Wednesday, June 5, 2013

The three big questions of economic thought

What am I missing?

- What determines the wealth of nations?
- What determines the distribution of income?
- Why do modern economies experience bouts of underutilization of capacity?


  1. about ethics and economics?

    There's a reason why I suggested Tomas Sedlacek's Economics of Good and Evil as an alternative to Robert Heilbroner's classic text, Daniel.

    Furthermore, are you going to cover the role of utilitarianism (as a moral philosophy) in influencing economics? Jeremy Bentham's An Introduction to the Principles of Morals and Legislation was the first exposition of the hedonic calculus, and it's been entrenched for a long time in the economics profession ever since.

  2. "Why do modern economies experience bouts of underutilization of capacity?"

    And what can be done about it? That's a different question.

  3. What about Modernism? When I first heard about the Post-Modernist view of history, I wondered if they had ever heard about the Romantic Era. But that view does seem to fit economic thought.

    To what extent is mainstream economics a reaction to 19th century socialism? What about Georgism? What about the conflation of land and capital, something that George would vigorously deny?

    What about bimetalism and Bryan's Cross of Gold speech? At first, that seems arcane today, but Bryan drew crowds to recitations of that speech for years. And today we see labor in Europe being sacrificed to a virtual gold standard in the Euro.

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  5. "Why do modern economies experience bouts of underutilization of capacity?"

    Seems that's framing things a little too restrictively. I would ask: "Why do modern economies experience bouts of reduced economic activity?"

    The whole underutilization thing is a bit more modern.

    1. Agreed. Daniel's question is really a conjecture about your question. It all depends on how you interpret "excess capacity". Is it a result of underutilization? Or is it a consequence of large-scale structural miscoordination? Depending on what you think, your policy prescription is going to very different. And contrary to what DeLong, Krugman, et al. might say/think, the word is still out on whether our problems are structural, or "utilization" related.

    2. Yes. Daniel's framing of the question misses out external shocks too. Things like wars, increases in oil prices and recessions in the economies of important trading partners.

  6. * Should we privatize the military first, or the courts first?

    1. *Before or after we privatize the "we"

  7. I believe that one of the central questions for the history of economic thought is how the value of goods is determined, i.e. surplus approach vs marginalism. Pretty much a millennia long debate from the Aristotle's 'just price' to the Sraffian conceptions of production of commodities by the means of commodities.

    The conceptions of economies as dynamic systems is also a worthy approach: from Quesnay to DSGE AND dynamic stock-flow consistent models.

    The back and forth between the free-trade doctrine and the ideas of protectionism is also an interesting theme of a study. Peshine Smith, List and other less known figures.

    1. The free trade vs protectionism debate is certainly important and should be on the list.

    2. What is important about free trade? The entire history of mankind has shown such to be an truly stupid idea. All national prosperity is now and forever will be built on Mercantilism.

      Show me a country whose prosperity is built on free trade, a country that will permit a USA firm to sell or provide any good or service in that country.

    3. Roman, you need more help than Daniel. Nothing has value independent of what someone will pay. If the market won't pay you $250 for your used car, it isn't worth $250, regardless of all the economic theory from the beginning of time to today. And guess what, as soon a A buys from you for $249, the car is no longer would $249 either

  8. The state of education is truly frightening.

    Distribution of income is entirely a political question, having nothing to do with economics.

    Have you learned nothing in how many years of economics!

    Oh,you learned not to be a libertarian. Big Whoop.

    1. "Distribution of income is entirely a political question, having nothing to do with economics."

      Now you are just trolling.

    2. Man are you dumb Absalon, really dumb.

      At one extreme, you can have gross political power: slavery

      In the middle: taxes, fees, licenses, etc., and redistribution

      At another extreme: patents, copyrights, trade secrets and marks, gov't monopolies, excessive rates in reg. utilities.

      And remember, if there was no gov't, I would never work. I would just wait and watch you work. When you fell asleep at night tired from a hard days work, being well rested, I will just steal from you.

    3. "When you fell asleep at night tired from a hard days work, being well rested, I will just steal from you."

      Yes, I accept that to be a candid disclosure of your character.

      Of course, my character is that I would cut your throat the first time you tried. (The original "Absalon" imposed law and order and security of property with an ax.)

    4. I can't understand why you too are arguing. You always sound identical to me.

      I'm enjoying it anyway.

    5. "You always sound identical to me."

      I'm not sure that we are identical but I seem to recall Alexander saying he is a lawyer and if that were true and he was, say, about sixty years old, then he and I would have some things in common. :-)

  9. Other questions to ask:
    1) What is "money"?
    2) Why do Libertarians have their heads up their ****s and what can be done to help them develop into functioning members of society?


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