Not Even Rational Fools

I have given some thought (about two minutes) to what is wrong with the economic theory that gave us the Great Moderation, with its eternal promise of no worldwide flood ever again, only the colors of rainbows. The temptation for theorists, in seeking a way forward, is to throw the baby out with the floodwater, and then the ark at the baby. But perhaps that would be a mistake. Perhaps the ark could be salvaged if a simple genetic modification were made to the baby. It has been customary to suppose that this baby is a rational human being, and moreover that this rational human being is representative of other human beings. Now, in all honesty, who here among us can claim to be represented by this?

This baby has always been a rational fool in the eyes of some, and lacking in judgment according to others. It was always going to be a tall order for it to carry on its shoulders all the responsibilities of a Great Moderation. Yet, theory suggested it was not only possible but certain, so now something has to give.

Here, out of a deep humanitarian concern for all, which in itself is a gross violation of the assumptions underpinning what has been considered respectable economic theory, I take a few moments out of my “schedule” to propose a simple but decisive break with tradition that will enable us to explain everything. Yes, at last, a theory of everything.

By “explain everything”, do I mean that an end to the Great Moderation could have been anticipated before it happened? Yes. This would have been entirely predictable under our modified approach. Do I mean that crisis could have been anticipated? Yes. It would have been entirely predictable. Could we have foreseen popular demands for “contractionary expansionism” in the face of mass unemployment and underemployment. Yes! A thousand times yes. Entirely and utterly predictable!

The modification to the traditional rationality assumption that enables us to explain everything without requiring any other hand wringing or change in philosophy is simply this:

     Many of us are morons.

That’s it. One small but powerful change in mindset and we can explain it all.

Understand, it was generous of the economists to imagine that we were intelligent and logical – yes, even rational – human beings. But now is the time to be real. (Otherwise we would have to introduce money into the analysis, the love of which is the root of all evil. We don’t want to go there.)

In economics classes, many of us learned the following seemingly innocuous axioms: that an individual’s preferences are 1) complete, 2) transitive and 3) independent of irrelevant alternatives. For present purposes, which amount merely to the modest aim of putting on firm foundations our theory of everything, it will be unnecessary to look further.

Completeness. This says that all actions can be ranked in order of preference. Given two choices, A and B, either I prefer A to B, B to A, or am indifferent between A and B.

Transitivity. If A is preferred to B, and B is preferred to C, I must prefer A to C.

Independence of irrelevant alternatives. If I prefer A to B, introducing another alternative X will not make me prefer B to A.

Granted, at first glance these axioms seem innocuous. (When studying in the School of Economics, I memorized them by rote, without question, and recalled 2 out of 3 on exam day.) But are they really innocuous, taking into account our latest theoretical advance, namely, that many of us are morons?

To avoid offending anyone, I will take myself as a case in point. The justification for this is that I am an individual, and, without loss of generality, I maintain, an individual who is representative.

Now, if in fact I am interpreting the axioms correctly, (and who’s to say in these postmodern days?), it turns out that none of them hold, at least in my case, the representative case.

Take completeness. According to this axiom, I either prefer A to B, B to A, or am indifferent. Oh how little I am understood!

Example. Action A is to read my friend’s self-published book of verse. Action B is to attend a football game with a buddy.

To prefer A is to miss the football to read bad verse. To prefer B is to offend a good friend and budding poet. To be indifferent is to appear aloof, risking both friendships.

I neither prefer one action over the other nor remain indifferent. I am torn. Rife with anguish. A fiendish choice. God, why hath thou forsaken me?

Well, maybe my choices are at least transitive?

Let’s see. I prefer blue to purple. I think blue’s nice. I prefer purple to red. I don’t know why. So, transitivity dictates I prefer blue to red. But how could I, when blue and red together evoke politics, with socialist red pitted against blue-blooded conservatism?

Perhaps if I was American I would satisfy transitivity in this case, thinking of blue states.

How about numbers?

I prefer 1 to 2 because 1 is smaller and odd. I prefer 2 to 3 because 2 is smaller and prime. So transitivity requires that I prefer 1 to 3. But I don’t. 3, though larger, is odd and prime. That makes up for it. Why? Don’t know, don’t care, don’t need to know, don’t need to care. I’m a moron.

That leaves the independence of irrelevant alternatives, and this is where the current economic policy debate begins to make sense, if only we “escape from habitual modes of thought and expression”.


     In depressions I prefer A) fiscal expansion
     to B) fiscal contraction.

But imagine X) a confidence fairy / a debt burden on our children / looming hyperinflation.

     Now I prefer fiscal contraction.


Because cutting spending increases spending / reducing current production increases future production / Weimar Germany.

No, really, why?

I’m a moron.


50 thoughts on “Not Even Rational Fools

  1. Peter, if you don’t want to read my poetry, you should just come out and say so. But your soulless ambivalence only inspires me:

    heaven and hell the sky
    and blood stained table cloths don’t care
    lost highway feelings

    a drainpipe reasons
    pull out my eyes lucid dreams
    on my tongue forlorn

    rain buckets away
    roaches scuttle salted pork
    a crow caws “football”

  2. You know, Pete, it seems we have been drinking or smoking the same kind of stuff lately.

    I have come to believe (with other people) that the problem is with the obsession with microfoundations.

    You know that economists suffer from physics envy. Economists dream of building economics on the model of statistical mechanics: to replicate with human beings a bit what Boltzmann managed to do with gas molecules. That is, to deduce the old empirical laws of gases from the movement of particles.

    The problem is that we do not have a microeconomic equivalent to the Newtonian laws.

    Yes, there is a Max U(x) s.t. a.x = 0 (a, x, 0 vectors, M scalar), but it doesn’t fucking work. And the more details we add, the less the whole damned thing resembles anything.

    (Unlike the meme one hears over the net: “some of the macro may suck, not mine!, but everything’s just fine with micro”).

    By the way, many people blame maths for this (like Austrians and a universal-specialist-on-everything that I know). I think this is a mistake, but that is for another day.

    In my opinion, we should try with a more empirical approach. This does not mean we should (or could, indeed) abandon all attempts at some basic micro postulates. But anything more than what the classicals did is just unwarranted.

    There, those are my two cents. Now, let me try a puff and another gulp.

  3. “Economists dream of building economics on the model of statistical mechanics: to replicate with human beings a bit what Boltzmann managed to do with gas molecules. That is, to deduce the old empirical laws of gases from the movement of particles.”

    I just see an attempt at creating ‘psychohistory’ from Asimov’s Foundation series? Austrians in particular with their ‘pure logic’ approach.

  4. @Neil Wilson

    “I just see an attempt at creating ‘psychohistory’ from Asimov’s Foundation series? Austrians in particular with their ‘pure logic’ approach.”

    Yes indeed: to create psychohistory. As an Asimov fan, quite familiar with the Foundation books, I can see the correspondence.

