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March 04, 2008

Comments

Ethan

Man, you are just begging for a Gavin Kennedy lambasting.

Keith

I think we underestimate the social value of individualism. We've seen that we as a society achieve high collective intelligence when we have mechanisms that incentivize individuals to become informed and then truthfully report their beliefs.

In most cases, social pressures, such as the desire to be liked, or any political process (even the democratic one) undercut the incentive and desire to gather information and report one's own beliefs. That then lowers our collective inteliigence.

In short, we may each have a Kantian moral obligation to be an almost Randian-syle individualist.

jose carlos

nice, smith was not a libertarian, what a heresy! but most economic analysts seem to be unaware of moral sentiments and that smith wrote something about it. a lot has to do with having ultra-rational, ultra-selfish homo-economicus as the representative agent of mainstream economic models. that may well be of use for some analytical purposes, but has driven many generations to the naive pseudo-science of ex-post ultra-selfish rationalization of social phenomena.

dubsizzle

Not only should economists read the Theory of Moral Sentiments, they should also read the Wealth of the Nations. So many seem unaware of Smith's nuanced views: need for progressive taxation (yes, it is all there), and government provided public goods, his concern about market failures and the plight poor. Seriously.

Armando

Economics can damage whole countries.
Take Italy, the country where I live.
Economics has replaced politics.
Next month, italians go to vote for two coalitions, a right one and a left one. Both have the same program, a program written by the same economists from the same Universities.
Obviously, is a right program.
Economists, in Italy, look at the United States as the "promise land".
But when you want to turn poeple with a specific culture, history and traditions in something of radically different, you destroy the basis upon which the country has built is achievements.
Italy is a country more unequally, more impoverished, more discouraged than 10 years ago. (With regard to inequality, poverty and inflation rate, economists sistematically deny what millions people lament for every day.)

(I apologize for my english. I would explain more in detail the problem, but this is beyond my capabilities.)

Armando

Economics can damage whole countries.
Take Italy, the country where I live.
Economics has replaced politics.
Next month, italians go to vote for two coalitions, a right one and a left one. Both have the same program, a program written by the same economists from the same Universities.
Obviously, is a right program.
Economists, in Italy, look at the United States as the "promise land".
But when you want to turn poeple with a specific culture, history and traditions in something of radically different, you destroy the basis upon which the country has built is achievements.
Italy is a country more unequally, more impoverished, more discouraged than 10 years ago. (With regard to inequality, poverty and inflation rate, economists sistematically deny what millions people lament for every day.)

(I apologize for my english. I would explain more in detail the problem, but this is beyond my capabilities.)

Ken Houghton

The short case is easy to make; its the implications of the nuances that would make the total argument appear "non-economic."

wjd123

Since you can't have a community without disipline and ideals, this remark I wrote last week in response to an article that regionalism was a danger to the WTO fits here.

All societies have underlying moralities. It's the glue that holds societies together. Free trade disrupts this morality in a mindless way. It amounts to intervention for change without any thought to how intervention will effect social morality or if social morality will be able to adjust to the intervention. The thoughtful way to freer trade is to bring values and trade along together. This is the way of the EU.

The mindless way to advance free trade is to open up nations to free trade without a thought to how it will effect the underlying morality which underpins society.

This separation of trade from values presents a problem for societies. How much buffeting can a society take with the mindless intervention of free trade? Can it find solutions to this ignorant assault on its underlying morality. Can it restore anew an underlying social structure that works. I see the NAFTA's approach to free trade in light of these questions as dangerous.

Once corporations are faced with an environment of free trade they are pushed by the pressures of competition to intervene into the social morality of societies for their own purposes. This intervention cross pollinates into different social moralities, some interventions bear fruit some doesn't. But from the point of view of understanding the underlying social morality of a society in which they are intervening or how well prepared a society is to cope with the consequence of the intervention it's a shot in the dark for corporations.

When companies come in to extract the mineral wealth of a country it sometimes happens that they sets off a political battle for power that evolves into civil war, genocide, and children as soldiers. The companies are focuses on the most efficient way to extract the minerals and not trades effects on society.

Who is in charge of saying that such methods would have dire consequences for the society. For instance, conflict theorist believe that values are economically based so for them shouldn't it stand to reason that great economic change will greatly stress existing social morality. Can theorist stand back as the society disintegrates and say no one could have known. Might it be more correct to say that they never bothered to understand.

Aren't free trade agreements like NAFTA where free trade is opened up among countries with great differences in their political economies likely to lead to some dire consequences because the right to intervene came before anyone bothered to look if the social morality which underlies these diverse political economies is able to handle the strain.

The EU approach to free trade looks at diverse values. It prepares the way so societies can handle the strain.

Since my critique is value based, I don't think the opposite of regionalism is trade under the auspices of the WTO. An example of this can be illustrated in the WTO's function in deciding on trade patterns in the banana war between the United States and the EU.

Let's say hypothetically that a shift in trade would cause great strain on the societies who traditionally supplied the EU with its bananas. And let's say the EU government understands this and feels that it is worth while to pay a higher price for its bananas in order not to allow this to happen. None of the EU's understanding goes into the decision made by the WTO.

For the WTO the decision revolves around the question of whether the EU is putting up an unfair trade barrier. In a values critique the WTO also represents the mindless intervention of trade.

For me free trade done the NAFTA way and the WTO way is the ignorant way because social morality gets lost in the onslaught of free trade. As such they are both dangers to society.

Ethan F

The problem with neoclassical economic theory (or any social theory for that matter) is that the theory itself comes to affect the reality the theory is purported to explain. For example, there is a large literature on how learning neoclassical economics makes students and professors more self-interested (see Robert H. Frank et al.'s 1993 article in the Journal of Economic Perspectives for an introduction to this debate).

