Thursday, September 22, 2016

Economics is always a philosophy of life, never one of death

What is economics? Is it a philosophy of death? No, it is a philosophy of life. Economics only includes the “allocation” of resources in support of life. There is no economics of death. Death is not an economic good that can be distributed fairly. Economics involves rational allocation. Just as there would be no point to irrational allocation, neither would there be any point to a theory of unfair allocation. So, all economic theories implicitly describe an allocation process that is fair.

     However, most professional scholars who have chosen to specialize in “economics,” pretending they know something, look for other ways to define or describe economics. They look for some other principle, but not fairness. So, the rule is to find some method for understanding economics allocation, and not fairness. What alternatives are available? It becomes the matter of what is left, to the “economics field.” The alternative, or the one alternative they decided to promote was that of self-interest. And in this way they achieved the goal: they found something outside of fairness.

Monday, August 22, 2016

A Curious Deception

The life that one lives under capitalism is not mere individualism; it is society, social, as much as any other kind of expression of human “socialness.” Those who claim the special character of an individualistic capitalism do so for a reason. They are afraid of the social, or of any way of life that involves more social responsibility than individual responsibility. These are merely two different ways of living. I am not saying one is objectively better than the other. A way of living that has more of the social quality is engaged in making its constituent members responsible for others. This is not the only way, however. The other way, espoused by many great Western intellectual figures, emphasizes primarily one’s individual responsibility. So there are these two trends. Both may provide viable ways of living, under specific circumstances. The trend towards capitalism is not a kind of individualism. Now, as to that kind of idea, the more individualistic kind of understanding of things, there are all kinds of justifications for this (which we can accept or not). But at the end of the day, one lives either in one system or the other. There is a system of shared responsibility and there is a potential, but probably not very current, system of potentially more individuatedness. Should the West have a system of social responsibility or one of individual responsibility? It is not ours to answer.

History has rendered its answer: social. Capitalism is in fact the answer that history has given. Capitalism, contrary to the received doctrine, a doctrine imposed on us by the very same capitalistic intellectual or cultural edifice, did not decide the case for individualism, capitalism only claimed to, and so over the years what we have been subject to is a curious deception.

Tuesday, July 19, 2016

Economics has various “schools” with ideas on "information." There are economic players, or participants. The schools of thought agree that the economic players obtain information. Do we obtain information? No doubt. Sure we do. It is not in doubt that economic theory covers information, as a theoretical component of its understanding. That is for sure. We all know that getting information is important. Information is in there someplace. I don't doubt it. Getting information is important. While getting the right information is important, there are times when we do not get it. There is more to it, somehow. There must be something else. This something else is, however, not usually explicitly spoken about. What is it then, that is not mentioned, when we focus on "information"? The other element is, perhaps, ignorance! The subject of ignorance should not be ignored. This subject may be divided up as follows. Here is how we do this. We can make a division of ignorance into intentional and unintentional, in the sense that one may be keeping the other people ignorant on purpose  or not. That makes two kinds of ignorance. The sense intended is that you either did it on purpose, or you did not – you knew what you were doing or you didn't. (Maybe it just happened that way.) You did not in the later case restrict information intentionally. That's the idea.
     It can be intentional, as in the case where a seller benefits from some of that good ol' ignorance  no doubt  then, the seller wants it, wants the customer to be in the dark. We may now consider that this is not really customary human behavior. We do not like to keep other persons ignorant in general. (This has some important implications we will omit here) On the other hand, we need to be aware of this. We have to allow it in. It is the “study possibility.  
     If we do not study how ignorance works in economic relations, Well: Then, we are ignorant!

