Because of political bias. Just look at the introduction of the (fake) Nobel Prize for economics. It exists purely to legitimize a neoliberal economic ideology. Awarding Chomsky a Nobel Prize would undermine that goal.
Any widespread movement or social institution exists under the pressure of new facts, new social norms, hence any social institution is a flexible moving target.
Only the heterodox, marginal movements can adhere to a rigid ideology. Mainstream science can't have one, only marginal branches can.
Modern economics is not a "neoliberal" plot, of course, there is a strong scientific discussion, various competing theories within it, which are constantly being validated using statistics, and omitted, if proved wrong. Economics today, 25 years ago and 50 years ago vastly differs even in methodology, it's a very vigorous field.
To say that this edifice is grounded in some ideology, one needs to omit all that constant scientific discussion, render empirically proved parts as ideological, axioms as "truths" etc.
This kind of intellectual dishonesty could come only from a ideology-loaded follower of some heterodox (and usually pseudoscientific) theory, most likely grounded in some ideology (guessing from value judgments of op like "neoliberal" -- left one) rather than verified by empiric data.
Of-course most people do not read economics papers.
This is like native speakers of a language (say, English) asserting that only non-native speakers of their language have accents. You do, you just speak with an accent that's considered to be standard.
>This kind of intellectual dishonesty could come only from a ideology-loaded follower of some heterodox (and usually pseudoscientific) theory, most likely grounded in some ideology (guessing from value judgments of op like "neoliberal" -- left one) rather than verified by empiric data.
And mainstream (i.e. neoclassical) economics[0] does that, even in the face of mathematical reality, let alone empirical data.[1] The ignorance of the implications of the SMD theorem,[2] because it implies that the aggregation problem remains unsolved and the fundamental breakdown of the "law" of demand, was a profoundly anti-intellectual move.
[0] https://en.wikipedia.org/wiki/Neoclassical_economics
[1] https://news.ycombinator.com/item?id=21269064
[2] https://en.wikipedia.org/wiki/Sonnenschein%E2%80%93Mantel%E2...
You are confusing different things together. Mainstream exists in a form it is not because Mainstream translates the Truth™, but because there are no better theories yet.
Newton's mechanics is worse than Einstein theory in describing celestial bodies' movements, yet the former was better than anything until the latter appeared.
I have a lot to argue against neoclassical economy, especially about its view of a person as a profit-driven (rational, as they call it) degenerate, or fondness of regressions in the mid of chaos.
Yet it changes in the right direction, behavioral economics appeared, regressions are taken with a grain of salt now, rational choice is heavily criticized.
The problem is that no heterodox theory provides both an axiomatic basis and empirical framework to compete mainstream economic science. What would you propose instead of Neoclassical economics? Nothing?
It's not ignorance to accept theory that is not always true, it's stupidity to omit theory without having anything better, as Lakatos would say.
As for ideology, I don't see such a thing. People in mainstream science vary from Joseph "We all need to follow Venezuela example" Stiglitz to post Austrians like William White.
Where have I heard that before? Oh yeah, the string wars in theoretical physics.
>Newton's mechanics is worse than Einstein theory in describing celestial bodies' movements, yet the former was better than anything until the latter appeared.
In its early days, the Copernican model was no better than the mainstream Ptolemaic model at describing the motion of celestial bodies:
For his contemporaries, the ideas presented by Copernicus were not markedly easier to use than the geocentric theory and did not produce more accurate predictions of planetary positions. Copernicus was aware of this and could not present any observational "proof", relying instead on arguments about what would be a more complete and elegant system.[0]
>I have a lot to argue against neoclassical economy, especially about its view of a person as a profit-driven (rational, as they call it) degenerate
I think you're confusing a person with a firm. A person has rational preferences[1] -- another unrealistic assumption -- while a firm seeks to maximise profits.
>The problem is that no heterodox theory provides both an axiomatic basis and empirical framework to compete mainstream economic science.
The idea that an axiomatic basis is necessary for a good theory is classic physics envy[2], and ignores the fact that even physics itself does not have an axiomatic basis, because that is Hilbert's sixth problem, which remains open.[3]
I don't know why this phenomenon is called "physics" envy anyway: it seems like you want economics to follow the model of Euclidean geometry, hence "mathematics" envy, which is even more absurd.
