A Brief Anti-Economist History

Here are a few historical facts that I consider to be both true and contrary to what most economists (and libertarians) think. All have substantial historical evidence behind them, whereas I find the opposing case generally relies on just so stories. All 3 cast considerable doubt on pro-capitalist stories about trade and development. (I would use bullet points but wordpress seems to be in a mood. You’ll have to imagine them):

Rich countries did not get rich through free trade, but through the use of protectionism and other state interventions such as capital controls and subsidies. This includes but is not limited to: the UK, US, Germany, Japan and Scandinavian countries. Furthermore, more recently developed countries got rich by doing something similar, and in the case of the Southeast Asian ‘Tigers,’ the intervention was even more explicit, with state employees working inside the infant industries. There are a couple of exceptions such as the Netherlands, but even in their case their initial rise was characterised by large state backed monopolies in order to overcome transaction costs. Finally, supposed bastions of free trade such as Singapore and Hong Kong are both characterised by various public provisions, and Singapore has a large GSE sector. The go to accessible source on this is Ha-Joon Chang, though others are also available.

Money did not arise as a solution to the ‘double coincidence of wants,’ a highly improbable concept that begs a lot of questions (such as ‘how exactly does the cow farmer get all his inputs?’) Money primarily arose as a form of credit, and this was intertwined closely with social relations and kept communities bound together. Credit only became ‘exact’ once it was enforced by force rather than social pressure, and evidence suggests the use of coins and notes primarily followed the introduction of taxation. Before this, the overwhelming majority of barter was rare and between different tribes/nations, and often accompanied by feasts, sex and violence (sometimes all at the same time!) The primary source on this is, of course, David Graeber. I have not seen a convincing critic, though not for want of trying (‘it might have happened even if there’s no evidence!’ and ‘but debt is just delayed barter’ respectively).

Peasants did not freely move from their land into 12+ hour days in factories because it was ‘better than the alternative.’ In many cases they had their land taken by foreclosure acts and their hunting severely restricted by game laws. Prior to the industrial revolution they had plenty of problems – they were particularly susceptible to disease and famine – but evidence suggests they had a far greater degree of leisure and control over their working conditions than wage labourers. Michael Perelman’s book gives an in depth treatment of this, and similar arguments can be found throughout marxist writings.

The conclusion is clear, and something I have said before: western capitalism is neither harmonious nor natural. It is a product of specific historical circumstances, some of which were incredibly brutal. Any libertarian who accepts this (and some do) – presuming they adhere to a broadly Nozickean conception of justice – should take a deeply skeptical stance of everything that followed (e.g. the modern world). In fact, most libertarians should probably be revolutionaries.

P.S. This post is partially inspired by Robert Vienneau’s similarly formatted post on economist’s misinterpretation of the history of thought, worth a read.

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  1. #1 by john77 on October 27, 2012 - 4:11 pm

    NO. They do not have historical evidence behind them. The references that you instance have nil historical support for some fairly stupid comments.
    The explosive growth in UK GDP in the followed the abolition of the Corn Laws after 1846. Ha Joon-Chang argues that this growth was the result of Walpole’s protectionism more than a century earlier. Balderdash! Growth (as a % let alone absolute) was twice as fast in the period from 1846 to the First World War than in the previous 120 years of protectionism.
    Graeber needs to look at the basis for the rise of Athens instead of using the absence of communities that still use barter thousands of years after the creation of money as”evidence” that barter never existed in despite of multiple historical records thereof.
    Yasha Levine perpetuates the spoof that Adam Smith who quoted a historical example of a pin factory led people to enclose land in order to force agricultural labourers to leave the land to provide a labour force for factories to be created in the future. TARDIS fail.

    • #2 by Metatone on October 27, 2012 - 10:13 pm

      There was no explosive growth in GDP following the abolition of the Corn Laws. GDP follows a trend line established from roughly 1820 out to about 1890. So even if we put aside context and technological changes (and you’d have to be an ideologue like John77 to do so) his misrepresentation of the historical record isn’t helpful.

      As for the “multiple historical records of barter” – citation needed, simply.

