Economics is not a natural science
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Failing to predict the future does not prove something is not scientific. For example there are simple cellular automatons whose evolution can not be predicted, even though all the rules they follow are known.
Also, what is "the market" supposed to mean?
"Now the interesting thing about this money is that it lost value over time. "
Oh dear, please tell me that it is not the "Freigeld" craze finally reaching HN :-(
I imagine, if we cut off the printing press, there will be massive deflation.
The Freigeld proponents want money that automatically loses value. Like the guy int he article mentioning that "money" in the middle ages would decay (because it was biological stuff). That's why I worried that he might be one of the Freigeld people.
It also depends on what you mean by predicting. Does economics have to be able to predict the Dow Jones in 10 years to 5 cent precision to be acknowledged as a science? There are zillions of things to predict in the context of economics.
Also, mathematics is not a science by that definition?
I think what the author means to say, and should have said in one paragraph, is that economics has not yet developed an appropriate language for their models. Economists are still trying to use calculus, which was thought of by physicists do describe physical phenomena, which, when used in economics, is leading to wildly inaccurate models.
noun a branch of science which deals with the physical world, e.g. physics, chemistry, geology, biology
Eek, don't like it. What is "the physical world"? Or rather, what isn't part of "the physical world"? It's just a matter of creating models for phenomena of increasing complexity.
Just as biology studies a set of phenomena emergent from enormous amounts of bio-chemical interactions, which are emergent from quantum physics, etc., economics is emergent from the psychology, beliefs, and interactions of people.
I'm okay with econ being a social science (it sure wasn't taught in the Natural Science building at my school!), and I'm okay with being critical of the way its framework extends into my life. I don't understand how anyone can get through the gauntlet of econ warnings with hubris intact.
“How to best transcend the current economic mess? Put Jeff Bezos, Pierre Omidyar, Elon Musk, Tim O’Reilly, Larry Page, Sergey Brin, Nathan Myhrvold, and Danny Hillis in a room somewhere and don’t let them out until they have framed a new, massively-distributed financial system, founded on sound, open, peer-to-peer principles, from the start. And don’t call it a bank. Launch a new financial medium that is as open, scale-free, universally accessible, self-improving, and non-proprietary as the Internet, and leave the 13th century behind.
In essence, I agree with the piece and the comment.
I also believe that the Chagora model is very close to what they are talking about… (it can function with standard and/or newly created currencies whether localized or not. Especially when combined with methods of geographical localization and scaled anonymity. The practical microtransaction in all areas is essential for proper scaling of civilization and its the political microtransaction (networked citizen lobbying) that is the trigger.
P.S. PayPal is a bad model for civilization development.
(Chagora is essentially scalable speech and association)
If I’m an idiot I’d like to find out soon since things are very tight. I’d like at least a chance to present my case and don’t know where else to go.
See blog for more...
http://culturalengineer.blogspot.com/2009/05/foundations-of-...
You can use science to study all sorts of systems, ranging from the oceans to the internet to economics. They don't have to be natural.
All that matters is whether you apply the scientific method to the phenomenon you are studying. Many economists do this, so (at least part of) the field of economics is scientific.
You might be able to imagine another world in which the laws of economics don't work. Ok, so what? You can imagine worlds in which the laws of physics don't work, it doesn't make physics unscientific.
I'm very much not an expert, but that seemed optimistic.
Economy's problem is that it describes a system which contain (more or less) intelligent beings who read up on economic theory -- and the beings then modifies their behavior from those studies...
So to get data and build models, it seems there must be some fix point to that function, somewhere...? :-)
(To add maiming to injury, those beings change culture and probably basic motivations every generation, these days.)
I have respect for economy and economists, they seem to do a reasonable good job from a bad position. But I'm happy I went with other interests.
A return to the less devastating Keynesian sort of capitalism won't undo the whole mess though.
Alternative digital economies of sharing have shown how there are plenty of other viable models of economic organization.
It's time to reevaluate the failed system that brought us here.
That, and digital economies are only suitable to things with the marginal cost of production of nearly 0 or is 0.
They are not divided evenly whatsoever and the countries that harbor them in many cases are poor and and chaotic, think Congo e.g.
Now that China decided to limit the exports of many crucial resources and the US ceases to be the most powerful economy many people in the West will discover that the current distribution of resources is not at all satisfying.
In the current order most people either starve or live on a minimum while a few people are living lavish and wasteful lives. This type of "economics" can't survive in the long run. Let's just hope id doesn't end in a bloody way.
Wasting most resources like we do now is not economical at all and telling people that's it's natural market forces that makes people in Africa starve while we get fat is just plainly naive.
