By Satyajit Das, the author of Extreme Money: The Masters of the Universe and the Cult of Risk (Forthcoming September 2011) and Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010)
John Quiggin (2010) Zombie Economics: How Dead Ideas Still Walk Among Us; Princeton University Press, Princeton and Oxford
R. Christopher Whalen (2011) Inflated: How Money and Debt Built the American Dream, John Wiley, New Jersey
Michael E. Lewitt (2010) The Death of Capital: How Creative Policy Can Restore Policy, John Wiley, New Jersey
“Mortmain”, derived from medieval French meaning “dead hand”, refers to legal ownership of property in perpetuity. Jurisprudence, to varying degrees, has sought to prohibit the control of property by the “dead hand”. Unfortunately, economic thinking seems to be controlled by dead economists or as John Quiggin, himself an economist, argues – “living dead” economists.
In “Zombie Economics”, Professor Quiggin takes aim at a number of “dead” ideas – the Great Moderation; Efficient Markets Hypotheses; Dynamic Stochastic General Equilibrium; Trickle Down Economics; Privatisation. The central thesis underlying “Zombie Economics” is that the global financial crisis (“GFC”) exposed the weaknesses of these ideas, which underpin free market or neo-liberal economics. But as William Faulkner argued: “The past is never dead. It’s not even past.” Worried that these ideas continue to live on in the minds of economist and politicians influenced by them, Professor Quiggin wants to kill them off.
Clever titled, with a wonderful and very un-academic cartoon cover and written without excessive use of technical jargon, “Zombie Economics” provides an elegant critical introduction and analysis of some of the key ideas of modern economic thought. The arguments are generally thorough, though lack depth reflecting the brevity of the work (around 200 pages). Professor Quiggin’s personal sympathies, which are politically left of centre, are never hidden.
Two recent books – John Cassidy’s (2009) “How Markets Fail: The Logic of Economic Calamities” and Justin Fox’s (2009) “The Myth of the Rational Market: A History of Risk, Reward and Delusion on Wall Street” – cover similar territory. Professor Quiggin’s economics training makes “Zombie Economics” far less character or narrative driven and far more interesting in its understanding and criticism of the theory.
The most interesting thing about “Zombie Economics” is actually its lack of interest in why the weaknesses in the theory, much of which has been recognised for years, does not preclude its acceptance. The answer most likely lies in politicians and ultimately the electorate need for simple painless remedies and nostrums. For example, Professor Quiggin’s criticism of privatisation of infrastructure does not seem to recognise the obvious driver of this policy – political expediency of circumventing public finance constraints.
The interesting thing, of course, is that any “new” idea that takes the place of the “zombie” ideas is not likely to be an improvement. Perhaps homo economicus and homo politicus is like David St. Hubbins in the satiric film This is Spinal Tap: “Before I met Jeanine…my life was cosmologically a shambles. I would use bit and pieces of whatever Eastern philosophy would drift through my transom.”
Christopher Whalen’s “Inflated” deals with one aspect of zombie economics – inflation. Changes in price level are ambiguous at best. Even measuring it can present considerable challenges – some years ago, Argentina consciously decided to exclude items where the price rise was particularly high on the basis that no one could afford to buy such products, justifying their irrelevance to the measured inflation rate. Government everywhere, similarly, manipulate inflation measures.
The real issue about inflation, however measured, is its use as a policy tool. The popular economic narrative assumes that inflation is an outcome of economic activity. In reality, it is a key weapon in policy maker’s armoury. Throughout history, governments have used inflation to wipe out excessive debt, a practice that is now central to the policy of the Bernanke Fed to reduce systemic leverage.
Mr. Whalen, a former banker and co-founder of Institutional Risk Analytics, provides an interesting history of inflation in the US. His objective is to use the past to seek insights into the 2008 financial crisis.
Highly opinionated, “Inflated” uses a series of episodes of American economic history to outline the work’s central thesis – the US has traditionally financed its economic objectives through debt, governmental, corporate and personal, using periodic bouts of inflation to manage its leverage. A phenomenon that Mr. Whalen argues is driven by “a national agenda and standard of living that is beyond our current income” and one which is at odds with American’s self image as “reasonably prudent and sober people.”
