Best Thread Keynes Vs. Hayek

[Martinghoul]

I note that you offer no evidence whatsoever, empirical or otherwise.

So let us examine some empirical evidence. The evidence is with regard to the competing theorems of money, viz. gold based, and fiat based.

In the first period, starting 1860, the tremendous inflation was due to the unchecked printing of "greenbacks" to finance the Civil War. After the war ended, the tremendous deflation was the return to a gold standard. After the economy stabilised, gold provided a period of "relative" stability. Gold's price, the price of money, will fluctuate as will any commodity, stability is a chimera, and you do not want prices static, unable to adjust to changing conditions. After 1913, and the implementation of the Federal Reserve System, we again see the effects of a fiat based money.

I didn't offer any evidence, because, as I mentioned, I didn't want to sidetrack the discussion you were having with Shakone. I would certainly be happy to respond to the above and also to discuss a couple of other items on your list.

Yes it is.

Which of course is the purpose of argument. To propose and defend different ideas, which, should allow others to make informed decisions as to where the truth lies.

jog on
duc

Indeed, but since this was a part of an existing discussion I decided to let its run its course before getting involved.

 

[Shakone]

ducati,

A Theorem requires a proof, and if it is subjective can it really be universal? If something is claimed true, and you believe you have a proof, then it only takes one counterexample to invalidate the entire theorem. Agreed? And when humans are involved, there is nearly always a counterexample.

You see, we're having a problem with terminology. You say "an irrefutable axiom". Well, Axioms are a starting point, because without a starting point, you can't proceed logically. Usually, we try to choose as axioms things that we believe are self-evident. But it is not the case that these are some golden truths that can't be refuted. They're things that you're assuming to be true, and lead you onto something else, that's all. So how do you know you have the 'right' axioms? You don't, because they doesn't exist. I can just as easily choose another set of axioms and come to different conclusions.

So given that we can use different axioms and come to different conclusions, it's a little strange to talk about universally true and irrefutable facts. They're your opinion based on some assumptions and your own deductions. Which is fine.

Let's take it point by point, as, I very much doubt that [a] in a single post I can do justice to all the points you request proofs, and that you will wish to argue specifics. So I'll start with the first point.

1. We know the cause.

First, we would need to agree on what we are seeking to understand. This would require a definition of "economics." Economics undertakes to describe the production, distribution and consumption of goods and services of scarce commodities, by individual human beings.

Obviously contained in that definition, is the "by individual human beings." It is ourselves that we seek to understand. We ourselves are the causative agents of "production, distribution and consumption."

Ok, you say we seek to understand ourselves. This is quite vague. Who is it we're understanding? You? Me? Be specific. From the first paragraphs it seems we're talking about any individual human being.

You also say "We ourselves are the causative agents of "production, distribution and consumption." No, this is something you're trying to prove eventually. You can't use it.

To survive, we must consume. The very basics being water, and food based nutrients. As food is scarce, it classifies as an economic good. As an economic good, we must produce it, and distribute it, so that we may consume it.

Does everyone want to survive? Are there people that don't want to eat for example? If there are, then there are people who are now sitting outside the conclusions you're making, agreed? So it's not universal now.

You make a claim that we must produce (no, why?) we must distribute it (no, why?). Neither has been proven as things we must do. So the proof esssentially stops here and no conlcusions can be drawn. Why must Mr Aborigine living on his own need to produce anything or distribute anything?

It is through our subjective actions, that these outcomes are created. We then are the causative agents. We knowing this to be a true statement, can state it as an axiom. From that axiom we can a priori, deduce using logic, true conclusions.

Nothing here is logically deduced, these are just statements. I don't think you have a good understanding of logic, axioms, theorems or proofs.

You were supposed to prove that we know the cause. You haven't even got started.