It's time to rethink the way of life we live based on the exploitation of the scarce resources and other people.
As a percentage, much fewer is poor for every generation that passes -- and a small percentage starve, today.
Go back a few hundred years and almost everyone lived hand-to-mouth. Check Hans Rosling's lectures on TED.com for how much better the present situation is.
From what I've read, when a country implements serious capitalism and good governance in the last century, there is no starvation after a generation or two.
Ah, never mind. Go to one of the places where they discuss things like this.
If you insist on quarreling with just me, post the link and I'll try to find the time to come along -- taking one for the team to help the average HN quality... :-)
Edit: I do understand where you're coming from. At day work, they are a bit frustrated at me telling them that Asian ginger candy is the answer to human happiness. (And let's not even think about getting started on editors!) I try to realize that I shouldn't proselytize on the web, people will realize the truth in the end... :-)
(By the way, I'm not talking about that garbage Indonesian ginger candy I used to love -- there is some Vietnamese variant that hurts, nam nam...)
As a percentage, much fewer is poor for every generation that passes -- and a small percentage starve, today.
Go back a few hundred years and almost everyone lived hand-to-mouth. Check Hans Rosling's lectures on TED.com for how much better the present situation is."
That's due to technological progress not because some people hoard the money while others are starving or live in misery or wage slavery.
Also around 1 billion people starve today, that's not a small percentage IMHO:
http://abcnews.go.com/International/wireStory?id=6423774
http://www.telegraph.co.uk/news/worldnews/asia/china/3698225...
I'm always astounded by the unwillingness of some people to move on and create a better society for all people not just the chosen few.
You don't have to wait generations to curb starvation. In Cuba they managed in a decade. That's the issue here: Either we do it on our own accord or one day people will take their fair share by force and that leads to dictatorships.
Given the fact that the poor populations grow while more Westernerns die than get born we will soon face a different situation. Once China has taken over for good I can imagine that the US will become stricken by wide spread poverty.
So try not to block progress like the auto industry execs who killed the electric car and then had to beg in Washington for tax payer money. The US capitalism has become a state capitalism like in the former Soviet Union already where banks and manufacturing are run by the state.
You seem to prefer that instead of some progress.
http://www.ted.com/talks/lang/eng/hans_rosling_reveals_new_i...
He discusses the trends. The first few minutes are about child mortality, income and changes over the last few centuries. [Edit: Also see from 14 minutes. Hell, see all of it. If you care about the developing world, it is really informative.]
>That's due to technological progress
Afaik, the industrial revolution needed capitalism. Any references otherwise?
But sure, the technology and the scientific method has been invented. Inefficient systems can grind along for a bit, until we in the open world outcompete them.
For countries to be rich enough not to have starving, they need capitalism and good governance.
>around 1 billion people starve today, that's not a small percentage IMHO:
This have the usual idealist problem -- you have to kill people to help them...
Let us split that value up, a bit. About a billion is hungry, according to Wikipedia (not the same as starving -- did you fake there?).
http://en.wikipedia.org/wiki/List_of_countries_by_percentage...
Let us get some absolute numbers:
http://en.wikipedia.org/wiki/Malnutrition#Malnutrition_demog...
Top three: India, 217.05. China, 154.0. Bangladesh, 43.45. That is, 400 millions of that billion.
Now, China is a communist country, so the real value is probably higher -- but they are implementing capitalism so the hunger will go away in less than two-three decades (unless the governance is too bad).
India will probably solve their own hunger problems if they can get good governance to work.
We can ignore India/China, because they (a) can solve their own problems and (b) both have nuclear weapons and would not take kindly to external forced solutions.
Bangladesh -- will never solve their hunger problems by themselves. It is generally held to be the most corrupt country on the planet and the politicians steal aid money. You can't solve the problems of Bangladesh without military intervention -- see Iraq, how that goes.
Note that with that population density, a Bangladeshi invasion would kill more people than starvation in decades...
You have no clue how to organize an intervention to China, India and Bangladesh. And how to sell it, without military intervention. And NO ONE ELSE HAS A CLUE, EITHER.
The next two in the "top" list: Congo/Pakistan (with 37.0/35 millions hungry) have civil wars/insurrections. Good luck solving that, without killing more than hunger will, in decades.
The rest of the big hunger case is Africa south of the Sahari desert.
http://en.wikipedia.org/wiki/Global_Hunger_Index#Conflicts_e...
"War and violence have been the major causes of widespread poverty and food insecurity in most of the countries with high GHI scores."
Well, as I said, you have an Iraq situation if you try to solve those cases...