      • #3 by john77 on October 27, 2012 - 11:35 pm

        In the first ten seconds looking for internet data I found http://en.wikipedia.org/wiki/List_of_regions_by_past_GDP_%28PPP%29 and then no more for several minutes
        That site shows that UK GDP grew by a factor of just over 3.5x in the 63 years from 1850 to 1913 after growing by a factor of less than 3.4x in the 120 years from 1700 to 1820.
        That is twice as fast under (relatively) free trade than under protectionism.
        I thought that would be good enough to scotch Ha Joon Chang’s rubbish
        Seemingly not – so try http://www.ukpublicspending.co.uk/year_spending_1846UKmn_12mc1n#ukgs302
        This has more detail and once again shows that CAGR for UK GDP was greater in the 67 years from 1846 to 1913 than from 1720 to 1846 *despite* the tendency for relative growth to slow as the absolute numbers get larger, because attention switched from sending children out to work to sending them to school and people got more leisure as the country grew richer if for no other reason (law of diminishing returns etc)
        This, once again, refute Ha Joon-Chang’s claim.
        *I* have not misrepresented the historical record. Someone who starts their comparison period with one relatively successful decade – immediately following a decade of negative growth which he/she carefully excludes from the comparison, instead of all 12 decades of protectionism should look in the mirror before making unjustified slurs.
        A quadrupling of GDP in a single lifetime means three times more growth than in the whole of recorded history. I think “explosive” is not an unreasonable piece of hyperbole to describe it.
        Robert Walpole’s industrial development policy including high tariffs led to GDP growth of a mere 11.5% or 0.36% compound over the next 30 years – in contradiction to HaJoon Chang’s claim that it was the basis for British dominance. Peel’s relatively free trade policy saw GDP fractionally more than double in the next thirty years.
        I am an ideologue only in so far as I believe that lying is wrong even in a political debate. I consider that stating the opposite of the the facts and the statistics that reflect them is lying.

    • #4 by Julia on October 28, 2012 - 2:17 am

      Could you name me some sources and records which show peoples/cultures that “still” barter after “thousands and thousands of years”? Or could you name me at least two anthropologists who agree with the “barter theory” of money creation?

      • #5 by john77 on October 28, 2012 - 9:45 am

        Could you please read what I actually said?
        I did not say barter still exists (although it does in school playgrounds). I said that money has existed for thousands of years, so the current non-existence of barter does not disprove theories that it did exist. .

    • #6 by Unlearningecon on October 28, 2012 - 11:36 am

      There was certainly no ‘explosive’ growth following the abolition of the corn laws from the evidence that you cite, but note that good growth is entirely compatible with the infant industry argument – Chang and others have never spoken out against free trade once countries are developed. Why you seem to see this alone as a ‘gotcha’ for all of the protectionist arguments is beyond me.

      Graeber is doing no such thing. He talks about Greece in his book – they always used taxation as a means to feed armies.

      Don’t know what you’re talking about. Nobody argues that Adam Smith ‘led’ the charge (actually though Levine misattributes that Smith quote; it was Smith’s teacher).

      • #7 by john77 on October 28, 2012 - 8:02 pm

        We have two wonderful examples of protectionism – North Korea and China under Mao. When Deng Xiao-Peng took over, the GDP of Taiwan exceeded that of mainland China: a GDP/head ratio of more than 50x although Taiwan had been poorer prior to the Communist conquest of the mainland.

      • #8 by Unlearningecon on October 28, 2012 - 9:22 pm

        And here we have an excellent example of Godwin’s law, Communism edition.

    • #9 by Nonya Bizness on October 28, 2012 - 2:52 pm

      Clearly, if one thing happened after the other, the other caused that thing.

      http://orange-papers.org/orange-propaganda.html#correlation

      • #10 by john77 on October 28, 2012 - 8:13 pm

        Please indicate whether you are trying to make a joke or trying unsuccessfully to be sarcastic, because it is not obvious whether you are taking a pot-shot at Ha Joon Chang for claiming that Walpole’s protectionism resulted in UK GDP growth after Peel repealed the corn laws or at me for saying that the repeal of the corn laws aided GDP growth. If the latter, I can call in the theory of relative advantage to support my view.

      • #11 by Unlearningecon on October 28, 2012 - 9:20 pm

        I am stating that Chang’s view is the corn laws may have allowed the corn industry to develop early on and once it had developed, free trade was a good option.

        The theory of comparative advantage does not trump evidence, sorry.

