An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
"While the love of money drives capitalism, which helps to provide the required material comfort necessary to live “wisely, agreeably, and well”, it is also a neurosis because there can never be a point of satiation."
Its not the "love of money" its the pursuit of profits/increased profits..... This is called "Continuous Process Improvement" and it should be/could be a force for our good...
"Delivery (customer valued) processes are constantly evaluated and improved in the light of their efficiency, effectiveness and flexibility."
The profit motive/targeted rates of return are the mathematical criteria (in units of USDs) against which management can evaluate the efficacy of implemented process improvements...
There is nothing wrong with this approach to economics it has led to any gains in our real standards of living we been able to achieve for at least the last half century since its apostles Shewart/Demming...
It doesnt have anything to do with government imposing moron macro economic policies.
This is a back-slapping purely ideological rant from Wray here... not edifying or even mildly insightful AT ALL.
"the fetish for liquidity plus inequality generate chronic demand gaps and unemployment."
Ah, no, its not "fetish for liquidity" its the goal of increasing efficiency thus lowering costs which implies increased profits if sales levels can be maintained...
We should all be retiring at 50 by now thanks to this system...
I guess Wray thinks we should blow it up? and go back to hunter-gatherer mode?
$BILLIONS have been invested in this knowledge base over the last decades.... and it is working...
Its not the job of firms to impose macro economic employment and tax policies...
"inequality generate(s) chronic demand gaps and unemployment."
Ok, so let's say Mike seeks investors for development of MNE, just like Blodgett over at BI got Bezos to invest there recently...
Mike says, "I'll sell a 10% stake for $2M..." use of proceeds from the offering will be to continue to develop MNE... with a goal of being the HuffPo of econ ...
Mike finds an investor for 10% at $2M.
Mike is now worth $18M as he still holds 90% of the shares and just manifestly sold 10% for $2M...
Mikes additional worth of $18M here now puts him into "the 1%" and "inequality" has been increased...
Mike starts developing an expansion plan, marketing plan, and interviewing IT development personnel, etc...
OK now explain to me how this financial xaction and Mike embarking on an expansion plan has now "generated a demand gap" and/or "unemployment"???
Step by step explanation please...
ie
Step 1: Mike solicits investors...
. . . . Step 50: This person is not hired for this job...
Step 51: This person no longer consumes this thing...
From my view on the sidelines here, what you describe in your MNE example sounds like productive, real Investment spending. Even if it propels Mike into the 1% as a by-product, the underlying activity is economically productive.
In Wray's piece, he seems to rail against activities that are destructive, extractive, and rent seeking. The antithesis of your example.
Both the magnitude of inequality and the manner in which it is produced are matter here.
Granted, that's just my impression and I could be completely wrong.
Matt, according to neoclassical economics you are correct. However, there is no profit beyond the average return to capital = the natural rate of interest in a free market. Obviously, this is not the case in reality owing to "market imperfections" that neoclassical economists explain by government intrusion. However, a realistic analysis shows that these imperfections are chiefly economics rests that go to those having the power to extract them. The sociology of capitalism, which conventional economists assiduously avoid and ignore, shows that in capitalist societies power and wealth are directly related, with wealth increasing power and power increasing wealth. This results in asymmetries that vitiate neoclassical assumptions.
If what you say were predominantly true, that is,
"Delivery (customer valued) processes are constantly evaluated and improved in the light of their efficiency, effectiveness and flexibility."
The profit motive/targeted rates of return are the mathematical criteria (in units of USDs) against which management can evaluate the efficacy of implemented process improvements...
then there would be distribution iaw marginal production and each factor would be reward according to productive contribution. However, in a system driven by asymmetries that result in rent-seeking and rent extraction, that is not the case and distribution is asymmetrically skewed toward the top.
Heterodox economists of various schools explain why, as also do economic sociologists and economic anthropologists. Capitalism is not so much an economic system as socio- economics system, which conventional economics ignores or denies.
