimshon Bichler and Jonathan Nitzan          156

Book Review: Fullbrook, E. and Morgan, J. (2020)
Modern Monetary Theory and its Critics
Junaid B. Jahangir          164

End Matter          171

Weekend read – How to be an Academic Hyper-Producer

from Blair Fix 

Are you an aspiring academic? If so, this manual will reveal the secret to maximizing your scholarly output. Follow my advice, and you too can become an academic hyper-producer.

The golden rule: Don’t do research

Newcomers to the academy typically think that the recipe for success is to ‘do high-quality research’. Nothing could be more false. ‘Doing research’ (and writing papers about your ‘results’) is a tedious waste of time. It is no way to be hyper-productive. Savvy academics know that their true goal is to have their name stamped (as author) on stacks of published papers.

Here is a jingle to help you remember the golden rule:

Productive academics neither research nor write,
That is their subordinates’ plight.
To inflate their way up the productivity ramp,
academic hyper-producers perfect their namestamp.

The billboard

When you begin your scholarly enterprise, the first step is to frame academic papers in the correct light. Their purpose is not to ‘convey knowledge’. Scholarly papers are devices for delivering authorship. They are billboards for your name.

Like an eye-catching advertisement, a good scholarly paper is soundly constructed yet easy to mass produce. To achieve the requisite economics of scale, the successful hyper-producer must subcontract the job of billboard construction.

If you’ve entered academia because you ‘enjoy’ doing your own research, now is the time to change your attitude (or exit the field). To become an academic hyper-producer, your goal is to secure billboards on which to stamp your name.

In what follows, I will detail the two most popular strategies for billboard acquisition.

Strategy 1: Graffiti tagging

For the cunning entrepreneur, learning the art of graffiti tagging is a good way to become an academic hyper-producer. The goal is to surreptitiously add your namestamp to material published by someone else.

Graffiti tagging can be done either in wholesale or in piecemeal.

Weekend read – In Search of Sabotage

from James McMahon and Blair Fix

The most important feature of private ownership is not that it enables those who own,

but that it disables those who do not.
— Jonathan Nitzan and Shimshon Bichler

A key aspect of Jonathan Nitzan and Shimshon Bichler’s theory of ‘capital as power’ is that it treats property not as a productive asset, but as a negative social relation. Property, Nitzan and Bichler argue, is an institutional act of exclusion. It is the legal right to sabotage.

If this idea sounds odd to you, it is because (like most people) you think of property in terms of the things that are owned. But if you focus instead on the act of ownership, you realize that property rights are legalized exclusion, pure and simple. Nitzan and Bichler explain:

Technically, anyone can get into someone else’s car and drive away, or give an order to sell all of Warren Buffet’s shares in Berkshire Hathaway. The sole purpose of private ownership is to prevent us from doing so. In this sense, private ownership is wholly and only an institution of exclusion, and institutional exclusion is a matter of organized power.

(Nitzan and Bichler, 2009)

Of course, Nitzan and Bichler are not the first to highlight the exclusionary nature of private property. (Enlightenment thinker Jean-Jacques Rousseau did so at length in his 16th-century treatise on inequality.) But what’s new in the theory of capital as power is the focus on capitalist property rights as a form of ubiquitous social ‘sabotage’.

COVID Déjà Vu

from Blair Fix

As 2021 comes to a close, I’m having a distinct sense of déjà vu. A year ago, I wrote a post celebrating COVID vaccines as a triumph of science. And I noted that vaccine discovery is a collective endeavour. The cumulative number of major vaccines tracks closely with the cumulative number of scientific papers, a bellwether for humanity’s collective knowledge. Here’s the trend:

Figure 1: The cumulative number of major vaccines tracks with the cumulative number of scientific papers. [Sources and methods]

This trend is a beautiful reminder that science is a social endeavour. No matter how novel, every discovery builds on the work of others. Science, in other words, is the quintessential public good. And so are vaccines.

Looking at the roll out of previous vaccines, however, I noted a perverse (but unsurprising) trend.