I get that mainstream economics has become more diverse, but neoclassical economics, which I believe is still the dominant school, is based on postulates that are simply unsupported by empirical -- and even mathematical -- evidence.
>What would you propose instead of Neoclassical economics? Nothing?
A critical synthesis of everything that isn't marginalism? An empirical search for a new framework with postulates backed by evidence?
And perhaps economists should learn more mathematics and have the courage to invent their own tools. After all, if you want to carry on with your physics envy, you should know that Feynman invented his own integral[4], which mathematicians derided for a long time for its lack of rigour... until its power became clear, at which point the functional analysts got down to work to extract the deep mathematics underlying Feynman's formalism.[5]
>It's not ignorance to accept theory that is not always true
This is an acceptance of Friedman's discredited positivism.
>it's stupidity to omit theory without having anything better
We have, and had, better: marginalism (aka neoclassical economics) was heavily criticised even during the 20th century. It's stupidity to cling to a theory when there are better ones.
[0] https://en.wikipedia.org/wiki/Copernican_heliocentrism#Early...
[1] https://en.wikipedia.org/wiki/Preference_(economics)#Applica...
[2] https://en.wikipedia.org/wiki/Physics_envy
[3] https://en.wikipedia.org/wiki/Hilbert%27s_sixth_problem#Stat...
Man, if you want to hear about anti-intellectualism and bias, go and look at the SMD theorem. Economists will continue to assume that Macroeconomic demand curves will continue to slope downward.
[1] https://web.archive.org/web/19991009000912/http://lheawww.gs...
I would agree.
> Just because a model is simple doesn't mean that it is bad or worse than a model with more complex assumptions.
I'm not condemning it being simple. If we were just talking about small or exceptional exclusions to the rules like Giffen or Veblen goods, then I wouldn't have made the above post. We're talking about fundamentally incorrect building blocks that aren't even acknowledged in the literature.
It's a joke to remind us of a sobering fact: that unreal assumptions lead to unreal results.
>Just because a model is simple doesn't mean that it is bad or worse than a model with more complex assumptions.
But if a model with more complex assumptions is a better approximation to reality than a model with simpler assumptions, would you not adopt the former?
What has happened in economics is that people have clung on to, say, Newtonian mechanics, instead of embracing Einstein's relativity.
Even this does not quite adequately express the enormity of the inertia that you see in economics, because at least Newtonian mechanics is right most of the time, whereas neoclassical economics is wrong most of the time. The SMD theorem guarantees, for example, that most market demand curves will NEVER satisfy the fundamental neoclassical "law" of demand.
Let me also point out that your comment is rehashing Friedman's positivism.[0] Even in quantum mechanics, which has for decades been dominated by the positivism of the Copenhagen interpretation, people are now transcending that positivism because they've come to the realisation that quantum mechanics can't be advanced without overcoming the crutch of positivism. And Friedman's assertions about assumptions are unsound anyway.[1]
[0] https://en.wikipedia.org/wiki/Essays_in_Positive_Economics
[1] For a critique of Friedman's argument about assumptions in models, see https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-6435....
Not necessarily. Maybe the simpler model is enough to understand what is going on. Maybe a more complex model suffers from over-fitting and performs worse than the simpler model. It really depends.
> The SMD theorem guarantees, for example, that most market demand curves will NEVER satisfy the fundamental neoclassical "law" of demand.
Does it really say that? Or simply that weird market demand curves are possible in a few exceptional situations?
If only physics departments everywhere would adopt this philosophy! Physics undergrads would then be liberated from the yoke of Einstein's relativity, let alone the tyranny of the mind-blowing quantum field theory with its insufferably complicated Feynman diagrams.
It does not depend. The simpler model in economics is fatally flawed, and is the one suffering from over-fitting (to a straight line, no less) and contributing to the bad reputation of economics as a "dismal science".
>> The SMD theorem guarantees, for example, that most market demand curves will NEVER satisfy the fundamental neoclassical "law" of demand.
>Does it really say that? Or simply that weird market demand curves are possible in a few exceptional situations?