K.C.R.

The problem I have with these critiques is the vagueness of their recommendations, many of these books follow a similar track: nine or ten chapters of thorough, trenchant critique of the market and it's various failures, followed by a final chapter full of meek, wavering suggestions for "some form of" alternative economic organisation, usually involving ambiguous and inadequately defined concepts such as "some form of" community self-organisation, "some form of" fair distribution of goods, "some form of" market but with "some form of" checks and balances in place, etc.

Motazz Soliman

I hope not to repeat on comments made thusfar, as I see that many insights can be gleaned from those already made. I would just like to add a few points, though.

I think a considerable part of the problem contributing to confusion over past economic/ political/social theory and practice is that ideas reached through social sciences in general are not adequate in and of themselves in explaining human behavior and in providing policy prescriptions.

For example, the classic economic liberalist approach (i.e. that free markets, unhindered, will ultimately lead to a level playing field where all benefit by completely unrestricted trade both domestically and internationally) has been refuted by failures of the free market to substantially uplift the poor and quite a no of proponents of free markets themselves have been involved in activity that could be labelled as unfair or double-standard.

On the other hand, theories and policy prescriptions founded as a reaction to free-market liberalism--such as the frameworks of structuralism and dependancy theory--that created programs like communism or import-substitution industrialization, have also proved quite disastrous and inadequate, and also failed to uplift the poor and underdeveloped and bring to par with the developed nations.

Certainly, there have been frameworks deemed more 'radical' than others, but the tendency to rely upon one strain of theories/ideas to explain and prescribe the "ideal" foundations of society truly brings out the fallacy of ideological deadlock/rigidity (whether in free-market capitalism or the various alternatives of economic development strategies pursued).

One of the fundamental aims of the various branches of social sciences is to provide for a systematic and organized study of collective and individual human behavior. And b/c such behavior is often complicated and both affect and are affected by complex factors, the fallacies of the mentioned rigidity can be (but are not always, unfortuanately) that clear. In defense of social science (I am a political scientist by training), perhaps then the problem is not so much social science (whether it be political science or economics, etc) as the way in which we (in collectivity and individuality) approach both the study of, and provision of recommendations for, human behavior and institutions that can seek equitable and decent improvement for all.

After all, economic and political activities take place everyday and in every moment, regardless of whether we choose to analyze it or not and whether we choose to offer recommendation for improvement or choose to ignore such endeavors. The problem may ultimately end up being (though it would be wise to caution against over-simplified generalities) the question: What is the right mix of market, the nation-state (government), and society (other, non-economic/non-political forces, such as culture/ values/ morality, etc)? This questiob may be especially crucial in the current wave of globalization that swept the world since the early 1990s, for this wave has had both "standardizing" / "homogenizing" and diversifying processes and tendencies.

paine

testimony of a guy
who's been
a communist stooge
for 35 years in and out of organized mischief of the marxoid kind
community vs market
is more wrong headed
then equity vs efficiency

society as it evolves
evolves its own
standards of community and equity
and as to markets
hey there are markets and there are markets

after what thousands of years
yee ole burgershaftenlich abolished slave markets
for crim sake
what more can a freedom loving puss head want then that out of a single on the fly
social formation

right now its
your anomie
is my new vogue

at any rate
after thiry years of
make way for privateering
capital markets
if they train wreck themselves
may wake up
to "no more mr thru pass "
type policy
yup
the right of way
capital express
might get abridged ...some

in this light even change comes in quanta

locus classicus
in cap markets

b4 john law
and after john law

self inflating bubbles
and other such paper towers
are vintage baby vintage

read :
'how i learned to stop
worrying
and love the capital markets '
by
cantillon jones
the rake of cambria

paine

btw
dani sir

now
his bradness
bluffington delongeurs
has named you

poli econ con
of the generation

what further laurels
remains worthy
of your noble pate

paine

what in hell
was the sudden capital quantum leap

here's the ny fed honcho's story

the leaper :
" the systems and practices that support the over-the-counter (OTC) derivatives market significantly lags that of securities markets and other mature markets. "

dreams of post leap traffic lights


"We need to move quickly to put in place a more integrated operational infrastructure that
supports all major OTC derivatives products,

is highly automated,

has robust operational resilience and risk management,

and is capable of handling very substantial growth in volumes. "

ooops err this
ain't in place already

cassandra cries

"train wreck "

dale

Habermas' Theory of Communicative Action provides some philosophical
perspective on the interplay between systemic sorts of social integration and the more cultural or relational- communicative forms of social integration. Along with an approach by which to make normative evaluations of the pathological sorts of systemic domination or colonization of the communicative realm.

jonathan hopkin

Armando does not, I think, accurately interpret the Italian debate on economic policy. Italy is, by most measures, the most hyper-regulated economy in Europe, and the suppression and manipulation of markets by both conservative and progressive interests is the central feature of Italian economic life. Moreover, this over-regulation has not produced progressive effects - Italy's Gini coefficient is one of the worst in Europe, close to the UK. Although blanket neoliberal reforms would not be a good idea, a dose of market competition could do lots of good, even from a progressive perspective (starting with a genuine liberalization of the media to undermine Berlusconi's control over information flows).

antonella

Hello i really like your weblog,i think it's very interesting....
Considering your extensive knowledge in the international business field,could you please help me in writing my report on the banana war??
I am finding it very hard..
I have been asked the following:
Critically evaluate the reasons put forward by the EU as to why it's trade policy on the imports of banana is discriminatory in favour of ACP at the expeses of Latin America and where relevant i would have to find eventual links with traditional economic theories... i 'd be very gratefull if you could help

thanks
Antonella

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