Economics

Sredni Vashtar

Because we do not appear to have an extant unified economics topic, and because I should like to talk about the subject, I have made this topic. Let us keep this conversation as civil but lively as possible, please.

Now, to start things off, here is an article from Jacobin about economists.

Odradek

Things I know about economics

* Most people have Opinions about where it goes wrong.

* Keynesnians hate Austrians, Austrians are hated by everyone, and Marxists hate Keynesnians.

* Most followers of Austrian economics are dicks.

* Marxists do not talk about math much.

* There are microeconomics and macroeconomics

*It's like philosophy in that it's debatable whether anyone really knows what they're doing, maybe.

* People are rational. Or not.

* Utility is a thing.

* Goldbugs are silly

* Economics is either a priori or not.

* Jehu Eaves should really stop trying to be a badass.

All of this is probably wrong.

Except that last thing.

Sredni Vashtar

These are true. Nevertheless, you should read that article that I linked. I think that you will find it interesting.

Odradek

I'm reading it now.

Sredni Vashtar

Cool!

Klinotaxis

i'm never sure what to think of these articles. obviously the author knows more about economics than I do, yet I can't see economics as the soulless dance it's always described as. economists i pay any attention to, stiglitz or sen or so on, well they aren't mainstream, but they're obviously fairly concerned with people in an ethical way. that's the whole basis of sen's well-known work on starving people etc. even krugman, bourgeois liberal that he is, talks all the time about e.g. we need food stamps to boost the economy and also because letting people go hungry is shitty bla bla.

so i read these sorts of articles about bad assumptions and economists' ideas being the basis of society and just kind of think well that's not where i live. where i live it seems like, say, people don't want to raise the minimum wage because they think it's only used by kids who don't really need money, and also lazy adults who deserve to be poor. this isn't borne out even slightly by any kind of statistics or whatever of course but it's the basis for such policies. sometimes when pressed they'll say something else, like that raising the minimum wage will cause inflation or something, but it sounds cargo culted, like they don't really know economics, they're just repeating something that sounds economical that was probably explained in more detail by an economist at some point but the detail isn't really important because they're just putting a scientific spin on top of their real beliefs?

i guess it's like biopower for me? i've been thinking about that a lot lately. here let me quote something that's probably uncontroversially part of a shitty program, gotō shinpei talking about japanese colonialism in taiwan in the 1910s

In this era of scientific progress, the basic principle of colonization has to be built on biology. Then, what is the basis of biology? It is to encourage a scientific way of living, from which are derived the systems of industrial production, hygiene, transportation, and law enforcement. It is also to realize the principle of survival of the fittest in this competitive world.

now obviously this has basically nothing to do with any kind of real "biology", he pretty much just threw the word in there to sound "scientific" for the purpose of convincing people. maybe he really believed this shit, i don't know, but the point remains it's not really biological. now obviously biologists did do shitty things as part of the taiwan program (e.g. blood types, racist everything) but it seems to me that it was subordinated to a policy not particularly based in any kind of "science", rather than it being the other way around. with economists i see it being analogous i guess.

this is a lot of dumb words sorry

Klinotaxis

god the formatting is too hard for me

www.princeton.edu/~pkrugman/interstellar.pdf‎

anyway here's a paper krugman wrote as a student about arbitrage in the presence of relativistic transport. it is humorous and has asimov jokes. this is my level of economic knowhow

Sredni Vashtar

Actually, I agree that people tend to use fancy, "expert"-sounding language to disguise motivations based on prejudice or selfishness all the time; consider modern debates with rightists on any major social issue. But by the same token, these beliefs are facilitated and bolstered by ideologues with their own motives, many of whom justify themselves with faulty logic.

What makes the situation worse is that the current prevailing vogue in economics—in Gramsci's terminology, the hegemony of economic academia—is one founded upon ideals that are not only unrealistic but, again, reinforce those irrational prejudices: The poor are poor and the rich are rich because that is the way that things "should" be. Assertions of labour-based value, criticism of the "perfect market"—these things are heretical, anathema. There is a religious air to it all.

Granted, there are people like Krugman who do not seem to think like that, but even so, the coincidence between the rightward shift of the economic "centre" in many liberal democracies and the failure of academia to produce any concerted contradictory ideological force is disturbing, to say the least.

glennmagusharvey

Utility function not working right?  Well, make sure it has appropriate factors that can vary with time, and also include things like social capital, existence values, and more.  Also, discount factors vary with time.

