Beyond OWS: Problem #1: The Market Ain’t So Free

Published by timdean on

This post is one of my series on the Occupy Wall Street movement, on the problems that I believe are underlying the protest and, at the end of the series, some proposed solutions. This post is on the first of the three core problems: that the market makes us miserable:

The Occupy Wall Street movement began as a collective expression of outrage at the current economic conditions in the United States. Crippling public and private debt, high unemployment, gaping income inequality and a recession caused by excessive borrowing and reckless behaviour on Wall Street. Yet, at the same time that many people can’t find a job, there are massive bailouts for those on Wall Street who precipitated this economic disaster.

But these are just the surface problems. While many OWS protesters are championing these issues (among others), they’re but symptoms of a far deeper malaise. If the OWS movement is to go beyond being a protest, it needs to direct its outrage not only at the present economic circumstances, but at the deeper causes of those circumstances. And that’s what this post is about.

Because economics is wonderful tool, but a horrible master. And we let it become our master.

The word “economy” originally meant “efficiency” or “frugal”, particularly in terms of management of resources. It used to be an approach. But now it’s a thing, and it’s a thing that we serve.

This is arse-backwards.

Economics is a science that helps us understand how to manage resources to reach a desired end. If people desire X, the market will often be the most efficient process to produce X to meet that desire.

But sometime around the mid-20th Century (1944, to be precise – the year in which Friedrich Hayek’s The Road to Serfdom was published), we let economics stop being the arbiter of the means to achieve some valued end, and opened the door for economics to become the arbiter of the values themselves.

According to this ideology (now often called ‘neoliberal’), if the market deigns not to produce some product, that’s because we, by definition, don’t value that product. Likewise, if the market encourages the production of some product, that’s because, by definition, we value that product.

This is wrong.


It wouldn’t be wrong if human beings were like homo economicus, i.e. perfectly rational agents, and we had access to all the relevant information to make optimal decisions that further our clearly-understood interests weighed up over the near- and the long-term.

But we’re not. We’re homo sapiens, a species of which one should never overestimate its rationality.

The other fallacy of contemporary free market economics is the efficient markets hypothesis. Yes free markets are efficient – often far more so than regulated markets. But they’re not perfectly efficient.

Certainly, one of the triumphs of the market is that money works as more than just a medium of exchange – it represents information. If a product goes up in price, that says something deeper than that we need to pay more for it. It says that demand has increased, that it’s more desired, that it is more valued, or that supply has decreased. And the information is spread as quickly as it takes for someone to strike out a price tag and write in another figure – or for someone to run their eyes over a store catalogue or website.

On the other hand, you could sit back and estimate how many of a product need to be produced next year, and mandate that they’re built by a single company – i.e. the centrally-planned economic route. This has the benefit of economy in the sense that there’s little wastage, little redundancy. But, astoundingly, this is less efficient than allowing multiple companies – each with duplicate design, engineering, manufacturing and management – to compete and build that product using pricing as one of the guides as to what people desire.

But markets aren’t as efficient as we’d hoped. Information is rarely transparent. There are individuals, groups and companies that don’t want you to have certain information. As a result there is often informational asymmetry – often in favour of the seller – which puts the buyer at a disadvantage when it comes to selecting the best product to satisfy their desires.

People also react to information in irrational, and often unpredictable, ways. And there’s only so much information one can digest in a finite time, leading to error-prone heuristics guiding behaviour rather than calculated reason.

Growth over sustainability

These two problems have compounded another: economics intrinsically doesn’t give a rat’s arse about sustainability. The future is less valuable than the present – that’s the principle of ‘discounting’. And the distant future – i.e. the world our children and grandchildren will live in – is often considered to be worth bugger all.

Competition also demands that companies consume resources as quickly as the market demands, regardless if that leaves us with none tomorrow. Then you get the ‘tragedy of the commons’, where an unregulated shared resource will be depleted even by rational agents or companies, ultimately to everyone’s detriment.

Current economics is also based on a growth paradigm. It makes growth not only as the leading metric of economic success, but it assumes that growth is intrinsically good – so it’s no longer a metric to measure something, but a metric that is striven for as an end in itself. The assumption is that growth fundamentally means the economy is better able to satisfy the desires of those operating within it. But that’s bunk.

