Future Economics Was Seen Before

Paul Krugman says in “New Thinking…”: “We’ve had a couple of centuries of economic thought at this point, and quite a few smart people doing the thinking.”

Excuse me: economics was named and conceptualized by Xenophon, 24 centuries ago. Differently from physics, that was practiced only partly and primitively, economics was already highly advanced, 25 centuries ago.

For example, the 200 trireme Athenian Navy that later defeated the monster Persian plutocracy was built, at huge ecological cost, with a public-private partnership system.

Adam Smith himself went to learn his stuff at the feet of French “physiocrats” who flourished 240 years ago (the head of that school was the top surgeon in France).

As I have argued, the sort of public-private government sponsored technologically progressing economy we need today was fully, and self-consciously, in command of France in 1600. Hence Henri IV’s slogan “workers ought to have a chicken in every pot”. A cursory inspection of history show that, from dams in Yemen, thousands of years ago, to the Roman army building roads, to Caesar’ draining the swamps to the construction of China or Europe’s canal systems in the Middle Ages, the biggest picture, in economics, is from the government.

At this point there is plenty of evidence that, in the USA, government disfunctionality is bringing the real economy down.

The main actors and agents in today’s economics originated in government. Look at, say lasers. They were made possible by Kastler’s discovery of Optical Pumping in the Normale Sup lab 100% financed by the French government.

More recently, the same lab, still funded 100% by the French government, found how to count photons, without destroying them (that was also rewarded with a Nobel). Nothing that interests private, for profit entrepreneurs, today, but, no doubt, one of the pillars of the future sci-fi economy.

Economics will continue to be dismal as long as we don’t focus on the scientific understanding of growth and innovation.

Imperial Rome went down because of a deliberate effort against elite innovation; leaving the field to be dominated by simple generals such as Diocletian… Instead of the top-notch intellectuals the best regimes throughout history surrounded themselves with.

In physics one studies, to start with, friction-less trains of mass zero, to teach basic dynamics. Similarly fans of economic theory as taught in USA schools say that economics is like other sciences: economics starts with simplified, basic formulas.

They opine that basic market theory assumes that goods are available as needed to be purchased by consumers with “perfect knowledge.” As one advances to higher-level classes, one learns the corrections for effect of advertising, imperfect knowledge, and externalities such as polluting air and water.

Nice. And that’s indeed what is taught as “economics” in the USA and all and any organization that advocates the economic system thriving in the USA (complete with a for-profit, “marketplace“, Obamacare).

But this is all wrong.

Reducing economics to the market’s inner guts, assumes a plutophile vision of economics. It assumes that economics is all about, and only about, the “free market”. But there is no such a thing. A market is never “free”. What looks “free” is actually government regulated. Even ‘deregulation’ is government regulated.

What looked like financial deregulation under Clinton was actually the regulation of providing the largest financial actors with a number of advantages on smaller actors and over the rest of the socioeconomy.  

Even more fundamentally, giant economies, such as the Inca empire, or (a large part of) Late Rome did without free market, and thrived. Economically (that Rome thrive economically until overrun by savages is a recent and surprising discovery in 21 C archeology).

Stalin’s “free-market”-free economy thrived enough to vanquish Hitler. Nazi economists were so sure of the superiority of their free market, they thought there was no way it would not take more than a few months to destroy the “command and control” USSR. That illusion did not survive contact with Soviet made and conceived T34 tanks. To add injury to insult, the Soviets were then able to out-produce the Nazi style free market.

The UK and the USA used a command and control economic model similar to the one used by the Soviets to out-produce the Nazis. Mass production concentrated on very few types, decided from above. The USA effort was headed by a young Canadian economist, Galbraith.

Nowadays, the People’s Republic of China’s economy, which uses a lot of command and control of the economy, has been persistently doing much better economically than the “free market” West.

So “economics” is a much larger subject than just what American economists call the “free market”.

That the biggest picture, in economics, is from the government is the perspective that eludes persistently American economists. In economy, God is not the market. God is the (hopefully democratic) government.

If the government is democratic, most people will profit from the economy beyond mere subsistence, and so more minds will partake in the society, making the civilization smarter. A virtuous circle of involvement.