The book is strongest in some of the earlier chapters when it covers debate about a national bank in the late 18th and early 19th centuries, the issuance of paper money to finance the Union effort during the Civil War and the panic of 1893 and 1907. The book is less successful in its coverage of modern times – from the stagflation of the 1970s and the period of banking and financial deregulation, leading up to the GFC. The coverage of recent events seems to be driven by the author’s personal repugnance of excessive government indebtedness and sloppy monetary management.
“Inflated” contributes to the important current debate on public finances. Mr. Whalen’s call to arms –the distinction between “real economic growth and the illusions of growth created by inflation and credit-driven speculation” – is central to any logical reappraisal of economic policy. Unfortunately, this reviewer and perhaps Mr. Whalen doubts whether it will take place. As William Faulkner remarked: “Facts and truth really don’t have much to do with each other.”
In “The Death of Capital”, Michael Lewitt, an investment professional and editor of the HCM Market Letter, explores the ultimate effect of “zombie economics”. Mr. Lewitt’s thesis focuses on the outcome of these economics, in particular, the rise of financialisation, debt and speculation and its effect on the real economy.
“The Death of Capital” is robust in its arguments, especially in it denunciation of Wall Street practices which he views as unproductive and morally reprehensible. The book makes the case that financialisation ultimately has the effect of undermining the fundamental role of capital in societies and financial markets as a mechanism for saving and channelling funds into real businesses. Drawing heavily on the work of Adam Smith, Karl Marx, Keynes and Hyman Minsky, Mr. Lewitt outlines his thesis clearly.
His solution seems curious, in the light of the trajectory of his critical argument – greater regulation, imposition of a tax on speculative transactions (in effect, a Tobin tax) and “principle based” reform. It is unclear why the proposed reforms can or will work, given that the very forces that propelled the financialisation that Mr. Lewitt criticises would be charged with implementing them. As Scottish philosopher David Hume knew: “All plans of government, which suppose great reformation in the manners of mankind, are plainly imaginary.”
The reality is that economics and economic relations are an adjunct to a larger process – the process of broad social control. Marx wrote about the fetishism of money, arguing that “the money-form of the world of commodities … actually conceals, instead of disclosing the social character of private labour, and the social relations between individual producers”. Human beings and societies are unable to see their own products and social relationships for what they are and become slaves to powerful forces.
French philosopher Michel Foucault identified a carceral continuum, the system of cruelty, power, supervision, surveillance and enforcement of acceptable behaviour affecting working and domestic lives. Economics and economic systems are part of this system of power. In Lewis Caroll’s Alice in Wonderland, Humpty Dumpty understood the issue: “The question is which is to be master – that’s all.”
Economics and economist have been always been part of the mechanism of social control and power. The rest is just noise.
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It is unclear why the proposed reforms can or will work, given that the very forces that propelled the financialisation that Mr. Lewitt criticises would be charged with implementing them.
We can add that even if such reformism were to temporarily prevail, it would then inevitably be ground back down and destroyed by the same corporate war of attrition which destroyed it in the past.
Reformists propose, at best, that we engage in an endless cycle of reform, subversion, tyranny, collapse, and new reform, forever. And for what? To maintain these criminals in existence. Why would we want to do that? Beats me – ask them. I suppose many of them are criminals themselves, but lamely want to keep the crimes under control.
But as this post admits, even that’s impossible by now. Even if reformism were desirable, it can never be accomplished under a terminal kleptocracy which is determined to impose a new, tyrannical feudalism. Anyone who’s been paying attention sees the uncompromising, totalitarian nature of the onslaught. If “finance reform” was impossible in the aftermath of 2008, how could it ever be possible some other time?
Nothing short of the complete destruction of this system will suffice.
French philosopher Michel Foucault identified a carceral continuum, the system of cruelty, power, supervision, surveillance and enforcement of acceptable behaviour affecting working and domestic lives. Economics and economic systems are part of this system of power. In Lewis Caroll’s Alice in Wonderland, Humpty Dumpty understood the issue: “The question is which is to be master – that’s all.”
Economics and economist have been always been part of the mechanism of social control and power. The rest is just noise.
Exactly right. I’ll add that economic policy has never been anything but politically chosen policy. Capitalism was never anything other than a political choice made by “elites”. Today especially, when we see the complete proven failure of all of capitalism’s promises, it can continue to exist at all only as a command economy chosen by the criminal elites.
