Is this why it is all failing?

kleefarr

Recently received via email and in my opinion, lays in all down on the table..

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama's socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on Obama's plan". All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A.... (substituting grades for dollars - something closer to home and more readily understood by all)..

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.

As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed.
It could not be any simpler than that. (Please pass this on)


Remember, there IS a test coming up. The 2012 elections.


These are possibly the 5 best sentences you'll ever read and all applicable to this experiment:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

oscarBravo

kleefarr wrote: »

The professor then said, "OK, we will have an experiment in this class on Obama's plan". All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A.... (substituting grades for dollars - something closer to home and more readily understood by all)..

/raises hand

I have a question.

What exactly is "Obama's plan" to average dollars so that everybody receives the same amount? Because in the absence of such a plan (which I haven't heard about) your parable is meaningless.

kleefarr

The only plan I can find is from 2008..

http://obama.3cdn.net/8335008b3be0e6391e_foi8mve29.pdf

Taking that into account, it would appear that the first steps of equalisation and socialism have already started. In general it appears that people and businesses are being bailed out by governments more than ever before. In the past people were left to struggle and find their own way.
As pointed out in the email I posted, this may, and probably will, lead to to point 5.

Is it time for the governments of the world to get tougher?

oscarBravo

kleefarr wrote: »

The only plan I can find is from 2008..

http://obama.3cdn.net/8335008b3be0e6391e_foi8mve29.pdf

Taking that into account, it would appear that the first steps of equalisation and socialism have already started.

Hmm.

In a similar vein, I could claim that the various laws that make it illegal to treat animals cruelly are the first steps towards animalocracy, where animals have greater rights than humans.

Seriously: is this the best you can do?

RichieC

here's a rewrite from dailykos.

On the first day of the semester, an economics professor walked into a lecture hall filled with a hundred students.

"Welcome to Economics 101. Over the course of the semester, I except regular class attendance from all of you." The professor pointed to one student and said, "In addition to attending class, you will have unlimited access to ask me questions, discuss concepts, and fill in any gaps from class time."

Selecting another four students, the professor continued. "The four of you will meet with me once a week for a study session over lunch. We will discuss any questions you may have, any recent economic current events, or anything else you feel was not covered in class. You will also each be able to email me once a week with questions."

The professor looked around the hall before pointing to ten different students. "The ten of you will have the option of meeting with me during office hours for an hour after each class."

Not missing a beat, the professor selected another five students. "The five of you will have the option of meeting with me outside of class twice during the semester for ten minutes total."

The professor paused for a moment. "As for the eighty students remaining, you will not be allowed to meet with me outside of class or ask questions during class. At the end of the semester, all one hundred of you will be given the same exam. Your grade on that exam will determine your grade in this class."

Several students raised their hands. A handful said that it wasn't fair and went against university policy. Most stared at the professor in shock. The professor chuckled. "Calm down. Now, this is an economics class. And in order to study economics, you need to understand the power implicit within our economic system. You see, the breakdown just given reflects the distribution of wealth in the United States. For most of us, such statistics translate very little into our daily life. We know some people are rich and some people are poor. And within a capitalist system, we recognize that rewarding success and initiative helps society as a whole. The question is, at what point does such a distribution limit success?"

The lecture hall was quiet again, and most of the hands were no longer raised.

"I'm not going to hold this class to the rules given. All of you will have equal access to me during class, office hours, and over email. At the end of the semester, all of you will take the exam, and all of you will receive a grade based off your performance during that exam. But throughout this semester, I want you to think about how your semester would be different if we had used the breakdown I gave. Would you have done better or worse? And how do we find the balance between rewarding success and giving everyone the tools to have a fair shot at success? I know most of you think you know the answer, but let me caution you right now: it's never as simple as it seems or as black and white as we want it to be."

kleefarr

From you quote..

"The question is, at what point does such a distribution limit success?"

That point would be as in point 5 of my original post would it not?

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

feicim

kleefarr wrote: »

From you quote..

"The question is, at what point does such a distribution limit success?"

That point would be as in point 5 of my original post would it not?

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Eh.. explain then how in Ireland there are people who work - and it is often pointed out on boards.ie that they would be financially better off on the dole - yet choose to work?

Of the many assumptions being made here, you are presuming that people only work for money... people work for all sorts of other reasons.