And what economic science ought to guide the government? Not the free market, assuredly, as this is the creature of the government. The government needs to be guided by real, all-encompassing economic science.

What could be a proper foundation for the whole science of economics? Energy. Just as in physics. Just as what is desperately in need of regulation now. See fracking, and the just uncovered fact it’s about 50% of USA greenhouse emissions right now.

Of course that will tell Obama nothing: he is not really the guy governing right now. It’s rather the creature down below that is governing, a magma of a few thousands plutocrats with crocodilian aspirations. They govern the jungle that feed them, complete with economists perched on the highest branches, eying the scraps left by the kills they gorge on. 

***

Patrice Ayme

***

Henri IV used the word “laboureurs” (from the Roman word, laborare, to work). That, of course gave the English “laborers”, and “labor”. So, three centuries before Henry Ford, Henri argued that workers ought to be paid enough to be well fed. Something denied to 50 million citizens of the USA (many of them working, see preceding essay). Today.

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28 Responses to “Future Economics Was Seen Before”

  1. Paul Handover Says:

    The USA and the UK have a significant democratic deficit, as I write about tomorrow. It is producing social pressures that will eventually evolve into a world we can hardly imagine.

    • Patrice Ayme Says:

      Curiously, the UK has no demographic deficit anymore. People coming from all over have boosted the population. The old British stock (so to speak) has barely budged.

      Those new Brits, those emigrants, came from all over, attracted by Thatcher’s very active economy (very active for new entrants).

      Maybe the democratic deficit developed in part from that. Because the exact same phenomenon happened in the USA. In 35 years the USA has added about the size of the UK in population. It has been equal, proportionally, to the greatest flux of immigration in the USA, ever, but from a much higher base.

      Meanwhile the population of the old USA stock stayed stuck below 200 millions. As the USA ask whether people are “white” we know those went down in the last census.

      If some savage comes from a dictatorship, the USA, or the UK, feel like paradise, and the arcane nature of plutocracy is besides the point.

      I know some USA citizens whose English is so bad, I mostly talk to them in Spanish… (I am sure they can wait to “shop” through Obamacare’s “marketplace”, as they don’t even know it exists!)
      PA

      • Dominique Deux Says:

        “If some savage comes from a dictatorship, the USA, or the UK, feel like paradise,”

        Especially if said citizen feels encouraged to make full use of his new-found freedom to impose his dearly held views on family and neighborhood alike, in the name of community empowerment. Democracy? What for? There’s a reason they did not go to France.

        (that was your friendly arrogant batrachian, not a too frequent mood I’m happy to report).

        • gmax Says:

          There are even more sinister things to say. That deliberate strategy was used in Roman principate, with cataztrophic results

      • Paul Handover Says:

        My understanding of the phrase ‘democratic deficit’ appears to be different to yours. I’ll make myself clearer tomorrow and Tuesday.

        • Patrice Ayme Says:

          How come? Clearly we the people are consulted in Switzerland, not other countries. Anyway will read!

          From my Android phone on T-Mobile. The first nationwide 4G network.

  2. Old Geezer Pilot Says:

    The greatest problem, as I see it, is that the industries of the future require so few workers. Case in point – photography.

    Kodak once employed some 60,000 people. How many are employed by facebook?

    • Patrice Ayme Says:

      dear OGP: I don’t see this as a problem at all. OK, suppose we have perfect robots, like say in Elyseum. They talk, understand 100% on the first degree. So all vehicles are robotized, all cooking, maid service, household work, administrative stuff, even surgery, etc.
      What would be left?
      Well, all the creative stuff, including learning enough to decide the direction of the world, and pushing for those ideas in the next referendum.

      There is some of this already going on with robot assisted brain surgery: surgeons planned the operation, robot execute.

      Right now the robots are (mostly) not yet here, but the work has been sent overseas.
      PA

      • Dominique Deux Says:

        That was the essence of the book by Marx’ son-in-law, Lafarge, “Le Droit à la Paresse”, where he ridiculed the working class’s addiction to work and incessant clamoring for more of it, when it should have been aiming at less work and better livelihood through technological improvement.

        This did happen – but on a very limited scale, and only through that incessant, ill-mannered bickering over wages and working hours which makes poor entrepreneurs so bitter when in their cups.

