Posted by: graemebird | August 9, 2010

Thoughts On Funneling Capital Accumulation To Lower Socio-Economic Individuals

Getting capital goods accumulation in the hands of the right people within lower socio-economic groups is really the key to the just society. It would also put us in a position where many Australians would be a lot more relaxed and comfortable about taking more migrants. I’m not relaxed and comfortable about new migrants. Because the policy expert (ho ho) incumbency has set up a situation where each migrant is a threat to us through welfarism. Instead of massively high income tax free thresholds to help struggling families along, we actually have to shell out money too these people. We have to supply family income support with all the poverty traps that this implies. Of course the Catallaxians will go on believing, out-of-context, that more migration is good for us no matter what. This is because they are not real smart, and so think they can interpolate the benefits of migration, as they would accrue under free enterprise, to the situation we find ourselves in. Like I say they are not real smart.

But nonetheless from a moral point of view we want policy settings that make it in our interests to take more migrants, and no doubt when we get these policy settings, it will be easier to convince Australians to let in more migrants.

Back to funneling capital goods down the chain to the fellow starting with nothing but the willingness to work hard and established good character. This is the key to the just society also, because it takes one more person off the list of the proletarian pool, doing more or less entry-level jobs.

Job-rigging due to credentialism adds to that proletarian pool. Anything that makes the average size of the firm larger than it ought to be adds to that pool. There are incredibly many things about our current crap policy settings that add to this pool. And this is one reason why we have such an unequal society. This thread is taken from a post of mine on this forum. Its not a step by step guide as to how to get capital accumulation at the lower socioeconomic levels. Rather it is a display of the sort of thinking necessary to do so:

Further thoughts on this article: It hardly seems like a den of wealth-creation does it; this milieu he is describing.

Wealth-creation in finance is all about making a loan to buy capital goods to increase cash-flow. By its nature banking ought to be a local business, where the main requirement of the banker is his ability to judge business proposals, and even more importantly; character.

Where does this all fit into the picture painted by the article? It doesn’t fit in at all.

We see here also that the sort of capital development needed at the bottom levels of society is all but incompatible with an income tax, where the tax free threshold is not high enough to shield most of society from its effects. Since once you’ve borrowed, to pay back the money, you will have to earn more income and that will throw you into paying more income tax. So you will be hit with interest AND extra tax.

Also from the supply side one ought notice that banking for wealth-creation, is really incompatible with any monetary situation other than growth-deflation. An inflationary environment will have the bankers cutting corners and sending money to real estate flipping, or to whatever bubble is running at the time.

We need to get rid of most of these government departments, and most of the family income support, and substitute instead high tax free thresholds and growth-deflation. That way the local 100% banks will funnel money to authentic wealth creation at the lower levels of society.

We also want to take a page out of the Thai business creation book. In Thailand you can create a new business on the footpath with extremely low startup costs. This is to be encouraged. It will bring down commercial rent prices, and the cost of prepared food at retail. The costs of other retail goods as well.

When I was staying at my brother-in-law’s condominium, across from the marvelous-looking Bangkok University……..

……. I would wander down to the main road in the mornings to get breakfast. An incredibly wide array of astonishingly cheap dishes were available. But what I liked most was this speciality drink that one fellow would prepare. He used canned carnation creamy milk of some sort. Coconut juice. Pieces of fruit and some sliced coconut as well as ice.

Ice is ubiquitous in Thailand. That people now have fridges hasn’t dented the early morning delivery of ice produced on an industrial scale. Ice is cheap even in terms of the Thai price level.

So he would make this creamy juice drink by grinding up all this stuff together. He took up probably less than a square metre of footpath. He only seemed to make one drink. And the equipment and supplies he needed to start up this business was minimal.

So many Thais are working for themselves in these small businesses. Another brother-in-law was running a shop out of his house. He would open at 6.00am and close at 9.00 pm or so. But if he wanted to get anything done away from the house, there was always someone else to mind the store. So me and him and a friend could bugger off on a couple of motorbikes to visit some mountain, or caves, or hot springs.

In Bangkok a friend of my wife, got sick of her job and was attempting to start up a coffee-vending outfit from out of her front porch. But she would leave her new fledgling business just to drive us around to different places.

There is not enough of this going on in Australia. And the fact of it leaves too many of us in the proletarian stream, bidding lower level wages down.

Our wages have stagnated. Now part of this was due to the breaking of union power with workchoices and so forth. And this was necessary to bring typical unemployment down from high single digits to mid-single digits.