This discussion becomes relevant in the case of mercantilism. This is understood as a system where we have an entire country that tries to bring benefit to itselfit uses a certain strategy in getting profit out of its trade life. There is something peculiar about the study of this practice as other countries, not receiving this "mercantilist reward," could perhaps want to know about it. Back in what one historian assures us they used to call “this manor of England,” a phrase he says was widely used, if a man back then were to, say, publish a book on mercantilism? He might give the whole thing away! The trade partner is the other country (usually it supplies raw material?) – which merely has to read the book. This, I would think, brings us back to the point about intentional, or unintentional, ignorance, as an aspect, for both the study of, and the practice of, economics. ("Enquiring minds want to know" and all that...)

     This shows that ignorance was important under mercantilism. I am concerned with ignorance in economics more for today. But, if ignorance was so important under mercantilism, and we note that it was so, at the country level, why could not ignorance be just as important in the next, upcoming phase of the human economic and social system, as it evolved in Europe? But, this time  in this system on the individual level. Let's now say that in this system (the current one), trade should be for the benefit of everyone, the entire society—that does not seem unreasonable. In that case, we get the situation where ignorance is important to the workings of the system. We get to a situation that can only be described as a situation where ignorance is essential to the system. What we get, then, is a system that not only depends on information, or knowledge, and we can include the system's ideas about so-called “perfect information,” but also depends on ignorance, and thus, ignorance is also necessary, for its proper working. 

     And we hardly talk about this, of course. But are we being ignorant intentionally, or, unintentionally?

Monday, July 18, 2016

"Welfare" in Conventional Economics

If we say there are books on economics, that sure is the truth. There are such books, indeed there are some of  these, and if we look at them we would find out more about what is being discussed. (This a rarer idea than you, the reader, might think it is.) So, I picked out this one book, you see. It is old. One term of discussion that I noticed was “the principle of welfare,” or “social welfare.” OK, then. But what does “welfare” mean, both back in 1928, and today? I would think that in general it might mean something like the overall good or good of the society (implies "whole society"). That would be a kind of basic idea t hat a person might have, and rather a broad idea. But instead what I find is that these writers think that it is a narrow idea, a “principle,” of welfare, which in practice means, “concept.” The concept is going to be used in the area of economics discourse, so one is subsumed to the other, and hence “welfare” becomes just a concept, and so, not much different from any other. Now the "welfare economist" need to slot it in. It has to be slotted in somewhere, within economics, which is to say within that discourse.  

     But let us suggest a much different way to look, which is to surmise that that in fact is economics itself is all about. So, that is different. Now we are seeing the same concept more broadly. There are two possible views that I can see in this regard. We can narrow it down to two, at least. One is that economics is for individuals, with no social welfare involved at all. This is a common enough idea that one encounters (and, in my opinion, wrong). The other idea would be what I already mentioned, that it involves, fundamentally, the whole society. If we were to hold these as two separate, distinct views we might be able to come up with some useful observation or analyses. But this kind of practice of slotting in something called "the principle of welfare," or this practice of making something called "social welfare" a separate concept just seems to be a part of the overall project of social oppression. This is the project these persons are always carrying out! Aren't they? Anyhow, there isn’t much of much interest here and this, naturally, is why we do not read so many of these books. We read the clever, new attempts at it (guys like Tyler Cowen).
     But it was gathering dust on the bookshelf, here at Roosevelt University. Hey, I thought I’d give it a try. I am curious like that. If “welfare” becomes a concept, then where to fit it in economics? This seemed to be the author's concern. This is the kind of thing they go around and around with. I observe that, f you are trying to do something that cannot be done, this may just preoccupy you for a really unlimited amount of time.
     Better to say that the social welfare is the purpose of economics—it is very basic. A person wants to be alive, so s/ he eats, or builds a tent. A whole society wants the same, so the society generates some kind of economic system. So, I would offer  that social welfare is a lot more closely related to economics itself than just being merely another concept, which we may endlessly screw around with, trying to fit the precision phrase ("social welfare" and "the principle of welfare" were phrases I memorized) into one’s intellectual plate, at university! When we take something as basic as the common good or the social welfare, should we just turn it into another ordinary concept? I think we surely end up with just a basket of particulars. This may then pre-occupy us, and for way too long. 
     And it is certainly not worth it to go back to the shelf. Nah... On a quest for the exact title/reference? (I won't bother, but I can say it is a rather oldish book, and it is HB 34 –something; because, it was next to another book, by Coates. But that's another story, now isn't it?).
     I do not think that is the best way for me to spend my time.