(Tanzania might be a case. It is peaceful and has 16 million hungry, but it has gotten foreign aid by billions and billions since decades. It seems to be either too corrupt or too damaged by the early attempt at socialism... Might be a case where aid might be better used. I don't know enough about Ethiopia, but they have 30+ million hungry... might be fixable. But that and Tanzania is 3% [edit: 5%, didn't add] of your billion.)
So, most of the hungry will either be solved by themselves (India, China, Vietnam) with capitalism -- or will need a military intervention to change the governments (and/or stop conflicts which generate the starvation).
Especially good luck with Zimbabwe, South Africa would probably start a war with the military intervention needed to get rid of the b-stards in government, that starves their population.
And about changing the world system:
Consider East Germany. West Germany tried to integrate it and really, really failed. You want to do the same for the whole world? Abolish winter too, please... [Edit: Note that East Germany volunteered, the governments you want to reach are those that won't...]
I consider your thesis that hunger could [Edit: fixed word] be solved crushed and killed. I winz.
I think you are either a troll or ridiculously naive.
Edit: As an additional note:
>> You don't have to wait generations to curb starvation. In Cuba they managed in a decade. That's the issue here: Either we do it on our own accord or one day people will take their fair share by force and that leads to dictatorships.
First, Cuba is already a dictatorship which locks in its population, so they don't go to better places. Second, people in democracies with good governance don't generally starve (as I noted above). Third, that was according to Cuban statistics (see Soviet statistics from the 1930s...)
(To anser the next comment -- Cuba had to lock in their population before 1989 too, when they had both trade partners and lots of aid.)
Edit 2: Some parenthese. And as a last note, http://en.wikipedia.org/wiki/Starvation#Hunger_statistics
In 1970, 37% of the population in the developing world was "hungry", in 2007 it was 17%. (And as I noted above, the large majority of the remaining are in countries which will solve it themselves -- or the results of military conflicts/dictators. Hard to go in and "fix", both of those cases.)
Sigh, i guess I have been trolled but good to answer this whining. Enough.
Afaik, the industrial revolution needed capitalism. Any references otherwise?"
So there was no industrial revolution in the Soviet Union? Do we have to rewrite history? You are right though without knowing. The Soviet state capitalism which already resembles the current US state capitalism forced industrialization upon the rural country.
>around 1 billion people starve today, that's not a small percentage IMHO:
This have the usual idealist problem -- you have to kill people to help them...
"Let us split that value up, a bit. About a billion is hungry, according to Wikipedia (not the same as starving -- did you fake there?)."
I don't care what Wikipedia says, the UN says "starving" and the press is reporting "starving". Any jerk can edit Wikipedia.
Also stop suggesting genocide or killing people as a solution. The current system kills people in massive numbers. We have to stop THAT!
"You can't solve the problems of Bangladesh without military intervention -- see Iraq, how that goes."
Did you just suggest to go to war to solve the hunger problem? Sorry, you are downright criminal minded. I can't go on discussing with you. You seem to love the idea of killing people.
P.S.: "Consider East Germany. West Germany tried to integrate it and really, really failed."
Have you actually been to East Germany? You can't see any difference to Western Germany now, it's much more wealthy than any other country from the former Eastern Block.
Sigh, it is a bit easier to copy things that already is invented...
My next comment was: "But sure, the technology and the scientific method has been invented. Inefficient systems can grind along for a bit, until we in the open world outcompete them."
(My original point was that everything was going better since about 100-200 years ago, for the whole world. You claimed it was just technology, which is obvious -- everyone was poor before! Then I noted that without capitalism, there would probably never have been a fast industrial revolution. Now you answered with something irrelevant.)
But you knew that, you just didn't have an answer.
>Any jerk can edit Wikipedia.
That was a small point, but you can prefer the propaganda material -- and ignore the publication with references... :-)
It does make you look even more like a troll.
>The current system kills people in massive numbers.
>Did you just suggest to go to war to solve the hunger problem?
You claimed the starvation problem motivated a change of the economic organization of the whole planet.
I went over the statistics by country for hunger and noted that either:
(a) The majority will be fixed by their local countries the coming decades.
(b) Changing the situation for most of the rest of the hungry would demand a military intervention (with many more dead than die from lack of food for many years).
But you knew that, you just didn't have an answer.
>>Have you actually been to East Germany? You can't see any difference to Western Germany now
Not relevant to my argument (about the size of a problem a thousand times smaller than what you want to solve). Either.
But you knew that, you just didn't have an answer.
You failed to adress a single one of my points!
But I knew that I wasted time, before you answered.