It’s bunk because the satisfaction of our desires aren’t bound to economic productivity (as I’ll explain below), and because it assumes the inputs into the economic equation are effectively infinite. But they’re not infinite. So our entire economic paradigm is predicated on a fundamentally unsustainable assumption.

Hedonic treadmill

The final – and possibly the greatest – problem with economics is that we pursue wealth instead of wellbeing. The neoliberal assumption that they equate to the same thing is utterly wrong.

Humans have a complex psychology – which is something I’m exploring in my PhD thesis – and our understanding and expression of our desires and interests is far from being a black and white issue.

Basically, we often don’t know what makes us happy. Most of us are really quite at a loss as to how to promote lasting happiness – or wellbeing – and instead chase fleeting happiness – or pleasure.

I’m sure all of us can recall countless times when we’ve prioritised some activity that will bring us immediate pleasure – eating a sweet or fatty meal, drinking a lot of alcohol, sleeping with someone opportunistically – that has ultimately brought us greater unhappiness in the long run.

And many of us report that we’re stressed, anxious, that we feel under pressure at work and at home, that we’re afraid we might not be able to afford the rent/mortgage/credit card repayments, afraid we might lose our job – even if we don’t like our job very much. We report that our lives lack deeper meaning and purpose, and that we feel isolated, even when surrounded by friends.

One of the greatest misconceptions in popular psychology is that more pleasurable experiences will lead to greater wellbeing. Sadly, this is simply not how our psychology works.

Instead, chasing pleasure often involves working more, being more stressed, having less free time, and we end up buying things that give us fleeting bursts of pleasure and then fade away. Our psychology is built to normalise our experiences – even pleasurable ones – so even that shiny new sports car fades into the background in a surprisingly short amount of time, yielding little ongoing pleasure.

This is the very definition of the hedonic treadmill: we have to keep running just to stay where we are. And many of us are kept miserable because of it.

In fact, it turns out wellbeing is promoted more by a lack of negative emotions than an abundance of positive emotions. Someone who lives without stress, without fear, without anxiety, is far more likely to be happier more often than someone who works in a high-paying, high-stress job, and who spends far more on pleasurable goods and experiences.

Yet our economy is built around the hedonic treadmill. Despite the neoliberal assertion that the market fundamentally serves our desires, it’s actually working against them. The market only serves to push our our surface pleasure buttons, but it leaves our lasting wellbeing listing.

This is what is wrong with the system – at least in terms of economics. Certainly, inequality is bad – particularly because it prevents lower income individuals from having access to the opportunities to steer their life the way they’d like. But even worse is that the promise of the free market to make us happy is illusory.

This is not to say that the market should be scrapped. I am certainly not advocating centrally-planned economies. The market is a wonderful tool. All I’m suggesting is that we’re using it wrong.

In the next post I’ll cover the second of the three big problems with ‘the system’: politics, particularly with the failure for the 20th century relics of the Left and Right to offer genuine solutions to 21st century problems for 21st century (i.e. post-baby boomer) people. Then I’ll move on to the third: ‘society’, which will touch on some of the points raised here about the hedonic treadmill, and ask: what is it we want from life, what do we want from society? And suggest whatever that is (and terribly few are even asking), it’s not delivering.

Finally, I’ll offer my three solutions. But I think one 1,300 post at a time is quite enough for all of us.


Paul · 31st October 2011 at 6:31 am

Maybe things look different in Australia where the unemployment rate is 5.2%, but I would say that, more than anything else, people in the developed world are upset because of the state of the labor market. Maybe all of the things said above about economics as dogma, sustainability, and the hedonic treadmill are true, but I think people are simply angry because they feel they no longer have control over their own destiny. Hard work, intelligence, skill, experience, etc. will not necessarily help you much during the middle of an economic depression. People just want to know that they will be able to pay their bills, have a roof over their head and have food on their table. Perhaps consumerism makes that more difficult, but the unhappiness I see in the U.S. is much more related to a lack of opportunity and a fear of poverty and deprivation than to the problem that people demand too much from life and expect purchases to make them happy. Are financial security and the ability to control your own destiny really shallow things to desire? Does pursuing those things lead to unhappiness?

