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Hot take: Capital is not about economics. Reading it will in no way help you understand how economists think.

by unmole 4y ago

Bakary 4y ago
Could you please expand on this?
- fennecfoxen 4y ago
  Not original poster, but Economics is about making decisions when your decisions have trade-offs because you have limited resources. Everything has a price, but the prices aren't always measured in a nice money-based price tag for your convenience, they're ultimately measured by the next-best alternatives. Decisions and policies don't just have consequences, they have second-order effects and third-order effects and you need to chase those down too, because excluding anything makes you understand the costs wrong (e.g. add highway lanes to relieve congestion -> now there is more traffic, because of "induced demand", not sure that was a good idea -> but why was there even induced demand? where are those trips coming from and what was the cost of the previous configuration? is this a housing-policy thing now??). You also learn to worry a lot about how decisions are actually made by self-interested decision-makers, rather than by abstractions-seeking-the-greater-good, and you examine what the decision-makers' incentives are.... Whereas a work like Das Kapital tells you very little about how to think this way. It's not intended to; it's more about the relative influence of various actors within a political-economic system, while raising tough questions about the meaning of private property.
  - imtringued 4y ago
    >Economics is about making decisions when your decisions have trade-offs because you have limited resources. But land isn't limited in the sense that there isn't enough of it for everyone, there is a fixed quantity of land on this planet but more than enough for everyone. Somehow some people got this absurd theory in their head that once there is abundance there is no need for economic allocation mechanisms. This completely ignores that even if there is enough land for everyone, a single person may have more land fenced off than he needs for himself, meaning that someone else ends up with less land than he needs for himself. Despite abundance of land you still need to allocate it properly and you still need economics to do that but economists shrug and do nothing. Artificial scarcity is the new normal. Since all producable goods tend toward market saturation you will have this problem in more and more sectors in the economy as your country gets wealthier. In fact the problem isn't poverty, the wealthier we gets the worse things get. Why is that the case? Why does the economy fail to allow abundance to happen? Why did economists put on a brain cage that tells them that scarcity is absolute and that if something isn't scarce it should be made scarce? Reality is quite boring. Assume that there is a floor on capital yields meaning the income share in labor can never reach 100%. Since economic activity gets siphoned off into the pockets of the owners of capital aka the rich get richer and they don't spend their wealth back into the economy, the rest of the economy must shrink. A game of musical chairs starts. There must be a loser and people will do absolutely everything to not end up as the loser. To prevent the non rich economy from shrinking and shriveling into nothing, we must keep up this farce of endless economic growth so that living standards don't get worse.
    - ClumsyPilot 4y ago
      we create scarsity of purpose with NFTs
    - XorNot 4y ago
      > But land isn't limited in the sense that there isn't enough of it for everyone, there is a fixed quantity of land on this planet but You have assigned an economic value system and denied doing it - that someone can have "enough" land and someone else does not have "enough". By who's pricing model and oops - guess we're back to plain old economics.
    - unmole 4y ago
      > But land isn't limited in the sense that there isn't enough of it for everyone, 1. How much land is enough for someone? 2. Is land fungible? > economists shrug and do nothing What exactly do you want economists to do here? Redistribute land? > if something isn't scarce it should be made scarce? Which economist is advocating for this?
imtringued 4y ago
Sorry but it actually is about economics and it is a pretty good description of capitalism but he makes some glaring errors about money by assuming that it is just a medium of exchange. Making such a grave error means that his proposed solutions to end capitalism are doomed to end in failure.
- mushbino 4y ago
  You could say the same thing about every other economist at the time or even much more recent ones. Things change and evolve.
- fennecfoxen 4y ago
  To expand on this (and hopefully not mangle your original idea), the key feature that makes a capitalist economy efficient is the use of a price mechanism to distribute the hard problems of decision-making to people who are reasonably well-informed and well-incentivized to make good decisions. These decisions will benefit society as a whole when (A) property rights exist and are enforced, (B) there are low barriers to entry, (C) transaction costs are low. (There will be failures otherwise. Pollution ends up under A, monopolies under B, and a whole host of modern stupidities ends up under C — e.g. just for instance, no one at a minimum wage job is going to afford a lawyer to negotiate their employment contract: transaction costs are too high; the bigcorp employer, by contrast, only has to draw up the contract once. Instant structural unfairness follows.) Orchestrating both information and incentives like this is really really hard. It's hard enough at a mid-sized project at a mid-sized company, where management spends hours and hours hammering on the idea of "alignment". At the scale of the global economy it's utterly intractable.