This is very simplistic to say the least.

laoch na mona

socialism wont work because of human nature
but Obama wasn't creating a socialist state he was just taking some of the positive policies of socialist thinking like basic welfare

RichieC

the relaxation of labour laws in the US and the decline in labour unions power is why the sky is falling. peole work harder and longer in less secure jobs for less wages.

the correlation between strong worker rights and prosperity is clear. they managed to hide this because although folks were getting less secure jobs and less wages, they were keeping their way of life by getting into credit card debt. an obviously unsustainable model.

SupaNova

RichieC wrote: »

here's a rewrite from dailykos.

The re-write is not a good representation of a capitalist system. To have access to better education(or more of the professors time) you typically have to pay more from money you or your parents previously earned. You earn money by providing value for others. Those who provide more value to others gain the ability to purchase education of higher value. The distribution of wealth in a capitalist system is not arbitrary or decided by a single individual like the example.

EDIT: Fwiw the first analogy is also poor or just wrong, but without being pedantic the 5 points made at the end of the email are correct.

amacachi

So eh Obama's a Socialist now? Cool. Cool cool cool.

theg81der

This thread is so interesting I`m really enjoyimg reading but I was thinking : In either illustration the student who got cancer/diabetes/heart disease etc or the student who suffered the loss of a close family member or the student who through financial problems has to take on a part time job limiting their study time or the student who gets raped and pregnant are not taken into account. These are factors completely beyond their control and if I was in a stronger position I would like to, and feel that in a civilised and educated society should be required to, contribute towards a fairer more equal society.

RichieC

amacachi wrote: »

So eh Obama's a Socialist now? Cool. Cool cool cool.

Depends who you ask I suppose. I would call him a center right moderate and a crushing disapointment.

cavedave

kleefarr

2. What one person receives without working for, another person must work for without receiving.

If I rub sticks together and make a fire I have worked and receive heat. If you then light a stick off my fire you receive heat. I still have my fire. I have not worked without receiving.


Technological progress makes everyone wealthier without stealing from anyone.

AngryHippie

http://www.chomsky.info/interviews/199811--.htm
from Chomsky:
What was different about the recent period of decline was that you had an almost classic failure of financial markets, a huge flow of capital, huge borrowing, private borrowing, private lending, and an extraordinary flow of herd-like behavior, and then pulling it all out in another irrational, herd-like action. And this is very familiar. Keynes warned about it 60 years ago, when he argued that finance ought to be closely regulated and controlled


nothing less than the democratic experiment in self governance was endangerd by the threat of global financial forces (Keynes)

If its been known for 60 years that removing controls increases vulnerability, and creating a global market leads to increased "herd-like behaviour" then the minds behind the powers that be must deliberately be aiming to effectively end democratic systems.
Having said all that, I think myself that a two party system is democratic in principle only, and what exists in the US and most modern democracies is a very contaminated and corrupt form of the concept, while on the other hand, democracies that are more pure tend to be less effective in executing government..
Maybe it is time for a change, a step forwards, away from the fascist, communist, or autocratic alternatives..
unfortunately I don't have the answer to that one

Jonny7

kleefarr wrote: »

These are possibly the 5 best sentences you'll ever read and all applicable to this experiment:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

Tax the middle class

2. What one person receives without working for, another person must work for without receiving.

Shared technology and one industry indirectly supporting many others

3. The government cannot give to anybody anything that the government does not first take from somebody else.

Advice, planning, legislation, policy

4. You cannot multiply wealth by dividing it!

Economics : the multiplier effect

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Which is why that remains hypothetical and has never existed

/my work here is done

Liam Byrne

cavedave wrote: »

If I rub sticks together and make a fire I have worked and receive heat. If you then light a stick off my fire you receive heat. I still have my fire. I have not worked without receiving.


Technological progress makes everyone wealthier without stealing from anyone.

Where did the second person receive the stick from ?

cavedave

Liam Byrne

Where did the second person receive the stick from ?

The ground. You can see its covered in them once you can tell the wood from the trees

johnnyskeleton

Haven't they carried out empirical studies on game theory / the prisoners dillema and found that, contrary to the expected result that everyone looks out for their own self interest, most people instinctively act in thr manner which is mutually beneficial? The results were criticised by the proponents of game theory etc as not reflecting real life situations. But essentially, while these anecdotes have an important message, they are only an illustration and should not be held out as axiomatic.