RWER issue no. 98

real-world economics review

Please click here to support this journal and the WEA
issue no. 98
download whole issue

101 Textbooks The riddle of the use of impossible examples in microeconomics textbooks Emmanuelle Bénicourt, Sophie Jallais and Camille Noûs	2
101 Textbooks The 1-2-3 toolbox of mainstream economics: promising everything, delivering nothing Shimshon Bichler and Jonathan Nitzan	23
Capitalists are dispensable, laborers are not M. Shahid Alam	49
Redistributing income through hierarchy Blair Fix	58
The Becker model of discrimination is anachronistic and should no longer be taught John Komlos	87
“Susan Strange saw the financial crisis coming, Your Majesty” Nat Dyer	92
Measuring economic transformation: what to make of constant price sectoral GDP Adam Fforde	112
Booming wealth alongside fiscal concerns about ageing populations David R Richardson	135
Price indices suitable for the monetary policy Carlos Guerrero de Lizardi	149
Interview From the political economy of financial regulation and economic governance to climate change Jamie Morgan with Andrew P. Baker	169
Board of Editors, past contributors, submissions, etc	203

 

Soft-wars

from Blair Fix

Political economist Chris Mouré has a new paper out in the Review of Capital as Power. It’s called ‘Soft-wars’, and it is a fascinating case study of the behavior of big tech.

The story starts in 2011, when Microsoft led a $4.5 billion consortium purchase of Nortel and Novel. Later than year, Google responded by buying Motorola for $12.9 billion. The funny thing is that Google then proceeded to sell off what it had just bought. By 2014, almost nothing was left of Google-owned Motorola. Nothing except patents. And that, Mouré thinks, was the whole point.

Mouré argues that this acquisition war was ultimately a battle over intellectual property. Google and Microsoft were competing to control the mobile market. And the way to do that was not to ‘produce’ anything. It was to command property rights.

The timing of the 2011 patent war, Mouré notes, was no coincidence. It corresponded with the moment when Google’s profits caught up to Microsoft. Figure 1 shows the trend. This is Mouré’s analysis of ‘differential profit’ — the profit of Microsoft and Google measured relative to the average profit of the S&P 500. You can see that Google entered the 21st century as a bit player. But by the 2010s, Google was a behemoth whose profits matched those of Microsoft.

“What is the true value of my property?”

from Blair Fix – http://www.paecon.net/PAEReview/issue97/Fix97.pdf

Putting a fence around something and calling it “property” is step one of capitalization. But property alone is not enough. Romans had property. So did most feudal kingdoms. But these societies did not have capitalization. To capitalize property, there is a second step. You must mix property with finance.

The word “finance” evokes a sense of awe – a sense of other-worldly complexity. But at its heart, finance is simple. It is the act of reducing property to a number – a price. Merge property and finance, and you have capitalization. How this merger happened historically is complicated. But let’s again reduce history to an apocryphal story. To paraphrase Rousseau:

Having enclosed a plot of land, the first capitalist took it into his head to put a number on his property and found people simple enough to believe him.

This act of giving property a number, Jonathan Nitzan and Shimshon Bichler (2009) observe, is the central ritual of capitalism. It is the ritual of capitalization … and it comes with a problem.

Because “capitalization” is literally just slapping numbers onto property, any number is as good as the next one. My property could be a 23. It could also be a 10²³. In other words, property can have any conceivable price. But which price is “correct”? Ever since our apocryphal capitalist put a number on his property, capitalists have agonized over this question: “what is the true value of my property?”

Dominant capital and the government

from Shimshon Bichler and Jonathan Nitzan

This note contextualizes the ongoing U.S. policy shift toward greater ‘regulation’ of large corporations. Cory Doctorow (2021) and Blair Fix (2021) are optimistic about this shift. We doubt it.

1. The Limits of Power

Large U.S.-based corporations are extremely powerful, but the growth of their power has decelerated considerably.

Figure 1, updated from our ‘Corporate Power and the Future of U.S. Capitalism’ (Bichler and Nitzan 2021), shows the earnings before interest and taxes (EBIT) of the top 200 U.S.-based corporations, ranked by market capitalization, relative to those earned by the average U.S. corporation. The top series confirms that this differential – which proxies the relative power of the top 200 firms – has grown exponentially, rising from roughly 1,000 in 1950 to more than 15,000 in the 2000s. The bottom series, though, shows that the rate at which this differential power has grown trends downwards.