But part of it is also this dysfunction in banking, monetary policy, business regulation, and taxation … part of this is also this myriad dysfunction we have, that is preventing capital goods flowing into the hands of these tiny businesses at the lower economic levels of society.

Quite naturally these inbuilt disadvantages to lower socioeconomic capital accumulation are twinned with the ugly phenomenon of big-shot executives essentially voting themselves higher and higher salaries such that now these salaries are at obscene levels. They can do this with impunity chiefly because they face very little in the way of competition from below.



  1. From unleashed:

    You make a very good point jim C. Take the American situation for example. In 2008,had the market been allowed to speak, an whole string of parasitical financial market players would have gone under. But they were propped up since the bankers have virtually taken over Washington. Now these guys are still acting parasitically so the Americans are not rid of them. Also there is a great deal of job-rigging in the professions. Medical costs and legal costs are far greater than they ought to be. So its not only the government departments that need dealing with.

    Once again, both struggling people, and retained earnings are being taxed. Should we be unable to get rid of these taxes without running deficits, its pretty clear that we have some government departments to close down. Since there is just no point in having these excess government departments if you need to tax poor people to do so.

  2. this is actually a good economics post for once Graeme.

    we need less restrictions on home based and other business.

    • All my posts are good posts. Why defame my other posts. Why not just acknowledge you agree. You are not restricted in agreeing by your tribal commitments.

      Just say …. “Graeme… on this point I am not hamstrung in expressing my agreement due to prior professional tribal committments.”

      Remember that it was your outfit that discovered that Coles and Woolies were surreptitiously gathering to themselves unrighteous and unmarket gains by restricting retail space investment on the local level. Your average punter could sense that something was amiss but then your crowd came through with the empirical evidence. You have to understand that what you guys discovered, and what was presented with the help of Alan Fells ….. thats just the tip of the iceberg.

  3. Is your blog down?

    • I suspect sabotage Philomena. It seems that posts of yours were being filed to spam. There is nothing my detractors won’t try on it seems.

      • Hahaha. Thanks. It must be the Overlords or Morons thread that’s the problem. Perhaps no one can post on that one now. Hmm.

        But your detractors underestimate the power of your particular animal spirits, Graeme.

      • Animal spirits hey? That Keynesian phrase. Sounds better when used in other contexts. You still on the same email?

  4. I posted a comment and it didn’t come up. Maybe it got stuck.

    • I’ll look for it. I know I had problems with another thread. And I just took that thread off from being “sticky”. I shall investigate.

  5. From Unleashed

    “These Bankers do not Vote Labour, they Vote Liberal.”

    Hmmmm. I don’t know about that. But be that as it may I agree that we have a problem with bank parasitism. But we don’t want to just fall back into the tribal positions our economists take. You see our economists fall into two main camps. Keynesian and Neoclassical. The Keynesians never see public debt that they are not in love with. No amount of public debt seems to dent this infatuation. Whereas the neoclassicals never see private debt that doesn’t make them swoon. They are basically lobbyists for the bankers and the bigshots. They love private debt so much that any public asset they see, they want to sell it off and attach huge private debts to this asset.

    You seem to have formed your views in opposition to this ugly smelly obnoxious neoclassical tribe. And righteous is your opposition to them. But we don’t want to be strong on bank parasitism and weak on government parasitism. We want to come down hard on both forms of parasitism.

    The two groups may be described as Keynesian and Neoclassical. But they can also be thought of as bloodsuckercentral, and her loyal opposition. Both these groups are against the average hard-working joe. And we must set our hearts against both these leech-preachers.

  6. I found one of your posts Philomena. So I put it up there and put the duplicates on hold. I cannot explain it and I hope it doesn’t happen again. But I cannot be sure it won’t.

  7. Which bankers vote Liberal? Of the ones I know I’d say they vote 60/40 favoring Labor. And why not? What could be more money for jam than a huge spending Labor government constantly knocking on IB doors cap in hand?

    • Yeah exactly. All that new debt created is traded. They pick up the trading margins. When they lend to the government, because thats a sure thing, they are confident enough to create new money on the basis of this “sure thing” and so they get the new money creation benefit, almost the exact same as if they were counterfeiters.

      I know that most of the financial types in the US are Democrats. But I’m not sure if that translates here. It might be that our bankers, while they perhaps are unknowlingly involving themselves in dirty business, are not all as corrupt and belligerent as the American versions. So some of them may well vote for balanced budgets and an end to government debt, even if it hurts their own prospects for hyper-bonuses.