How do they vary?  Well, they vary as people feel like it.

No, seriously.

Klinotaxis

Sredni Vashtar said:

What makes the situation worse is that the current prevailing vogue in economics—in Gramsci's terminology, the hegemony of economic academia—is one founded upon ideals that are not only unrealistic but, again, reinforce those irrational prejudices: The poor are poor and the rich are rich because that is the way that things "should" be. Assertions of labour-based value, criticism of the "perfect market"—these things are heretical, anathema. There is a religious air to it all.

i don't know how to format quotes

right, see, this is exactly what I don't see among actual economists. for example there's this cute paper http://arxiv.org/abs/1002.2284

that paper right there i just linked it said:

I prove that if markets are weak-form efficient, meaning current prices fully reflect all information available in past prices, then P = NP, meaning every computational problem whose solution can be verified in polynomial time can also be solved in polynomial time. I also prove the converse by showing how we can "program" the market to solve NP-complete problems. Since P probably does not equal NP, markets are probably not efficient. Specifically, markets become increasingly inefficient as the time series lengthens or becomes more frequent. An illustration by way of partitioning the excess returns to momentum strategies based on data availability confirms this prediction.

now the author philip maymin, i have just looked up, is not only a professor of finance at NYU (so probably not too far outside the mainstream), but in fact a libertarian politician (so probably kind of a douche wrt: poor people), and here he is saying very explicitly that markets are not efficient.

so i mean, between this sort of thing, and Krugman being a super-respected mainstream economist with an NYT column, it's kind of really weird to read that there's a religious prohibition against criticizing the wisdom of the market?

Klinotaxis

you could make a case that economists should be dealing better with politicians being shitheaded bigots and using economic language to defend it, of course, and i'd probably be for it.

another economist i know if is this guy http://hajoonchang.net/ now he's somewhat non-mainstream, but i mean

this dude's page on consulting or whatever said:

I have worked with most of the UN organisations that deal with socio-economic issues and a number of multilateral financial organisations, like the World Bank. I have worked with private sector firms and organizations as well as ‘left-leaning’ non-governmental organisations (NGOs) and think-tanks.

also he's a reader at Cambridge. not exactly a dude in his garage is what i'm getting at here

and he wrote e.g. 23 Things They Don't Tell You About Capitalism

book description on amazon said:

one of today's most iconoclastic thinkers destroys the biggest myths about the world we live in. It may have its flaws, but there's no real alternative to free-market capitalism - ultimately it's making us all more prosperous. The West is more efficient and financially savvy than the developing world. And technology is the way forward for everyone. Right? Wrong.

and

How did the rich countries really become rich?  In this provocative study [Kicking Away the Ladder], Ha-Joon Chang examines the great pressure on developing countries from the developed world to adopt certain 'good policies' and 'good institutions', seen today as necessary for economic development. His conclusions are compelling and disturbing: that developed countries are attempting to 'kick away the ladder' with which they have climbed to the top, thereby preventing developing countries from adopting policies and institutions that they themselves have used.

also the guy i mentioned earlier, stiglitz. he has an economics nobel and used to be chief economist of the world bank. he has written a book Whither Socialism? claiming (to vastly oversimplify) that neoclassical economics has major problems; that these major problems led to market socialism being formulated in a way that wouldn't work; to have developed a better model for market socialism to take.

again these are only a few peeps and i'm no economist, but hopefully my point here is clear - i'm not really sure where this religious economic orthodoxy is.

also again, i'm talking specifically about economists here. among politicians it's pretty easy to find people who really believe poor people should be poor etc.

Obā-san

Ooooh, all of these articles and things are very nice!


Also it seems to me that in economics, as with many/most sciences, the impression that is given looking solely at more layman's sources is rather different from, and more hegemonic than, the actual views and discussions going on among professionals. In fact, given how closely economics is tied with the reality warping lens of political thought, I would be willing to venture that it is even more the the case in this field. (Sorry if this does not make a terrible amount of sense, I am half asleep)

Tachyon

Klinotaxis said:

i don't know how to format quotes

<blockquote rel="name of source quoted"></blockquote>

Klinotaxis

wow this still looks super bad & is ugly

thanks though

glennmagusharvey

It's HTML.  This forum doesn't use BBCode.  (I don't think you've been to IJBM, but for what it's worth, we use BBCode there, and the markup is just [quote]stuff[/quote].)

Obā-san

BBCode here would be cool

Sredni Vashtar

Pangur Bán said:

Ooooh, all of these articles and things are very nice!


