Best Thread Keynes Vs. Hayek

[Shakone]

ducati, I've always read "jog on" as some sort of disrespectful f off. So why do you end all your posts with it?

Interesting discussion here. I can't add anything original. However, it seems that there is a lot of rigid understanding of what a term means, e.g. capitalism. Do you think this is sensible? A theoretical democracy is different from the practical democracies we experience, and debating about the theoretical serves no real value, just as talk of capitalism and disregarding the empirical flaws that it has produced in favour of the theoretical concept doesn't help. There has to be some responsibility on the concept to the result of applying that concept in practice.

I agree with the vast majority of

Eliminate all taxes as illegal
[ii] Default on all government debt
[iii] Return to the free market to set interest rates based on time preferences.
[iv] Eliminate all government expenditures
[v] Eliminate all fiat money, return to a gold coin standard.
[v] Eliminate fractional reserve lending. 100% reserving.
[vi] Eliminate government legislative monopoly [if they still managed to exist of course.]

 

[ducati998]

Continuing...

Just to add context to the following assertion, this is what prompted my initial response:

Re: Sub-Prime / Failure of Capitalism - what ever one wishes to call it issue is one and the same. What we had - in some extreme cases were Triple AAA rated secure asset backed securities. So called 'REAL' tangible assets. What could be safer than property? CDO's were conceived, manufactured and distributed by the creme de la creme of banks. These were later found to be worthless as property prices fell. Now if they were in the money and risks were properly managed, calculated and rated, then little man loses job, institution gets property and resells to get monies. Job done. Hey presto system works as intended. But if the repacking of this highly risky assets in numerous ways such as to be beyond imagination for any one person to calculate or assess risk and subsequently rated AAA to maintain corrupt capitalist system who's fault is that.

Well this is a little like falling profits (whilst making net profits) or reduced price in the value of the property (whilst property still having some value). Same house now worth less in real terms.

The "real property" is the land and the house. The price paid for that land and house is the value, calculated in money terms, of that real property. The question that you need to ask is: what is value?

Value, is an ordinal ranking, of diminishing marginal utility. As such, it will vary, from person-to-person, time-to-time, place-to-place, etc. Add to the fact that these ordinal values were valued using debt, and you add a very volatile variable to the mix.

As time passes, with lack of maintenance, the real property may also physically decline, which adds yet a further variable, undergo a change in demographics, and a host of other seen/unseen variables. Why, exactly, would anyone in their right mind expect "value" to be stable and unchanging?

Capitalism can deal with increasing profits and values but not falling ones.

What is a falling profit actually telling you?

It is telling you that consumers no longer value as highly your product. There may be a newer/superior/cheaper alternative. It is telling you that you need to reallocate your capital to a more profitable investment.

The free market, capitalism, does not rest on past reputations, if you are not producing the most urgently demanded goods/services, at the most competitive prices and quality, consumers will abandon you.

In this way, scarce capital, is allocated to the most urgently demanded lines. Simple. Efficient. Meritorious. Just.

Ok if management of big corporations do not have accountability who does - Shareholders?

Already answered. I would just add that the Board of Directors, should be made up from say the top 20 common stock holders. If they sell their stock, they are replaced. Having the CEO on the board, or selecting the board, is illegitimate.

My take on all this is that these corporations work in an environment of perfect competition with full information in a free market economy.

Taking the most egregious example, the banks: so fractional reserve lending, which is a blatant violation of the law, which is allowed by government, nay, encouraged by government intervention, is an example of the "free unhampered market?"

Is there free entry, and hence perfect competition in the banking space? Absolutely not.

Those names were the figure heads but there are literally 000s of bodies working these corporations. Did they not know anything about the business they ran.

Jimmy Cayne, spent his time playing golf and gambling, Dick Fuld sacked anyone who dared disagree and point to risks, Chuck Prince was so inept it was scary. The short answer is no, they didn't have a ****ing clue.

Did nobody know anything about these corporations in the capitalistic system they operated under.