      Remember we are far from the centre of things. So it may be that our corruption, and the corruption of our banking executives, lags somewhat behind their northern hemisphere vermin-brethren.

  8. Inductive/Deductive thinking is where its at. This is the bread and butter of finding the truth. Maxing out on armchair thinking is cost-effective. But in the end this armchair thinking must always bow to the empirical evidence.

    I always thought from the time I read Von Daniken that our planet ought to have been visited sometime in the past. But after getting a bit over-enthusiastic about the Von Daniken thesis as a 13 year old, I rejected this thesis for the most part …. . But then STILL concluded, out of sheer probability, that we would have been visited by alien life. But that it would be a once every million or once every ten million year affair.

    Now for some reason this thinking, has turned out to be wrong. The logic isn’t wrong. The distances between the stars is so vast that we would not be expected to have visitors but once every million or ten million years. But then again the number of stars is such that there ought to be intelligent life out there.

    So the net effect of the distances and number of stars involved ought to mean that we have been visited, but not recently, and incredibly infrequently. We might say that I adopted a “Von Daniken-Lite” Thesis, from out of pure armchair thinking.

    Don’t tell me I’m wrong on logic because if you do so you are only showing that you are full of shit. I’m not wrong on logic. I’m wrong in fact.

    The fact of the matter is we now know we have been visited within the last thousand years. I don’t know what factoid that we don’t know about makes this credible. I don’t know anything else about it. But in the end logical thinking must bow down to the empirical evidence. And the empirical evidence shows that we have been visited within the last thousand years.

  9. I found a good blogger today.

    I really enjoyed these two posts and the comments.

    • Yeah they are good posts. They are observant enough to realise that there is something terribly wrong with the economic orthodoxy that is trickling down to them.

      The answer from a purely economic point of view is the British Classical/Austrian Synthesis that George Reisman (currently looking after his sick wife) has been able to produce.

      I’ve decided that this purely economic approach is not enough. Its like bringing a clenched fist to a gunfight. We have to realise that there is a strategic and combative political side to this as well. You can redistribute income and wealth, but only the tiniest amount before this causes real economic damage. I would now say that we have to aim just a tad above this tiniest amount, and accept a little bit of economic damage, because the world keeps turning, and in every time period the bigshots will have locked in a whole string of strategic and subtle measure to keep their act on top.

      But it is important to know what the purely economic limitations are. One never puts them aside and pretends they are not there. Once never ought doctor-shop, when it comes to economists. We need a more patient utopianism.

  10. What I’m trying to say in this thread is that we can have the good society. We can have the society where we are proud of those amongst us who make great fortunes. Where its not just about commandeering huge salaries, that you vote for yourself. Its not just being born in Australia already rich. We can have a society that is statistically more equal in wealth then other countries, but doesn’t achieve this by outright stealing of the rich and giving to the poor, since that never works anyway, and is never going to work.

    The application of authentic economics knowledge for the goal of the fair and powerfully productive society, can yield results. It all can be done without violence. But not if those fractional reserve advocates want to get in the way of reform. And particularly not if those really powerful fractional reservists, in the Northern hemisphere, want to try and get in the way of reform through underhanded and covert measures.

    If the Northern Hemisphere rich elites harden their hearts against the good society in Australia, then these fractional reserve power-brokers must be seen as the enemy, far moreso than the former Soviet Union, was an enemy of this country. These people, whoever they turn out to be, must be given the designation of “regime leadership” and so are fair targets for deterrence, or for warlike actions to maintain the peace of our choosing.

  11. From Unleashed:

    Graeme Bird :
    09 Aug 2010 7:10:30pm
    We just don’t have time for these anti-science and anti-environmental religions that our leftists want to nag into existence. We don’t have the time nor the resources. Small subcontractors are being taxed on their reinvestment. This is unacceptable since it prevents them accumulating capital, hiring people, taking on the big boys, and thus moderating bigshot salary excesses.

    We don’t have time for this nonsense since poor hardworking people are still being taxed.

    On top of this is the reality is that CO2 levels, over geological periods, have been reducing. It may be that it is our role, as an intelligent species, to keep the CO2 levels high, for the good of the planet. It is not to be assumed that our CO2 levels will remain high without our intervention.

    Extra CO2 increases net primary production, and therefore enhances life on earth. There is no getting around that. And just by the way, high CO2 makes agriculture more productive and therefore relieves hunger. I don’t think any serious humanitarian ought not take into account this undeniable scientific reality.