Weekend read – How dominant are big US corporations?

from Blair Fix

I recently had a lively Twitter debate with Jonathan Nitzan, Shimshon Bichler and Cory Doctorow¹ about the future of big corporations in the United States. The debate was prompted by Doctorow’s piece ‘End of the line for Reaganomics’, which I reposted on capitalaspower.com.

Doctorow argues that we may be witnessing a sea change in the way governments treat big corporations. Since the Reagan era, the US government has taken most of the teeth out of antitrust enforcement. The reason is not well known. In fact, I’m ashamed to admit that as a trained political economist, I didn’t learn this antitrust history in grad school. I learned it from Doctorow’s blog.

In Bork we trust

The antitrust story revolves around a judge named Robert Bork, who came up with a way to defang antitrust law by changing how it was interpreted. His 1978 book The Antitrust Paradox argued that antitrust law should be interpreted narrowly in terms of ‘consumer welfare’. And ‘consumer welfare’, in turn, meant one thing: low prices.

To make an antitrust case, Bork argued that you needed to show that the offending firm had used its monopoly power to raise prices. Moreover, you needed to demonstrate that government intervention would do more good than harm. The paradox, according to Bork, was that by interfering in the ‘free market’, antitrust prosecution tended to protect inefficient firms from competition, and so led to higher prices.

From a scientific standpoint, Bork’s arguments are a flaming pile of garbage. But they are fiendishly clever ideology.

RWER issue no. 97

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Has economics become a new theology?           2 Andri W. Stahel

Beyond dollar creditocracy: A geopolitical economy           20 Radhika Desai and Michael Hudson

A black-swan shock exposes the deep fissures, endemic imbalances, and structural weaknesses of the U.S. economy           40 John Komlos

Fuck the market           62 Terry Hathaway

The ritual of capitalization           78 Blair Fix

Economic hypocrisies in the pandemic age           96 Raphael Sassower

The politics of economics           106 Shu Shimizu

Putting Minsky into space: The geography of asset price bubbles in the United States, 1994–2018           123 John Posey

How financial bubbles are fueled by money creation a.k.a. bank lending: An explanation for public education           143 Ib Ravn

China, the exception that proves the growthist rule?  REVIEW of Smith, R. (2020) China’s Engine of Environmental Collapse            155 Jamie Morgan

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Weekend read – With great power comes great fear

from Blair Fix

Over the last year, I’ve watched with horror and amusement as health agencies around the world flip-flopped their advice on how to deal with COVID.

My horror comes from knowing this flip-flopping breeds mistrust in science. But I am (morbidly) amused because I know that uncertainty is a basic part of real research. For the public, ‘science’ tends to mean authoritative knowledge. But for researchers, ‘science’ is an iterative process, filled with wrong turns, new evidence, and revised ideas.

With COVID flip-flops in mind, I thought I’d tell you a story about science in progress. It’s a story about how we should understand the stock market.

Three stories about the stock market

Here are three stories about how the stock market works.

The first story says that the stock market reflects the productivity of the underlying economy. When stocks go up, the thinking goes, everyone should celebrate because the tide of productivity is rising. This is the story that neoclassical economists believe.

Weekend read – The evolution of ‘big’: How sociality made life larger

from Blair Fix

The game I play is a very interesting one.
It’s imagination in a tight straitjacket.

— Richard Feynman

Like Richard Feynman’s game of science, evolution is stuck in a straitjacket. It is driven by chance. But evolution is not free to explore every path.

Take, as an example, the evolution of organism size. While it seems like there are many routes to bigness, I propose that there is fundamentally only one: sociality. In the march towards ever-larger organisms, there have been three major revolutions. All of them involved the merger of previously autonomous organisms into a new communal creature. I call this route to bigness ‘size through sociality’. It is a tale 4 billion years in the making.

The drive towards sociality, I argue, is a response to a basic feature of geometry. As objects get larger, their volume grows faster than their surface area. This fact of space causes problems for harvesting energy. It requires that big organisms harness and distribute energy on a limited surface-area budget. The easiest way to solve this problem, it seems, is to merge existing structures. Hence the evolution of bigger life is deeply connected to the evolution of sociality.

The evolution of ‘big’ is also connected to human culture.