Also it seems to me that in economics, as with many/most sciences, the impression that is given looking solely at more layman's sources is rather different from, and more hegemonic than, the actual views and discussions going on among professionals. In fact, given how closely economics is tied with the reality warping lens of political thought, I would be willing to venture that it is even more the the case in this field. (Sorry if this does not make a terrible amount of sense, I am half asleep)

This is true. It seems that there is a serious divide between how working economists seem to view the world and how economics is taught to people not studying economics.

Perhaps my issue lies more with the assumption in a country like the United States that capitalism is the canon which one may diverge from or challenge rather than a popular philosophy. Really, while I can think of many prominent economists who say that things like progressive taxation and regulation are good ideas, even except them as givens in a functional society, I can't think of any* that are willing to come out and say that capitalism in and of itself is not a good idea. Maybe it's the sore loser in me...

*I am not counting Noam Chomsky for various reasons.

Klinotaxis

sredni vashtar said:

This is true. It seems that there is a serious divide between how working economists seem to view the world and how economics is taught to people not studying economics.

way to sum up what i was trying to say, except coherently!

also i wouldn't count chomsky as an economist because... he's not an economist?

as for capitalism i suppose it depends on what you mean by "capitalism". like iunno, the chicago school (or well, austrian, but they're completely bugnuts) is the economists most onboard with republican fuckery, but they're not the whole deal. would you count the nordic model as non-capitalist? i wouldn't, and it's certainly not a communism dreamt of, but it's just as certainly distinct from the american policy group. there's, uh, more than one "capitalism", i guess.

eta jesus christ quote formatting

Sredni Vashtar

Klinotaxis said:

also i wouldn't count chomsky as an economist because... he's not an economist?

That's why I said he didn't count. Strictly speaking, he's a linguist, although he has written about economics.

I wouldn't consider the Nordic model non-capitalist, actually, although it is certainly a lot better than, say, the Chicago School's take on capitalism. There is a distinction to be made between social democracy and democratic socialism.

Klinotaxis

i didn't write that clearly, i said i wouldn't consider it non-capitalist either.

Sredni Vashtar

I noticed. I just forgot to mention it because I am a twit and also slightly distracted.

Odradek

http://duncanlaw.wordpress.com/2013/10/29/economics-as-science/

Odradek

Interesting article.

Klinotaxis

'rational' in scare quotes. my hero

Obā-san

"rational"man to the rescue

Klinotaxis

that wasn't sarcasm, it's really nice to see 'rationality' not a criterion

reminds me of http://vserver1.cscs.lsa.umich.edu/~crshalizi/weblog/698.html

except I and probably the author think economics is doing better than haruspicy

Saladofstones

'rationally' speaking

Obā-san

it's gotten to the point where seeing the word rational applied to something makes it seem less trustworthy

Sredni Vashtar

Rationality fetishism seems to have a rather disturbing coincidence with extremely right-wing economic beliefs, doesn't it? Less rationality, I think, and more rationalising.

I like that guy's attitude and I like the way that he thinks.

Mr. Darcy

The Great God Pan said:

Rationality fetishism seems to have a rather disturbing coincidence with extremely right-wing economic beliefs, doesn't it?

Marxists used to call their beliefs "scientific socialism". That's been a hard sell with the empirical evidence that they were history's most homicidal failure.

Sredni Vashtar

There is an important distinction to be made between authoritarian and democratic socialism. If you actually read Marx and Engels' work, they were very much in the latter category, while such institutions as the Soviet Union and Pol Pot's regime fall very hard into the former. To conflate the two would be akin to claiming that Murray Rothbard is one and the same with Augusto Pinochet because neither of them liked economic regulation.

That said, people who are convinced that their ideas are the absolute truth tend to use either science or religion to justify them, particularly when the "solution" demanded of "problems" that they see involves the explicit or tacit brutalisation of an assigned Other.

Obā-san

To conflate the two would be akin to claiming that Murray Rothbard is one and the same with Augusto Pinochet because neither of them liked economic regulation.

lemee put it this way, have you ever seen them in the same place at the same time?

hmmmmm?

Klinotaxis

i should actually link an article instead of whtever

http://crookedtimber.org/2012/05/30/in-soviet-union-optimization-problem-solves-you/

it's about socialism, check it you fucing dirtbag reds

Mr. Darcy

The Great God Pan said:

There is an important distinction to be made between authoritarian and democratic socialism. If you actually read Marx and Engels' work, they were very much in the latter category, while such institutions as the Soviet Union and Pol Pot's regime fall very hard into the former. To conflate the two would be akin to claiming that Murray Rothbard is one and the same with Augusto Pinochet because neither of them liked economic regulation.