  2. #12 by Mick Brown on October 27, 2012 - 6:30 pm

    The suggestion by john 77 that bartering as an instinct would have been lost over time doesn’t ring true.

    I don’t feel any instinct to barter but do feel obligation which I think is not abnormal. To me bartering is not an instinct but something that is usually regarded an attempted cop-out from obligation.

    Similarly it is likely that the peasant mentality actually is still with us (since the industrial age has been comparatively short). I would suggest that the reason that people still give political power to the owners of capital is that they still think that the ‘man in the big house’ knows best.

    I would also venture to say that our (Western?) brand of capitalism depends on raw materials and fuel being available at a below-market price. Since the oil price rises in the 1970s which were intended as a progressive move, at least by economists who were advising the producers, one scam after another has been tried to avoid the effect, with the latest one (involving property) being the most outrageous.

    • #13 by Unlearningecon on October 28, 2012 - 12:05 pm

      Absolutely, when reading Graeber’s book I found myself thinking how much it rang true that friends and family have ongoing obligations to each other, most of which they would be fairly vague rather than £X. I know I do.

      Because of this, the prison example of cigarette barter is not surprising – perhaps I’m guilty of watching too many movies, but you’re unlikely to have vague ongoing relations in a place where you get your ass kicked if you don’t pay back.

      I actually had a recent discussion with some friends where I suggested worker ownership of production. The response was generally ‘but surely the business owners know best?’ Why would they say that? Maybe you are right that its inherited (in any case, some quick references to show businesses are generally both inept and evil sufficed to persuade them).

  3. #14 by Julia on October 28, 2012 - 2:20 am

    The amount of historical ignorance and assumptions floating around about economic history is astounding. What’s scarier is how young people in my age group (I’m a 23-year old senior in college) take these ideas and use them as the ideological framework for the society we get in the future. Ideas matter, folks.

  4. #15 by Aziz on October 28, 2012 - 2:28 am

    On peasants, I agree with you. The move to wage labour was forced by the legal framework of the time that outlawed older patterns of behaviour, and forced people out of their old ways and into the towns and factories.

    On social credit and barter, I don’t see why Graeber and Menger both can’t be partially right, with specific instances of each. These institutions weren’t just invented one, they were invented multiple times in multiple societies, and my reading of the historical record tends to suggest that the different instances are along a spectrum rather than definitively one or the other. Ancient societies were far more diverse than modern ones, and their features and functions were dependent on the members of the tribe, their accepted norms, the nature of the land they were living on, abundance predators, etc. This would have meant a huge diversity in early financial institutions.

    On free trade and protectionism, again, I am not entirely convinced that either school is monotonically correct. There are specific instances where protectionism has been beneficial, and specific instances where it has been disastrous. In a lot of cases it has been a prisoner’s dilemma — when most countries have been open to free trade, they have all benefited, but when one reneges and becomes protectionist (like China today), it sucks up the benefits, and the only sensible route to retaliate is counter-protectionism. My discriminant tends to be democracy: if a society wants an interventionist protectionist government, let them have it. If not, let them have something else.

    The main reason why I consider myself to be a capitalist (although Western capitalism has strayed dramatically from this path) is its experimentalism. The private sector consists of many, many individuals acting out their subjective economic preferences. This dynamic is largely experimental; businesses come and go, survive, thrive and die based upon their ability to stay liquid and retain a market, and this competition for demand forces innovation and creativity. Preferably, the world will feature a mixture of libertarian nations and statist-interventionist ones and fairly lax immigration laws so that human beings have a choice on the kind of society that they prefer (e.g. the contrast between early 20th century Europe and the USA was a reasonable choice, but since then globalisation has forced convergence).

    • #16 by Draco T Bastard (@DracoTBastard) on October 28, 2012 - 2:58 am

      … and this competition for demand forces innovation and creativity.

      This innovation for demand is what’s killing our world and our societies. That is, after all, what wars do.

      Being cooperative would actually bring about more innovation due to sharing of information and also allow us to have a sustainable society. What it won’t allow though, due to the lack of artificial restrictions, is rich people. You’d have rich societies but not rich individuals.

      • #17 by Aziz on October 28, 2012 - 7:03 am

        Being cooperative would actually bring about more innovation due to sharing of information and also allow us to have a sustainable society.

        I am all for co-operation. I’m not really for state-enforced co-operation.

