John Quiggin
There is, though, one way in which the current Great Recession/Lesser Depression provides a sharp test of a critical proposition in economics. All forms of classical economics involve, in one form or another, the claim that the causes of unemployment are to be found in labour markets, and not in macroeconomic variables such as the level of aggregate demand. That’s equally true of the Say’s Law version of classical economics criticized by Keynes, the New Classical macroeconomics of Robert Lucas and the attempts by Real Business Cycle theorists like Kydland and Prescott to explain cyclical fluctuations in terms of labor market shocks.
The crucial problem for all these theories is that labor markets and the associated institutions operate mainly at the national level. Even within the EU, different countries have very different labor markets. So, it is essentially impossible for labor markets in many different countries to move together, except as the result of macroeconomic influences operating at an international level[1]. That means that the occurrence of a sharp and sustained increase in unemployment, taking place in many countries at once, is inconsistent with classical economics.
This point seems trivially obvious, but as far as I can tell hasn’t been made, or at least not clearly. Once it’s conceded, it seems impossible to avoid a view of the world that is basically Keynesian in its analysis of the macroeconomy. It is possible to hold such a view and reject Keynesian policies on pragmatic grounds, as in Friedman’s critique of ‘fine-tuning’. But the longer and deeper the recession the harder it is to sustain this view.
lunes, 30 de abril de 2012
domingo, 29 de abril de 2012
sábado, 28 de abril de 2012
viernes, 27 de abril de 2012
Crítica a las políticas de Bernanke
Debate
Brad Delong aca y aca. Daniel Kuehn comenta
Tim Duy
Is higher inflation really the answer?:
A lot of people, including those who favor NGDP targeting, want the Fed to raise the rate of inflation; at least, temporarily. Three questions immediately come to mind: [1] What is the theoretical mechanism linking economic prosperity to the rate at which nominal prices rise; [2] Exactly how is the Fed, given the tools at its disposal, supposed to generate higher inflation under current economic circumstances; and [3] What is the evidence to support the belief that more inflation will reduce unemployment (or increase real GDP)?
Brad DeLong vs James Hamilton. Scott Sumner critica a Hamilton. Opinion de Bill Woolsey. James Hamilton responde
Is higher inflation really the answer?:
A lot of people, including those who favor NGDP targeting, want the Fed to raise the rate of inflation; at least, temporarily. Three questions immediately come to mind: [1] What is the theoretical mechanism linking economic prosperity to the rate at which nominal prices rise; [2] Exactly how is the Fed, given the tools at its disposal, supposed to generate higher inflation under current economic circumstances; and [3] What is the evidence to support the belief that more inflation will reduce unemployment (or increase real GDP)?
Brad DeLong vs James Hamilton. Scott Sumner critica a Hamilton. Opinion de Bill Woolsey. James Hamilton responde
jueves, 26 de abril de 2012
Why does Uncle Sam borrow?
Aca
"I wish to make a radical suggestion: Public borrowing is an outdated practice, and we could dispense with it entirely. Borrowing by the public treasury and the accumulation of government debt obligations are legacies of the era that preceded the development of modern fiat currency, an era when governments were primarily users of traditional means of payment that lay outside their control, and not the producers and issuers of the primary means of payment."
Cost of food as catalyst for change cannot be ignored
Aca
"One of the elements often overlooked is the heavy reliance on both energy and water in the production and availability of food. Food production is largely agriculture – which requires land, energy, water, and chemicals for fertilizer. Food availability, on the other hand, encompasses ports and shipping, rail systems, trucking, refrigeration, warehousing, storage, supermarkets, packaging (more chemicals), transporting consumers to and from markets, home refrigeration and, particularly in developed countries, a huge amount of waste disposal.
