If the education bubble collapses, will it be the end of blue skies research ?

[FD3SA]

It's probably because they avoid professions where you learn about how money and power works. The reason I ended up working on Wall Street, is precisely because I am a Marxist. Once you figure out that money and power are the root of why things are why they are, then it's logical to go somewhere that you learn about money and power.

Twofish, I have recently been very concerned with exactly the question of wealth generation. I have spent a great deal of time looking at the history of the western civilization and analyzing which policies work and which don't. My conclusion is simply that all socialist forms of governance (including representative democracy) are unsustainable.

Interestingly, my sentiments are shared by some prominent people. The financial situation the majority of the western world (US & Europe) see themselves in is largely caused by the runaway process of increased government spending due to socialist voting patterns.

I refer you to an excellent article by the Global Custodian Editor in Chief.

http://www.zerohedge.com/article/wi...pped-through-revolution-extinguishing-politic

 

[diggy]

My conclusion is simply that all socialist forms of governance (including representative democracy) are unsustainable.

Lets cross our fingers, I dream of living in a land where every road is a toll road and water fountains require the swipe of a credit card.

 

[vici10]

]The reason I ended up working on Wall Street, is precisely because I am a Marxist. Once you figure out that money and power are the root of why things are why they are, then it's logical to go somewhere that you learn about money and power.

As Marx has said:
”The philosophers have only interpreted the world in various ways—the point however is to change it.”

Learning of how present system works is of course necessary first step.

It's probably because they avoid professions where you learn about how money and power works.

There is probably some truth in what your are saying. I found the critical research of Bichler and Nitzan be refreshing and original, especially their empirical methods.
Interestingly enough, Nitzan before becoming a professor worked for five years as Senior Editor at the BCA Emerging Markets Strategist. And their books are mostly admired not by economists, but by mathematicians and physicists, although they do not use heavy math. Your opinion about their work, as someone who works at Wall Street in quantitative analysis, would be very interesting.

 

[twofish-quant]

My conclusion is simply that all socialist forms of governance (including representative democracy) are unsustainable.

Which is interesting since I happen to be a fan of socialism. The problem is that people use the term socialism to mean fifty different things, and it's often not clear what people are talking about.

The financial situation the majority of the western world (US & Europe) see themselves in is largely caused by the runaway process of increased government spending due to socialist voting patterns.

And I'm all for more government spending and higher taxes on the wealthy, and much of the problem in the financial system was because there wasn't enough government regulation. One reason I tend to be favorable toward socialism is because I work in a large financial corporation.

Big corporations tend to be mini-centrally planned economies, so I'm more comfortable with bureaucracy and central planning than other people. I should point out that this is not an unusual opinion among people in finance, which is why Wall Street gets along with Obama a lot better than it gets along with the Tea Party folks.

It's also the fact that I come out of academia which absolutely depends on high levels of government spending. Also I personally have massively benefited from government spending both directly (i.e. student loans) and indirectly (defense contracts to research universities), so I think that taxes in the US for the wealthy are too low.

 

[twofish-quant]

Learning of how present system works is of course necessary first step.

The trouble of course is that once you get inside the system, the powers-that-be give you enough money and prizes that you don't want to change the system, and you start thinking like the people within the system.

The google term for this is "social reproduction."

I found the critical research of Bichler and Nitzan be refreshing and original, especially their empirical methods.

I don't find their ideas to be either refreshing or original. On the other hand the ideas of neo-classical economists tend to be particularly *unoriginal*.

It's interesting, but I think it's quite crude. One problem is what does it mean to "own" something? Suppose I "own" 50 shares of Exxon. What exactly does that mean? Also, they also seem to make the general mistake of assuming corporations are individual humans when they aren't. When you say "private property". What is "private" and what is "property"?

I should point out that these sorts of questions are not "academic." It's the sort of thing that people think about at work.

 

[vanesch]

My conclusion is simply that all socialist forms of governance (including representative democracy) are unsustainable.

That's Margaret Thatcher's opinion, no ? Socialism is unsustainable because sooner or later you run out of other people's money

 

[eaglezfan187]

And I'm all for more government spending

Are you for or against the bailouts? Because although at first glance they seem socialist, in reality they are quite the opposite. They tax the ordinary citizens (through inflation) and give the money to banks like AIG, but banks like AIG still owe money to banks like Goldman Sachs thus making the rich even richer. Which is not socialism.

