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Is there any way to build an economic system without having periodic crashes?
by winrid 5y ago
Is there any way to build an economic system without having periodic crashes?
- deleted 5y ago[deleted]
- tanbog5 5y agoPossibly, but it probably won't have many periodic peaks either, and very flat or zero growth. A lot of people seem to like getting rich even it means some of them wind up poor /shrug
- Nemrod67 5y ago"A lot of people seem to like getting rich even it means some of them wind up poor /shrug" wouldn't be that bad, but replace "some of them" with most of them.
- actually_a_dog 5y agoNot if it's run on market principles.
- Ekaros 5y agoI wonder if they were actually run on market principles would crashes be so bad or big? Or more of corrections of certain sectors.
- actually_a_dog 5y agoI don't think so. The problem is that there's always going to be some amount of speculation in a market. And, it's really speculation that drives prices up beyond what they really "should" be, which eventually leads to the correction. If the speculation goes on too long, and drives prices up too high, then you have a "crash." And, absent regulation to the contrary, there's nothing preventing the market from rising too high, too fast (i.e. the market can remain irrational for arbitrary lengths of time, to paraphrase Keynes). OTOH, there doesn't seem too be a sensible way to determine what constitutes speculation, for purposes of constructing a regulation that prevents it.
- actually_a_dog 5y agoWhoops. I meant "I do think so" in the first sentence.
- kqr 5y agoHumans have experimented with very diverse types of economic systems the last tens of thousands of years, and in all cases we have evidence of, there are recurring periods that could reasonably be called crashes. Some of the fundamentals make that hard to avoid, I suppose: natural events and people's tendency to self-reinforce behaviour within their groups.
- mellavora 5y agoWhy would that be a good thing? The environment is a chaotic dynamic system. There are massive non-linearities, phase shifts, etc, and yes, massive damping feedback loops as well. Don't forget the 2nd order, 3rd order, and 4th order effects. You could build an economic system which did not have periodic crashes, it just would have to be very limited in scope (by keeping it in a highly controlled and isolated environment) and would thus only have one crash, when the containing vehicle breaks apart. A one-off is not periodic.