The movement of food from farm to market to shopper is a major consumer of energy but those energy costs are not captured in the price of the food on our shelves. As we run out of arable land this will change, prices will rise and cities must become part of the solution."
miércoles, 25 de abril de 2012
martes, 24 de abril de 2012
domingo, 22 de abril de 2012
viernes, 20 de abril de 2012
jueves, 19 de abril de 2012
miércoles, 18 de abril de 2012
martes, 17 de abril de 2012
lunes, 16 de abril de 2012
sábado, 14 de abril de 2012
viernes, 13 de abril de 2012
Prices and quantities
Sobre teoría neoclásica
"As I discussed before, in particular with respect to capital, this approach (supply and demand or marginalist), which contrasts with the surplus approach, has serious problems. Even if we dismiss, for simplicity sake, the subjective part (about preferences) and concentrate just on supply conditions, the difficulties are insurmountable. Producers only supply more at higher prices, which means that they must encounter increasing costs (diminishing returns). It cannot be the case that they are only willing to supply more at higher prices (higher remuneration) even if costs are not higher, since if one producer obtained higher remuneration free entry of new producers (attracted by the higher remuneration) would imply that more would be produced. So the supply curve depends on diminshing returns.
And diminishing returns are a highly improbable proposition, as Sraffa argued back in the 1920s. Not many producers, if any, would tell you that they don’t produce more because their costs would go up (and that would reduce demand as prices get higher). Most simply would reply that, although they could produce more at the same price, they don’t have enough demand. But the diminishing returns fetish dominates the profession (I won’t say much about imperfect competition, but Franklin Serrano noted here that this would be related to barriers to entry).
In the surplus approach, that concerns itself with the way in which societies reproduce themselves (usually in an amplified scale and with accumulation), prices and quantities are treated separately. Since costs of production, for a given technology, seem to be independent from the quantity produced (i.e. the cost would be the same if you produced slightly more or less), then the quantity can be taken as given for the discussion of the determination of prices. It is well know that, in that case, prices depend on the technology, which must allow for reproduction (including of the labor force) and by the way in which the surplus (what is left over, above and beyond the needs of reproduction) between classes.
Be that as it may, I’m more interested in the macroeconomic implications of the mainstream views about prices and quantities. Since the late 1960s, these views have coalesced around the notion that, whereas there is a short run tradeoff between prices and quantities (the so-called Phillips Curve, PC), in the long run the tradeoff vanishes. Put simply, if you push demand too much (through fiscal and monetary policy), output would increase and unemployment fall (as per Okun’s Law: higher output implies lower unemployment) inflation would accelerate. In the long run, however, the economy is self-adjusted and output cannot be above the optimal level, so the only effect of the expansionary policies would be inflation (Friedman dixit).
By the way, the same (the mainstream loves symmetry) is true for deflation. Yes it may cause some problems, but the system returns to full employment, even in the face of contractionary policies (the Greek should not worry about contraction, because markets would produce full employment if they are allowed to work; hence, the need of labor market flexibility). In the long run contractionary policies only would affect prices. In sum, supply and demand would lead to the optimal price and quantity, so if you get off my market (cranky old neoclassical guy would say), and stop expanding demand, there would be no inflation.
The evidence for a natural rate or for a PC is incredibly weak. In order to argue that there is a natural rate, the mainstream has basically suggested that it moves around all the time. So in the 1980s the natural rate was higher (in the US), when the actual unemployment was higher, than in the 1990s (particularly towards the end of the decade), when the actual rate was also lower. The ad hoc nature of the solution is evident. They tell you that the natural (which they measure as an average of the actual) is the attractor of the actual rate, and not the reverse."
"As I discussed before, in particular with respect to capital, this approach (supply and demand or marginalist), which contrasts with the surplus approach, has serious problems. Even if we dismiss, for simplicity sake, the subjective part (about preferences) and concentrate just on supply conditions, the difficulties are insurmountable. Producers only supply more at higher prices, which means that they must encounter increasing costs (diminishing returns). It cannot be the case that they are only willing to supply more at higher prices (higher remuneration) even if costs are not higher, since if one producer obtained higher remuneration free entry of new producers (attracted by the higher remuneration) would imply that more would be produced. So the supply curve depends on diminshing returns.