Like I said, your opinions are fine, and many have merit, many I agree with, but you are using terms such as irrefutable, truths, facts, proofs, axioms, derived from logic, universal etc, and it is not the case. It is your opinion. I don't see much derived from logic at all. Calling something a truth doesn't make it so. And when someone asks you for an answer on various issues and you respond in this way it isn't helpful, it is the equivalent of me making a statement and when questioned responding with "just because". You can dress it up with any terms you like, but it amounts to the same thing. Try to present an actual logical argument, where one step follows from the previous one.

You haven't proven one of the things I asked for, or even got close. You can axiomatise, sure. But we do not necessarily know this to apply to the real world that we live in.

If I say all numbers are equal, that is 1=2=3=4=5, they're all equal, and someone says how can that be. I can respond with well 1=0 that is axiomatically true. And then 2=1+1=1+0=1 by the axiom, so 2=1, great and so on for 3, 4 etc, all numbers are equal. It of course leads us nowhere useful. It's just an axiom that many wouldn't agree with, which leads to a conclusion that many wouldn't agree with. It at least has 'some' logic applied though.

Now what you are talking is actually a theory, an idea or set of ideas which has no proof, and is questionable. And that's fine.

 

[Atilla]

This is true enough, largely because of the myriad of definitions held by individuals. Inflation/Deflation is the expansion/contraction of money and credit.

I have a different interpretation as you suggest. To me it is purely prices of goods and services whether it is increasing or decreasing.

Regarding cause it could be due to excess demand, excess supply or excess money supply or improved productivity etc etc. To correlate it to purely the supply and demand for money is likely to lead to confusion.

As such, a fall in prices due to increased production, with a given demand, will result in lower prices. This, by my definition, is not deflation. This is not given either as improved productivity is likely to lead to increased market share and displacing of competitors goods and services.

If however, prices fell, due to the contraction of the money or credit supply, due to the increased value of money, viz. with a given demand, supply contracts, then the price of money rises, then this would classify as a "deflationary" episode, as exchange ratios of goods to money would fall.

Definitions, and especially faulty ones, can really complicate an understanding of ideas and arguments, which places people in intransigent positions, which usually degenerates into ad hominems due to frustration.

jog on
duc

I have always found the following relationship to have stood the test of time.

Pr x GnS = Freq x Ms

P=Price
G=Total Goods n Services
F=Frequency of exchange - level of econ activity
M=Money Supply

This equation obviously needs to balance.

So as an example the Ms can increase but if people are not willing to spend and level of activity is low then as we have in our current situation prices and good & services will remain static.

 

[ducati998]

ducati,

A Theorem requires a proof, and if it is subjective can it really be universal? If something is claimed true, and you believe you have a proof, then it only takes one counterexample to invalidate the entire theorem. Agreed? And when humans are involved, there is nearly always a counterexample.

A couple of points here: at this stage, I am preparing the ground to present my axiom, that is universal. If you cannot refute it, then, as a starting point to progress logically, I will then deductively, prove the correct, true, universal theorem of economics.

I agree, you only need a single falsification.

You see, we're having a problem with terminology. You say "an irrefutable axiom". Well, Axioms are a starting point, because without a starting point, you can't proceed logically.

I don't think we are at the moment. It is, as we shall see, that you are creating straw men.

Usually, we try to choose as axioms things that we believe are self-evident.

Which is precisely what I intend.

But it is not the case that these are some golden truths that can't be refuted. They're things that you're assuming to be true, and lead you onto something else, that's all. So how do you know you have the 'right' axioms? You don't, because they doesn't exist. I can just as easily choose another set of axioms and come to different conclusions.

Indeed, however, the definition that I am using is that an axiom is established, viz. proven to be a true, universal statement. In which case your objections are irrelevant.

So given that we can use different axioms and come to different conclusions, it's a little strange to talk about universally true and irrefutable facts. They're your opinion based on some assumptions and your own deductions. Which is fine.

That is however not what I intend.

Ok, you say we seek to understand ourselves. This is quite vague. Who is it we're understanding? You? Me? Be specific. From the first paragraphs it seems we're talking about any individual human being.

