The European Debt Crisis and the Euro - Page 153

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.

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.

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.

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.

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.

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

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.

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?

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?

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).

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 +

edit at below: that's an interesting theory dear jonnyjohn, you should write a book detailing your philosophy of history!

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