And diminishing returns are a highly improbable proposition, as Sraffa argued back in the 1920s. Not many producers, if any, would tell you that they don’t produce more because their costs would go up (and that would reduce demand as prices get higher). Most simply would reply that, although they could produce more at the same price, they don’t have enough demand. But the diminishing returns fetish dominates the profession (I won’t say much about imperfect competition, but Franklin Serrano noted here that this would be related to barriers to entry).
In the surplus approach, that concerns itself with the way in which societies reproduce themselves (usually in an amplified scale and with accumulation), prices and quantities are treated separately. Since costs of production, for a given technology, seem to be independent from the quantity produced (i.e. the cost would be the same if you produced slightly more or less), then the quantity can be taken as given for the discussion of the determination of prices. It is well know that, in that case, prices depend on the technology, which must allow for reproduction (including of the labor force) and by the way in which the surplus (what is left over, above and beyond the needs of reproduction) between classes.
Be that as it may, I’m more interested in the macroeconomic implications of the mainstream views about prices and quantities. Since the late 1960s, these views have coalesced around the notion that, whereas there is a short run tradeoff between prices and quantities (the so-called Phillips Curve, PC), in the long run the tradeoff vanishes. Put simply, if you push demand too much (through fiscal and monetary policy), output would increase and unemployment fall (as per Okun’s Law: higher output implies lower unemployment) inflation would accelerate. In the long run, however, the economy is self-adjusted and output cannot be above the optimal level, so the only effect of the expansionary policies would be inflation (Friedman dixit).
By the way, the same (the mainstream loves symmetry) is true for deflation. Yes it may cause some problems, but the system returns to full employment, even in the face of contractionary policies (the Greek should not worry about contraction, because markets would produce full employment if they are allowed to work; hence, the need of labor market flexibility). In the long run contractionary policies only would affect prices. In sum, supply and demand would lead to the optimal price and quantity, so if you get off my market (cranky old neoclassical guy would say), and stop expanding demand, there would be no inflation.
The evidence for a natural rate or for a PC is incredibly weak. In order to argue that there is a natural rate, the mainstream has basically suggested that it moves around all the time. So in the 1980s the natural rate was higher (in the US), when the actual unemployment was higher, than in the 1990s (particularly towards the end of the decade), when the actual rate was also lower. The ad hoc nature of the solution is evident. They tell you that the natural (which they measure as an average of the actual) is the attractor of the actual rate, and not the reverse."
Europe needs to drop its resistance to non bank credit
Aca
The financial systems in the United States and Europe have long differed on an important aspect. In Europe, most of the credit flows through the banks. In the United States the bank channel is less dominant, and borrowers gain access to capital directly by issuing bonds or through “non-bank” intermediaries that do not take deposits and are not regulated as banks. An oft-quoted measure is that in Europe banks represent more than two-thirds of total credit, whereas in the United States the proportion is less than one-third. In the past few years of crisis, this difference has mattered decisively.
To begin with, the securitization of residential mortgages in the United States went wild in the mid-2000s and was the initial trigger of market turmoil in the summer of 2007. Many continental Europeans have concluded that their bank-based system was less risky or more virtuous. But the subprime securitization debacle, severe as it was, has been one part of a more complex story. Many European banks have made risk-management mistakes just as massive as the reviled originators of US securitization deals. Spanish or Irish banks anticipating a never-ending property boom, or failures such as Dexia in France and Belgium, Hypo Real Estate or WestLB in Germany, or RBS in the United Kingdom, are sad reminders that Europeans have no grounds to feel complacent about their own system.
The financial systems in the United States and Europe have long differed on an important aspect. In Europe, most of the credit flows through the banks. In the United States the bank channel is less dominant, and borrowers gain access to capital directly by issuing bonds or through “non-bank” intermediaries that do not take deposits and are not regulated as banks. An oft-quoted measure is that in Europe banks represent more than two-thirds of total credit, whereas in the United States the proportion is less than one-third. In the past few years of crisis, this difference has mattered decisively.