        His father-in-law understood plutocracy and its suicidal instinctive greed better. Robots are its property and it ain’t giving anything away, never has, never will. Leisure in luxury for all can only result from extensive culling at the top.

      • Old Geezer Pilot Says:

        A 22 year old friend of mine is a foreman of a machine shop. There are 300 CNC mills on the floor; there are 3 foremen.

        50 years ago there would have been 300 machinists per shift.

        • Patrice Ayme Says:

          No doubt. Now one farmer, perched on one giant machine after another, can produce as much surplus food as 20,000 Middle Age farmers… I should say serfs.
          That’s progress. One man now can direct a ship as big as 1,000 Athenian triremes. And soon that one guy will be replaced by a robot. And a guy watching if the robots are doing a great job.
          One just has to find meaningful employment for today. The government has to.
          PA

  3. Patrice Ayme Says:

    [Some of the essay above appeared first as comments in the New York Times in Krugman’s blog; those comments got approved by many readers, and then removed, before too many could see them. Plutocracy at work. I sent what’s below to Paul Krugman.]

    Why were some of my long, serious, informed comments on “New Thinking…” allowed, approved by many readers, and subsequently removed?

    As Paul Krugman apparenly approved the comment initially, one can only guess that higher authority intervened. At least that’s what an other editor at the New York Times let me understand in a confidential communication.

    Several of my other comments were not published. Why is the New York Times censoring serious thinking?

    You really believe that, in the age of the Internet, censorship works? You really believe that, worldwide, the New York Times is not going to become famous for its censorship?
    PA

    • Poomakmak Says:

      poomakmak, tent.

      @Patrice. Unfortunately, censorship works. It most often works by omission, by pretending something was not said, written,expressed. It comes today before the fact, not so much after the fact. In academia, it’s endemic–Harvard publishes the childish work of a Neill Ferguson, but won’t touch more rigorous, analytic criticism of society/economy. cf. the writings of Bourdieu….

  4. Patrice Ayme Says:

    Plutocracy is the sado-masochist organization of human society. Plutocrats provides with the sadism, workers with the masochism.

  5. Patrice Ayme Says:

    Dominique: I was planning to write something on sleep, vacation, dreams, explaining that the lack thereof in the USA explains much of the madness.
    Madness? A judge recently stopped the California Very High Speed train project. A judge. He judged, in his madness, that, because the whole thing is not clearly financed at this point to completion, people ought not to be bothered by it.
    PA

  6. EugenR Says:

    Dear Patrice, the essence of market economy are.
    1. The sacredness of private ownership, (lately strongly damaged buy the publicly owned corporate managers and banksters, who changed the aim of the companies from profit to the owners to the profit to the self nominated managers).
    2. The existence of risk taking system, where every failure is punished and every success is priced. A permanent failure has to bring annihilation. (like in the case of Kodak mentioned above, that refused to reinvent itself, so was destined to be annihilated).
    3. Freely fluctuating product prices, that are too many times disturbed by subsidies initiated by political means.
    4. Reward for excellence and punishment to the failure.

    If to summarize the question what is the main difference between the economic entities run by government and the privately owned ones, the answer would be;
    1. While the first is financed by money collected as taxes and to establish and maintain its activity this money doesn’t have to generate high yield the second needs to attract privately owned financial resources and this money can be attracted only by higher yield and what apears to be as lower risk.
    2. If an entity run by government fails to attract sufficient demand for its product it still can continue its existence, while if the privately owned economic entity fails to attract sufficient demand, eventually it will perish.

    • Patrice Ayme Says:

      Dear Eugen: Interesting. You attract my attention on the fact that I should be clearer. My point of view seems to be misunderstood.
      There are different concepts one has to distinguish:

      1) State sponsored entreprises. Say the Soviets’most famous newspaper “Pravda” (truth). But the concept could also be extended to, say, the New York Times (also using censorship: the paper has been actively censoring me, and even trying to get rid of me, for more than ten years; and conveying government lies; not just about Obamacare, but about Iraq, more than ten years ago.)

      A state sponsored enterprise could also be the NSA, the CIA, or their agents: Google, Facebook, and the entire shadowy world of the SV. Not just Fannie may…

      Boeing, Airbus, are state sponsored.
      to be continued…

      PA

    • Dominique Deux Says:

      Dear Eugen, you fail to mention that the market economy as you describe it is a fairy tale. A fairy tale for adults, because it is obscene.

