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The market economy exhibits most of the traits of the much hyped – and feared – singularity, where an artificial intelligence takes over the show and humans are enslaved.

We have all heard the stories of the powerful algorithms. They control our choices and they learn by analyzing an ever increasing amount of data. In the book Homo Deus, Yuval Noah Harari says that we have replaced the idea of God with an algorithm. In this emerging ideology, which he names Dataism, the ultimate goal is to increase the amount of information flow through the algorithm.

“Hitherto, data was seen as only the first step in a long chain of intellectual activity. Humans were supposed to distil data into information, information into knowledge, and knowledge into wisdom. However, Dataists believe that humans can no longer cope with the immense flows of data, hence they cannot distil data into information, let alone into knowledge or wisdom. The work of processing data should therefore be entrusted to electronic algorithms, whose capacity far exceeds that of the human brain.”

Harari makes a link to the markets in his analysis, for example he says that:

“We often imagine that democracy and the free market won because they were “good”. In truth, they won because they improved the global data-processing system.”

These are good observations, but in my view he doesn’t draw the full conclusions of his own observation.

That the market is the super AI and the Singularity.

According to the singularity hypothesis, an intelligent agent (such as a computer running software-based artificial general intelligence) would enter a “runaway reaction” of self-improvement cycles, with each new and more intelligent generation appearing more and more rapidly, causing an intelligence explosion and resulting in a powerful superintelligence that would far surpass all human intelligence. (Wikipedia)

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The Greek Disaster: State Inertia and the Market Economy

August 1, 2018

The Greek Disaster: State Inertia and the Market Economy

What happened in Attica, close to Athens, is without precedent. An ordinary fire, like the ones that occur in this area almost every other summer, met up with a terrible, sudden wind that turned it into real galloping inferno. The tragic result was 87 dead Greek citizens and more than 20 still missing. Huge questions loom on the horizon and only very limited answers are forthcoming. Are some of the lessons from this tragedy related to the wider geopolitical and political-economic questions?

Public-sector clientelism is leading to disastrous inefficiency

Why do tragedies like these occur in social environments with firmly entrenched clientelist political systems and in political entities that operate on the periphery of major, bureaucratic, modern empires? Sweden saw huge uncontrolled fires this summer. However, there was no loss of life or major disasters that befell the urban centers. In Portugal last year — and very recently in Greece — scores of people died, mainly due to the inability of the state machinery to efficiently deal with the problem. The major difference between these examples is the quality of the civil service. In Greece and Portugal there is no real ethics in the public administration, which frequently fails to meet any vigorous efficiency test .

In public bureaucracies that sprout favoritism the way trees grow branches, it is very difficult to design long-term plans to handle critical and life-threatening situations. Likewise, the political system lacks the prerequisites to draw upon informed societies that are trained to be cooperative and disciplined when there is a need for coordination. When clientelism dictates and forms the essence of the political culture, this culminates in fractured societies that are infected with spreading islands of lawlessness and limited possibilities for administrative coherence.

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Conservativism Now? Market Economies and the Liberal Anti-Culture

June 19, 2018

Conservativism Now? Market Economies and the Liberal Anti-Culture

The persistent purpose of my writing over the past decade has been to reflect in a hopefully complex manner on the sort of culture necessary to “solve” the climate and ecological crisis and create a truly sustainable way of life.

One of my main themes has been that neither liberalism (nor Liberalism[i] ) is suited to that task, in large part because it is fundamentally growthist, requiring for social stability the “simple requirement,” as Franklin Delano Roosevelt put it, of “the enjoyment of the fruits of scientific progress in a wider and constantly rising standard of living.” As David Fleming wrote, “starting some three centuries ago, the market economy has, with growing confidence, been the source and framework for a loose and easy-going but effective civil society and social order” (85). Expansion, growth, and the promise of limitless possibility are the foundation of the “effectiveness” mentioned by Fleming. Growth is the social glue that has held liberal industrial societies together, which is one of several connected reasons why we won’t address our relationship to our natural ecology by becoming “more liberal” or “more progressive.” Sustainability, then, is neither liberal nor progressive.