To begin with, the securitization of residential mortgages in the United States went wild in the mid-2000s and was the initial trigger of market turmoil in the summer of 2007. Many continental Europeans have concluded that their bank-based system was less risky or more virtuous. But the subprime securitization debacle, severe as it was, has been one part of a more complex story. Many European banks have made risk-management mistakes just as massive as the reviled originators of US securitization deals. Spanish or Irish banks anticipating a never-ending property boom, or failures such as Dexia in France and Belgium, Hypo Real Estate or WestLB in Germany, or RBS in the United Kingdom, are sad reminders that Europeans have no grounds to feel complacent about their own system.
jueves, 12 de abril de 2012
lunes, 9 de abril de 2012
Oferta y demanda de bonos del Tesoro
Noticia en Bloomberg: Record Treasury Demand Keeps Yields Low as Supply Shrinks
"The net supply of Treasuries, or gross issuance minus the amount of maturing debt, will fall by an average of $32.5 billion a month this year, to $77.3 billion, which will leave an average of $99.4 billion of investable cash a month from maturing debt, up from $68.1 billion in 2011..."
The truth about deficits and interest rates:
"The net supply of Treasuries, or gross issuance minus the amount of maturing debt, will fall by an average of $32.5 billion a month this year, to $77.3 billion, which will leave an average of $99.4 billion of investable cash a month from maturing debt, up from $68.1 billion in 2011..."
The truth about deficits and interest rates:
"Our federal government spends money through the congressional authorization and presidential approval process set forth in the United States Constitution (more or less). It also collects tax revenues in ways approved by congress and the president. Spending injects money into the economy; taxes subtract money from the economy.
When the government’s budget is balanced, it is taxing the same amount as it is spending. The adding and subtracting cancel each other out, so spending just redirects the economy in directions the government favors.
When the government runs a budget surplus, it taxes more than it spends. The tax subtraction from the economy exceeds the spending addition. The government, in this case, is diminishing the amount of financial assets available to the economy.
When the government runs a budget deficit, it spends more than it taxes. The spending addition exceeds the taxing subtraction. The government is adding to the amount of financial assets available to the economy.
Our government issues debt to the public when it runs a budget deficit, issuing a dollar in bonds for every dollar it spends in excess of taxes collected. But because the bonds and the deficit spending are perfectly matched, there’s no net added demand on the economy’s financial resources."
domingo, 8 de abril de 2012
Brad DeLong sobre teorías de los ciclos
Aca. 'The general glut of Thomas Robert Malthus'
Todo lo sue ha venido diciendo Brad DeLong: This time is not different: Walter Bagehot and the persistent concerns of financial macroeconomics.
What Bagehot said
DeLong: We need a hegemony:
"From this perspective monetary policy is and always has been about supporting asset prices at a level that allows firms that ought to be expanding to obtain finance and expand profitably. And ever since 1825 the central bank has done this by, whenever it needs to, taking long-duration and risky assets into its own portfolio--and thus off of the stock that must be held by the private sector whose risk tolerance has collapsed."
Todo lo sue ha venido diciendo Brad DeLong: This time is not different: Walter Bagehot and the persistent concerns of financial macroeconomics.
What Bagehot said
DeLong: We need a hegemony:
"From this perspective monetary policy is and always has been about supporting asset prices at a level that allows firms that ought to be expanding to obtain finance and expand profitably. And ever since 1825 the central bank has done this by, whenever it needs to, taking long-duration and risky assets into its own portfolio--and thus off of the stock that must be held by the private sector whose risk tolerance has collapsed."
jueves, 5 de abril de 2012
The trend is the cycle
Aca
"The conclusion is that jobless recoveries are due entirely to jobless recoveries in routine occupations. In this group, employment never recovers beyond its trough level, nor does it come anywhere near its pre-recession peak. This is in stark contrast to earlier recessions."