    Reply Alert moderator

  12. Graeme, Barney Rubble is definitely hot but he can’t be taken too seriously as a potential government minister. As you can see in this interview all he can do is be negatively critical of the ALP and fail to answer the very good questions and economic policy probings of the ABC journalist.

    • I know what you mean and watched the video all the way through. I was going to give you a very big response in his defense but got distracted replying to your other posts.

      Just remember he is in full-blown election mode. He cannot afford to be as candid as he usually is. Your observation is akin to saying he’s acting like a politician. Well the pressure is now on. The election is on a razor’s edge. He has to be thinking that at this stage he is far more capable of blowing the election singlehandedly then winning it by his own devices. He’s got to be very careful not to make mistakes or allow himself to be pinned down.

      Parties can tolerate exceptional people like Barnaby most of the time. But even he has to pull his head in in the last couple of months before an election. Same way as I had to take my election demands off-air last time once the countdown began.

  13. With a few caveats this is a good and interesting post Graeme.

    People do set up street stalls to sell produce or products or offer services here in Australia but these are almost all one-offs, illegal or subject to all sorts of regulations and fees.

    I think your anti-government thesis falls down not least by quarantining defence (and police?) from your desired public service blitz. For if these two agencies were the sole or principal government agencies remaining, ones that by definition are best placed to coerce the entire civilian population into doing what their controllers dictate, then how would their inbuilt propensity as government/state agencies to corruption, fraud, mismanagement and waste help rather than hinder the birth of the type of libertarian society you advocate?

    • You make an excellent point. The nature of the society itself, reflects the predominant government spending. In the last couple of decades both parties have, to some degree, abandoned their traditional constituents, in favour of the sensibilities and individuals of the non-defense public sector. This is a tendency that is self-reinforcing. And its not a done deal that we will break free of it in time to avert catastrophe.

      But your point is solid since if you consider the 19th century, despite the rationality of the era, those countries whose military emphasized the standing army (rather than the navy) were repulsively militaristic in nature by the latter half of that century. How ugly it would have been to have the Gendarmerie getting about haughtily on the French streets, or have some Prussian soldier messing around with your girlfriend whilst you were away on business.

      The society of Britain had its own problems to do with massive inequality of wealth. I think you would agree that this hatefully overdone enclosure movement of three centuries earlier penalised the civil society of Britain in this way (Not excluding other causes of excess inequality). But the militarism of France, and Prussia wasn’t there. The ugly nastiness of it would not have been as big a feature. Since they would put all the bully-boys into boats, and ship them overseas, or at least leave them patrolling the deep blue. The nasty British boot would have landed hard outside of their own society. Plus the vast numbers of the sea-dogs were taken from the lower classes. And this had a way of moderating their pushiness whilst in port.

      But as you imply, since the defense spending, would be the major government spending flow, it would have the effect of infusing nasty militaristic tendencies in the civil society itself. The tendencies now emphasized are the tendencies towards spending other peoples money on crap and banker bonuses. But the sensibilities of the public servants are at least gentle in some respects, and not harsh on sinners and minorities. With a lot of bad, there comes some good to it smuggled in.

      There is no short answer as to how to combat what you are talking about. To be glib I would see the answer in the citizen-soldier. I would see us very much expanding the part-timers in the armed forces and letting the numbers of the full-timers drift downward, or at the very least stagnate. I would see the full-timers as schedulers and instructors, to keep the part-time service productive.

      This is no full answer to the problems that you bring up. We would need to be aware of these problems on a 24 hour basis. We would need to think about these problems with that sort of 24 hour obsession that some of the secretaries think about chocolate.

      I’m not saying I’ve answered your concerns. Not by a long shot.

  14. “Inductive/Deductive thinking is where its at. This is the bread and butter of finding the truth.”

    But Man (sic) does not live by bread alone.

    It’s true that the model of induction and systematic testing of phenomena involving the breaking up of that which is under investigation into what is thought to be the principles or elements of which it is composed and then after isolating these recombining them to build up knowledge and to name the phenomenon was a great advance.

    But it still doesn’t approximate let alone equate with truth. And anyhow truth doesn’t anyhow lie in taxonomical exactness or the existing means to achieve it, forms of measurement.

    As Julia Gillard said on Sunday when asked to rank Mark Latham’s recent boorish behaviour: some things just can’t be measured.