 

[vici10]

Regarding private ownership, I shall quote Bichler and Nitzan:

“Every social order is created through a certain mixture of cooperation and power. In Athenian democracy cooperation was paramount; in capitalism, power is the governing principle. The primacy of power in capitalism is rooted in the centrality of private ownership. ‘Private’ comes from the Latin privatus, meaning ‘restricted,’ and from privare, which means ‘to deprive.’ In the words of Jean-Jacques Rousseau: ‘The first man who, having enclosed off a piece of land, got the idea of saying “This is mine” and found people simple [minded] enough to believe him was the true founder of civil society’ (Rousseau 1754: Second Part). The most important feature of private ownership is not to enable those who own, but to disable those who do not. Technically, anyone can get into someone else’s car and drive away, or give an ‘order’ to sell all of Warren Buffet’s shares in Berkshire Hathaway. The sole purpose of private ownership is to prevent us from doing so. In this sense, private ownership is wholly and only an act of exclusion, and exclusion is a matter of power. Exclusion does not have to be exercised. What matters is the right to exclude and the ability to exact terms for not excluding. These ‘terms’ are the source of accumulation.
The actual process of exclusion is qualitative and potentially multifaceted; its ultimate evidence, quantitative and uniform. We can observe and describe the many individual facets of exclusion, but the only way to ‘aggregate’ these qualitatively different facets is by examining the distribution of income (earnings) and its temporal trajectory (risk). And since both earnings and risk are a matter of exclusion and therefore power,it follows that capital, being the present value of risk-adjusted earnings, represents the capitalisation of power. Ultimately, what gets capitalised is the power to ‘order’ society.

Furthermore, and crucially, since power and distribution are inherently differential, we cannot talk about ‘absolute’ accumulation. Accumulation is always and everywhere a differential process, a quantitative representation of the power of owners relative to others – others who can exclude plenty, others who can exclude little, and, finally, those who can exclude no one and therefore own nothing.

Bichler and Nitzan “New Imperialism or New Capitalism?
http://bnarchives.yorku.ca/124/01/041214NB_NewImperialismNewCapitalism(Ver2).pdf"



Regarding the question what is being owned:

“Every power society has its own hierarchical system of ranking, and capitalism’s is by far the most universal, flexible and encompassing. With capital viewed as a capitalisation of power, the logic of accumulation is inherently differential. A stock or a bond is a power claim over the social process. Its relative quantity, measured as a ratio of money values, represents the proportionate ability of the owners to control and shape this process for their own aims. And since this power, by definition, is exclusionary, it is only relevant relative to the power of other owners. Microsoft’s capitalisation being $300 billion is meaningless. But this capitalisation being 13 times larger than GM’s and a million times larger than a well-off software analyst gives us a clear reading of Microsoft’s relative power. For this reason, capitalists seek not absolute accumulation, but differential accumulation. They want not more purchasing power or more machines, but to see their assets grow faster than the average. They want to augment their ability to exclude and redistribute, and the evidence for this ability is differential asset growth.

Bichler and Nitzan “New Imperialism or New Capitalism?
http://bnarchives.yorku.ca/124/01/041214NB_NewImperialismNewCapitalism(Ver2).pdf"

Just a note about exclusion. This is borrowed from Veblen who saw “industry” and “business” being in constant conflict. For Veblen “industry” is human creativity, “instinct of workmanship”, human urge to shape nature, to produce. The main goal of “industry” is production of goods and services for betterment of human life.
Business aims are different. Its main goal is monetary wealth. Business is all about ownership and power.
Under capitalism industry is subjugated to business. If industry will stop, business will not be able to accumulate profit. But if industry will be allowed to produce in full capacity, business will become redundant and will lose ability to control and hence ability to profit. Therefore Veblen talks about “strategic sabotage” of business over industry (productive capacity of community).

It's interesting, but I think it's quite crude.

It is not their model that is crude, what is crude is what they are analyzing: the capitalists. These people account to no more than 1 to 5% of population, and yet they own the vast majority of world's resources. They are driven by the simple and crude dynamic of accumulation of capital. Sure we can hire physicists to make it look very complex. In final analysis it still comes down to bunch of wealthy families that essentially care for nothing but the accumulation of power that is invested and represented by wealth. The fact that majority of planet suffers from a lack of clean water, are food insecure and are deprived of energy resources does not matter as such to these people. These people, a small group of people, driven by motivations, pathetically crude motivations that perpetuate the capitalist system.