Friday, May 27, 2016

Condition of the Working Class in England (by Engels)

There does not seem to be any doubt but that we are social beings. The doubt arises when you ask whether there is any sense talking about it. Some don't want to, but whether you want to talk about it or not, it remains there. The fact of human sociality remains, and we are always going to be social beings, and that entails helping, cooperating, and so forth, for we can only live where others accommodate us. You can think of this as giving way, interaction. There always has to be some giving way, some interaction.

     Let's say, then, that I am out in Arizona, and I also have a neighbor. He may be a few miles away but eventually I am going to have to decide whether or not to be social towards him: “social” means anything short of a state of war. Or, sometimes it can be a state of war!

     If some persons do not want to talk about it, fine, but I say that they are social: Everybody is. I am social; so are you, however some do not want to have that discussion.

     The matter is settled. Now, if we are social beings and we like to get along with each other it appears that nevertheless at one time capitalism (as described by Engels and also Marx, in the 1840s or 50s) was not very socially accommodating. It wasn’t very social—at least not to workers whom Engels studied. He gives copious references to the condition of “The Working Class in England,” which is a workman-like title for Engels' 1844 book, originally in German. The book is truly without mercy. However, we know now that Engels' analysis of capitalism as strictly anti-social was wrong; capitalism survived. And thus it is my contention, that it must have done so due to the fact that this social aspect of human life was injected into capitalism. Somehow, it eventually entered in, or else it was already there, dormant.

     Still, discussions since the time of marx and Engels (marx shall be henceforth lowercase, as it is the only way to avoid deifying him) are always about how dehumanizing capitalism is. This is something we need to get over.

     Engels says: “the bourgeois certainly needs workers...but as we need an article of trade or a beast of burden...” In the engaging passage that follows (page 114, Penguin Classics), the bourgeoise always gets the better end of it. He “takes very good care” not to treat workers well. In the long run this analysis is not well-supported and incorrect.

     Even in 1844, Engels admits, “it has become very complicated” (p114). Over time something happens that was outside of his model. Engels did not suspect that persons could get nicer. Or probably I should say that human decency gets injected into capitalism. But this is not accounted for in the 1844 report. When Engels speaks of “the centralizing tendency of competition”, on page 117, and of a process that “transfers the goods that cannot be disposed of in one market to other markets”, let us note that it has the potential of social interactions. Possible interactions of this kind are so various, and multiply so much, that over time, another eventuality comes due, the utility of better social behavior. This may come into play as much as any other thing. But perhaps the puritanical German, of Rhineish orientation and under Prussian domination, did not see this one coming.

     At the beginning of what K. Polyani calls “market society,” which is to say the latter half of the eighteenth century, the whole situation naturally seemed chaotic. Thus there was little opportunity to put any social benevolence into the situation. It appeared that workers would be thrown to the dogs, as perhaps they were for one hundred years. This is rather dismal news about capitalism, indeed. Nevertheless, a humanizing trend eventually took hold—even in dismal England where the human cesspools of Manchester were located that were described with such detail and proficiency in the opening chapter of the able Engels volume. That situation could not go on much longer—now, this is correctly perceived by the author (and his friend Marx), but the trend, instead of revolution, was more of an evolutionary process. It was, eventually, humanizing. Humans have an inherent need to be social, and also sociable, as were the good bourgeois Engels and family, Marx and family.