"The conclusion is that jobless recoveries are due entirely to jobless recoveries in routine occupations. In this group, employment never recovers beyond its trough level, nor does it come anywhere near its pre-recession peak. This is in stark contrast to earlier recessions."
miércoles, 4 de abril de 2012
martes, 3 de abril de 2012
lunes, 2 de abril de 2012
Rawls and classical political economy
Aca
"Classical political economy was premised on the labor theory of value—the idea that there is a concrete, economically meaningful measure of value that guides economic organization. Further, there was the idea that the economic needs that individuals had were also concrete—the consumption goods that permitted life to proceed. These goods included items like food, clothing, shelter, medicines, and perhaps schooling. So economic activity, according to the classical economists, was about something objective.
Neoclassical economy, by contrast, rejected even the idea of utility as a concrete or objective human reality. Instead, modern economics bracketed the reality of needs in favor of a metaphysics of subjective preference. Economists no longer needed to think about what people needed, but rather simply what they preferred; so the utilities "consumers" ascribed to outcomes could be discovered by the quasi-experiments of “revealed preference.” Welfare was then defined as the extent to which the individual can satisfy the range of subjective preferences he or she happens to have. So classical and modern economic paradigms differ substantially on what economic activity ought to achieve: satisfaction of material needs, for the classical economists; and satisfaction of subjective preferences, for the modern economists.
...
Sunday, April 1, 2012
Rawls and classical political economy
John Rawls's A Theory of Justice is highly relevant to the ways we think about our economic system. If we just read the citations, Rawls seems to be primarily influenced by "modern" economics -- Samuelson, equilibrium theory, game theory, and marginalist theory. And so we might suppose that his moral worldview reflects a neoclassical vision of economy and society. However, his thought actually seems to reflect a recognition of the intellectual tension between classical political economy and “modern economics”. In some ways his framework for thinking about our contemporary economy seems to be closer intellectually to Mill, Ricardo, and Marx than it is to Pareto and Samuelson.
Classical political economy was premised on the labor theory of value—the idea that there is a concrete, economically meaningful measure of value that guides economic organization. Further, there was the idea that the economic needs that individuals had were also concrete—the consumption goods that permitted life to proceed. These goods included items like food, clothing, shelter, medicines, and perhaps schooling. So economic activity, according to the classical economists, was about something objective.
Neoclassical economy, by contrast, rejected even the idea of utility as a concrete or objective human reality. Instead, modern economics bracketed the reality of needs in favor of a metaphysics of subjective preference. Economists no longer needed to think about what people needed, but rather simply what they preferred; so the utilities "consumers" ascribed to outcomes could be discovered by the quasi-experiments of “revealed preference.” Welfare was then defined as the extent to which the individual can satisfy the range of subjective preferences he or she happens to have. So classical and modern economic paradigms differ substantially on what economic activity ought to achieve: satisfaction of material needs, for the classical economists; and satisfaction of subjective preferences, for the modern economists.
A major thrust of the critique of neoclassical economics arises at just this point. Development organizations like the Dag Hammarskjöld Foundation and economists like Amartya Sen have put forward fundamentally different ideas about human wellbeing. The basic needs approach disputed that the goal of economic development in poor countries should be defined in terms of subjective preferences or utilities. These thinkers argued instead for achieving a decent minimum for whole populations in the satisfaction of basic needs. A 1975 report from the Dag Hammarskjöld Foundation to the United Nations (What Now – the 1975 Dag Hammarskjöld Report on Development and International Cooperation; link) is illustrative; it emphasized the idea of basic needs within the discussion of development priorities.
Amartya Sen went a step further, by introducing a more adequate theory of the human person in terms of capabilities and functionings, and argued for a conception of wellbeing that is defined in terms of the ability of individuals and populations to realize their capabilities. Sen advanced these ideas in many places, including On Economic Inequality and Development as Freedom. (Earlier posts have discussed the capabilities approach; link, link.) These are objective criteria of wellbeing, not simply summations of subjective preference satisfaction. And these frameworks of thought present a major challenge to the foundations of modern economic thought.