(Please don’t try to say “this isn’t capitalism”. What’s called capitalism has been in the deployment stage long enough and universally enough that what it’s always been in practice is what it truly is and always will be.
Once again we see the irony of those who call alternatives to capitalism “utopian”. What could be more utopian and ivory tower than those who still believe textbook capitalism and “free markets” could ever exist in reality?)
Call me crazy, but I can still imagine a world in which politicians are not all shysters, executives are not all looters, economists are not all toadies. Exposure of all these bankrupt ideas is a good beginning, but people need to care enough about change to demand it en masse.
Jake,
Where social relations and power structures are such that individuals pursue what is contrary to their own best interest, and in fact enforce their own subjugation, then how is it that these same people will rise up to throw off the shackles. This has been the quandary for eons.
The Cultural Marxist of German decent who fled Nazi Germany were deeply perplexed by why it was that German workers who had until then a strong constitution for social change and workers control, ultimately became the foot soldiers for fascism. They looked into the authoritarian personality, the breakdown of the family and the role of the father. They examined the social and economic forces at play. In the end, they found themselves profoundly pessimistic, most of them that is, and wondered how it was that the very forces of the Enlightenment, reason, science, etc., were turned into forces of domination rather than liberation.
when I read Jared Diamond’s book “Collapse” I was struck by three things.
1. The book’s sweeping muscularity. It was like one of those old fashioned dudes in Venice beach with the barbells and biceps and rippling thighs, posing all over the place. It was like a big bench press with photographers.
2. It didn’t say anything. LOL. It’s geographic breadth seemed like strength without power. Like a Venice Beach muscle dude, if you sat on his chest he could bench press you, for sure. But if he had to jump like a cat or even a mountain goat . . .
3. The one thing I remembered most, was that he did hit one bullseye. He talked about a little island in the South Pacific whose culture had survived — without uprising, rebellion, anarchy, famine, genocide, revolution, upheaval — for about (I think) 2000 years. I read that and I thought “Holy Fcuking Shit!” This is incredible. How’d they do it? How’d they channel all their thanatos on that little island without murdering each other with their fingernails?” Sadly, Mr. Diamond doesn’t lift the lid on that Pandora’s box. That would have been another book, and perhaps a more interesting one from the perspective of analytical psychology rather than descriptive geographical sociology.
So yes. I think it is possible that people in a society can be sane and clear and quiet within themselves, even their leaders (if they are compromised to the point they need “leaders”). Whether that’s because they have minds like children, or because they know that to have minds like children’s minds with the wisdom of the flesh is a form of ascendancy, I don’t know.
but I suppose it is possible, somehow.
“Craazyman”-I also experienced disillusion with “Collapse”,
and for most of the same reasons. Instead, if you havn’t, read “Killing Hope” by William Blum-definitive documented
historical of CIA resource wars, assassinations of democratically elected el presidentes…
I assume you’ve already read Naomi Klein’s, “The Shock Doctrine-Rise of Disaster Capitalism” and Perkins’, “Confessions of An Economic Hit Man”…
2000ish years with stone tools…sigh, with a low beginning population to area saturation – see rubbish tips for clear indicators of resource depletion.
Now factor in the speed and size of our consumption today, we could replicate the devastation within decades…shez.
Skippy…it collapsed because they played societal games with Moi, over reduction in consumption, their beliefs in gods over all else were their undoing. GOD = dopamine fix + emotional blanket + night light to the unknown – clear signs of environmental degradation. To boil it all the way down…their choice was__GODs__over food, shelter and life for all things, unsubstantiated belief before empirical facts.
PS. after morte there will be plenty of time for mystical delights…
“Economics and economist have been always been part of the mechanism of social control and power. The rest is just noise.”
If Das is right, then to call the system capitalism is to engage in mystification and to seek alternatives to “capitalism” is futile.
Ingrim,
I too always thought that Foucault was too extreme in his social constructivism. The stucturalist critique was invaluable, but Foucault is too pessimistic. Another constructivist, Noam Chomsky, offers a critique that is more nuanced and more optimistic, and his analysis does not destroy all hope of finding our way out of the wilderness.
There was a great debate between the two over this very issue, which can be seen Part 1 here and Part 2 here.
From what I’ve already said, I’m sure you can guess that I hew more to Chomsky’s position.