Thursday, May 26, 2016

R. H. Tawney

Is it a natural characteristic of acquiring money that, having acquired it, one should be able to do whatever one likes with it? The attractive component of capitalism, for those with no morality, has always been that they can do whatever they want with it—I should rather say, with the money that comes out of it. The requirement of the system is that you need to pay for what you get. Deirdre McCloskey gave me a long lecture on this. We may work for six months, then go to the market, to spend our wages. Are seller and buyer the same? The seller earned a profit in a few minutes, based on perhaps six months of hard labor on the part of the other person. It was just these kinds of opportunities that became the surplus value component of capitalism.

     This was quite an opportunity for someone. Is it all bad, to explore this opportunity for profit? NO, I don’t think so. I do not think we need to label it as bad but I do not think it is good, either, although this seems to be the position that McCloskey ends up in, which seems to be rather untenable, considering its extreme unlikelihood. And this she calls “virtue.”

Tuesday, May 24, 2016

Would it be of use?

Would it be of any use to anybody, I wonder, to have a better understanding of economics? Do we need that? I am not saying that I can change the world and I am not saying that I want to do that. My mission is to tell you you were taught stuff in college economics that is wrong. That stuff isn’t true. It's not easy to tell this to people. I can add that OK — it’s a nice story. If it wasn't a nice story, no one would buy it. Yes, but it cannot any longer seem so 'nice' when you realize what has happened. You are deliberately being given wrong information. It's a troubling situation, and serious problem. 
     Then it does not seem so innocent and 'nice.' We are unable to explain the economic basis of the society we live in. This is a matter that concerns me, is of concern to me. It concerns me that we have only the basic, common sense notions about economics. The problem, and it is a deep problem, is that no one is able to get past that, or to develop the deep theories that one would expect to see, in other areas of scholarly inquiry. There has been this failure to explain economic life in a disciplined, formal manner. And they are telling us, with a straight face, that the existing "science" is good. This is what's troubling. You have not only "pretty bad science," but a propaganda effort to say it isn't. And here we get back to the earlier question. Why is it so hard to create a genuine economics? 
     In short, why tell people the wrong things? This is something we really need to understand. Is it an honest mistake? This is a big question but in any case the pretend explanations are out there, doing their thing.  Now, all these are centered in a particular school, that arose starting around 1880. That school is the “neo-Classical” school. Creative work in this school peaked, I would say, around 1920. OK, maybe not. Maybe you could say it peaked in the 1930s or at some other time; but, what is it still doing being around at all? Did it turn out to be the truth? No! So, you would think it would have very effectively choked itself to death some time ago. It should fall, based on its being wrong. Well, why doesn't it? That's the question. And, for neo-Classical economics to still be there has to be malicious. It doesn't just hang around for no reason. In the past, every so often, I have checked. And, what I would find out, every time I check, is that it is still out there, being taught. (I am always amazed to see that this is the case. I have not checked under any rocks for a while, though. Maybe it just got to be too boring. However, it is also true that many professors are questioning it, now. Currently, this is true. That's great. What took you so long, baby? It sure took them a long time, to get there. My, that is strange.)

The Classical theory is much preferable. Let's see how the Classical theory looks, written out. I encountered the following explanation. This was from a Wikipedia page: “neo-Classical Economics.”

Classical economics, developed in the 18th and 19th centuries, included a value theory and distribution theory. The value of a product was thought to depend on the costs involved in producing that product. The explanation of costs in Classical economics was simultaneously an explanation of distribution. A landlord received rent, workers received wages, and a capitalist tenant farmer received profits on their investment.  

This sounds to me better than the “other approach. Anything would be.

Saturday, April 16, 2016

In What Way is Knowledge Available to US?