Of course they did. I could provide a long list of individuals who raised all the issues, months, years ahead, where, had they been listened to, would have mitigated the damage.

Once again I put to you the reason for all these big fouls is that capitalism is imperfect. In fact I'm tempted to say money is made out of imperfections. That is where the edge is. I fear you will ask me to account for it. eg: Insider Trading

Nothing to do with Capitalism. All to do with Socialism. Which, reminds me, I'm waiting on a Socialist to peep his head above the parapet and actually define Socialism.

jog on
duc

 

[new_trader]

Nothing to do with Capitalism. All to do with Socialism. Which, reminds me, I'm waiting on a Socialist to peep his head above the parapet and actually define Socialism.

jog on
duc

I would say it is much closer to fascism.

 

[ducati998]

ducati, I've always read "jog on" as some sort of disrespectful f off. So why do you end all your posts with it?

Quite correct, I forget the name of the film it came from, the original football hooligan film. It amuses me, as I was Millwall, back in the day. I've used it for oh, about 10yrs now.

Interesting discussion here. I can't add anything original. However, it seems that there is a lot of rigid understanding of what a term means, e.g. capitalism.

This argument, is not new. It goes back, as the thread suggests to Keynes & Hayek, and actually pre-dates them by a number of decades.

Do you think this is sensible? A theoretical democracy is different from the practical democracies we experience, and debating about the theoretical serves no real value,

This again demonstrates just how far understanding has atrophied. A "theory" is a true statement, arrived at via a priori reasoning. A "hypothesis" is an idea, that is tested under the scientific method, and is "empirical."

If the two come into conflict, the "theory" is always correct, it is a "universal" while "empirical" hypotheses are subject to falsification, thus, are less than true, and certainly not "universal."

Thus the methodology chosen, a priori, or empirical should be chosen on the basis of the phenomena that you are studying. In the physical sciences, we only see the "outcomes" thus we must form a hypothesis on the "causation."

In the social sciences, economics, we know the cause, ourselves. Thus we can proceed a priori, and proceeding from a true premise, to a logically consistent conclusion, results in a true conclusion. Irrefutable.

Economics, as a science, suffered from physics envy. As such, the empirical methodology was adopted, with some very lame mathematics thrown in, the result is this disaster that we have today.

Government, embraces Socialism, as Socialism is the path to "Power." Apologists, technocrats and government have waged an incessant propaganda campaign against the free market. Capitalism is actually "Classical Liberalism."

just as talk of capitalism and disregarding the empirical flaws that it has produced in favour of the theoretical concept doesn't help. There has to be some responsibility on the concept to the result of applying that concept in practice.

Now, after reading the above, you see the methodology that you have selected? Whereas, the "theory" is a true, universal principal. Even "theory" has been tarred with the brush of Socialism.




jog on
duc

 

[ducati998]

I would say it is much closer to fascism.

Fascism is a derivative of Socialism. Leninist socialism, is the far left, Mussolini socialism [fascism] is the far right.

The true meaning of the "labels" has been largely lost due to the assumption of labels by government, and their reversal: example liberalism today, has nothing in common with "Classical Liberalism" which now has to be pre-fixed to differentiate it from its pretender.

jog on
duc

 

[Shakone]

A "theory" is a true statement, arrived at via a priori reasoning. A "hypothesis" is an idea, that is tested under the scientific method, and is "empirical."

No. A theory is not a true statement at all. It is an idea. A theorem is a statement that requires a proof, and is then considered true if the proof is valid. A hypothesis is also an idea, which you try to test. It seems you mean theorem.

If the two come into conflict, the "theory" is always correct, it is a "universal" while "empirical" hypotheses are subject to falsification, thus, are less than true, and certainly not "universal."

No again. Newton had a very nice theory. Einstein had a hypothesis, that Newton's wasn't correct or wasn't the full picture, he then developed some theorems of his own, but it would be silly to say that when Einstein's hypothesis met with newton's theorem's that the theorem was correct. Correct in what? In itself, maybe, with its own false assumptions, but not correct for what was being studied, and therefore wrong.