I sincerely hope you are a troll and not this intellectually dishonest.
By the way, Wikipedia quotes the UN report -- and shows you to lie or be a fanatic.
http://en.wikipedia.org/wiki/Undernourishment#cite_note-51
From key finding #1 in the report: "FAO’s most recent estimates put the number of hungry people at 923 million in 2007"
(Note, not starving.)
In sum, you didn't answer a single one of my points -- and didn't have a fact correct.
I sincerely hope you're a troll and not this dishonest.
http://news.ycombinator.com/item?id=831958
I might also add to the long list of onreact's problems that the first quote made it look as if I wrote the first sentence ("That's due to technological progress").
Quotation error, too! He he, sometimes the trolls are more fun for us trolled, than the other way.
Economics is something that we can all agree to disagree on in order to talk about what we have in common: hacking and startups.
Nowadays the market is not free at all, it's ruled by a few oligopolies in most industries. You must be blind not to acknowledge that. The creation of corporations was the last nail in the coffin of the free market.
A market can only be free where all people can take part in it and not only a few decide who gets the money. Btw.: The abolitionists attempted to abolish wage slavery as well but it's still prevalent.
It's also absurd to sever the economics from the business and startups part. Also web programming in open source projects is just pure communism. So just saying we don't talk about economics here is like talking about cars without ever mentioning the engines.
Like with cars we have to rethink the way we build engines. With cars it's the hybrid/electric model, with capitalism it's something else. We just can't go on like that. The economy break down has just been postponed. It will happen sooner or later.
Ignoring or censoring that fact won't make it disappear.
To be honest: The current set up of startups begging a few VCs for money is neither sustainable nor does it make much sense. Just look at most startups. Either they disappear, they get swallowed and more or less left to rot or the VCs fire the founders. Or of course they go bankrupt. Is this what people are working for? I doubt that.
I guess sooner or later crowdfunding will take over and VCs will disappear. Maybe sooner than later as the financial system can finally break down any day.
My two cents.
If people were ok simply talking about economics as a mechanism for optimization... that would be one thing, but these discussions pretty much always degrade on the internet.
With all due respect, don't you get tired of being down modded for preaching relig.. politics on HN?
If you really can make a good argument for those theories, which shows them to be a serious alternative -- with proof that the failure modes won't kill millions of people -- put them on a web site and put up a link.
If you can do that, I promise to vote for it. (Also, you'll probably get the next Nobel for economics.)
Edit: Added a ",".
I perfectly conform with the HN system and guidelines and already have more 1000 karma points in around a month I'm actively contributing here. You contribute far less so don't teach me about HN.
Also you're very funny. How can I bring you proof that a theory (btw. which one exactly?) can do this or that in future? Time travel?
Last but not least, the current system is killing millions. 50k children dying daily so think twice before offending me and suggesting I somehow speak in favor of genocide.
So you don't have an alternative, but are only complaining that the present system isn't perfect and countries do realpolitik?
>>the current system is killing millions. 50k children dying daily so think twice before offending me and suggesting I somehow speak in favor of genocide.
Which, counted as percentages, is arguably better than ever in history. And is getting better ever decade. [Historically, where I grew up, the child mortality was around 20-30%... and large families.]
As you wrote, you don't have an alternative, either.
I am all for attempts to try other economic systems, but not inside 10000 km of where I live. Continue writing your political faith then, if it is so important to preach...
So you don't have an alternative, but are only complaining that the present system isn't perfect and countries do realpolitik?"
There are plenty of alternatives around, but I don't have to propose alternatives to be able to criticize something. This way you can shut up everybody, but "unfortunately" we have free speech. You don't post from Saudi Arabia or something, do you?
Now that you ask: Parecon is a whole system based on participation. It sounds quite feasible.
"As you wrote, you don't have an alternative, either."
See above.
"Which, counted as percentages, is arguably better than ever in history. And is getting better ever decade. [Historically, where I grew up, the child mortality was around 20-30%... and large families.]"
Again, that's due to medical and technological progress which does not depend on capitalism. It's the other why around: You have a better healthcare in Cuba than you have in the US that's why US citizens visit Cuba for surgery etc.
"I am all for attempts to try other economic systems, but not inside 10000 km of where I live. Continue writing your political faith then, if it is so important to preach..."
No, I didn't say there is no alternative and I didn't preach. You preach the gospel of realpolitik where there is no alternative. Are you a fatalist?
You can't list an example that has worked for a big population in an industrialized world -- and given them an open society.
It seems like complaints that someone should do something about cancer, because it isn't nice.