        Do you actually have any evidence for this? Because the empirical record is pretty clear that societies that favour central planning have historically been significantly less innovation-prone. I think that a society where individuals are free to experiment with and co-operate with whoever they want will lead to better solutions to our many challenges, especially the environmental challenges. We need to commercialise carbon-scrubbing technologies and solar, but this is very difficult given the level of big oil subsidies that governments are pushing. for example. We’ve been waiting for governments and IGOs to come up with solutions to environmental challenges for twenty years, but where’re the results? In a freer and less-regulated market, we might get higher emissions, but at the same time we would have a lot more venture capital sloshing around for monetising carbon scrubbing and especially solar and solar-electric which are potentially massive moneymakers.

      • #18 by Draco T Bastard (@DracoTBastard) on October 28, 2012 - 7:59 am

        I don’t see where I said anything about state enforced cooperation. What I’m more in favour of is getting rid of the state enforced competition.

        We need to commercialise carbon-scrubbing technologies and solar,

        No we don’t. What we need to do is some serious R&D into the best methods and then get that information out to everybody and support those who choose to use it in anyway that they choose including more R&D. Commercialisation and the market is the problem not the solution.

        In a freer and less-regulated market, we might get higher emissions, but at the same time we would have a lot more venture capital sloshing around for monetising carbon scrubbing and especially solar and solar-electric which are potentially massive moneymakers.

        There’s plenty of money for venture capital – it’s just being put in safe places like government bonds rather risky start-ups because the rich don’t take risks.

      • #19 by john77 on October 28, 2012 - 9:56 am

        Venture Capital cannot be invested in government bonds and retain its tax breaks.
        The rich do take risks – usually with a small proportion of their wealth that they can afford to lose, but a few gamble madly andtens of thousands of Lloyds Names were ruined when a reasopnable risk was turned into disaster by a retrospective change in US law that held them responsible for risks that they had not insured.
        I don’t know what you are studying but I sincerely hope that it is neither law nor history

      • #20 by Draco T Bastard (@DracoTBastard) on October 29, 2012 - 2:32 am

        Venture Capital cannot be invested in government bonds and retain its tax breaks.

        But capital which presently isn’t being used can be, ie, they didn’t have any and just leaving it under the pillow will have it decreasing in value due to deflation and the banks charging for deposits.

        The point I was making was that, despite the rhetoric, the rich don’t actually fund start-ups or, in fact, take any risk at all. After all, they don’t need to.

    • #21 by john77 on October 28, 2012 - 10:21 am

      On peasants unfortunately the generally agreed historical data provides no support for Perelman. His claim that the purpose of the Game Laws was to force people into factories seems a little odd since the Norman kings pre-dated the Industrial Revolution by around 700 years. The *Tudor-era* enclosures forced peasants off the land and were roundly condemned by Sir Thomas More. That was 300 years away from the Industrial revolution. The eighteenth-century enclosures improved the productivity of arable land, promoting an increase in the number of agricultural labourers (arable land needs more labour per acre than grazing land). Enclosure did not dispossess peasants of their land – it consolidated each peasant’s holding from a number of scattered strips into a small field and an enclosure could only be carries out with the agreement of at least 80% of landowners. The number of agricultural workers did not change significantly despite the introduction of the seed-drill and major improvements in weaving technology that substituted factory production for rural labour and other improvements in efficiency. Those two technological advances on their own should have led to a larger reduction in the rural workforce than seems to have actually occurred.
      So Perelman’s claims do not stack up
      There is an argument that is compatible with statistical data that the flow of workers from the land into towns was due to an increase in population that resulted in the number of casual labourers and younger sons far exceeding the number of casual jobs available.
      Other people look at the condition of a casual labourer in agriculture in the eighteenth century and have concluded that they decided working in a factory was less bad.

      • #22 by Unlearningecon on October 28, 2012 - 12:37 pm

        On peasants unfortunately the generally agreed historical data provides no support for Perelman. His claim that the purpose of the Game Laws was to force people into factories seems a little odd since the Norman kings pre-dated the Industrial Revolution by around 700 years.

        Game laws had multiple purposes. They were used in feudal times too; you are repeating the Smithian view that they were simply a remnant of a past age. But their enforcement had dwindled by 1630 when King Charles I tried to reenact them and failed. It wasn’t until 1671 that they began to be reenacted, for example the black acts, which were used as an excuse to stop people subsisting by themselves (hunting, fishing, chopping wood). The enforcement of game laws strengthened substantially over time, rising from 868 to 1467 convictions from 1816-1820.