In the social sciences, economics, we know the cause, ourselves. Thus we can proceed a priori, and proceeding from a true premise, to a logically consistent conclusion, results in a true conclusion. Irrefutable.

Very refutable.

Now, after reading the above, you see the methodology that you have selected? Whereas, the "theory" is a true, universal principal. Even "theory" has been tarred with the brush of Socialism.

Not at all. When dealing with issues that you're talkign about we need to live in the real world too and not just the theoretical

"As far as the laws of mathematics refer to reality, they are not certain, and as far as they are certain, they do not refer to reality."

and you can replace the word 'mathematics' with 'logic' and it would still apply.

 

[Pat494]

Getting down to brass tacks - it seems to me that right wing fascism is the small elite taking over the rest for their own purposes, while left wing extremism is a so called dictatorship of the many supposedly, but as in Soviet Russia, still the rule of a few people.

Looking back at UK history up until the 13th century and Magna Carta the King was the sole owner of everything and everyone. It took until the 20th century for the people to get their hard won freedoms. Now the successive governments have to take note of elections and the will of the majority.

Sounds like progress you may well say except for the fact that the politicians are so constrained by " the will of the people " they are unable to function in a commanding role. The present financial crisis is a good example of govt incompetence and ineptitude. The people just vote for bigger handouts. Any talk of austerity or living within one's means has been kicked into the long grass and almost forgotten. A sad state of affairs which has taken even the greatest empires of the past to ruin. Another similarity between the collapse of the Roman Empire and modern times is the ever widening gap between rich and poor. Also the final nail in the coffin of the Roman Empire strangely enough was defeat by Persia or modern day Iran.

Someone hopefully will come up with a viable system i.e. so that the rulers rule well and the people have reasonable freedoms. An upgraded sort of democracy I suppose.

 

[ducati998]

No. A theory is not a true statement at all. It is an idea. A theorem is a statement that requires a proof, and is then considered true if the proof is valid. A hypothesis is also an idea, which you try to test. It seems you mean theorem.

I suggest you consult a dictionary.

No again. Newton had a very nice theory. Einstein had a hypothesis, that Newton's wasn't correct or wasn't the full picture, he then developed some theorems of his own, but it would be silly to say that when Einstein's hypothesis met with newton's theorem's that the theorem was correct. Correct in what? In itself, maybe, with its own false assumptions, but not correct for what was being studied, and therefore wrong.

Newton had an hypothesis, that stood until Einstein falsified it. Newton was a physical scientist, not a social scientist, he observed results, or outcomes, the very starting point for the "scientific method."

Very refutable.

So refute it.

Not at all. When dealing with issues that you're talkign about we need to live in the real world too and not just the theoretical

The theory, being universal, will always describe "reality."

"As far as the laws of mathematics refer to reality, they are not certain, and as far as they are certain, they do not refer to reality."

So you are going to refute Euclidean geometry?

and you can replace the word 'mathematics' with 'logic' and it would still apply.

Really, please demonstrate your "proof."

jog on
duc

 

[ducati998]

Getting down to brass tacks - it seems to me that right wing fascism is the small elite taking over the rest for their own purposes, while left wing extremism is a so called dictatorship of the many supposedly, but as in Soviet Russia, still the rule of a few people.

Taking over what exactly? The answer is "property." The Leninist version of Socialism, has the "State" assume 100% ownership of all property. Right wing Fascism, leaves the ownership of the property to individuals, but dictates all prices, inputs/outputs etc. Essentially, there is no difference in the outcomes, simply the form that the control takes.

Looking back at UK history up until the 13th century and Magna Carta the King was the sole owner of everything and everyone. It took until the 20th century for the people to get their hard won freedoms. Now the successive governments have to take note of elections and the will of the majority.

The era of "Absolutism," postulated by Machiavelli in "The Prince."