Now, it may be that economics as religion or dogma has lead the developed world down a path of greater volatility that ignores the importance of stability for maintaining opportunity for the masses. And that may very well be the point of the following posts. I just thought I would point out the lack of an explanation of how the problems with economics has lead to the current situation in which unemployment in the U.S. and Europe is unacceptably high and median household income is steadily declining.

However, coming from a Quaker background, I think that it is correct that economics as dogma, the hedonic treadmill, and the lack of a focus on sustainability lead people and policy makers to make poor decisions that are not conducive to the well being of citizens or the polity.

Tim Dean · 31st October 2011 at 8:09 am

Good point about the sentiment overseas Paul. And I certainly want to acknowledge that very sentiment. However, while I feel OWS was *triggered* by high unemployment and recession which corresponded with Wall Street bailouts, high corporate profits and increasing income inequality, I see these things are being symptomatic of a deeper malaise, as mentioned in this post.

Income inequality, for example, is a result of free market dogma, which presumed the trickle down would create jobs. It doesn’t. The recession was caused by reliance on the efficient markets hypothesis. Unemployment is a result of the global recession and debt crisis, and is compounded by the fact employment is not intrinsically valuable to the market, but is a product of the market. So an economy can be booming on paper, yet still see >10% unemployment.

What I really want is for the OWS movement to move beyond the outrage directed towards the present economic circumstances and direct it towards the deeper cause of those circumstances.

I’ll edit the post to clarify this point.

JW Gray · 31st October 2011 at 4:22 pm

Are you saying that governments or politicians are using fallacious economics? If so, how?

Skeptical Enlightenment · 2nd November 2011 at 10:01 am

“gaping income inequality and a recession caused by excessive borrowing and reckless behaviour on Wall Street”

I challenge your premises. Income “inequality” is demonstrably flat and your excessive borrowing is an entirely predictable outcome from the Fed’s zero rate policy. I also challenge your notion that free markets are usually more efficient “often far more so than regulated markets”. Recent research has shown just how bad regulated markets really are. I challenge you to demonstrate a single real market, and by that I mean one of real good and services (not something mythical like carbon credits) that is made more efficient by external regulation. Perhaps you are confusing efficiency with your evolved sense of social justice.

Humans are not perfectly rational according to some subjective and arbitrary standard. However, almost all people act in their own rational interests quite well. Especially when you take the time to understand the interests of any particular individual.

Any philosophy that seeks to diminish individual choice invariably fosters some flavor of collectivism, which is the proverbial road to hell paved with good intentions.

Tim Dean · 2nd November 2011 at 9:09 pm

I’m not sure what you mean by “Income ‘inequality’ is demonstrably flat”. Can you elaborate?

I do agree excessive borrowing is a consequence of low interest rates. And this encouraged high-risk behaviour and reckless borrowing, creating the housing bubble and fuelling unsustainable consumer spending, among other things.

Also not sure of your point about how bad regulated markets are. I’ve stated that, strictly speaking, less regulated markets tend to be more efficient and more productive. However, efficiency and/or productivity is not the only metric by which we judge an economic system. A highly efficient system that results in 25% unemployment, for example, is going to be unacceptable. Or even one that results in 25% unemployment once every 15 years. Or one that sees 90% of the wealth concentrated in 10% of the population, if the remaining 90% are struggling.

This is why the US had the TARP bill. It would arguably have been better economically to let the bankrupt companies fail. The economy might even have recovered sooner had they failed. However, hundreds of thousands, if not millions, of people would have been out of work, and this arguably would have resulted in even greater harm being done, socially and economically. At least, that’s the argument behind the TARP bill – not that I’m giving it an unconditional tick of approval.

I also contest the efficient market hypothesis on the grounds that information flow isn’t sufficient and agents not sufficiently rationally competent to reach the ideal level of efficiency it suggests is possible.

The kind of regulation I advocate is regulation that ensures the market serves our desired ends. Preventing monopolies, regulating banks, environmental protection, accreditation etc are regulations that might dent efficiency or wealth creation, but they steer economic activity away from practices deemed destructive.

Not sure what you mean by humans not being perfectly rational “according to some subjective and arbitrary standard”. I think economists (and philosophers) have a very clear idea of what rational is – i.e. individuals who are able to steer behaviour in terms of clearly articulated desires, guided by transparent beliefs, informed by information provided by the world around them. And people aren’t much like that. Heuristic thinking is more likely to guide behaviour than this kind of rationality. There are countless psychology experiments that demonstrate this, the ultimatum game being just one.