But, one might ask, why so persistent a critique of our liberal friends? After all, they (we) seem the most inclined to pay attention to the environment, and to show care and concern for our connection to nature. One might imagine a story about a contradiction in progressive attitudes, torn between concern and empathy, on the one hand, and growth and prosperity on the other, happily resolved as the empathetic side prevails in the face of growing awareness of the collateral damage of growth and prosperity. Perhaps.

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Are Economic Crises Inherent to Market Economies?

December 12, 2017

ARE ECONOMIC CRISES INHERENT TO MARKET ECONOMIES?

It is interesting to note that Marx, in his analysis of the capitalist economic system, basically concentrates on the study of the imbalances and maladjustments which occur in the market.

This accounts for the fact that Marxist theory is primarily a theory of market disequilibrium and that occasionally it even coincides remarkably with the dynamic analysis of market processes which was developed by economists of the Austrian School, and particularly by Mises and Hayek themselves. One of the more curious points on which a certain agreement exists relates precisely to the theory of the crises and recessions which systematically ravage the capitalist system. Thus it is interesting to observe that certain authors of the Marxist tradition, such as the Ukrainian Mijail Ivanovich Tugan-Baranovsky (1865–1919), reached the conclusion that economic crises originate from a tendency toward a lack of proportion among the different branches of production, a lack Tugan-Baranovsky believed inherent in the capitalist system.1 According to Baranovsky, crises occur because

the distribution of production ceases to be proportional: the machines, tools, tiles and wood used in construction are requested less than before, given that new companies are less numerous. However the producers of the means of production cannot withdraw their capital from their companies, and in addition, the importance of the capital involved in the form of buildings, machines, etc., obliges producers to continue producing (if not, the idle capital would not bear interest). Thus there is excessive production of the means of production.2

Clearly part of the underlying economic reasoning behind this analysis bears a strong resemblance to that behind the Austrian theory of the business cycle. In fact Hayek himself mentions Tugan-Baranovsky as one of the forerunners of the theory of the cycle he presents in Prices and Production.3

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“It Could Reshape The Global Trading System For Decades” – US Rejects China’s Bid “Market Economy” Status

November 30, 2017

“It Could Reshape The Global Trading System For Decades” – US Rejects China’s Bid “Market Economy” Status

The US has filed a legal submission to the WTO as a third party, intervening in a case that China has brought against the European Union. The US rejects China’s argument that under the 2001 agreement, which confirmed China’s WTO status, it would should automatically be considered a “market economy” fifteen years after joining. The dispute could affect both America’s and China’s future within the international body and, as the New York Times contends, “shape the global trading system for decades to come.” It goes without saying that this will only ratchet up the current tensions between the US and China over trade, which has been a cornerstone of Trump’s rhetoric since he launched his election campaign.

Briefly, the US submission sets out the legal arguments explaining why China should not be designated as a market economy, which would give it preferential treatment under existing WTO rules. China is currently designated a “nonmarket economy” which allows the US, EU and other countries to decide whether China is dumping products at unfair prices under a WTO framework. If they decide that China is dumping, countries can add an extra duty to protect domestic manufacturers.

According to the Financial Times, “the Trump administration has opposed China’s bid for recognition as a “market economy” in the World Trade Organization, citing decades of legal precedent and what it sees as signs the country is moving in the opposite direction under Xi Jinping. The US opposition to China’s efforts to be recognised as a market economy in the WTO came in a legal submission due to be released on Thursday in a case brought by Beijing against the EU. Market economy status would make it more difficult for the US to prove anti-dumping cases against Chinese companies at the WTO.”

…click on the above link to read the rest of the article…

Neo-Liberalism: From Laissez-Faire to the Interventionist State

October 24, 2017

NEO-LIBERALISM: FROM LAISSEZ-FAIRE TO THE INTERVENTIONIST STATE

One of the most accusatory and negative words currently in use in various politically “progressive” circles is that of “Neo-Liberalism.” To be called a “Neo-Liberal” is to stand condemned of being against “the poor,” an apologist for the “the rich” and a proponent of economic policies leading to greater income inequality.

The term is also used to condemn all those who consider the market economy to be the central institution of human society, at the expense of senses of “community” and shared caring and concern beyond supply and demand. A Neo-Liberal is one who reduces everything to market-based dollars and sense, and disregards the “humane” side of mankind, say the critics of Neo-Liberalism.