Knowledge is not available as such, although we point to an exception: the field of philosophy. But, if this is the case, then what do the philosophical treatments of knowledge depend on. Surely, they depend upon arguments. In order to make others believe something we are saying, we need the argument. This applies to products, firstly. Since this is an economics blog? So, then: A “Snickers” bar presents the us with an argument that a the “Snickers” bar in question is not some kind of junk, but actual food. I never quite bought that argument. I have bought them on occasion. But, I do not buy the argument. I think I have rarely had a really ‘yum’ experience with the candy bar. My body seems to reject these things, out of hand. But it is an argument, and the same goes for other products. They are an argument for us to buy them. But, leaving that aside, beliefs as well are “sold” as arguments, and, in some cases, if something was to be disseminated (to the ‘market’ or) to the public, that meant it had to be sold. It had to be packaged in a commercial form. Thus, persons live both capitalistically and culturally. In the book trade (as opposed to something like iron, or natural gas) very often ideas are the items being sold. But these are still commercially packaged.

     Don’t all cultures always have all kinds of cross-currents? Some ideas are purely non-commercial, but some are only slightly related to commerce, and some are close. "Arguments" get closer and closer to the real thing.

Sunday, April 3, 2016

Business Humanism

The truth is there's an element of disruption, in business, and, in the society. This truth applies to retail, or other, business. And therefore it applies to the situation of successful capitalism. In real capitalism there is this element of disruption. I am not saying  this is good. But only that it is not all goody two-shoes or "virtue" or nice. This is all I am saying. The "bourgeois" are not all "virtue." There is plenty of non-virtue! [example follows]:
     I worked, very briefly, for a furrier store and, upstairs, the craft shop. During my childhood, this was my very own dad's business. He seems to have liked this kind of work. I didn't. It made me uncomfortable, and by actually working there for a few months I knew more than I wanted to about that world. I worked in the upstairs shop, sometimes, as a child or adolescent, but this is when I was an adult. And, after what passed for a day's "work" in retail, the day ended. I got off the job, finally, but the bad mood didn't leave me. Next, I must have stopped at a service station. There I encountered a similar retail experience, and now I knew it from the inside. This of course represented the same ethos as dad's store, and here we find a variety of candy in open bins. So, I just started stealing the candy. That's how angry I was after a day working the downstairs, interacting with both salesmen and customers and dad's store—and with dad. The end result? Snatching candy! The proprietor saw this. I didn't care. I was not going to change my attitude, knowing what I did about the way business worked! He turned out to be one hostile fucker, too, a rather mean fellow.
     But it forces me to ask: this is what McCloskey calls "virtue"? I cannot quite go along with that. I think that no businessman would accept these proclamations she makes, concerning the culture of business. It doesn't work this way. Her dad was a Harvard man; my dad was a retail business man. They are indeed honest enough persons in this world, who could tell you that such a view does not accurately capture life in the business world. Nevertheless, I still like McCloskey's theories.
     The element under discussion is that of disruption, or "rough trade." And, this is a known part of life to all hustlers, playboys, sharks and I am afraid small, sharp little businessmen. Now let us look to the blacks: they have a music called "blues." (They also buy a lot of fur coats don't they? Dad?)
     The blacks integrated into the society of capitalism. They took their culture North, actually, and, yes, they have this music, which may be a dirty, disruptive music. There is a rough feel to it. Blues starts with acoustic guitar, then goes north on the train and gets even rougher for a while, what with electric guitars and all (and "Chess" Records, run by a typical Jewish businessman). Then it suddenly turns around and gets more "smooth," starting with B. B., who I saw on television once explaining his mission in life for blues to get more respect(able). I see a tendency for the disruptive, raggedy element (and this, in turn, is a part of a capitalistic society) to get cleaned-up. Certainly, human behavior has a potential range to it. (For the academic to clean it with mathematics has, of course, absolutely no impact.) It goes from one end of a spectrum of human behavior to the other, as music, too, goes from falsetto to bass. Whose job is it, to provide for us the answerwhether to be smooth, or disruptive?
     Now Ms. McCloskey has given us her word: "virtue." What it indicates is a moral or ethical character, and also the element of conduct. There are persons who are virtuous but also act a little rough on the outside. They are of major interest, in capitalism. The interesting question is this. Does capitalism need this aspect of roughness that so upset me, at the fur store?

