Finance capitalism and Marxism are both way passe’. Direct and Reciprocal Monetary Distributism intelligently and strategically implemented is the thirdness greater oneness of that obsessively contentious duality. Steve Hummel 02/02/2020
MC: The flaw in your geology as an exemplar Geoff is that for decades Alfred Wegner’s theory of Continental Drift was ignored despite the overwhelming evidence in it’s favor. So science alone, facts and even evidence alone, doesn’t even sway the institutional and historical inertia of a given culture’s scientists. Specifically the American response and it’s intransigence compared to European response.
Science cannot solve the value crisis the roots of which are historical and rooted in political power and cultural predjudices and out-right ignorance.
Without a certain degree of moral and ethical (and ethics is philosophy, after all) maturity level within a culture science cannot really flourish. When respect for truth dies, when post-truth alt-fact comes to hold equal footing with sound science, a civilizational decline is inevitable. Another dark ages is a very real possibility.
Just look at the United States right now for proof that decline of culture, historical awareness , morality, and philosophy of ethics.
Me: What the hell are you always slamming me for. You completely agree with the philosophy I’ve been advocating here for years. Yes, I am evangelical about what I consider the new monetary and financial paradigm, but not without good empirical and philosophical reason. Hence I’m confident, not arrogant, impatient, yes, because there is a rational end to patience especially when survival may be in the balance.
We’re right where we need to be, we just have to stand in the light of the obvious. When all of the leading heterodox reforms are about money and finance that’s a glaring indicator that what economics needs is to find the paradigm there.
KZ: “Our approach to causation needs to change. Causation is not a thing. It is a story. A story that explains within the framework of a specific culture how events or actors relate to one another, and how both relate to human culture and society.”
Me: Yes, parables/stories are the tool of wisdom which is precisely what we need in economics and in the entirety of our lives.
KZ: “A believable story we can share. But this “believable” story is still part of complex events. Complexity makes identifying causality in a predictive way impossible.”
Me: Time and space will always make PERFECT predictability impossible, but the wisdom of grace as in the integration of the discern-able truths in opposites is pretty damned predictive, and undoes any obsessive need for perfection. Perhaps god or the computer programmer who created the cosmos set it up this way….so we wouldn’t become so titanic-ally bored by perfect predictability.
Me: Public banks that require PRIVATE collateralization are public/private entities and so remain within the neo-classical “loanable funds”mindset. That mindset is a ruse because private banks loan first and look for reserves later and are always backed by the central bank in a pinch anyway. In other words the central bank is the handmaiden of the private banks. Only when we have a publicly administered national banking system, the central bank and government are harmonized with the public interest as the goal and private capitalization requires good business plans to prevent the Chinese “throw money at it and put the malinvestment in the central bank’s safe” sloppy process.
Me: That is a bold effort. Obrador had best watch his back. However it still assumes that money is the primary cause of “monetary” inflation when it’s real causes are the smallish cost inflationary nature of the economy and the lack a well crafted alternative to systemic austerity. Why is the latter not there? Because it lacks the insight of the reality inverting/paradigm changing effect of a high percentage discount/rebate price and monetary policy at the point of retail sale. That insight is (and reflects) the simple yet powerful reality inversion of the positions of the earth and the sun of the Copernican Cosmological paradigm change….applied to economics.
JR: Can’t let you get away with that, mate!
EB: Interesting. How DO you determine the size of the gap?
Me: Ellen, The size of the gap numerically….is irrelevant. To attempt to precisely quantify it and then simply fill it shows that one is stuck in the mindset of dynamic stochastic (statistical) general equilibrium…which Steve Keen amongst others have invalidated. Why do all heterodox economists still fear inflation? Because they haven’t recognized the ending/summing/turning point that is retail sale, and the fact that a high percentage discount/rebate price and monetary policy at that point could totally invert creeping inflation into beneficial deflation and simultaneously resolve individual income scarcity and systemic austerity as well. Heterodox economists want and recognize that you have to have deficit/disequilibrium spending or the economy goes into recession. They just haven’t glimpsed the new paradigm and its most significant and strategic policy.
The 50% discount/rebate policy at retail sale is the the telescope, the ellipse and, reflectively, the inversion of the earth and the sun of the new monetary, financial and so economic paradigm.
JR: Steve, too much money chasing too few goods is an exceedingly dangerous risk and if we went silly and caused it, that would damn monetary reforn for ever.
Pointing out, as I and others have done many times, that it is unlikely that it occurs in our present tight system doexn’t mean the sky is the limit.
Me: As I stated before even in the inflationary housing bubble in the run up before 2008 never came close to be 50% per annum. The discount policy and tax regime to discourage inflation, tax incentives to encourage competition and as a last resort if enterprise refuses to abide by the beneficial rules and new policy regime, loss of their rebate privileges are good and effective regulations. “Sellers set their prices according to what the market will bear” doesn’t cut it ethically or if we’re serious about economic health and stability. Isn’t that the proper attitude for reformers, or should the libertarian irrational market worshipping generalization be allowed to plague us for another 5000 years? And what markets? We have confused chaos for freedom, and lawlessness consequently rules.
JR: And, Steve, the rise in debt required to fill almost all of the “gap” seldom got above 5 to 7% of GDP.
Me: An awakening is necessary to right economics alright. But awakenings don’t occur unless you discover and analyze the aspect of the economy that holds all of the de-stabilizing emergent qualities of economics in place. And that of course is the money system and its paradigm of Debt Only.
Don’t take my word for it, take the words of Steve Keen who said that the reason neo-classicals won’t recognize that its a monetary economy not a veil over barter is “because if they did they’d have to admit that the money system destabilizes the economy.” And that’s just one small but utterly important insight short of locating the essence of the real problem which is the monopolistic monetary and financial paradigm of Debt ONLY. That crashing realization is the inversion of the positions of the earth and the sun….of economics.
RL: No paradigm has been established in economics, even its just simplification, without merit.
Me: In the first place the necessary new paradigm is in money and finance. This blog hasn’t even isolated that fact, that rather obvious fact, despite the fact that supposed contributors here like Steve Keen, Michael Hudson, Edward Fullbrook, Warren Mosler and Randall Wray etc. have shown that Minsky’s FINANCIAL Instability Hypothesis, FINANCIAL Parasitism and Modern MONETARY Theory are the major and most relevant aspects of the ECONOMIC problem.
Only when the new tool/new insight that resolves the problematic areas in the old/current paradigm is discovered, honestly confronted and accepted will that new single concept ….clearly be the change necessary in economics.
The inverse of the old buddhist saying still applies: The 5000 year old journey ends with the CORRECT final step.