If you think about it, have you ever worked as part of a group or team in an assignment or task? I so, have you found that the members of that group performed better or worse than when on their own. Generally speakng, people will work together and work towards the best overall result for the group. So in the above example an equally plausible result is that the whole class cooperated and got a B grade and all were content with that result.

Lockstep

This analogy has been knocking around for years.

BOHtox

Jonny7 wrote: »

Economics : the multiplier effect

Exactly, not the diviser effect

SupaNova

Jonny7 wrote: »

Economics : the multiplier effect

Yes those wonderful equations based on shakey assumptions, using the flawed GDP as a measure.

Sand

johnnyskeleton wrote: »

Haven't they carried out empirical studies on game theory / the prisoners dillema and found that, contrary to the expected result that everyone looks out for their own self interest, most people instinctively act in thr manner which is mutually beneficial? The results were criticised by the proponents of game theory etc as not reflecting real life situations. But essentially, while these anecdotes have an important message, they are only an illustration and should not be held out as axiomatic.

If you think about it, have you ever worked as part of a group or team in an assignment or task? I so, have you found that the members of that group performed better or worse than when on their own. Generally speakng, people will work together and work towards the best overall result for the group. So in the above example an equally plausible result is that the whole class cooperated and got a B grade and all were content with that result.

I dunno about that - Strong individuals, working together can deliver better results than if they were working independantly. However, weak performers do not suddenly become magically more competent when teamed up with stronger performers. If anything they tend to lead to delay, rework and more effort on the part of the stronger team members who have to do additional work to cover their weaker team members - a strong team member doesnt just have to do his own work, he has to also has to check and redo the work of his weaker team mate.

Eventually this leads to declining morale and performance on the part of the stronger team members. The way to get results is accountability - individual accountability. I see and deal with this on a daily basis.

The OPs analogy is deeply flawed as well for what its worth - especially the simplistic lessons.

RichieC

RichieC wrote: »

the relaxation of labour laws in the US and the decline in labour unions power is why the sky is falling. peole work harder and longer in less secure jobs for less wages.

the correlation between strong worker rights and prosperity is clear. they managed to hide this because although folks were getting less secure jobs and less wages, they were keeping their way of life by getting into credit card debt. an obviously unsustainable model.

Suryavarman

RichieC wrote: »

The heading of the graph states "as union membership decreases, middle class income shrinks" the graph then displays a different set of data. Why did you bother posting something of such a low quality?

RichieC

Do yo want to argue the point I'm making or point out semantic flaws in the graph I provided?

Suryavarman

RichieC wrote: »

Do yo want to argue the point I'm making or point out semantic flaws in the graph I provided?

All of those graphs indicate that US median income has been consistently increasing. Obviously it has fallen in recent years but the general trend is for increasing wages even as union membership decreases.

johnnyskeleton

Sand wrote: »

I dunno about that - Strong individuals, working together can deliver better results than if they were working independantly. However, weak performers do not suddenly become magically more competent when teamed up with stronger performers. If anything they tend to lead to delay, rework and more effort on the part of the stronger team members who have to do additional work to cover their weaker team members - a strong team member doesnt just have to do his own work, he has to also has to check and redo the work of his weaker team mate.

Eventually this leads to declining morale and performance on the part of the stronger team members. The way to get results is accountability - individual accountability. I see and deal with this on a daily basis.

The OPs analogy is deeply flawed as well for what its worth - especially the simplistic lessons.

There's nothing magic to it. Working together does create accountability. It is often assumed that an individual will work his hardest when he is on his own and obtains all the benefits of his labour for himself. While that may often be the case, humans have a tendency towards working together. Thus, many of the empirical tests of game theory have shown that, contrary to the anticipated result, people often act not in self interest but in the interests of the group.

So while you say that being part of the group leads to declining morale and performance, this is not axiomatically so. Sometimes it can be the result if the stronger performers feel they are carrying too much weight or that the weaker members are exploiting them. Equally, however, the weaker members may up their game because while they do not find sufficient motivation in their own grades, they do get motivated by the potential loss of esteem in the eyes of their peers.

I think a better one of these analogies is the men in the pub / tax rebate one because that shows the effect of marginal unfairness of too much group equalisation rather than the perception of an absolute rule.