There's Paul Ryan, Donald Trump, and Hillary Clinton. There is a spectrum from clean people like Ryan, who are super-conservatives and also look like some kind of porcelain dolls, to rougher, radical types. And, come to think of it, they, predictably enough, have tousled hair. Which one is the "virtue" element? 

Saturday, March 26, 2016

Delivered To Your Door

All these persons, sitting alone and isolated in their little houses have no idea that the world is falling apart. They seem shielded. That way, they do not understand what is really going on. The system delivers money and material things, right to their door; so, they cannot see reality. They believe that everything is fine. Everything is fine, but that is  because an efficient system delivers just exactly that appearance.
     So, it's an appearance; everything seems OK. But how do we know that everything is going to be OK? In fact, there may be evidence to the contrary, but a nice big door locks. It blocks their home at the front door.
     The money they have is (of course) made through international trade—the subjection of other peoples through U. S. imperialism, which has been a very successful system, successfully delivering the world into "globalization." It was an old plan, and this has been supported, since the second world war, through a maze of military bases whose value is now being questioned, at least occasionally, by various persons.
     The U. S. thinks it can dominate the whole world, but should you think that everything is going to be OK, what does that mean? It is to say that you don’t see any evidence of that, any contrary evidence. No. Not in your isolated ‘little’ or 'medium' or 'big' house.

You do not even read the newspaper that is delivered to you and that bumps against the bottom of your outside door.

Monday, February 29, 2016

The Concept of "Economics"

Capitalism is of a liberal nature, it's not conservative at all. However, this does not mean there are not any conservatives in capitalism. Many of the richest participants (or those in capitalism who have the most capital) are conservatives. That does not make the system by nature conservative. Within the "regime of Kapital" there are conservatives, certainly. And not only that, but also there are all kinds of conservatives. Still, the behavior is liberal. Capitalism is by nature more like something that is open, and therefore liberal. So, that is the nature of this phenomenon. (We have understand here that it is a social phenomenon and not in any truly meaningful way an 'individual' phenomenon at all, which means a drastic break with formerly popular ways of viewing it.)
     For example they share. ("They" means the persons participating, and surely capitalism in the end engulfs entire societies. As an example of how participants share: how can you make money without sharing information? There is also close holding of trade secrets, closed social classes of various kinds, etc. But overall, I don't think I am wrong to suggest that capitalism creates a more liberal society, a sharing society.)

     The common behavior pattern of capitalism is of a rather more liberal nature; whereas as  secondary consideration concerns the ideology of capitalism. That becomes bifurcated (into L. & R.)
Capitalism gradually increased in influence. Finally, it dominated (above, I say "engulfed") the whole societies within which it was practiced. And as capitalism rose it became gradually clear to the powers of society what was happening. They knew they were becoming capitalistic; they could see something different happening, right before their eyes. What you are now gonna need, then, is this  element of an explanation. People are going to try to create a  theory. In other words: when the society began to understand and integrate this knowledge that capitalist practice was proving to be superior, there was also a very great (and I do not ignore them or belittle them or their interests) conservative element. This element in society then proceeded to create it's version. It wasn't true, but it was a version of what happened. That theory is today called "economics." It also, we should mention, once ran under the rubric, "political economy." In any case what we can say here is that Society (upper classes, so a capital letter!) crafted their own version of what was happening. And: this is what modern "economics" is, when we mean by "economics" the study of what used to be called "political economy." (The contrasting lexical group would be the business and trade behaviors as such, the "phenomena" of capitalism.)

Generally speaking, all phenomena are subject to interpretation, or certainly most phenomena so long as there is a subjective element. Thus, what a capitalistic society says about capitalism is one particular interpretation.