To be a universal, it must apply to all human individuals.

You also say "We ourselves are the causative agents of "production, distribution and consumption." No, this is something you're trying to prove eventually. You can't use it.

This is not my axiom.

This is a definition of "economics" just so that we are on the same page. You have not understood what I wrote, although, I do accept that I muddied the water somewhat. I will be very specific as to stating the axiom.

Does everyone want to survive? Are there people that don't want to eat for example? If there are, then there are people who are now sitting outside the conclusions you're making, agreed? So it's not universal now.

You make a claim that we must produce (no, why?) we must distribute it (no, why?). Neither has been proven as things we must do. So the proof esssentially stops here and no conlcusions can be drawn. Why must Mr Aborigine living on his own need to produce anything or distribute anything?



Nothing here is logically deduced, these are just statements. I don't think you have a good understanding of logic, axioms, theorems or proofs.

You were supposed to prove that we know the cause. You haven't even got started.

Therefore let me state it:

Humans, act, displaying intentional behaviour.

This axiom is not derived from observation. Bodily movements need to interpreted through reflective understanding. This understanding concerns a self-evident proposition.

This then, is our starting point.

jog on
duc

 

[ducati998]

I didn't offer any evidence, because, as I mentioned, I didn't want to sidetrack the discussion you were having with Shakone. I would certainly be happy to respond to the above and also to discuss a couple of other items on your list.

Indeed, but since this was a part of an existing discussion I decided to let its run its course before getting involved.

Which is fine, save you raise the point in a post.

jog on
duc

 

[ducati998]

This was it:

Right, but I am not really interested in what happens "soon". I am interested in what happens in this case to Bob's and his missing testicle. Are you suggesting that, in this particular circumstance a miscarriage of justice may occur solely and purely as a result of the design of the "private judiciary"? Moreover, are you suggesting (or I could have misinterpreted) that such a miscarriage of justice is "acceptable", because it's sporadic and will tend to vanish in the limit, so to speak?

I did address this question. My answer was: Bob would relocate his case to another Court. He could legitimately cite "conflict of interest."

Will it? But, quite clearly, the judges are all products of the lower courts that, undoubtedly, have been taken over by the various private sector entities. Why should they suddenly change their respective allegiances upon promotion to the Supreme Court? Suppose for a moment that all the lower courts have been taken over by different insurance companies? Would that not virtually guarantee no justice for Bob (and his missing testicle)?

No, not at all.

This is the purpose of competition. If as you suggest, all the existing Courts were purchased by, or, already supplied by their Insurance companies, then under free entry, competing, non-affiliated Courts could be set-up. Their prices would undoubtedly be higher in the short-term, but, they would be free of bias. They would represent a "neutral" Court, where, justice would not be influenced by the prejudice of the control exerted via the insurance companies.

Further, Insurance companies that fight every claim, refusing to payout even in the most valid cases, would soon lose their customers to the more "just" insurance companies, and their economic influence will soon diminish.

It doesn't really matter what term you use to describe the legal principle at the heart of the system. The point that you're ignoring is that the principle isn't important here. What is important is that, to arrive at the actual enforceable law, the principle is interpreted by someone or someones.

While it is true that other individuals must judge, based on the evidence, governed by the principals of law, it does not follow that the principals of law are unimportant.

No matter how noble a principle you design to lie at the heart of your system, the ultimate implementation is what matters. I mean take any religion, for example. "Thou shalt not kill" etc are hardly a bad set of "Axioms" (I hope you'd agree) and they've been around for a good long time. And yet, we're not quite residing in a perfect Christian heaven.

"Thou shalt not kill" actually is based on an axiom. The axiom of property.

What Statutory Law? What Government? We are examining a case where there is no government and no Statutory Law, as this was the design that you have specified.

I have lost the context of this argument, I'll have to find it, and return to it.

In the case we have discussed, the community of town residents is imposing its will on you and preventing you from exercising the Axiom of Private Property, i.e. disposing of it the way your heart desires (building a nuclear waste treatment plant).