Ingrim,
Also, I’m currently reading a wonderful book by David Sloan Wilson called Evolution for Everyone: How Darwin’s Theory Can Change the Way We Think About Our Lives.
Wilson sounds a rallying call that is not too different from that expressed by Chomsky in the Foucault debate:
Instead of minimalistic assumptions such as the utility maximization of rational choice theory or the blank slate of behaviorism and social constructivism, we need to discover a complex psychological architecture that evolved by genetic evolution and that causes small groups to self-organize into coordinated units. Alexis de Tocqueville got it right in 1835 when he wrote, “The village or township is the only association that is so perfectly natural that…it seems to constitute itself,” but modern science has yet to even remotely take his conjecture seriously. Conscious intentional thought is just the tip of an iceberg. The rest of the iceberg operates beneath conscious awareness and must be discovered scientifically, like vision, despite the fact that it takes place within us every moment of the day. Even more strangely, it takes place without us, in our social intercourse in addition to our neuronal interactions. The idea that we play a role in group-level mental processes without any conscious awareness will take some getting used to, especially against the background of individualism, which has dominated the intellectual landscape for the last half century.
As if these layers of ignorance aren’t enough, there is another layer that involves culture rather than genes. Our genetic architecture enables us to create, transmit, and select behavior in roughly the same way that the immune system creates, transmits, and selects antibodies. Part of this process is conscious and intentional. To some extent, we are aware of our problems and actively seek solutions, as I just showed in the previous chapter. To a larger extent, however, the creation, retention, and selection of behaviors take place beneath conscious awareness. We learn the ways of our culture at a very young age, in the same spongelike fashion in which we learn language. As adults we adopt new behaviors and mannerisms unconsciously at least as much as consciously. Many of our current behaviors exist not because someone decided they were useful but because they outsurvived competing behaviors. Human life consists of many inadvertent social experiments. Even when we try to steer the course of events, our efforts interact with those of others in unpredictable ways that might as well have been random. A few social experiments hang together, while the others crumble into the dust.
that’s why I always say “DNA is a radio”.
Not sure who’s broadcasting. But I think the Bible explains that. Especially in the Old Testament, when the angels of the Lord visit the prophets.
I used to think all that stuff was a big fairy tale, made up like a work of fiction. But then I realized it was far more complicated than that, and that I was looking through the glass darkly, as they say.
Not to sound like I’m only seeing shallowness in this rather deep discussion between Chomsky and Foucault, but I couldn’t help but notice that the furnishing and the overall interior design of the lecture hall are back in style, even the clothes and eyeglasses that the speakers and audience members are wearing are back in style. But I don’t see drinking orange juice out of tiny wine glasses coming back in style anytime soon. Drinking water out of plastic bottles is way too hip for that to happen.;~)
Agreed. Foucault would strenuously deny it, but I think his work carries more than a vague sentiment of nihilism. of course, his project was critical in nature rather than prescriptive. but, his analysis doesn’t leave any real space for meaningful action. his work seems sadly defeatist in a way. a lot of good stuff in there though
Thanks Satyajit! The early characters in the story of the American dream are certainly more fun than their contemporaries. This is one reason why I encourage members of both parties to go ahead and flirt with default. See latest on same below.
http://blogs.reuters.com/christopher-whalen/2011/04/18/default-debt-ceilings-and-democracy/
Like Yves, I believe it is good to cause a ruckus and thereby inspire and inform debate. That was main driver for book.
Chris
“The question is which is to be master – that’s all.”
Since both Communism and Neo-Liberalism have been tried and found wanting it would seem that some sort of devolved partnership capitalism for the many will be our next master to control the forces of nature.
Satyajit,
As ever, great reviews interspersed with excellent secondary quotes from literature and history.
One things for sure, capitalism as conducted today, as Marx explained, is its own worst enemy and the ‘Great Moderation’ was neither great nor moderate for many, particularly the average worker.
Chris is perhaps correct to focus on the early history of the USA both prior and after the Civil War, for what we have actually seen over the past three years is history repeating itself.
There has always been a huge dichotomy at the heart of the great US experiment, as recent posts on this site concern the Federalists and Anti Federalists clearly demonstrate that this great divide is now played out in the corporate and financial services sector i.e., its fine for them to receive massive state subsidies and full protection of a corrupted and discredited state, quite another thing for the average Joe to demand such rights, never mind actually enjoy them.