Yes, it does.[0] The exceptional situations are precisely those that neoclassical economics assumes are the norm, namely, that there is only one agent and one commodity in the market.[1]
As soon as you have more than one agent/consumer in an economy, the mathematics will undermine the "law" of demand, because the inter-agent interactions would generate non-linear terms in the market demand function.
And once you have terms of higher order, the demand curve generated by that function will have sections that slope upwards, exactly what is being forbidden by the "law" of demand.
And we haven't yet taken into account the very real fact that multiple consumers cannot possibly have the same preferences. Or that these preferences can change with different levels of income.[2]
In short, neoclassical microeconomics only works in a communist economy of identical clones with identical preferences and incomes.
Oh, the irony.
[0] https://en.wikipedia.org/wiki/Sonnenschein%E2%80%93Mantel%E2...
Let's take electrical engineering as an example. If you model an electrical circuit, you assume that there simply is a voltage source where electricity comes from. That assumption is of course complete nonsense: In reality, electrical energy is not just there, it has to be generated somewhere, for example in a power plant. The electricity also flows through a grid that is shared with many other consumers.
So, according to your requirement to always use the more realistic model, electrical engineers should always model a whole power plant and an entire power grid in each circuit, because otherwise their model would be bullshit.
> Yes, it does.[0]
Do you know of any empirical studies that show that the models currently used in macroeconomics actually cause problems with real data?
I'd usually say you're shifting the goal posts, perhaps muse about how dehumanising and simplistic it is to think of humans as components in an electrical circuit, and move on. Then I thought that it'd be more illuminating to address your analogy, because your reasoning suffers from the same problem that I've been talking about.
>If you model an electrical circuit, you assume that there simply is a voltage source where electricity comes from. That assumption is of course complete nonsense: In reality, electrical energy is not just there, it has to be generated somewhere, for example in a power plant. The electricity also flows through a grid that is shared with many other consumers.
I think it might help to read Musgrave's paper[0] (the abstract will do if you can't get the paper itself) on the three kinds of unrealistic assumptions, in which he attacked Friedman's twist. The assumption you pointed out is the most benign type: a negligibility assumption. It's like assuming that a object falling through air experiences no friction: complete nonsense, but air friction exerts only a negligible effect on most falling objects, unless the object is, say, a feather.
In the case of your example, taking into account the power plant adds nothing to the analysis, because the electrical circuit you're concerned with usually doesn't output electricity. Usually. But in the 21st century, that can change...
>So, according to your requirement to always use the more realistic model, electrical engineers should always model a whole power plant and an entire power grid in each circuit, because otherwise their model would be bullshit.
Firstly, I did not say the more realistic model should "always" be used. The situation in economics is more like the more realistic model is ignored in favour of the incorrect unrealistic model, even when the more realistic model is appropriate. The analogy with Newtonian/Einsteinian mechanics is quite shaky here, since as I've said, Newtonian mechanics is vastly more accurate than neoclassical microeconomics.
To take another example from engineering and continue the theme of relativity, error corrections required for GPS depend on an understanding of relativity.[1] If, as you've previously suggested, the simpler and more easily understandable model should be preferred, then we would not have GPS and allied technologies today.
Secondly, in the 21st century when we have renewable energy, electrical engineers are now required to take into account a power grid, because consumers are now also power plants if they have solar power, for example, and want to feed the excess power generated into the power grid.
The point is this: if the circuit you're modelling is a passive one that doesn't generate electricity, sure, make use of the unrealistic assumption that there's an unknown voltage source. However, if your circuit is also a voltage source, that assumption is then false, and you need to update your model.
The same should apply in economics. Unfortunately, it turns out that markets and economies are far more complex systems than power grids: as soon as you have more than one agent (e.g. humans, corporate entities, HFT algorithms, etc.), the simplistic analysis derived from marginal utility theory fails. So, outside of the laboratory perhaps, the models used in neoclassical microeconomics are probably almost never appropriate for the problems they're treating.
>> Yes, it does.[2]
>Do you know of any empirical studies that show that the models currently used in macroeconomics actually cause problems with real data?
