I've warmed to Arnold Kling more recently because he's had a series of interesting posts on technological unemployment, even to the point of constructing a model. Previously, Kling has talked more in terms of what might be called "mismatch". The refrain from a lot of Keynesians has been "yes, mismatch happens all the time but that doesn't do much to explain spikes in unemployment". Kling has started to push basic mismatch ideas (which he's oddly been discussing as if they were novel) to think about why a creative destruction/mismatch scenario might result in depression conditions. He's achieved this by moving from mismatch to overproductionism and technological unemployment (and he's called it that explicitly). Here's one incredible line from him:
"I wonder if the real public policy issue is not restoring full employment but coming up with a fair distribution of leisure. That is because with high levels of productivity, it is arithmetically possible to sustain a high ratio of dependents to workers. However, this is not easy to come to terms with politically. The dependents may suffer from low self-esteem. The workers may feel resentment. I would expect that advances in productivity will increase leisure."
This sounds very familiar. This is Keynes (1930), Bertrand Russell, Samuel Chase - H.P. Lovecraft for that matter! - and any number of other overproductionists in the 1930s. Kling's posts are here, here, here, here.
I wish I had more to say than that, but I don't at this point. I just think people underappreciate (1.) the value of overproductionist thought, (2.) the role of overproductionism as a precursor to Keynesianism, and (3.) that we've been here before. Does Kling know he's advancing perhaps the single most popular explanation of the Great Depression? I don't know.
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2. Tyler Cowen and Michel Foucault
Tyler Cowen has had two interesting posts on Foucault, although he generally downplays the value of Foucault. He doubts that he will even be much read fifty years from now. Still, I've always been intrigued by Foucault and simply interested in learning more. He talks about power relations in a way that is very similar to how Dewey talks about coercion - and Dewey has influenced me on this point, which understandably makes me wonder if I oughta get more familiar with Foucault. Occassionally when I mention Dewey on here I mention Foucault too.
In his second post, Cowen talks about Foucault and methodological individualism. In this post he also talks about the macrofoundations of microeconomics - something I am a strong proponent of as well.
Anyway, Cowen's post inspired me to read up on some Foucault. Here is a fascinating discussion of the mercantilist view of money in The Order of Things:
"The usual attitude towards what it has been agreed to call 'mercantilism' is doubly unjust: either it is denounced for comprising a notion it continually criticized (the intrinsic value of precious metal as the principle of wealth), or it is revealed as a series of immediate contradictions: it is accused of defining money in its pure function as a sign while insisting upon its accumulation as a commodity; of recognizing the importance of quantitative fluctuations in specie, while misunderstanding their action upon prices; of being protectionist while basing its mechanism for the increase of wealth upon exchange. In fact, these contradictions or hesitations exist only if one confronts mercantilism with a dilemma that could have no meaning for it: that of money as commodity or as sign. For Classical thought in its formative phase, money is that which permits wealth to be represented. Without such signs, wealth would remain immobile, useless, and as it were silent; in this sense, gold and silver are the creators of all that man can covet. But in order to play this role as representation, money must offer properties (physical and not economic ones) that render it adequate to its task, and in consequence precious. It is in its quality as a universal sign that it becomes a rare and unequally distributed commodity: 'The rate and value imposed upon all money is its true intrinsic goodness'. Just as in the order of representations the signs that replace and analyse them must also be representations themselves, so money cannot signify wealth without itself being wealth. But it becomes wealth because it is a sign; whereas a representation must first be represented in order subsequently to become a sign. Hence the apparent contradictions between the principles of accumulation and the rules of circulation."Foucault understood what the mercantilists had right and classical economics had wrong, and he put it beautifully. To be honest, this surprised and impressed me.
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"But in order to play this role as representation, money must offer properties (physical and not economic ones) that render it adequate to its task, and in consequence precious."
ReplyDeleteIt seems like this statement by Foucault can be interpreted to be an argument against fiat currency. Admittedly, I am not too read up upon how mercantilists and classical economics regarded money. From the passage you posted, its seems classical thought regarded money as more of a sign, but did it really disregard it as a commodity?
So I think Foucault's mistake is to fail to strike "and not economic ones"... but I'm still thinking through it. Perhaps I'll post more later.
ReplyDeleteI think his point is that because money is precious by virtue of the fact that it is money we have an inherent conflict between the goal of accumulation and the goal of circulation. The problem with thinking of money as a pure sign (and not as precious in itself) is that it writes off this tension between accumulation and circulation. I think this is very similar to Keynes's critique of the classics.
I think the question of whether it's an accurate depiction of the classics is much harder to answer - and I'm certainly not qualified to. Keynes himself says that few classics were guilty of coming out and declaring his version of Say's Law - but they acted as if it were true.
I find it hard to believe that classics regarded money as just a sign when the prospects of inflation are basically characteristics of money being a commodity in that it mainly occurs due to an increase in quantity. But like I said, I am not incredibly familiar with the whole of the school of thought.
ReplyDeleteAnd I am not one to take Keynes's criticism of other schools as thought as completely accurate, but that doesn't make him very different from other economists in that regard.
First - this is Foucault talking about things like signs and signifiers. I would not put that into the mouth of the classics.
ReplyDeleteLet me think more about this for a little while - I may write more. It's taking post-structuralist social theory and looking at 19th century economics. I'd read it as that and not an explanation of classical economics.
Not directly related to the comments above, but the only Foucalt that I've read was "Madness and Civilization"... And that is going back more than a few years now. Apart from the relative profundity and/or validity of his arguments, what has stayed with me about the book, however, is how convoluted the writing was. Blame the translation?
ReplyDelete(To be fair, I seem to recall paragraph-long sentences all over the place, which you can do little about as a translator. Doesn't do much for readability.)