  - ClumsyPilot 4y ago
    it appears that yout descruption equally applies to ancient rome - property rights were neforced, including on people. Price mechanism was used. Was ancient Rome capitalist?
    - fennecfoxen 4y ago
mushbino 4y ago
Economics is mostly political economy. It's based on ideology more than anything moral or actually scientific. Neoliberalism has been the dominant theory since Keynesianism. It's been an abject failure, but nobody has come up with anything to replace it yet.
- boppo1 4y ago
  How is neoliberalism different from keynesianism? Who was the big neoliberal writer/ what is neoliberalism's "general theory of interest"
- unmole 4y ago
  > Economics is mostly political economy. I'm sorry, what? Look at the curriculum for any economics degree, look at the winners of the Sveriges Riksbank Prize. How much political economy do you see there? > based on ideology Krugman and Manikw are on the opposite ends of the ideological divide. But the economics textbooks that they each wrote will not contradict the other.
nilaykumar 4y ago
A cursory look at the table of contents of Volume 1 turns up various topics such as: - the length and regulation of the working day for factory workers - the division of labor - the economic impacts of increasing automation/mechanization - wages (the factor payments for labor) These are all topics that I think reasonably fall under the umbrella of economics. Certainly Capital is not a book on positive economics. It is, throughout, quite normative, and expressly interested in the combination of politics and economy. Reading Capital may not help you understand how modern mainstream economists think, but it will definitely get you thinking about the same kinds of problems that they deal with. For example: how regulations might be used to enforce a 40 hour work week. Of course, capitalism has quite outgrown Marx's mid-19th century conception of it. It's an old book. But I find it difficult to understand how a book critiquing the work of the first economists is not a text about economics.
culi 4y ago
Well you labeled it a "hot take" so that at least shows you understand how absurd this take seems on its face. So what's the part I'm missing? Why is this a good take?
- colinmhayes 4y ago
  Marx was a political scientist, not an economist. He thought about how greed effects decision making and power corrupts. He was interested in a political revolution because he believed capitalist systems are unable to solve market failures. Economics is generally less interested in the politics of how to implement solutions and more interested in what the optimal solutions are.
  - culi 4y ago
    > Marx was a political scientist, not an economist This is probably as pointless of a statement to argue against as it is to make in the first place. But, Marxian economics is still considered one of the main schools of economic theory today and comprises several other schools within it > He thought about how greed effects decision making and power corrupts. This is not really something he wrote about. Maybe you're confusing him with the anarchist Bakunin who believed anyone with any amount of (unequal) power would inevitably become corrupt. But given that he believed you could have a "dictatorship of the proletariat" to usher in revolution, he clearly didn't share this view. > He was interested in a political revolution because he believed capitalist systems are unable to solve market failures. I guess in a vague, broad sense this is sorta correct... But he actually believed capitalism was a necessary step towards socialism. So much so that Russian Marxists like Lenin specifically tried to bring Western-style capitalism to Russia. They thought it necessary for the advancement of society > Economics is generally less interested in the politics of how to implement solutions and more interested in what the optimal solutions are. Karl Marx was specifically interested in "Scientific Socialism". In his time he was hailed as "having done for economics what Newton did for physics". He developed a pretty in-depth and rigorous theory that provided really useful tools to study and analyze society. And he and his followers believed that his conclusions were a result of this rigorous and scientific approach to social analysis Mind you, this is not really unlike modern economic theory. We have tons of tools that had never actually been tested. In fact, I'd say that the past 15-ish years of economics are revolutionary precisely because it's the first we're actually being data-driven about things. Things like the Phillips curve are still taught in Econ 101 classes around the country but it has thoroughly been debunked using actual real-world data You can argue that Marx's theories had issues but they were just as "scientific" as modern economics has been up until very very recently. (That is, not very)
interpenetrate 4y ago
Reading the first chapter alone (in particular the section on commodity fetishism) will tell you all you need to know about how economists think, because it tells you why economists think. This is a domain of inquiry that is necessary for any science, but that the economists since Marx have ran from for reasons Marx exposed in Capital itself. Notice that the OP article doesn't even try to justify its categories. How do economists think? Marx responds very simply: ideologically, dogmatically.