    Paul Krugman, for instance, a few years back, said that the Foundation was his inspiration to go into economics:

    Other economists, before Krugman had already seen the connection statistical mechanics/macroeconomics. One of them was, not surprisingly, Paul Samuelson, if memory serves.

    Ironically enough, if you think about it, Hari Seldon (the fictional creator of psychohistory, for those not in the know) has a suspicious similarity with Karl Marx and in a sense, psychohistory has a similarity with Marx’s crises theory (I have been writing something about this for some time now, but I keep postponing the whole thing).


    I have given some thought to Mises’ Human Action on this and I also agree with your comment in this respect. The main difference is that Mises (and most Austrians, that I know of) rejects the use of mathematics, while at least Mises explicitly speaks a lot about logic, theorems, deductions, etc. Which to me is quite contradictory, and symptomatic of a confusion about what logic and mathematics are.

  5. Trixie, back in university days, one year a friend won the “Appalling Poetry Competition” run by the student union’s magazine. His winning entry was a parody of a fan’s unreasonable reaction to a cricketer being given out LBW in a test match.

    I remember the competition organizers announced the results of the “Poetry Competition” and “Appalling Poetry Competition” at the same time, noting that many serious entries may have been mistaken for deliberately appalling ones.

    Your comment was not only more on-topic than the majority of comments in this thread but also a poem of sorts.

  6. Thanks for the link, Magpie. I haven’t had a chance to read much of it, but at a glance it looks like it provides a good and useful summary of the dominant interpretation of value.

    Personally, I side with the TSSI when it comes to Marx’s theory of value, so right from the very first sentence my understanding of Marx is at odds with the dominant view expressed in the FAQ:

    The LTV is the theory that market prices are attracted by prices proportional to the labor time embodied in commodities.

    That’s not my understanding of Marx’s theory (as opposed to the perspective of the classical economists). I don’t think Marx’s theory is an attempt to explain value in terms of embodied labor.

    Actually, I don’t describe Marx’s theory as a “labor theory of value”. I prefer just “theory of value”.

    The FAQ also provides the standard critique of Marx’s solution to the so-called transformation problem:

    Marx calculated the rate of profit on inputs evaluated at untransformed labor values.

    I agree with the TSSI that input prices (not input values, transformed or otherwise) are the data for determination of new value.

    The same quote often used to support the view that Marx perceived an error in his theory can be argued to support the view that input prices (not input values) were, in Marx’s view, determinative of final commodity values.

    Consider also:

    … the cost-price of constant capital — or of the commodities which enter into the value of the newly produced commodity … may likewise be either above or below its value. Thus … the difference between the cost-price and value, insofar as it enters into the price of the new commodity independently of its own production process, is incorporated into the value of the new commodity as an antecedent element. (Marx, Theories of Surplus Value, Part III) (emphasis added)

    I think this concluding remark from the FAQ sums up the debate aptly:

    At the end of the day, where are we? Neoclassical value theory is incoherent. Prices of production are internally consistent and may be used for a materialist theory of value. It is not clear how important labor values are to such a theory, or whether it can properly be described as a labor theory of value. Marx’s legacy is a matter of contemporary lively debate among some economists.

    At some point I might post on value (I’ve been intending to for ages), but since its relevance is to understanding capitalism, and I am not interested in preserving capitalism, increasingly I just want to think about where we could be heading post capitalism. Post capitalism, I don’t think value should be connected to labor time. We can be free of all that.

  7. Very good points! It was a good decision to ask an opinion from your side of the debate (I say “your side”, because I haven’t chosen any side, yet; not because I am on the other side)

    I, for instance, noticed Viennau frequently cites Ian Steedman, which I believe is a bit of a “no-no” for many Marxists (I haven’t read Steedman, so far, btw).

    Like I said, I, however, am still very much an agnostic on this. It will take some time until I can make up my own mind: there is a lot to read, the relevant literature has pre-requisites (my maths is really rusty!), and, well, I also need to make a living…

    How important is the Boehm-Bawerk/Bortkiewicz debate in this matter?


    “At some point I might post on value (I’ve been intending to for ages)…”.

    Oh, man! Don’t dismiss that idea…

  8. Magpie wrote:

    How important is the Boehm-Bawerk/Bortkiewicz debate in this matter?

    The critique by Bortkiewicz is the one that influenced the dominant interpretation of Marx’s theory of value.

    I found an old comment where I discussed in a little more detail the points raised in this thread.

    Regarding Marx’s theory of value:

    Oh, man! Don’t dismiss that idea…

    I am still tussling with the extent to which the TSSI can be regarded as compatible with MMT, Post Keynesian analyses of a monetary production economy, and Kalecki’s profit equation. This is another factor holding me back.

    For example, in the following quote taken from a paper on money and inflation by Randall Wray (I have reproduced this quote previously), there appears to be a similarity in perspective between the TSSI understanding of the determination of total surplus value produced and a Kaleckian understanding of the determination of aggregate profit realized. Both perspectives depict an aggregate determination of profit, which is then distributed among capitalists through competition, mediated by concrete factors, notably financial conditions:

    Post Keynesians adopt an aggregate markup theory of pricing in which price is determined at the macro level as a markup over labor costs. The price of consumption goods must be high enough above wages in that sector so that some consumption goods will be left for workers in other sectors. This allows some workers to be put in the investment sector (and government and trade sectors) to produce the surplus (goods and services) that workers cannot buy. At the micro level, each capitalist must be able to obtain a markup over labor costs, ability to do which depends in part on market power. However, at the macro level, there won’t be any profits to distribute unless there is spending in excess of the wage bill in the consumption sector. The aggregate, macro, price level determines the aggregate potential surplus to be divided among all the firms in society; the capitals then compete at the micro level for profit flows. What generates this aggregate surplus to be realized by firms at the micro level? As the Kalecki equation shows, the aggregate amount of profits is identically equal to the sum of investment plus consumption out of profits plus the government’s deficit and the trade surplus, less saving out of wages. In the simplest model (no government deficit, balanced trade, and no saving out of wages), profits equal investment plus capitalist consumption. If the price is set high enough that workers cannot buy all the output, capitalists can get the rest so long as they spend.

    To me, it seems that this should be compatible with the TSSI understanding of Marx’s theory of value. Since, in the TSSI, value is always expressible either in terms of labor time or money, where the monetary equivalent of an hour of labor time is represented by the MELT (monetary expression of labor time), Marx’s theory relates to a monetary production economy, as does Post Keynesianism. Input prices, which according to the TSSI are determinative of new value, could be viewed as contingent on financing conditions, competitive conditions, market power, and other concrete factors.

    I find the last sentence in the above quoted passage particularly interesting:

    If the price is set high enough that workers cannot buy all the output, capitalists can get the rest so long as they spend.