Based on Property rights. They cannot arbitrarily decide that they don't like you, so you can't have your nuclear plant: they have to demonstrate that their property rights are being violated, not will be violated, as "will" is future tense, and may never come to pass.

I chose a term "Zoning Laws" ('cause that's kinda what it is), which you're clearly unhappy with. Let's forget my term and call it the "People Do Not Want a Nuclear Waste Treatment Plant Built In Town" Law.

Which under Common Law, would be illegitimate, and you would get your nuclear plant.

You have stated in your previous posts that this is a perfectly viable situation within the framework you have defined and isn't a result of a poor interpretation of the law by the jury or poor efforts by your Barrister. Is this not therefore a perfectly legitimate case of what I have described in my post as the Axiom being superseded? And if an Axiom can be superseded under certain circumstances (as determined by a viable jury), what sort of an Axiom is it?

You seem to be saying that you were awarded a flawed result, due to a faulty interpretation of the law. That is the purpose of appeal. Am I claiming "perfection?" Of course not. What I am claiming is that everyone is subject to a level playing field under the law.

I beg to differ. So far, you have not demonstrated any specific logical errors or inconsistencies in my reasoning.

So you think.

jog on
duc

 

[Shakone]

Therefore let me state it:

Humans, act, displaying intentional behaviour.

This axiom is not derived from observation. Bodily movements need to interpreted through reflective understanding. This understanding concerns a self-evident proposition.

This then, is our starting point.

Ok, this is your starting assumption, and you're suggesting that human actions display intent.

Just to be clear on the boundaries, you're not suggesting all human actions are intentional, just that some actions display intent, yes?

Ok fine so far.

 

[Martinghoul]

Which is fine, save you raise the point in a post.

jog on
duc

I apologize. I was being flippant. Again, I would be happy to come back to that discussion.

I did address this question. My answer was: Bob would relocate his case to another Court. He could legitimately cite "conflict of interest."

Indeed, I must have missed it...

No, not at all.

This is the purpose of competition. If as you suggest, all the existing Courts were purchased by, or, already supplied by their Insurance companies, then under free entry, competing, non-affiliated Courts could be set-up. Their prices would undoubtedly be higher in the short-term, but, they would be free of bias. They would represent a "neutral" Court, where, justice would not be influenced by the prejudice of the control exerted via the insurance companies.

But, hold on, we're talking about Bob's case having now gone to the Supreme Court. There can be no competing, non-affiliated courts at this level of the hirearchy... To quote Highlander, there can be only one. Furthermore, what is stopping a private entity from taking over the Supreme Court, just like they are able to do with the lower courts?

Further, Insurance companies that fight every claim, refusing to payout even in the most valid cases, would soon lose their customers to the more "just" insurance companies, and their economic influence will soon diminish.

I am not sure I can see that as clearly as yourself. Suppose the insurance companies collude to form a cartel, such that no new "just" insurance company may enter the industry? At any rate, this is not really relevant to the current discussion.

While it is true that other individuals must judge, based on the evidence, governed by the principals of law, it does not follow that the principals of law are unimportant.

They are important, inasmuch that they are a necessary condition for a viable functioning society. However, and this is the key point I am trying to convey here, a set of principles, no matter how noble and just, cannot be a sufficient condition.

Based on Property rights. They cannot arbitrarily decide that they don't like you, so you can't have your nuclear plant: they have to demonstrate that their property rights are being violated, not will be violated, as "will" is future tense, and may never come to pass.

Which under Common Law, would be illegitimate, and you would get your nuclear plant.

Right, let me reiterate, so that we can establish a proper context. I live in a town that predates me. I own some property and I decide to build a nuclear waste treatment plant on this property. Let's say I have built it and it started operating. The other residents object and take me to court on the grounds that I am violating their property rights. You agreed, if I am not mistaken, that the expected "just" outcome in such a case is that I am forced to shut down (and dismantle my plant). Is this not an example of how, in this particular case, my fundamental right to private property is superseded? Furthermore, let's imagine an alternative universe, where I am living in a total wilderness. In this other universe, I would be able to build and operate my nuclear plant to my heart's content. So is it incorrect to conclude that external circumstances (where I reside, etc) actually determine whether my fundamental right to private property is effective and can be exercised or not?

