Tag Archives: economics

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John Maynard Keynes’ post-capitalist vision

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With the recent economic troubles many commentators have brought up the economic ideas of John Maynard Keynes with regard to fiscal stimulus to avert or ameliorate the effects of a recession.

One of the most interesting comments I’ve read talks about Keynes’ attitude to capitalism in general, from John Nalsh in The Times, is a reference to an essay entitled Economic Possibilities for Our Grandchildren in which he predicted:

The strenuous purposeful money-makers may carry all of us along with them into the lap of economic abundance. But it will be those peoples, who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.

This is a brilliant point. Keynes is basically saying that capitalism is necessary to create wealth – but it is not the be all and end all of human existence. Consuming and speculating is a means to an end.

The aim of capitalism is in the long run to make capitalism irrelevant. Once everyone on the planet has a high standard of living then we can all get on with other things.

[essay available here, via The Times][image from Jacob Bøtter on flickr]

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Yanking on the Long Tail

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Ring-tailed lemurChris Anderson’s ‘Long Tail‘ theory of online economics gained traction with great rapidity, but gathered its fair share of detractors along the way. Hence when a group of economists examined some different data and found a different distribution, there was much snarking:

This really isn’t the upbeat fairy tale message Anderson has spent four years selling on the conference circuit. However, as he took his “message” to Davos and beyond, the Long Tail has gradually developed into a ‘Policy Based Evidence Making’.

Ouch. Anderson’s not giving up just yet, though:

Unfortunately, Page didn’t send me the data or reveal its source, so we may not be able to answer these questions. He’s a good economist, so I’m sure his analysis is excellent. But without knowing where the data came from, we really have no way of knowing whether he’s discovered anything about music demand broadly, or has just been reminded once again that some music markets, such as mobile, don’t work very well.

Anderson also points to a post at Hitwise which suggests that – in the business of search, at least – the Long Tail is alive and well.

So, is the future of business in “selling less of more”? Who knows – as with most predictions about the future, those of us who aren’t economists will just have to wait and see. [image by benoutram]

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The Fourth Republic and the future of America

A fascinating article at Salon.com on whether the election of Barack Obama represents the beginning of a new segment of American history, within the context of the Three Republics model:

George W. Bush was not only the final president of the Jeffersonian backlash period of Roosevelt’s Third Republic, but the last president of the 1932-2004 Third Republic itself. The final president of a republic tends to be a failed, despised figure.

The First Republic, which began with George Washington, ended with James Buchanan, a hapless president who refused to act as the South seceded after Lincoln’s election.

The Second Republic, which began with Abraham Lincoln, ended with the well-meaning but reviled and ineffectual Herbert Hoover.

The Third Republic, founded by Franklin Roosevelt, came to a miserable end under the pathetic George W. Bush.

Unlike most of the hyperbolic editorials I’ve read on Obama’s victory this one gives a technological and economic historical context:

…what causes these cycles of reform and backlash in American politics? I believe they are linked indirectly to stages of technological and economic development.

Lincoln’s Second American Republic marked a transition from an agrarian economy to one based on the technologies of the first industrial revolution — coal-fired steam engines and railroads.

Roosevelt’s Third American Republic was built with the tools of the second industrial revolution — electricity and internal combustion engines. It remains to be seen what energy sources — nuclear? Solar? Clean coal? — and what technologies — nanotechnology? Photonics? Biotech– will be the basis of the next American economy.

This presents an interesting historical framework to the United States. As to whether it’s true, only time will tell.

[via Boing Boing][image from zaphodsotherhead on flickr]

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American lifestyle must change, says neuroscientist

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According to neuroscientist Peter Whybrow, head honcho of the Semel Institute for Neuroscience and Behavior at UCLA the concept of the American DreamTM is a “biological impossibility.” From the Wired article:

“We’ve been taught, especially in America, that happiness will be at the end of some sort of material road, where we have lots and lots of things that we want,” said Whybrow

…

Our built-in dopamine-reward system makes instant gratification highly desirable, and the future difficult to balance with the present. This worked fine on the savanna, said Whybrow, but not the suburbs: We gorge on fatty foods and use credit cards to buy luxuries we can’t actually afford. And then, overworked, underslept and overdrawn, we find ourselves anxious and depressed.

This seems to be related to the newly-emerging discipline of behavioural economics, as pioneered by Richard Thaler and others. Here is a good introduction to behavioural economics on Edge.org.

Behavioural economics seem to reflect the fact that economists are coming round to the intuitively obvious idea that human beings really are not super-intelligent, near-psychopathic, wholly self-interested beings like homo economicus.

[image from Orin Optiglot on flickr]

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Nobel laureate Paul Krugman discusses interstellar trade

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Recent recipient of the Nobel Memorial Prize in Economics Paul Krugman wrote a humorous academic paper on interstellar trade back in 1978:

This paper extends interplanetary trade to an interstellar setting. It is chiefly concerned with the following question: how should interest charges on goods in transit be computed when the goods travel at close to the speed of light?

This is a problem because the time taken in transit will appear less to an observer travelling with the goods than to a stationary observer. A solution is provided from economic theory, and two useless but true theorems are proved.

…

It should be noted that, while the subject of this paper is silly, the analysis actually does make sense.

This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.

Beautiful. The paper itself is full of zingers and whatnot, and is well worth a read.

[via the FT and David Friedman’s blog][image from Gaetan Lee on flickr]