    The total price realizable by capitalists, relative to labor costs, depends on how much they are willing and able to spend, and this of course depends on finance, confidence, etc.

    Magpie wrote:

    I say “your side”, because I haven’t chosen any side, yet; not because I am on the other side.

    Personally, I think that both the Sraffian and TSSI approaches are valid as positive theories in their own right, and I think the Sraffian approach is enabling interesting research, such as the long-period demand analysis briefly discussed in my previous post.

  9. Magpie,

    While you’re here… you asked about this in the capital controversy blog.

    “In other words, the forces of competition that lead capitalists to those sectors with higher remuneration and establish a uniform rate of profit do not operate in the Walrasian world.[5] Hence, the Walrasian models are incapable of ascertaining tendencies in real economies, a defect that is not mitigated with the introduction of imperfections (Stiglitz, 1993, p. 109), which Stiglitz calls the post-Walrasian and post-Marxist paradigm.”

    You might be interested in this.

    Although it’s not comprehensive, it explains the type of things that capitalists do in response to falling rates of profit. These days, large corporations can get this info in real time.

    I like Stiglitz because he is one of the informational economists. In an informational model, even consumers create value; for example using the expected utility model above, when a consumer makes a choice they discover unexpected utility as well. This is new information that may be communicated or may remain secret. I’ll write something on this later as it’s my lunch hour. The major flaw in the expected utility model is that it’s non-positional. Information is created by search therefore it is fundamentally positional.

  10. At first glance, expected utility combines expectancy theory with utilitarianism and dresses it up in a bit of set theory. However, I don’t think expected utility adheres to expectancy theory which is not an atomist theory. I don’t know the history of expected utility but my experience of data analysis is that I often force things into atomic form for the purpose of aggregation. I know when I am distorting data by doing this but sometimes it’s a convenient way to do quantitative analysis. The non-positional atomist micro economic assumptions appear to persist because they can be aggregated. Sraffa objected to aggregation and I agree with his view on this but I also see the practical side of data convenience. The area of policy prescription is an area where it’s important to understand the fundamental processes of an economy. There’s been a long held assumption that aggregate models are somehow related to micro process models. They really aren’t. They’re just data manipulation techniques. I think a lot of people understand this now.

    From the perspective of a node in a network, the immediately connected nodes appear to be a set. They are in fact a set but they aren’t just a set. Individual behaviour operates in a context of connectedness. The only way that an individual can understand all their choices is to take all their choices but as soon as one choice is made the choices change because the position in relation to potential choices has changed. The utility of a choice is only discovered after the choice is made, therefore the utility created by a choice is unexpected and affects other choices. This can be extended to the principle that all choices are framed by previous choices and making a choice reframes all choices. Making a choice doesn’t only reframe individual choices but new information resulting from the choice can be communicated, affecting other people’s preferences. Expected utility ignores the way that choices are framed by experience and society.

    Circuit theory, on the other hand, is a macro process model that could in theory compensate for our “animal spirits”. Ecologies maximise oscillation in population size in order to maximise genetic information gain. We (human beings) see the business cycle as climate change because it’s human nature. It’s human nature because it’s nature, as observed in ecological boom and bust. I only add this to draw a distinction between micro process models, macro process models and data manipulation techniques.

    I don’t think John Von Neumann would have minded anyone poking holes in his maths. He was a first class hacker in the best sense of the word. He just wanted to get things to work and knew that maths was broken at a fundamental level. It’s a fairly glib statement but axioms of rationality appear to be broken at a formal level by Russell’s paradox.

  11. Election day in a few hours here in the US, Peter. Or yesterday for you. Or like last decade. Who knows? Have mercy, and tell me who wins.

    Otherwise, you have NO idea what “Appalling Poetry” is. And I have no problem live-tweeting “it”. In your comments section. Like forever.

    Your call.

  12. @Peter

    I remember that thread very well (and Vernengo’s post, which I printed and have at home), but, for the life of me, I can’t remember your last comment, which indeed went into much more detail.

    In particular, I remember Stiglitz’s reference to post-Marxists, which I, like you, guessed was a reference to the Analytical Marxists (Roemer & co.).

    I am confused. The only explanation I can think of is that after asking my questions in my last comment (which you answered) I never came back to check for a reply.

    I apologize for that. I guess I better search your old posts on Marx.

    Again, sorry about that.

  13. @Hacky The Hufrex

    Thanks for the link! There are some interesting things in there (particularly in relation to monopolies and concentration).

    I am afraid I don’t know what expectancy theory is.

  14. Magpie, no need to apologize. I had forgotten myself other than having a nagging feeling that I might be repeating myself. A “grueling” search revealed my redundancy. 🙂

  15. @Pete

    I was so embarrassed by having missed your old comment that I forgot to comment on the Wray article! So, I ignored one comment and because of this I was ignoring another one!

    I agree with you: the last sentence is very suggestive.

    As you, I also find a clear affinity between some MMT analysis and some of the Marxist schools (the one I am more familiar with is the Baran-Sweezy/Monthly Review, which I believe Prof. Mitchell is also familiar with).

    I also found interesting the sentence immediately preceding it: “In the simplest model (no government deficit, balanced trade, and no saving out of wages), profits equal investment plus capitalist consumption”.

    What if, instead of being 0, savings were negative? That is, instead of saving, households were getting into debt to fund consumption?

    I remember I had a discussion with Ramanan some time ago about a similar scenario.

  16. Tricky question if we retain the assumption of zero worker saving …

    In this comment I will retain this assumption, meaning that the aggregate dissaving is due to capitalist behavior. In the next comment, I will address worker dissaving.

    Others may have a better explanation of the case of capitalist dissaving, but I am far too foolish not to take a stab!

    In Kalecki’s simplest model, we know:

    P = Cp + I    =>  P – Cp = I     =>  S = I

    where P is the volume of gross profits (profits plus depreciation), Cp is capitalist consumption, I is gross investment, S is saving.

    From the above, S < 0 only if I < 0; and if I < 0, then Cp > P.

    So for saving to be negative, there would have to be negative gross investment.


    Most likely, it would be through zero or very low gross investment in capital goods alongside a rundown in inventories (negative inventory investment) summing overall to negative gross investment.

  17. My previous comment assumed it was capitalists who were dissaving.

    If negative saving was due to workers dissaving, this will add to total gross profits.

    Readers unfamiliar with Kalecki may find it helpful to read this post as background. Briefly, in Kalecki’s simplest model,

    (1) Y = W + P

    (2) Y = C + I

    where Y is real income, W total wages, P total gross profits, C private consumption expenditure, I gross investment.

    Kalecki divided consumption into capitalist consumption, CP, and worker consumption, CW, on the understanding that the two groups would have different saving propensities. He assumed that, in aggregate, workers would consume all their wages, neither saving nor dissaving. Under that assumption, W = CW, which enabled Kalecki, by setting (1) equal to (2), to arrive at his famous identity P = CP + I and its various equivalent forms. Kalecki maintained that causation ran from investment to profits and, by implication, from investment to saving, since saving is profit minus capitalist consumption in the simplest model.