You seem to be saying that you were awarded a flawed result, due to a faulty interpretation of the law. That is the purpose of appeal. Am I claiming "perfection?" Of course not. What I am claiming is that everyone is subject to a level playing field under the law.

No no, this isn't what I am suggesting at all.

 

[ducati998]

Ok, this is your starting assumption, and you're suggesting that human actions display intent.

Just to be clear on the boundaries, you're not suggesting all human actions are intentional, just that some actions display intent, yes?

Ok fine so far.

That voluntary actions are purposeful, display intent. Involuntary actions, say the reflex initiated through tapping the L3/4 myodermal distribution, would not be considered within this axiom.

jog on
duc

 

[ducati998]

Atilla,

Money is a creation of man. Nothing universal about money. Man was around before creation of money. Animals have no requirement for money yet they exist naturally.

True.

Have I misunderstood what is universal?

Universal as it is being used currently is a philosophical term denoting "in all times and places."

Money can be removed from the our socio-poli-economic system if a new one can be conjured up as in no doubt it will one day.

Well yes, it could be removed, but, that isn't a good idea.

Do they have money on Star Trek?

I don't ever remember it being mentioned.

We have determined the interactions among us yes but created nothing. Slapdash development based on confrontation and survival. Theorems of economics are universal - is simply a grandiose statement of no meaning.

Well no, it does actually carry significant meaning.

No it's not. There is quantitative economics or econometrics which attempts to measure what if scenarios. At price y, demand x, suppy x+1 etc etc. One can apply mathematics to economics. Have I got the wrong end of the stick ???
jog on

Mathematics is illegitimate in the social sciences, as, humans are subjective, which is qualitative, not quantitative.

Economic theorems are normative opinions of people. Like cultures they change and adapt. Nothing universal about them. Economics is not a positive science. I've never heard of economics described as universal theorem before?

Interestingly, I'd agree, economic theorems are normative. They however do not change, they are universal. I also agree that economics is not a positivist science. Look how we are progressing.

I have trouble comprehending this and what is a true conclusion in economics. To get top 10 economists into a single room and get them to agree on a true conclusion has got to be a miracle if I may say so. When I see that I'll believe God exists.

There is of course a reason for that. Should the truth of economics ever actually be accepted, there would be no need for government intervention, thus removing one of the great foundations of government power, the monopoly over money.



duc

 

[ducati998]

Continuing...

Distribution o fthe cake is an economic/political decision. In the history of life on earth there is one universal truth among all species and that is some pigs are more equal than others. This is why the female lion does the work hunting and the male takes the best part and leaves the rest. I can't see Queen Elizabeth or Prince William foreaging for food. So when we say economics is the allocation and distribution of scarce resources one must really consider the social hierarchy. Now this is a universal truth even in primates - although money is not.

Again, we are close to agreement.

Agreed that we are not all created equal. That we have different talents etc. Would you like the production of a critical commodity, assigned to a cretin? That is precisely the risk that we take in allowing Socialism power.

By way of example, the Banks. They pay these chap's millions to lose billions? I could do that for a fraction of the cost.

My take is that everything is a commodity. However, air and water is so free in supply that it is not an economic good. I guess it depends on ones location. The same would apply to food for the Red Indians and herd of buffalo before they were wiped out by the white man and replaced with his money based so called advanced civilisation.

Correct, any "thing" that is so abundant, that there are no issues around allocation, are not economic goods, and have no value. The valuation of course must be based on the marginal unit, not the totality.

Teach a parrot the words Supply and Demand, one can make an economist out of it. I'm afraid I'm lost with all these universal theorems and with due respect to me it sounds like big words with little or no real meaning.