Sounds like progress you may well say except for the fact that the politicians are so constrained by " the will of the people " they are unable to function in a commanding role.

Really, how so?

The present financial crisis is a good example of govt incompetence and ineptitude.

Don't forget criminal.

The people just vote for bigger handouts. Any talk of austerity or living within one's means has been kicked into the long grass and almost forgotten. A sad state of affairs which has taken even the greatest empires of the past to ruin.

Which is commonly known as the "Welfare State."

Another similarity between the collapse of the Roman Empire and modern times is the ever widening gap between rich and poor.

Rome also fell prey to the "Welfare State" via free, or hugely subsidised grain, circuses, etc. Inflation, to pay for the above, put paid to Rome. It did, however take awhile.

Also the final nail in the coffin of the Roman Empire strangely enough was defeat by Persia or modern day Iran.

Which in her heyday, she would have crushed like an insect.

Someone hopefully will come up with a viable system i.e. so that the rulers rule well and the people have reasonable freedoms. An upgraded sort of democracy I suppose.

There is a viable system. It is commonly referred to as "Capitalism" but, unfortunately receives a poor press due to ever increasing ignorance within the populace.

jog on
duc

 

[Pat494]

Ah yes Capitalism.
As ever it has some good points and some really bad ones too imho.

Are those illegal loggers in the world's ever diminishing rain forests ever going to stop ? Not while there is plenty of money to be made. Capitalism does provide many jobs etc. but should pensioners be kicked out into the street because there is more money to be made selling the property ? The drug empires are a direct result of greedy capitalists - criminals. Capitalists should have a heart for the less fortunate or they will suffer the fate of revolution. Capitalism is never going to clean up the pollution of land and sea. All those extra zeroes on the bank accounts of the rich won't be enough to either.

 

[Atilla]

Continuing...



Eliminate all taxes as illegal - lead to chaos
[ii] Default on all government debt - lead to war
[iii] Return to the free market to set interest rates based on time preferences. - ok
[iv] Eliminate all government expenditures - lead to chaos
[v] Eliminate all fiat money, return to a gold coin standard. - ok
[v] Eliminate fractional reserve lending. 100% reserving. - ok
[vi] Eliminate government legislative monopoly [if they still managed to exist of course.] - lead to chaos and war/fighting etc.

I have provided what I would do, if I could. Just consider, before you, or anyone else becomes hysterical, there is solid theory behind each recommendation, so if you wish to argue the point, be my guest, but you need to be on point.


jog on
duc

Is this not taking us back to cave man era? - Free for all!

Man is a physical and social animal. Even whilst I like the sound of your suggestions above I fear not everyone will adhere to the rules of the environment. Not much different to today.

Just another system to be corrupted if it doesn't tilt in my favour so to speak.

 

[Atilla]

A conjunctive argument.

To break it, you, or anyone else, will need to show a true free market failure. I'll save you some time and list the common ones:



I'll save you some more time, I have rebutted them in the past, and can do so again. If however you can come up with something original, then, by all means post it. I would be fascinated.

jog on
duc

This is a good example and current flavour of the decade. Failure of the financial system is a failure of an unregulated or poorly regulated free market system.

The free market system in pursuit of abnormal profits circumvent the very safety controls and checks that are their to keep it safe.

I'm afraid there are so many people, institutions and bodies involved its difficult for me to accept the arguments you put forward. .

In fact our financial banking services sector were trumpeted as the great evolutionary outcome of our capitalistic free market economies. No need to regulate. Even Mr. Greenspan admitted he placed too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.

Now 82, Mr. Greenspan came in for one of the harshest grillings of his life, as Democratic lawmakers asked him time and again whether he had been wrong, why he had been wrong and whether he was sorry.

 

[new_trader]

Duc,

I wish you the best of luck with Atilla and Pat494. I’ve been down this road many times before with them and no matter how logical and factual you present your argument, Atilla and Pat494 will always respond with rambling diatribe and conclude that it is “Socialism that saved Capitalism”.