  15. Great post Philomena. Its true that truth doesn’t lie in taxonomy. Taxonomy is part of the process. Taxonomy is there to make analysis workable. Since in the end all of truth and reality is holistic.

    My dogma says that we can only know truth by convergent evidence, in the context of a process of ranking and re-ranking multiple hypotheses.

    We want convergent verification and falsification, and partial efforts of same. Partial verification is when you can rightly say “this evidence tends to lend weight to this paradigm, whereas it rather would seem that it detracts from our third paradigm” That sort of thing. A points decision as to the effect of the new data, rather than a knockout and absolutist effect either way.

    So I would say we can indeed have total certainty of things. For example all evidence verifies that the heart is analogous to a pump, no evidence refutes it, there are no outstanding paradoxes in this regard.

    Whereas most of the tired assumptions of contemporary science do not come close to meeting this criteria. Its an absolute scandal.

    No individual in the current climate can feel rightfully certain about a great deal of things in science. Because every individual is fallible and is unable to get across all related subjects and get to a point where he can rule out some earth-shattering factoid coming in from left field.

    But a community of scientists could very quickly enlarge the scope of scientific truthzzz that we can be very sure of …….. if that community of scientists were not so bloody dysfunctional as they are now.

    If they were ranking paradigms in parallel, and if they understood that it was convergent evidence that they were after, then they could do the job, to give the rest of us an increasing volume of things that we could be certain of.

    This is not how they are working, and the hard yards are not being done. At the same time people think they KNOW a whole lot of stuff that comes under the heading of 1. rubbish. 2. speculative and 3. entirely unlikely.

    Take for example the idea that the suns energy is produced, almost exclusively, by fusion-alone.

    People are so sure of this, yet it is very unlikely according to the evidence. And the reality that much, if not most of the energy, is generated by other means, has all sorts of implications.

    Like the idea that the very huge stars are young stars. Which is almost definitely the opposite of the truth.

    In almost every non-commercial area of science we see examples of this unwarranted certainty. We see the ubiquity of wasted funds. We see a near total ignorance of what constitutes good process, good evidence, good reasoning. We see very little in the way of reason at all.

  16. Great Timing! Lloyd Pye just sent me this one.

    Saturday, August 7, 2010

    The Noblest Expression of the Human Spirit
    by Alexander Green

    Dear Reader,

    Here’s a riddle.

    What is the secret of eloquence, the standard of virtue, the basis of moral authority, the object of philosophy, the most formidable power on earth, the noblest expression of the human spirit, and beauty itself?

    Thoreau said it was better than money, love or fame. The New Testament proclaims it the basis of personal freedom (John 8:32). Schopenhauer observed that it is first ridiculed, then violently oppressed, then accepted as self-evident.

    The answer, of course, is truth. Yet you’ll notice that the supply often exceeds demand.

    The other day, for instance, a friend forwarded me a political email filled with dubious accusations and misstatements of fact. You would think a message that is unsigned, printed in three colors and written in ALL LARGE-CAPS might engender a bit of skepticism. Yet it resonated with him so strongly that he eagerly accepted it.

    We all want to believe that we are in possession of the truth. Even when we’re uncertain, we like to feel that we’re evaluating information rationally and will surely recognize the truth when we see it.

    But as Winston Churchill observed, “Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened.”

    We all walk around with a picture in our heads that we believe reflects the world as it truly is. We depend on this image. It governs our thoughts, feelings and behavior.

    But is it accurate?

    With today’s radio, cable TV and Internet, you can watch, read or listen to whatever kind of news pleases you, and indulge your political, social and scientific theories, whether sophisticated or naive, extremist or pedestrian, grounded in reality or so far out you’re floating in the asteroid belt.

    It’s called selective exposure. Rather than dealing with the unpleasant sensation of having our beliefs tested, we simply steer clear of information that contradicts what we think we know. We carefully select the messages we consume.

    As a result, we’re not just arguing over what we should be doing. We’re arguing over what is happening. We’re no longer just holding different opinions. We’re holding different facts.

    We don’t have time to investigate everything ourselves, of course. So we rely on conventional wisdom and the opinions of others. We draw generalities from specific circumstances. We accept things we hear or read if they sound credible – and especially if they appeal to our personal prejudices. As we grow older, we even forget or misremember our own experiences.

    We are creatures of culture too, brought up to accept certain narratives about how the world is. Yet these preconceptions harden and make us resistant to opposing points of view. They prevent us from opening our eyes… or our minds. And out of politeness or political correctness, we are reluctant to ask questions or voice dissent. We fall back on what is generally accepted rather than doing the heavy lifting and thinking for ourselves.

