Saturday, June 9, 2018

Sandwichman — The Wage[s]-Lump Doctrine -- still dogma after all these years

The lump-of-labor fallacy CLAIM is the wage-fund doctrine in disguise. The fallacy claim's conclusions about the ultimate futility of workers' demands are indistinguishable from the doctrine's conclusions. Only the premise from which those conclusions are deduced has been altered. Instead of asserting a certain quantity of work to be done, the fallacy claim attributes that fixed assumption to a designated scapegoat: workers, unions, populists. The claimants' own assumptions are left undefined, as an amorphous "in reality."
That undefined "reality" is a given amount of capital for employing workers that can only be increased or decreased as a result, respectively, of a decrease or increase in the cost of labor. That is to say, a wage-fund lump!...
Econospeak
The Wage[s]-Lump Doctrine -- still dogma after all these years
Sandwichman

77 comments:

AXEC / E.K-H said...

Employment theory as an example of proto-scientific soapbubbling
Comment on Sandwichman on ‘The Wage[s]-Lump Doctrine ― still dogma after all these years’

“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

Fact is that economists do NOT have the true theory. This holds in particular for employment theory, and the lump of labor theory is a case in point. The lethal methodological blunder of employment theory consists in the Fallacy of Composition, i.e. the illegitimate transfer of truths that hold for one firm/market onto the economy as a whole. What the representative micro-brained economist never understood is that what is true for the molehill is not true for the universe.

Methodological conclusion: the traditional microfoundations approach is as false as one can get and has to be fully replaced by the macrofoundations approach.

The axiomatically correct macroeconomic Law of Employment/Unemployment#1 is reproduced on Wikimedia.#2

From this objective-structural-systemic relationship follows inter alia:
(i) An increase in the expenditure ratio rhoE leads to higher employment L or lower unemployment u (the Greek letter rho stands for ratio).
(ii) Increasing investment expenditures I exert a positive influence on employment.
(iii) An increase in the factor cost ratio rhoF=W/PR leads to higher employment.

The complete Employment Law is a bit longer and contains, in addition, the public sector and the foreign trade sector.

Item (i) and (ii) cover the familiar arguments about how aggregate demand affects employment. Item (iii) embodies the macroeconomic price mechanism. It works such that overall employment L INCREASES if the average wage rate W INCREASES relative to average price P and productivity R and vice versa.

From this follow the rules of effective employment policy. In the unemployment situation (with rhoE and I given), the scientifically enlightened Legitimate Sovereign sets the parameters as follows: price increase zero and wage increase greater than productivity increase. This increases employment for a while. Afterward: price increase zero and wage increase equal to productivity increase. This stabilizes the economy at full employment.

Mentally retarded economists do after 200+ years still not know how the price- and profit mechanism works. The one thing that they have brought to perfection in all this time is the trick of blowing bigger and bigger communicative soap bubbles.#4 Not to forget, economists reward themselves with the Nobel Prize for Proto-Scientific Soapbubbling a.k.a. Economic Sciences.

Egmont Kakarot-Handtke

#1 NAIRU, wage-led growth, and Samuelson’s Dyscalculia
http://axecorg.blogspot.de/2015/01/nairu-wage-led-growth-and-samuelsons.html

#2 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2130421

#3 Wikimedia, Structural-systemic Phillips Curve
https://commons.wikimedia.org/wiki/File:AXEC36.png

#4 Economics: communication without content
http://axecorg.blogspot.com/2018/02/economics-communication-without-content.html

Ralph Musgrave said...

Sandwichman’s claim that the lump of labour theory is an attempt to do down those poor, over-worked, exploited (add tear jerking adjectives to taste) workers is bunk.

First, “Lump of labour” is a dreadful phrase, still we’re stuck with it. LoL is a rebuttal of the ever popular claim that unemployment can be reduced by shortening working hours, early retirement, longer holidays, etc etc. The big and very simple minded idea is that the work not done by those working fewer hours can be done by the unemployed. The flaw in that idea is quite simple and is thus.

The big difficulty in raising employment when unemployment is down to 3%, 4% or so is FINDING suitable labour. I.e. the lower is unemployment, the more difficulty employers have finding the right person for specific vacancies. Now if everyone chooses (or is forced to) work say 10% fewer hours, employers STILL FACE the fact that there are relatively few people to choose from for filling specific vacancies. I.e. the problem does NOT go away. QED.

Note that that is not, repeat not, repeat not to say that people should not work fewer hours if they want to. But it is to say that if everyone choses to work say 5% fewer hours, then GDP will decline by about 5%.

Tom Hickey said...

But it is to say that if everyone choses to work say 5% fewer hours, then GDP will decline by about 5%.


Not if labor is paid the same wage and the difference is made up from owner's share. This creates the incentive to increase productivity through technology and technological innovation.

The idea should be to increase leisure while maintaining effective demand at full employment, and this has been accomplished historically by increases in productivity through technology. Automation and robotics are desirable as long as effective demand is also balance with optimal output at full employment.

Think going from the 12 hr to 8 hr work day and the institution of paid holidays and paid vacations.

Why not aim first at a 6 hr and and then a 4 hr. day? It would not actually have to in terms of work days but work weeks, reducing the 40 hr work week with some having an extra day or two off at the same pay, while keeping the plant running at optimal capacity.

Matt Franko said...

I vote for Tom for President!

Ralph Musgrave said...

Tom, First, how in practice are you going to force employers to take a smaller slice of the cake with a view to giving labor a bigger slice? Raising profit tax on corporations will not necessarily do the trick because employers may just up their prices and recoup the share/slice they think they're entitled to.

Second, if indeed there is a practical way of forcing employers to cut their share and that magically increases productivity, why not do that ANYWAY? Even better: do it every year, then we'll get unheard of productivity increases every year. I.e. that trick has nothing specifically to do with lump of labor or cutting working hours etc.

Third, I'm not happy with your phrase "The idea should be to increase leisure...". I suggest it's entirely up to each individual to decide for themselves what hours to work.

Fourth "this has been accomplished historically by increases in productivity through technology." Well clearly if productivity rises by 5% then demand can be raised by 5% in real terms. But that leads to zero increase in employment because each person is producing 5% more. I.e. productivity increase (or decreases for that matter) have nothing to do with my basic point, which is that as full employment is approached, the number of people available for each vacancy declines, hence the chances of employers finding the right person for each vacancy also declines. Whether productivity is at the levels that obtained in the 1800s, 1900s or 2018 is immaterial to that point, which explains why the average unemployment levels have not changed significantly since the 1800s.

Tom Hickey said...

How did the developed world go from the 12 hour workday to the 8 hour. Workers forced it on business.

But it doesn't have to be forced. It is smart business practice.

What Happened When I Moved My Company To A 5-Hour Workday

Tom Hickey said...

I suggest it's entirely up to each individual to decide for themselves what hours to work.

This is the beauty of working from home.

A friend of mine that was a project manager for a large bank worked on a team that was scattered around the country. The firm encouraged him to work at home and only come to the office once a week for local necessary. He resisted it for some time, since he was not sure he had the discipline to handle the freedom. But when he gave it shot he loved and did very well.

He had a job to do and the firm didn't care when he did it or how long it took as long as objectives were met on time.

Calgacus said...

Ralph, Tom:I suggest it's entirely up to each individual to decide for themselves what hours to work.

Though I disagree with much else of what Ralph says, that is one thing I agree wholeheartedly with. Anything else is absurd and tyrannical.

Some BIG/UBI proponents do believe in the lump of labor fallacy. So it is not entirely mythical. Thinking that a Job Guarantee can be Ponzi-ish or inflationary comes within shouting distance of that fallacy, too.

Tom Hickey said...

Ralph, Tom:I suggest it's entirely up to each individual to decide for themselves what hours to work.

I agree with that too. And it is an option that is not available for most workers.

The question is how?

A potential solution would be to provide a social dividend that provides workers the freedom to decide their own work/leisure ratio.

Calgacus said...

The question is how?

Mr. Broken Record here says, that a JG does it just fine. The right way to lower necessary hours of work is to raise the JG wage, so fewer hours per work will give you the same weekly decent living wage earnings. If you want more time off work, fine. If you don't, and prefer more money, also fine. Substantial monetary social dividends just don't do anything, particularly anything good, that can't be done better in other ways, like providing easy or necessary stuff and services for free.

ANC Driver said...

"The question is how?"

It is unfortunate that the limit of mankind's imagination in attemting to answer this question is that only by selling ones time are they contributing. The irony is that in order to reduce workload we must sell less not more.

The story of the American and the Italian antique dealer suffices to illustrate this.

Tom Hickey said...

easy or necessary stuff and services for free

I have always recommended that a social dividend be in real goods rather than $.

This real goods social dividend would be based one a baseline of free health care, free education from day care through PHD, and a provision for necessities like housing, transportation, food, clothing, etc.

This is significant because the monetary cost of these things in markets varies locally and regionally across the nation.

A monetary stipend at a fixed rate would not take this into account without adjustment.

For example, there's a big difference between a JG rate of say 15 p/hr in Manhattan and rural Iowa. In rural Iowa it would be handsome wage while in Manhattan it would be not cover subsistence.

Poverty and affluence are not a matter of money as generally supported but rather access to real goods. In a market-based economy that rations goods using price, this distinction is overlooked.

Historically, "poor" has meant living at the subsistence level and "destitute" meant trying to survive below subsistence level. "Affluent" meant having a wide range of options regrading real goods.

While those that own the means of production are generally viewed as controlling the distribution of $, from the POV of economics, which is concerned with production of commodities, and their distribution and consumption, this is control over the distribution of real goods.

Money is the wrong lens.

Calgacus said...

I have always recommended that a social dividend be in real goods rather than $.

Then we agree entirely.

Tom Hickey said...

Incidently, this arrameantement would promote a genuine capitalistic system based on innovation and entrepreneurship, especially small scale entrepreneurship, in that there would be a safety net available in case of failure, which along with a sane bankruptcy law, would make it possible for a lot more potential entrepreneurs to strike out on their own and undertake the necessary risk involved in a start-up venture.

jrbarch said...

arrameantement = arrangement ? :-) !

Tom Hickey said...

"Arrangement," of course. I wonder where that came from.

ANC Driver said...
This comment has been removed by the author.
ANC Driver said...

Tom Hickey said: "While those that own the means of production are generally viewed as controlling the distribution of $, from the POV of economics, which is concerned with production of commodities, and their distribution and consumption, this is control over the distribution of real goods. Money is the wrong lens"

I agree with the majority of what you said in your post, but this part is where I see all the problems because I am unable to see how you can disassociate 'money' from 'commodity'. The moment you treat any resource as a commodity you must by definition be viewing it through the lens of money. Through the lens of the law, specifically contract law, money, private property, and commodities are all the same thing - a bundle of legal enforceable rights over a particular subject matter which is always alienable. To distribute commodities 'IS' to distribute money because economics (and the tax office) only deals with the production, distribution, and consumption of 'legal rights'; it does not deal with granny swapping an apple pie for a dozen eggs with next door.

And it is for this reason that the right wingers will continue to fight the left until the end of time. God made both competitive people and noncompetitive people, and yet what the left are trying to do is design a world for noncompetitive people by shutting out the competitive people - which makes no logical sense. The capitalists have always been great at industry, production, and technological advances, which is why we need them, they are just crap at distribution.