The problem is how -- just complaining that the world could be better is not really interesting (I expect better on HN).
>No, I didn't say there is no alternative and I didn't preach.
But on a direct question, you had no alternative.
You really seem emotionally involved and complain about the world system, which you would probably have to kill a large fraction of the world's population to change.
>Are you a fatalist?
Read what I said -- do tests of different organizational models but far from where I live, please. The failure modes are too scary.
[Edit: I am not joking, to run a society with an untested economic system and nudge it along seems like doing brain surgery on yourself. In addition, left wingers seem too much like a cult of true believers to be pragmatic, then you get a "strong man".]
If you really want to find my opinion, google for "democratic peace theory" and "resource curse".
The countries not opening up and embracing capitalism and good governance are the ones with problems. They are either oil countries ("free" money for the controlling junta) or poor dictatorships with high walls, big oceans and really poor population (Syria, North Korea, Cuba, etc). Modern monarchies, if you will.
For countries with capitalism and good governance, it is a question of time until their problems are solved.
>>that's due to medical and technological progress which does not depend on capitalism
Again, capitalistic models [Edit: added previous word] was needed for industrialization, afaik.
And the US health care system is even more fscked than my local European one. (Is health care the reason why Americans are fleeing to Cuba in droves?)
Edit: Changed an "or" to "and", "as" to "than".
You can't list an example that has worked for a big population in an industrialized world -- and given them an open society."
Well, to use my car metaphor: You are just saying that because I can't show proof that electric cars have worked in a country on a large scale we can't build electric cars.
With this way of thinking we should abandon any attempt to of modernizing anything and only use proven things. new things can't work, they must be proven first but when we don't try we can't prove anything. Perfect Catch 22.
"It seems like complaints that someone should do something about cancer, because it isn't nice."
Your are saying that cancer is natural and we aren't allowed to do anything about it.
"The problem is how -- just complaining that the world could be better is not really interesting (I expect better on HN)."
I showed you one alternative, Parecon,
http://www.zmag.org/zparecon/parecon.htm
which is a whole economic system based on participation and cooperation of everybody not just a few big players and you ignored it.
Also I don't complain, I just say that there are alternatives. You are only blocking any thought there might be of an alternative solution because in your opinion capitalism is either a natural law or God given but not made by man.
"But on a direct question, you had no alternative.
You really seem emotionally involved and complain about the world system, which you would probably have to kill a large fraction of the world's population to change."
Again, stop ignoring my suggestions. There are many alternatives. I offered you one, Parecon and you have chosen to ignore it but don't lie to me that there aren't any.
Also stop suggesting that there must be a kind of genocide involved in change. That's ridiculous.
">Are you a fatalist?
Read what I said -- do tests of different organizational models but far from where I live, please. The failure modes are too scary."
There are several organizational alternatives on a local level, the most popular throughout the world are parallel local currencies that don't allow capital accumulation. But you are right: You are plainly scared! You are afraid of anything that might mean a change. You're irrational. You won't even buy an electric car when 90% of the population will drive one.
US corporate capitalism and soviet state capitalism both installed industrialization by brute force but that has happened 80 or 100 years ago. The same model implemented in China and elsewhere would kill the planet.
Also studies show that capitalism is only good for a small percentage of a population both on in nation and on a global scale. Moreover capitalism just broke down this/last year, don't you see it? It's now completely financed by tax payers. How can you ignore that and tell me that capitalism works fine?
You are suggesting a bit larger problem than electric cars, it is more like nuclear driven cars that would literally explode with Megatons if any of them crashed...
(No, that is not an exaggeration, considering the repeated number of mass murders/starvations of at least millions wherever these experiments have been done -- China, Soviet, North Korea, Kampuchea, etc.)
>I showed you one alternative, Parecon,
I asked specifically for: "You can't list an example that has worked for a big population in an industrialized world -- and given them an open society."
Your answer was not relevant. but you knew that -- there is just no example -- and you lack the integrity to admit that.
>You are afraid of anything that might mean a change.
First you are upset by my lack of humanity in not wanting to change the world economy -- and then you call me coward for not wanting to do experiments that traditionally kills tens of millions of people.
Not coherent. But you knew that.
BTW, your extraordinary claims lack references (e.g. "capitalism is only good for a small percentage of a population" is not how Eastern Europe tells it!).
But then, you prefer news stories to Wikipedia with its references -- so there might not be enough TV programs on the net...?
Never mind, since you couldn't answer a single of my points regarding hunger above -- and lacked the integrity to admit it -- I only skimmed this.
The only question is if you're trolling or fanatic. In either case, you're a waste of time.