    Regarding this identity, Kalecki famously noted, “workers spend what they get; capitalists get what they spend”. The meaning is that workers wages, which by assumption are all spent on consumption items, cycle back to the capitalist class as a whole, neither adding nor subtracting from total profits, whereas capitalist expenditures remain within the capitalist class.

    Now, if workers dissave rather than simply not saving, this would mean that CW > W. Let’s denote the difference Cw – W as CW0, since it will be autonomous consumption undertaken by the workers (i.e. not financed out of current income).

    We can then rewrite identity (2) as:

    (2′) Y = W + CW0 + CP + I

    Setting this equal to identity (1), we get:

    P = CW0 + CP + I

    So, workers dissaving boosts total gross profits of the capitalists. This, of course, is not sustainable for long, because it would involve workers becoming increasingly indebted.

    The reverse implication also holds. Positive worker saving, which would correspond to CW0 < 0, would subtract from total gross profits, because the part of the wage bill saved will not return to capitalists as a class.

  18. Now replacing the two expressions for profits in (1), we find that the difference in GDP (with and without debt) is:

    Y[w] – Y[w/o] = Cw0

    Does this remind you of what Steve Keens is trying to do?


    Bottom line: capitalists may wail desperately when the little people live beyond their means, but, boy, their bank accounts grow fatter and fatter in the process.

    Of course, like you said (and what Keen is warning us), this cannot last forever.


    How does this analysis (and especially the capitalists behaviour) change if we consider a government?

    I am asking because from MMT we know that

    I – S = T – G;

    if T > G, then I > S

    But in the first analysis (the capitalists’ behaviour) we assumed that I = S.

  19. “But in the first analysis (the capitalists’ behaviour) we assumed that I = S.”

    I=S identity *includes* the government sector investment and saving.

    Once you separate the sectors the identity no longer holds (I and S essentially get redefined)

    And it is ‘if I > S then T > G’. The implication doesn’t run in the opposite direction – the economy can shrink instead.

  20. If government is included in a closed economy with no worker saving:

    S = I + (G – T)

    => P – CP = I + (G – T)

    => P = CP + I + (G – T)

    The budget deficit adds to total gross profits.

    So worker dissaving, if included, positively affects profits in the same way as a budget deficit; worker saving negatively affects profits in the same way as a budget surplus.

    Note, also, that this boost to profit brought about by a budget deficit or worker dissaving is also conducive to strong I, and therefore S (and also T if government is included) through income adjustments.

    All this, of course, assumes excess capacity.

  21. Magpie

    There are so many theories of motivation, it’s hard to keep track. At its most basic, expectancy theory is another ordinal theory that says people make decisions based on what they expect to happen. Ordinal theories are based on the idea that people rank choices rather than using a ratio measure of expected utility. The ordinal theories probably all stem from measurement theory which was developed around the same time. I’d have to check out the history to be sure which came first.

    I found a free copy of the Stiglitz paper.

    The post Walrasian concept is older (from David Colander) and I think Stiglitz is extending by metaphor into social justice territory. The post Walrasian philosophy is a wide ranging critique of grand theories. Grand theories were popular in the 19th century and the projects continued into the 20th century. They had mostly collapsed by the end of the 20th century. Off hand there’s the grand unified theory of everything in science, there was an attempt at a unified theory of maths (I can’t remember the name), there was the unified theory of action in sociology and there was general equilibrium in economics. All grand unified theories are based on a materialist, mechanistic, determinist view of reality. One of the implications is that micro and macro are separate and unrelated models. David Colander cites Peter Howitt, William “Buz” Brock, Xavier Gabaix (among others) as post Walrasian.

    Expectancy theory has a little bit of relevance to Marx’s tendency for the rate of profit to fall. The argument would be that firms expect the rate of profit to fall and therefore take action to avoid the scenario and the conditions for the tendency are not met. Capitalists have a number of choices to avoid falling profits, some good faith and some bad. A bad faith policy might be to aim for a market monopoly. A good faith policy might be to develop products with greater utility (product innovation). Not all capitalists have the expectation of falling profits and the cost leaders charge headlong towards falling rates of profit while blaming workers for not being competitive. I don’t believe that these people are successful capitalists although this type of pundit gets media time. The largest firms are commodity conglomerates but half of the most profitable companies are high tech firms employing a mixture of good faith and bad faith strategies to avoid falling profit.

    My micro model is a one way search of an expanding directed graph. In this context aggregation can be used to understand the past but it is not predictive because the graph changes with every decision. Stiglitz’s views are less informational than mine, which are heavily borrowed from artificial intelligence theories.

  22. @Neil Wilson

    I’m afraid you lost me.

    “I=S identity *includes* the government sector investment and saving.
    “Once you separate the sectors the identity no longer holds (I and S essentially get redefined)”

    I agree with you: in an economy with government, I and S includes government sector investment and saving (that is, both I and S are redefined, from what they were without government). Up to this point, the agreement.

    But it is that very premise that motivates my question: if there is a budget surplus then T > G and I > S (regardless of which comes first), but it is not obvious to me that any of this implies that I S then T > G’. The implication doesn’t run in the opposite direction – the economy can shrink instead.”

    I am happy to recognize that I am no expert; and I could very well be mistaken, but, to me, this doesn’t sound right at all.

    After all, the policy (“independent”) variables are T and G; through their direct manipulation we are supposed to direct the movement of I, S, and C, plus employment, while the effects of an increase in Y only feedback on T – G through the automatic stabilizers (which is a second order effect).

    Isn’t that what fiscal stimulus measures are supposed to achieve?

  23. @Neil Wilson

    Geez, for some reason the comment above is missing a bit of text. Disregard it, until I re-write it (which I’ll have to do from memory

  24. @Neil Wilson

    Hopefully this is what I had written

    I’m afraid you lost me.

    “I=S identity *includes* the government sector investment and saving.
    “Once you separate the sectors the identity no longer holds (I and S essentially get redefined)”

    I agree with you: in an economy with government, I and S includes government sector investment and saving (that is, both I and S are redefined, from what they were without government). Up to this point, the agreement.

    But it is that very premise that motivates my question: if there is a budget surplus then T > G and I > S (regardless of which comes first), but it is not obvious to me that any of this implies that I is negative, and we require disinvestment (i.e. negative I) when capitalists dissave.

    To put hypothetical numbers: if there is a surplus budget of $5 billion, by I – S = T – G we know that I must exceed S by $5 billion (regardless of which comes first). This tells us nothing about the magnitude of I.


    “And it is ‘if I > S then T > G’. The implication doesn’t run in the opposite direction – the economy can shrink instead”.