What would be better to implement is to have the left 'purchase' all its resources from the right but from that moment on no longer treat them as commodities. In other words, if you want an equal distribution of social goods for the purpose of lifting the destitute off the canvas, you must show the right wingers that once they have paid for said resources they will no longer be treated as commodities, and this will be especially true for housing and other big ticket items that the right love to speculate over. Only when you show the right that you will do it this way will they step out of your way.

Everyone needs to make a life changing choice, preferably when just reaching adulthood. Do you want to treat your house and your labours as an asset, and if so, you must accept that you are a market capitalist and accept the risks that come with it (such as bankruptcy). If you do not want to accept the risks then you should not be permitted to treat anything as a commodity. What appears to be happening is that most people want the benefit of owning a home and other financial assets but without the risk of loss - I do not understand how anyone can think that is possible.

Tom Hickey said...

What would be better to implement is to have the left 'purchase' all its resources from the right but from that moment on no longer treat them as commodities. In other words, if you want an equal distribution of social goods for the purpose of lifting the destitute off the canvas, you must show the right wingers that once they have paid for said resources they will no longer be treated as commodities, and this will be especially true for housing and other big ticket items that the right love to speculate over. Only when you show the right that you will do it this way will they step out of your way.

Yes, that's what happens when the state moves resources from the private sector to public use. Scaled-up it is socialism. Scale all the way to 100% and it's communism.

ANC Driver said...

Tom Hickey said: "Yes, that's what happens when the state moves resources from the private sector to public use. Scaled-up it is socialism. Scale all the way to 100% and it's communism."

Currently, when someone receives welfare, there is nothing stopping them from using that money to invest, gamble, or do any other market activity. To me (as someone who is neither a left or a right) this is wrong and sends the wrong message to all those who do produce, unless that person is only unemployed temporarily and wants to get back into the market - then the welfare is just an investment in the actual person.

If that same person is a noncompetitive type and has no aspirations of financial wealth, then it makes no sense to pay them welfare in the form of money, because it makes no sense to shove them into the labour market either.

There is no reason why a capitalist, a socialist, and a communist can not all live on the same street. The only difference between all 3 is how they legally hold and treat their resources which effects what they can and can't do with those resources.

Tom Hickey said...

That is a reason I recommend that social dividends be distributed in real goods rather than $.

ANC Driver said...

"That is a reason I recommend that social dividends be distributed in real goods rather than $."

Right. So now the question becomes how do we go about it?

We have the political route, fraught with all the dangers of ignorance and belief systems which allow people to live their whole lives based on false assumptions and yet having power to enforce those beliefs and assumptions on others through the democratic process.

The other way is to take the matter to court as a test case with the intent to prove that if any 'one' individual was to operate under such a model that it would come at no economic cost to tax-payers, the business sector, rentiers, and investors. Every economist and/or businessman/investor/landlord in the world who 'politically' argues against such models, would find that in court their theories won't hold. Once one case is won and a court declaration is made, then politically, it will be impossible for the legislature to ignore it. This is the avenue I am working on. It's been a long road, but considering the political road has been struggling for 300+ years without any success, I still think this way is better.

Calgacus said...

ANC Driver: What would be better to implement is to have the left 'purchase' all its resources from the right but from that moment on no longer treat them as commodities.

As I understand you, that is partly good (no longer treat), but partly a terrible idea (the purchase all from the right). If say housing is more expensive in NYC, then the solution is not to give New Yorkers extra money for housing. That would instantly land in the landlord's pocket and do absolutely nothing for the New Yorkers. The solution is to build public housing and do it as much as possible within the public sector. And if the costs are too big, people might just have to live elsewhere. Nobody has a right to live on Wall Street or Sutton Place.

IMHO You aren't thinking about the law (and money) in the right way and "the law" is not the right way to think about many things. Distributing stuff and services is not the same as distributing money. Money is not a bundle etc & economics and the tax office certainly do concern themselves with granny swapping ... (which includes a transfer of legal rights too.)

The outlandish and counterfactual, imaginary division between types of people and other aspects of your proposals are much, much worse than what we have today. Things I and many others would fight on the beaches etc against.

What appears to be happening is that most people want the benefit of owning a home and other financial assets but without the risk of loss - I do not understand how anyone can think that is possible.

Well I find that a very sad statement, that you can see such things as difficult to do, let alone impossible or inconceivable. It's really easy to set up a ("capitalist" even) society so there are no homeless people and everyone can own financial assets. The whole world has done it.

The intelligent left, MMT is in no way shape or form "trying to design a world for noncompetitive people by shutting out the competitive people". There are not such two kinds of people and the idea is to help both. It's just trying to get criminally insane "elites" from not attacking everyone else. The first and last thing to do is to get the 99% to understand how they are doing it. By far the most important crime is the theft of the 99%'s property in their own labor.

A monetary economy without a job guarantee is a criminally insane, logicphobic idea. It's a joke. Might wreck the lives of billions, might wreck mine or yours. But one thing nobody can do is to make you not see a joke once you've seen through it, make you take such an idiotic idea seriously, once you've seen the anti-logic of it.

Once people couldn't see the illogic, the joke, the insult to one's intelligence embodied in the very concept of slavery, either. But moderns have progressed. Now we do.

AXEC / E.K-H said...

ANC Driver, Tom Hickey, Calgacus

The Legitimate Sovereign can realize any employment level by applying the Employment Law. This is NOT AT ALL a question of left-wing/right-wing. The Employment Law defines exactly the set screws for policymakers.#1 It is much like taking an aircraft off the ground.

Needless to emphasize that soapbubbling economists have never taken anything off the ground. Just the opposite.#2

Egmont Kakarot-Handtke

#1 The set screws of overall and individual employment
https://axecorg.blogspot.com/2018/05/the-set-screws-of-overall-and.html

#2 Mass unemployment: The joint failure of orthodox and heterodox economics
https://axecorg.blogspot.com/2017/01/mass-unemployment-joint-failure-of.html

ANC Driver said...

Egmont,
Why would anyone want full employment?

Tom Hickey said...



Institutionalization is an issue involving political economy and politics.

Tom Hickey said...

Oops. I forgotten cite the quote to which I was responding.

"So, as a matter of principle, the economic system can be held stable at any level of employment with no inflation/deflation. How this can be institutionalized is a separate question."

#1 The set screws of overall and individual employment

Institutionalization is an issue involving political economy and politics.

AXEC / E.K-H said...

Tom Hickey

You say: “Institutionalization is an issue involving political economy and politics.”

No, not at all. Institutionalization involves two things: the Legitimate Sovereign and Science. The actual problem with regard to economic institutions is that there is neither.

There is political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.

Economics claims to be a science but is NOT. Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years.#1 Employment Theory is provably false, Profit Theory is provably false, Monetary Theory is provably false, and so on.

MMT, too, is proto-scientific garbage. And it is too obvious that it has been hijacked by political agenda pushers.#2

Economics, understood as science, is supposed to develop the true theory. The true economic theory tells one how the economic system works. This knowledge is needed to realize the goals that have been set in the political sphere by the Legitimate Sovereign.

Image this situation: The Legitimate Sovereign ― in current understanding = We The People ― has extensively discussed whether to fly to the paradise on Christmas Island or to the paradise on Easter Island. The decision has been the Christmas Island and in order to make things happen, a group of people have been tasked to build the aircraft. Obviously, these scientists and engineers need a lot of knowledge about materials and physical laws. What these folks need not at all is an opinion whether the Christmas or the Easter Island is the better destination. What these folks need indeed is scientific competence.

What has happened in economics is that economists have since Adam Smith/Karl Marx been permanently involved in the political discussion and have spent neither time, nor talent, nor brains to figure out how the monetary economy works. What we now have is incompetent scientists from Krugman to Varoufakis to Kelton to Mitchell and so on from the right-wing to the left-wing and back who are fully occupied to push some agenda.

The vast majority of economists has entirely lost any scientific instincts, which would tell them to keep science and politics strictly apart, and has joined the crowd of clowns and useful idiots in the political Circus Maximus.#3

MMTers are no exception. The whole discussion about the Job Guarantee is just political soapbubbling that lacks sound scientific foundations. It is only good as a smokescreen to obscure the political agenda of money making for the one-percenters. Economics has degenerated to plain political fraud.

Make science great again! Throw all economists out! Start with MMTers! Take Tom Hickey first!

Egmont Kakarot-Handtke

#1 Economics has arrived at the bottom of the proto-scientific shithole
http://axecorg.blogspot.com/2018/04/economics-has-arrived-at-bottom-of.html

#2 Richard Murphy: the MMT fraudster dressed up as realist
http://axecorg.blogspot.com/2018/06/richard-murphy-mmt-fraudster-dressed-up.html

#3 For details of the big picture see cross-references Political Economics
http://axecorg.blogspot.com/2015/11/political-economics-cross-references.html

Tom Hickey said...

Throw all economists out! Start with MMTers! Take Tom Hickey first!

I am not an economist. My PhD is in philosophy. If I were an economist, I would argue economics with you, but I don't operate outside my field.


In political science and politics, a fundamental problem is that even when the "true theory" is known, it is not automatically adopted but must be passed into policy (law) and that involves politics.

For example, a friend of mine ran for president on a third party ticket, not because he expected to win but to get a place at the table in the political debate. He is a theoretical physicist that also has an interest in applying science to social issues.

Like Warren Mosler, he reported that he did indeed get access and the chance to outline how scientific solutions were already available for many of the most pressing issues. He said that just about everyone he had an opportunity to converse with agreed that he was correct but that politically, the policy proposals based on them were not feasible politically in the political climate.

The political compass is often represented as four quadrants resulting from the bisection of a vertical axis representing the range from authoritarian to libertarian and the horizontal axis representing the range from right to left. I would reinterpret that using the vertical axis to represent the range between centralization and decentralization, and the horizontal axis to represent the range from conventional to experimental.

Political opinions are distributed widely in these quadrants but the clustering shifts both over time and geographically. Politicians pay close attention to the clustering, since they assume that appealing to those constituencies (interests) is the key to victory, not espousing truths that may be held by few voters.

In addition, there are powerful interests aligned against changing current policy that favors their interests and toward pushing interests favorable to them even through these policies may not be favorable to the rest.

Liberalism is based on the assumption that free inquiry and open debate will lead to discovering the truth and adopting policy based on it. That has not been the case historically. The historical dialectic has been about bringing power to bear and using persuasion to justify policy proposals instead of scientific theory and evidence — as Warren Mosler and my friend learned.

AXEC / E.K-H said...

Tom Hickey

You say: “I am not an economist. My PhD is in philosophy. If I were an economist, I would argue economics with you, but I don’t operate outside my field.”

As a philosopher, you have studied The Republic and what Plato has said about stories “… which are now in use [but] must be discarded.”

“Of what tales are you speaking? he said. …
Those, I said, which are narrated by Homer and Hesiod, and the rest of the poets, who have ever been the great story-tellers of mankind.
But which stories do you mean, he said; and what fault do you find with them?
A fault which is most serious, I said; the fault of telling a lie, and, what is more, a bad lie.”

Philosophers are known since 2000+ years to be committed to truth. They invented the distinction between doxa=opinion and episteme=knowledge. You say you are a philosopher who operates strictly within his field.

How does it come, then, that you promote on this blog economists who are political story-tellers, incompetent scientists, and who violate scientific standards/ethics on a daily basis?