This is a really garbled question. Firstly, nowhere did I assert that economic models "cause problems with real data". I really don't understand this assertion and would welcome any clarifications.
Secondly, I think you misunderstand the point of my argument about the SMD theorem. The point is that, as soon as you have more than one agent/consumer (human, firm, algorithm, what-have-you), they will interact in a non-linear way, giving rise to a nonlinear market demand function that gives a "weird" market demand curve.
This has nothing to do with any effect that the belief in a certain economic model would have on the economic behaviour of an agent. That is an entirely separate question altogether.
Back to your question about whether "weird market demand curves are possible" only "in a few exceptional situations". The SMD theorem basically says no: in all but the most exceptional cases, multiple market equilibrium points can exist.
The implication is that the aggregation problem[3] is not solved by the neoclassical assertion that the market demand curve for a well-defined commodity has the same pleasant mathematical properties -- in particular, that it is monotonically decreasing ("downward-sloping"), i.e. obeys the "law" of demand -- as the demand curve for that commodity of a rational agent.
And the reason why the aggregation problem isn't solved is because, as soon as you have more than one agent or commodity (like in most IRL markets), you get a complex system. And when you have a complex system, you can't draw line diagrams like you do in the textbooks. You need to do modelling and numerical analysis. There's a field called complexity economics[4] that's only beginning to do that, some 40 years after the SMD theorem appeared. Better late than never, but it's still a lot later than the other less "dismal" sciences, which have come to realised that they're dealing with complex systems and have updated their thinking accordingly.
[0] https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-6435....
[1] https://en.wikipedia.org/wiki/Error_analysis_for_the_Global_...
[2] https://en.wikipedia.org/wiki/Sonnenschein%E2%80%93Mantel%E2...
The D in SMD was actually awarded the nobel prize in economics.
Debreu's work on general equilibrium, which was the basis of the award, had to skirt around the SMD theorem:
>Prize motivation: "for having incorporated new analytical methods into economic theory and for his rigorous reformulation of the theory of general equilibrium."[0]
In order for the Arrow-Debreu model[1] to give a unique equilibrium, which is usually desired, some strong (arguably, unrealistic) conditions must be assumed, otherwise there can be multiple equilibria, as guaranteed by the SMD theorem.[2]
In particular, the SMD theorem asserts that any polynomial function can be a market demand function, which fundamentally breaks the so-called "law" of demand in neoclassical economics. This is because most polynomial functions are not monotonically decreasing[3], as required by the "law" of demand, but give rise to demand curves that can curve up or down arbitrarily. As an example of such a function, just think of the curve generated by a generic cubic polynomial.[4]
This "anything goes" situation then leads to non-unique equilibria, since a supply curve can now intersect the market demand curve at more than one point. But since an equilibrium point is supposed to be where welfare is maximised in a society, the existence of non-unique equilibria means that there can be multiple economic arrangements under which social welfare is maximised. Then it's a matter of taste (i.e. "ideology") to decide which equilibrium point a society wants to be in.
[0] https://www.nobelprize.org/prizes/economic-sciences/1983/deb...
[1] https://en.wikipedia.org/wiki/Arrow%E2%80%93Debreu_model
[2] https://en.wikipedia.org/wiki/Sonnenschein%E2%80%93Mantel%E2...
[3] https://en.wikipedia.org/wiki/Monotonic_function
[4] A graph of such a curve is shown here: https://en.wikipedia.org/wiki/File:Monotonicity_example3.png
Watch out for moving the goalposts. He was awarded the nobel prize after all. "Rigorous reformulation" does not sound like skirting at all.
> This "anything goes" situation then leads to non-unique equilibria, since a supply curve can now intersect the market demand curve at more than one point. But since an equilibrium point is supposed to be where welfare is maximised in a society, the existence of non-unique equilibria means that there can be multiple economic arrangements under which social welfare is maximised.
Economy (or climate or orbits) exhibit chatoic and complex behaviour and it is not surprising that they can have multiple stable points (look up bifurcation diagrams for a simple representation of chatoic solutions). If I am not mistaken, one can hear such things routinely in university economy classrooms today especially when giving caveats about models being wrong in general. Even when you include game theory and Nash equilibria with respect to economic solutions, there might not be efficient ways to reach the equilibrium points at all!