    I am happy to recognize that I am no expert; and I could very well be mistaken, but, to me, this doesn’t sound right at all.

    After all, the policy (“independent”) variables are T and G; through their direct manipulation we are supposed to direct the movement of I, S, and C, plus employment, while the effects of a decrease in Y only feedback on T – G through the automatic stabilizers (which is a second order effect).

    Isn’t that what fiscal stimulus measures are supposed to achieve?

  25. “we know that I must exceed S by $5 billion (regardless of which comes first). This tells us nothing about the magnitude of I.”

    Absolutely. And that’s where all the confusion lies. It’s entirely possible to have vast investment and vast savings. But if the former is more vast than the latter then government likely has to be in withdrawal mode.

    The key issue is ‘excess’ savings or ‘excess’ investment which then doesn’t clear automatically at full employment and stable prices and has to be actively dealt with by some agent.

    “Isn’t that what fiscal stimulus measures are supposed to achieve?”

    The government can only control the first order spending. After that its influence on decisions disappears very rapidly. It can’t really control the amount of tax paid for example.

    The job of the government is (or should be) to offset the savings (or dissaving) desires of the non-government sector to keep things at full employment and stable prices.

    So if I > S the government sector is *forced* to withdraw net spending once you meet capacity. (And the auto-stabilisers do just that).

    So those variables are not independent (exogenous) at all *if* you are pursuing a policy of full employment and price stability (If you don’t care or are deluded then you can let the economy collapse instead – which seems to be the EU approach).

    So all the variables end up being dependent on each other (it’s always a spending cycle) but the causality chain is best seen starting with the non-government’s aggregate decision on the level of saving or negative saving.

    So you look at what the non-government sector is saving to excess and you look at unemployment and you decide that the circulation is insufficient and you construct the injection (tax or spend) based on that (with the annual variation handled by strong auto-stabilisers).

    There are just far more spending decisions made in the non-government sector than in the government one. So it sort of has a greater ‘mass’ than government.

  26. @Neil Wilson @Peter

    Okay, I think I understand your (NW’s) meaning.

    But my concern here is different: whether capitalists may be making a killing, even during a recession. If this were possible, it would explain why they feel comfortable with policies that perpetuate the recession.

    So, we know that budget surplus leads to non-goverment sector dissaving. We don’t know, from this, who dissaves more, capitalists or workers.

    If capitalists dissave, they disinvest and this lowers their profits.

    If workers dissave, they go into debt and this increases capitalists’ profits.

    Both effects run in opposite directions; but it seems to me (from a purely intuitive point of view) entirely possible than one effect dominates the other.

    What do you guys think?

  27. @Trixie

    I consider myself a feminist. Therefore I’d propose that maybe they should unearth the remains of Ayn Rand for their next candidate

  28. “So, we know that budget surplus leads to non-goverment sector dissaving. We don’t know, from this, who dissaves more, capitalists or workers.”

    You do from the five sector model though.

    Have a look at the three sector vs. the five sector model of the UK here:

    It’s as clear as day that the non-financial-corporations have been saving like mad while the households were dissaving. Then the collapse happened and the dissaving was taken over by government. NFC’s carried on saving barely missing a beat.

    The Household sector is overwhelmingly ‘workers’.

  29. I think democrats need to display a real attempt at cutting the deficit through spending cuts. Once they can show they are able to do that, republicans may consider tax hikes and cuts in deductions. If we raise taxes, government will just spend more and we are still in the same place with more taxes and more debt.

  30. what is wrong with the economic theory that gave us the Great Moderation …[peterc]


    Problem is, you don’t see the world’s economists or anybody else for that matter – having very important global or national meetings with excellent lunches and wine to ensure the sharpest focus and concentration of consciousness and rewards for solidarity – recognising the problem and how best to counter, greed …


    Generosity is a presence, greed its absence.

    See, that was easy. No theory required ….

  31. jrbarch, maybe the reason so many economists are apologists for the current economic system is that it has occurred to them that there will be no need for economics when it passes.

  32. Peter, you are the worst comment moderator in the history of comment moderators. Seriously. Even your OWN comments disappear. And instead, we are left with Viagra-bot spam.

    You asked if you should enable comments on older posts.


    While I don’t have anything to add, I welcome newcomers and their thoughts as they progress through your posts.

    You are the worst communist ever.

  33. Trixie, you’ll be pleased to know that I have caved on the comments-enabling issue. My concerted attempt to claw back past gains of readers and commentators alike came unstuck in the face of strong grass-roots opposition. Fearing “Occupy heteconomist” might not be far off, I have decided to relent and bide my time.

    Magpie, one side effect of this back down may well be an increased infiltration of Viagra-bots.

  34. ” … maybe the reason so many economists are apologists for the current economic system is that it has occurred to them that there will be no need for economics when it passes”. [peterc]

    Mmmmm … you know, there have been billions and billions of people come and go on the face of this earth – each one of them with Generosity installed. Those ‘apologists’ could be flat out busy busy busy with programs that actually looked after people’s needs … just need to push the Activate button?

    Seriously peter, do you ever think about how much theory is dependent upon how generous we are feeling?

  35. @Neil Wilson @PeterC

    Returning to the “psychohistory” as model for macroeconomics: I’ve found a very interesting post on this subject (Tom Hickey beat me to it, and posted a comment there):

    Methodological individualism today

    I am not sure I fully agree with the author’s views, but his exposition of methodological individualism is very enlightening. There are also other posts on this subject.

  36. jrbarch has a go at economics!

    #“Why is Paris Hilton crying?” Asked by an incredulous and very poor Indian farmer; comment by a friend. “I am only ‘rich’ if I feel rich. No matter what I own or command”. I am only happy when I feel happy; I am only at peace when I feel peace; I am only content when I feel content. It has to come from within. It cannot be dependent upon anything without. Wanting to be fulfilled is the sovereign reality of every human being.

    #Human beings ‘value’ things. They do not like their values compromised. Sometimes they exchange things according to their values. Values are dynamic because all values are resolved in an ultimate value. When kids play they demonstrate this dynamic interaction of values – settlement can only be had when each party to a relation or exchange is satisfied – each child is themselves the ‘in the moment value’. Honesty trust, confidence, respect, right human relationships, are always the life breath of values.

    #Human energy (human will, love-wisdom, active intelligence) is incorporated in values. ‘Money’ is a concrete representation of some values. Therefore it is individual in origin, social in interaction.

    #When kids play they play with toy cars and toy planes. When they grow up they play with real ones. It is just a play (thanks Shakespeare)! It is the human being that is Real!!! Real bullets destroy real human beings – we destroy reality with no clue as to what we are doing, in so many different ways.