The Shak would likely disagree with you on this point.

jog on
duc

 

[ducati998]

Yes that is also a very interesting thread I'm following and learning a lot from.

However, I don't have much faith in free markets or big private companies following rule of law.

Why is that?

You asked for one example and here is a recent one...
Thalidomide birth defects caused by morning sickness drug. Basically, drug companies have to balance the need to test drugs against safety and side effects. If not for regulation and strict controls the profit motive will over-ride safety. Given big money, I have very little or no faith justice will prevail or even now whether it does on people who have been impacted.

Interesting choice. The drug was only withdrawn after it had been released to the public, and birth defects started to show up. Even if the government hadn't forced withdrawal, don't you think that public withdrawal of support via purchases, and medical opinion/advice against prescribing the drug, would have had the same effect?

If not for government legislation this scenario would be far worse with unthinkable consequences. Many companies even if they do go to the wall will have made millions/billions before any justice is served.

I doubt it.

jog on
duc

 

[ducati998]

Continuing...

I have a different interpretation as you suggest. To me it is purely prices of goods and services whether it is increasing or decreasing.

Regarding cause it could be due to excess demand, excess supply or excess money supply or improved productivity etc etc. To correlate it to purely the supply and demand for money is likely to lead to confusion.

First let me just correct an omission: in addition to the expansion/contraction of the money/credit supply, the demand for money by individuals must also be considered.

Returning to your explanation, what if prices rose, given existing supply/demand? I agree that if you vary supply/demand, you will vary prices. Your analysis cannot account for a change in prices, with a given demand/supply. A change in the money supply however can.

As such, a fall in prices due to increased production, with a given demand, will result in lower prices. This, by my definition, is not deflation.

This is not given either as improved productivity is likely to lead to increased market share and displacing of competitors goods and services.

And why, would it lead to an increased market share by your analysis?

I have always found the following relationship to have stood the test of time.

Pr x GnS = Freq x Ms

P=Price
G=Total Goods n Services
F=Frequency of exchange - level of econ activity
M=Money Supply

This equation obviously needs to balance.

So as an example the Ms can increase but if people are not willing to spend and level of activity is low then as we have in our current situation prices and good & services will remain static.

This is Irving Fischer's M*V = P*T, correct?

jog on
duc

 

[Atilla]

Continuing...



Again, we are close to agreement.

Agreed that we are not all created equal. That we have different talents etc. Would you like the production of a critical commodity, assigned to a cretin? That is precisely the risk that we take in allowing Socialism power.

Considering number of banks that have been caught up in our fiasco not one exec has been fired. Even Sir Paul Shred Fred paying billions without conducting due diligence and paying top dollar for not much. A supermarket shelf filler who gets muddled up would be dismissed pretty quickly imo. System has not much to do with rewarding lack of talent. ie Son of an Etonite or son of a polit bureau official is splitting hairs to me.

By way of example, the Banks. They pay these chap's millions to lose billions? I could do that for a fraction of the cost.

Yes and very happy Barclays have recruited from within.


Correct, any "thing" that is so abundant, that there are no issues around allocation, are not economic goods, and have no value. The valuation of course must be based on the marginal unit, not the totality.


The Shak would likely disagree with you on this point.

I have the greatest of respect for Shakone and was not referring to his arguments or subject matter which I also find very interesting. I try and read it carefully to understand and wish I had more time to delve into it more.

I was more referring to you talking up economics as if it is universal this and that. Nothing of the sort imo. As with examples other life forms and man's history clearly shows there have been many different orders not requiring anything like the economics of what we have today. So to bring up universal theorems in economics seem wildly obtuse to me. I do hope you can clarify.

Water on earth for sustaining life is a universal truth to me. Anything re:economics is pure opinion of man.


jog on
duc

I'm also certain they didn't suffer stress, anxiety and unemployment like we do. I wonder what they would have thought of coca cola??? Firewater without the side effects perhaps.

