Tuesday, April 23, 2013

Steve Keen — Instability may not be optional (1)


If instability is a feature of capitalism rather than a bug, the question becomes how much instability should be risked institutionally in order to unleash individual incentive to risk without excessively putting social stability at extreme risk.

Or should we be asking whether "capitalism" is worth the human cost.

Steve Keen's Debtwatch
Instability may not be optional (1)
Steve Keen


12 comments:

Anonymous said...

:)

y said...

No, Tom, you must worship the infallible god called *whatever* that will ALWAYS deliver an optimum outcome for you, your family, and your people, so long as government just gets the FUCK out of the way.

Just believe and it will happen!

Believe!

If it doesn't happen, just try believing a bit harder!

Matt Franko said...

When Marx invented Capitalism in the mid 19th century, we were under metals.

Now we are not under the metals anymore (we are under law) so is this taken into account when we still examine Marx's so-called 'Capitalism' today?

Can Marx's so-called 'Capitalism' exist under a FFNC currency system?

Marx certainly never wrote about it (dead).

Is it accurate thinking to be looking at Marx's 'Capitalism' as if it exists today?

Is it a good idea to talk about Capitalism without making this distinction between the type of monetary system we have at different times?

Doesn't the monetery system trump 'Capitalism'?

Rsp

Matt Franko said...

Here's David Harvey who has been "teaching" Marx's "Capital" for over 40 years:

http://davidharvey.org/2009/02/why-the-us-stimulus-package-is-bound-to-fail/

"The problem for the United States in 2008-9 is that it starts from a position of chronic indebtedness to the rest of the world (it has been borrowing at the rate of more than $2 billion a day over the last ten years or more) and this poses an economic limitation upon the size of the extra deficit that can now be incurred. "

He continues with his belief in "pump priming":

"In order to work, the stimulus has to be administered in such a way as to guarantee that it will be spent on goods and services and so get the economy humming again."

The FFNC system requires constant provision of $NFA flow, "pump priming" does not exist.

It goes on, and on, and on.....

Are students really learning anything from David Harvey's class here?

Is this not a complete waste of time?

rsp,

Matt Franko said...

Keen quoting Minsky:

"Minsky’s most famous phrase on this front is often paraphrased to three words: “Stability is Destabilising”."

????????

Does one need a PhD to understand such sophistry?

So if you dont have a PhD you cant understand this?

paul said...

Is an electrical circuit stable when it isn't plugged in or doesn't receive enough current to function? Is it unstable?

We need to think of the economy and monetary systems as separate systems that interact.

The economic machine can be healthy yet not function because we don't provide it with the "current" it requires...$NFA.

We can run it on batteries for a while (credit) but what happens when that runs out?

Anonymous said...

Personally, I think the instability is not inherent to the economic system but to human psychology and human nature. The inherent instability we get under capitalism may be (and in the past, has been) less than the drastic instabilities we see from misallocation of resources under socialism.

paul said...

"The inherent instability we get under capitalism may be (and in the past, has been) less than the drastic instabilities we see from misallocation of resources under socialism."

The instability we are currently experiencing are a result of misallocation of resources.

For what it's worth I read of a study recently (can't remember where) That found that Soviet Union socialism was every bit as efficient as capitalism, in fact more so…the problem was that when investments failed they kept trying tp prop them up rather than move on and try something else.

Anyway, in my view efficiency is highly over-rated…except for a few areas we are capable of producing way more stuff than we can possibly consume.

Tom Hickey said...

Marx's critique of capitalism is dated, of course, because the capitalism of his day was the move of gentry from land ownership to factory factory ownership. Few capitalists of Marx's were the entrepreneurs that invented the capital goods themselves. Rather, capital goods were purchased by people of wealth who had access to credit on that basis.

So-called capitalism has changed radically since then. Now we have managerialism on the side of productive capital and finance capital is setting in the driver's seat, which Marx never imagined possible.

So Marx's works have to be viewed in that light rather than interpreted as being as fully applicable today as in the Marx's time. The context is different.

Tom Hickey said...

Paul We can run it on batteries for a while (credit) but what happens when that runs out?

I like it. :)

Tom Hickey said...

Personally, I think the instability is not inherent to the economic system but to human psychology and human nature.

Yes. Minsky's point is that the financial sector is inherently instable due to Keynes's "animal spirits," so that the financial cycle culminates in Ponzi finance, then reacts by over-tightening after the horse has left the barn, exacerbating the ensuing debt-deflation.

According to Minsky, this is endemic to a credit-based system, and "capitalism" is credit-based.

Matt Franko said...

Here's some "instability" for you:

In Sept '12, Treasury injected for the month $254B of $NFA... then a few months later in Feb '13 they injected $443B....

Lets say US retail sales are 400B/mo...

Does anyone believe that this $200B swing in $NFA injection between these recent months is a "good idea"?

Does anyone rational not think that this type of swing in monthly magnitude of $NFA injection will not cause "instability"???

Does anybody rational not think that when your chief executive is led to believe we are "out of money" that is not an "unstable" situation????