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If I remember correctly, did Keynes not make the prediction with the proviso that there wouldn't be another war?
Toggle Commented Nov 18, 2015 on Keynes' error at Stumbling and Mumbling
Not sure how clear the intelligence was about Iraq - in many cases it contradicted Bush/Blair's narrative, but they went ahead anyway...
Toggle Commented Oct 28, 2015 on Two Blairs, or one? at Stumbling and Mumbling
I would go one step further and suggest that nuclear catastrophe is not something to which we can attach a probability. And it could be that trident increases some risks by making *us* more aggressive.
@britonomist ""Value" is subjective, it's that simple." It really isn't. Subjectivists and Marxists mean two different things when they say 'value'. For Marxists, 'value' is the phenomenon underlying production and surplus under capitalism. For subjectivists, it means personal preferences. It's incredible that two different uses of the same word has caused so much confusion for so long. @luis "Does Marx say that once profits are sufficiently low, they no longer qualify as exploitation but as a fair return on capital? I am thinking of an analogue of "the cost needed to bring that factor into production" as this wiki definition of economic rents puts it:" No - exploitation does not depend on the amount of profit the capitalist gets; it simply depends on the labour-capital relationship. Capitalists pay workers wages below the value that they produce, the difference being exploitation. I suppose you're asking whether a capitalist could feasibly pay a worker more than the value they produced, and hypothetically I guess this could happen. But it couldn't be widespread, as such as business would be sucking up surplus from elsewhere, resulting in no profits -> no capitalism. And even this would still retain the owner's control over what was produced, which is for me the essence of the relationship in qualitative terms. "And if so, if the rate of profit is supposed to fall over time, does that mean capitalism gets less exploitative until, perhaps, it is no longer exploitative at all?" Well, the point is that as the RoP falls it generates crises which reset it to a higher level (or prompt some sort of social revolution/disintegration). Capitalism can't continue existing with a low rate of profit for reasons that aren't necessarily marxist (no growth, unemployment etc). @Matt Moore "I can work for years on an invention or artwork but if no one wants it, it's worthless." This is true, and something Marx also believed, but commented: "What has this to do with my theory of value? To the degree that corn is sold above its value, other commodities...are, to the same degree, sold below their value. The sum of values remains the same." The point is that the LTV concerns aggregate, economy-wide trends rather than individual prices. There is disagreement among Marxists about this, but IMO @Brett is right to note that the empirical evidence Chris presented is partly tautological. Investigations into the LTV should concern aggregate rather than micro tendencies.
"It's possible to argue that wages depend upon social forces because those forces affect the position of supply and demand curves." You could, but this would render the concepts even more unfalsifiable than they are already. Why must we assume demand-supply 'underlies' everything? Is there any scope for abandoning it? The rest of your post is fine without any appeals to demand or supply.
A couple of quick objections: 1. Regardless of how efficient you believe markets are at predicting, they can't predict base don information which isn't there. You just gave a number of ways in which young people face fundamental uncertainty - how exactly can markets deal with this better than individuals if it depends on things which are completely unpredictable? 2. I would worry about speculation here. Hedge funds decide to short, I don't know, cleaners - will this have no effect on the profession? You seem to believe markets can be benign and only reflect fundamentals, rather than influencing them.
@luis See, someone from a discipline which was more secure about its empirical record wouldn't have responded with a petty dig; they'd have (a) given some examples and (b) asked themselves exactly how someone could complete an economics degree without having the usefulness of utility demonstrated to them. By the way, I'm now half way through a Master's, and it still hasn't happened. If anything, the more I learn the sillier utility becomes.
Toggle Commented Jan 9, 2015 on Endogenous preferences at Stumbling and Mumbling
@ luis The problem with the "we don't really believe that but it's useful" refrain is that it just becomes an empty catch-all that you can use whenever utility is questioned. The question is *how* utility is useful (making theory mathematically tractable doesn't qualify because that says nothing about its realism).
