I am reading Nassim Taleb’s Antifragile and then I went back to rereading parts of his extraordinary Black Swan. The Black Swan’s blurb by Daniel Kahneman, “The Black Swan changed my view of how the world works” is fully justified. It will remain one of absolutely indispensable books, a huge epistemological advance. Antifragile is, perhaps, an even more ambitious book because it aims to make systems (including people) antifragile, that is thriving in conditions of (what Taleb calls) “opaque randomness”. So, it is broader in scope and has a prescriptive part that The Black Swan does not.
Here I would like to address one of the two themes of Taleb’s that find immediate resonance among people who work on income inequality and globalization: the former one. I leave globalization for another post.Wonkish.
I have explained elsewhere in this blog that the term “socialism,” unlike “communism,” is imprecise. The Bolshevik Party of Lenin used the term “socialist,” but so did the bourgeois centrist Radical Socialist Party (7), which dominated the French Third Republic, which existed between 1871 and 1940. It was also used by Adolf Hitler and his extreme-right National Socialists—the Nazis. Could Leon Walras, the economist whose ideas more than any other form the basis of present-day neo-liberalism, also be a socialist? Yes! Indeed, Walras considered himself a “democratic socialist.”
Like certain radical followers of David Ricardo and Henry George and his followers in the United States, Walras believed that the land should be nationalized. The government would then depend on ground rent alone for its revenue. Walras was especially opposed to taxes on wages. If wages were not taxed and land was nationalized, Walras believed, wage workers would be able to transform themselves into self-employed individual businesspeople if they so desired. If the government followed these “democratic socialist policies,” Walras believed, the number of independent business people would explode, creating the conditions that would allow an approximation of perfect competition to be achieved in practice.
Today’s neo-liberal microeconomists, though their theoretical foundations are “Walrasian,” do not advocate the nationalization of the land nor do they oppose taxes on wages. On the contrary, they are both staunch supporters of private property in land just as they support private ownership of capital. And they support policies that attempt to shift the balance of taxation onto the shoulders of workers.
When reading about economic theory, one of the arcane areas of argument that comes up is the origin of money. From the perspective of knowledge for the sake of knowledge is a good thing, one cannot complain about this. However, if you are interested in understanding the current monetary system, this debate is largely a red herring. In this post, I discuss some of the criticisms of "neo-Chartalism" by Anwar Shaikh in his new book Capitalism (link to my discussion of that book).The simple answer to the importance of the history of money in theory of money is historical. Neoclassical economics is based on the barter-commodity theory of money, which implies that money is a neutral veil.
It was just two years ago that Thomas Piketty's book, Capital, made the best seller lists. Right now considerable attention is being paid to Anwar Shaikh's voluminous magnum opus, Capitalism. Both of these books take as their central issue that of the underlying forces driving secular trends in income distribution, particularly the division between wage incomes and profit or interest-based incomes.
Curiously, Piketty's theory remains firmly in the neoclassical camp regarding the questions raised by the old Cambridge, England school. He notes those controversies, but more or less dismisses them, perhaps reflecting the influence of being at MIT for a long period of time, even as he mocks excessive mathematical abstraction of much of modern growth theory. Jamie Galbraith and others, including Shaikh, have taken Piketty to task for his dismissal of the issues raised by those old controversies,…
Shaikh is an old fan of Sraffa's and a participant in the original debates. While he also does not present most of his theory as drawing on these old arguments, his approach is much closer to it in flavor and atmosphere, even if he eventually draws more heavily on modern econophysics methods. These fit nicely into his more Marxist approach, even as he downplays Marx. But, of course, it was Marx who more sharply posed these questions regarding the nature of capital and how it affects income distribution, as well as power distribution, within societies.…
As I noted in my discussion of Anwar Shaikh's new book Capitalism: Competition, Conflict, Crises, one of the most interesting parts of the work was his discussion of how microeconomic behaviour is reflected in aggregate performance. There are fundamental constraints upon individual behaviour that result in the same aggregate patterns at the macro level. Using the currently popular buzzword, macro behaviour is emergent, and cannot be predicted from individual behaviour with reference to the aggregate system. In my view, this is useful for macro analysts, as it means we do not waste our time obsessing about the lessons of microeconomics. For mainstream ("neoclassical") economics, this line of thinking is disastrous, as it means that entire "microfoundations project" has all the usefulness of a foundation made of sand.…Bond Economics
Capitalism: Competition, Conflict, Crises is a comprehensive overview of economics published by the noted heterodox economist Anwar Shaikh. This article is technically not a review, rather a "what I am reading now" article. I have read enough of it to describe the audience for the book, but I cannot hope to summarise the contents of the work, which is just over 1000 pages.…Bond Economics
Anwar Shaikh is one of the few economists who had warned about cracks in the foundations of growth of the US economy and the world economy as a whole and that it will lead to a crisis in the 2000s. He has a new book titled Capitalism: Competition, Conflict, Crises. It will be published around February next year....
... In an interview to Ian Macfarlane, Wynne Godley says how much he learned about neoclassical economics from Anwar Shaikh. They then put up a paper titled An Important Inconsistency at the Heart of the Standard Macroeconomic Model. Wynne Godley considered it one of his most important papers.The Case For Concerted Action