 

[Liquid validity]

Original post:
http://www.trade2win.com/boards/eco...is/133422-keynes-vs-hayek-92.html#post1957148

I note that you offer no evidence whatsoever, empirical or otherwise.

So let us examine some empirical evidence. The evidence is with regard to the competing theorems of money, viz. gold based, and fiat based.

In the first period, starting 1860, the tremendous inflation was due to the unchecked printing of "greenbacks" to finance the Civil War. After the war ended, the tremendous deflation was the return to a gold standard. After the economy stabilised, gold provided a period of "relative" stability. Gold's price, the price of money, will fluctuate as will any commodity, stability is a chimera, and you do not want prices static, unable to adjust to changing conditions. After 1913, and the implementation of the Federal Reserve System, we again see the effects of a fiat based money.

How else would the civil war have been funded?
My point is, and I suspect from MartinGhouls tongue in cheek reply,
that FIAT and gold standard systems are both necessary, depending on conditions.

Yes I completely agree FIAT money is open to abuse, it can also be the only way
of funding military campaigns.
I say that from a pragmatic point of view.

War is a fact of life, history proves that.
Yes you can cite examples such as India having never invaded another country.
That is actually a fallacy:
Maratha War of Independence - Wikipedia, the free encyclopedia
Switzerland may be a recent exception, its civil defense network and terrain
meaning operation Tannenbaum was never realised by the Nazis.
Swiss neutrality was not the reason for Nazi invasion plans being canned.

The principle foundation of any society is for war.
War is driven by power and greed.

Just to be clear, I am not arguing for or against gold standard / fiat.
What I am saying is that they come and go in cycles that are necessary,
in much the same way that boom and bust are both necessary cycles
of capitalism.
There is no perfect system or answer for all of eternity.

http://www.trade2win.com/boards/att...46526991-keynes-vs-hayek-100yrs-inflation.jpg
How big an influence do you think two world wars in the twentieth century
have on that chart?

 

[Pat494]

I am amazed that I find myself increasingly arguing for the case of 1 party control. But there remains that question of who will regulate the top politicians. Democracy - 2 party system may have had its opportunity to shine and well let's face it done pretty dismally recently.

 

[ducati998]

For the Shak...

Humans act purposefully, constrained by time. The nature of time necessitates that purposefully acting requires a choice be made. Choosing necessitates that one "thing" be preferred over another "thing."

jog on
duc

 

[ducati998]

Atilla,

I was more referring to you talking up economics as if it is universal this and that. Nothing of the sort imo. As with examples other life forms and man's history clearly shows there have been many different orders not requiring anything like the economics of what we have today. So to bring up universal theorems in economics seem wildly obtuse to me. I do hope you can clarify.

Well that is the intention of my discourse with the Shak.

jog on
duc

 

[ducati998]

How else would the civil war have been funded?
My point is, and I suspect from MartinGhouls tongue in cheek reply,
that FIAT and gold standard systems are both necessary, depending on conditions.

Yes I completely agree FIAT money is open to abuse, it can also be the only way
of funding military campaigns.


War is a fact of life, history proves that.


The principle foundation of any society is for war.
War is driven by power and greed.

I have edited out much of your post, only for the reason that you present another facet of the "State." That is of course "war." There are arguments for, and they were first articulated by Aquinas, for a "Just War."

Of course this post has opened yet another can of worms, as if another were needed on this particular thread. It is of course directly related to the subject that is under discussion, so I'll certainly engage with you on it.

There are only three real ways that the laws can either be discovered or created:

From custom and tradition
[ii] From arbitrary ad hoc pronouncements from those who control the apparatus of the State
[iii] From reason and logic, deducing from axioms, the natural law.

It was Lord Acton who clearly the deep flaw in the Greek and their later followers conception of natural law political philosophy was to identify politics and morals, and then to place as the supreme moral agent – The State.

From Plato and Aristotle, the State’s proclaimed authority or supremacy was founded in their view that morality was undistinguished from religion and politics from morals, and in religion, politics and morality there was only one authority.

