Economic Theory (July 15, 2012)

We live in a society. In our society economics is important. I wrote in an earlier post in connection with this that ignorance is also important. http://jacksgreatblog.blogspot.com/2012/04/understanding-ignorance.html. Ignorance cannot be called a fault, therefore removing it cannot be called a remedy. Ignorance was a necessary factor in the development of the system. This is true (although I do not know of anyone else who has made the connection); ignorance is important in economics. At the same timme, too much ignorance cannot be good. Such thinking would be absurd. Too much of it is going to have consequences. Negative consequences of ignorance are worse than negative consequences of knowledge (e.g., too much would stifle growth). I would not say that ignorance is a good thing in and of itself, so I am not saying that: I of course do not believe ignorance to be good in general, which would be weird.
But what I say is capitalism needs ignorance: or it doesn't exist. Also, our illusions and our unreality can sustain us only so long, so it is a connundrum.
So, the question is, "What do we do about that?" If it is possible we should have less ignorance. That is why I am writing this. My guess is that you also need what is called "policy."

Ignorance is a temporary expedient necessary for the development of this system we have: capitalism. Capitalism needs ignorance positively. When I wrote the earlier piece there are, (the other article), I said there are plenty of examples, if you want to get concrete. (E.g., it is in every case the fact that consumers do not get the dollar profits or information on the profit margin of a businesses when they walk in the door to patronize it; there is no "perfect information" in this sense.)
Maybe this ignorance topic, or ignorance business I am coming up with is a rather odd thing. OK. Maybe I am not sure what I am supposed to say about it or where I want to go with this subject.

Probably you would need to find the correct policies. This ignorance needs to be addressed with the correct policies. If an ignorance situation (I cannot really say "problem" here anymore, can I?) is never addressed at all, problems would appear eventually.
You don't want mere ignorance merely mushroom.
Eventually the basic institutions would simply fail.
In that case — when enough basic institutions fail — we would simply die. This is not sensationalist writing.  

The fall of the society is not usually a topic for conversation. Most persons, in their day-to-day life, are optimists — let us say this: optimism pays. So, considering things like total system breakdown, the failure of the system --- this is not a hot trend. (See Barbara Ehrenreich's “Bright-Sided,” for more optimism lore) Some people do not even consider it. (They are the same ones in the Wiz piece who do not think there is a government) On the other hand --- I am autistic. For various reasons, not only one, my own social system has been a failure. Therefore, I have vision. I can see total system failure as a possibility.

I characterize the society above as having a strong economic aspect. The various basic institutions seem to have a lot to do with economics. That is not just capitalism gone amok, or too much privatization, but it is also a characteristic of a way of life that has been developing in the West for several hundred years. We also could ask what "economics" means. It is not totally clear, is it? Here, we shall just note that money is being used. It is not the only way to handle the question, but it is the one we are using right now. There is lots of trade goin' on— lots of transactions — authorities on the subject tell us money is being constantly moved from person to person, place to place, etc. All that is terrible, it is superficial, and crass. But these are, ipso-facto, the main, important persons in society (and in Bain Capital) who do this. In any case, it is impossible that everything is that merely superficial. This is not what "economics" means! As Marx figured it out, and he did get a few things right, so we need to be able to cite him, the economy is not an idea; it is material. The whole economy, even for Soros, is not merely the "financial economy" (that has to go along with the other thing, the Soros "real economy"). Part of economics also has to be actual work that persons need to have done, like, for example that the garbage must be disposed of. In connection to this, sanitation workers are paid. There is the money aspect again! It does not happen directly. Even a material task like cleaning up the garbage depends on money. So, I was right to say that money is important. It is a difficult subject that stumped Schumpeter. To summarize, in our social system economics is important, and so is money. At any rate I am going to stick with the formulation that our society is characterized by emphasis on economics.

taking all of that under consideration, there is at times also the need for intervention. At some point, policy has to come into the picture. There are many examples from the past, when radical alterations or policies revived economies that were weak. Hamilton for example. He worked very hard at this. He created certain financial policies for the early U. S., and you can read about that in his collected works, which you can find in a library. Also the Constitution was important. It was a pretty radical document, wasn't it? The initial conditions for U.S. capitalism were not set up by the magic of the market. They were set up by the Constitution, a kind of opening gun of intervention in the economy, in order to get it started. Subsequently, the economy grew, but before the Constitution, not much was going on. Persons were comfortable but  they were sitting on their land — not much commerce was going on.

There is at times a need for intervention. There is at times no need. Capitalism is hybrid, capitalism is bifurcated. Hybridity is a feature of capitalism. It is not one-dimensional. It is not that capitalism is either bad, or, capitalism is good. It just does not reduce to that, it is more complicated. It works in of those ways. At any moment it can work both ways. Capitalism has both aspects at once. The one thing nobody thinks of is that maybe the situation is complicated. The truly best attitude would be to have our eyes wide open, always be intelligently ready for the situation in which we need to intervene; and that is the direct opposite of the advice that we should be constantly telling ourselves that we should not ever do so. That right-wing propaganda is rubbish. It is just a completely stupid idea, simply bad advice. It is really, really bad advice. This idea of how the economy should not be intervened with as a matter of principle is rubbish: discard.

Capitalism is hybrid, which means it is a little more complex and has these two sides. This is what I have determined scientifically. So, at times you do not need intervention and at times you do.
Now as for this stupid idea that that you never need intervention: it is not honest, it isn't sincere. It is a useless idea and goes far beyond the ignorance that I mentioned. This stupid, useless idea also illustrates something which is that the economy, already based upon its ignorance, is subject to ideology. 

No one has ever picked up on the way that ideology intervenes, wreaking havoc on the field. I am clearly the first persons discussing it. The person who comes closest, in my experience, to  this kind of understanding is Deirdre McCloskey. She has a book from 1992/1984. She perversely insists that, nevertheless, despite all she has shown in this book, “The Rhetoric of Economics,” it is really not that bad. Well, I think it is definitely that bad. Also she speaks always of "rhetoric" but you cannot just say it's “rhetoric.” Economists are saying things that are very far from the truth. Therefore, I do not think Deirdre McCloskey is correct that the issue of truth disappears completely. I think truth counts for something, so our views are a bit different there. Ignorance is ignorance, not a pretty island called "rhetoric" that we are taking a leisurely tour of. Propaganda is propaganda. Words like "propaganda," "ignorance" or, sometimes, "ideology" are ugly for a reason. There is not really any more to say about it. I am not interested in a philosophy of ugliness, or a best-seller called "Bullshit." I have better things to do. End of discussion.