Monday, June 18, 2012

Econo Theory

(note: improved July 13)

Neo-classical economics assumes that the capitalist act might work or might not work. But what it does not assume is a general condition. It assumes a digital event, where there is only on and off / yes and no. The logic of neo-Classical economics is more like the logic of digital electronics. Neo-classical economics (it's the kind with all the equations and math) holds that any  given transaction may either occur, or, it may not. That is t he same binary basis of digital electronics. But none of  that applies to the case of capitalism itself. There is never the situation where capitalism might happen or might not happen. It is this huge thing that did happen. It happened. We study it because it is there, we don't worry about whether or not it exists. Capitalism did emerge. It is a large-scale trend that emerged. Then economists tried to explain it. There is no neutral situation that exists and into which you are trying to decide if capitalism will come or not. It is something that happened. There was never a situation where there was a possibility of capitalism not happening. It did. It did so over a period of between a few hundreds of years and over a thousand, depending on how you look at it. It happened, there was a period of development that took place. It developed, it took place. Yes. There is not any doubt over whether it happened. you can see the whole world at once --- that's pattern of "cloud" thinking.             [David Brooks: Karl Popper, the great philosopher said, “All problems are either clouds or clocks.”  A clock is a… to understand a clock, you can take it apart, it’s individual pieces and you study the pieces and then you can understand how a clock works.  A cloud, you can’t take apart a cloud.  A cloud is a dynamic system.  A cloud you can only study as a whole.]
     There is no binary of "it happened, or it did not." Capitalism is not a momentary event like a decision to buy a pack of chewing gum or any of the other things neo-Classical economics considers. Neo-Classical economics and capitalism are systems that rely on qualitatively different premises. [capitalism is not a simple extension of the yes - no binary. It goes deeper than that. The "digital revolution" is only one SIDE of capitalism]
     During the "development phase," which is a word in my economics jargon or language, it would have been possible for an observer to note that capitalism is developing (that is also what the neo-Classical economists originally wanted to explain, i.e. capitalism, it's very existence) and overlook the possibility of failure. That person would have "invested" and made positive returns from investing in capitalism.
     Every hear of "growth"? We cannot say that capitalism might happen or might not happen. Then why does the theory, the premise, of neo-Classical economics consist of asking the questions that it does? Neo-Classical economics asks whether a deletable event will occur, it asks whether a microcosmic event (one which may happen or may not happen) will happen of fail to. And if it does, the neo-Classical economist wants to know what would have caused it to happen. This is the kind of micro-cosmic causality they are interested in but they never ask whether capitalism happened, or not, because they know that it did. By contrast, a particular piece of candy might be sold or not sold; a particular business might succeed or not succeed. Neo-Classical then ask about the causality: what might the circumstances or cause of the event have been? (wages went up to five dollars per hour causing more persons to apply for jobs) They want to know what the price was in order for an event to take place. I say that this should not imply that the only thing we need to explain is the isolated transaction, like a point on a graph.
     Our efforts can also apply to all of capitalism. I have found that it is possible to talk about the phenomenon of capitalism, or capitalism itself. And as we said, capitalism did happen. This means that a system of human social organization that relies on profit actually did occur. It came to be, on the face of this earth. And we know that. We are not on tender(tenter?)hooks waiting to find out if our date'll kiss us. When we consider that persons go into business not knowing whether they will succeed we remember that part of the picture too: that is the individual success or failure part of capitalism. I am not saying that this does not exist. Sometimes an entrepreneur's first two or three businesses fail. But then the third one succeeds. The poet Philip Schwartz's dad never succeeded, he always failed. But in any case, capitalism is not a microcosmic event. It is a world-historical event.
     Contrast that to the neo-Classical approach, or the standard university economics approach and we see that the Neo-classical technique is to ask, in regard to every specific transactatory event, whether it happens or not: whether a) the transaction occurs, or b) the transaction does not occur.

     Why are there capital loans, loans made to supply money to a person engaged in business? Because, the established trend is that capitalism works. The banker was the type who understood that, in general, capitalism was on an upward incline, and that is a different attitude from the attitude of neo-Classical economic theory. This is so, because the neo-Classical theory holds  that one should at each specific, individual event ask whether that event will happen, or not. This refers to one more unit, of money or of product.
     Analyzing neo-Classical economics -- the "micro" side -- is interesting. It contains the minute analysis that is supposed to determine whether a thing -- usually a given transaction -- happened or didn't (happen). It is as if at every moment capitalism might lurch forward or not, may succeed, or fail. The suspense is killing me, you know?
     Everything in such a schema can be analyzed in terms of binaries. It either happened or it didn't. What kind of world is that? What kind of person is that? It is a person that thinks that everything is an outcome that may or may not happen. Those kinds of persons can slot themselves into capitalism very nicely. Everything always goes one way or the other. It either succeeds or it fails. They either move one step ahead in the game, or they don't. They are good at slotting themselves into capitalism, and it shows that a certain set of suppositions seem to fit capitalism. What all this shows is that capitalism does exist and these persons have their "economic" behaviors that are designed to accommodate that.

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