> Then it's a matter of taste (i.e. "ideology") to decide which equilibrium point a society wants to be in.
That is to assume that every equilibrium solution you get is tied to a specific policy or a set of them (or even more, an ideology!) or that points can be reached easily which are very strong assumptions. Maybe some ideologies don't exhibit any reachable equilibrium points or pertain only to unstable ones.
Says the one who's been moving the goalposts in the first place. The point of this thread was about whether or not the Nobel prize in economics was anti-intellectual and ideologically biased. You chimed in with:
>>>The D in SMD was actually awarded the nobel prize in economics.
Which is why I responded, because this was a non-sequitur and an appeal to authority (of the people awarding the prize, and the question was whether or not these people were biased).
>He was awarded the nobel prize after all.
That means nothing in the context of this thread, and is another appeal to authority.
>"Rigorous reformulation" does not sound like skirting at all.
The SMD theorem was a big deal, yet Debreu wasn't awarded the prize for that, but for a rigorous reformulation of Walrasian equilibrium,[0] which has very strong assumptions.
In particular, that rigorous reformulation, known as the Arrow-Debreu model,[1] fails under weaker (i.e. more realistic) assumptions, because of the SMD theorem.
This is skirting the issue.
>Economy (or climate or orbits) exhibit chatoic and complex behaviour and it is not surprising that they can have multiple stable points (look up bifurcation diagrams for a simple representation of chatoic solutions). If I am not mistaken, one can hear such things routinely in university economy classrooms today especially when giving caveats about models being wrong in general. Even when you include game theory and Nash equilibria with respect to economic solutions, there might not be efficient ways to reach the equilibrium points at all!
A few points:
- It's nice and all that caveats are being given, but what tools are being taught to economics undergrads to handle chaotic and complex behaviour? Please supply links to some university course syllabus as evidence (I'm happy to read material in a language other than English).
- If economics students aren't being taught tools to handle chaotic and complex behaviour, then giving caveats is just paying lip service.
- Game theory and Nash equilibria are tools to deal with equilibria, which is what neoclassical economics is comfortable with. To be more realistic, you need to look at what happens in disequilibria, as you've pointed out yourself.
- Chaos theory also showed that equilibria may never be attained at all by a system, so the obsession with equilibria in economics is, at best, unproductive.
>That is to assume that every equilibrium solution you get is tied to a specific policy or a set of them (or even more, an ideology!) or that points can be reached easily which are very strong assumptions. Maybe some ideologies don't exhibit any reachable equilibrium points or pertain only to unstable ones.
Agreed. Unfortunately, neoclassical economics, thanks to its underlying ideology, assumes that equilibrium points can be reached by the "free market" and are desirable.
[0] https://en.wikipedia.org/wiki/Competitive_equilibrium
[1] https://en.wikipedia.org/wiki/Arrow%E2%80%93Debreu_model
I think this statement is quite representative of the world we live in, don't you? My personal experience is, strongest adherents to an ideology are the least productive people .
> If there was no chemistry prize and Dow Chemical or Bayer stepped in to create one, it wouldn't be anywhere as respected as the actual Chemistry Nobel, would it?
The Nobel Prize was created by the owner of a Swedish chemical and weapons company. I don't see what's so great about it.
And as for the Swedish Central Bank, I think Paul Krugman hit the nail on the head: Oh, and cue the usual complaints that this isn’t a “real” Nobel. Hey, this is just a prize given by a bunch of Swedes, as opposed to the other prizes, which are given out by, um, bunches of Swedes.
Which is very unfortunate, because like medicine, the practice of economics has the power to influence decisions and affect lives.
So will the Economics Nobel be legitimate when it turns 100 then?
The official Nobel site lists the Economics prize:
* https://www.nobelprize.org/prizes/economic-sciences/
What other authority on the matter is there than the actual organization itself?
Edit: Brain having a moment off - s/Swiss/Swedish/
The very idea of it is anti-intellectual? That's absurd. There's nothing magical about awarding prizes to scientists that prevents it from being done with a motivation. The committee famously cancelled the prize for a year to avoid awarding it to Einstein, since he was a Jew with radical political beliefs.