Hot take: Capital is not about economics. Reading it will in no way help you understand how economists think.

by unmole 4y ago

Hot take: Capital is not about economics. Reading it will in no way help you understand how economists think.

Bakary 4y ago

Could you please expand on this?

fennecfoxen 4y ago
Not original poster, but Economics is about making decisions when your decisions have trade-offs because you have limited resources. Everything has a price, but the prices aren't always measured in a nice money-based price tag for your convenience, they're ultimately measured by the next-best alternatives. Decisions and policies don't just have consequences, they have second-order effects and third-order effects and you need to chase those down too, because excluding anything makes you understand the costs wrong (e.g. add highway lanes to relieve congestion -> now there is more traffic, because of "induced demand", not sure that was a good idea -> but why was there even induced demand? where are those trips coming from and what was the cost of the previous configuration? is this a housing-policy thing now??). You also learn to worry a lot about how decisions are actually made by self-interested decision-makers, rather than by abstractions-seeking-the-greater-good, and you examine what the decision-makers' incentives are.... Whereas a work like Das Kapital tells you very little about how to think this way. It's not intended to; it's more about the relative influence of various actors within a political-economic system, while raising tough questions about the meaning of private property.
- imtringued 4y ago
  >Economics is about making decisions when your decisions have trade-offs because you have limited resources. But land isn't limited in the sense that there isn't enough of it for everyone, there is a fixed quantity of land on this planet but more than enough for everyone. Somehow some people got this absurd theory in their head that once there is abundance there is no need for economic allocation mechanisms. This completely ignores that even if there is enough land for everyone, a single person may have more land fenced off than he needs for himself, meaning that someone else ends up with less land than he needs for himself. Despite abundance of land you still need to allocate it properly and you still need economics to do that but economists shrug and do nothing. Artificial scarcity is the new normal. Since all producable goods tend toward market saturation you will have this problem in more and more sectors in the economy as your country gets wealthier. In fact the problem isn't poverty, the wealthier we gets the worse things get. Why is that the case? Why does the economy fail to allow abundance to happen? Why did economists put on a brain cage that tells them that scarcity is absolute and that if something isn't scarce it should be made scarce? Reality is quite boring. Assume that there is a floor on capital yields meaning the income share in labor can never reach 100%. Since economic activity gets siphoned off into the pockets of the owners of capital aka the rich get richer and they don't spend their wealth back into the economy, the rest of the economy must shrink. A game of musical chairs starts. There must be a loser and people will do absolutely everything to not end up as the loser. To prevent the non rich economy from shrinking and shriveling into nothing, we must keep up this farce of endless economic growth so that living standards don't get worse.
  - ClumsyPilot 4y ago
    we create scarsity of purpose with NFTs
  - XorNot 4y ago
    > But land isn't limited in the sense that there isn't enough of it for everyone, there is a fixed quantity of land on this planet but You have assigned an economic value system and denied doing it - that someone can have "enough" land and someone else does not have "enough". By who's pricing model and oops - guess we're back to plain old economics.
  - unmole 4y ago
    > But land isn't limited in the sense that there isn't enough of it for everyone, 1. How much land is enough for someone? 2. Is land fungible? > economists shrug and do nothing What exactly do you want economists to do here? Redistribute land? > if something isn't scarce it should be made scarce? Which economist is advocating for this?

imtringued 4y ago

Sorry but it actually is about economics and it is a pretty good description of capitalism but he makes some glaring errors about money by assuming that it is just a medium of exchange. Making such a grave error means that his proposed solutions to end capitalism are doomed to end in failure.

mushbino 4y ago
You could say the same thing about every other economist at the time or even much more recent ones. Things change and evolve.
fennecfoxen 4y ago
To expand on this (and hopefully not mangle your original idea), the key feature that makes a capitalist economy efficient is the use of a price mechanism to distribute the hard problems of decision-making to people who are reasonably well-informed and well-incentivized to make good decisions. These decisions will benefit society as a whole when (A) property rights exist and are enforced, (B) there are low barriers to entry, (C) transaction costs are low. (There will be failures otherwise. Pollution ends up under A, monopolies under B, and a whole host of modern stupidities ends up under C — e.g. just for instance, no one at a minimum wage job is going to afford a lawyer to negotiate their employment contract: transaction costs are too high; the bigcorp employer, by contrast, only has to draw up the contract once. Instant structural unfairness follows.) Orchestrating both information and incentives like this is really really hard. It's hard enough at a mid-sized project at a mid-sized company, where management spends hours and hours hammering on the idea of "alignment". At the scale of the global economy it's utterly intractable.
- ClumsyPilot 4y ago
  it appears that yout descruption equally applies to ancient rome - property rights were neforced, including on people. Price mechanism was used. Was ancient Rome capitalist?
  - fennecfoxen 4y ago

mushbino 4y ago

Economics is mostly political economy. It's based on ideology more than anything moral or actually scientific. Neoliberalism has been the dominant theory since Keynesianism. It's been an abject failure, but nobody has come up with anything to replace it yet.