Toggle Commented Jan 7, 2015 on Endogenous preferences at Stumbling and Mumbling
"required the leap of faith that the whole was somehow more than the sum of its parts." ...a leap of faith that is made in virtually every other field, including many which have far better empirical records than anything in economics.
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@luis I'm more like you than Chris - I'll spend a long time on a post (not actually working on it, but from when I first get an idea to when I actually finish is often around a month), trying to make it read well and anticipating objections. But ultimately anything can be criticised, you will never spot every typo, and you will make mistakes. Best just to accept this and get over yourself (I'm not directing that last part specifically at you).
Toggle Commented Apr 13, 2014 on In praise of brevity at Stumbling and Mumbling
You really should read Andrew Kliman on this. He uses similar measures of the profit rate and comes to the same conclusion, but he points out that the increasing rate of "moral depreciation" (technical obsolescence) in the computer age is not often accounted for in the data. Once you remove this the 'rebounds' in the rate of profit fall to nothing and it may even have fallen further.
Toggle Commented Dec 19, 2013 on Profits & investment at Stumbling and Mumbling
OK I think we may have two different definitions (or at least applications) of accounting here. You mean it as relationships like S=I, which help us to think but ultimately are tautologies and not "economics". I agree with that. However, when I say 'accounting' I mean something more like the actual accounting behaviour and practices of businesses, particularly banks (but let's not go there!) and how that helps us to understand their actions or 'microfoundations'.
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1. Well, this is kind of circular. You're defining economics as what you want to do then telling me what I want to do isn't economics. If economics is defined more broadly as 'the study of the economy', it seems obvious that accounting relationships help us understand the economy and are therefore a part of economics. In fact, you basically go on to acknowledge this so I'm a bit confused. 2. OK, you didn't necessarily mean mathematical microfoundations. That's cool, but I felt like your post was defending microfoundations in modern macro or some such. My bad.
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Two quick thoughts spring to mind: (1) It's admirable, in a sense, to want to understand the human foundations of economics. However, sometimes they simply may not be relevant for the matter at hand. All models abstract from things, as economists like to say, and some might abstract from individual actions and motives and look instead at, say, accounting relationships and flows of funds. (2) What you consider 'microfoundations' could easily be considered just another set of arbitrary mathematical relationships that don't really help us achieve your stated goal. Most economists will happily say "no, people don't really maximise some metaphysical concept called 'utility', but it helps us build models that make predictions etc etc." Now, we can argue about whether this is useful from a modelling perspective until the cows come home, but it does seem that it demonstrably fails to help us understand real people, which is what you want to do. In fact, I think if you really want to understand people's relationship to the economy you're probably better off steering clear of mathematical microfounded models. That's not an outright dismissal of maths for this purpose, but I certainly think things like *asking* people about the economy are a better way to understand their motives and actions, even though economists have historically steered clear of such methods.
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@luis Capitalism may 'deliver the goods', but the marxist argument is that they are unevenly distributed and often wasted, while production is often focused on superfluous things.
OK, left the wrong comment on the wrong post. Let's try again: @chris OK, but there is circularity in the statement "economics predicts the crash couldn't be predicted, and economists didn't predict the crash, so this proves economics is right!" We first have to prove the first part eg defend the EMH. I think that this proposition as at least questionable. @andrewlilco, OK, OK, I hear you. I wrote that comment in a somewhat jaded state (does it show?) In any case, I'll leave a comment on your blog.
Toggle Commented Nov 2, 2013 on Economics, good and bad at Stumbling and Mumbling
@luis Capitalism may 'deliver the goods', but the marxist argument is that they are unevenly distributed and often wasted, while production is often focused on superfluous things.