This is something that would be quite hilarious to see from an actual scientist about a topic that is supposedly their field of expertise but it's very much something you'd expect from somebody who is there to legitimize a neoliberal (no quotes necessary) ideology.
And the claim that it 'legitimize a neoliberal economic ideology' is baseless nonsense if you actually look at who got the prices.
Chomsky doesn't get a nobel price in economics because nonthing he has done is close to worthy of that price. Whatever some Hacker News comment thinks.
Here's an example from an article posted yesterday. While one might not agree with the article's main premise regarding climate change not being real or anthropogenic (I, for one, don't), the mechanism described here is all too common across many areas of science, economics, politics, public policy, etc:
"(...) many of the world’s major national academies of science (such as the Royal Society in the U.K., the National Academy of Sciences in the U.S.A and the Australian Academy of Science) persuaded themselves to issue reports giving support to the conclusions of the IPCC. The reports were touted as national assessments that were supposedly independent of the IPCC and of each other, but of necessity were compiled with the assistance of, and in some cases at the behest of, many of the scientists involved in the IPCC international machinations.(...)"
That's how one can find and quote N "independent" studies and organizations approving something or verifying another, when, looking carefully there's a single, well funded, or politically well supported, central origin behind all of their "findings", and their "independent verification" is basically a high level re-telling of what was giving to them (with nobody bothering to run the numbers).
(edit: Assange, not Snowden)
As for Julian Assange, the hearings with the two alleged rape victims DO NOT describe rape. It describes an asshole having sex with star struck women.
They do by the Swedish law.
> with star struck women.
So justice to you means blame the alleged victim?
I still prefer the Swedish way, the tribunals, the judges, and all the ceremony of a real justice system to your tribal "white men are always right" rite.
If there are procedural violations it does not have any bearing on whether TPB broke the law or not. It only means that TPB owners can revert that particular decision if they are right.
Assange - yeah, I'm amazed how people can still revere him. His personality aside, his blocking of information related to Russia or China to be published on Wikileaks is atrocious and pretty telling.
But again, that's beside the point. It's kind of weird to me, this whole "sturstruck" angle. When that happened he was no way near a celebrity. Also, why do you have to whitewash it like that? The "it's not rape, he's just an asshole" defense sounds pretty whitewashy to me.
[0] The Assange case has the veneer of legality. The Swedish law against statutory rape is actually very strict, stricter than what you might believe. It's just about everything else in the whole sordid affair which is horrible.
[1] Yes, Sweden has a constitution, not as neatly cut and well defined as the US one, but it exists. The point is ministers must not push their departments around, but let them follow the law on their own. It's even got it's own name "minister rule". ("Ministerstyre".)
I like Chomsky because he's such an antagonist (we need them) but I think he also misrepresents a lot of information.
As opposed to which model? The highly successful communist alternative?
Marx is socialist, socialism is not (only) Marxist.
You can be socialist without being Marxist.
So "There are non-neoliberal economic ideologies that aren't Marxian." it's not technically true.
Okay, understood.
> So "There are non-neoliberal economic ideologies that aren't Marxian." it's not technically true.
These two things just don't even remotely follow. Socialism isn't Marxism, therefore there have only ever existed Neoliberal and Marxian economic systems?
What do you think Neoliberalism is?
Furthermore, do you believe the United States was Neoliberal in, say, 1963?
One thing worth noting is that fascism (and neo-fascist/nazi groups) was anti capitalist, but not (of course) marxist-socialist.
They have some common ideas, the nationalization of the means of production for example, but it ends there, they aren't against social classes, they aren't against private property, they are simply against free market.
If for Marx communism was the goal, for fascists the goal is complete autarchy.
I would add neo-fascism to the list of anti capitalist movements, even though I sincerely hope they'll disappear ASAP.
I don't know what to tell you, but the Keynesianism the US applied before 1973 is fundamentally different from what followed in Reaganomics--i.e., Neoliberalism.
I don't think you have a strong grasp on what the word means.
It is true, but I think it was more about war reconstruction and applied automation that drove the public spending up.
