380. market, corporations and the attractions to bigness.

April 5, 2010 § Leave a comment

People who criticize market forces I think are missing that it is corporations using markets through control that cause economic difficulties. The reason, I speculate is because they tend to be progressives who really like large scale organizational interventions, because their careers are there,  and being critical of markets appears to take head on the economic difficulties of our time, but really misses that it is self-serving large corporations that are the real source (not in isolation of course, they need markets to operate in) of economic exploitation nd inequality and the purchase of governments.

Just as Burkean conservatives are lost in the right wing rhetoric, and so unheard, progressives who are also democratic and inclined to smaller scale go unheard.

see my The use of religious affiliation – a way of saying “No”? for an older but still relevant analysis.

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378. food, land, generations

April 5, 2010 § Leave a comment

And of course money is a proxy measure for

  • food
  • land
  • health
  • education

 

and intergenerational continuity and care. that is, for the life of a full human.

370. Two world views

April 5, 2010 § Leave a comment

In the last post I wrote,

….. a major division toward the future: will it be one world of managerial necessity, or regional and local, with wars and fears? I think history is on the side of regional, avoiding the large bureaucratization of the world, but one humanity on one planet is compelling logic. there are major attempts ahead to deal with the problems, intertwined, of economics, finance, and consumption.

I am thinking this is a, or even the, major division point. From Catholics vs Protestants, Polytheism and monotheism, WW2 with its split between northern European and Mediterranean perspectives.. More will come forth.

369. Soros & Johnson to Shake Up Economic Thinking

April 3, 2010 § Leave a comment

After a description of an attempt to bring progress out of the current economic malaise, a reader writes,

I don’t know about you, but when I see the words, “Toward a New Global Financial Architecture,” all the red lights on my dashboard start to flash. And when these words are coupled with the name of Soros, I start to hear sirens.

The point of quoting this is because it represents a major division toward the future: will it be one world of managerial necessity, or regional and local, with wars and fears? I think history is on the side of regional, avoiding the large bureaucratization of the world, but one humanity on one planet is compelling logic. there are major attempts ahead to deal with the problems, intertwined, of economics, finance, and consumption.

via Soros & Johnson to Shake Up Economic Thinking at INET’s 1st Conference in Cambridge, April 8th – 11th » New Deal 2.0.

Hard to do political economy without a goal

My view now is that climate change requires that we give up the growth, wars and empire model for sustainability where we need development without growth. We also need very rapid technical innovation (current innovations do not sum to a substantial enough change in climate condition amelioration, such as clean energy. The numbers are too large.). But that innovation will be, to be clean, highly automated and robotized. The result would be even more structural unemployment. Hence we need a “citizen dividend” or guaranteed income, if people are going to e secure enough.

Hence we need an economic school of thought that looks for how to achieve high tech innovation and citizen dividend toward a sustainable low growth society.

One of the problems we face is caught in the newdeal 2.0 comment,I don’t know about you, but when I see the words, “Toward a New Global Financial Architecture,” all the red lights on my dashboard start to flash. And when these words are coupled with the name of Soros, I start to hear sirens.

The unitary world, essential to some, is the end for others.

King’s College Cambridge

· 1930 and the Challenge of the Depression for Economic Thinking: Friedrich Hayek versus John Maynard Keynes

Hayak did not make the same critique of corporations that he did of government: too big to plan well/ The background is Adam Smith’s critique of corporations as instruments of anti-market control.

· Anatomy of Crisis – The Living History of the Last 30 years: Economic Theory, Politics and Policy

This is the period of the neo-liberals. The previous liberal consensus was also a problem. Leaves out resources at one end of political economy and wealth distribution at the other. The crisis is much longer than 30 years. Perhaps the whole empire and war paradigm from the bronze age is at an end, the planet filled up, we need a really new model of development without growth (Aristotle).

· What Kind of Theory to Guide Reform and Restructuring of the Financial and Non-Financial Sectors?

 A theory of economics that begins with nature and ends with wealth. A return to the broader gauge political economy.

Has the Efficient Market Hypothesis Led to the Crisis? Collapsed with The Crisis?

No, the problem was corporate control of markets, not markets.

Toward a New Global Financial Architecture

Recognize that finance rides of economics and tries to be free of economic realities to play the game of financial arrangements. Society cannot afford the costs of finance as a separate sector.

How Empirical Evidence Does or Does Not Influence Economic Thinking and Theory: Calibration, Statistical Inference, and Structural Change

The range of “evidence” and data is too narrow. Leaves out wealth distribution and resource exploitation, unfair about real costs and externalities, treats labor as a cost but profit as a gain. This is really a mess. Measures such as productivity (increase by firing workers) show how biased the current data approach is.