Sunday, February 21, 2016

accepting and rejecting the neo-Classical approach in economics

(Kaldor, “theories of value and distribution” ; Introductory chapter ; 1960)

When Nicholas Kaldor says, in 1960, “the conditions under which…”, he means cerebral. Those “conditions” are cerebral as they are not found in the manifest, physical world. Kaldor also seems on related territory when he mentions “abstract” and “a-priori,” in this introduction to volume 1 of his collected “essays” (“Collected Economic Essays”; 1980).
     In telling us all about his earlier life as a neo-classical fellow (he studied under Lionel Robbins at the LSE), we are given to understand that the goal is to determine economic equilibrium: “the factors determining economic equilibrium,” or the conditions of economic equilibrium. As a purely private scholar-economist my own view puts me in a different place. My economics takes me to a different place. I assume rather the opposite. To me, there aren’t any such factors or conditions: the concept doesn't seem to apply. The difference is in where we start from. We find ourselves back to the consideration of assumptions; and, we may question them, we may try to get a read on how different people assume different things. Assumptions do not merely need to be assumed. Rather we can get some bearings on where we are at with them. So, Kaldor seems to keep saying the same things. I mentioned the word "conditions," and there is also “that abstract world.” Another bit from Kaldor is where he mentions generalisations that are “derived from a few self-evident postulates alone.” I also noticed the word, “static.” 
     In his “introduction to volume one” Kaldor does really a quite excellent job of stating the whole nest of problems that relate to the self-generated neo-classical mental world (as of 1960). He discusses what he and other economists believed in economics, in the 1930s. But Kaldor eventually rejected it; and, this I hasten to add, took a while. So; He is someone who both accepted and rejected the neo-classical system of thought. Quite a feat. Most of us do one or the other, but not both, while Mr.  Kaldor first accepted then rejected.
     There also could be someone who first rejected, then decided that, if looked at more carefully, there could be a little sense to it. Not much, some. Why else would anyone have believed in it?
     Let us now read through the 1933 paper (“The Determinateness…”) in order to get, only, sentence six. This reads:

     For in any analytical study, forces whose laws of operation are known must clearly be separated from others in whose behavior [things are, Um—not so well known] and the only satisfactory way to detect and account for the influence of the latter [what he said, above, which I chose to omit, was, actually, “uniform principles” and he is en-quoting these words himself] in the real world is by assuming them away and examining what events would be like in their absence. It is, moreover, only by employing this “method of difference” [as before: the author is en-quoting his own wording] that we can hope gradually to extend the range of phenomena over which we can make generalisations.
     The excerpt, which I have slightly tampered with, provides us with perhaps a good example of how the more intelligent sort of neo-classical practitioner thinks (in – for example – the thirties).
     How are these “forces of operation” to be “known”? What does he mean by “known”? I would like to point out, firstly, that they are known to the economist. And what does Kaldor mean by forces (I will choose to accept “forces” here) whose laws are “known”? I want to discuss this sentence here as one which seems to invite an enormous, devastating criticism. How are these bits (or laws) known? When the “forces whose laws of operation are known [or not]” are divided into the two categories Kaldor gives (this known and the unknown stuff echoes Donald Rumsfeld, for reasons I don't know anything about), even without considering them we are able to see that both of the two categories are to be known strictly through self-referential, internal exercises. The problem is that, first, some of these laws – those that are not known – are omitted. We can accept that. Fine, then, the only way for us is to omit them. But what are left are things that are known cerebrally. Since that is so, both categories are self-referential, both are merely internal, cerebral, self-generated “knowledge.” It is all happening inside the head.
     The “static,” the “a-priori,” the cerebral—this constitutes everything he calls “known.” The division into two parts is thus in my view absurd. The “forces...are known”, claims Kaldor. Yes, but as a thought exercise. There is, he claims, a case where the “behavior of things” (my own en-quotation) is not known. In the other case, they are. This exists as a contrast to the other case. In the latter case, “forces” or “laws” are not known, they are to be assumed away because of this. So it is the case that where “there is no ‘uniform principle’” we are justified to assume these things away and then what is left are those “forces,” or “laws,” that are known. We have assumed away some things that are not known, but that is alright (we could say valid, or scientific) since it is the case that “forces whose laws of operation” are known are taken into consideration (and this has to be done, I suppose, in a most scientific manner).
     When we ask how they were known, we see they were known only by the mind. Yet this same mind also assumed away other phenomena. Or “forces,” which could mean many things, really, including “behaviors,” which word may not have been so commonplace in the thirties, compared to today, in psychology and economics, among other places. So, the objection here is that what is “known” (according to Kaldor’s view as of the 1930s) are the behaviors—presumably something like buying and selling. These are known by mind, by the mind—only that. There is a backstory here. We are looking at something. Some persons looked at some others persons who were engaged in buying and selling practices—trade, in other words. That person then calls himself an economist. He says that he (or she--however I do not see the females who “know” these things) knows things. That’s great; but, what? That which she “knows” turns out to be assumptions. Everything comes from the same place—the mind.
     How about turning it around? Wouldn’t it be much better to assert rather that we do not know exactly what is going on in this buying/selling world? This world we call, for lack of a better name, economics. That is not what they do. These men say: “we do know.”
     This is the kind of assertion they make, but when we look? Then it is clear that nothing is really known. It is assumption after assumption, case after case of merely listing possible realities or assumptions. What is actually known is much less than Kaldor’s use of the word “known” would seem to indicate. From observation of the world, what we know, is this. Persons are in fact buying and selling things to each other. They sell a lot of things. They almost always use money, too, so that not only are goods transferred. Also money is. Many times the monies used are obtained on credit, and this is where bankers come into it. More we do not know. We do not know that (these are Kaldor’s examples, numerically listed to the number of six, in this first piece) “a closed economy” can be assumed, or that there is “perfect knowledge,” or that there is “perfect competition.” (Kaldor also has something called “direct exchange,” which seems to be another conceptual necessity to make all of this stuff function properly.) Then he adds a fifth and sixth consideration as regards problems involving time, and concludes by saying “these assumptions we may thus regard as the ‘accepted framework’ of static theory…” (We should note another self-en-quotation.) He then adds that in the case where there are those who (even in the thirties) contest this framework, they do so in a particular way. (It has to do with the word “determinateness,” b.t.w., where, once again, even the very word “determinateness” apparently needs to be self-en-quoted.) This seems to be Kaldor’s practice (of putting things in quote markings), but I want to say that he is a very thorough person and clearly has given much thought and study to these things that he at one time accepted, later rejects.

So, once again, my problem with Kaldor’s presentation is that everything is determined by the mind, including both the category of what laws by which forces act or what forces we are able to know, and that other set of complimentary forces or laws or behaviors we don't know. The result is we have no way to say where one is to make the cut. Yet such a division into two categories is defended, this in the opening paragraph of “introduction to volume one.” There is nothing, or almost nothing, that is “known” or else on the other hand somehow suffers from something like “no uniform principle,” which allows us to leave those factors off since both are uniform. This is because both come from the mind, nowhere else. And if there are some phenomena of economics that are validly known, it is just these general everyday observations. All businessmen know about that. In fact, all of the fancier things (that only the economist knows) like “forces,” factors, laws, behaviors and whatever are creations of mind. And since these are cerebral only, my argument is that none can be “known” any more than any other. There is nothing definitively known at all—nothing to base a science on.
     I feel that, properly understood, this is very important refutation of ideas within the area of economics. The “known” forces are just as mysterious as the “unknown” forces, and everything collapses with that observation. His confidence in “forces whose laws of operation are known” is clearly mistaken. We see it when we ask about how they are “known” at all.

For in any analytical study, forces whose laws of operation are known must clearly be separated from others in whose behavior no such “uniform principles” have yet been detected; and the only satisfactory way to detect and account for the influence of the latter in the real world is by assuming them away and examining what events would be like in their absence.


Note: Kaldor, “essays on value and distribution,” second ed; Holmes and Meier Publishers, Inc; New York; 1982