Which is why our current system of a moderate level of government imposed wealth redistribution is the prevailing system. It is generally popular and, while there are undoubtedly some fine tuning issues to be resolved (I think, and many would agree, that there is currently too much tax/welfare redistrubtion at present, leading to a popular belief that you are better off not working than working), overall it is a system which the majority of people are happy with. Consequently, we can deduce that the preferred option would be for a significant part of the grading to be done on group work but with the majority being individual work.

snow scorpion

kleefarr wrote: »

These are possibly the 5 best sentences you'll ever read and all applicable to this experiment:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

6. There will always be politician who promise, "Vote for me and I'll give you something for nothing."

7. There will always be votes stupid enough to believe it.

8. Both of the above groups exist in numbers large enough to scare anyone with an ounce of common sense.

Yahew

Suryavarman wrote: »

All of those graphs indicate that US median income has been consistently increasing. Obviously it has fallen in recent years but the general trend is for increasing wages even as union membership decreases.

I thought the person posting these graphs was trying to show the clear and obvious reduction in the rate of income growth. The original graph you are responding to makes the starker point, and the more pertinent one. The share of wealth earned by the middle income groups has declined relative to GDP ( in other words GDP per capita has increased more rapidly than gross wages).

Suryavarman

Yahew wrote: »

I thought the person posting these graphs was trying to show the clear and obvious reduction in the rate of income growth.

I'm sure RichieC was claiming that income was shrinking for wage earners.

The original graph you are responding to makes the starker point, and the more pertinent one. The share of wealth earned by the middle income groups has declined relative to GDP ( in other words GDP per capita has increased more rapidly than gross wages).

It has to be taken into account that household size has also been shrinking which would cause household income to shrink even though individual income might be the same. This could be because of retirees living in their own house instead of living with children and numerous other factors.

Yahew

Suryavarman wrote: »

I'm sure RichieC was claiming that income was shrinking for wage earners.

The graph was titled badly on the top, at the side it said middle class share of income.

It has to be taken into account that household size has also been shrinking which would cause household income to shrink even though individual income might be the same. This could be because of retirees living in their own house instead of living with children and numerous other factors.

Thats an excuse, though, since the cause could be the other way - less money, fewer kids. The soviet Union stagnated in per capita income from 1970 until it's collapse. The number of children per household no doubt also declined. Since children are non-earners this is not an argument. Wokers are producing more wealth per capita, and less of it is being earned as wages, more as capital.

vard

They don't correlate. If you study, work hard, put in the effort or happen to be particularly intelligent you will get good grades. You deserve these good grades.

The size of your monetary worth is rarely an indicator of how intelligent you are, how hard you've worked, or how much you deserve it.

benway

johnnyskeleton wrote: »

Haven't they carried out empirical studies on game theory / the prisoners dillema and found that, contrary to the expected result that everyone looks out for their own self interest, most people instinctively act in thr manner which is mutually beneficial? The results were criticised by the proponents of game theory etc as not reflecting real life situations. But essentially, while these anecdotes have an important message, they are only an illustration and should not be held out as axiomatic.

The homo economicus, selfishness-based model ... y'know, the centre piece of most canonical economics and the core political assumption of the libertarian right (c/f Ayn Rand) has no basis in fact, and should have been completely discredited by this stage. It. Does. Not. Work.

But you still regularly see people coming out with stuff like, "fear and greed is human nature" as if this were an obvious fact.

http://www.sscnet.ucla.edu/anthro/faculty/boyd/MacGamesBBSFinal.pdf

Ostrom

The point of the prisoners dilemma is not that it represents a deep fundamental of human action (i.e. inherent tendency toward maximisation), but that it approximates many real-world situations where individually rational strategies lead to collectively irrational outcomes, and therefore that cooperation is impossible.

It is a flawed assumption, insofar as it is assumed to be transhistorical - in human ecology, many studies have shown that collective resource management systems lead to the opposite (i.e. under differing property regimes, collective arrnagements exist which have lasted hundreds of years). In its ideal form, it also assumes both parties possess complete information, and that all parties are aware both of the game structure and potential results of differing strategies, which is often a poor approximation of reality.

benway

Isn't it a thing that it's used to "scientifically" underpin a Hayekian notion that a society of individuals purely seeking their own gratification will reach a stable equilibrium?