Perhaps the Anti Federalists were right after all, they cherished liberty, communtarianism and localism – not too mention democracy itself – something that has been perverted by those that denounce such idealism.
One thing is for sure, no country can afford another bailout of its banking/corporate sector due to their brazen greed and disrespect for the law.
Perhaps when the next crisis hits, as it surely will due to a lack of any meaningful reform or reigning in the financial services sector, the vast majority of the citizens may finally wake up to the fact that they have been robbed and fleeced by charlatans and crooks – we may then have some kind of reform. Until then, all we can do is prey and hope.
Glad to see Faulkner quoted.
The Benjy section of “The Sound and the Fury” sort of sums up economic thought in my little book, without all the math.
And the banksters are the Snopes, degenerated to the point of a complete and unredeemed malignancy.
“The reality is that economics and economic relations are an adjunct to a larger process – the process of broad social control.”
“Capitalism is a government project.” — George F. Will
RE: “Economics and economist have been always been part of the mechanism of social control and power. The rest is just noise.”
Absolutely true!
It won’t be an immediate process but… the nature of transaction is changing across the board… and that has a lot to do with the future of social control and where power will ultimately reside.
Its up to us… and this landscape is taking form right NOW!
Human well-being is a group activity and rests upon human interaction… i.e. transaction… money is a technology of human interaction. And frankly its way behind the times and wants to stay there… and keep you there as well.
In a hunter-gatherer society there were essentially no landscape costs for transaction with pretty much everyone in your world.
That freedom of transaction went away with larger social structures… proximity was lost… money and writing were amongst the technologies developed to handle non-proximate transactions.
Proximity and a near costless landscape are returning for some forms of transaction… but not yet for all.
Information & Communication Technology (ICT) has been reducing transaction costs in voice, image and information ever since the printing press.
Its not done yet.
Leveling The Transaction Landscape: Technology and the Campfire
So-called financial services have largely become pre-occupied with bleeding from transaction at every level… whether check-cashing for the poor… or leveraged buyouts for the rich that add nothing to real value.
P.S. Dear Mr. Stumpf, I understand Wells Fargo is all about building better communities and new enterprises! COOL! I look forward to hearing more!!!!!
Because so far it’s seemed like your bank’s incentives are distorted in a way that makes you actually consider it irrelevant whether or not you manage your assets well… and more profitable to run rough shod over due process and common sense being TBTF and all. At least that’s been my personal experience. I sure wish there’d been somebody holding my note and mortgage I could have talked to. I figure it would have taken us about 5 minutes to resolve things.
Whereas now it’s going to take years… cause I really, really, really hate bureaucratic stupidity.
The Soviet System could’ve learned a lot from America’s TBTF banks!
Tom Crowl said: “That freedom of transaction went away with larger social structures… proximity was lost… money and writing were amongst the technologies developed to handle non-proximate transactions.”
I think the sequence of events might have been just the opposite—-the invention of written communications enabled social organization on a much grander scale. A great book on this subject is Walter J. Ong’s Orality and Literacy.
But you make an excellent point about modern communications. How will the ability to store and instantly transmit oral and visual communications change things? Will it take us back more to more of an oral culture?
Here’s another passage from Wilson’s book I quoted from above:
The difference between oral and literate thought is wonderfully captured in the novel ‘No Longer at Ease’, by Chinua Achebe, which is set in Nigeria in the 1960s. The protagonist, Obi Okonokwo, is a young man who has been sent to England by his village to receive a modern education, so that he can return and obtain a high post in the Nigerian government. He has made the transition to literate thought and proudly regards himself as a Nigerian instead of a son of Umuofia, his village, but the members of the village who sacrificed so heavily to give him his education still regard him as one of their own. The conflict and ultimately tragic ending form the basis of the book, but the dialogue of the villagers also illustrates how members of oral societies think and talk to each other in terms of proverbs. In the following passage, Obi is visiting his village for the first time since returning to England:
“Four years in England had filled Obi with a longing to be back in Umuofia. This feeling was sometimes so strong that he found himself feeling ashamed of studying English for his degree. He spoke Ibo whenever he had the least opportunity of doing so. Nothing gave him greater pleasure than to find another Ibo-speaking student in a London bus. But when he had to speak in English with a Nigerian student from another tribe he lowered his voice. It was humiliating to have to speak to one’s own countryman in a foreign language, especially in the presence of the proud owners of that language. They would naturally assume that one had no language of one’s own. He wished they were here today to see. Let them come to Umuofia now and listen to the talk of men who made a great art of conversation. Let them come and see men and women and children who knew how to live, whose joy of life had not yet been killed by those who claimed to teach other nations how to live.”