    #Transactions are a medium for giving and receiving, conditioned by values. We tell little kids to share …

    #Put two babies in a room together and they will smile at each other and start communicating. Put one toy in there and sooner or later one will pick it up and clock the other with it. This can only be overcome individually, one by one, when generosity, gentleness and kindness is valued more than temporary gratification – in the mean time we need rules. At the moment Greed rules – people have forgotten what it is like, how to enjoy being Human – we have let our humanity slip; that is the main problem. The human heart understands far more than the human mind.

    #At the centre of all this is this little thing called ‘I’. As a seed germinates in the darkness, taking nutrients from the soil and life from the water, pushing its leaves up into the air and blossoming so that it may drink in the Sun; so too is the ‘I’. It knows itself when it sees the Sun! Economics is all about pushing up through the soil.

    #After 200,000 years on the road, what is a human being?

    #Gerry Rafferty: ’The Ark’

  37. Great stuff, jrbarch. Your pearls of wisdom are greatly appreciated.

    Money is the one point on which I probably have a different view. Although I think money could be used in a much better way than it usually has been — which, I guess, is why so many of us have spent time discussing MMT — I think we should be able to do without it all together, really.

    In its origins, I agree with the chartalists that money probably emerged as a debt relation — as a way of the few to enforce debts on the many.

    In terms of money possibly enabling the representation of the value of some things (i.e. in a limited sphere), I think it can only reveal an approximate reflection of our values (within that limited sphere) to the extent that distribution of spending power is reflective of our values. If distribution were sound, then demand would tend to induce a pattern of production in the monetary sphere more closely reflecting our values, but the prices would tend to reflect relative costs of production (e.g. exchange value), not intrinsic value (e.g. use value). That is, our values within this limited sphere would be reflected in the amounts of various goods and services produced, not in the relative pricing of those goods and services.

    But maybe I have missed your meaning on money. (?)

    Loved the song, by the way. I looked it up, as I hadn’t heard it before (bit before my time). Now I am checking out his other stuff. I couldn’t find an official video or live performance of “The Ark”, but the recording has been posted several times:

  38. ” But maybe I have missed your meaning on money. (?)” [peterc]

    Well, the thing about ‘wisdom’ is that it is simple! Our existence is simple.

    ‘Money’ on the other hand, seems to be like the five blind men grabbing hold of the elephant!

    Agree with ‘debt relations’ and ‘limited sphere’ – my ‘meaning of money’ IS rather nebulous. I looked at the explanation below and thought ‘this isn’t going to help’ – but anyways … it’s a point of view!

    At least conceptually, you will have to start off with the premise that I view everything from ‘inside to outside’ and back and forth. What this ‘means’ is based on our experiences.

    I think of words as symbols, which mask meaning, which in turn mask significance (Purpose). So the ‘meaning of money’ for me is to minister to human need, to create those conditions of comfort, health and focus for the persona so that it may (in my understanding – when the heart calls and grabs attention) have a secure basis to support its quest – learning how to focus and turn within. Purpose: I suppose – the ‘I’, enjoying a life living both in the world and perhaps more importantly – enjoying its own existence, standing on the shores of the ocean within. Some say there are wider implications. This to me is the sovereign reality of every human being. I am afraid the world news is not: that is Shakespeare’s ‘play’.

    Still setting the background for ‘meaning of money’.

    I would say this ocean is ‘Energy’. I don’t know why human beings wish to imagine a personal G.O.D. – the reality is far more beautiful and powerful. Energy causes fortuitous arrangements of atoms which we ‘value’ in different ways: an African tribe in days gone by may have taken a Rolls Royce and beat it into spearheads! (Imagine the look on Her Majesty’s face)! A little child will take a bowl of food and tip it onto their head and laugh and laugh without any sign of loss of dignity! Consciousness (the variable involved) is also energy; conditioning the vehicle in which it manifests.

    Now, people on all sides of belief have trouble using the word ‘Divine’ for this Energy (which makes me chuckle) – because they are standing in it, as reality. They have turned the ocean that is all around and within them into farce (just talking about churchianity here, not the real feeling of devotion to something ‘higher’ people hold in their hearts) – or worse. The meaning and significance are lost. The coins you hold in your hand are a ‘fortuitous arrangement of atoms’ and atoms resolve themselves into energy. In my experience, the only reason I came to this earth was to discover that energy within – what is going on outside of me could be anything; but should be good.

    So: seen in the light of this Energy within, ‘money’ appears to me to be ‘simply an externalisation of value – concretised energy’. The fact that this externalised around debts to the State is the way it happened to grab attention: if you upset some value of your wife or kids, you will be involved in a transaction too!!

    When I was a little kid I couldn’t understand why I had to go work for somebody else, to get ‘money’ so that I could buy that new toy I desired with All of my being! Now I understand it’s all about control: people on this earth love controlling each other, and nobody likes to be controlled!! There is such a world of difference between cooperation and competition plus coercion. I don’t think you will get rid of money peter, until it is realised there is nothing gained in controlling other people? ‘Spending’ those precious 25,550 days in the pursuit of ‘fortuitous arrangements of atoms’ – when the wealth you are really looking for is already inside of You!! It means redefining what it ‘means’ to be human; lifting a veil over a known landscape.

    Thankfully death draws a little line through all of the control business to stop it completely freezing up! The universe is the original recycler!

    So, my understanding is Life is real; human beings are real – we can only commit ourselves to something that is real. Everyone who holds their hand over their heart and repeats the Aus. Citizenship Oath is telling fibs (in that sense). A human being can only ever commit to something that is real because they were created by something that is real. ‘Australia’ is just a wave in the mind-stuff that will not last forever. Everything on the outside will always change, because the atoms recycle. ‘Money’ has only an apparent hold over this flow and makes a lot of false promises about what it can do for you. Value is a dynamic only resolved in an ultimate value. Am not saying we don’t need countries, trains and planes – just suggesting there is a different angle to view them all from.

    When the heart ushers the ‘I’ into the realm of that Energy within, then everything makes sense for me. “..…the world is living in its dream”. Money and magic trickery seem to go well together – billions of asset value dollars just disappeared off the face of the earth overnight not so long ago? Amazing!

    Many thanks for the digital space to say these odd things peter!

  39. Magpie

    re. your comment on monopolies. It struck me that this is exactly what’s happening in the UK energy market. An energy cartel has increasing rates of profit due to its monopoly status. Energy market manipulation has been a news story in the UK recently.

    I also checked out the history of rational choice theories. It appears there are two parallel histories, one from Jeremy Bentham and the other from Daniel Bernoulli (with help from family). These two schools weren’t unified until the 20th century. Under the Bernoulli theory, expected utility is a redundant term because utility means the degree of preference. Jeremy Bentham’s definition of utility is much broader covering a broad range of “goods” (using the broad definition of a good from ancient Greece). It’s a more complicated history than I thought.