Here are five political story-tellers/agenda pushers who pose as scientists and censor and manipulate their blogs/Twitter accounts:
Bill Mitchell,
Stephanie Kelton,
Jason Smith,
Lars Syll,
Richard Murphy.#1

You know quite well that the foundational MMT balances equation is provably false. This is sufficient for the refutation of MMT. Refutation means that MMT has no sound scientific basis. It’s just story-telling and political agenda pushing. That is NOT what scientists are supposed to do.

What kind of philosopher are you? Who awarded you a degree? Trump University? And why do you so evidently operate outside your field?

Egmont Kakarot-Handtke

#1 For details/proofs see cross-references MMT
http://axecorg.blogspot.com/2017/07/mmt-cross-references.html

Tom Hickey said...

Social life is all about narratives and those who control the narrative control the situation. Epistemologically the narrative is similar to the frame of reference in logic and science. Science itself is a kind of narrative. The normal paradigm in science is the prevailing narrative in the scientific world and it plays a part similar to scripture in theological worlds. IN the narrative of bourgeois liberalism, the "God" of dogmatic theology becomes "the market" after passing from theology to economics via the "invisible hand" as integration of the 18th century view of Deism with Newtonian science. While naturalism was break with dogmatic theology, it was not a clean break at all.

For example, see Philip Pilkington, GLS Shackle and the Link Between Theology and Marginalist Economics

Shackle, I think, saw the essentially religious underpinnings of marginalist economic discourse. He could see that this was, in fact, a form of pseudo-secular religion (how can it be truly secular when it so firmly believes?) and that struck him, as it strikes others, as absurd. He saw no place in rational discourse about the world for religious vagueness and so he tried to construct a theory of human decision-making that did not rely on a benevolent entity ["the market"] that reconciled all of our problems automatically.

This is excerpted from a short post that is worth reading in full.

Tom Hickey said...

BTW, if one reads Plato's Republic closely, one learns that Plato held that episteme (true knowledge) is over available in non-ordinary states of consciousness, and that ordinary knowledge is limited to doxa (opinion).

The analogy of the cave can be viewed as an allegory representing gross consciousness in the form of those chained so that all they see is shadows of props.

Subtle consciousness is presented by those moving the props in front of the light source to generate the shadows.

Mental or casual consciousness is represented by those that leave the cave and behold the real things that the props and shadows only vaguely resemble. Here the light source is the sun as the real illumination.

Plato stops here, but the testimony and teaching of perennial wisdom is that the next and final step is becoming one with the sun.

This is also reflected in The Republic where Plato sets forth his political philosophy of the training of the guardian class as enlightened sages, since only the enlighten are able to guide the society based on truth rather than opinion.

Interestingly also, in fact amazingly, I saw a documentary some time ago that showed a Native American mountain tribe in South America that used something very similar to this to train its ruling class of shamans. They were actually raised in a cave and followed a path of development along these lines.

Tom Hickey said...

"over available" = only available

AXEC / E.K-H said...

Tom Hickey

You need not study philosophy, what the absolute novice in every marketing- and PR-department and every half-witted journalist can tell you even in the state of near-coma is the mantra: Whoever Controls The Narrative Controls The World.

After all, already Plato was aware of “the great story-tellers of mankind”. The point is, though, that Plato was not directly enthusiastic about “telling a lie” or “a bad lie” or what we today call fake news or propaganda or disinformation or cargo cult science.#1, #2, #3

Yes: “He [Shackle] could see that this [marginalist economics] was, in fact, a form of pseudo-secular religion… and that struck him, as it strikes others, as absurd.”

Yes, and because it IS absurd marginalist economics will now be thrown out of science together with Keynesianism, Marxianism, Austrianism, Pluralism, MMT, and the fake philosopher Tom Hickey.

Note that economists award themselves with the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” which is a deception of the general public. Economics has never been more than story-telling. Economics is the worst embarrassment in the history of modern science. And MMT and Tom Hickey are part of it.

Egmont Kakarot-Handtke

#1 Economics is not a science, not a religion, but proto-scientific rubbish
https://axecorg.blogspot.com/2017/07/economics-is-not-science-not-religion.html

#2 Economics: communication without content
https://axecorg.blogspot.com/2018/02/economics-communication-without-content.html

#3 Economics: stories, narratives, and disinformation
https://axecorg.blogspot.com/2017/10/economics-stories-narratives-and.html

ANC Driver said...

"Economics, understood as science, is supposed to develop the true theory. The true economic theory tells one how the economic system works. This knowledge is needed to realize the goals that have been set in the political sphere by the Legitimate Sovereign."

I agree with Egmont that unless we understand how the monetary system works and how profits come into existence, then any goals set by 'we the people' (whatever that means) is pointless. What I do not get is what these actual 'goals' are supposed to be?

Tom Hickey said...

You need not study philosophy, what the absolute novice in every marketing- and PR-department and every half-witted journalist can tell you even in the state of near-coma is the mantra: Whoever Controls The Narrative Controls The World

What many if not most that think they understand this but have not studied a relevant discipline don't understand is that "the world" is based on a narrative aka story and myth.

Different myths are correlated with modes and types of behavior. Social and political philosophers, literary theorists, and sociologists and anthropologists call this "mythos and ethos."

The complete phrase is ethos, logos, pathos and mythos, with mythos and ethos, being explicit and logos and pathos implicit as cognitive-affective bias. They are entangled and can only be distinguished intellectually. All cultures have all four these and they reflect the worldview of the culture as a whole.

Differences within that cultural pattern reflect different social cohorts in the culture and their worldviews. A society with cohorts whose worldviews don't mesh are fragmented, and if they clash, the culture is fractious. Listening their respective narrative reveals that these cohorts inhabit different and potentially incompatible "worlds."

Different groups have different narratives-stories-myths, hence they inhabit different worlds, although those worlds intersect owing to physical proximity and increasingly as a result of transportation and communications technology.

But even in a single culture like the American, different cohorts have different foundational narratives and thus live in different "worlds." These "worlds" are often conflicting "realities," whose construction is based on their respective POVs.

Germans even have a compound terms for this phenomenon — Weltanschauung and Weltbild. Weltbild is foundational in Wittgenstein's Philosophical Investigations, where plays a logical part rather than a traditional epistemological psychological one.

There is also a German term for conflict in worldviews — Weltanschauungskrieg — apparently coined by the Nazis. It got translated into English as "propaganda war," and more recently "information warfare."

There is intact a Weltanschauungskrieg in progress in academic economics between the so-called orthodox and heterodox, which terms alert one to its quasi-theological nature.

In liberal republics, especially, this conflict also reveals itself in the ongoing battles among factions for influence and power. Debate is not so much to inform as to persuade. Hence, the ongoing battle over narrative control.

To say that "truth " is somehow an arbiter in this seems to me to be naive. Its' never been that way when the stakes are high and power is involved.

Tom Hickey said...

I agree with Egmont that unless we understand how the monetary system works and how profits come into existence, then any goals set by 'we the people' (whatever that means) is pointless. What I do not get is what these actual 'goals' are supposed to be?

There are basic matters that should elicit general agreement since they are evident or demonstrable, but they don't. Research shows that when confronted with contradictory evidence the faction holding that view doubles down. Surprising, the more educated the person the stronger the doubling down.

This reveals that the issue is not cognitive, and neither reasoning nor evidence will apply.

ANC Driver said...

"There are basic matters that should elicit general agreement since they are evident or demonstrable"

But what are they?

Tom Hickey said...

But what are they?

Accounting rules and operational practices, for example. This is foundational for understanding money & banking, especially form the government side, which not many seen to get.

Warren Mosler reported that former US Treasury Secretary Larry Summers told him that he did not understand reserve accounting when Warren was trying to explain the operational basis of MMT to him. He blew Warren off.

MMT economists have not only studied the institutional arrangements but also questioned middle level operational types that actually manage the operations.

jrbarch said...

I’ve always found the cross of the political quadrant a curious device. The cross usually represents matter, the swastika matter in motion.

For me, the horizontal arm would represent the heart, with self-knowledge above and the ‘I’ below; when the heart opens one passes on the vertical arm from the lower state to higher, the vertical spanning from matter at the bottom, to its opposite pole far above - spirit (the One Self).

Above the horizontal we have higher-mind and below lower-mind. Consider them both as matter of different degrees of density, responsiveness to impression, and ability to ‘let in the light’; in other words as material bodies with given functions.

From that perspective the workings of the intellect and a field held in the mind-body such as an ideology are seen in a new light. As are the ambitions of the ‘I’ compared to the universal evolution of the self. The key lies in what people ‘love’; although - the ‘I’ ‘likes’, is attracted etc – the self loves; its polarity is positive.

For me, EKH is a great story teller, but the danger is that he builds a house in his own mind that he cannot escape. I sincerely hope there is a lot more to EKH than what is visible on this web site; Tom’s breadth of vision in the lower mind is a very good thing that I think everyone here appreciates. Everything resolves itself in being.

Tom Hickey said...

Nice matrix model, JR

Here is another along the same lines.

Vertical axis = range of universality at the top to individuality at the bottom.

Horizontal axis = range of mind (thought, reason) to heart (love).

AXEC / E.K-H said...

Tom Hickey

You say: “What many if not most that think they understand this but have not studied a relevant discipline don’t understand is that ‘the world’ is based on a narrative aka story and myth.”

Everybody understands this and knows that people are born, told some idiotic stories in the kindergarten, are later on guided in their neurotic behavior by it, eventually become philosophers/journalists/bloggers and earn a living by pushing narratives, tell their children the updated idiotic stories, and then go as stupid out of ‘the world’ as they have come in. This is how culture and communication work in Plato’s Cave.

The scientific realm is different. Science is about true/false with truth well-defined as material and formal consistency: “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)

The political realm and the scientific realm run on fundamentally different principles. And this is why they have to be kept strictly apart. The mixing of politics and science inevitably ruins science as everybody can know from the history of political economics which has produced NOTHING of scientific value in the last 200+ years.

Political economics was and is in the best case brain-dead soapbubbling and in the worst case outright fraud.

MMT falls into the latter category: it pushes the narrative of the benefits of MMT policy for the ninety-nine percenters through all media. Scientific fact is that the MMT selling proposition ‘print, spend, and don’t worry about public debt’ with the same necessity as the First Law of Thermodynamics translates into Public Deficit = Private Profit and therefore benefits the one-percenters.

So, MMT is clearly what the philosopher Plato called a “bad lie” and what the philosopher Tom Hickey euphemizes as narrative, covers with folk-psychological soapbubbling, and actively promotes by applying the old Huxley/Orwell recipes of political brain-washing.

Egmont Kakarot-Handtke

Tom Hickey said...

1. You are now arguing outside your field unless you are credentialed in , philosophy, especially logic and epistemology, or a discipline in the field of cognitive science. Germans, especially, know what I am talking about, since they make much of credentials, or at least used to. So my advice is to stick to economics.

2. You have also represented my views, which I have stated many times here and elsewhere. I have criticized MMT as not dealing sufficiently with the distribution of wealth in the form of real and financial assets held in portfolio balance sheets (stocks), but rather focusing on intra-period changes in stocks (flows). Where the flows are going may not be important in economics, but it is important in political economy and politics. But stock and changes in stocks actually are important economically because they are ex post at the close of a period but also ex ante as endowments at the beginning of the next period. This then spills over into political economy and politics.

Downplaying this ignores one of the chief factors in macro and political economy, namely, influence over financial and economic policy and the application of political power based on wealth and access (plutonomy), which even Citibank now admits leads to inequality of income, wealth, and distribution, and consequently to social and political dysfunction and potential unrest.