As far as Atilla is concerned, he would argue that it is wet roads that cause rain, such is his distorted and incomprehensible logic.

 

[Martinghoul]

Firstly, I think you have forgotten to respond to the first set of my questions. I am hoping you will.

Indeed. This Supreme Court will be made up of Judges drawn from the competing lower Courts. They will not be "lifetime" appointments, possibly just 1yr. They will be selected how? I rather favour by random drawing of ballots, but, who knows.

Right, but will this Supreme Court be "private" like the lower courts? If not, who will be responsible for nominating and approving the judge candidates? if yes, what will stop the insurance company that is denying Bob his payout from taking over the Supreme Court and thereby perverting the course of justice in Bob's case, as well as future such cases?

It must also not harm your property rights. Your "desire" to create a nuclear station is an action in the future. If your proposal to create a nuclear plant is rejected, your existing property and rights are not harmed, as the nuclear plant is still only a future possibility, and the future is uncertain.

Yes, apart from the "intended." I've expanded on this above. Future property, not actually in existence in the present, can exercise no property rights. That would be analogous to me claiming property rights of the entire moon, as, in the future, I will mine it for minerals, under first use principals.

jog on
duc

The distinction you draw above is not really important. The point of the matter is that you have just explained to me that the axiom of "property rights" is an axiom in theory only. In practice, it's really just as open to subjective interpretation as any modern legal principle, as zoning laws, for example, would supersede under certain circumstances (the various quid-pro-quos and provisos you feel you need to insert just offer more evidence of this). What this tells me is that the answers you provide to my questions in your post #657 are precisely as good as the ones offered by society as it exists today. Your recipes are wildly theoretical and you somehow forget to try and test your theories under simple real-life scenarios. They make for funny reading, but, as prescriptions, they just don't measure up.

 

[Martinghoul]

Continuing...
Eliminate all taxes as illegal
[ii] Default on all government debt
[iii] Return to the free market to set interest rates based on time preferences.
[iv] Eliminate all government expenditures
[v] Eliminate all fiat money, return to a gold coin standard.
[v] Eliminate fractional reserve lending. 100% reserving.
[vi] Eliminate government legislative monopoly [if they still managed to exist of course.]

I have provided what I would do, if I could. Just consider, before you, or anyone else becomes hysterical, there is solid theory behind each recommendation, so if you wish to argue the point, be my guest, but you need to be on point.


jog on
duc

I would like to add a few things to this list, please...

[vii] declare immediate peace on earth
[viii] make lions and lambs lie down together
[ix] make boy bands like "One Direction" illegal

I can come up with more, but you get the idea... I am amazed that you're not familiar with the available empirical results from experimenting with the principles you have offered above.

In seriousness, your discussion with Shakone is interesting and, needless to say, I respectfully disagree with your interpretation and agree with his/hers. When you two are done with your discussion, I would be happy to contribute.

 

[Shakone]

I suggest you consult a dictionary.

I don't want to spend too much time on semantics, except to say that I have proven many theorems using logical principles, and also proven many lemmas using the same, but never a theory. Please direct me to the unquestionable proofs of the theory of relativity and the theory of evolution. There's terminology involved here, it's subtle though, I'll grant you that.

Newton had an hypothesis, that stood until Einstein falsified it. Newton was a physical scientist, not a social scientist, he observed results, or outcomes, the very starting point for the "scientific method."

I wonder why they call it Newton's theory of gravity then...Newton's theory of colour...Newton's theory of motion...etc. These are all just hypotheses as far as they apply to the real world, all just ideas. Newton has actual theorems. They haven't been falsifiable, certainly not by Einstein, it's that they didn't apply to the real world, and Einstein presented a more realistic model of the real world. And now people look for an even more realistic model. The theorem's aren't falsified, the theory just doesn't tell the whole story.

So refute it.

I already did, but you didn't understand.