Acton saw that any philosophy of natural law would come into direct conflict with custom and positive law , this Acton urged was the essential attribute of classical liberalism. For Acton then, the individual, cognizant of natural law principals and morals, was in a strong position to analyse and criticise positive law and by direct association, the State.

After the fall of the Roman Empire, the Church emerged as the power that through religion, controlled the moral base of individuals, seeking to centralise that control to the Church via the Papacy. With the re-emergence of Kings, via Charlemagne, the Church retained its power, only really being challenged through Henry VIII many hundreds of years later.

Of course the modern State has assumed total power, sidelining the Church in the Western world and economies, which has broken the religious – moral – political nexus that existed prior to the monopoly of the State in assuming all moral authority.

Created by the wars that required it, the machine now created the wars that it required.

Schumpeter.

War is the health of the State.

Randolph Bourne

Take the American Revolutionary War and the American Civil War as two examples. Both were wars for secession, one from the British Empire, the other from the Union. They were both wars of the “people” against the State, seeking freedom from the State, or at least a smaller, less intrusive and less powerful State.

Contrasted to wars of conquest, and imperialism. Take your pick from the Roman conquest of Gaul and others to British and European imperialism, to the current American imperialism.

What is the difference? Is there a difference?

I would argue that there is: one war is ethically justified, the other is unethical and illegitimate. Simply consider property rights. If each individual owns himself, and all property produced, contracted for, or gifted, then any incursion of those property rights, is illegal and illegitimate.

Therefore, a war of revolution, to claim back property rights that have been taken illegitimately, is ethically defensible. A war of conquest, to infringe or remove other individuals property rights, is ethically illegitimate.

The problem is that anti-war, anti-interventionism, has been labelled as isolationism which has negative connotations of weakness, and withdrawal from the world. Of course, it means no such thing. It simply means that you do not involve yourself in others wars of conquest, or revolutions. You only fight to protect your property rights if you are targeted.

Was the Civil War a just war? Was the South entitled to secede? Of course they were. The Constitution provided to them the legal right, as well as the ethical right, to secede. Therefore calling the war the Civil War, which is a war fought to control a single government, and hence exercise the monopoly power of that government, is rather inaccurate. The American Civil War was no such thing. It was a war fought by one side wishing to secede from the other: to reassert their property rights. The North, fought a war of conquest, to maintain and expand the territory under their monopoly control.

In a second part, I'll examine how the State, by its very construction, wages not "Just Wars" but illegitimate wars.

jog on
duc

 

[Liquid validity]

Well I don't particularly disagree with anything in your last post:
http://www.trade2win.com/boards/eco...is/133422-keynes-vs-hayek-95.html#post1957442

However, the ethics or causes of war are not the question I was asking.
I am referring purely to the ability to pay for war.
Gold standard in the modern era is impractical in times of war.
That was the main point of my post:
http://www.trade2win.com/boards/eco...is/133422-keynes-vs-hayek-95.html#post1957346
You say as much in the post I refer to:
http://www.trade2win.com/boards/eco...is/133422-keynes-vs-hayek-92.html#post1957148

In the first period, starting 1860, the tremendous inflation was due to the unchecked printing of "greenbacks" to finance the Civil War. After the war ended, the tremendous deflation was the return to a gold standard. After the economy stabilised, gold provided a period of "relative" stability. Gold's price, the price of money, will fluctuate as will any commodity, stability is a chimera, and you do not want prices static, unable to adjust to changing conditions. After 1913, and the implementation of the Federal Reserve System, we again see the effects of a fiat based money.

That is my question, summarised below:

War is a constant in history, and will be in the future.
Gold standard can not be maintained in times of war.
That is the primary weakness of the gold standard.
In other words a gold standard system does not suit all conditions.

In modern history, a fiat system has pretty much always been adopted to pay for a war.
Note that does not mean I think fiat systems are perfect.
What are you thoughts on that?