Monday, June 19, 2017

Ramanan — Morris Copeland’s Monetary Economics

So you see Morris Copeland was the clearest monetary economist at his time.
Lots of quotes. Morris Copeland is considered an institutionalist economist.

The Case for Concerted Action
Morris Copeland’s Monetary Economics
V. Ramanan

See also

Copeland on money as electricity
Anne Mayhew | Emerita, University of Tennessee


Neil Wilson said...

What do people think of the active power/reactive power analogy for government intervention?

Motors and modern machinery need reactive power as well as actual power to get to maximum output. The relationship between the two is the 'power factor', where 1 is all active power and no reactive power.

As an economy industrialises it needs less and less of its labour to deliver output. So an economy has a power factor as well - how much labour it needs related to how much it has available. The lower the power factor, the more government 'reactive purchasing' there has to be to ensure maximum output.

Matt Franko said...

Similar Neil but I would suggest just look at the electrical analogy for ideas on how to approach it ... and still develop a unique approach...

Bob said...

What do people think of complex numbers, where there is a real and imaginary part?

Find another analogy please.

Matt Franko said...

Can't crack this nut with analogy anyway...

Tom Hickey said...

Godley and Lavoie attempt to create a stock-flow consistent modeling approach in Monetary Economics and they mention Copeland in Chapter 2.

Contemporary mainstream macroeconomics, as it can be found in intermediate textbooks, is essentially based on the system of national accounts that was put in place by the United Nations in 1953 – the so-called Stone accounts. At that time, some macroeconomists were already search- ing for some alternative accounting foundations for macroeconomics. In the United States, Morris A. Copeland (1949), an institutionalist in the quantita- tive Mitchell tradition of the NBER, designed the first version of what became the flow-of-funds accounts now provided by the Federal Reserve since 1952 – the Z.1 accounts. Copeland wanted to have a framework that would allow him to answer simple but important questions such as: ‘When total purchases of our national product increase, where does the money come from to finance them? When purchases of our national product decline, what becomes of the money that is not spent?’ (Copeland 1949 (1996: 7))

G & L

Neil Wilson said...

"Can't crack this nut with analogy anyway..."

Can't do it any other way. The other side is using the household analogy. Need something to grab attention and that clicks.

The reason for using electricity is that you have actual experts in electricity who can explain that is how it works, then you can link by analogy and leverage their expertise into the economics.

You can then use the horse pulling a barge image to explain the process. The horse pulls at a tangent - some spending, some saving. The saving is the friction of the tiller in the water. That makes the barge slower than if the horse was in front of a carriage and it was all spending. So you have to supply more horsepower to get the same speed.

Tom Hickey said...

There are five major ways of gaining knowledge:

1. experience
2. intuition*
3. reasoning
4. authority of those in a position to know
5. analogy*

* Some accounts of the epistemology reject intuition and analogy of genuine sources of knowledge.

The false government-as-household analogy seems to be based on one's experience as a currency user and as a result the idea that government is different seems counterintuitive. Moreover, it is bolstered by the authority of conventional "experts."

So the challenge is determining good strategies for changing minds based on those five inputs.

Matt Franko said...

Why not just go to school on the methods used in electrical theory and develop a new economic theory using similar but unique methods...

Bob said...

Vectors are easier to understand and as such the horse analogy is better.

Matt Franko said...

Nobody uses analogies in a theory... you have to develop your own theory...

Neil Wilson said...

We're not developing a theory Matt. We're doing politics.

Economics has little or nothing to do with how economies actually work. It's all to do with pushing a political ideology while pretending you're describing how an economy works.

Let's get real here.