EPTKrugman and his Keynesianism ilk don't believe in history though, there is never any historical crisis just a prohlem of restarting the magic ahistorical growth machine. For him all economics is a tautology. That's what happens when you let yourself be seduced by idealism.
The European Debt Crisis and the Euro - Page 153
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bookwyrm
United States722 Posts
Krugman and his Keynesianism ilk don't believe in history though, there is never any historical crisis just a prohlem of restarting the magic ahistorical growth machine. For him all economics is a tautology. That's what happens when you let yourself be seduced by idealism. | ||
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aksfjh
United States4853 Posts
On September 04 2014 02:10 bookwyrm wrote: Down boy. It's more profound than that. The question is understanding long term trends about WHY there is excess liquidity and how it distributes itself over geography. There's more to the arrighi thesis than i can explain off the top of my head. It's more than a tautology... Krugman and his Keynesianism ilk don't believe in history though, there is never any historical crisis just a prohlem of restarting the magic growth machine. For him all economics is a tautology. That's what happens when you let yourself be seduced by idealism. Until we can trace some sort of importance back to these pools of money, it doesn't make sense to put in too much thought about it. For now, it sounds more like those claims, "People pushing around money that don't actually contribute to the economy!" right before they go on about fractional reserve banking evils and how the whole system is coming down... I could be wrong, and maybe you need to go into more detail about it, but I'm not sold on it (yet). Depends on what history you talk about. 15th century economics doesn't hold a lot of lessons for us to learn because there's so little data on it. That holds true up until around the early 20th century. | ||
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Sub40APM
6336 Posts
On September 04 2014 02:10 bookwyrm wrote: Krugman and his Keynesianism ilk don't believe in history though, there is never any historical crisis just a prohlem of restarting the magic ahistorical growth machine. For him all economics is a tautology. That's what happens when you let yourself be seduced by idealism. Yes, those jerks, citing the 1930s like some idealists. but you are right, they prefer to cite those pieces of historical evidence for which we have a relatively wealthy source of data instead of 17th century Dutch tulip trading. Those ahistorical assholes ! | ||
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IgnE
United States7681 Posts
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JonnyBNoHo
United States6277 Posts
On September 04 2014 03:42 IgnE wrote: The other half of the Arrighi thesis is that a new long cycle is always driven by a new global feature of the economy that is external to and exploited by the new hegemon's capital. In 15th and 16th centuries in Italy there was the opening of the new world and the influx of silver, gold, and sugar. In the 17th and 18th centuries in the Netherlands there had the opening up of Asia with the spice trade. In the 19th century in London there was the opening up of new markets in Britain's vast global empire, the exploitation of the Indian subcontinent, and the extraction of raw resources from Africa and China. And in the 20th century, the American century, there was the destruction of world war II, the opening up of Chinese and southeast Asian markets, and the extraction resources from Brazil, Indonesia, Chile, etc. But every time the cycle repeats the total amount of floating capital is higher, so new investment opportunities have to be able to accommodate the exponential growth. At this point it is unclear if there are opportunities large enough to fuel a next "long century." Africa is a complete mess and an investor's nightmare. Demand in the first world has been saturated for some time, so it's unclear where new markets can be had. Without new markets to buy more stuff, it's unclear how wages can continue to grow in China and India, whose cheap labor is now becoming more expensive. Arrighi suggests that a state-directed capitalism like that seen in China, Hong Kong, Singapore, and some of the other Asian tigers might usher in the next long century, but it is from far certain that the massive, unwieldy, capitalist superstructure will be able to sustain it's required multi-trillion dollar investment levels without either an influx of raw resources, exponentially bigger than the influxes we've seen before (discovery of the New World), or the opening up of new consumer markets that can generate much greater demand. Economies don't work like that anymore since the industrial revolution. It used to be that economic output was more or less a fixed thing per capita. Because of that you were at pretty much a steady state unless some new opportunity opened up. The vast majority of economic activity was labor and land intensive agriculture, so you couldn't really grow much without grabbing more. The modern economy is differs in that per capita output can, and does, increase substantially. Because of that output and demand can increase even without new markets opening up. If you still want to stick with the need for new markets idea, Africa has shown a lot of improvement over the past couple decades and has already been a growing destination for investment. African banks largely avoided the financial crisis and GDP growth has been really good. | ||