    In my view decision theory is a total mess. Without independence, statistical methods are no longer valid. Even recent theories like prospect theory are no good because, historically, decision theory started in the wrong place (number theory, Fermat, etc.). The critique of rationality has tended to revolve around psychological experiments using framed decisions. Decision theory ignores the framing process and treats every “decision frame” as independent (all the data has to be independent for statistics to work). In the real world decisions are framed by the path that the person has experienced. There are many levels of connectedness within the context for any real decision.


    I am interested in social value. I think this is an area that value theory has neglected. The idea of social capital can be traced back a long way (e.g. Epicurus or Aristotle). I’d like to see things like community commons or equity accounting to build shared value (GNU GPL is one of the few examples). The problem that I have with concepts of gift economies is that they are still focussed on exchange and fall into the trap of commodity fetishism. In my experience I have found it very difficult to build social capital outside of the public sector / private sector model where people are paid to work in an organisation. The co-operative model doesn’t seem to have progressed for centuries and I desperately want a world that is more social. Everything outside of capitalist modes is so small and disheartening.

    I’m sticking to my definition of money as price indirection, but if we share then there’s no price because there’s no exchange. Maybe we don’t have to share everything but I think we have to share more and exchange less. Sharing isn’t easy because it requires trust and game theory explains why blind trust doesn’t work.

    Your words remind me of process theology. It would be interesting to know if you like any of the philosophers that are related to it. It may seem a bizarre connection to make but I suspect that calculus may have had some influence on the development of these philosophies. I could develop this tangent further (sorry for the pun) but I may be reading too much into what you’ve said.

  40. Hi HH –
    So, the question is – why are you interested in social value? My suggestion (besides all of the obvious and reasonable answers) – is that what you see going on in the world makes you feel uncomfortable and you would rather feel OK. So your mind tells you – if I fix this problem – then maybe I will feel OK.

    We tell little kids ‘they should share’ …..

    Had to look up process theology …..

    I like my mind and I like to think about things ‘for myself’ as the saying goes. But mind has its limitations. So much so that there is an incredibly strong statement in some Veda somewhere: ‘The worldly mind is born in darkness, lives in darkness, and dies in darkness’. Believe it or not, in this age of universities, enlightenment and genius, I can relate to that statement quite easily; especially if you take ‘darkness’ to mean ignorance (ignoring) and confusion.

    Another problem with mind is that it contains the ego which often muddies things with its desires and understandings. I am differentiating here between the ‘self’, (the ‘I’) and the ego (as a wave in the mind-stuff). Many people consider themselves to be their mind. Many people are slaves to their mind. If you think of the ‘I’ of a 4 year old (without the ego) then you will perhaps get the picture of a self that drinks everything in, learns through feeling, without making judgements other than ‘I like – I don’t like’.

    You wake up in the morning – there is a momentary stillness and peace: then mind says hello to you and starts telling you what to do; what to worry about, who you are, what your problems are, what your relations are; defines to you ‘success’. Its favourite questions, ever since the days of the caveman are: ‘who am I, where did I come from, what am I meant to be doing, what will happen to me’? If somebody even looks at you the wrong way, mind will be off constructing some fantasy about how offended it is. Mind is busy, busy, busy all day long. Solitary confinement is hell for the mind. It is mind that likes to control and that is why people spend every waking moment trying to control each other – something is pulling their strings!

    So – many people are slaves to their mind, controlled by mind, and consider themselves to be mind in a body.

    Enter here the realm of the heart!

    Now, the realm of the heart I consider to be far more ‘real’ than mind; through experience – (not through conceptualisation). In fact, in the realm of the heart, just as in the quote from the Vedas above I would have to concur: ‘the mind lives on vapour, the heart lives on substance’. Which again is another very powerful statement. However, I do not wish to admonish in any way the usefulness of human intellection and its relation to the persona.

    When we were kids we were placed in a school. Learning through ‘feeling’ was obliterated and the mind was given control. Am not saying intellection does not need to be responsibly trained; nor that the persona should not be taught right human relations (which is even more important and where education should be focused in my understanding) – just that the path to the ‘I’, if that is the path you would like to explore, is a process of feeling; supported by understanding and commitment. Mind in this process is definitely a subordinate partner (see below).

    So, in answer to your curiosity: philosophy is in the realm of the mind. Would be interested in your connection to calculus.

    A human being is a door and that door is opened by turning within; retracting the attention from the senses and the mind. Mind in this state becomes still, concentrated like a calm lake – only now capable of reflection without diffusion; like a mirror it reflects what is inside back to you, (never losing its power to reflect the outside world if that is the direction in which the attention is focused). It is through the longing that emerges from the human heart that one is drawn inside.

    I guess, when that longing becomes more powerful to a human being than anything else, progress in that direction is possible. It has to be real. Because human beings are real. And there is a Reality within them that surpasses all expectations ….

  41. Hi jrbarch

    Sorry I’m a bit slow to reply.

    My interest in social value is due to my perception that social capital is becoming less social and more capital. Firms are becoming stronger and society is becoming weaker. Social value appears to be a game theory problem. If everyone played the game cooperatively then everyone would be better off, but when some people choose to be selfish then the most cooperative players are worse off. Some of the social value problems have been solved by the law but the law is too complex and specialised for most people. This has resulted in a situation where powerful people can exploit social value but the people creating the value are disenfranchised. It seems that religion used to be one of the solutions to social value. I find religious people are often very cooperative within their communities. If I generalise from this principle then it appears that shared beliefs can also create social value and social capital.

    It’s a long time since I read process theology, process philosophy, Teilhard De Chardin, Henri Bergson etc. I studied these when I did a fine art degree because they influenced early modernism. I’ve read that there are similarities with Hinduism and Buddhism though I don’t know these religions well enough to say how true that is. I agree to some extent on the issue of chakras. The circuit tradition within psychology was influenced by older models of self (including chakras) and I don’t think the older models are necessarily less valid or less scientific. The way I would phrase this is to say that decision making is modal and the chakras correspond well to modes that can be observed. This is another problem with rational decision theories. Humans have been shown to make decisions differently under different circumstances (e.g. when under stress). I think it’s debatable whether chakras are strictly modal in the way that the adrenal gland is modal, or whether the chakras have some independence as in traditional teaching.

    I don’t pay much attention to the mind/body duality in western philosophy as I don’t think it’s a significant debate any more. My view on self is that it’s constructed by the mechanics of human thought. There appear to be certain aspects of thought that are innate. I believe syntax and categorisation are innate. There is some evidence for this. Deaf children have spontaneously developed language in a school where adults haven’t taught them signing. I believe self is an innate part of thought. The way that we see the world doesn’t necessarily have any truth in reality. This applies to the mechanics of perception as well as cognition. For example; red, green and blue are light primaries. There’s nothing special about these colours in nature. The specialness of these colours comes from the way that we perceive colour. We only see red, green and blue and we interpret the rest. We perceive yellow by using all the red cones and all the green cones therefore we see the colour yellow twice as brightly as the colour blue because we use twice as many cones to recognise it. My belief is that we have a number of modes of cognition that are innate. In my view; perception of self, language syntax, the tendency to categorise and decision modality are innate aspects of our biology.