And I don’t subscribe to your brand of libertarianism, if that’s what you’re suggesting in your last paragraph. I also don’t subscribe to overt collectivism. I do subscribe to using economics as a tool – limited though it is – with careful regulation to steer it towards ends that are able to produce genuine wellbeing – as I’ll discuss in a future post in more detail.

Skeptical Enlightenment · 2nd November 2011 at 11:12 pm

See Mark Perry’s post on income inequality:

According to the Austrians, a truly free labor market wouldn’t have much in the way of unemployment that wasn’t voluntary.

Your wealth argument (90/10) split smacks of the fixed pie canard. Wealth is created, not distributed. The entrepreneur who creates a new product or service and enriches themselves with it by proving it to people who desire it does not make the rest of us poorer by their rising wealth.

TARP turned out to be nothing more than a political slush fund. It bought none of the flawed mortgage backed securities that it was reportedly intended to purchase and the money was used to bailout unions and other political favorites.

If humans were as irrational has you seem to be arguing, how could we have a working society at all? America has reached faster and further into wealth than all societies combined who have come before us. Government made that happen?!?!?

You see, a tool has to be wielded by a worker. Someone who controls the tool and bends it to their will. Your proposed use of “economics”, a sociological rather than a scientific tool, would require coercion in order to force individuals into your “rational” model. And we know through thousands of years of human history that never turns out badly…

Tim Dean · 3rd November 2011 at 9:06 am

Perry’s figures are unconvincing for no less than four reasons: 1) he only shows the top quintile, and even then it’s increasing; 2) if he had the courage to show the top 1% it would look more like this; 3) an increase of Gini coefficient from 0.4 to 0.5 is hardly cause to claim income inequality is no big deal, as 0.5 is higher than most OECD countries (which have an average of 0.31); 4) Perry works for The American Enterprise Institute, a bald proponent of precisely the economic dogma I’m challenging.

It might be the case that a truly free labour market would have near full employment, but at the cost of drastically lower wages for many. If high employment or wealth creation is your aim, then go for it. But that places economic ends before the ends of the people the economy is supposed to serve. A minimum wage might place a drag on economic output, but it prevents many from living below the poverty line. It’s a sliding scale, not a black and white issue.

I’m well aware that economics is not a zero-sum game. But it’s not entirely non-zero-sum.

If humans were as irrational has you seem to be arguing, how could we have a working society at all?

I’m not sure if you’re serious about this question. It smacks of a straw man. But if you read up on psychology, you’ll find that reason has a place in decision making, but it’s a gross error to overestimate its role in directing behaviour. Read some advertising manuals while you’re at it – they’re the masters of motivating action, and appeals to reason have diminished in favour of appeals to emotion, for example.

America has reached faster and further into wealth than all societies combined who have come before us. Government made that happen?!?!?

I would encourage you to reflect on the circumstances of America’s economic growth, particularly post-WWII, when America had a substantial head start on other post-war economies, and government made significant investments in science, technology and education. Fortuitous global circumstances and government intervention helped mitigate some of the problems of an aggressive economic model, but those circumstances – along with the Right making the economic model more aggressive while hobbling the government’s ability to manage it – have led to the state the U.S. is in now: crippling debt, low growth, income inequality, high unemployment etc.

And consider that the golden eras of U.S. economic growth had greater regulation, higher taxation and greater government involvement.

I feel your dogmatic adherence to economics as an end in itself is probably more motivated by your broader worldview which, I venture to guess, says the world is a competitive place where endeavour does and should be rewarded, and those unwilling to work hard don’t deserve coddling. If that’s the case, I fear you may have selectively sought out the economic and political ideologies that most fit that worldview. Yet that worldview doesn’t necessarily accord with the way the world really is – as I discuss in the post about politics.

Skeptical Enlightenment · 4th November 2011 at 9:36 am

So then, what is the proper income inequality GINA? What method of coercion would you suggest to “adjust” our current GINA figure to one more acceptable than a, mostly, voluntary system of exchange has arrived at? Personally, I would start with confiscating the wealth of the residents of Washington D.C. and its environs, who have recently surpassed Silicon Valley as the wealthiest location in America. How productive and efficient those creators of wealth must be.