      In the real world, where are the rewards? Everywhere to be seen, to be sure. Wealth, power, better healthcare for the happy winners. Not, however, on the basis of personal achievement, but on the basis of inheritance, class, and (for the lesser breed such as for-sale economists) fawning and kowtowing.

      Where are the punishments? once again, everywhere to be seen, poverty, squalor, an early demise, aka social mass murder. Yet again, completely unrelated to personal skills or achievement. When was the last time a failed banker ended up on the dole? Whenever I read of the capitalist society as fair because it only rewards risk taking, I have to (a) groan and (b) ask: what risk? Who is at a risk – the investors, or the workers?

      I do believe in the market economy as a powerful engine for economic activity as a whole. So was slavery. Don’t sell it as the ultimate fairness graal. Like the explosive power in steam or gas, it has to be walled in, steered and fitted with brakes before it can be any use.

  7. pshakkottai Says:

    Hi Patrice: this is interesting in the age of robotics.
    “1. Most Americans work primarily to obtain dollars.
    2. Americans use dollars to acquire life necessities and indulgences.
    3. The U.S. government has the unlimited ability to create dollars.

    Put them together and you have the beginnings of a solution: The federal government should provide more dollars for life necessities and even indulgences, with less requirement for human labor.

    Yes, of course, if no one worked, nothing would be done and we’d all starve. But we’re not talking about no one working. We’re talking about working less, and enjoying life more.

    And yes, some people love their work. No problem; they can continue to work, if they can find it. And yes, some people may choose not to work at all. No problem; they can live the life non-work affords.

    Now for the reality of the majority: Given previous points #1, #2 and #3, we can consider how we might plan for the inevitable disemployment:

    1. Legally reduce the traditional 40 hour work week to 30 hours and less.
    2. Prevent hunger for lack of dollars. The government could provide for everyone’s basic food supplies by paying grocery stores to offer free milk, meat, fish and vegetables.
    3. Provide health care for everyone. The government could pay for 100% Medicare for every American of all ages.
    4. Keep people from suffering homelessness. The government to pay for home mortgages at a minimum level (Rather than “minimum wage,” we could have “minimum home mortgage,” where people could add dollars for more expensive homes. Or “minimum rent,” something akin to the government paying for hotel stays).
    5. Just as today we provide free education, grades 1-12, the government should provide free college and advanced degree education to every American.
    6. Begin with government-paid-for local, public transportation, then expand this by paying airlines and railroads for free national public transportation.

    We began this discussion with three facts. There is a fourth fact: Disemployment is the future. As winter follows fall, nothing will stop it.

    At first blush, some ideas may seem outlandish, if based on yesterday’s employment reality. But, disemployment already has begun. The coming years will continue to see less and less need for human labor. We can close our eyes to change, and follow the increasingly obsolete “full-employment” paradigm. Or we can begin to discuss ways to meet this challenge.

    Summer has ended. Fall has just begun. We can buy heavy clothing for winter – clothing which may seem outlandish based on yesterday’s warm reality – or we can ignore the occasional chilly breeze, and allow ourselves to freeze when the snow falls.

    Disemployment is not an “if.” It’s a “when” and the when is upon us. We can rail against the cold, or we can prepare. We should stop looking at unemployment as a problem to be solved, but rather as an eventuality and an opportunity to loosen the binds of obligatory labor.

    How would you make disemployment work? from
    http://mythfighter.com/2012/08/22/how-would-you-make-disemployment-work/

    • Patrice Ayme Says:

      Dear Partha: I agree with all your points. I agree that enough money ought to be created to support not just banks, or the economy, but also society.

      HOWEVER: This is not the ideology of the individuals Barack Obama or Nancy Pelosi, or Harry Reid, or Paul Krugman, or Jo Stiglitz, or all the individual commissars of the European Commission, or, Putin, or Xi, or more generally of all the Haves, well, have.

      They believe they deserve it, and the others don’t so that they can use their power, precisely, on those others.

      Get a big enough chimp cage, and observe, taking into account there is LESS sexual dimorphism in humans. That’s all what it is.
      PA

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