To me this is surprising, since one of their colleagues and allies is Michael Hudson, who is perhaps the most outspoken economist on this issue.

It's also a likely reason that Stephanie Kelton never managed to convince Bernie to adopt MMT in his campaign instead of putting the focus on addressing distribution and the prevalence of economic rent by taxing the rich and putting a stop to politics as legitimized corruption.

But now we are talking about strategy and tactics, as Scott Fulwiller has pointed out in the past in comments here at MNE.

That is political matter and not an economic one. I am sure that there are reasons for strategic choices the MMT economists make and I am not in the loop on that.

At this point, their major objectives has to be to get a foot in the policy door. They are never going to be able to do this in the world of academic economics unless some major names come out for MMT. So far, it's pretty much just James K. Galbraith at this point. Not enough. In addition, they have major opposition in the Post Keynesian field, too.

As usual with most things that are consequential, it is nuanced. We are on the outside looking in and much of what happens goes on behind the scenes. This is why much political commentary is misguided.

AXEC / E.K-H said...

Tom Hickey

You say: “You are now arguing outside your field unless you are credentialed in philosophy, especially logic and epistemology.”

Before pestering the world with your good advice and talking nonsense about credentials, take first a basic methodology course on YouTube.#1 Note, in particular, that science is NOT about credentials but about logical/empirical proof.

You seem to have an extremely short attention span. You present yourself as a philosopher who does not operate outside his field and then blathers about theoretical economics and political economics and political science and sociology and mass psychology.

You say: “In political science and politics, a fundamental problem is that even when the ‘true theory’ is known, it is not automatically adopted but must be passed into policy (law) and that involves politics.”

Wake up, this is NOT the problem, for the simple reason that economists do not have the true theory. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal economic concept profit wrong. Economic policy guidance has NO sound scientific foundations for 200+ years. Nothing to adopt, neither automatically nor otherwise.

Get it, there is NO true theory in economics, economists are NOT scientists but agenda pushers and useful political idiots.

Here is a good advice for you: read what the great methodologist and economists J. S. Mill has said about the separation of science and politics: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”

Repeat: NO part of his business. The political decisions are made in the political sphere by the Legitimate Sovereign and they are NOT AT ALL the business of folks who should have figured out in the last 200+ years how the monetary economy works but failed to do so.

As a philosopher, you have NO credentials to dabble in economic policy or to promote MMT. All the more so, as you have obviously NOT realized some basics about what you are promoting:

(i) MMT is proto-scientific garbage, i.e. provably false, i.e. materially/formally inconsistent.

(ii) MMT is a political fraud, i.e. it pretends to promote the cause of the ninety-nine-percenters but de facto promotes the cause of the one-percenters.

(iii) MMTers are scientifically incompetent.

(iv) MMTers constantly violate scientific standards/ethics.

You say you are a philosopher who does not operate outside his field. Very good! Get out of economics, we have already an oversupply of soapbubblers or what Joan Robinson called the ‘throng of superfluous economists’.

Egmont Kakarot-Handtke

#1 YouTube, Feynman on Scientific Method
https://www.youtube.com/watch?v=EYPapE-3FRw

Tom Hickey said...

@ AXEC / E.K-H

1. I never talk about economics as economics, a field in which I am unqualified to contribute. I would just be guessing.

The last book in economics per se that I looked at was Samuelson's text over fifty years ago. I have neither the time nor the interest in learning economics as a discipline of study. Similarly the last finance book I read was Graham and Dodd, also about fifty years ago. If I talk about this at all, it is based on experience trading my own account when I was grad school.

I talk about ethics, social and political philosophy, philosophy (aka "foundations") of science, philosophy of social science, philosophy of economics, logic, intellectual history, and other subjects in which I am qualified. I also served as an operations officer in the military and know something of that field also, although I don't claim expertise.

As a concerned citizen I also express my views about political matters including economic policy. These are opinions. As a philosopher, I am chiefly concerned with how to approach the enduring question of what it means to live a good life as an individual in a good society as a community, and how this might apply to contemporary conditions. In the broader sense, it is about problem solving and designing systems that work based on criteria that are mutually agreed upon in an environment of open inquiry and free choice.

I almost never even mention my area of specialization, which is comparative spirituality — not that it is not relevant, it is, but it is beyond the scope of this blog most of the time, where it would be a distraction. But it is not possible to appreciate the issues comprehensively without knowledge of it, since this is the basis of wisdom.

2. You might also ask yourself personally why no economists are willing to engage with you if what you say is so obvious as economic science.

If you operationalize your argument to make it useful politically, you might have better success at engagement. Just throwing some allegro at non-economists and claiming that economists other than you are wrong is not likely to take you very far, and if you are interesting in actually engaging with other economists, you might consider a different strategy instead of starting by insulting them. What you are doing is not working as far as I can see.

Tom Hickey said...

"allegro" = algebra

ANC Driver said...

Seeing as we are talking of economics, science and philosophy all in the same cave I thought I'd share probably one of the best 'short' (23 pages) pieces I have ever read and which for its comparative size has probably had the greatest impact on me personally in understanding first and foremost, what an economic activity actually is, second, that we take the ability to engage in economic activities for granted, and third, that we cannot mix morals with economics.

"Economics as a philosophical science" by Collingwood (download pdf for free or google for the pdf)

https://www.jstor.org/stable/2377247?seq=1#page_scan_tab_contents

Calgacus said...

ANC Driver: Why would anyone want full employment?
You asked someone else, but since nobody answered, I will. (I'm a fan of Collingwood too.)

See Abba Lerner's Integrated Full Employment in Abba Lerner, Frank Graham- Planning & Paying for Full Employment- Princeton (1946) for answers - especially p. 208-220 section 9. The Importance of Full Employment & 10. Paying for Full Employment

"The security of knowing that one is able to find another job also means that the worker is more thoroughly protected against oppression than by any legislation. His great recourse to threatened oppression is his power to go away and get another job. The employer and the foreman will have to treat him as a man on their own level and he will know what is meant by saying that all men are free and equal. Full employment is the greatest guardian of the dignity of man. (p. 210)"

...

"There are a number of minor discomforts which will arise in a full employment economy. It will not be so easy to get men to sweep the streets in case of sudden snow-fall. In the absence of many unemployed waiting for a snow-fall we will have to pay good enough wages for this unpleasant work to tempt men away from other less urgent occupations for a day. Employers and foremen may sometimes miss the servility that insecurity breeds in those that are dependent on them. They will speak of the difficulty of maintaining discipline. Servants will be hard to get. The movement of people out of the sweated industries will mean that some products, like pecan nuts, will seem unduly expensive. And there will be hundreds of minor nuisances of this kind some of which we can observe around us and which we tend to blame on the war, or on reconversion, when they are really nothing but some of the concomitants of a high level of employment.
All of these nuisances are the obverse of the benefits of full employment. No one can seriously complain about such nuisances unless he does not realize that he is really asking for others to be servile to him in a manner that is incompatible with our alleged belief in the principle of the equality of man. The abolition of the slavery of unemployment necessarily carries away with it some of the pleasantness and comforts that others have derived from such slavery. To make the complainant ashamed it it is only necessary to point out what he is asking of others." (p. 219)

Tom Hickey said...

I suspect that ANC Driver's question is not clearly specified.

1. Does it mean under the prevailing institutional arrangements, or another set of institutional arrangements.

2. If under the same, then the answer is because efficiency is assumed to be a priority in economics and economic policy, and idling real resources that are available for use is wasteful, especially when there is not compelling interest to do so. Moreover, the current economic rationale given for doing — NAIRU — so is disprovable. There are also social, ethical and moral reasons for preferring full employment given the consequences of unemployment under present arrangements, but the economic reason is sufficient in itself.

3. If under different institutional arrangements, what would they look like, e.g., this is a request for a proposal for change that is not utopian and provides a path from here to there.

Tom Hickey said...

I would say that while full employment is a high priority for economic, social, ethical, and moral reasons under prevailing institutional arrangements, capitalism based on wage labor is a poorly designed system and needs to be replaced. That, however, requires an iterative and incremental approach. Beginning with an MMT JG and economic policy based on MMT (SFC macro modeling and functional finance) is a good initial step.

But transition from the Industrial age to the information age will present emerging opportunities, just as did the transition from the agricultural age and feudalism to the industrial age and capitalism. We don't know what the information age will bring, but there is no reason to assume that wage labor will continue to play the part is does under industry and capitalism.

Hopefully wage labor will to the way of slavery and serfdom, and the employment of the residual as a servant class. Capitalism is not the end of history.

ANC Driver said...

In response to Calgacus and Tom Hickey:

I am sympathetic to the point you are making which is basically saying that in order for people to feel more secure in life people need to find a way so that workers and the unemployed are not slaves to owners of the means of production and politicians who work for them. I get that.

But I am not asking the question from this perspective because it is my contention (which I have the right to contend) that unemployment and the plight of struggling workers is not a result of being slaves to the owners of the means of production, but because they are slaves to the concept, belief, ideal (whatever you want to call it) which says that 'only by economic activities within a market, (selling one's time and contributing to GDP), can one contribute to society'. I will call this 'market economics' from now on. And that as a result of this enslaved mentality, the markets themselves are over-crowded and will forever be over-crowded until mankind is able to lift his thoughts and imagination above this ideal as the only way to contribute to society.

Whilst I agree with Adam Smith's phrase that we all should pursue our self-interests, I do not agree with the underlying assumption which is carried with it, i.e. it must be confined to market economics. Market economics was a means to get out of feudalism but today it is now imposed like a religious order, and from what I can see has passed it's use by date.

Having said this, I am not against market economics as an individual choice, and if that floats your boat then all the better for you. What I am saying is that:

1. Market economics as a system wide mechanism where 100% of the able population are engaging in it is incapable of supporting itself.
2. Even if #1 was mathematically possible, it is still not in everyone's capacity or desire to be a participant of market economics nor to beleive in it as an ideal.
3. There are other ways, and lots of them, that people can contribute to society which have no commercial or economic element to them whatsoever.
4. If even half of the unemployed (or more to the point, say 2-3% of the population) were to operate under these other 'ways', it would create a huge benefit to the economy itself and to all those who do want to continue to engage in market exchange because it would reduce the over-crowdedness of all the markets.
5. As a result of #4, the influence of the owners of the means of production would also be diminished to some extent because people would have the choice to leave market economics and operate under these others 'ways' if conditions warrant it.

Some points in support of this:

part 2 continued...

ANC Driver said...

The average worker in Australia produces 5 times in GDP than what it takes for the average person to live if they are completely debt free and have no desire for luxuries and property ownership, and I have no doubt the figures are similar in other developed countries. I do not believe that we need more workers (paid employment contributing to GDP), I believe we already produce (in GDP terms) far more than we need and we will continue to produce far more than we need.

I also know that from a statistical point of view if every household in Australia reduced it's bad debt (consumption debt) by half each worker could reduce their work load by 3 hours a week, which if divided up over all the unemployed would create 30 hours per week of employment for every single one of them. Obviously this is not achievable in practical terms, but it highlights the fact that many people must work 'full-time' jobs because of the debt they have to service.

The irony is, and as the Bank of England, and Egmont has shown and which I agree, that only by the creation and expansion of credit are we creating and expanding the job market and retirement funds.