The right-wing is certainly cognizant that the ability to store and instantly transmit audio and visual communications, while avoiding the MSN gatekeepers, changes things. The potential threat was mentioned in this article from a neocon blog, The National Interest, that commenter Externality linked the other day:
The same technological advances that made precision-guided weapons and improved battlefield communications possible have also made the U.S. military vulnerable to the dissemination of graphic pictures and confidential information. U.S. strategy and operations will have to adjust to these threats.
I’m not sure what Whalen means by “a national agenda and standard of living that is beyond our current income”. In fact, the standard of living for the vast majority of americans is way below our current income – if, as is the contention of Dr. Wolf of NYU, the bottom 90 percent of the population owns 25 percent of the wealth, then they are surely living far below the standard of living they really produce.
There is an Austrian meme that American prosperity has somehow been an illusion for 75 years. If so, I’d say, stick to the illusion and lets have another 75 years, and another after that. An illusion, here, means that it violates the precepts of an ideology. That ideology is, of course, the ideology of a class of people who consider themselves ‘savers’, and consider saving a virtue – although why it should be considered a virtue it is difficult to say. It isn’t a virtue of the love your neighbor type, or a virtue of the creative enterprise type – it is a virtue of the stagnant type, the coupon clipper, the English gentlemen of the late victorian era who wanted history to halt so he could enjoy his port. I would rather have the unsober America anytime rather than a superannuated America of rentseekers.
If I’ve read Whalen’s blog posts right, then his biggest problem is that he doesn’t really understand why the (US) consumer started living on bubble/debt. It always struck me while reading him that he accepts the current (low) level of redistribution uncritically or as logical/just/whateveryouwanttocallit, and then proceeds to argue that the median/average American consumer is at fault for not earning wages that can sustain him and his family’s healthcare/edu needs (leaning on the intuition that the market identifies ‘fair’/sustainable wages for types of workers, and forgetting that wages have an awful lot to do with bargaining power, and competitiveness a lot to do with the yes/no existence of import barriers or quality requirements that give some an edge over others).
More generally, it seems to me that, by taking inflation as the central point of economic management, rather than as a consequence of certain modes of (re)distribution of wealth and income, he will likely be unable to understand the importance of unequal distribution as a driving force behind creating instability. (and thus behind the need for those inflationary bouts.) That is, if we look at the Great Depression, and now the Great “Recession”, what we see are two crises of consumption caused by ever-dropping wages in the decades preceding it. In both cases the problems were papered over using debt funding/bubble blowing keeping consumption going; but once this became impossible, poof, there went aggregate demand.
“It always struck me while reading him that he accepts the current (low) level of redistribution uncritically or as logical/just/whateveryouwanttocallit, and then proceeds to argue that the median/average American consumer is at fault for not earning wages that can sustain him and his family’s healthcare/edu needs”
Yes, exactly. The reason for disagreement between two reasonable, intelligent people is almost always that each holds different assumptions/baselines.
For instance, Scalia is not stupid and I don’t think him a particularly nefarious, mendacious man. He just holds a vastly, vastly different vision of what particular words mean and what sort of community we should build.
Sorry, but you misunderstand my point. Understanding how money functions, and how inflation or asset bubbles come about is something you do or don’t understand (to whatever degree). So while it is true that complex systems can be described in different ways, it is still the case that some descriptions will be better — that is, have more explanatory power — than others. And my reading of Whalen is that he in fact does not understand how money functions in society, and specifically why inflation comes about.
And not understanding something is something else entirely from your (rather anodyne) suggestion of “having different baselines”.
Now, to note a more substantive point about Whalen’s book, which is sadly missing from Das’s review, let me note this: Whalen is basically arguing that, because “poor people borrow”, and because “big government borrows to keep the poor people happy”, poor people and big government are evil, for the simple reason that they cause inflation, and thus impoverish rich people. If that is the kind of thesis you want to see “defended” (in a rather unconvincing manner), then this is the book for you.