        The eighteenth-century enclosures improved the productivity of arable land, promoting an increase in the number of agricultural labourers (arable land needs more labour per acre than grazing land).

        If this is true, then it still fits with the idea that the purpose was to turn people into wage labourers for the ‘good’ of the national product.

        Enclosure did not dispossess peasants of their land – it consolidated each peasant’s holding from a number of scattered strips into a small field and an enclosure could only be carries out with the agreement of at least 80% of landowners.

        Which land owners? The peasants or the existing elites? If the latter, again that doesn’t contradict my argument. Also citation needed.

        Population growth played a role, so I wouldn’t be surprised if the agricultural population stayed constant while the industrial population increased. Btw, you have no sources for what you say, and none of it seems to be echoed here or in other sources I’ve read.

    • #23 by Unlearningecon on October 28, 2012 - 11:44 am

      Not much to disagree with here. The argument about protectionism shouldn’t be ‘put up/down tariffs/quotas/subsidies (delete as appropriate) and you will prosper!!!’ But it’s all about pragmatism and previous institutional context. China is an excellent example of a pragmatic nation when it comes to development.

      I guess some places might have exhibited something resembling the Mengerian account of money (though I have not heard any definitive accounts), but the broad point is that debt is the important dynamic, yet economists mostly ignore it. Graeber also demonstrates the difficulty of separating economic life from political and social lives. Overall, from the evidence he presents, I’d think of his story as the ‘rule’ and the Mengerian one as the ‘exception.’ Menger’s account was mostly armchair and hence pretty ethnocentric.

      • #24 by Aziz on October 28, 2012 - 2:07 pm

        Yes I think Graeber’s account is important because it emphasises debt, which has been much-ignored.

  5. #25 by Roman P. on October 28, 2012 - 5:22 am

    I will have to agree with Aziz in respect to the existence of barter. There probably were instances of it (based on what I know about Ancient History), though it diminished in importance in the more modern societies. There is evidence ranging from the transportation of flint across the continents to the international trade of copper, tin and corn during Bronze Age (the famous standardized oxhide ingots).

    Does anyone here knows good academic sources on the economics of the Late Bronze Age? I think that the phenomenon of international trade between the great powers of this time and how it affected their production, society and warfare is fascinating.

    • #26 by Unlearningecon on October 28, 2012 - 11:49 am

      There’s the thing – it seemed to occur when empires wanted to feed their public servants (mostly the military). They would pay them in some shiny metal and then demand that back as taxation. Once you do that people will open shops and do whatever it takes to get their hands on some of said shiny metal.

      • #27 by Roman P. on October 28, 2012 - 3:44 pm

        No, it is actually not. The productive structure of the eneolith and Bronze Age depended on the availability of the metals to function at all. Without copper, it was restrictively unproductive to chop down forests, plow the farmland and fight the wars. Tin + copper makes bronze, the wunderwaffe of the ancient armies, expensive but ideal for making weapons. Without weapons, you could not outfit your armies and then you can’t defend your territory and extract surplus corn from your subjects. And the catch is: tin and copper were very rare, for example by the end of the Bronze Age the only good deposit of tin was in Britain. This created a very complicated dynamics between the major powers of the region (Hittites, Egypt, Shumer and Mycenaean), not achieved until much, much later in the Iron Age.

      • #28 by Unlearningecon on October 28, 2012 - 11:53 pm

        I stand corrected.

        However, I still think this is at odds with, say, the Mengerian view. In this case the metals had clear other uses and your formulation does not seem to involve the double coincidence of wants (?)

      • #29 by john77 on October 28, 2012 - 6:46 pm

        The Greek City states had citizen armies and elected unpaid magistrates, yet the silver mines of Attica were, before Athens built its naval predominance the initial source of its greater prosperity than most other cities. Greeks wanted the shiny metal for reasons other than paying imperial employees..

    • #30 by Draco T Bastard (@DracoTBastard) on October 29, 2012 - 2:37 am

      Well, I’m not sure if it’s a good academic source but it is an interesting read

      http://www.counterfire.org/index.php/articles/a-marxist-history-of-the-world

      • #31 by Roman P. on October 30, 2012 - 6:37 am

        Thank you!