As more proof of the problem of this irony, Australia's total mandatory superannuation savings (3.7 trillion) a scheme which began 30 years ago, only eclipses total household debt (3.5 trillion) by the smallest of margins, and therefore has failed. The only assets retirees have now are housing, which many will have to sell, and could create a huge bust in housing market.

Obviously, at least as I see it based on the statistics I am reading, and the proofs of how the monetary economy works, this whole idea of having 'everyone' engaging in market economics as a means to contribute to society does not work.

But because the aim is 'full employment', my suggestion is, instead of trying to reduce the unemployment level by making 100% of the able labour work for money, reduce the level of unemployment by putting some of the unemployed (if they agree of course) into other programs which involve occupations which are not suited to market economics. The type of people which may gravitate toward this group are economists, researchers, hobby farmers, preachers, artists, public servants, and people who are from cultures which do not practice private property etc, to name a few.

How these other 'ways' or 'programs' would or could be implemented and institutionalized for those 2-3% of the population, and which would come at no cost to the tax-payers etc, has been my life's work, which I have found is too difficult to explain in text - it is only by face to face that I have been able to fully express the idea and have it understood by the recipient. However, in saying this I feel that what I have expressed so far will more than likely be enough to illicit enough criticism anyway.

AXEC / E.K-H said...

ANC Driver

You recommend Collingwood’s Economics as a Philosophical Science as follows: “Seeing as we are talking of economics, science and philosophy all in the same cave I thought I’d share probably one of the best ‘short’… pieces I have ever read and which for its comparative size has probably had the greatest impact on me personally in understanding first and foremost, what an economic activity actually is, second, that we take the ability to engage in economic activities for granted, and third, that we cannot mix morals with economics.”

Realize:
• You are putting economics, science and philosophy into one hat.
• This is illegitimate because economics and philosophy are what Feynman called cargo cult science.
• The fundamental blunder of economics is that it defines itself as social science.
• The subject matter of economics is the economic system, i.e. the interaction of economic variables like employment, price, profit, productivity, income, output, and so on.
• Human Nature/motives/behavior/action is the subject matter of Psychology, Sociology, Anthropology, History, Political Science, Biology, Social Philosophy, Ethics and so on.
• As far as economics deals with Human Nature/motives/behavior/action it is Political Economics.
• Political Economics has achieved nothing of scientific value in the last 200+ years.
• Political Economists are failed/fake scientists.
• Political Economics is since Adam Smith/Karl Marx a smokescreen for agenda pushing.
• Political agenda pushers, no matter how they present themselves, are either stupid or corrupt or both and will therefore never be accepted in the community of scientists.
• Economics had been hijacked from the very beginning by agenda pushers. This aberration has to be reversed. In methodological terms: economics needs a paradigm shift.

Collingwood writes in the introduction: “The thesis here to be advanced, then, is that there is a special type of action, … that this utilitarian or economic type of action is the fundamental fact with which all economic science is concerned; …”

No, this exactly is the Social Science Fallacy. Economics as a science is NOT concerned with how people behave but how the economic system behaves. There are systemic laws which can be objectively determined, but economists have to this day failed to figure them out. Instead, they were very successful in producing a breathtaking heap of peer-reviewed proto-scientific garbage.

Time to acknowledge that political economists had much support from retarded social philosophers like Collingwood and Tom Hickey. Time also to properly separate science/theoretical economics from politics, soapbox economics, agenda pushing, philosophy and all the other cargo cult sciences.

Politics has to be determined in the political sphere by the Legitimate Sovereign. The political sphere and the scientific sphere have to be separated. After 200+ years of failure, economists are supposed to figure out now how the economic system works. Only then can they credibly claim to be of assistance in the realization of the Legitimate Sovereign’s objective, that is, the Good Society.

Egmont Kakarot-Handtke

Tom Hickey said...

@ANC Driver

The system you described is a fair summation of a mixed economy in a capitalistic system based on modern finance and propertarianism.

The issues in such societies arise as a result of a variety of factors that can be addressed.

However, as long as there is a monetary production economy in which income is required where money is always someone's liability, giving rise to the credit-debt relationship, income will be an issue and the system is vulnerable to financial cycles.

This system is likely to persist as long as the fundamental institutional arrangements remain essentially in place. This framework and the socio-economic systems that dependent on it have design flaws that cannot be corrected completely since tradeoffs are involved and there are winners and loser; thus, different path lead to different consequences with both positive and negative features.

These institutional arrangements grew out of the transition from the agricultural age to the industrial age and from feudalism to capitalism. I think that Marx is likely correct in assuming that the material forces of production are fundamental, so we are stuck with so-called capitalism based on wage labor until the transition to the next phase of material production begins in earnest. That may be happening now, and according to the people that study these things, the world will be radically different by 2030 owing to the proliferation of automation, robotics, AI, and other technological innovations that will begin to be adopted widely.

So in a sense, focusing on full employment now is a sidetrack or at least a side issue. Its arises because most people are assuming that the future will resemble the past, although most are also aware the landscape is changing fast owing to technological innovation that is also disruptive.

In my view as social and political philosopher that has studied the past and a social theorist that considers the future, I would say that the world needs to be begin in earnest a reexamination of fundamental concepts, assumptions and structure with a view to making iterative and incremental changes in the way that the range of philosophical, social, political and economic categories are approached systematically. Philosophical categories include reality, which is studied by metaphysics or ontology, knowledge which is studied by epistemology and cognitive studies, and action, which is studied by action theory and ethics.

In a liberal environment this requires deep inquiry and open debate, hopefully putting cultural differences and ideological bias aside as much as possible to arrive at a developing highly functional system that works for everyone, not with mathematical precision but with moral comprehension.

Given that we have to avoid utopian thinking, which is a path to nowhere ("utopia" means nowhere), we need to consider getting from here to there as seamlessly as possible. Given contemporary conditions, that would seem to involve instituting full employment now, since it is not only possible but simple by following MMT analysis, theory, and policy based on it. In fact, as Calgacus has pointed out, the MMT JG would begin breaking the back of modern capitalism by increasing labor power.

So I do not see full employment as an end itself but rather a stepping stone toward a better and far different future as technological innovation makes increased leisure and its distribution not only possible but also necessary to avoid dysfunction.

But the MMT JG is not the only such step that can be taken now to get the ball rolling. What needs to happen is that the capital/labor share ratio has to be shifted in favor of workers.

continued

Tom Hickey said...

continuation

This is not chiefly a monetary matter, however. The share needs to be approached in terms of real goods and resources. $ is just bookkeeping in a monetary production economy in terms of the economic cycle of production, distribution and consumption of real goods and use of real resources. This is difficult to see in a framework where markets where goods are rationed by price, hence also money, have replaced the theological notion of God in the cultural paradigm.

With evener distribution of real goods and resources, as well as the work/leisure ratio, everyone would be well off, although some would gain while others would lose. This would largely affect the tails, and the range and standard deviation would be more reasonable, with less to no poverty and lower inequality. Most of the population would be "middle class" with freedom from want and a reasonable amount of comfort.

end

AXEC / E.K-H said...

Tom Hickey

You say: “Given contemporary conditions, that would seem to involve instituting full employment now, since it is not only possible but simple by following MMT analysis, theory, and policy based on it. In fact, as Calgacus has pointed out, the MMT JG would begin breaking the back of modern capitalism by increasing labor power. … What needs to happen is that the capital/labor share ratio has to be shifted in favor of workers.”

Take notice that there is Xmas economics where everybody writes down a list of his wishes. Your priorities go roughly as follows: full employment, technological innovation, increasing productivity, increasing leisure, a more equitable distribution.

This list makes you a very likable philosopher. Not many people will contradict you but probably add such things as environmental protection and affordable health care.

In order to realize this program, you need to know how the monetary economy works. Your problem is that you don’t. For example, you recommend MMT/JG without realizing that MMT’s money-creation/deficit-spending makes distribution progressively more unequal.#1 You say that you want to better the distributional situation of the ninety-nine-percenters but your recommendations make matters worse.

The economist’s business is NOT to write down a wish list but to realize the goals that have been authorized by the Legitimate Sovereign. This requires scientific knowledge about how the monetary economy works. This knowledge is embodied in the systemic laws of the monetary economy. You cannot achieve full employment (however defined) if you don’t know the Employment Law.#2

To soapblubber about flying above the clouds is futile. It is the folks that have figured out the laws of aerodynamics and thermodynamics who get things off the ground. Analogous in economics.

As Marx said: “Philosophers and politicians have hitherto only popularized various wish lists; the point is to know how to realize them.”

Egmont Kakarot-Handtke

#1 MMT: So-called progressives as trailblazers for Trumponomics
https://axecorg.blogspot.com/2018/04/mmt-so-called-progressives-as.html

#2 This brings us back to the first post.

Tom Hickey said...

@ AXEC / E.K-H

I have said that new vision its needed and proposed a framework in terms of one of the enduring questions of Western intellectual history, which I believe can only be dealt with holistically by incorporating non-Western traditions. That question is the one that occupied the ancient Greeks, what does it mean to live a good life as an individual in a good society. That has a long tradition in terms of ethics, action theory and social and political thought.

I have a theory in that framework that I have not elaborated here. I began thinking about it seriously back in the Sixties and wrote a master's thesis entitled, Revolution or Evolution: Toward a Theory of Social Change. Aside: A professor warned me away from it as a career-killer.

The outcome of this investigation was that I became convinced that the solution to a vision of total living required a basis in perennial wisdom, which both Plato and Aristotle had suggested in the West and which is integral to Eastern thought. Subsequently I shifted my specialization toward perennial wisdom.

I have been engaged with some others of like mind in working on a comprehensive vision with input from many fields. Economics is one of them, but conventional economics appears to be a path in the wrong direction since it examines a mode of production that leads to a dysfunctional individual and a dysfunctional society, being based on self-interest when self-interest is the basis of the problem.

I don't think that a design solution is possible without revising the current design to correct its major flaws, which lie in a misconception of reality.

So all we can hope for is palliatives and analgesics until a new system is unfolded.

I have never said that MMT provides a complete solution, and I don't think that MMT economists claim that either.

It addresses some of the major results of design flaws and policy misconceptions while leaving the system largely in place.

Realistically, that is where we need to start strategically. What MMT proposes is feasible politically. Utopianism leads to nowhere. I am always open to other ideas and strategy, but so far MMT is the best there is on the table, at least in my estimation.

Looking in my crystal ball, as it were, I expect major changes in the coming decades as a result of technological disruption, on one hand, and challenges like growing inequality, the effects of climate change, and the looming Sino-American rivalry on the other.

But we could act now to obviate unemployment. As I have also said, we also need to address economic rent and rent-seeking as a factor in growing inequality and incipient plutonomy that threatens the republic.

Warren Mosler has set forth a range of proposals for implementing a policy based on MMT principles. The range is not complete and many other issues need to be addressed that MMT doesn't as yet. As the MMT have said, there are less than a dozen of us, which is an improvement on the original 3 + 1 twenty years ago- Warren Mosler, Bill Mitchell and Randy Wray, along with grad student Pavlina Tcherneva.

You have to start somewhere and the MMT JG seems to be a good choice strategically, since it leads into the rest of MMT in explaining now to "pay for" it.

Really, the first step is providing a vision and how to actualize (operationalize) it and that requires educating those involved about the possibilities and feasibility.

This requires more than just economic theory. And more than political economy, too. Fortunately, the MMT cohort is now growing and diverse.

In fact, economic theory is really only needed in discussion among economists. It has to be broken down for others to understand, since they lack the necessary background in the field.