I understand the mathematical and the philosophical ideas of logic. Neither applies universally to issues involving humans or the world in which we live. Is there a proof that it does? You can try to apply them and come to a conclusion, but there's no guarantee that is the correct conclusion as far as it applies to the real world. Statements such as "The theory, being universal, will always describe "reality."" are meaningless. Is the theory of evolution universal? Does it apply to rocks for example? Do rocks evolve? Do chemical elements evolve? You see it's not universal at all. Theories aren't. It has no real proof, only evidence, and yet it is the theory of evolution. Get it yet?

So you are going to refute Euclidean geometry?

You've also managed to miss the other point I made, which is that the valididty or correctness of a solution depends upon what you're looking at. There is non-Euclidean Geometry, so in the non-Euclidean world, conclusions of Euclidean geometry are easily refutable. Which one applies to the real world? Neither applies universally. You could make a good argument that neither applies at all. So yes I can refute it, logic can. Try to understand the process of such things. You make some assumptions, you can even call them axioms if you wish, you define your terms and you use logic to derive from those basic assumptions some conclusions. Your assumptions may be wrong, doesn't matter, because it's not universal, it only applies within the framework of the assumptions you've made.

Really, please demonstrate your "proof."

A proof is not necessary, a counterexample will do. You talk about Euclidean geometry, I have no idea why, but lets stay with that. In Euclidean geometry, a point is defined as...'that which has no part'. This isn't something of the real world is it? Show me that which has no part. Show me where it exists. So a point in the Euclidean context doesn't apply to reality regardless of whether we can draw valid conclusions from the theory.

Now applying logic to social issues, and in this case economic issues has given us the field of economics. But you don't seem to like this. You seem to think you have a 'better logic' than these could come up with, and 'universal principles' that describe 'reality'. From what i've seen, you have nothing of the sort, just a lot of ideas, some of which I think have value, but none of which that is proven correct.

In the social sciences, economics, we know the cause, ourselves. Thus we can proceed a priori, and proceeding from a true premise, to a logically consistent conclusion, results in a true conclusion. Irrefutable.

Final comment. Prove that 1) We know the cause, 2) that it is ourselves, 3) That we can indeed proceed a priori, 4) that it is a true premise, 5) that we result in a true conclusion, 6) That is it irrefutable.

 

[Pat494]

Apparently the illegal loggers in Amazonia have resorted to murdering any green activists in their way !!

This is the dark side of capitalism - money at any price !! while the NT clones trash the planet.

 

[new_trader]

Apparently the illegal loggers in Amazonia have resorted to murdering any green activists in their way !!

This is the dark side of capitalism - money at any price !! while the NT clones trash the planet.

You did say illegal loggers didn't you? How is capitalism conducive to illegal activity?

Explain how people like me are trashing the planet, while people like you are not.

 

[Pat494]

Duc,

I wish you the best of luck with Atilla and Pat494. I’ve been down this road many times before with them and no matter how logical and factual you present your argument, Atilla and Pat494 will always respond with rambling diatribe and conclude that it is “Socialism that saved Capitalism”.

As far as Atilla is concerned, he would argue that it is wet roads that cause rain, such is his distorted and incomprehensible logic.

Capitalism is like a horse that needs reins or else it flies off the path. In fact very relevent to the present financial situation. Politicians threw away the restraints on bankers and they have made one huge mess of the planet's economies while feathering their own nests. And the punishment ? Well a few cross words from their mates ( and thanks for the kick-back probably ). Did " Legs " Diamond pay back the £16m a year he was paid by his friends on the remuneration committee ?- not that I've heard of.

 

[new_trader]

Capitalism is like a horse that needs reins or else it flies off the path. In fact very relevent to the present financial situation. Politicians threw away the restraints on bankers and they have made one huge mess of the planet's economies while feathering their own nests. And the punishment ? Well a few cross words from their mates ( and thanks for the kick-back probably ).

Instead of sidestepping and trying to change the subject. I asked you to back up your assertions by answering the following, please.

1) How is capitalism conducive to illegal activity?

2) Explain how people like me are trashing the planet, while people like you are not.