5 comments:
"While the love of money drives capitalism, which helps to provide the required material comfort necessary to live “wisely, agreeably, and well”, it is also a neurosis because there can never be a point of satiation."
Its not the "love of money" its the pursuit of profits/increased profits..... This is called "Continuous Process Improvement" and it should be/could be a force for our good...
http://en.wikipedia.org/wiki/Continual_improvement_process
"Delivery (customer valued) processes are constantly evaluated and improved in the light of their efficiency, effectiveness and flexibility."
The profit motive/targeted rates of return are the mathematical criteria (in units of USDs) against which management can evaluate the efficacy of implemented process improvements...
There is nothing wrong with this approach to economics it has led to any gains in our real standards of living we been able to achieve for at least the last half century since its apostles Shewart/Demming...
It doesnt have anything to do with government imposing moron macro economic policies.
This is a back-slapping purely ideological rant from Wray here... not edifying or even mildly insightful AT ALL.
"the fetish for liquidity plus inequality generate chronic demand gaps and unemployment."
Ah, no, its not "fetish for liquidity" its the goal of increasing efficiency thus lowering costs which implies increased profits if sales levels can be maintained...
We should all be retiring at 50 by now thanks to this system...
I guess Wray thinks we should blow it up? and go back to hunter-gatherer mode?
$BILLIONS have been invested in this knowledge base over the last decades.... and it is working...
Its not the job of firms to impose macro economic employment and tax policies...
"inequality generate(s) chronic demand gaps and unemployment."
Ok, so let's say Mike seeks investors for development of MNE, just like Blodgett over at BI got Bezos to invest there recently...
Mike says, "I'll sell a 10% stake for $2M..." use of proceeds from the offering will be to continue to develop MNE... with a goal of being the HuffPo of econ ...
Mike finds an investor for 10% at $2M.
Mike is now worth $18M as he still holds 90% of the shares and just manifestly sold 10% for $2M...
Mikes additional worth of $18M here now puts him into "the 1%" and "inequality" has been increased...
Mike starts developing an expansion plan, marketing plan, and interviewing IT development personnel, etc...
OK now explain to me how this financial xaction and Mike embarking on an expansion plan has now "generated a demand gap" and/or "unemployment"???
Step by step explanation please...
ie
Step 1: Mike solicits investors...
.
.
.
.
Step 50: This person is not hired for this job...
Step 51: This person no longer consumes this thing...
Matt,
From my view on the sidelines here, what you describe in your MNE example sounds like productive, real Investment spending. Even if it propels Mike into the 1% as a by-product, the underlying activity is economically productive.
In Wray's piece, he seems to rail against activities that are destructive, extractive, and rent seeking. The antithesis of your example.
Both the magnitude of inequality and the manner in which it is produced are matter here.
Granted, that's just my impression and I could be completely wrong.
Matt, according to neoclassical economics you are correct. However, there is no profit beyond the average return to capital = the natural rate of interest in a free market. Obviously, this is not the case in reality owing to "market imperfections" that neoclassical economists explain by government intrusion. However, a realistic analysis shows that these imperfections are chiefly economics rests that go to those having the power to extract them. The sociology of capitalism, which conventional economists assiduously avoid and ignore, shows that in capitalist societies power and wealth are directly related, with wealth increasing power and power increasing wealth. This results in asymmetries that vitiate neoclassical assumptions.
If what you say were predominantly true, that is,
"Delivery (customer valued) processes are constantly evaluated and improved in the light of their efficiency, effectiveness and flexibility."
The profit motive/targeted rates of return are the mathematical criteria (in units of USDs) against which management can evaluate the efficacy of implemented process improvements...
then there would be distribution iaw marginal production and each factor would be reward according to productive contribution. However, in a system driven by asymmetries that result in rent-seeking and rent extraction, that is not the case and distribution is asymmetrically skewed toward the top.
Heterodox economists of various schools explain why, as also do economic sociologists and economic anthropologists. Capitalism is not so much an economic system as socio- economics system, which conventional economics ignores or denies.
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