These comments are a useful squib on American economic theory.
Saturday, April 28, 2018
RE DK POST THE IMPACT
Doris Gazda
Having a government led by people who chose to not believe in science, this will only get worse.
Bruce Wilder:
Your observations in this post are of the moment in a particularly urgent way.
I like that you relate it to college Economics in the 1960s and the figure of Milton Friedman, who was hugely influential as an individual and as the leader of Chicago School economics. He had opponents -- you mention Galbraith whose books were popular and widely read, but who had no "school" or following in the academy. Galbraith was an institutionalist in the tradition of Veblen, and institutionalism was wiped out after the war with the advent of Samuelson's mathematical codification of core economic theories. Samuelson wrote his Ph.D. thesis, which was published in expanded form as his landmark, Foundations, at Harvard, but he came from Chicago and went to MIT where he shared an office with Robert Solow, another giant of late 20th century economics, for good or ill.
I wonder if Economics 1 used Samuelson's textbook. My college used the number 2 textbook of the day, Lipsey Steiner, which followed much the same outline and pedagogy as Samuelson's, but the authors were noted sceptics regarding the implicit precepts of the Chicago approach to economics. The Chicago School built up its economics by attempting to outline how an economy might work as a system of markets, coordinated by market competition driving toward an equilibrium in price. Samuelson had given the Chicago School approach an elegant expression as a system of theorems, a kind of Euclidean geometry: sweeping, insightful, and consistent in a way that invited bright minds to extend its application.
The Chicago School model of an economy as a system of markets stabilized by its own seeking after a general equilibrium in market price was an idealization and the general method of economics was to try to understand the economy by comparing this elaborately worked out logical ideal with the "messiness" of institutionalized reality. The economists among the architects of the New Deal and the international order constructed during and immediately after WWII were only sometimes of the Chicago School; more commonly they were institutionalists like Galbraith, who administered the system of price controls during the war. The American economy of the 1960's was a carefully constructed, complex and managed system dominated by private and public bureaucracies, the existence of which was scarcely imagined in Samuelson's Euclidean system. Friedman's genius was to feed the anti-authoritarian impulse with a story of the economy as an example of spontaneous self-organisation, in which the deliberate planning of the second Agricultural Adjustment Act, the Tennessee Valley Authority or the elaborate financial engineering of Carter Glass, not to mention public utility regulation, industrial unions, professional associations and so on.
A generation educated in the economics of "the market economy" was ill-equipped to resist the politics of dismantling the institutional economy of carefully balanced "countervailing power" (Galbraith's phrase). A leftish neoliberalism formed to offer token resistance after the Reagan-Thatcher revolution, but accepted the basic ideological assumption that policy ought to promote "market" solutions. The collapse of the communism of the Russian Revolution (right on a schedule of generational change that ought to impress: 72 years exactly, with the death of Stalin as its midpoint) was interpreted triumphantly.
Energy Flow
https://qz.com/1250100/income-inequality-russia-and-the-us-are-now-equally-unequal/?utm_source=qzfb
http://piketty.blog.lemonde.fr/2018/04/10/capital-in-russia/
I did MBA studies in early 90s and got that free market globalist inoctrination and later took up import export where I helped expand China's trade surplus. Now I see things much like you do.
Above some links with graphs from piketty on wealth inequality over last century between USA, Russia, France. We are all back where we started except France but they have growth problems. So loosening the reins helps but can cause situations of inequality which lead to revolution. Trump election is Friedmann's fault, in a nutshell. Protest against wealth inequality. All this left wing attack against his racism, against deplorables, against Putin are missing that Bill Clinton embraced, like Tony Blair, European social democrats the unitary globalist philosophy of Friedmann that growth, inequality are the price tp pay for progress. Apparently the French and Italians never got the message and live in a slow growth statist society where ghe rich have less freedom. So realistically seen, life is a tradeoff. If I work a job if I am an acheiver I stay, otherwise bye bye it will be exciting but stressful, otherwise boring, constricting, safe. This is a difficult choice of lifestyles on a national scale. If we can turn it around to more fairness when both parties are in pockets of industry and follow free trade, globalist, free market agenda is question here. New parties or party takeover from base must happen. Military, pharmas, wal-mart, Amazon are huge. Money buys influence in congress and press. Naysayers can be targeted for smear campaign as conspiracy theorists or in extreme cases die mysteriously if too insistent on muckraking, rocking the boat. We are back to where GM got union activists murdered. The more tthings change the more they stay the same. Like I read that after Kennedy assassination around 55 people died mysteriously who talked to, itnessed key events in the process. Why does Trump change from isolationist to military expansionist so quickly? Maybe he values his and his family's life. Why are Chinese, Russian, Iranians so afraid of USA, UK, because they never saw a contract they didn't find a way to break, like the social contract between classes after WWII under Reagan, Bill Clinton(bipartisan effort). Basicaly a big crisis with war, financial collapse could change things for the better, otherwise it seems very difficult. Next week or so you will be back on page with neo pravdian mainstream propaganda dissing our illustrious leader in his battle with DNC or agreeing with fictitious chemical false flags to provoke WWIII instead of seeing what is root of problem as you have touched on today. 'Follow the Money, cui bono'.
