Counter Economics

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1. on December 24, 2009 at 7:04 pm | Reply Paul Gowan

   “It’s a Wonderful Life”(1946)
   Something that has interested me since the mid to late 1980′s when I read the Jan. 1940 FORTUNE magazine article on U.S. Industrialization, is where the U.S. stands today if a similar article was done. What would the data be for other countries? The editors of FORTUNE in it’s first decade had a far greater global vision than the short article business magazines of today. When FORTUNE did an article on a business they looked at it from a global perspective from the rubber tree in Malaysia to the modern industrial metal hammer with rubber handle sold to a farmer at a hardware store in Iowa.[Note influence of R.Buckminster Fuller]
   I noticed in your Blog regarding Adam Smith that you mentioned “Adam Smith’s Mistake” by Kenneth Lux. Have you ever done an article on the Mondragon Cooperatives in Spain that Mr. Lux refers to? One thing that is interesting is how the “virtual wealth” resulting from the ability of a bank to “create money” is retained by the cooperative community instead of being skimmed off by the owner of a private bank. Of course, we all know that since the Banking Act of 1933 and the Glass-Steagal Act bankers are just pinstriped clerks, or did someone deregulate that industry since then? Personally, I think Untermeyer read too many textbooks and J.P. Morgan was right about the true source of credit. He was such a good judge of character.

   Values and Economics
   Value Wars and the The Cancer Stage of Capitalism by John McMurtry. . Infinite wants vs. finite needs. R.B. Fuller’s statements re: metal recirculation (recycling). Design Science and doing more with less. The World Game.

   I also just finished reading a book on global history entitled “Bound Together: How Traders, Preachers, Adventurers, and Warriors Shaped Globalization” by Nayan Chanda in which it is stated that the ratio between executive “compensation” and employee ratios in different countries was usually around 6:1 – 10:1 with Britain being about 20:1 and then the U.S. ratio was a whopping 170:1. Talk about your GRoss UNiversal Cash Heist (GRUNCH)!
   Critical Path and Grunch of Giants by R. Buckminster Fuller

   
   
2. on January 2, 2010 at 11:29 am | Reply Masrour Zoghi

   I stumbled upon this blog because I was looking for people who have put some effort into beating Milton Friedman at his own game by going through his arguments one by one and examining whether or not each one of his assumptions (be it explicit or implicit) hold any water in real life.

   Ideally, it would be nice if one could add other reasonable assumptions and get completely different conclusions (you’d be amazed how often this happens), although this would probably require a lot more effort.

   For instance, one rather explicit assumption in economics is that the total wealth of a nation needs to be maximized, and this is taken as granted because of the implicit presumption that the greater the total wealth, the “happier” the population, hence all this hype about GDP. It’s of course no accident that this part of the argument is not made explicit: first of all, most people won’t even notice the missing link (thanks to our crappy education system, which was butchered by these same neo-liberal economists), and even among those few who do notice it, most of them won’t give it more than a second’s thought because they’ll assume that it obviously holds true exactly because it was left implicit. Mathematicians have a tongue in cheek terminology for this: it’s called “proof by intimidation.”

   What people are not told here is that the choice of total wealth as the quantity to be maximized is made purely for the sake of mathematical convenience: the total wealth is a linear function, which is a class of functions that is very well-understood and usually reasonably easy to optimize (given manageable constraints). My roommate (who’s also a mathematician) and I were trying to come up with a more reasonable (I mean socially, not mathematically) alternative to the total wealth and of course the simplest candidate was something that you could say nothing about without using a computer. But, that’s how life is and accuracy should not be sacrificed for the sake of technical convenience, even if it means that a few people like me will be out of jobs: there’s always flipping burgers.

   I didn’t mean for this to become so long-winded. Let me finish by asking if you happen to know of any such efforts and if you have thought about some of this stuff yourself. Thanks.