Modern human institutions may represent a new transition in the evolution of life — a transition from massive organisms to supermassive superorganisms. But as with the rest of life, this evolution occurs in a straitjacket. The size distribution of human institutions seems to follow the same pattern as the size distribution of other organisms. In fact, it is an extension of this pattern, upping the size of life to new proportions.

In this light, human cultural evolution may be a variation on an old theme: size through sociality.

The tyranny of geometry

As I child, I loved playing with toy cars. I made the little vehicles jump over great distances, usually with the gleeful hope that they might explode. But the toys always took the beating with ease. When I imagined doing the same stunt with life-sized cars, however, I knew that they couldn’t withstand the punishment. But I didn’t know why.

Today I do. It’s because the size of an object changes how it behaves. The reason owes to a simple feature of geometry. As objects get larger, their volume grows faster than their area. This fact affects the objects’ properties.

Weekend read – Is human probability intuition actually ‘biased’?

from Blair Fix

According to behavioral economics, most human decisions are mired in ‘bias’. It muddles our actions from the mundane to the monumental. Human behavior, it seems, is hopelessly subpar.¹

Or is it?

You see, the way that behavioral economists define ‘bias’ is rather peculiar. It involves 4 steps:

1. Start with the model of the rational, utility-maximizing individual — a model known to be false;
2. Re-falsify this model by showing that it doesn’t explain human behavior;
3. Keep the model and label the deviant behavior a ‘bias’;
4. Let the list of ‘biases’ grow.

Jason Collins (an economist himself) thinks this bias-finding enterprise is weird. In his essay ‘Please, Not Another Bias!’, Collins likens the proliferation of ‘biases’ to the accumulation of epicycles in medieval astronomy. Convinced that the Earth was the center of the universe, pre-Copernican astronomers explained the (seemingly) complex motion of the planets by adding ‘epicycles’ to their orbits — endless circles within circles. Similarly, when economists observe behavior that doesn’t fit their model, they add a ‘bias’ to their list.² 

Weekend read – Essentialism and traditionalism in academic research

from Ryan Kyger¹and Blair Fix

Philosophy of science is about as useful to scientists as ornithology is to birds.

— attributed to Richard Feynman²

Most scientists don’t worry much about philosophy; they just get on with doing ‘science’. They run experiments, analyze data, and report results. And by so doing, they fall repeatedly into known philosophical pitfalls.

This essay is about two such pitfalls: essentialism and traditionalism.

‘Essentialism’ is the view that behind real-world objects lie ‘essences’ — a type of eternal category that you cannot observe directly but is nonetheless there. Racial categories are a common type of ‘essence’. To be racist is to attribute to different groups universal qualities that define them as people.³

Given the long history of racism, it’s clear that humans need little impetus to impose categories onto the world. Still, our instinct to categorize is not always bad. In fact, it’s a key part of science. Looking for patterns is how Dmitri Mendeleev created the periodic table. It’s how John Snow discovered that cholera was water-borne. And it’s how Johannes Kepler discovered the laws of planetary motion.

So if categorizing patterns can be helpful, what makes essentialism bad?

Weekend read – Free speech for me, not you

from Blair Fix

They say that Americans love two things: freedom … and guns. The trouble with guns is obvious. The trouble with freedom is more subtle, and boils down to doublespeak.

When a good old boy defends his ‘freedom’, there’s a good chance he has a hidden agenda. He doesn’t want freedom for everyone. He wants ‘freedom for himself, not you’. I call this sentiment freedom tribalism. It’s something that, given humanity’s evolutionary heritage, is predictable. It’s also something that has gotten worse over the last few decades. And that brings me to the topic of this essay: free speech.

When the talking heads on Fox News advocate ‘free speech’, they’re using doublespeak. What they actually want is free speech for their own tribe … and censorship for everyone else. This free-speech tribalism extends far beyond the swill of cable news. It’s clearly visible (and growing worse) in the pantheon of high thought — the US Supreme Court.

To make sense of this free-speech tribalism, we need to reframe how we understand ‘free speech’. And that means reconsidering the idea of ‘freedom’ itself. Behind freedom’s virtuous ring lies a dark underbelly: power. Free-speech tribalism, I’ll argue, amounts to a power-struggle between groups — a struggle to broadcast your tribe’s ideas and censor those of the others. When you look closely at this struggle, it becomes clear that ‘free speech’ is not universally virtuous. In modern America, free speech has become a kind of slavery.