boppo1 4y ago
How is neoliberalism different from keynesianism? Who was the big neoliberal writer/ what is neoliberalism's "general theory of interest"
unmole 4y ago
> Economics is mostly political economy. I'm sorry, what? Look at the curriculum for any economics degree, look at the winners of the Sveriges Riksbank Prize. How much political economy do you see there? > based on ideology Krugman and Manikw are on the opposite ends of the ideological divide. But the economics textbooks that they each wrote will not contradict the other.

nilaykumar 4y ago

A cursory look at the table of contents of Volume 1 turns up various topics such as: - the length and regulation of the working day for factory workers - the division of labor - the economic impacts of increasing automation/mechanization - wages (the factor payments for labor) These are all topics that I think reasonably fall under the umbrella of economics. Certainly Capital is not a book on positive economics. It is, throughout, quite normative, and expressly interested in the combination of politics and economy. Reading Capital may not help you understand how modern mainstream economists think, but it will definitely get you thinking about the same kinds of problems that they deal with. For example: how regulations might be used to enforce a 40 hour work week. Of course, capitalism has quite outgrown Marx's mid-19th century conception of it. It's an old book. But I find it difficult to understand how a book critiquing the work of the first economists is not a text about economics.

culi 4y ago

Well you labeled it a "hot take" so that at least shows you understand how absurd this take seems on its face. So what's the part I'm missing? Why is this a good take?

colinmhayes 4y ago
Marx was a political scientist, not an economist. He thought about how greed effects decision making and power corrupts. He was interested in a political revolution because he believed capitalist systems are unable to solve market failures. Economics is generally less interested in the politics of how to implement solutions and more interested in what the optimal solutions are.
- culi 4y ago
  > Marx was a political scientist, not an economist This is probably as pointless of a statement to argue against as it is to make in the first place. But, Marxian economics is still considered one of the main schools of economic theory today and comprises several other schools within it > He thought about how greed effects decision making and power corrupts. This is not really something he wrote about. Maybe you're confusing him with the anarchist Bakunin who believed anyone with any amount of (unequal) power would inevitably become corrupt. But given that he believed you could have a "dictatorship of the proletariat" to usher in revolution, he clearly didn't share this view. > He was interested in a political revolution because he believed capitalist systems are unable to solve market failures. I guess in a vague, broad sense this is sorta correct... But he actually believed capitalism was a necessary step towards socialism. So much so that Russian Marxists like Lenin specifically tried to bring Western-style capitalism to Russia. They thought it necessary for the advancement of society > Economics is generally less interested in the politics of how to implement solutions and more interested in what the optimal solutions are. Karl Marx was specifically interested in "Scientific Socialism". In his time he was hailed as "having done for economics what Newton did for physics". He developed a pretty in-depth and rigorous theory that provided really useful tools to study and analyze society. And he and his followers believed that his conclusions were a result of this rigorous and scientific approach to social analysis Mind you, this is not really unlike modern economic theory. We have tons of tools that had never actually been tested. In fact, I'd say that the past 15-ish years of economics are revolutionary precisely because it's the first we're actually being data-driven about things. Things like the Phillips curve are still taught in Econ 101 classes around the country but it has thoroughly been debunked using actual real-world data You can argue that Marx's theories had issues but they were just as "scientific" as modern economics has been up until very very recently. (That is, not very)

interpenetrate 4y ago

Reading the first chapter alone (in particular the section on commodity fetishism) will tell you all you need to know about how economists think, because it tells you why economists think. This is a domain of inquiry that is necessary for any science, but that the economists since Marx have ran from for reasons Marx exposed in Capital itself. Notice that the OP article doesn't even try to justify its categories. How do economists think? Marx responds very simply: ideologically, dogmatically.