I sometimes wonder if there's a cultural drive in the west to try to make us behave more like homo economicus, for that reason - because this model makes the equations work, and the equations say that if everyone behaved like this it would resullt in a stable equilibrium, with the added bonus that people's behaviour would be 100% predictable. I tend to place the greed is good - religion and "do-gooding" are bad tendencies in our culture in this context. Maybe I'm just a big conspiracy theorist like that.

Of course, real people behave nothing like this.

Also, is it not a thing that once people co-operate, to varying degrees, the results become unpredictable and unstable? I have read a bit of this puzzle of altruism stuff, especially the game theory side of it, but I'm not as well up on it as I'd like to be.

SupaNova

benway wrote: »

I sometimes wonder if there's a cultural drive in the west to try to make us behave more like homo economicus, for that reason - because this model makes the equations work, and the equations say that if everyone behaved like this it would resullt in a stable equilibrium, with the added bonus that people's behaviour would be 100% predictable. I tend to place the greed is good - religion and "do-gooding" are bad tendencies in our culture in this context. Maybe I'm just a big conspiracy theorist like that.

I don't know if you are a conspiracy theorist but it is quite clear you know nothing about Hayek.

benway

Many economic classical liberals, such as Hayek, have argued that market economies are creative of a spontaneous order, "a more efficient allocation of societal resources than any design could achieve."[5] They claim this spontaneous order (referred to as the extended order in Hayek's "The Fatal Conceit") is superior to any order human mind can design due to the specifics of the information required.[6] Centralized statistical data cannot convey this information because the statistics are created by abstracting away from the particulars of the situation.[7]

http://en.wikipedia.org/wiki/Spontaneous_order

Would find a better link, but it's too early in the morning. Hayekian spontaneous order of rational self-interested actors is what I'm talking about. It's only the "scientific" underpinning for the idea that unregulated markets are "more efficient" and that it would be possible to all but do away with the state without things descending into chaos. Both dubious claims, given the events of the past decade and the conceptual weakness of the homo economic model.

Or are you only into anti-socialist polemics like the Road to Serfdom?

SupaNova

Its quite clear your knowledge of Hayek is little more than a Wikipedia page or two. If its not, maybe you can explain how you jumped from the idea of spontaneous order to the following nonsense?

I sometimes wonder if there's a cultural drive in the west to try to make us behave more like homo economicus, for that reason - because this model makes the equations work, and the equations say that if everyone behaved like this it would resullt in a stable equilibrium, with the added bonus that people's behaviour would be 100% predictable. I tend to place the greed is good - religion and "do-gooding" are bad tendencies in our culture in this context.

benway

Touchy, defensive libertarian is touchy and defensive. What's the matter, chief? Afraid that the theoretical underpinnings of your belief set may not stand up to close scrutiny?

And, seeing as you seemed not to even know of the idea I was talking about, I'd thank you to stop being so snooty. If my knowledge of Hayek is really so patchy, why don't you set me straight, then?

It relates because the underpinning of that idea, and the "proof", via game theory, depends on the homo economicus model - rational, selfish, etc, etc

You are familiar with homo economicus, aren't you?

Problem is that people don't behave like homo economicus in the slightest, and my inner conspiracy theorist makes me think that a concerted cultural attempt is being made to make us fit that model. This is pure idle speculation, btw ...

SupaNova

benway wrote: »

You are familiar with homo economicus, aren't you?

Yes, it's the other nonsense you attribute to the theory I was referring to, stable equilibrium, 100% predictability, all to fit equations, of a simplistic model??? I'm baffled as to whether you are actually talking about Hayek, seriously.:)

benway

http://gametheory101.com/

Game theory provided the "proof" that Hayek's spontaneous order could work. Its core assumption is the rational, self-interested actor, aka homo economicus.

As I understand it, the Nash equilibrium is taken as the evidence that a system of individuals relentlessly pursuing their own rational interests will be stable. If each individual relentlessly pursues their own interests, they will be 100% predictable. Open to correction on this, of course, it's all independent learning rather than something I've been taught at any stage.

Game theory is a big, big idea ... big enough that Hollywood turned the spiky, eccentric Nash, who coincidentally or otherwise suffered from paranoid delusional schizophrenia, into a tragic hero played by Russell Crowe in A Beautiful Mind.

SupaNova

benway wrote: »

As I understand it, the Nash equilibrium is taken as the evidence that a system of individuals relentlessly pursuing their own rational interests will be stable. If each individual relentlessly pursues their own interests, they will be 100% predictable. Open to correction on this, of course, it's all independent learning rather than something I've been taught at any stage.