In light of these observations, it is very interesting to observe that Rawls defined the foundation of his theory of justice, the original position, in terms that are strikingly classical. In the original position, representative individuals are asked to deliberate behind a veil of ignorance about what principles of justice they would choose to regulate their social cooperation and competition. Individuals are presumed to be mutually disinterested, and their sole concern is to adopt principles that they can live with in the resulting society. But what are their interests? Rawls says that the participants in the OP are interested in a set of primary goods: material resources and liberties, essentially. These are "things which a rational man wants whatever else he wants"
So Rawls's definition of the situation of deliberation within the original position is one that focuses on primary goods, not subjective utilities. And this sounds much closer to a classical assumption about economic interests and the human good than it does a modern assumption. It offers an objective and realistic assumption about what people need in order to live decent lives.
This line of thought is supported by a second feature of Rawls's philosophical orientation. The most basic substantive moral position that Rawls takes is his rejection of utilitarianism as a general principle of justice. Just institutions are not defined as those that "create the greatest good for the greatest number." Instead, they are defined as those that can be assured to provide fair circumstances of life for every citizen. This is established by the unanimity rule. Choice within the original position must be unanimous; and this means that it needs to support the interests of every participant.
...
So I'm inclined to argue that the greatest contribution Rawls made to contemporary economics is his strong and philosophically convincing case for primary goods and his definition of a good life. His rationale for primary goods is that a person’s ultimate goals are set by his or her conception of the good, and there is no reason to expect there to be a common agreed-upon standard for the conception of the good. It is logical, however, to observe that there are some goods that every individual requires in order to pursue any conception of the good: access to material resources and liberties. This seems like a nod towards the moral worldview of classical political economy."
"Classical political economy was premised on the labor theory of value—the idea that there is a concrete, economically meaningful measure of value that guides economic organization. Further, there was the idea that the economic needs that individuals had were also concrete—the consumption goods that permitted life to proceed. These goods included items like food, clothing, shelter, medicines, and perhaps schooling. So economic activity, according to the classical economists, was about something objective.
Neoclassical economy, by contrast, rejected even the idea of utility as a concrete or objective human reality. Instead, modern economics bracketed the reality of needs in favor of a metaphysics of subjective preference. Economists no longer needed to think about what people needed, but rather simply what they preferred; so the utilities "consumers" ascribed to outcomes could be discovered by the quasi-experiments of “revealed preference.” Welfare was then defined as the extent to which the individual can satisfy the range of subjective preferences he or she happens to have. So classical and modern economic paradigms differ substantially on what economic activity ought to achieve: satisfaction of material needs, for the classical economists; and satisfaction of subjective preferences, for the modern economists.
...
Sunday, April 1, 2012
Rawls and classical political economy
John Rawls's A Theory of Justice is highly relevant to the ways we think about our economic system. If we just read the citations, Rawls seems to be primarily influenced by "modern" economics -- Samuelson, equilibrium theory, game theory, and marginalist theory. And so we might suppose that his moral worldview reflects a neoclassical vision of economy and society. However, his thought actually seems to reflect a recognition of the intellectual tension between classical political economy and “modern economics”. In some ways his framework for thinking about our contemporary economy seems to be closer intellectually to Mill, Ricardo, and Marx than it is to Pareto and Samuelson.
Classical political economy was premised on the labor theory of value—the idea that there is a concrete, economically meaningful measure of value that guides economic organization. Further, there was the idea that the economic needs that individuals had were also concrete—the consumption goods that permitted life to proceed. These goods included items like food, clothing, shelter, medicines, and perhaps schooling. So economic activity, according to the classical economists, was about something objective.
Neoclassical economy, by contrast, rejected even the idea of utility as a concrete or objective human reality. Instead, modern economics bracketed the reality of needs in favor of a metaphysics of subjective preference. Economists no longer needed to think about what people needed, but rather simply what they preferred; so the utilities "consumers" ascribed to outcomes could be discovered by the quasi-experiments of “revealed preference.” Welfare was then defined as the extent to which the individual can satisfy the range of subjective preferences he or she happens to have. So classical and modern economic paradigms differ substantially on what economic activity ought to achieve: satisfaction of material needs, for the classical economists; and satisfaction of subjective preferences, for the modern economists.