Governments had to deal with the consequences of the war and made everything possible to give people a job, a purpose, to let the war behind.
The crisis of 1973 revealed the truth: that kind of growth is not sustainable, especially if it's global (in Italy we call that period "Italian economic miracle", it was more "spending the Marshall's plan money without thinking of the consequences on the future").
But without doubts it was different from Reaganomics, if I'm not wrong it was even possible to approve in the 60s a public healthcare system (kind of) in USA named Medicare. Of course the conservative attacked the idea and Reagan in particular was very vocal about invasion of the freedom and all the usual things they say.
But, if Reagan's idea of economy won is not because Reagan was particularly good, but because lobbies invested an enormous amount of money on propaganda and people in the 70s had good jobs, a powerful enemy to fight, baby boomers had lived 30 years of peace, fought no war and didn't think enough of the consequences of leaving the poorest behind.
They had been educated to believe that if you put enough effort in something, you will succeed.
If you don't succeed, it's because you haven't worked hard enough.
In places like Europe, were being socialist was not seen as a crime, public debate never ceased to address the fundamental differences between a free market economy (even with Keynesian bits) and a more equal society based on the idea that everyone deserves the same level of services from the state and the same protection, regardless of the single economic power.
So in a way USA before 1973 was more similar to what we call socialism, but not for the same (correct?) reason.
It was the best way they had found to sustain growth and fight unemployment and consequently discontent, but they did'nt really believe in a more equal society, that is the base for the economic ideas of socialism.
But they would be wrong, it's the other way around.
> and Xi Jinping would tell you that the PRC is socialist (with Chinese characteristics!),
It is, economically speaking, at least until it entered the WTO it was 100% a socialist country.
You're conflating politics and economics, China is a socialist country, Sweden is mostly a socialist country, Italy is mostly a socialist country, the state has a lot of economic power in these countries.
It is simply true.
What the U.S. take wrong (among many other things) is that it is not bad for the citizens. I live in Italy and would never change it for Silicon Valley. I don't want to live where homeless are homeless because the staste cares more about selling more guns, so that another mass shooting in a school can happen, than helping poor people.
How, then, would there have been an economic system which fits neither Neoliberal nor Communist models? It's super simple: there are more than two competing systems.
Probably something that doesn't blow up every 5-7 years or pushes us into a climate apocalypse.
"Climate apocalypse" is a function of capitalism/"neoliberal economics" only insofar that this system provides things that make living nice and comfortable - like smart-phones, air-conditioning on hot days, heating in the winter, affordable air travel, meat, washing machines, etc - and there is no way to provide those things to 7 billion people without major impact on the environment. You can choose a system that makes everybody poor and consequently environmentally friendly - but do you really want to?
Where is it evident that protectionism would sustainably help and not reduce aggregate demand or in fact not lower employment? And how would one prevent even more entrenched oligopolies?
Australia is an example of a protectionist capitalist society: in fact, its first federal government was formed by a party called the Protectionist Party, with the support of the union-based Labor Party.[0] Unions are relatively strong there, compared to the rest of the world, and Australia's immigration policy is pretty tight, which protects workers there from foreign competition. Consequently, workers have some of the highest (minimum) wages in the world, and enjoy relatively excellent working conditions. The economy has also been doing well since the 1990s, despite the GFC and everything.
The EU is probably another example: strong labour laws with stringent labour market tests and excellent working conditions, as well as stringent requirements on a wide range of commodities that has to be satisfied by imports.
Please define what you mean by "protectionist".
In what sense are unions not protectionist? Their sole function is to protect the labour market. I'd view unions in Australia as really protectionist: they've managed to secure very high minimum wages, as well as highly restrictive immigration policies that Trump praised to high heaven.[0]
>Also the protectionist government you are referring to the cabinet which was active until 1903
Their immigration policy[1] lasted for decades, before being replaced by the current immigration policy. The Protectionist Party[2] hung around until 1909, when they merged into the Commonwealth Liberal Party. This party was a predecessor of the current Liberal Party:
Protectionist + Anti-Socialist -> Commonwealth Liberal
Commonwealth Liberal + National Labor -> Nationalist
Nationalist + dissident Labor + Australian -> United Australian -> Liberal
So there is still protectionism hanging around in both major political parties today.