Apropos of Scalia, if he knows that the society he propounds has 40% of the population below the poverty line, then I am not sure why you wouldn’t be allowed to say that he in fact is nefarious person.
It has always struck me that language has been the great barrier. While it has been said before, “he who controls the definition, controls the debate”, it seems that this small, and rather important fact is entirely overlooked.
It is why “liberal” and “socialist” and “regulation” have such a negative context in today’s media. It effects how we “think” and prepossesses all possible outcomes.
As long as we are shackled by current terminology and it’s linguistic baggage, it is very difficult to expound new ideas without the “negative” context infused in the terms used in structuring the debate.
The government and the media are well aware of this situation, and it is why “death tax” becomes “estate tax” and “financial fraud” becomes “financial innovation”.
Before anyone can begin to provide a rational alternative, we have to take back control of the “definition”. We need to be able to express ourselves on our own terms, and not allow the elites to control the dialogue with their “loaded” terms and their vacuous arguments designed to produce an emotional response based on their “definition” of just what reality is.
Nowhere,
the English language carries with it potential for great abstraction-we can, for example, consider our species “rational”. The concept=word “be”, derives from “BEhavior”. Has our species ever acted upon the concept? How can we BE “rational”, without said BEhavior?
Asian language is pictoral, which is a picture of an action=
little such abstraction, by contrast…those of us steeped
with inundation of eastern philosophy, perceive
such minutiae intensely…
Economics plays a key role in social control, but more to the point, political oppression and individual subjugation to the will of another. We would have no social order to speak of, without some sort of social control. We would have no civilization at all, for good or bad, if every malcontent went about criticizing it, for no other purpose than disagreement, a difference of opinion, an egotistical exercise to charge the Bastille in order to make green lights red and red lights green, and only then be truly a man/woman made whole in the whole fulfillment of freedom.
But of course, we are dealing with much higher stakes than whether money should be gold, paper or digital images. The problem with tweaking the system to make it a little more tolerable, a little more efficient and maybe even a little more moral and ethical is that while we may actually fix a part, the system as a whole is still an unholy mess.
To further confound the discourse, we are living through the train wreck, in slow motion. We may be sitting in the 1st class cabins in a 1000 car line and know that the train has gone off the track, we can smell smoke from the fires and some of the wreckage goes flying by our windows, so we know it is only moments before we suffer the effects. Yves analysis serves as good old fashioned debunking. We have had our Copernican Revolution for quite some time in that we are able to accurately describe the system that we are a part of. We can further judge its desirability and short comings. But, like all historical, i.e. human, processes, it will run its course. All things must pass.
Reform of this part or that part is still possible, but the system overall, the endless accumulation of capital is breaking down. Not that it is a bad idea, but people have made it into a bad system by using it exclusively to subjugate others often brutally, cruelly, and for what purpose? It is too easy to hijack the state bureaucracy and the private bureaucracy just to extract profits used to control the system of whole to keep it moving and expanding. But again to what end. The exogenous variables such as fuel, water and food will always limit us. So unending economic growth is not possible.
Complexity theory has been used to explain the Egyptian Revolution.
http://www.newscientist.com/article/dn20082-can-complexity-theory-explain-egypts-crisis.html
Scientists who study complex systems have been warning that ever-tighter coupling among the world’s finance, energy and food systems would result in waves of political instability. Some say that is now happening in the Middle East.
Economics is not only a dead hand, it is obsolete. Intellectually, it is at best a compartmentalized element of a greater scientific work to understand the social order that sustains us, and the policies the public should pursue to when change is needed when it becomes apparent that the currently behavior is maladaptive and heading toward train wreck junction. We are all currently on a hell bound train. We need to carefully slow the train, stop and get off. The transition to some new vehicle to carry the social order will have to be consciously and deliberately developed. That discussion is beyond simple description of the debunked economics, and will have to include the sharing of power by the very act of deliberation. The era reform is past. Complete and systemic political change is what will stop the ongoing social upheavals, that will not go well for any of us.
You do a fantastic job of describing how complexity is exactly what we are attempting to take out of the bureaucratic system, and then you commit the age old Progressive mistake of concluding that we need to design another one implying we are limited by resources.