I really don't know where you are getting this from. It is not from Hayek's work or anyone from the Austrian School. What your attributing to Hayek must be from a long chain of second hand accounts of his work where each person in the chain misinterpreted or deliberately misrepresented Hayek by a wide mark. Nash equilibrium is not something given much time to by Austrian economists and is completely separate from the concept of spontaneous order. Then the bolded bit I honestly don't know how anyone could get that from Hayek's work, it's a million miles in the opposite direction of Hayek's or Austrian economists view of the economy. If you actually decide to familiarize yourself with the work of Austrian economists, you will find a sizeable chunk of writing dedicated to uncertainty, and almost zero to the idea of 100% predictability of economic agents.

benway

Hayekian = derived from Hayek, not part of his own corpus, or even his milieu. Just like a Foucauldian analysis doesn't have to have been written by Foucault. The point here is game theory and spontaneous order, and like it or not Hayek is the leading 20th century proponent of the latter. For a good, accessible example of the general direction, see:

ftp://www.econ.bgu.ac.il/courses/Institutional_Economics_in_Historical_Perspective/readings/Week3_Sugden_1989.pdf

Here's another one for you, seeing as you're so caught up on those wacky Austrians:

http://www.druid.dk/wp/pdf_files/98-28.pdf

SupaNova

benway wrote: »

Hayekian = derived from Hayek, not part of his own corpus, or even his milieu. Just like a Foucauldian analysis doesn't have to have been written by Foucault.

Sorry to disappoint but this doesn't change my points, as you still have attributed stuff to Hayek that is polar opposite to his view.

SupaNova

benway wrote: »

The point here is game theory and spontaneous order, and like it or not Hayek is the leading 20th century proponent of the latter. For a good, accessible example of the general direction, see:

ftp://www.econ.bgu.ac.il/courses/Institutional_Economics_in_Historical_Perspective/readings/Week3_Sugden_1989.pdf

Here's another one for you, seeing as you're so caught up on those wacky Austrians:

http://www.druid.dk/wp/pdf_files/98-28.pdf

Had a very quick flick through, not sure what you are getting at. What is your personal opinion, that game theory backs up spontaneous order, and Austrian's should incorporate it?

EDIT: Also genuinely curious to know why you consider Austrians wacky?

benway

The only idea I attributed to Hayek was spontaneous order. Simple question - when I say spontaneous order, what's the first name that comes to mind? Q.E.D.

The rest is standard model game theory - the strong, Beautiful Mind model. I realise that there have been developments since, evolutionary game theory and the like, in response to criticisms like those I raised above. Like it or not, game theory has been far more influential in the past quarter century than orthodox Austrian economics.

I agree with this analysis, mind you, even if it is an earlier form of game theory that's referred to:

... there is no definite gap between the Hayekian approach to [economic knowledge and market processes] and this (Morgenstern and Von Neumann) branch of game theory ....

I like that your radar goes haywire at the slightest hint of a criticism of old Freddy, but this is about game theory and spontaneous order, not What Would Friedrich Do?

***

SupaNova wrote: »

What is your personal opinion, that game theory backs up spontaneous order, and Austrian's should incorporate it?

Personally, I treat any theory of human behaviour which lays claim to scientific rigour with circumspection at best. I generally find that when such a theory is presented as an ahistorical, apolitical fact of nature, there's normally a historically specific political agenda behind it.

This includes most economics, including the Austrians (wacky was just a turn of phrase). Don't get me wrong, I'm in awe of the mathematical achievements, but they're essentially parlour tricks. We don't know enough about human nature, if in fact such a thing exists, which I personally doubt very much, to begin to accurately model it. So, the models depend on simplistic assumptions like homo economicus, and watered-down versions like bounded rationality, to make them work.

What about power? I'm with Foucault all the way on this.

It's therefore unsurprising to me that economists have been unable to adequately address the current crisis of capitalism and its causes by reference to their narrow, pseudo-scientific worldview:

http://www.iasc-culture.org/publications_article_2010_Summer_mirowski.php

In that vein I think that the ideal of spontaneous order is cornerstone of the anti-state discourse that's risen since the 70s, as the strong states necessary for total war, and for post-war recovery, were picked apart by powerful private interests, moving towards an almost feudal model of massive corporate fiefdoms. It serves a political agenda, simple as that.