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bookwyrm
United States722 Posts
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IgnE
United States7681 Posts
On September 04 2014 04:32 JonnyBNoHo wrote: Economies don't work like that anymore since the industrial revolution. It used to be that economic output was more or less a fixed thing per capita. Because of that you were at pretty much a steady state unless some new opportunity opened up. The vast majority of economic activity was labor and land intensive agriculture, so you couldn't really grow much without grabbing more. The modern economy is differs in that per capita output can, and does, increase substantially. Because of that output and demand can increase even without new markets opening up. If you still want to stick with the need for new markets idea, Africa has shown a lot of improvement over the past couple decades and has already been a growing destination for investment. African banks largely avoided the financial crisis and GDP growth has been really good. Sure you can achieve greater output now with the same resources. Modern technology and all that. And yet up through the last century Arrighi makes a compelling case that the major factors driving growth in each of the long centuries were the opening of new markets and resource stockpiles, with the ascendant global hegemon in each period best able to exploit the new circumstances. Linear increases in efficiency can't sustain reinvestment opportunities that require exponential growth. | ||
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JonnyBNoHo
United States6277 Posts
On September 04 2014 05:01 IgnE wrote: Sure you can achieve greater output now with the same resources. Modern technology and all that. And yet up through the last century Arrighi makes a compelling case that the major factors driving growth in each of the long centuries were the opening of new markets and resource stockpiles, with the ascendant global hegemon in each period best able to exploit the new circumstances. Linear increases in efficiency can't sustain reinvestment opportunities that require exponential growth. Productivity gains tend to be exponential, and investment opportunities don't have to require exponential growth. Exponential growth is typical, therefore investments are generally structured around that. If growth is no longer exponential, the math just has to change, which isn't a big deal. You can even have an investment structured around decline - like an oil well. | ||
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bookwyrm
United States722 Posts
companies don't exist to exploit single oil wells, so that comparison is a bit sily | ||
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JonnyBNoHo
United States6277 Posts
On September 04 2014 05:09 bookwyrm wrote: Compound growth is exponential. The exponential dynamics come from the way money works, not the way the world works companies don't exist to exploit single oil wells, so that comparison is a bit sily No, the exponential dynamic comes from how the world works. If the population of workers is increasing exponentially and productivity is increasing exponentially, ofc growth will be exponential too. Some companies do exist to exploit single wells or fields. The Prudhoe Bay Trust just owns Alaska's Prudhoe Bay field and once it's dry, it's expected to terminate. From their 10K (risk factors): Royalty Production from the Prudhoe Bay field is projected to decline and will eventually cease. The Prudhoe Bay field has been in production since 1977. Development of the field is largely completed and proved reserves are being depleted. Production of oil and condensate from the field has been declining during recent years and the decline is expected to continue. Royalty payments to the Trust are projected to cease after 2027. Link So yes, it's possible to set up a company to not grow or even decline. | ||
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WhiteDog
France8650 Posts
On September 04 2014 01:16 Nyxisto wrote: I basically agree with Krugman's article, but why are the countries in a liquidity trap, and why are the banks hording the central bank money instead of getting it into the economy? Because there is a lack of profitable investment opportunities. You can print as much central bank money as you want, but if there's nowhere to put it it's not going to do anything. And that's something that monetary policy, Brussels or Germany can't solve.Restructuring the economy in a way that actually makes investment and growth possible is only something the respective countries can do. You did not understand Krugman at all. He is basically saying that we are the zero lower bound, it is not a technicist point of view, but a psychologic point of view. In this situation, capital is not invested not because of opportunities (what does it mean opportunities ? it's anticipations that matter in investment, which is not the objective opportunities but the way people view demand/innovation behaving the future). For Keynesians, it is the aggregation of those anticipations that matters, and since those anticipation are null no matter the interest level, it is the time for an exogene force to invest and chance the anticipation - the rôle of the budget. To