But that is the beauty of complex systems. They are adaptable, robust, creative and resilient. They are those things precisely because they are self-organizing and without hierarchy.
Your own argument is saying the same thing; the question is not how we ‘share’ power or what ‘form’ we take. If complexity is our model, the question is how we divest ourselves of power accumulation; there should be no higher federal power for large nodes to appeal. That is the number one lesson of complexity and scale free networks.
It is impossible to be a complexity theorist and agree with Progressive hierarchical tripe. Also please read some Tainter and Olsun.
Frankly, I am tired of supposedly bright academics writing books telling us all what is wrong (including their own theories and the regulation that went with them), and then telling us that even more control at the top will save us and that the problem was that we didn’t have enough of those regulations to begin with. The conclusion does not follow the premises.
I have another alternative; for once, just once, let the market work. It is inherently irrational, self-organizing, adaptable and bakes its own punishments right in the sauce. It is a complex system with no Basel, no concept of equilibrium (now there is silly idea), and no closed ended regulation curbing and altering feedback.
Whiskey,
only nature is so encompassing..
Existentialism probably provides the answer. It doesn’t matter, really, why or how the books are cooked. The point is to make it through another day. In the global finance context, I believe that this is not a given unless we engage in some serious reforms.
Of course it is correct that the forces so well described by our forbears (Hume, Smith, Marx, Keynes, Minsky, ..) are prevalent and will act to restore their version of homeostasis. But existentially speaking, there is no real dilemma. We have to do the next right thing, and that appears to be some form of Tobin tax, perhaps applied differentially according to the liquidity risk created by the transaction.
how does existentialism apply to computer trades of millions
per minute, based upon billions of megabytes of info per second, generated within narrow frameworks of human preference?
This is the reason hedge funds are known internationally as “the locusts”…
the question should involve controls..of locusts…you know, like Canadian banking-unaffected…
Ignim notes above that “If Das is right, than to call the system capitalism is to engage in mystification and to seek alternatives to capitalism is futile.”
I partially agree with Ignim.
Social control in the U.S. in 2011 goes far beyond capitalism.
This is where Foucault and the trajectory of his analysis seems relevant. He started from a position that admitted the possibily of subjectivity, then created, in my opinion one of the 20th century’s most devasting critiques of the free individual(i.e. all the institutions of power, including the panoptical discipline of the market and the state, which dominate our lives and our subjective experiences)yet near the end of his life became once again fascinated with choice, freedom, experience and agency.
If physics theory was addressed like economic theory, Copernicus, Galileo, Newton, and Einstein would have been declared irrelvant. Instead, the Ptolemaic model of the solar system would still hold sway.
Economics cannot be called a science until it is willing to use data to prove and disprove theories.
The logical conclusion of the book is not more regulation; after all it is Basel that allows more leverage, and places like Canada that ignored it that didn’t need bail-outs.
No, the logical conclusion is that the banks should have been allowed to fail given the issues described, or nationalized and sold off for parts to more principled survivors.
Of course many of our quasi-religious economics are bogus. That does not make market economies any less effective. And our professional belief in government regulation may be the largest and most erroneous religion of them all.
Shorter WhiskeyJim: ideologies are all bad, except for the one i subscribe to.
The logical conclusion of the book is not more regulation; after all it is Basel that allows more leverage, and places like Canada that ignored it that didn’t need bail-outs.
No, the logical conclusion is that the banks should have been allowed to fail given the issues described, or nationalized and sold off for parts to more principled survivors.
Of course much of our quasi-religious economics are bogus. That does not make market economies any less effective. And our professional belief in government regulation may be the largest and most erroneous religion of them all.
Memo to America: Stop waiting for Democrats and Republicans to save you.
“WAKE UP!” – JOIN THE REVOLUTION
Read “Common Sense 3.1” at ( http://www.revolution2.osixs.org )
We don’t have to live like this anymore. “Spread the News”
An Alternative to Capitalism (which we need here in the USA)
Several decades ago, Margaret Thatcher claimed: “There is no alternative”. She was referring to capitalism. Today, this negative attitude still persists.
I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: “Home of the Brave?” which was published by the Athenaeum Library of Philosophy:
http://evans-experientialism.freewebspace.com/steinsvold.htm
John Steinsvold
Perhaps in time the so-called dark ages will be thought of as including our own.
–Georg C. Lichtenberg