I don't know how you define "democratic" (is it democratic when, per Thucydides, the demos kills the aristocracy because they see the Athenian military?), but it's clear reading Capital that Marx was wholly in favor of revolution. Maybe he naively thought that all future revolutions would turn out as relatively benign as the American Revolution rather than the French Revolution or English Civil War. And that's ignoring the famine deaths from collectivized agriculture and only counting the dictatorships' murders as deviations from "true" Marxism.

Besides, scientific socialism is just one example. The literal Cult of Reason also coincided with left-wing rather than right-wing beliefs.

Sredni Vashtar

Part of my issue with Marx is that his idea of revolution is very mid-1800s in character: It assumes that most institutions are aristocracies requiring actual violent revolt against the military and the upper classes in order to create a more equitable state, rather than liberal democracies that can be reformed to a more equitable state. It also predates the advent of passive resistance as a revolutionary tactic, and so misunderstands the power of civil disobedience (see India, Portugal).

Collectivised agriculture is a different matter, but to say that putting all economic decision-making power (particularly agricultural) in the hands of an ideologically fixated, horribly inexperienced political oligarchy (most of whom knew nothing about how agriculture worked) missed the point is a tremendous understatement. There is a broad gap indeed between workers in an industry taking control of that industry themselves and what Lenin and Stalin did in Russia.

As for the Cult of Reason, I already addressed that, but I don't think that you noticed.

Tachyon

Communism in Russia might have been a catastrophic failure but there was a hell of a lot wrong with the USSR in any case

i still don't understand why many people seem to assume left-wing economics is going to automatically lead to re-education through labour, the outlawing of religious institutions, mass censorship, the Holodomor, etc.

Klinotaxis

necro. I am reading Sen and I have found an example of the completely out of touch computational economist, which I thought was mythical.

Behold.

I mean, Sen is also a Nobel-winning economist and calls this "astonishing" negatively, so I hardly think the field is like this, but I'm laughing my ass off at how ridiculous this is

might as well respond as long as i'm here

Tachyon said:

i still don't understand why many people seem to assume left-wing economics is going to automatically lead to re-education through labour, the outlawing of religious institutions, mass censorship, the Holodomor, etc.

sort of what sredni said. The cliche of course is answering "that's happened every time before", to which I'd add - how much of a serious alternative have "leftists" (scare quotes b/c not a very coherent grouping) provided? As someone interested in non-capitalism I would love to see some serious planning but it does not seem to exist in the revolutionary type peeps. They just don't seem to think or care about the aftermath, and that is exactly what Lenin and Mao did.

Sredni Vashtar

I'd say that what most really left-leaning people want to ultimately happen with the economy varies. I have a friend who is a fairly radical Trotskyite, and he and his peeps have a pretty solid concept of how a stateless post-capitalist society (and more importantly, the progression to it) could function, with the caveat that this sort of thing must be intrinsically flexible in order to account for, well, reality. But his view of what is necessary to promulgate such a society is pretty different from what a more orthodox Marxist or a more straightforward anarchist might argue, let alone the less savoury authoritarian branches or more moderate, social democratic positions.

The basic idea in any of the more radical branches tends to involve collective ownership of the resources of the state and truly democratic decision-making on at least the local level. What the greater structure looks like is harder to pin down and really varies depending on just what ideology you're talking about. Pretty much all of them think that the whole idea of a management class should be abolished, though, either as a class or as a concept.

Tachyon

When i made that post i wasn't even referring to radical leftists, though; just speaking favourably of socialism in any capacity makes a lot of people hostile and they start making slippery slope arguments and comparisons to Russia and China.

But admittedly, yes, left-wingers often seem quite vague on what precisely it is they have in mind post-capitalism.

Klinotaxis

oh that's just cold war detritus

Klinotaxis

just gonna post random garbage here now. thank

When a famine was developing in Gujerat in 1812, the Governor of Bombay turned down a proposal for moving food into an affected areas [sic] by asserting the advisability of leaving such matters to the market mechanism, quoting ‘the celebrated author of the Wealth of Nations.’ Warren Hastings, who had tackled a famine in Bengal in 1783-4 by using public channels for moving food into the region, was rapped on the knuckles by Colonel Baird-Smith for not having understood his Adam Smith, adding that Hastings could ‘scarcely have been expected’ to have absorbed Adam Smith so soon (1783) after the publication (1776) of the Wealth of Nations. The basically non-interventionalist famine policy in India lasted late into the nineteenth century, changing only around the last quarter of it.