    And that should make us consider from time to time whether our version of reality – our truth – is correct.

    Social scientists observe that what we believe – what we accept as true – is highly dependent on our upbringing and the society we live in. We are all caught in a web of cultural context.

    Postmodernists and deconstructionists have taken this to extremes, claiming that there is no such thing as objective truth, only culturally-based worldviews and opinions, none any more valid than another.

    What a depressing thought, for what are we all pursuing if not objective truth? Yet Oxford biologist Richard Dawkins effectively skewers the postmodern position in River Out of Eden. “Show me a cultural relativist at thirty thousand feet,” he says, “and I’ll show you a hypocrite. Airplanes built according to scientific principles work… Airplanes built according to tribal or mythological specifications don’t. If you are flying to an international congress of anthropologists, the reason you will probably get there – the reason you don’t plummet into a ploughed field – is that a lot of Western scientifically-trained engineers have got their sums right.”

    It is not possible to thoroughly investigate every claim we accept. But not all modes of knowing are equal. In fact, most of our beliefs are derived in one of three ways.

    The first is tradition. These are beliefs that are handed down from grandparents to parents to children and so on. The problem here, of course, is that if a particular fact or story or folk remedy was in error to begin with, it’s as untrue today as it was originally, no matter how many generations have passed it along.

    The second source is authority. If a teacher, public official or expert tells us something is true, we’re more inclined to accept it. This can be a valid shortcut. But, regardless of their credentials, experts are often mistaken. Just because information comes from someone important, it doesn’t guarantee its reliability.

    The third source of belief is reason and evidence. Here we are on firmer ground. Historians use documents, letters and photographs to piece together the past. Judges base their opinions on physical and circumstantial evidence, eyewitness testimony and well-confirmed facts. Scientists construct hypotheses, test them by observation and experiment, share their methods and offer the results for confirmation or rejection.

    Scientists – like historians and judges – are far from perfect and their claims are always subject to revision. Yet the scientific method – with its double-blind methodology and rigorous peer-review process – is based on a fine understanding of human fallibility. It is designed to weed out erroneous conclusions.

    In 1989, for example, Martin Fleischmann, then one of the world’s leading electro-chemists, and Stanley Pons announced their discovery of cold fusion, nuclear fusion near room temperature. But their results could not be replicated and their “discovery” was soon dismissed for lack of evidence.

    The success of science in the modern era has given it a powerful aura. Indeed, some have tried to make it the unquestionable authority and final arbiter of truth and knowledge.

    That’s a mistake.

    Scientists are just as egotistical, ambitious and biased as the rest of us. Even the peer-review process – as we have seen in the recent ClimateGate scandal – can fall prey to ideological conflicts and personal vendettas.

    Science has plumbed the depths of the ocean, the hinterlands of space and the recesses of the atom. It has increased our understanding of life immeasurably. But it has not told us why we’re here or given us the answer to life’s meaning.

    Science does an excellent job of telling us what is. It cannot tell us what ought to be.

    That is left for historians, theologians and philosophers. Some important truths we have to discover for ourselves.

    Carpe Diem,


  17. Theories are valuable even when they are false or partially true because they lead us to look for facts that will corroborate the theory and what often happens next is that the new facts do not corroborate but disprove the theory leading to a new theory to be invented to fit the newly observed phenomena. This new theory then leads its advocates to look for fresh factual corroborations and so the process goes on indefinitely for there is no reason to suppose that we will ever discover the absolute truth about anything.

    • “Theories are valuable even when they are false or partially true ….”

      Yes this is my position as well. But in the current cultural environment in the West theories are actively being used as a weapon to abuse people, maintain incumbency power, and inhibit the quest for knowledge.

      We have certain characteristics in the culture that were there for a long time but in far more muted form. For example right now we have adopted this idea that the pronouncements of non-profit organisations, or even the claims they make on their websites, trump scientific evidence. I don’t think the laity has ever bought into such unscience idiocy before.

      We have always had a problem with the overuse of the argument-from-authority. The argument-from-authority is only valid in the most moderate sense. Now its been blown up to such an extent, in some circles, that it is believed to a degree comparable to that demanded by that priesthood loyal to the pharoahs.