Toggle Commented Nov 2, 2013 on Economics, good and bad at Stumbling and Mumbling
Chris I am surprised you endorsed the idea that since the EMH says things are unpredictable, it accounts for the 2008 crash. This just seems to me to be hand waving, and given the other problems with the EMH, I'm not sure why anyone would consider it an explanation at all. Lilco also goes on to repeat some standard right-wing talking points...moral hazard means the gummut done it, regulation somehow caused the crisis, and it was an example of creative destruction. But none of these really make any sense, I really can't be bothered to repeat why. In any case, the problem is that macroeconomic models simply didn't predict it. Regardless of whether economists have some key lessons correct, such as moral hazard, the discipline as a whole was blind to the systemic problems faced by financial institutions, and by the link this could have to the economy as a whole. You can claim the discipline has changed, but to claim it predicted and accounted for the crisis is beyond the pale.
Toggle Commented Oct 30, 2013 on Economics, good and bad at Stumbling and Mumbling
Eh, I suppose I should be glad that I've bothered somebody enough for them to link to a completely irrelevant debate - in which I was apparently skewered - just because my name was mentioned. However, I think chad_sexington should reread Harrison's post, my comment, as well as my original post on the matter. Such a reading would reveal that all Harrison really did was restate the history of existing communism with incredulity and in more detail, as well as make some questionable but in any care largely peripheral points. At no point did Harrison discuss the history of capitalism, or mention by survivorship bias argument. Anyway, sorry for the OT rant. Maybe chad should instead just investigate which debate he has actually stumbled into.
Toggle Commented Oct 25, 2013 on Economics as science at Stumbling and Mumbling
"For me, all this means that BI is like land value tax or open borders. It's an idea whose merits far exceed its popularity." We might add to that: reforming patent law (eg having far fewer patents) and decriminalising/legalising certain drugs. And probably some others I haven't thought of.
Toggle Commented Oct 16, 2013 on Why not a basic income? at Stumbling and Mumbling
Naturally, I agree with you that the classical 'political economists' have a lot - probably more - to offer than modern economists. I think a crucial point where classical and neoclassical economics differ is the theory of value. Classical economists, most of all Marx, used labour to explain how economic value became embodied in commodities and measurable by the same yardstick (money). Marx's system did not attempt to explain all of the day to day fluctuations of prices but merely the total amount of exchange value in an economy. Classic political economy considered use-value to be inherent and unquantifiable. On the other hand, the subjective theory of value tries to explain individual purchases by quantifying use-value as utility. This model has some good aims but doesn't seem to have much predictive value, as it is either circular, 'revealed' ex ante, or completely deterministic based on how the model is constructed. Meanwhile, what explains the total production and value in neoclassical theory? Not much, past some massively fudged 'production functions' that have all sorts of problems, not least of all exactly which units they're supposed to represent. Therefore, the capability of explaining therefore lost in neoclassical economics, while for all practical purposes utility theory doesn't seem to offer much more than saying 'use-value cannot be formalised' does. The result is that by choosing neoclassical over classical economics, we lose some predictive power and gain none, at least as far as value is concerned.
The fact that anomalies might be explainable doesn't mean the theory is unfalsifiable. The theory would be falsified if there were no evidence for an explanation, as there is no evidence that "an alien came here circa 5000 B.C." And Newtonian physics is logically inconsistent with the fact that velocity is relative. See eg this video: (I don't agree with that video, it's exaggerating, but it demonstrates the example well)
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W. peden, When you say there is "nothing" that would falsify Darwinian evolution I wonder what on earth you are talking about. Off the top of my head, there are two things: - An irreducibly complex organ/body part. - A fossil in the wrong place. Newton's physics is also completely falsifiable, and at very big and very small levels, it has been falsified. If you want to be strict, it is false at all levels, though of course it's so accurate at every day levels that it doesn't matter too much.
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Terrible news, Mark - best wishes.
Toggle Commented Jun 19, 2013 on The Saddest News at Economist's View
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"UE: in what sense is any genuine worker ownership not also private ownership?" In that it is owned by private individuals, it is private. However, in that it is collective and therefore owned by many, it is not 'private' in that one person cannot exclude everyone else.
Toggle Commented Dec 24, 2012 on The ownership question at Stumbling and Mumbling