Calgacus said...

EKH:MMT’s money-creation/deficit-spending makes distribution progressively more unequal.#1 You say that you want to better the distributional situation of the ninety-nine-percenters but your recommendations make matters worse

As several people have commented for some time, no it doesn't. Not seeing fallacies in some reasoning that MMT is welfare for the rich is not the same as there not being a fallacy, and there is. A really easy way for anyone to quickly see that the reasoning must be fallacious (formally inconsistent) is the historical fact that applied MMT has everywhere led to progressively more equal distributions of wealth and income, not the opposite. I. e. Such reasoning is materially inconsistent to use EKH's terminology. (By applied MMT I mean the New Deal, WWII in the US & UK, the postwar era practically everywhere & for a few countries even afterward. Pretty much the closer to MMT / genuine Keynes - the better for income/ wealth distribution.)

I've commented on this error in the past, (without a relevant answer from EKH that I recall) but for something new, I think I saw Wray treating such points somewhere in some old Economonitor "Great Leap Forward", will try to dig it up if it exists. It is basically a well known, classical error IIRC; should be plenty refutations in the 30s 40s debates on Keynesian econ too, exact refs may come to me.

ANC Driver said...

Egmont, in response to your response to me:

I agree with you, but does not LS also need to define first and foremost what is and what is not an economic activity and therefore which acts become statistics for national accounts and which actions do not (not to mention what it is that enables anyone to engage in economic activities to begin with and the inherent cost involved)?

No disrespect to others on this forum, but it appears to me that the most people do not understand the profit law which you have taken pains to explain (nor the other laws you frequently write of) because at the core they do not even understand when something is an economic activity and when something is not an economic activity, nor do they seem to understand what allows an economic activity to take place in the first place (Nick Rowes romantic fruit tree example suffices to demonstrate this because nowhere in his article does he touch on the cost that ownership of those trees carries and therefore nowhere in his analysis does he factor in the fact that the tree owners will always have to pass those costs on to someone else which obliterates his romanticized notion of being able to swap an equal amount of bananas for apples indefinitely because eventually he will be facing bankruptcy, and so too will the other two tree owners).

For starters, which of the following would you deem economic activities which make it into the national accounts statistics?

Granny owns an apple pie business with a registered business name and business tax number which whilst selling some pies for actual cash, she also sometimes swaps for other produce, and today she swaps one pie for a dozen eggs with next door (in this case it is irrelevant if the egg swapper is an actual business or not) - economic activity yes/no?

Granny does not own any business and only makes pies for personal consumption but one day someone offers to swap a years worth of pies (one every week) for a piece of antique artwork (which has monetary value) wherein an actual contract is drawn up - economic activity yes/no?

Granny does not own any business and only makes pies for personal consumption but today next door (who is not a business owner in the 'egg' sense) comes around with a dozen eggs and asks if granny would be willing to swap a pie for the dozen eggs - economic activity yes/no?

Now explain to the whole class why there is a difference between the above acts and why not all are economic activities.

The following link may help some students.

https://www.business.gov.au/info/plan-and-start/a-business-or-a-hobby

On to Nick Rowe and his fruit trees.

Why has he not factored in that ownership of the tress carries costs? The reason is because he doesn't want to admit that ownership carries costs because it messes up his whole theory and just about everything he has worked on for all those years, not to mention what he learned in economic school. If he factors in the costs of ownership and the fact that those costs must be passed on to others, i.e. consumers and households, then he will be forced to admit that property ownership, the very thing, the 'only' thing, which enables anyone to perform any economic activity to begin with has inherent costs which economic activities themselves cannot pay for, and must come from somewhere else.

Hence the reason why I say that society takes for granted the fact that 'some' of us can engage in economic activities to begin with whilst at the same time having very little idea of what enables them to do it in the first place.

It is only because I have taken the time to fully understand what constitutes an economic activity, and what enables them to be performed in the first place and the costs which this 'enabler' comes at, which has enabled me to UNDERSTAND YOUR PROFIT LAW.

ANC Driver said...

As an addition to my last post Egmont, I have added here below a link to a download (spreadsheet) which I worked on some time ago which was inspired by my understanding of your profit law - which people should be able to download and can interact with on the spreadsheet to try and make the business sector profitable. Any comments or feedback most welcome!

https://drive.google.com/open?id=17fYN4vDCMVQH8m_QiH8qGucpzBb36icj

ANC Driver said...

Tom Hickey:

I did not know what the term perennial wisdom meant until today (I googled it after reading your post). Although never before knowing the term, a few years ago, after doing some bible study with a friend, I was flying to Thailand, and in the entertainment monitors on the back of the seats, I found the whole Koran so I decided to read as much of that as I could during the flight; and when I got to Thailand in the drawer next to my bed in the hotel was a book on Buddhism, which I also subsequently read. After all of this I came to the conclusion that all of these texts were relaying the very same core principles.

For me, the most basic core is the tenet 'treat others as you would have them treat you'. On first blush, and as many have testified, this may seem like a charitable statement, but I disagree. To me it means, if you like competing, bargaining, and power struggles then there is nothing wrong with it, but only do it with others who are going to treat you the same way, and do not do it against those who do not like competing, bargaining and power struggles. By the same token, if you don't like competition, bargaining and power struggles then don't stick your nose in where it doesn't belong and is not wanted, and instead find people who are like you and work with them instead.

At it's core, all economic activities which have legal effect, are acts of competition, bargaining, and power struggles - there is no two ways about this#. No entity or system which treats labours and resources as commodities can perform any economic activity without competing, bargaining, and power struggles because no economic activity can be performed, no contract fulfilled, and no legislation upheld, without holding others legally accountable with the threat of punishment. This is the core of property ownership and alienability and therefore all economic activities.

The question I asked myself then was:

'can anyone provide for their daily sustenance without some form of legal accountability as against others in general (i.e. as against the rest of the world)?'

The answer here is no, but in this instance we are talking purely of possessory rights, i.e. I have the right to the utility of a house and whatever resources are necessary (without owning the same resources), and no one else has the right to prejudice those possessory rights. Whether every individual on earth should have possessory access to sufficient resources such as housing, clothing, etc is not a matter of economics - it is a matter or law because unless everyone has access to basic needs they themselves are unable to obey all laws.*

The next quesiton I then asked was:

'can anyone provide for their daily sustenence without some form of legal accountability as against others in personum, i.e. contracts, and other agreements where damages for non-compiance sound in money and seizure of property?'

cont...

ANC Driver said...

Right at this point I realized what all the religious texts were saying to me. I have a choice as to whether or not I want to hold others legally accountable for their promises, or better yet, whether or not I want to set about engaging people into legally binding promises to begin with and that choice will dictate how I myself will be treated. Yet, when it comes to economics and the treatment of resources as commodities, it only permits 'one way', the legally binding way.

Do all people like the fact that the only way you can access resources sufficient to function property in this world is by holding others legally accountable for their promises under threat of monetary damages etc? Do all people like having the same accountability being held against them, even if they know deep down that because they can't know the future they never really know if they can ever fully make good all their promises?

There are many people who will answer yes to both these questions, and some of them will answer yes even though they may perceive of other ways; then there will be many who will answer yes but do so not because they want it this way but because they cannot perceive of any other way. But there also many who will answer no.

Can you see other ways one may be able to hold resources and work (such as in trust and custodianship) where one does not have to hold other individuals directly legally accountable under threat of monetary damages and property seizure and which does not rely on trade unions, economic visionaries, and other such organizations/people to engage in power struggles on their behalf?

# http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/sa/SASC/2007/365.html?stem=0&synonyms=0&query=%22autonomy%22
Individual Autonomy
1. In a competitive world where one person’s economic gain is commonly another’s loss, a duty to take reasonable care to avoid causing mere economic loss to another, as distinct from physical injury to another’s personal property, may be inconsistent with community standards in relation to what is ordinarily legitimate in the pursuit of personal advantage:

http://www.austlii.edu.au/au/cases/cth/HCA/1984/52.html
DEANE J. It is an incident of human society that action or inaction by one person may have a direct or indirect effect on another. Unless there be more involved than mere cause and effect however, the common law remains indifferent. A person's action or inaction may be a cause of another's injury or discomfort; unless there be some particular relationship, personal or proprietary right or other added element, the common law imposes no liability to make payment of compensation or other damages. In a society where material success, commonly measured in comparative terms, is accepted as a legitimate objective and the preservation of individual freedom of action or speech is acknowledged as a legitimate goal, the law must be so restrained if it is to be attuned to social standards and reality. If material success were to be accompanied by legal liability to all who have suffered emotional chagrin or physical or material damage as a consequence or along the way, it would be largely self-destructive. In that regard, the common law has neither recognized fault in the conduct of the feasting Dives nor embraced the embarrassing moral perception that he who has failed to feed the man dying from hunger has truly killed him.


* https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=2662&context=ulj

Calgacus said...

(1/2) ANDC Driver:I am sympathetic to the point you are making which is basically saying that in order for people to feel more secure in life people need to find a way so that workers and the unemployed are not slaves to owners of the means of production and politicians who work for them. I get that.

It's not about "feeling more secure". It's about being more secure. It is not an opiate to slaves. It is about liberation. I really do not think you get that, because you don't understand the problems. The problem of unemployment or other social problems today. And I have to say it is probably because you are too young. You've only seen the repulsive side of the world the neoliberals made, and think that this outlier, aberrant society is the way it always was and must be. I think you have a lot to contribute, that your ideas on the relevance of concepts of law, of property, of philosophy etc are looking in a very important and underexplored direction. But is it a good idea to become too exclusively attached to one's own ideas, even if they have good seeds in them? While half-understanding and prematurely dismissing solid work like MMT - that you don't seem to understand expresses much of these ideas already, but in a more coherent way? And that the defects and worse of your proposals are caused by the "neoliberal" "market" way of thinking embedded in them, NOT in the JG and MMT? If I am harsh, please forgive me, it is because I am pressed for time and am taking you seriously.

Again: What appears to be happening is that most people want the benefit of owning a home and other financial assets but without the risk of loss - I do not understand how anyone can think that is possible.
(1) Homes aren't financial assets. (2) Nobody thinks they have no risk of any loss - that is, not having a particular house with a mortgage they can't afford, or thinks that they cannot go bankrupt. So you lose that house, so you go bankrupt. Big deal. But that is not the same thing as not having any private property at all, not being able to have financial savings or not having some home (a property right in a lease, say) and a secure life. There is no inconsistency or impossibility or even difficulty there. You're quite wrong and confused here. The people you "do not understand" are right and are not confused.

but because they are slaves to the concept, belief, ideal (whatever you want to call it) which says that 'only by economic activities within a market, (selling one's time and contributing to GDP), can one contribute to society'. I will call this 'market economics' from now on. And that as a result of this enslaved mentality, the markets themselves are over-crowded and will forever be over-crowded until mankind is able to lift his thoughts and imagination above this ideal as the only way to contribute to society.

You mix some good MMT ideas with some very bad ones, that nobody would or ever has opted for except under extreme duress. The conception of market economy here, the relations between societies, the state and the market is very confused. #1 - The market doesn't exist. No such thing. Not even a useful concept almost. #2 This non-existent market is a side effect. A side effect of the state policies which are called "intervention" - a side effect of the "another way" you are talking about, which has always existed and always will exist. It's not that markets can't work well without the "another way", they can't exist, can't be defined without it. It is like talking about an itch that has no animal attached. :-) This way of fleeing "the market" is highly enslaved to marketism. Remove the marketism, fix the economics and the accounting and they turn into MMT & the JG.