  6. #32 by Aziz on October 28, 2012 - 8:29 am

    Draco — 

    I don’t see where I said anything about state enforced cooperation. What I’m more in favour of is getting rid of the state enforced competition.

    If you’re referring to privatisation, I mostly agree with you. In the UK, the majority of people were against the privatisation of things like utilities. Such programs were basically a looting of the public wealth. Although with things like privatisation there’s not really much competition — most utilities just end up being run as a state-enforced monopoly.

    No we don’t. What we need to do is some serious R&D into the best methods and then get that information out to everybody and support those who choose to use it in anyway that they choose including more R&D. Commercialisation and the market is the problem not the solution.

    There’s plenty of money for venture capital – it’s just being put in safe places like government bonds rather risky start-ups because the rich don’t take risks.

    Yeah, rich people don’t like taking risks. The single biggest risk in the world today is anthropogenic climate change, which is why the market’s risk aversion will more than likely fix this issue sooner rather than later. The single biggest problem in my mind is big oil and gas subsidies (USA is not the only culprit — look at Russia) as this makes carbon technology artificially competitive, restricting the market and profitability of alternative energy.

    R&D is all very good but it’s almost impossible to compete with a state-backed oil cartel perverting the market and making alt-energy uncompetitive.

    • #33 by Unlearningecon on October 28, 2012 - 11:51 am

      A brief butt in: you are rarely ‘wrong’ Aziz, but the way you frame the issue is as if these ‘state enforced’ privileges are outside of capitalism, rather than simply a natural outcome of wealth disparities finding their way into the government.

      • #34 by Aziz on October 28, 2012 - 2:06 pm

        It’s a very natural outcome of capitalism.

        We need to develop better strategies to defend the state and prevent its capture by monied interests. This is why I emphasise the centrality of democracy in capitalism and why I reject Miseseanism.

    • #35 by Draco T Bastard (@DracoTBastard) on October 29, 2012 - 3:16 am

      If you’re referring to privatisation, I mostly agree with you. In the UK, the majority of people were against the privatisation of things like utilities. Such programs were basically a looting of the public wealth.

      Same here in NZ – the government still sold them though and are presently setting out to sell our power companies (yes, companies – the government set up faux competition in power in the 1990s but only got round to selling one before we got round to changing the government – again).

      We have great proof of the dead weight loss of profit from it though:

      Telecom NZ was sold in 1990. Since then there has been approximately $15b taken out in dividends. In the early 2000s it became obvious that Telecom wasn’t doing a hell of a lot of investing in the network and that we weren’t getting any credible competition leaving us with an effective monopoly with super profits. The government started to address this by spending a couple of hundred of million dollars on getting network access to some of the more remote areas. It wasn’t enough and we’re now having to spend $1.5 billion dollars upgrading the network (most of which is going to Telecom).

      The network should have been upgraded from the income (as would have happened if it had remained a state monopoly) but that’s not what happened. Instead, the taxpayers are having to pay for the upgrade. It shouldn’t come as a surprise to learn that Telecom NZ didn’t debt in 1990 when sold but is now in debt up to it’s eyebrows.

      Our state owned power companies did the same but the government took the dividends. Now they’re having to put up prices to cover the investment that they should have done with the dividends paid out to the government.

      …most utilities just end up being run as a state-enforced monopoly

      Which is the most efficient form. Competition in such things usually just increases costs . Competition in natural monopolies just increases costs as we end up with massive duplication and, due to it being privatised, also the added costs of profit.

      The single biggest risk in the world today is anthropogenic climate change, which is why the market’s risk aversion will more than likely fix this issue sooner rather than later.

      The market won’t do that. The companies have a product that they want to sell and they will do everything to maximise profits in the short term and that means selling more and more of their product. To get the change that we need to we need to change the purpose of the economy from that of profit to that which the society needs and to keep use of resources to within sustainable limits.

  7. #36 by systempunkte.org on October 28, 2012 - 12:34 pm

    We published a version of this post translated into German on our site http://www.systempunkte.org. The focus of the site is broadly anarchist, left-libertarian, libertarian socialist. We hope you approve.

    https://systempunkte.org/article/eine-kurze-weltgeschichte-wie-sie-die-%C3%B6konomen-nicht-h%C3%B6ren-wollen

    • #37 by Unlearningecon on October 28, 2012 - 12:50 pm

      Of course! Thanks for the link.

