The End of Neoliberalism?
Here’s a talk I gave at a conference on Economics and Democracy with an MP3 audio and a PDF of the presentation The End of Economic Liberalism and endofeconomicliberalism0812. There may be a paper in due course.
Tuesday 16 Dec 2008 | John | Economics - general
Thank you for a very informative view on this topic–I realize you gave this talk some time ago, but I have only just come across it in the context of sustainability—so these comments may have been covered in other contexts that I don’t know about. Also, I hope my comments don’t seem too abrupt, but I have tried for brevity.
It seems to me, as a scientist and a technologist, that any area of knowledge has three ways of being established. The first is historical—we can look at the past and see, in retrospect what happened—in science an example would be evolution. The second is empirical, we can examine the present with telescopes and microscopes and deduce how it is operating—a lot of science falls into this category.
The third way is often not understood outside of physics—we can establish equations, that make UNEXPECTED predictions, and then verify them. This then leads us to believe that we can predict other things about the future, using the same equations. In some cases, such as quantum mechanics, this later manner provides astonishing predictive power.
Now it seems to me, that actually all knowledge falls into these categories—I admit my bias and ignorance of other areas of knowledge. In this context, I found your discussion of RISK extremely helpful. But I also found it ultimately frustrating that you didn’t cover, for example, the role of the Japan “carry” trade (and now the Chinese “carry” trade) as well. It seems to me that this was highly relevant in servicing the public and private debt established in the United States, and understanding why they would lend at effectively zero interest is important (for such an offer will seldom be refused)?
You also didn’t cover why Europeans were, and are, as implicated in (ultimately) stupid decisions—or why the USA was able to change its tax laws so that the richest few percent of people pay little to no tax, while the vast part of the population was either not better of, or was worse of, in the period 1980 to the present—but the poorest certainly are at more risk from systems failures, and poorer.
Does this mean that economics has no reliable mathematics, that can predict with reasonable accuracy the future (or range of futures) resulting from present decisions?
This question is of course of enormous importance in studying the consequences of actions taken to mitigate climate change, and establish a sustainable future.
The question is also of enormous importance to the ordinary worker, in deciding if their employment is threatened by certain kinds of economic decision making—as they say, the chook is involved but the pig is committed when making bacon and eggs.
But the question ultimately strikes at the questions of regulation. If we CANT predict the future with any kind of confidence, we are driving through the rear vision mirror—and that leads to simple minded linear extrapolation, we crash at the next corner.
In this very non-linear world, obviously we need to live with the degree of our ignorance, such as we have in climate change, and to manage RISK in that context—managing risk does not mean eliminating it but it is probably the safest thing to do.
However, politicians don’t (usually) understand mathematics, or risk, or control theory, or epistemology—but it does appear that they don’t even have the ability to delegate. My guess however is that we may be missing the point that 10% of the GDP is spent on “marketing” in all rich countries—and real estate agents and financial planners are as big in this area as anybody else—can you really regulate against stupidity and greed when “if it seems too good to be true, it is”?
Republicans banned leaded petrol, CFC’s in fridges, and acid rain. There were lots of screams about the economic consequences, but it was nice to save the kids, the ozone layer and most of the statues (in that order). Right now it would be nice to save some of the biosphere: isn’t the simple answer that Political gradualism won’t do that?
—but it does appear that they don’t even have the ability to delegate. My guess however is that we may be missing the point that 10% of the GDP is spent on “marketing” in all rich countries—and real estate agents and financial planners are as big in this area as anybody else—can you really regulate against stupidity and greed when “if it seems too good to be true, it is”? Yes!!
thanks for web pages..