point out something that Stiglitz made clear through various studies, there are great investment possibilities in the green industries, with a 40 % return on investment (yes this is not a fiction, 40 %) but those possibilities are very dependant on the will of the state. Anybody working in the financing industry in green project will tell you this is true. The problem is the market are not "working properly" (or they are working properly but economic model undervalue the safeness of public bond). On September 04 2014 02:10 bookwyrm wrote: Down boy. It's more profound than that. The question is understanding long term trends about WHY there is excess liquidity and how it distributes itself over geography. There's more to the arrighi thesis than i can explain off the top of my head. It's more than a tautology... Krugman and his Keynesianism ilk don't believe in history though, there is never any historical crisis just a prohlem of restarting the magic ahistorical growth machine. For him all economics is a tautology. That's what happens when you let yourself be seduced by idealism. Krugman is the mainstream economist who put history back into economic discurse with his theory in economic geography... | ||
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bookwyrm
United States722 Posts
White dog, but he still thinks that capitalism is a system which can grow infinitely no matter the historical circumstances and that therefore all we have to do in the current situation is get the motor started again, by means of monetary policy. Right? Let's keep in mind that standards for historical consciousness in mainstream economics are very, very low. The definition of 'history' being basically 'the twentieth century' I have contempt for anyone who thinks that monetary policy is a solution to our problems so ill admit ive never taken krugman seriously enough to investigate him very carefully. Should i? More to the point, can I learn anything about economic geography from him that I haven't already learned from David harvey? | ||
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Sub40APM
6336 Posts
On September 04 2014 08:58 bookwyrm wrote: I have contempt for anyone who thinks that monetary policy is a solution to our problems so ill admit ive never taken krugman seriously enough to investigate him very carefully. Should i? More to the point, can I learn anything about economic geography from him that I haven't already learned from David harvey? I was going to write something snide here but I thought better of it instead I am going to ask this: How can you possible start criticizing Krugman's economics when you havent actually read any of it? Thats like me saying Harvey doesnt know shit about shit because his explanation of the Iraq war as a 'neo con attempt to distract Americans from the failure of capitalism" is a marxist fantasy. | ||
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bookwyrm
United States722 Posts
What should i read by him that will cure my ignorance. I'm not going to pretend like i understand any of this. But I've learned enough about it that I'm pretty sure nobody else does either. And I'm very, very angry. edit but i am derailing the thread and its just becoming about how bookwyrm is mad in general at economic snake oil peddlers so i think its better if i shut up. At any rate, have fun monetizing debt europe! Fun for the whole family!! I'm sure the magic growth machine will restart any minute now... just dont... stop... believing... edit edit and if you recommend a book i really will read it, believe it or not I am studying political economy fairly seriously and I'm deeply obsessed with monetary policy. | ||
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aksfjh
United States4853 Posts
On September 04 2014 08:58 bookwyrm wrote: Jonny you need to go think a little about malthus. I can't believe you actually think that exponential population growth implies exponential growth in 'productivity' (whatever it is that you mean by that term in the first place). White dog, but he still thinks that capitalism is a system which can grow infinitely no matter the historical circumstances and that therefore all we have to do in the current situation is get the motor started again, by means of monetary policy. Right? Let's keep in mind that standards for historical consciousness in mainstream economics are very, very low. The definition of 'history' being basically 'the twentieth century' I have contempt for anyone who thinks that monetary policy is a solution to our problems so ill admit ive never taken krugman seriously enough to investigate him very carefully. Should i? More to the point, can I learn anything about economic geography from him that I haven't already learned from David harvey? That's because before the 20th century, records were almost nonexistent. The records that do exist are so incomplete that they don't even tell enough of a story to build anything off of it. So much is left out that you can bend most of what happened into whatever you want reality to be. I'll admit, it's a lot of fun thinking about the abstract and projecting what we know long into the future, but it's not practical from a policy standpoint. The famous phrase, "... in the long run, we're all dead," perfectly describes what I think about this notion that one day we will not be able to sustain the exponential economic growth. Right now, there are things we know we can do to stop the suffering and wasting of human resources (that WANT to contribute). To simply chime in and declare that "it's all going to fall apart anyways one day, so why bother," that's not helpful at all. As for recommendations, The Return of Depression Economics is supposed to be his best work iirc, with The Return of Depression Economics and the Crisis of 2008 being an update on it. | ||