    There’s nothing profound in my view that calculus influenced process theology. In the 19th century there was a growing scientific view of change and this fed into the philosophies of the late 19th century and early 20th century and several philosophers of this period were mathematicians. I call this view a thermo-dynamic perspective. It’s a view that’s confident in explaining the mechanics of the world but not life processes. I don’t think there was any scientific confidence in explaining life until artificial intelligence started to make contributions to genetics.

  42. ”I believe self is an innate part of thought …. perception of self, language syntax, the tendency to categorise and decision modality are innate aspects of our biology”.

    Nice, thoughtful reply HH – and I know your view is science based and consensual.

    You would probably agree there are many definitions of self.

    There are conceptualised, a variety of selves in both psychology and philosophy, expanding into societal selves. There are religious selves, artistic selves, business and political selves. If the self is blown apart in some way by some internal or external shock, then there is the self in disaster mode. If one hundred people know you, each carries in their mind a slightly different picture of who you are, as do you (all changing over time), so then there is one-hundred-and-one selves.

    In fact, people have been trying to put the self in a box for a very long time now – there seems to have been an agreement reached that ‘self mind ego’are all based in and products of electrical currents and the brain; genetics, the environment etc. The self remains however, something of an enigmatic chameleon, identifying strongly with its physical gender, race, activities, culture, nationality, and the age in which it is born. The self can play out the role of other selves (actors), somehow get lost playing out a role it chooses for itself (is there free choice), become confused, ill, over and under-inflated – feel sorry for itself, or sail away on an illusory cloud of grandeur and make believe – seek gratification, seek destruction – all apparently down to the magic of chemistry! Some selves can be hypnotised into believing they are chooks! Most are hypnotised by the fashion industry for example; or some ideology. The self can range in feeling that all is well with the world, right down to life is not worth living. At the centre of every mind-state is this little thing called ‘I’.

    Can we construct and deconstruct the self through thought, if indeed the ‘self is an innate part of thought’? I haven’t seen the ultimate handbook yet although many have tried.

    It was the Nazi’s who last had a go at breeding a super-race: playing with chemistry. Nowadays the would-be shapers and manipulators of the human race just use the mind.

    All I can say is: ‘not in my experience’ HH. In my universe there is an ultimate Energy of which I am a very small energy particle. The reason why we are such a mystery to ourselves is that we need the right mirror. We need to learn how to turn within, look within WoPG teaches one way that I know works. Not very scientific I am sure.

    From this perspective mind (and ego) are the creator of all of our problems. And you cannot employ the problem-maker as the problem-fixer as a matter of reality. The world spirals around in circles. Our lives go around in circles. I don’t think mind is actually a friend. Mind will refuse to see another human being as a human being, using them instead as rolling logs to launch a ship or State. Mind is responsible for all of the man-made ills in the world today. There are some gigantic egos, without an ounce of compassion in them, that rule whole countries. That is mind …. Without the heart, the mind is a very dark place.

    If you look at your mind like a newspaper, you will see that 96% of what is written there came from somewhere else.

    There is a place inside of each human being where mind cannot go. It is a place of tranquillity and peace, where clarity and real happiness hang out (unconditional happiness); there is a ‘sun’ there (for me) that burns brightly, ‘enlightening’ the self and through that self it slowly filters down into the brain consciousness of the persona. Life comes first: after that the instrument is built. Life plays upon the instrument and consciousness is the musical result manifest. The consciousness attunes itself closer and closer to Life and connection is made to the physical brain; the persona becomes aware. It is the only process I know of more powerful (far more) than mind.

    So, I am not a great fan of mind to solve problems; or in its ability to perceive reality of any colour! Reality is the province of the heart in a human being. Mind generates more questions than answers.

    In order to bring peace to a human being I know for a fact that one must step outside of the province of the mind and enter the realm of the heart. Perhaps when individuals can feel peace in their lives, they will create a better world. They will be able to use mind like a tool, rather than have it screwing everything up, and running the show as is currently the case.

    Having said that I still really like the Humanities, Technology and Science – Science in particular is a leading light for humanity and I wish the legal profession would follow in their footsteps and whip the financiers and politicians back into something at least resembling human beings. Bill Black is the greatest in that regard!! Tom Hickey is a stalwart defender of humanity! There are many more beyond the heterodox economic blogs.

    So, I guess whether or not the self is chemistry or something beyond chemistry is for now a moot point. Whatever it is, we need to rediscover out humanity. The engine that drives humanity is the desire for fulfilment. We need to understand that fulfilment must come from within – whether chemistry or Light is the origin of this desire. People that take drugs know that chemistry is a temporary and illusory fix. I don’t know whether it is possible to rule molecules and atoms with other molecules and atoms – energy has to play a role in it somewhere? For me, there is an Energy within each and every human being that always Was, Is and Will Be – and it has supreme control over the universe(s) – it plays happily with chemistry, no problem at all!

    Everyone, enjoys meeting their Self!!! That’s the good part ….

  43. Magpie

    If you’re interested in monopolies then Veblen can’t be avoided. Most Marxists aren’t keen on Veblen because he rejects the classical economic foundations of Marxian economics. Marxists put a lot of emphasis on crisis theory but Marx’s conflict theory is one of the foundations of social theory. From the perspective of conflict theory, Veblen makes a lot of sense.

    Warren Buffet echoed Veblen’s concepts when he said..
    “There’s class warfare alright, but it’s my class, the rich class, that’s making war, and we’re winning.”

  44. Hi jrbarch

    When I said that I thought self was an innate part of thought, I had the following definitions in mind..

    * thought as a neurological process of symbol manipulation
    * Self as a recognition that the self is separate and special in relation to the perception of everything else

    I had in mind that any species capable of thinking probably has a sense of self. I would say this is a biological perspective of self.

    I was also using a different definition of self when I was talking about theories of self. In that context, I meant the theories of self throughout history, e.g. religious, philosophical, psychological. This is probably a cultural perspective of self.

    I couldn’t follow the WoPG link but I searched on it and found Words of Peace Global. Is that what you were linking to? The energy that you’re referring to sounds a bit like “elan vital” or the idea of God as a motive force in the philosophies that I mentioned. You may find them interesting and also you might like some of the ways people interpreted these ideas in early modernist art like Cubism.

    I used to have a friend who believed that God separated from one into many in order to see herself. I don’t know where that idea came from but it’s kind of an equal and opposite idea of your mirror, i.e. understanding self by understanding others.

    I’m still planning to write something on meta-evolution but it’s little bit long-winded. It would probably tie in with your interests and also Tom Hickey’s metaphysics as well.

  45. [HH]
    Oh … Yes, Words of Peace Global was the source material I had in mind; ‘elan vital’ too.

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