      Its exactly as you say with theories under normal functional circumstances. Even pretty bad theories help you understand the better theories. So that if Keynesianism was of now mainly just of historical interest, it would be a good thing to learn it, as it would contrast to the Austrian school theories, and thereby help people put that rather tight Austrian model in the right perspective.

      And of course the British Classical school thinking was excellent, but now its been more or less abandoned outright, even though the younger JS Mills (that is JS Mills earlier work) and that of his Dads, seems to be utterly exemplary. And even minor figures during that time seem to be well worth studying. The Austrians corrected them on a few big things. But having done so seem to have then ignored the brainpower condensed during that time.

      So each paradigm helps put the others in perspective. Which means that to have perspective 90% of any given subject is the history of that subject. In the modern era almost all the non-Austrian economists that you can respect, are the economists who had their background in the history of economics, or at least gave great weight to this subject.

      George Reisman has achieved more than any other economist still alive because he has integrated the British Classical school, with his Randian epistemology, with the Austrian school, with the science of modern accounting, with his observations as to how business actually works.

      Now lets line those up.

      1. The British Classical School

      We absolutely KNOW what omissions and mistakes these guys made.

      2. The Austrian School

      Of course I don’t agree with everything these guys say. Or I wouldn’t be spruiking the Reisman redrafting of the lessons from this school.

      4. The Randian Epistemology.

      It goes without saying that almost all philosophers take their good ideas a little bit too far. Rand has been unfairly singled out in this respect.

      5. The Science Of Modern Accounting.

      This goes back a long way and has been market tested in competitive medium-sized business to a great degree. No matter how bad certain practitioners are the core fundamentals of this science, at least insofar as the take-home-story for economists, appears to be utterly sound.

      “Theories are valuable even when they are false or partially true ….”

      Well you can believe me that I agree with you. Since I’ve deconstructed the astonishing Reisman achievement and we see that it is made up of knowledge from multiple sources, only one category of which I may not be able to find fault with, although the Randian thing might be delegated under “carping.”

      So he was able to achieve what he did achieve, as you say, from polishing and building on theories, most of which WEREN’T PERFECT.

      Now I’ve formalised your point of view and I’ve said that the scientific method must involve the ranking and re-ranking of at least three, and preferably six paradigms (theories …. hypotheses) IN PARALLEL

      It is by never designing a research project without three differing points of view that we stop bad theory being used as a primitive-priesthood weapon to restrict progress.

  18. Economics on its own is insufficient. Literature, art, sociology, political theory, history and other disciplines must be drawn on for understanding of reality.

    For example in the early 1920s there was a flood of works that broke new ground (by writers such as James Joyce, T.S. Eliot, Rainer Maria Rilke, Proust, Virginia Woolf, Sinclair Lewis (Babbit) which in different ways severely criticised the war and post-war society that capitalism had brought about, a society where value was placed on possessions, where life had become a race to acquire things, as opposed to knowledge, understanding, ethical action, etc.

    The economic historian R.H. Tawney was a key figure in this period. He participated in the Royal Commission into Coal Mines at the time of a miners’ strike in 1919 and it was this experience above all which led him to write the works for which he is best known: “The Acquisitive Society”, “Religion and the Rise of Capitalism” and “Equality”.

    He’d served in the trenches during the war and had been educated at Rugby and Oxford. He came to hate the brutality of unbridled capitalism particularly the waste and inequalities it produced. He expected capitalism to break down after the war. He thought it misjudged human nature elevating production and the making of profit which ought to be a means to an end into ends in themselves. This had the effect of encouraging the wrong instincts in people, such as acquisitiveness, which will not bring them happiness in any case and that this pre-occupation sabotaged the instinct for service and solidarity that is the basis for civil society.

    He thought that in the long run capitalism was incompatible with culture because under capitalism culture became more private, less was shared and this trend went against the “common life” and that individuality inevitably promoted inequality. He thought that capitalism was at its heart incompatible with democracy and that its inequalities would as they increased tend to threaten social cohesion with all that entailed, not least the growing militarisation of society and curtailing of civil liberties and personal freedom.

    As well as seeing his role as promoting a moral attack on capitalism which like many he thought had been at least partly responsible for WW1, he was an historian who looked at capitalism historically. The thesis of “Religion and the Rise of Capitalism” is that “economic man”, the creature of classical economics, was not the universal figure in history he/she was supposed to be, that human nature was not necessarily shaped as classical liberals said it was.

    • “Economics on its own is insufficient…..”

      Yes it is insufficient on its own. And we see that where I disagree, on the basis of practical politics, with the dummies on Catallaxy, even when it is on issues that I do agree with them somewhat on economics.