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Nyxisto
Germany6287 Posts
On September 04 2014 05:47 WhiteDog wrote: To point out something that Stiglitz made clear through various studies, there are great investment possibilities in the green industries, with a 40 % return on investment (yes this is not a fiction, 40 %) but those possibilities are very dependant on the will of the state. Anybody working in the financing industry in green project will tell you this is true. The problem is the market are not "working properly" (or they are working properly but economic model undervalue the safeness of public bond). I completely agree with this, I don't know why you think I wouldn't because I have made clear in several posts that restructuring and modernizing the economies of the crisis countries is pretty important. But as long as that doesn't happen and as long as investors aren't sure that they'll see their money back (Greece for example has gotten two very big haircuts during the crisis, and that's where debt comes into play), they'll simply park their money at the ECB. | ||
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bookwyrm
United States722 Posts
let me try to un - parable the point. you want to sacrifice historical scope in order to gain access to large amounts of quantitative data, because you believe that the only legitimate methodology for thinking about economics requires that data. But in order to do that, you have to sacrifice any historical context and assume that economics will always function basically like it has for the periods for which we have data. Because your methodology cannot gain access to the longue duree, you believe that we should abandon any attempt to understand that longue duree. I think this is a very myopic and dangerous view, and I think we should take the opposite approach - abandon the false comfort of elaborate mathematical apparatus and face the difficult challenge of accepting the possibility that the way things worked in the 20th century have not always, and will not always, remain 'the way things work'. That is, accepting the possibility of real historical change. If that means that we have to learn to think in some other way than that in which economists have trained themselves to think - well, that is simply the nature of the very difficult task with which we are faced. I think that the view your are expounding is very dangerous epistemological fallacy and is part of the reason that mainstream economics is about as intellectually bankrupt as ptolemaic astronomy (remember, ptolemaic astronomy is pretty good at predicting a lot of observations, it is a very sophisticated theoretical apparatus - but it falls apart when you begin to look more closely and to widen the scope of your inquiry) saying 'well, we only have data for the 20th century, so I'm going to assume that all times are basically the same as the 20th centiry, so that my methodology works' is really a dangerous fallacy edit: thanks for the recommendation, I will read it next in my economics slot when I am done with eichengreen edit at below: that's an interesting theory dear jonnyjohn, you should write a book detailing your philosophy of history! | ||
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JonnyBNoHo
United States6277 Posts
On September 04 2014 08:58 bookwyrm wrote: Jonny you need to go think a little about malthus. I can't believe you actually think that exponential population growth implies exponential growth in 'productivity' (whatever it is that you mean by that term in the first place). + Show Spoiler + White dog, but he still thinks that capitalism is a system which can grow infinitely no matter the historical circumstances and that therefore all we have to do in the current situation is get the motor started again, by means of monetary policy. Right? Let's keep in mind that standards for historical consciousness in mainstream economics are very, very low. The definition of 'history' being basically 'the twentieth century' I have contempt for anyone who thinks that monetary policy is a solution to our problems so ill admit ive never taken krugman seriously enough to investigate him very carefully. Should i? More to the point, can I learn anything about economic geography from him that I haven't already learned from David harvey? I didn't say that exponential population growth implied exponential productivity growth. To rephrase what I wrote; exponential economic growth is a by-product of the factors of economic activity (increased population plus increased productivity). Edit: to be clear on something, I'm not arguing that capitalism can grow infinitely. Nor is anyone else. I don't know why this fantasy keeps coming up. edit 2: edit at below: that's an interesting theory dear jonnyjohn, you should write a book detailing your philosophy of history! I'm not writing about philosophy or theories. There are things about the economy that we can observe and measure. | ||
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Sbrubbles
Brazil5776 Posts