The opponents of Neo-Liberalism, so defined, claim that its proponents are rabid, “extremist” advocates of laissez-faire, that is, a market economy unrestrained and unrestricted by government regulations, controls or redistributive fiscal policies. It represents and calls for the worst features of the “bad old days” before socialism and the interventionist-welfare state, each in their respective “radical” or “moderate” ways, attempted to abolish or rein in unbridled, “anti-social” capitalism.

The Birth of Neo-Liberalism: Walter Lippmann and a Paris Conference

The historical fact is that these descriptions have little or nothing to do with the origin of Neo-Liberalism, or what it meant to those who formulated it and its policy agenda. It all dates from about eighty years ago, with the publication in 1937 of a book by the American journalist and author, Walter Lippmann (1889-1974), entitled, An Inquiry into the Principles of the Good Society, and an international conference held in Paris, France in August of 1938 organized by the French philosopher and classical liberal economist, Louis Rougier, centered around the themes in Lippmann’s book. A transcript of the conference proceedings was published later in 1938 (in French) under the title, Colloquium Walter Lippmann.

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Governments Create Monopolies and Cause Worker Exploitation, Not Free Markets

May 19, 2016

GOVERNMENTS CREATE MONOPOLIES AND CAUSE WORKER EXPLOITATION, NOT FREE MARKETS

The world is threatened with a renewed wave of anti-capitalism and anti-business sentiments and policies. Many who cheered the demise of Soviet communism in the early 1990s, presumed that this meant that, by default, the case for free markets and competitive enterprise had won in the battle of ideas. Over the last twenty-five years it has become clear that the same misguided arguments against free market capitalism constantly reemerge, like an ideological vampire waiting to rise from the intellectual grave and drain market freedom of its lifeblood by more government regulations and controls.

One of the most persistent of these misguided ideas is the belief that left on its own, competitive markets tend to bring about concentration of wealth, inequality of income, and “market power” to exploit workers and consumers of what justly should be theirs.

The most recent example of this is an article on, “Monopoly’s New Era,” by Joseph E. Stiglitz, the 2001 Nobel Prize winner in economics, which appeared on Project Syndicate website on May 13, 2016. Professor Stiglitz is one of those thinkers who seem to see a “market failure” at every turn and apparently has rarely found a government intervention he did not like.

Two Ways of Looking at the Market Process

He contrasts two differing views of the market economy. One view, an outgrowth of Adam Smith and those who followed in his intellectual footsteps over the last 250 years, argue that freedom, prosperity, and income equity are generally assured wherever the market is kept open and competitive, with minimal government impediments.

The other “school of thought” that he interestingly identifies with no one particular thinker of the past “takes as its starting point ‘power,’ including the ability to exercise monopoly control or, in labor markets, to assert authority over workers,” Stiglitz explains.

…click on the above link to read the rest of the article…

Understanding True Credit and False Credit

March 8, 2015

Understanding True Credit and False Credit

There are two kinds of credit: that which would be offered in a market economy with sound money and banking (true credit), and that which is made possible only through a system of central banking, artificially low interest rates, and fractional reserves (false credit).

Banks cannot expand true credit as such. All that they can do in reality is to facilitate the transfer of a given pool of savings from savers (i.e., those lending to the bank) to borrowers.

Consider the case of a baker who bakes ten loaves of bread. Out of his stock of real wealth (ten loaves of bread), the baker consumes two loaves and saves eight.

He lends his eight remaining loaves to the shoemaker in return for a pair of shoes in one-week’s time.

Note that credit here is the transfer of ”real stuff,” i.e., eight saved loaves of bread from the baker to the shoemaker in exchange for a future pair of shoes.

Also, observe that the amount of real savings determines the amount of available credit. If the baker had saved only four loaves of bread, the amount of credit would have only been four loaves instead of eight.

Note that the saved loaves of bread provide support to the shoemaker. That is, the bread sustains the shoemaker while he is busy making shoes.

This means that credit, by sustaining the shoemaker, gives rise to the production of shoes and therefore to the formation of more real wealth. This is the path to real economic growth.

– See more at: http://www.cobdencentre.org/2015/03/understanding-true-credit-and-false-credit/#sthash.cG5TkgeW.dpuf

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