And with those incendiary words, let’s jump into the free-speech fire.

The quant case for open-access COVID vaccines

from Blair Fix

Around the world, rich countries are celebrating as their COVID numbers fall. Their success is no mystery — it’s because of a massive rollout of COVID vaccines. While we should celebrate the development of these vaccines, their deployment highlights the tyrannies of capitalism.

Most of the basic research for COVID vaccines was funded by the public. Yet their manufacture is controlled by Big Pharma. The predictable result is that vaccines flow to the highest bidder and Big Pharma reaps the profit. Thus, the world is now ‘blessed’ with 9 new pharma billionaires.

Since we’re stuck with COVID for the long haul, we need to end the privatized vaccine model. The alternative is surprisingly simple. Let governments continue to fund basic science. And let private companies continue to manufacture vaccines. Just don’t let these companies have a monopoly on property rights. Instead, put vaccines in the Creative Commons. The result will be cheap vaccines, available to all.

To make the case for open-access vaccines, it helps to run the numbers. To date, the vast majority of COVID vaccines have gone to rich nations. It’s plutocratic healthcare in action: more money = more vaccines.

Let the data speak.

The global distribution of COVID cases

We’ll start by looking at how the global distribution of COVID cases has played out since the beginning of the pandemic. Figure 1 shows the global share of cases by continent since February 2020.

The ritual of capitalization

from Blair Fix

. . . the clergy aren’t priests … they’re economists.

There’s something mysterious about finance. The symbols are arcane. The math is complex. The practitioners are impressively educated. And the stakes are high. All of this gives finance the veneer of higher truth — as if quants are uncovering a reality not accessible to the rest of us. In a sense they are. But the ‘reality’ is not what you think.

When you look at stock-market numbers, they do point to a truth about the world. But it is a truth not about natural law or of human nature. It is a truth about human ideology. The reality is that finance is a quantitative belief system. At its center is a universal ritual — the ritual of capitalization. It is this ritual that underlies all stock-market numbers.

In this post, we’ll look at the regularities that stem from the ritual of capitalization. They are astonishing in scope — a breathtaking consistency to human behavior. They beg the mind to look for some material basis for their existence. But that is a mistake. The reality is that the regularities of capitalization are an artifact of ideas — a manifestation of capitalist ideology itself. A regularity from ritual.

Giving property a number

The ritual of capitalization starts with the institutional act of exclusion — namely property.¹ Property, of course, has a deep history that long predates capitalism. I won’t wade into this history here. Instead, I’ll defer to Jean-Jacques Rousseau’s succinct (but apocryphal) telling of property’s emergence. Property arose when

[t]he first person who, having enclosed a plot of land, took it into his head to say ‘this is mine’ and found people simple enough to believe him …

(Jean-Jacques Rousseau, 1755)

Putting a fence around something and calling it ‘property’ is step 1 of capitalization. But property alone is not enough. Romans had property. So did most feudal kingdoms. But these societies did not have capitalization. To capitalize property, there is a second step. You must mix property with finance.

Weekend Read – Radically progressive degrowth: Reducing resource use by eliminating inequality

from Blair Fix

Pity the billionaires. High in the towers on Billionaires’ Row, life is hard. The pencil-thin buildings groan as they sway in the wind, keeping penthouse dwellers up at night. Water pipes break, ruining posh décor. And elevators are unreliable, interrupting billionaires’ highly productive lives. So reads Stefanos Chen’s recent piece about the pitfalls of sky-high living.

Chen admits (thankfully) that “the plight of billionaires won’t garner much sympathy.” He is correct. As I read Chen’s piece, I shed no tears. Instead, I was fantasizing about an alternative world, one in which the super-rich would be problem free … because they wouldn’t exist.

Imagining this world without billionaires got me thinking about degrowth. In a world without billionaires, the ridiculous towers on Billionaire’s Row (below) wouldn’t exist. And that means the stupendous amounts of energy required to build these towers could have been spent on something else … or not spent at all. In short, ridding the world of billionaires sounds like a great policy for reducing resource consumption (a.k.a. ‘degrowth’).