Wednesday, April 17, 2013

Leo Hickman — GRANTHAM: Capitalism Is Great, But It Assigns No Value To Your Grandchildren

Jeremy Grantham: "Capitalism does millions of things better than the alternatives. It balances supply and demand in an elegant way that central planning has never come close to. However, it is totally ill-equipped to deal with a small handful of issues.
"Unfortunately, today, they are the issues that are absolutely central to our long-term wellbeing and even survival. It doesn't think long-term very well because of high discount rate structure."
Business Insider
GRANTHAM: Capitalism Is Great, But It Assigns No Value To Your Grandchildren
Leo Hickman, The Telegraph

Jeremy Grantham gives a shout out to Kenneth Boulding, author of Evolutionary Economics, Ecodynamics, The World as a Total System, The Economics of Human Betterment, and many other works. Boulding was also aware of monetary economics, sectoral balances and functional finance. See, for instance, Economic Analysis, rev. ed., 1948, p. 399-402. See also L. Randall Wray, "Kenneth Boulding's Reconstruction of Macroeconomics," Review of Social Economy; December 1997.
Grantham: One of my new heroes is an economist called Kenneth Boulding who, at 22, got a paper into Keynes's journal. At the age of about 50 he realised that economics was not taking its job seriously, that it was not interested in utility, in real serious improvement in the world, but that it was increasingly interested in new, elegant mathematical theories designed to get career advancement, over usefulness.
He said the only people who believe you can have compound growth in a finite world are either mad men or economists. He also said: "Mathematics has brought rigor to economics. Unfortunately, it also brought mortis."
This is a fairly long interview, but it is worth reading for several reasons. One is, of course, that Jeremy Grantham has been around for a long time and speaks from deep experience. In addition, he is essentially saying that what matters is real resources rather than money.
We don't build things on paper and yet we've begun to talk as if we do. People say that the Chinese have built all their railroads on debt, to which I say, "no, they haven't". They've built them with real Chinese people and real cement and real steel that are part of the real world.

7 comments:

Anonymous said...

"Capitalism Is Great, But It Assigns No Value To Your Grandchildren"

That's OK. They're not for sale.

Tom Hickey said...

@ Bill

That's what "they" want you to think.

Anonymous said...

@ Tom

;)

Anonymous said...

"It balances supply and demand in an elegant way"

I'm pretty certain that it doesn't necessarily.

In orthodox economics (or austrian, for that matter) there's always this super-duper infallible god, generally referred to as 'the market'.

I guess people have to create an imaginary perfect god somehow, to try and make sense of things.

system failure due to insufficient evolution? said...

How the economic-political elites design the new dark ages

A scenario-nightmare for the future of Europe

(Thatcher's legacy)

http://failedevolution.blogspot.gr/2013/04/a-scenario-nightmare-for-future-of.html

system failure due to insufficient evolution? said...

How the economic-political elites design the new dark ages

A scenario-nightmare for the future of Europe

(Thatcher's legacy)

http://failedevolution.blogspot.gr/2013/04/a-scenario-nightmare-for-future-of.html

circuit said...

Tom,

Good of you to bring up Boulding. He was decades ahead of his time in terms of his understanding of the role of public policy.

We used to have central bankers who learned policy from Boulding textbooks (he was gospel to elders at the Bank of Canada).

IMO, he should be mandatory reading for any first year undergraduate (no matter what discipline - his work is multidisciplinary, as you point out)