Thursday, January 10, 2013

Ramanan on trade — Dani Rodrik and Joan Robinson

Perhaps it is the main aim of this blog to argue how the sacred tenet of free trade is devastating to the world as a whole and why a sustainable resolution of a crisis can only be achieved by new international agreements on how to trade with one another combined with coordinated demand management policies with an expansionary bias.
The Case for Concerted Action
“Free Trade Doctrine, In Practice, Is A More Subtle Form Of Mercantilism”
Ramanan

Until political leaders, economists and policymakers start treating the global economy as a closed system and also a complex adaptive system that functions as key in the ecological life-support system of humanity, the current insanity called neoliberalism will prevail, resulting in incalculable human misery, social turmoil, political repression, maldistribution, waste of valuable resources, and damaging externalities, including military adventurism and war.


2 comments:

Unknown said...

Total hodgepodge.









(only kidding)

Tom Hickey said...

I should clarify when I say the global economy is a "closed system." The global economy is "closed" in that there is no external sector. There is also no global government even though there are supra-national regional and global institutions.

If the global economy were a simple or even complicated system, it could be subject to general equilibrium equations. However, it is a complex adaptive system in which humanity is continually faced with emerging challenges that are addressed (or not) in terms of reflexivity (information feedback) and creativity (innovation), making precise prediction impossible in terms of "natural" equilibrium. The natural state is in the direction of increasing complexification.

See for example, The Evolutionary Impact of Gradual Complexification on Complex Systems, David Malkin , A thesis submitted for a degree of Engineering Doctorate of the University College London in Computer Science

This is not to say that biologists are unaware of the fact that complexification takes place. The concept of complexification is well accepted and is considered to explain the origins of biological life; billions of years ago simple replicating molecules combined and created more complex replicating ensembles of molecules, complexity kept increasing ultimately leading to complex biological life (Dawkins 1989, Kauffman
2002). While the mechanism of this ever increasing complexity of biological systems are still not perfectly understood the concept is well accepted (Kauffman 2002).

The problem is not that complexification is not accepted; the problem is that studies which investigate the evolution of complex systems using fitness landscape tools very often completely ignore the process of complexification. A large group of researchers have omitted complexification from their models

p. 47 (emphasis added)