Firm believers in the market mechanism were often disappointed by the failure of the market to deliver much. During the Orissa famine of 1865-6, Ravenshaw the Commissioner of Cuttack Division, expressed disappointment that private trade did not bring much food from outside which should have happened since ‘under all ordinary rules of political economy the urgent demand for grain in the Cuttack division ought to have created a supply from other and more favoured parts’.

Sredni Vashtar

Adam Smith himself was not a complete non-interventionist, nor did he believe that the market was some kind of inherent good in itself. As far as modern "capitalists" go, Smith himself was practically a socialist, which says a lot...

Klinotaxis

yeah that's what amused me, he was an economist, not a magician ('created a supply', seriously?)

i mean lots of people died though

Sredni Vashtar

That tends to happen with that sort of thing. Assuming that economic theories work like magic or miracles is generally a horrible idea, as Stalin and Pinochet have demonstrated.

Klinotaxis

http://www.telegraph.co.uk/finance/economics/11764018/Varoufakis-reveals-cloak-and-dagger-Plan-B-for-Greece-awaits-treason-charges.html

http://yanisvaroufakis.eu/2015/07/27/statement-by-yanis-varoufakis-on-the-finmins-plan-b-working-group-the-parallel-payment-system/

What the fuck man

Klinotaxis

Wow! Look at all that formatting I utterly fucked up up there. Takes me back, man. Good times.

So anyway I got linked to this article on slavery economics and even though it's pretty provisional (it says not to post it, but i got this from someone more economics-involved than I so unless one of you is secretly an Economic History Review editor I think it's ok) i think it kind of distills one of my bugaboos with socialism by way of particular example

to sum up, they quote a few economic historians and environs (including chomsky) as stating that cotton output in the South US increased over the years due to advances in whipping technology

Chomsky said:

[US slave plantations] were highly efficient. Productivity increased even faster than in industry, thanks to the technology of the bullwhip and pistol, and the efficient practice of brutal torture, as Edward E. Baptist demonstrates...

and due to "ratcheting", i.e. increasing production quotas constantly.

When I read this I immediately think, no, that's crazy, because we're talking about a quadrupling in production here, over decades. there's only so much faster you can move your hands. And the point of the paper is indeed that this picture, Baptist's specifically, is based on bad interpretation of slave narratives and other evidence. (The authors attribute the increase to spread of different cotton cultivars and stuff.)

This seems to sum up a major break I have with socialists. Socialists, especially the traditional ones, they say that all this evil, slavery or imperialism or anything, is immoral, but also efficient, and it's that efficiency that allows it to continue. As Chomsky so specifically said (not that he's a socialist but... you know... left) Sometimes there are elaborate theories of dehumanization spun, because a lesson here is that as soon as you don't treat people like people you can really increase production! And, to be really mean for a second, maybe you get gulags that way.

Whereas I see these horrible things and I think it's evil, but also inefficient. I think of things like Campbell stuffing his quota with dirt and local officials ignoring imperialist dicta as soon as they're out of earshot. Intuitively, how could forcing someone to work against their own interests ever be efficient? People work hard when they want to and gunk up the works when they don't. And in a way that's sadder, because it means the cruelty is totally and utterly pointless, just the overseers being evil people, but on the bright side, maybe we can act sort of like rational homo economicus without anyone getting whipped

Sredni Vashtar

You're saying "socialists" like you mean all socialists, when I'm pretty sure that a lot of socialists would argue that oppression remains ostensibly profitable because of the *illusion* of efficiency, and moreover because it maintains a social status quo.

Klinotaxis

i did. i know that's true. i just seem to know a lot of people who think that lenin's analysis of imperialism pretty much covered everything

Sredni Vashtar

Because they're Marxist-Leninists, and generally speaking, Marxist-Leninists are not to be trusted with any endeavour more sophisticated than a lemonade stand.

Klinotaxis

yeah. but well, i don't think it's just them. people a lot of the time go into this conspiracy-verging stuff about how the people behind ads are in total control of public opinion or increased police homicide or whatever damn thing for the sake of profit. which is why canada is ruled by the hudson's bay company which did not have to become a clothing store. ijbm

Sredni Vashtar

Oh, no doubt, but I kind of mentally lump those people into the same greater category of "kooks."