By the way, what does "overcrowded" mean? That unemployment exists? That markets cannot supply everyone?

Calgacus said...

(2/3)
they are slaves to the concept, belief, ideal (whatever you want to call it) which says that 'only by economic activities within a market, (selling one's time and contributing to GDP), can one contribute to society'.
This is blaming the victim, very unjustly and incorrectly. It is not the ideas of the unemployed which are at fault. But those of the criminally insane state and the criminally insane unemployers who corrupt it. Those killed by some maniac firing into a crowd are not at fault. That is what being unemployed is. Your contribution to society is held in contempt because maniacs firing into a crowd randomly chose you. Proposing to eliminate private property rights for anyone, particularly those who can make a contribution to society and are refused by the maniacs is something - well if you understood how evil it is, I don't think you would propose it. It is like preventing people in a crowd being shot at from shooting back or taking cover.

'only by economic activities within a market, (selling one's time and contributing to GDP), can one contribute to society'. There are other ways, and lots of them, that people can contribute to society which have no commercial or economic element to them whatsoever.

No, there are no such ways, because this is a contradiction in terms. If it is a contribution to society, it is economic. If it involves two people cooperating in any way whatsoever, it is economic - it is those two people selling their time to each other. The examples you give "economists, researchers, hobby farmers, preachers, artists, public servants, and people who are from cultures which do not practice private property etc," prove this point. Why on earth do you think a Job Guarantee and a bigger public sector as in the postwar era, would not employ such people, as they did in the past? If society thinks it is a contribution, it is a contribution, and today's societies reciprocate this subsidization by money. JG workers, public servants are subsidizing the society, the state, not vice versa. And this money value is part of GDP = C + I + G. That G covers the contributions to society you are talking about. They are not "within a market" but they are monetary transactions, productive transactions. And again, "the market" is a side effect of these transactions.

Calgacus said...

(3/3)
As more proof of the problem of this irony, Australia's total mandatory superannuation savings (3.7 trillion) a scheme which began 30 years ago, only eclipses total household debt (3.5 trillion) by the smallest of margins, and therefore has failed.

This is like adding the temperature to the air pressure and saying that since it is below the humidity, we are DOOMED. Whhuuuh??! Those numbers have little to do with each other. Not too familiar with Australia, but I think you saying something like there is too little money in the Social Security Trust Fund. No, the problem is there is too much! Would have been much better if there were no money at all in these Australian Funds or the SS Trust Fund. That's how the US SS Trust Fund worked for about 50 years, basically nothing in it - and could have worked forever that way. A nation saving up its own money for itself, or enforcing private saving in any but the most inflationary environment (WWII UK) is a crackpot idea. Just give people a state pension when they are old. If they want to have a bigger one, maybe let them "pay in". The pension payment is paid with newly created state money.

I do not believe that we need more workers (paid employment contributing to GDP), I believe we already produce (in GDP terms) far more than we need and we will continue to produce far more than we need.
Who are you to say what we need? Who are you to tell other people what to do? All that MMT says is that it is literally insane, criminally insane to not have a JG, to not let people earn money when they want, and thereby they're going to contribute to GDP. And almost everyone would prefer to earn a decent living from a JG than to be treated as a subhuman with no right to property. (Why, why, why?!!? It is a solution without a problem, far worse than any problem.)

Throughout time, the vast majority of human societies, under which the great majority of people have lived, have had a parallel practice to the JG. The national monetary economies of the past two odd centuries are an extreme aberration. The postwar era was basically a return to the norm.

Calgacus said...

Covering your more recent comments - very interesting, but I don't think you are thinking about law and economics the right way. Roughly, it seems you focus on loi, gesetz or lex instead of droit, recht or ius - all translated by law in English. You over restrict "economics" and refer to things like national accounting, when the point is to explain them, explain the "ius" concepts used therein, not use some particular "lex" as a confining authority. I strongly recommend Crawford MacPherson's book "Property" (anthology of a dozen great philosophical sections on the subject, with an introductory and concluding essay) as an example of what I think is the right way.

Again, restrictive views of economic can be caused by marketism. It is getting things backwards. The "contribution to society" as defined by society, defines market value, not vice versa. A JG does everything good your "another way" does, without constricting freedom for fear of imaginary problems.

Calgacus said...

EKH:Take notice that there is Xmas economics where everybody writes down a list of his wishes.

Have to mention this.

The world's greatest mathematician by far, an all-time great up there with Archimedes and Newton, until he died in 2014 was Alexander Grothendieck. He called one of his methods "l'arbre de Noel" the Christmas tree. Write down a wish list of theorems and definitions and concepts. So if Xmas math works, why not Xmas economics? :-)

You gotta do it right. Wish boldly, but be careful what you wish for, you might get it. There are more tears shed over answered prayers than unanswered ones. See how your wishes interact. And if the facts contradict your theories or theorems- see where the mistake was, don't pretend it didn't exist, that Santa can fulfill your contradictory wishes. But the MMTers understand that, like AG and few others.

ANC Driver said...

Calgacus,

Thanks for the lengthy reply, I do appreciate it; however, I am not against a JG program, I am not against private property, I am not against jobs/paid employment, I am not against earning money, I am not against free-markets, I am not against regulated markets, I am not against capitalism, I am not against socialism. Every individual on earth is endowed with certain strengths and weaknesses which vary so much that it is necessary that all of these above institutions exist.

But all of these institutions are not enough for there are also other people who lack the necessary capacities to be able to sell their time, who lack the capacities to hold down a job, let alone obtain private property, and my proposal is to create security for these people (other than with welfare) which in no way would effect any of the institutions above mentioned, but also allow these people to contribute to society in ways other than 'selling' something. I am sorry we do not see eye to eye on this. As a result of seeking such a model I discovered that such a way might also benefit people in certain fields of specialization - it was never my intent to suggest that because someone is an economist, researcher, hobby farmer etc that they 'must' renounce money/property etc.

The fact that you are interpreting what I say to mean I am against all of these things above, I accept 100% as my fault for not explaining myself properly, but text is a difficult medium to convey things (other than legal accounts of course! lol..sorry, had to throw that in - I hope you appreciate the humour in that).

AXEC / E.K-H said...

Tom Hickey

Tom Hickey summarizes: “I have said that new vision is needed and proposed a framework in terms of one of the enduring questions of Western intellectual history, which I believe can only be dealt with holistically by incorporating non-Western traditions. That question is the one that occupied the ancient Greeks, what does it mean to live a good life as an individual in a good society. That has a long tradition in terms of ethics, action theory and social and political thought.”

Yes, the political/philosophical discussion about the Good Society goes back to the beginning of civilization.

Tom Hickey tells the story how he came after a spiritual quest through Western and non-Western history to see that the society we live in is mentally deranged and institutionally dysfunctional and that MMT offers a solution, at least for the economic causes of the malaise.

“Realistically, that is where we need to start strategically. What MMT proposes is feasible politically.” Tom Hickey’s narrative explains how he became an MMT agenda pusher.

When one takes the political glasses off and puts the scientific glasses on one sees a quite different reality:
• Tom Hickey never did serious science.
• It is the MMT social goals that appeal to him.
• He never realized that the economic theory that underlies MMT policy guidance is provably false.
• He promotes MMT for political reasons and does not really care about its scientific validity.

So, Tom Hickey stands firmly in the tradition of Political Economy which abuses ‘science’ from Adam Smith onward as credibility/authority-enhancer. For agenda pushers, the political narrative comes always first: “A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. ... A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent.” (Haack)

Tom Hickey recounts MMT history: “Warren Mosler has set forth a range of proposals for implementing a policy based on MMT principles. The range is not complete and many other issues need to be addressed that MMT doesn’t as yet. As the MMT have said, there are less than a dozen of us, which is an improvement on the original 3 + 1 twenty years ago ― Warren Mosler, Bill Mitchell and Randy Wray, along with grad student Pavlina Tcherneva.”

This is what MMT looks like for me. The trained economist and hedge fund founder Warren Mosler stumbled one day upon Post-Keynesianism/MMT and found that it contained a lot of sound arguments against mainstream monetary theory and some good social planks for a political platform. Warren Mosler developed the narrative of how the fiat money system can be used to solve most socio-economic problems. As a marketing buff, he realized that Wall Street types have a credibility problem with selling social policy. And this resulted in strengthening the sales team with caring Stephanie Kelton and the spiritually enlightened philosopher Tom Hickey.

I have no problem with agenda pushers promoting their stuff in the political Circus Maximus. And I have no problem with Wall Street’s Warren Mosler running for Virgin Islands governor. The lethal flaws of MMT are:
• The scientific part of MMT is provably false.
• MMT policy guidance has no sound scientific foundations.
• MMT is a political fraud, not substantially different from Neoclassics, Keynesianism, Marxianism, Austrianism.

The mixing of politics and science always corrupts science. This starts with Smith/Marx and continues over the whole right/left spectrum from Hayek, Keynes, Friedman, Krugman, Keen, Mosler to Tom Hickey.

Let’s get rid of all of them.

Egmont Kakarot-Handtke

Calgacus said...

But all of these institutions are not enough for there are also other people who lack the necessary capacities to be able to sell their time, who lack the capacities to hold down a job, let alone obtain private property, and my proposal is to create security for these people (other than with welfare) which in no way would effect any of the institutions above mentioned, but also allow these people to contribute to society in ways other than 'selling' something.

Again, ANC, by thinking in overcomplicated terms imho, you don't seem to see that you contradict yourself above. If they can't "sell their time", very broadly understood, then they have to be supported by "welfare". "Contributing to society" = "selling your time", rather "trading your time". The logic of the JG applies to any economy, a gift economy etc and is instituted everywhere except in modern monetary production economies. You do something nice for society. Society does something nice back. That's it. I suspect that like most you have overly narrow and incorrect conceptions of what work JG programs would do and have done. (E.g. somebody once suggested to me "ballerina" so I gave a link referring to WPA ballerinas.)

Sure, people can go live on communes, whatever. Let their relatives handle much of their stuff (I do myself.) But restricting their rights!? There are basically no people who can cooperate with others = contribute to society, and do something like literally burn their paycheck every time they get one. If they do that, in a sane moment, they could ask the JG bureau to autodeduct their rent from their check, or something similar. You're thinking of money too much as a thing, as a commodity (which it sort of is) but not as what it is more deeply, a credit-debt relationship, just like the one that is created by gifts in a gift economy.

The institution of money etc just represents, is an instantiation of gift economy relations, of the less formal obligations that would occur in your "another way" subset of society, if they are not just living off other people's work. There is plenty of existing financial social technology available that would "be provident for" the improvident. That there are non-negligible numbers of people in modern societies who somehow are pegs that can't fit in these very adaptable holes is just not true IMHO. I mean, there is plenty of real world experience with this.

The real, pressing social problem of millions, of billions of people is that you can be the most market oriented, adaptable person imaginable. And the market society can and does make your life unlivable, for no reason other than to make some rich people relatively but not absolutely richer. IMHO you ask that people adapt to a market economy, while MMT is more about adapting market economies to people. (Writing fast because I probably will be off the net for a week or so.)

Tom Hickey said...