>the productivity growth in the 1990s was followed by Labour winning majority in the parliament. What am I missing?
It's spelled Labor, because modern spelling.[3] And Labor was in power from 1983 to 1996 (Hawke[4], then Keating[5]), so that productivity growth in the 1990s... probably Labor's fault? Lol. I think the proliferation of personal computers may have had more to do with it.
[0] https://www.abc.net.au/news/2019-06-27/donald-trump-tweets-s..., https://www.theguardian.com/us-news/2017/mar/01/donald-trump...
[1] https://en.wikipedia.org/wiki/White_Australia_policy
[2] https://en.wikipedia.org/wiki/Protectionist_Party
[3] https://en.wikipedia.org/wiki/Australian_Labor_Party
The function of unions is decidedly NOT to “protect the labour market”, but to provide organised market power to a group of labourers. A union fulfils its function even if it secures jobs for its members at the cost of say workers of another trade or those who are not unionised. Hence a union can satisfy its members but reduce the overall employment.
Also, I don’t understand. At first you claim that the 90s boom was due to protectionist policies. Now you claim that it’s because of personal computers. Which one is it then?
I'm not sure which part of the Australian politics I've described doesn't fit your definition of what protectionism is.
I've certainly gone into great length about restrictive immigration policies: in fact, one of the first pieces of legislation of the Barton government was the 1901 Immigration Restriction Act,[0] the passage of which was a condition of Labor's guarantee of confidence and supply for the minority Protectionist government.
The 1901 election itself[1] was straight from the textbooks: Protectionist vs. Free Trade vs. Labor. Protectionism (Protectionists and Labor) won that election, both in terms of seats and popular vote. You couldn't get a more literal election than that.
As for tariffs and selective subsidies, Australia has that too.[2][3][4]
>The function of unions is decidedly NOT to “protect the labour market”, but to provide organised market power to a group of labourers. A union fulfils its function even if it secures jobs for its members at the cost of say workers of another trade or those who are not unionised. Hence a union can satisfy its members but reduce the overall employment.
You're presuming a fragmented union ecosystem, which isn't quite the reality in Australia. The Labor party was founded as the political arm of the unions; this shows a high enough degree of co-ordination amongst the unions at the very least.
And once you have a party in parliament, you get the power to influence policy-making in such a way as to protect the labour market. A single union may only be able to protect its own members, but a well-coordinated group of unions is well-positioned to protect the entire labour market itself. Labor did that in spades in the early days of federation, and still does to this day.
>At first you claim that the 90s boom was due to protectionist policies. Now you claim that it’s because of personal computers. Which one is it then?
I did not. You wrote:
>>yet the productivity growth in the 1990s was followed by Labour winning majority in the parliament. What am I missing?
I pointed out that you missed the fact that Labor was in power from 1983 to 1996.
I then made the facetious statement that perhaps it was Labor's fault that the 90s boom happened: this was a joke because, clearly, nobody blames a party for a good economy.
I then went on to suggest that the productivity growth may perhaps be more reasonably attributed to the proliferation of PCs, and the attendant automation. There are other plausible factors for the boom: the economic rise of China must surely have been one.
In any case, it's simply not true that the 90s boom was due to protectionist policies. Labor during the Hawke-Keating years was uncharacteristically enthusiastic about reforms, and I think the success of their policies may have inspired the Third Way of Blairite Labour.
[0] https://en.wikipedia.org/wiki/Immigration_Restriction_Act_19...
[1] https://en.wikipedia.org/wiki/1901_Australian_federal_electi...
[2] https://en.wikipedia.org/wiki/History_of_tariffs_in_Australi...
A small community of people could come up with the greatest governmental system we could ever dream of, but if the leaders of the current system believe it to be a threat they could wipe out its adherents before it is ever properly understood by the wider population. Or spread misinformation about it to dissuade people from finding out more about it for themselves.
I have absolutely zero faith in the average HN user to understand, but why should I explicitly appease their ignorance? The downside is people like you, who obviously realise that it could be irony, might imagine the avg HNer would legit say it.