Free open markets work better than central bureaucracies.
The excellence of the exchange solution becomes even more evident when contrasted with the defects of a bureaucratic solution. The bureaucrat … (gives the people) what he thinks is good for them, and he gives it in the measure he finds possible or convenient; nor can he do other wise, for the brains of a bureaucrat are not equal to the task of thinking of everything; only the brains of all men together can even approximate to that. … when a limited liability company has served its day, it goes to bankruptcy court; but when bureaucrats take over power, they intend to stay. … when the pressure of terrorism is needed to oil the wheels of enterprise, then the immediate effect is either an explosion or else servile degeneracy. … the exchange solution is a dynamic equilibrium resting on the equilibria of markets. … every product of the exchange economy must mate through exchange with some other product, and the ratio in which the two mate is the exchange value. The generality of this equilibrium makes it indifferent to endless complexity and endless change; for it stands on a level above all particular products and all particular modes of production. While these multiply and vary indefinitely, the general equilibrium of the exchange process continues to answer with precision the complex question, Who, among millions of persons, does what, among millions of tasks, in return for which, among millions of rewards? Nor is the dynamic solution unaccompanied by a continuous stimulus to better efforts and more delicate ingenuity. For the uniformity of prices means that the least efficient of those actually producing will at least subsist, while every step above the minimum efficiency yields a proportionately greater return. (CWL 21, 34-35)
In the first section .I., we’ll list a) a ranking or scale of preferences of meanings and values within the ecology in which humans live, b) money’s values from different points of view, and c) an ordered hierarchy of economic activity. In the second section .II., we’ll add detail to that scale of preferences and situate money’s values and the ordered hierarchy within the scale. Finally .III., we’ll display excerpts to point readers to original sources. One might find this outline useful when reading A Must-Read: Fred Lawrence, “Money, Institutions, And The Human Good”: An Ordered Perspective Distinguishing Social and Monetary Values. Lawrence points out that Lonergan properly clarifies the concept of exchange value in a free exchange process so as to destroy with a single stroke the mistakenconcepts of Adam Smith, John Locke, David Ricardo, and Karl Marx.
Not only do feelings respond to value. They do so in accord with some scale of preference. So we may distinguish vital, social, cultural, personal, and religious values in an ascending order. (CWL 14, 31-2/32-3) (Continue reading)
On Saturday, 12/19/ 2020,John Cochrane‘s blog “Bisin on MMT Rhetoric” cited Alberto Bisin’s review of Stephanie Kelton’s Book “The Deficit Myth. “ Alberto Bisin contends, as do we, that So-Called Modern Monetary Theory, as espoused by Kelton and others, does not qualify as a theory. Cochrane quotes Bisin:
The book should be seen as a rhetorical exercise. Indeed, it is the core of MMT that appears as merely a rhetorical exercise. As such it is interesting, but not a theory in any meaningful sense I can make of the word. The T in MMT is more like a collection of interrelated statements floating in fluid arguments. Never is its logical structure expressed in a direct, clear way, from head to toe.
For an ordered perspective on the role of culture in the ecology consisting of the schemes of recurrence of a) technology, b) production and exchange, and c) politics, one should read Fred Lawrence’s article, “Money, Institutions, and the Human Good.”Continue reading →
N. Gregory Mankiw’s two textbooks – Principles of Microeconomics (Fourth Edition, 2007) and Brief Principles of Macroeconomics (Fifth Edition, 2009) – have their first chapter entitled “Ten Principles of Economics.” The first four of the ten principles deal with the concept of efficient cause consisting in the subjectivepsychology of human participants as they make microeconomic decisions about their personal economic well-being. In contrast, Lonergan’s Macroeconomic Dynamics: An Essay in Circulation Analysis (1999) first treats the objective macroeconomic situation to whose laws the psychological participants must adapt in the conduct of their lives. Lonergan seeks the immanent macroeconomic intelligibility of the objectivesystem of production and exchange. Both Mankiw and Lonergan deal intelligently in the micro and macro realms. Lonergan seeks to treat “first thing first.” Continue reading →
Preliminary note: In this section we are addressing the proper understanding and management of the economic process in normal, non-pandemic times. We affirm that the current pandemic calls for extraordinary measures.
Unwittingly, first out of ignorance and recently as necessitated by a pandemic, some nations, including the U.S., are wandering into the ultimatemenace to the financial system, the spending without constraint blessed and recommended by unscientific Modern Monetary Theory. (Click here and here) The systematic result of MMT’s unconstrained printing of money, unjustified by corresponding production of goods and services, is rampant inflation in prices for a) goods and services and/or b) financial assets. (Continue reading)
Concomitance is, I would claim, the key word in Lonergan’s economic thinking. [Philip McShane, [Fusion 1, page 4 ftnt 10]
Recall that the subtitle of CWL 15 is “An Essay in Circulation Analysis”. It is by virtue of concomitance that continuity and equilibrium are achieved so as to constitute an orderly process of circulations. (Continue reading)