The Consequences of Inequality and Wealth Distribution

This requires really deep thinking about the nature of human society, civilization, motives, quality of life and culture. But basically inequality leads to politicians bought by money and a system of elites that, as Toynbee said, “in cries, the elites abandon ther own people”. Or Joseph Tainters’ “Collapse of Complex Societies”: elites, owning infrastructure, take ou costs rather than repair, when a crisis is imminent.” (paraphrase)

Mathematical Models: Rigorously Testable, Qualitative Metaphors, or Simply an Entry Barrier

Models are fine, but of whole systems not of sub systems. Let’s measure real stuff. This gets to climate change, pollution, costs of toxicity..

Political Economy: What Can Government Do? What Will Government Do?

When governments are owned, not much. Need a deeper understanding of the role of elites, democracy, decentralization. The great problem with the mess we are in now is must we be centralized to make critical decisions, or do we need dispersion so that local experiments can flourish? Population is a key driver. But they major issue for governance is going to be centralization vs regionalization, the argument the Greeks had over Alexander and Macedonia.

Above all, larger scope, and consider

1, time line of how we got here (western civ, population, wars, materialism, etc.)

2. mess map of current nasty dilemmas and their interconnections

3. Plausible scenarios going forward

For example (few years old)

I have constructed a small graphic to represent potential future directions for the world’s societies, and what they might suggest in terms of social purpose and strategy.

Two unknowns of our future are

Can we solve our major problems?

Will we do so primarily with large organizations, or small organizations (local and regional economic and governance)

Making axes of these gives us four future possibilities.

clip_image001

In the upper right we have market globalization. This is the "official scenario", especially in the United States. Below on the right are small organizations working to solve major problems. This we can call Jeffersonian.

Those moving into the top right have the values of those in the Jeffersonian, to live in homes in the country near the village and have their children walk to school, but the tendency is for the Jeffersonians to fight. This tension leads to increased security concerns and moves the whole society to the left hand side ("left" not in the usual sense.), fascism, if big systems dominate, and local mafias if things fal
l apart.

Thus we should avoid polarizing, and foster purposes – strategies, policies – that move in between, inter-weaving the Jeffersonians and marketists together.

But is there really an alternative to technocratic centralization?

Let me be blunt. Markets without constraints lead to monopolies, democracies without constraints lead to tyrannies. The two tend to engage the same people near the top, and that is fascism.

This tendency is exceedingly strong. But that helps define a purpose – to work hard to find an alternative viable direction for humanity, one that subordinates economics and politics to social good, not to a kind of personal gain that in practice enriches a few while impoverishing many. This has of course been a perennial issue, from Aristotle to the struggles of the 20th century, over how to manage capital, status and technology. If we understand why we get this technocratic trend, we can have a more informed purpose.

349. Clarity

March 8, 2010 § Leave a comment

I really like these descriptions but it highlights for me why I am so drawn to psychoanalysis and literature. The increased depth and awareness of the cloudiness of real life. Harder to deal with but intrinsically more interesting to me. It is the loss of cultural awareness of that murkiness and importance that i find so discouraging, and motivating.

Translating unmappable facts into economic discourse, it turned out, was what Krugman was better at than anyone else: he could take an intriguing notion that had come up in real-world discussions, pare away the details (knowing just what to take out and what was essential), and refine what was left into a clean, clever, “cute” (as he liked to put it), and simple model. “It’s poetry,” Kenneth Rogoff, an economist at Harvard, says. “I mean, you go back to his first book and there was this beautiful chart about what the Volcker contraction did to output that swept aside so much—he just drew this little graph which really cleared the air. I’ve heard economists use the word ‘poet’ in describing him for decades.”

via How Paul Krugman found politics : The New Yorker.

344. early warnings have no effect

March 8, 2010 § Leave a comment

People were quite certain before WW1 and WW2 that they would happen. Good thinking about global warming is over a hundred years old (Fourier),  the financial failing was anticipated by some smart people.

But the ruling powers of money would rather keep the cash flow than deal with human well-being. hence we are caught in repeatable cycles because narrow interests control the political process. It has nearly always been like this. Is there a way out?

This is a deep problem for us. It especially brings into question such things as

  • the relation of science to society
  • the problem of social classes
  • the relation of success in power to success in civilization and human potential.

And above all the relation of thought to human action.

335. shoddy everything

March 2, 2010 § Leave a comment

After WW2 and before Japanese competition upped the standards, we built shoddy cars, and the rest of the consumer world went with them.Cheap, not long lasting. We built housing and offices and stores that are cheap and won’t last long.

The result is, we have a replaceable society with no money to replace what is rotten and nearly exhausted. Just cleaning up would be extremely costly, and disposal an environmental  monster.

This could be a great opportunity if managed well, but more likely, with just in time junking, not going to go well.

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