From the Wikipedia article on C. B. Macpherson:

Macpherson's best-known contribution to political philosophy is the theory of "possessive individualism", in which an individual is conceived as the sole proprietor of his or her skills and owes nothing to society for them. These skills (and those of others) are a commodity to be bought and sold on the open market, and in such a society is demonstrated a selfish and unending thirst for consumption which is considered the crucial core of human nature. Macpherson spent most of his career battling these premises, but perhaps the greatest single exposition of this view can be found in The Political Theory of Possessive Individualism, where Macpherson examines the function of this particular kind of individualism in Hobbes, Harrington and Locke (and several writers in between, including the Levellers) and its resulting pervasiveness throughout most liberal literature of the period. An avowed socialist, he believed that this culture of possessive individualism prevented individuals from developing their powers of rationality, moral judgment, contemplation and even friendship and love. These were the "truly human powers," Macpherson claimed.[5]

On Milton Friedman
Essay VII of the Essays in Retrieval was titled "Elegant Tombstones: A Note on Friedman's Freedom," and was a direct challenge to certain assumptions of "freedom" made by Milton Friedman in Capitalism and Freedom. For Macpherson, capitalism was discordant with freedom. Part of the disagreement can be found in the differing interpretations of 'freedom.' For self-described 'classical liberals' like Friedman, freedom is negative and is seen as an absence of constraints or freedom of choice. Following a tradition that began with G.W.F. Hegel, Macpherson viewed freedom as positive and defined it as the freedom to develop one's fullest human potential.


Spot on.

Tom Hickey said...

This is what MMT looks like for me. The trained economist and hedge fund founder Warren Mosler stumbled one day upon Post-Keynesianism/MMT and found that it contained a lot of sound arguments against mainstream monetary theory and some good social planks for a political platform. Warren Mosler developed the narrative of how the fiat money system can be used to solve most socio-economic problems. As a marketing buff, he realized that Wall Street types have a credibility problem with selling social policy. And this resulted in strengthening the sales team with caring Stephanie Kelton and the spiritually enlightened philosopher Tom Hickey.

Bad guess. it's contradicted by Warren Mosler's account of how he discovered what he called "soft currency economics" through an operationally-based understand of government finance, from which he made a pile of $. Subsequently, Warren met Randy Wray and then Bill Mitchell, who jointly developed the economics that came to be called MMT. Warren funded it. The other MMT economists came way later. MMT didn't get any serous exposure before Bernie Sanders chose Stephanie Kelton as an economic adviser.

AXEC / E.K-H said...

Calgacus

You say: “Not seeing fallacies in some reasoning that MMT is welfare for the rich is not the same as there not being a fallacy, and there is. A really easy way for anyone to quickly see that the reasoning must be fallacious (formally inconsistent) is the historical fact that applied MMT has everywhere led to progressively more equal distributions of wealth and income, not the opposite. … (By applied MMT I mean the New Deal, WWII in the US & UK, the postwar era practically everywhere & for a few countries even afterward. Pretty much the closer to MMT / genuine Keynes - the better for income/ wealth distribution.)”

Note that there are two issues here (i) the classical macroeconomic issue of the relative magnitudes of profits and wages [To determine the laws which regulate this distribution, is the principal problem in Political Economy (Ricardo)] and (ii) the issue of the distribution of wages among workers and of profits among firms. I have dealt with both issues in working papers#1, #2 and in blog posts.#3, #4

It is pretty obvious that economists from Smith/Ricardo via Keynes to MMT never understood what macroeconomic profit is and by consequence thoroughly messed up Distribution Theory.

I know for sure that you don’t understand what macroeconomic profit is. Therefore it is beyond your means to say anything sensible about distribution.

The axiomatically correct Profit Law for the economy as a whole is given as Qm=Yd+(I−Sm)+(G−T)+(X−M) which reduces to Qm=G−T for Yd, I, Sm, X, M = 0. The reduced Profit Law says that the monetary profit of the business sector Qm is equal to the deficit G−T of the public sector, in a nutshell: Public Deficit = Private Profit.

Now, MMT is essentially money-creation/deficit spending. Because of this, it is correct to say that MMT progressively worsens the distribution.#5

However, for anyone who can read an equation, it is obvious that the positive effect of a government deficit G−T on macroeconomic profit Qm can at any time be counteracted by negative effects of the other variables, i.e. Yd, I, Sm, X, M.

Whether this has been the case during the “New Deal, WWII in the US & UK, the postwar era practically everywhere” can be established only by testing the complete equation.

There is no way around it, in order to make progress with Distribution Theory, the Profit Law must be tested with the data for the historical time periods you mentioned.

As far as I know, the axiomatically correct Profit Law has never been tested. Your assertion “Pretty much the closer to MMT / genuine Keynes ― the better for income/ wealth distribution.” is pretty much hanging in midair.#6

Egmont Kakarot-Handtke

#1 The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2511741

#2 Essentials of Constructive Heterodoxy: Profit
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2575110

#3 Profit and the decline of labor’s nominal share (I)
https://axecorg.blogspot.com/2017/08/profit-and-decline-of-labors-nominal.html

#4 Profit and distribution: a primer
http://axecorg.blogspot.com/2017/06/profit-and-distribution-primer.html

#5 Keynes, Lerner, MMT, Trump and exploding profit
https://axecorg.blogspot.com/2017/12/keynes-lerner-mmt-trump-and-exploding.html

#6 Keynesianism as ultimate profit machine
http://axecorg.blogspot.com/2015/07/keynesianism-as-ultimate-profit-machine.html

Tom Hickey said...

You're thinking of money too much as a thing, as a commodity (which it sort of is) but not as what it is more deeply, a credit-debt relationship,

This is key. A lot of wrong thinking about issues related to economic matters involves conflating money with money things. They are different. Money is entirely abstract, where as money things are concrete tokens going proxy for the abstractions that are the stuff of formal institutional arrangements that arose from and were initially fashioned by customs. Eventually traditions were codified as law.

Historically, credit came first and then state money based on it. Focusing on the tokens that represent money leads to just-so stories about history and confusion of barter and monetary economies. Barter was never central and could not be central owing to the inefficiency of the double coincidence of wants. Commodity "money" is just a convenience within the barters system by providing things that are generally desirable and can be "saved," that is, stored. Initially this was grain, not gold or other "precious" goods, since they were not available to supply demand. The natural transition was from the gift economy of implicit credit to formal accounts in ancient Sumer, for instance.

It's similar with property. Property is an abstraction related to institutional arrangements growing out of customs, which were later codified into law. Property as real assets is created by and dependent on the abstractions that lie at the basis of legal ownership, contract, etc. and are enforceable.

These abstractions at thew basis of money and property are not real "essences" existing in some Platonic world of form. As institutional arrangements arising from customs, they are social constructs that can change, have changed over history and geography, and can be changed in the future — and likely will be changed.

ANC Driver said...

Calgacus, you are still misrepresenting me, and the more you reply the worse it is becoming. Nowhere did I say nor do I advocate restricting rights, if anything, I am trying to increase the scope of rights for those people who unfortunately lack the capacity to sell anything including themselves of which there are many and it is increasing at an alarming rate (including two sons I have who have special needs and are not fit for being sellers of anything let alone having the discipline to hold down a job of any sort), and to do so in ways other than welfare. We do not want your or anyone elses welfare. But to be frank I am tired of this conversation; I doubt anyway, even if you were to fully grasp what I was saying whether you'd support it let alone actually be able to contribute to it being implemented.

As an aside, I googled WPA ballerinas and all I got was Ebay listings. Is this what you were referring to - if so I don't get it?

ANC Driver said...

Calgacus,
By suggesting I am young (I am 45) and have only experienced the neoliberal era, I should be safe in assuming you are much older than me. With all due respect, you must also not assume that because I am young that I do not read nor study history. I have read and studied Plato, Aristotle and the like, all major religious texts, I have read Commentaries on the Laws of England by Blackstone and others of his books, Suits in chancery by Gibson, Equity Jurisprudence by Pomeroy, Law on Trusts by Lewin, Trusts in Australia by Jacobs, I have studied all the rules of all the Supreme courts and High court of Australia, I have read 100s of cases out of Australia, US, UK, Canada etc on all manner of rights whether legal or equitable. I have read and studied every single Banking Act since Australia's federation in 1901. I have read and studied all manner of books on Banking, Economics, Finance. I have studied the stock, forex, futures markets and their histories. I have read Proudhon, Marx, Rousseau...need I go on?

I have also been homeless, my brother has also been homeless and much much longer than me. I have seen wealth first hand (when my parents wont the lottery only to end up bankrupt 4 years later). I have worked for employers, I have owned my own businesses, including a trucking business which ultimately left me with a damaged and irreperable back.

So please don't tell me I am wrong or that I am confused, or that I have no idea what I am on about. I can assure you now, that in trying to achieve what it is I am trying to achieve I have placed an inordinate amount of emphasis on ensuring that by doing so that it will never come at any nominal or real cost to any tax-payer or property owner so that I can ensure they have no grounds to complain.

AXEC / E.K-H said...

Wrapping up the MMT narrative

Tom Hickey puts the MMT narrative straight: “… it’s contradicted by Warren Mosler’s account of how he discovered what he called ‘soft currency economics’ through an operationally-based understand of government finance, from which he made a pile of $. Subsequently, Warren met Randy Wray and then Bill Mitchell, who jointly developed the economics that came to be called MMT. Warren funded it.”

This information helps to wrap up this thread.

• MMT is the most recent incarnation of Political Economy. Political Economy abuses science since Adam Smith/Karl Marx for the purpose of agenda pushing.

• Political Economy started as open propaganda, became more sophisticated over time, and is now a mixture of propaganda and science with varying proportions of the component parts. In most cases, the science ingredient does not satisfy the criteria of material and formal consistency. So what remains in the end of political economics, is a piece of communication with zero scientific content.

• The scientific component of MMT is provably false. More precisely: MMT’s foundational macroeconomic balances equation, i.e. (X−M)+(G−T)+(I−S)=0, is false. The true equation reads (X−M)+(G−T)+(I−S)−(Q−Yd)=0.#1

• The true equation says, inter alia, Public Deficit = Private Profit.

• The economic policy guidance of MMT boils down to money-creation/deficit spending. Deficit spending has multiple effects, the main and immediate effect is that it increases macroeconomic profit.

• MMT is presented to the general public as a socially beneficial program that uses the fiat money system for the Common Good. MMT’s argumentative flagship is the Job Guarantee. MMTers always talk about the employment effect of deficit spending but never about the profit effect.

• As matter of fact, MMT amounts to a capturing of the state/central bank for continuous deficit spending which in turn amounts to a continuous self-financing of the one-percenters.

• Members of the Oligarchy like Warren Mosler fund the propagation of the MMT self-financing scheme on all levels of communication from academia to the social media.

• With regard to economics, which still claims to be a science, this has become common practice.#2

• The real problem with MMT, though, consists in the employment of the well-meaning and unsuspecting philosopher Tom Hickey and other proponents of the Good Society for pushing an a-social agenda.#3

Egmont Kakarot-Handtke

#1 MMT: The one deadly error/fraud of Warren Mosler
http://axecorg.blogspot.com/2017/11/mmt-one-deadly-errorfraud-of-warren.html

#2 Meet the Economist Behind the One Percent’s Stealth Takeover of America
https://www.ineteconomics.org/perspectives/blog/meet-the-economist-behind-the-one-percents-stealth-takeover-of-america

#3 MMT is ALWAYS a bad deal for the 99-percenters
http://axecorg.blogspot.com/2017/12/mmt-is-always-bad-deal-for-ninety-nine.html