So lower wages for working, productive individuals is less desirable than unemployed, unproductive individuals who must be supported by expropriation? How exactly does one improve one’s prospects when unemployed, other than to vote for greater levels of public support?

So, because it is possible to influence purchasing behaviors via effective marketing techniques (sex sells after all) it is therefore permissible for a select ruling class to coerce behaviors they deign more acceptable than others? Who makes these decisions? What angels should we seek to govern our “irrational” natures for the benefit of ourselves?

If by the “Right” you mean the Federal Reserve, I almost agree with you. America has been the driving force of innovation for all of its existence. Even now we out produce the entire world in physical and intellectual terms. I believe I can successfully argue that we’ve done that in spite of our government and certainly not because of it.

Greater regulation? Are you really keeping a straight face when you write that? When more than 40,000 pages of regulation are added to the Federal Register every year? We STILL don’t know all of the rules of the Obamacare bill as DHS has not finished drafting the rules required by the law. People derided Nancy Pelosi when she stated that they would have to pass the bill before we could know what was in it. That was an absolutely true statement. Even Congress and the Justice Department cannot count all the current Federal criminal statutes now on the books. It has literally become impossible for a Citizen to know all the behaviors they must avoid to prevent becoming a criminal.

Economics is a study of what already exists, the real behavior of participants within the economic system. Economics is not a planning or predictive science and is therefore unsuitable as a governance framework of any stripe. The rise of macroeconomics and its ability to provide politicians the pretense of knowledge with the patina of legitimacy is leading us down the road to self immolation.

I do believe in freedom, industry, charity, and thrift. I also believe that attempting to legislate those values has diminished both public and private life. As we attempt to add greater and greater control to correct the deficiencies seen in previous attempts at control, we are increasing the the instability of our Republic as we wear it away with good intentions.

Tim Dean · 4th November 2011 at 4:21 pm

Your propensity to push positions to their extremes – both in idealising your own and mischaracterising mine – is unhelpful. These issues are not matters of right and wrong, but are complex sliding scales. Just because 100% regulation is bad doesn’t make 0% regulation good. One of my points is simply that we’ve slipped too far down towards the low regulation end of the spectrum, which not to say we should climb too far back up to the high regulation end.

I also stress that the position you advocate is predicated on the idea that wealth creation is the ultimate end. I disagree that this ought to be end we seek. In fact, I suggest it isn’t the end most people seek – they seek wellbeing – and they don’t realise that wealth alone is insufficient to make them happy.

I also suggest your characterisation of economics is incorrect. Economics studies the creation, distribution and consumptions of wealth, products and services, and it does that partly by looking at real behaviour and partly through abstract modelling of behaviour. However, behaviour is far more complex than abstract modelling using idealised rational agents – hence the rational agent crutch that economists employ today.

It is a mistake (one made all-too often by economists) to take those highly abstracted models of rational agents and assume that real people behave that way. Game theory, for example, is wonderful at modelling different interactions, but is not so good at modelling people’s decision-making processes in those interactions.

Economics also can, and should, be used to guide political decisions, but only as a tool to provide information and make predictions about the impacts of particular decisions. It’s still up to non-economists to plug in the values that are relevant (‘how important is employment’, ‘how important is x industry compared to y industry’, ‘how important is happiness’ etc).

I am also not as sceptical as you about the potential benefits of government. Of course a self-interested ruling elite shouldn’t be telling us what’s good for us. However, that would represent a failure in implementation rather than a failure of principle. Wise leadership can influence the economy and our behaviour for the better – given ample checks and balances to prevent it descending into corruption or error.

I also add that I’m not only talking about the U.S. in these posts, but all developed liberal capitalist democracies. The U.S., if anything, represents a case study of how to push things way too far in favour of the market, but it’s not the only example of a failure of economics to yield the fruits of happiness it has promised.

Skeptical Enlightenment · 5th November 2011 at 1:27 am

Could you please supply a few examples of how you believe “we’ve slipped too far down towards the low regulation end of the spectrum”? I really, really find it hard to believe that there are any good examples of this. Some of the more notable examples you might cite such as airline deregulation, appear to me to be universally successful. In today’s world with Dodd Frank, PPACA, and others our lives are blanketed by regulations.