I personally think that a robust, functioning state is a necessary bulwark against powerful private interests ... as do, I think those very private interests, and this is why they're set on undermining it. Take a look at the kinds of spurious attacks that the O'Reilly media run day-in, day-out, for example.

Funnily enough, I drifted from a leftist counter-cultural suspicion of the state towards a spontaneous order, cultural evolution type viewpoint in my early twenties, looking for a utopia without top-down control. This which is when I did most of my reading on this stuff, but ultimately came to the conclusion that the theory is flawed beyond repair, and the practice serves the interests of private sector players. I still find game theory fascinating, must get back into it, my Masters was very much based on traditional social "science".

For me, a statist solution is the lesser of two evils, by far - entrenched power will always exist, but the state serves to negotiate between powerful and powerless, which its why it's evolved. Also, as should be clear in 2012, an unregulated market society will inevitably collapse into chaos without state intervention.

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tl;dr

I don't believe that spontaneous order will emerge in an unregulated society, I think that the removal of formal regulation and intervention will lead to a tyranny of the strongest players in the given society rather than some utopian community of free individuals.

SupaNova

I don't deny that other schools of economic thought have been far more influential, nor am I personally upset by it. Despite other schools and branches having the benefit of being in fashion far more than the Austrian School over the last quarter of a century, they have been pretty dismal in furthering our understanding of economic phenomena, mathematical modelling being the most fruitless of all. Since game theory seems to be your fetish, and it has been in vogue the last quarter of a century, maybe you can enlighten me to some of its achievements or breakthroughs?

And don't worry I'm not upset if Freddy gets criticized.

SupaNova

I'm not going to respond to everything you posted, as some of it would be hair splitting and some I agree with.

benway wrote: »

This includes most economics, including the Austrians (wacky was just a turn of phrase). Don't get me wrong, I'm in awe of the mathematical achievements, but they're essentially parlour tricks. We don't know enough about human nature, if in fact such a thing exists, which I personally doubt very much, to begin to accurately model it. So, the models depend on simplistic assumptions like homo economicus, and watered-down versions like bounded rationality, to make them work.

We had a debate on economic modelling very recently where you can see what side of the debate I fall on. In short, I think it is delusional to think we can model a complex economy of billions of people interacting and cooperating, to form an intricate structure of production in a spontaneous manner.

Here is the thread anyway, start on page 3:
http://www.boards.ie/vbulletin/showthread.php?t=2056492366&page=3

In that vein I think that the ideal of spontaneous order is cornerstone of the anti-state discourse that's risen since the 70s, as the strong states necessary for total war, and for post-war recovery, were picked apart by powerful private interests, moving towards an almost feudal model of massive corporate fiefdoms. It serves a political agenda, simple as that.

Spontaneous order is all around us, and the market the most fascinating of all. Its not a case of spontaneous order or the state, spontaneous order will occur either way. I always think of the Leanord Read's 'I Pencil' essay, when talking about this kind of thing, here is a nice version from Sheldon Richman:
http://www.thefreemanonline.org/columns/perspective/i-pencil-revisited/

I personally think that a robust, functioning state is a necessary bulwark against powerful private interests ... as do, I think those very private interests, and this is why they're set on undermining it. Take a look at the kinds of spurious attacks that the O'Reilly media run day-in, day-out, for example.

I would agree the state, as we know it, is necessary in our current world, and will be for the foreseeable future. Will it always be necessary, who knows.

Funnily enough, I drifted from a leftist counter-cultural suspicion of the state towards a spontaneous order, cultural evolution type viewpoint in my early twenties, looking for a utopia without top-down control. This which is when I did most of my reading on this stuff, but ultimately came to the conclusion that the theory is flawed beyond repair, and the practice serves the interests of private sector players. I still find game theory fascinating, must get back into it, my Masters was very much based on traditional social "science".

I would have never guessed:P. I will have a proper read of the articles you linked when I get a chance, they looked interesting from the brief flick through I had.

For me, a statist solution is the lesser of two evils, by far - entrenched power will always exist, but the state serves to negotiate between powerful and powerless, which its why it's evolved. Also, as should be clear in 2012, an unregulated market society will inevitably collapse into chaos without state intervention.

Austrian's make a strong argument that it is continued state intervention via central banking that primarily causes booms in the first place, which will inevitably end with a bust. But that's for another day.