On September 04 2014 10:05 bookwyrm wrote: Aks - that's what my parable of the man in the parking lot was about. let me try to un - parable the point. you want to sacrifice historical scope in order to gain access to large amounts of quantitative data, because you believe that the only legitimate methodology for thinking about economics requires that data. But in order to do that, you have to sacrifice any historical context and assume that economics will always function basically like it has for the periods for which we have data. Because your methodology cannot gain access to the longue duree, you believe that we should abandon any attempt to understand that longue duree. I think this is a very myopic and dangerous view, and I think we should take the opposite approach - abandon the false comfort of elaborate mathematical apparatus and face the difficult challenge of accepting the possibility that the way things worked in the 20th century have not always, and will not always, remain 'the way things work'. That is, accepting the possibility of real historical change. If that means that we have to learn to think in some other way than that in which economists have trained themselves to think - well, that is simply the nature of the very difficult task with which we are faced. I think that the view your are expounding is very dangerous epistemological fallacy and is part of the reason that mainstream economics is about as intellectually bankrupt as ptolemaic astronomy (remember, ptolemaic astronomy is pretty good at predicting a lot of observations, it is a very sophisticated theoretical apparatus - but it falls apart when you begin to look more closely and to widen the scope of your inquiry) saying 'well, we only have data for the 20th century, so I'm going to assume that all times are basically the same as the 20th centiry, so that my methodology works' is really a dangerous fallacy edit: thanks for the recommendation, I will read it next in my economics slot when I am done with eichengreen Aksfjh is right that that looking too far back in economics is difficult because of problems in obtaining precise data. This is extremely important in terms of validating empirically what economic theory fits best into what you're looking at (theoretical economists frequently forget this but they should by all means be criticized for it), but also because the timing on business cycles (from boom to bust) are relatively short in historical perspective. The longest cycles that are relevant to economic analisis are technological cycles, but they aren't longer than 40 years. More important to understand why looking too far back is fruitless within economics you've gotta understand the complete paradigm change the industrial revolution was on society. There's a clean break from one period, lasting hundreds of years in which material wealth per capita barely rises to another, after the industrial revolution, in which the malthusian trap is finally foiled. Looking it at it from another perspective, the industrial revolution also created, in essence, the economic man in its weaker form, with material wealth no longer the interest solely of kings and merchants. It was also the culmination of the process of ocupations no longer being determined by tradition (I am a smith because my father was a smith) nor by command structures (I am a mason because my lord ordered me) to being determined by economic logic. Now, I love studying economic pre-history, and it has much value in historical analysis itself, but it offers minimal insight to understanding contemporary economics. As a side note, speaking of paradigm shifts, you may think you have clear signs of an imminent one, but you're not the first to think so. You might be happy to hear, though, that there are economists who seriously discuss the concept of secular stagnation, but that may be too mainstream for your liking. Edit: if you wanna read something from Krugman, I'd recommend Peddling Prosperity. It looks at the use of weak economic ideas to further political goals in the US (specifically from the 1960s to early 90s). | ||
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bookwyrm
United States722 Posts
How can you possibly justify the claim that no cycles' (if indeed cycle is the correct metaphor) longer than 40 years matter for economics as anything other than an a priori dogma? I don't even know what this supposed technological cycle is. You claim that economics can't look at anything other than recent history, and then that economics shows that nothing except recent history matters?!?!? Talk about begging the question the modern break is a myth, homo oeconomicus is a myth... the world now is totally different from the 30s, but you can only understand that difference by going back even further and really thinking in the long term. I'm sorry if there's no data, that's not an excuse not to think about it. We are not as different and special and modern as you think we are, and whatever we are, we won't continue to be it. There are no equilibria- there is only the storm blowing from heaven! but you will all continue to think in this way i guess until the storm really arrives, and then it will be too late for talking you should check out a book called 'the great wave' it is about price revolutions which are extremely long term economic phenomena which take place over hundreds of years. By a guy called fischer. It's a really interesting book. | ||
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