I do not believe that wealth creation is the ultimate end, however I do believe it is the ultimate enabler. I believe it is a moral imperative that one create enough wealth to support yourself and your desires. In doing so the “invisible hand” betters all of us collectively.

What you appear to be completely unwilling to discuss is the degree to which you are comfortable coercing others in order to bring about the orderly society you appear to desire. On principal, I oppose coercion in all its forms.

The only “benefits” suitable for government are the protection of our rights and liberty from predation by other individuals and our own government. Any other “benefit” one could seek from government inevitably descends into the madness of corruption and error. Merely in protecting our individual rights, government does not create conflict as there can be no conflict unless one interferes with the rights of another. As soon as government moves beyond that limited scope, conflict is inevitable and immediate. As government seeks to “help” it must by necessity create conflict between those being “helped” and those whose resources are being confiscated to provide that “help”. As soon as one group is “helped” they immediately become a constituency that seeks to perpetuate that “help”. Politicians inevitably pander to those constituencies as they seek to further their personal goals of simple employment or power seeking. As someone who believes in economics, you must agree that incentives matter and the incentives for government to grow are inescapable.

Tim Dean · 5th November 2011 at 11:17 am

On regulation, I can think of several examples. In the U.S. there is the Glass-Steagall Act, which wasn’t perfect, but it did reduce risk in the banking and investment industries. In Australia’s banking regulation is another. It was one of the key reasons why Australia didn’t have to bail out any banks during the global recession. Regulations governing food and pollution standards are another. They prevent the inherent information asymmetry in many transactions from harming individuals before the market is able to punish the perpetrators.

One of the key roles of good regulation is to soften the turbulence of economic progress. If in flattening the peaks we also flatten the troughs, then the regulation is successful, such as with Australian banking regulation. Of course one doesn’t want to impede growth so far that it drives the economy backwards. But it’s an empirical (not an ideological) question as to what the correct amount of regulation is – and the global recession has shown that many countries lacked effective regulation.

I also utterly disagree about the “moral imperative” to “create enough wealth to support yourself and your desires”. This is a misuse of the word “moral”. And this is precisely why I believe the current system is backwards. We have a prudential imperative to provide for ourselves, but a moral imperative to ensure our pursuit of such ends doesn’t impact the ability for others to pursue those ends.

The only “benefits” suitable for government are the protection of our rights and liberty from predation by other individuals and our own government.

As I’ve stated several times before on this blog, I’m no fundamentalist libertarian, as it appears you are. I simply don’t buy the notion of individual autonomy that underlies it. I’m also no fundamentalist socialist. I’m a pragmatist who seeks to slide on the scale between liberty and community depending how best it promotes the wellbeing of those in society.

You make so many empirical claims – like “As soon as government moves beyond that limited scope, conflict is inevitable and immediate.” – that are just not backed up by empirical evidence. I feel you adopt these positions because of your ideological commitment to libertarianism, and you may not realise that it’s made you into a fundamentalist.

I would reflect on your conceptions of ‘autonomy’ and ‘moral’. When you understand that my (and many others’) are different, you might better understand where our disagreement lies in terms of economics.

Just flagging: this will be my last comment. After this, I fear we’ll simply be repeating ourselves in our disagreement over a couple of key points.

Skeptical Enlightenment · 6th November 2011 at 12:44 pm

I’ll take the last word then… 😉

I see lots of arguments in both directions for Glass-Steagall, but don’t forget the rest of what GLBA gave us. I think that was perhaps the single most expensive regulation passed. Certainly the big accounting firms liked it. And I may have not been very clear in that my position is not completely anti-regulation just as I am not completely anti-government. My position is that on the whole, we are more regulated today than we have been in the past. Certainly, Dodd-Frank has far reaching implications and numerous emergency powers that will allow the Federal Government to act as the sole arbiter of our economic fate. Gives me the shivers…

Prudential is not nearly a strong enough word. I can lay no claim against your property to enable my life, nor can I support others who would do so on my behalf. Anything less and we create a situation where I or my agents may claim your property in amounts we alone feel adequate. Freedom is predicated on property rights and we are made less free precisely to the degree that we have allowed infringement against property rights.