A major thrust of the critique of neoclassical economics arises at just this point. Development organizations like the Dag Hammarskjöld Foundation and economists like Amartya Sen have put forward fundamentally different ideas about human wellbeing. The basic needs approach disputed that the goal of economic development in poor countries should be defined in terms of subjective preferences or utilities. These thinkers argued instead for achieving a decent minimum for whole populations in the satisfaction of basic needs. A 1975 report from the Dag Hammarskjöld Foundation to the United Nations (What Now – the 1975 Dag Hammarskjöld Report on Development and International Cooperation; link) is illustrative; it emphasized the idea of basic needs within the discussion of development priorities.
Amartya Sen went a step further, by introducing a more adequate theory of the human person in terms of capabilities and functionings, and argued for a conception of wellbeing that is defined in terms of the ability of individuals and populations to realize their capabilities. Sen advanced these ideas in many places, including On Economic Inequality and Development as Freedom. (Earlier posts have discussed the capabilities approach; link, link.) These are objective criteria of wellbeing, not simply summations of subjective preference satisfaction. And these frameworks of thought present a major challenge to the foundations of modern economic thought.
In light of these observations, it is very interesting to observe that Rawls defined the foundation of his theory of justice, the original position, in terms that are strikingly classical. In the original position, representative individuals are asked to deliberate behind a veil of ignorance about what principles of justice they would choose to regulate their social cooperation and competition. Individuals are presumed to be mutually disinterested, and their sole concern is to adopt principles that they can live with in the resulting society. But what are their interests? Rawls says that the participants in the OP are interested in a set of primary goods: material resources and liberties, essentially. These are "things which a rational man wants whatever else he wants"
So Rawls's definition of the situation of deliberation within the original position is one that focuses on primary goods, not subjective utilities. And this sounds much closer to a classical assumption about economic interests and the human good than it does a modern assumption. It offers an objective and realistic assumption about what people need in order to live decent lives.
This line of thought is supported by a second feature of Rawls's philosophical orientation. The most basic substantive moral position that Rawls takes is his rejection of utilitarianism as a general principle of justice. Just institutions are not defined as those that "create the greatest good for the greatest number." Instead, they are defined as those that can be assured to provide fair circumstances of life for every citizen. This is established by the unanimity rule. Choice within the original position must be unanimous; and this means that it needs to support the interests of every participant.
...
So I'm inclined to argue that the greatest contribution Rawls made to contemporary economics is his strong and philosophically convincing case for primary goods and his definition of a good life. His rationale for primary goods is that a person’s ultimate goals are set by his or her conception of the good, and there is no reason to expect there to be a common agreed-upon standard for the conception of the good. It is logical, however, to observe that there are some goods that every individual requires in order to pursue any conception of the good: access to material resources and liberties. This seems like a nod towards the moral worldview of classical political economy."
domingo, 1 de abril de 2012
Europe’s Periphery: A postmodern version of Britain in the 1930s?
Aca
"In short, just like Britain before 1929, Europe’s Periphery was being secretly buffeted by a slow-burning recession (which did not show up in their national statistics, courtesy of real estate, white elephant developments and unlimited credit) well before 2008. Labouring under an overvalued currency, their industries were being depleted in exchange for phoney growth in real estate and finance. And when the Crash of 2008 burst these bubbles, Europe’s Periphery, unlike Britain and the US, found itself in a situation very close to that which Keynes was trying to study in Britain in the 1930s."
"In short, just like Britain before 1929, Europe’s Periphery was being secretly buffeted by a slow-burning recession (which did not show up in their national statistics, courtesy of real estate, white elephant developments and unlimited credit) well before 2008. Labouring under an overvalued currency, their industries were being depleted in exchange for phoney growth in real estate and finance. And when the Crash of 2008 burst these bubbles, Europe’s Periphery, unlike Britain and the US, found itself in a situation very close to that which Keynes was trying to study in Britain in the 1930s."
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