  8. #38 by Mick Brown on October 28, 2012 - 9:01 pm

    Is there an explanation why many economists persist in these views? (I think that Steve Keen and David Graeber both have ways of describing common sense)

    Are they being sticky? Or, maybe, they are like Archbishops who don’t actually believe in God?

    • #39 by Unlearningecon on October 28, 2012 - 9:21 pm

      Learning economics instills a sort of cognitive dissonance that causes people to reject criticisms and evidence that contradict their theories.

      As always, science advances one funeral at a time.

  9. #40 by Unlearningecon on October 29, 2012 - 9:55 am

    John,

    Please ensure you do the following in future:

    (1) Make sure your comments are reasonably well formatted.

    (2) Try not to flood the thread with your comments.

    (3) Stay on topic instead of meandering into North Korea etc.

    (4) Cite more sources

    (5) Stop and think about what position you are actually arguing. Half the stuff you say doesn’t even contradict my arguments, yet you act as if it does. For example, that the black act was before the biggest part of the industrial revolution does not contradict that laws like it were required to get people to start working in factories. That opening industries up to free trade after years of protectionism resulted in higher growth does not contradict the infant industry thesis. Many of your claims about the positions of those I’ve cited are also simply false.

    (6) Try not to throw terms like ‘conspiracy theory’ and ‘leftist/’edited by marxists’ as if they are actually arguments.

    P.S. Having said all this, you are obviously knowledgeable about history and I enjoy having your perspective on this site.

  10. #41 by SR819 on October 29, 2012 - 7:41 pm

    I wish the current UK government reads this post. We are one of the most strongly pro free trade countries in the world, and where has that taken us? Many traditional and well respected British brands like Cadbury’s, Jaguar Land Rover, British Steel, Tetley’s Brewery have been taken over by foreign investors, while our indigenous manufacturing and agricultural capacity has been decimated. It’s almost impossible to buy a product anymore that says “Made in the UK”. And what has that got us? Significant parts of the country that relied on manufacturing suffer from crippling unemployment, while the affluent shareholders who’ve benefited are largely from already rich places in the South East.

    The funny thing is, the same people who say “we’re now a service sector economy” don’t even complain when call centre and IT jobs are offshored to Mumbai? Without protectionism, there will soon be no jobs left in the UK, and at the same time the welfare state is being decimated? Where’s the economic logic in that?

    The reality is that the strongest economies in the world at the moment are strongly protectionist, and support domestic companies over foreign ones. Look at Germany, who have a strong industrial policy, while countries like France have regularly tried to oppose takeover of their domestic companies. That’s without mentioning China, the best exponents of protectionism in the 21st century.

    • #42 by Unlearningecon on October 30, 2012 - 1:43 pm

      Absolutely. Capitalism has no inherent tendency to provide full employment for the population – given an opportunity to cut or outsource workers to increase profits, a firm will almost always do it (certainly a large enough one). Furthermore, both at the individual and political level it is good for capitalist firms to have a reserve army of labour, so it’s no surprise one persists.

      It doesn’t really take a genius to figure this stuff out but an education in economics tends to obscure the reality.

      • #43 by Philip Walker on October 31, 2012 - 5:27 pm

        Well, literally full employment is undesirable (in much the same sense as you don’t want to be on a motorway where the traffic is nose-to-tail). No sustainable economy can deliver literally full employment, because you always need slack for people to be able to move from post to post, as well as coping with people who die and people who enter the labour system. In other words, it’s good for workers as well as employers that there be some level of unemployment.

        The debate is the size of the pool of unemployed persons, and the duration which any one of them experiences within that pool.

        So in that context, what would you say is the optimal rate of unemployment, and how would you go about working it out?

      • #44 by Unlearningecon on October 31, 2012 - 5:46 pm

        Bit off topic, but a brief answer would be whatever level the level of job vacancies is roughly equal to the level of unemployment.

        My primary preferred policy is that of Keynes: a low long term rate of interest.

      • #45 by john77 on October 31, 2012 - 5:54 pm

        It varies according to the underlying structure of the economy and the rate of technologically-inspired change.
        But the UK was running an unemployment rate mostly below 2% sometimes as low as 1.5% in the ’50s. NB that included those on the equivalent of ESA as well as JSA.
        This led to a gentle upward drift in wages as those firms seeking to expand often had to pay higher wages to attract new recruits.