I believe your distinction between liberty and community is a false dichotomy. Those living in liberty will form communities for their own mutual benefit. I’m certainly not an agorist, but I also believe that government displaces private community with the desires of the politically powerful.

That conflict exists is simple logic. If A takes from B to give to C, there is immediate conflict as B resents A for the theft and C for the use of the stolen resources. How else can it be? On a personal level, I resent watching EBT cards purchasing wedding cakes or national news of adult “babies” supporting themselves on Federal welfare. Why be charitable when 40-50% of my earnings is taken by government, mostly for the benefit of others. It’s an ever increasing “obligation” on my part to support people whom in no way have any incentive to limit their use of my resources. Even worse, with government as the middleman, they have no sense of their privation.

Of course our conceptions of autonomy and morality are different. In my view, that is why adherence to principals is that much more important. I oppose attempted “engineering” of our society and our economy precisely because those conceptions are different. As those two entities become ever larger and complex, the principal of self-organization becomes even more important.

It’s been fun.

Tincup · 8th November 2011 at 4:10 am

You hit the nail on the head regarding three issues that trouble me:

1. We don’t control economics, rather, economics controls most of us
2. Economics should be a means to help us reach for higher ends…not an ends in and of itself
3. Economics is concerned merely with continuous growth

I will try to keep this extremely brief and get my point into one long run-on sentence. Here it goes:

Economics has become an international ponzi scheme made possible by the invention of money, debt, financial institutions, and strong connection with government…this ponzi scheme relies on a growing and large population than becomes less intelligent over time which enables marketing and finance mechanisms to sway the herd…the ponzi scheme is run by a few very “smart” and savvy (not to be confused with intelligent, wise, and noble) people that are able to control or at least pull the levers to accumulate more money than they as human beings are intrincially worth for their services or work provided…the whole system is run or controlled by these smart and savvy people that have short life spans and no interest in long-term goals or the future.

Davor · 11th January 2012 at 6:37 am

“It wouldn’t be wrong if human beings were like homo economicus.”

Execept 1) Only those who have access to money can influence the market, leaving out the poor. 2) Only human being can have the opportunity to gain that access, leaving out plants and animals and 3) Only those people who are currently alive have said opportunity, leaving out future generations.

“[…] money works as more than just a medium of exchange – it represents information.”

Yes, information regarding investement opportunities. All other information that may be relevant cannot be carried by the market.

“Information is rarely transparent.”

Indeed, but it goes beyond this. Markets lack a distinct mechanism for coordination of plans; even if the whole thing was 100% transparent and all information avaliable to all actors, it does not logically follow that those actors would be able to coordinate their plans as to avoid waste and inefficiency.

“The future is less valuable than the present – that’s the principle of ‘discounting’.”

True that, but that is not an essential property of markets or even capitalism. It is a conseqence of interest rates, and simply the principle applied today. We can very well imagine free market capitalism without this principle.

Beyond OWS: Problem #2: The Problem with Politics « Ockham's Beard · 1st November 2011 at 9:17 pm

[…] This is part two of my series on Beyond Occupy Wall Street. You can find part one, where I put the boot into contemporary economic dogma here. […]

Beyond OWS: Problem #3: The Age of Unreason « Ockham's Beard · 7th November 2011 at 6:40 pm

[…] I mentioned in my previous post, much of this comes down to psychology. While our economic and political systems are remarkably […]

Page not found « Ockham's Beard · 20th November 2011 at 3:21 pm

[…] Beyond OWS: Problem #1: The Market Ain’t So Free […]

Beyond OWS: Where to Next? « Ockham's Beard · 20th November 2011 at 3:23 pm

[…] problems that have inspired the Occupy Wall Street movement – problems with our current economics, politics and society – even if the Occupy movement itself is yet to identify these problems […]

Beyond OWS: The Slow Revolution « Ockham's Beard · 20th November 2011 at 3:26 pm

[…] problems that have inspired the Occupy Wall Street movement – problems with our current economics, politics and society – even if the Occupy movement itself is yet to identify these problems […]

Wellbeing > GDP as Metric of National Progress « Ockham's Beard · 8th December 2011 at 8:47 pm

[…] touched on this in my earlier posts about the Occupy Wall Street […]

Leave a Reply

Avatar placeholder

Your email address will not be published.