      “Economics on its own is insufficient…”

      Yes yes true again. But the failure to recognize this has not been the big problem. The big problem has been for intellectuals to DOCTOR-SHOP their economists. The intellectuals have as individuals ignored Misean economics and have AS-A-GROUP promoted the idiocy of Keynesian economics.

      “Economics on its own is insufficient….”

      This is true. And this is why I have finally had to redraft the Reisman economics to bring in other non-purely-economic factors. Its no disagreement with purely technical economic matters. But as you say “Economics on its own is insufficient….” so from here on in I’m going to be on the libertarian wing of the GK Chesterton mode of thought. My motto will be ONE MILLION SOLE TRADER FIEFDOMS FOR AUSTRALIA.

      It is only in the independence we can gain by having a million sole trader fiefdoms in Australia, that we will have a vibrant and unrestricted cultural and intellectual life.

      “Economics on its own is insufficient….”

      But the main intellectual sin of the twentieth century wasn’t to regard economics AS-ALL-THINGS. Rather it was to ignore economics. Like for example our Animal Rights philosopher. Peter Singer. Clearly Peter is more than competent with bivalent deductive logic. And we see the faults of the philosophical profession through him.

      After thinking hard about subjects, for more than three decades, with his superior philosophical skills …….. HE IS STILL A DEMENTED LOCK-STEP-LEFTIST.

      The gorilla in his room is Misean economics. And he has no time for the good economics. Presumably he DOCTOR-SHOPS when it comes to economics, despite his technical proficiency as a philosopher. I type these words angrily. If you rely on deductive logic alone and not on convergence, you can justify pretty much any bullshit you wish too, and most of it comes from Kenworth-sized omissions in your philosophising. And not from any fault of logic.

      The faults of the philosophers mainly comes from failure to integrate realities into their thinking. Few competent philosophers fuck up on logical grounds alone. Yet virtually all of them fuck up. My oath they do.

  19. I’ve also been re-reading Aldous Huxley’s essays from the 1920s. Huxley was fascinated among many other things by science and its methodological procedures.

    He argued that all good ideas are unrealisable and that reality is too complicated to regard any abstraction as completely true, that “truth” itself is multiple or plural, and subjective. That the sheer diversity of sense impressions precludes any possibility of a single or monolithic truth in a universe which has no single, pre-established meaning and that the universe is possibly “irrational” something that physics seems to bear out e.g. what is sense in the sub-atomic universe is nonsense in the macroscopical world.

    He’s a very stimulating thinker and writer (as I’ve said on more than one occasion).

  20. “I’ve also been re-reading Aldous Huxley’s essays from the 1920s. Huxley was fascinated among many other things by science and its methodological procedures.”

    Good so far.

    “He argued that all good ideas are unrealisable and that reality is too complicated to regard any abstraction as completely true, that “truth” itself is multiple or plural, and subjective.”

    Thats a glass half empty argument. Can we really deny that the heart is analogous to a pump?

    Can we really deny that the earth is (basically) spherical?

    “……. That the sheer diversity of sense impressions precludes any possibility of a single or monolithic truth in a universe ….. ”

    Absolutely correct. And thats the take-home story. We need a lot of small-models to navigate reality. And yet what do we see in physics? This insane quest for the “theory of everything.”

    These people SO MUCH don’t know how to go about things. Its as if we are dealing with people who cannot put into sequence the punch-line to a joke.

    Good post Philomena.

  21. “Can we really deny that the heart is analogous to a pump?”

    I suppose not. But I have to say I laughed when you first made that analogy as if that was the primary thing about it or how most people experience or think of it. Which is sort of the point. Science can simplify and reduce diversity to identity and thus make the mistake of reducing human beings to matter in motion of being instrumentally reductionistic and one-dimensional when we sense at least that we are far more than matter in motion but what exactly or even how or why we don’t yet know much at all.

  22. But if we are prepared to see reality through many different “small models” we ought to have confidence in “OUR” ability to find the answers.

    The problem comes with the definition of “OUR”.

    No one person can do it on his own. Since there is simply not the time to check everything that one might be being bullshitted over.

    But a FUNCTIONING ACADEMY ought to, by following the scientific method, be able to get us closer and closer to truth, and be able to expand those items that we prosaically know to be true.

    Unfortunately we lack a functioning academy. And probably have done so since before World War I, (to quote a somewhat arbitrary cutoff).

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