      • #46 by Draco T Bastard (@DracoTBastard) on November 3, 2012 - 2:07 am

        I’d go for full employment, i.e, everybody employed with a goal of decreasing the amount of work required to maintain society. The result would be higher productivity with a more equal distribution of wealth.

        Having unemployment, IMO, results in poverty and the existence of poverty within a society is proof that the socio-economic system that the society uses has failed.

      • #47 by john77 on November 3, 2012 - 10:55 am

        Unemployment and poverty are not co-terminous* and some of us look forward to retirement. Your ideal of full employment was present in the days of the workhouse.Since there are a number of seasonal jobs it is impossible for an economy to operate efficiently with some unemployment at various times of the year. The Attlee government targeted 2% as they thought that was the inevitable minimum to cover “frictional unemployment” while people moved from one job to another (of course there was no frictional unemployment in Ancient Egypt but I prefer the modern era).
        Regrettably those governments who have set out with the principal aim of abolishing inequality have ended up by starving millions to death. On the other hand economic policies that lead to low unemployment tend to promote a “levelling-up” of wage incomes at or below the median. Famously, Tokyo was the most expensive place in the world to get a haircut in the seventies.
        * In the latter days of Communism, with full employment, an unemployed individual with no dependants in London or New York had an income in excess of the average for a dozen eastern european state and there are still nine with GDP/head below the basic level of Job Seeker’s Allowance (excluding housing benefit) http://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_GDP_%28nominal%29_per_capita

      • #48 by Draco T Bastard (@DracoTBastard) on November 5, 2012 - 9:23 am

        john77, you completely missed what I said. Full employment with work taking up 20 hours per week or less leaves plenty of slack for dynamic situations.

        Unemployment and poverty are not co-terminous*

        Your assertion means nothing especially in regards to modern capitalist societies where the unemployed really are in poverty and the threat of unemployment is used to keep wages down increasing poverty for those working as well.

      • #49 by john77 on November 5, 2012 - 10:06 am

        I didn’t miss your point – I refuted it.
        In the real; world there are people working 50 or 60 hours a week who are poor and unemployed people quite comfortably off. You clearly do not know what real poverty looks like Try imagining living on NZ$35 per week (unemployment benefit for an unmarried teenage New Zealander living with parents is more than four times as much – even pocket money for those in hospital in NZ with no need to spend a cent on food, accommodation or clothing is more).
        Full employment with everyone forced to work a standard week (which would have to be more than twenty hours) would reduce productivity – in case you hadn’t noticed human beings are not all the same and the private sector has a financial interest in employing the most productive available worker in each job. In case you had failed to notice the 70 years prior to Gorbachev, your idea had been tried and had failed, resulting in the poverty shown up in my link.
        Incidentally, there are a lot of jobs that just cannot be done properly with a 20 hours each job-share.

  11. #50 by Neil on October 31, 2012 - 10:10 am

    Strangely (or not, thinking about it) none other than Michael Hestletine has just said something very similar to this in the Telegraph:

    http://www.telegraph.co.uk/finance/economics/9643174/The-market-cant-deliver-growth-without-government-help.html

    And, wouldn’t you know it, the comments box is full borderline-incoherent fundamentalists, busily ignoring any rebuttals. Why *are* they always so angry?

    • #51 by Unlearningecon on October 31, 2012 - 5:41 pm

      Because of Bob Crow!

      Thanks for the link, always good to see a rightist try and create some nuance.

  12. #52 by AAMCommons on November 1, 2012 - 5:01 am

    Late to the debate, but as I noted to UL on twitter, the wealth of the Old World and of the USA ( the most fertile soil for Libertarianism ) was derived from Colonization, Slavery, resource theft and later Debt servitude via the IMF and World bank in addition to the “use of protectionism and other state interventions such as capital controls and subsidies.”

    I find it ironic that many Libertarians – not some like Aziz – don’t see the irony in seeing the only role of the State being the protection of their privilege (I mean property), which they are fortunate enough to be able to afford because of the historical deeds of predatory States at the barrel of the gun or via the swindle of debt and contract.

  1. 3 economic myths most people still believe in. | A Division by Zer0
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