Friday, March 4, 2011

What is an Economy?

Taking another look at fDChief's thread Arc of a Diver, I think that something basic is missing that has come up at the end of that thread, especially in comments by Publius, jim and Al.

Exactly what the economy is hasn't been defined. Chief talks about "securing needs" at the beginning of his post, but that's more human focus and motivation than economy. If I'm dying of thirst, I'm not going to be looking for entertainment, but water, which doesn't necessarily require an economy at all, let alone $$$.

So how do we define "economy"? The distribution of goods and services within and between communities? But it's more than that imo, it also involves providing "gainful" and "meaningful" employment/activity for the members of said community. This would not require commerce at all, could be based instead on reciprocity, which would also not require money. These of course would be relatively limited and not very complex communities, but the basic tie in with economy still holds imo since we still have the same basic requirements which the economy is expected to meet.

Where does "money" come in? Notice I say money and not property which are two different things, although today we see them as one in the same. Money is an abstract concept based on shared assumptions and trust. I assume that my $100 note will be accepted by the check-out counter attendant because it is "legal tender". The attendant assumes that my note is genuine, but the note has no actual value in and of itself, unlike property. Money acts as more the lubricant for the economy, the easing of commercial transaction than as the focus and/or purpose of the economy. The more lubricant the better the system functions, but also the lubricant acts as a measure as to how successful certain parts of the apparatus are operating. Still, the purpose of the overall system is actually much broader and all encompassing than what the money would indicate, and in order to be adequate requires a certain amount of social/communal stability.

Now what happens when we radically redefine "economy" to "making a profit" or more simply as "cashing in"? Instead of a market/sharing of trade and reciprocal/meaningful action we have a gambling table where only the richest can play. The majority are simply pawns in the much larger game of high stakes bets, wagers, and swindles, in fact deception is considered a necessary and highly-valued skill. There is no thought of meaning or distribution, rather of "winner take all" and the loser gets perhaps another chance as long as his money holds up.

But even this doesn't quite capture the reality of the great transformation we have experienced imo. Soooo consider this fable:

There were once two river steamboats. One was new and gleaming, state of the art for the time, well-managed and prosperous. Being steamboats, we of course have riverboat gambling. The other was old and dilapidated, patched up with old worn-out parts and wired together with baling wire, but still functioning more or less. The two steamboat captains decided to have a race. As long as there was no race the inherent weaknesses/strengths of both boats were not apparent.

So on the first boat we have the machinery working well, the crew operating as expected, the gaming tables operating in the best interests of the boat, raking in big profits from the gamblers on board.

On the second we have the machinery barely holding together, the crew semi-mutinous or drunk and disinterested. The gamblers have bought off all the dealers who allow them to win big at the cost of the house, while the uninitiated are fleeced mercilessly. The captain (not the president) is drunk on the bridge but with great delusions of grandeur and considers his boat simply "too big to fail" and orders yet more steam as the first boat is lengthening its lead. The smokestacks are glowing redhot by this point and everyone paying any attention to the reality of the situation knows the boiler is about to go which will blow the whole thing sky high, but the gamblers at the tables are totally focused on their crooked game and ignore the rumbling until it is too late . . .



One of the constitutive components of the modern capitalist spirit and, moreover, generally of modern capitalism, was the rational organization of the life on the basis of the idea of a calling. It was born out of the spirit of Christian asceticism. Our analysis should have demonstrated this point. If we read again the passage from Benjamin Franklin cited at the beginning of this essay, we will see that the essential elements of the frame of mind he described as the "spirit of capitalism" are just that we have conveyed above as the content of Puritan vocational asceticism. In Franklin, however, this 'spirit' exists without the religious foundation, which had already died out.

The idea that modern work in a vocational calling supposedly carries with it an ascetic imprint is, of course, also not new. The limitation of the Faustian multi-dimensionality of the human species, is in our world today the precondition for doing anything of value at all. This is a lesson that already Goethe, at the peak of his wisdom in his Wilhelm Meister's Years of Travel [1829] and in his depiction of the final stage of life thought his most famous character Faust [1808], wished to teach us. He instructs us tht this basic component of asceticism in the middle-class style of life - if it wishes to be a style at all - involves today an inescapable interaction in which the conduct of 'specialized activity', on the one hand, and 'renunciation', on the other, mutually condition each other. For Goethe this acknowledgment implied a farewell to an era of full and beautiful humanity - and a renunciation of it. For such an era will repeat itself, in the course of our civilizational development, with as little likelihood as a reappearance of the epoch in which Athens bloomed.

The Puritan wanted to be a person with a vocational calling; today we are forced to be. For to the extend that asceticism moved out of the monastic cell, was transferred to the life of work in a vocational calling, and then commenced to rule over this - worldly morality, it helped to construct the powerful cosmos of the modern economic order. Tied to the technical and economic conditions at the foundation of mechanical and machine production, this cosmos today determines the style of life of all individuals born into it, not only those directly engaged in earning a living. This pulsating mechanism does so with overwhelming force. Perhaps it will continue to do so until the last ton of fossil fuel has burnt to ashes. According to Baxter, the concern for material goods should lie upon the shoulders of this saints like "a lightweight cloak that could be thrown away at any time". Yet fate allowed a steel-hard casing (stahlhartes Gehäüse) to be forged from this cloak. To the extent that asceticism attempted to transform and influence the world, the world's material goods acquired an increasing and, in the end, inescapable power over people - as never before in history.

Today the spirit of asceticism has fled from this casing, whether with finality, who knows? Victorious capitalism, in any case, ever since it came to rest on a mechanical foundation, no longer needs asceticism as a supporting pillar. Even the rosy temperament of asceticism's joyful heir, the Enlightenment, appears finally to be fading. And the idea of an 'obligation to search for and then accept a vocational calling' now wanders around in our lives as the ghost of beliefs no longer anchored in the substance of religion. Whenever the conduct of a vocation cannot be explicitly connected to the highest cultural values of a spiritual nature, or wherever conversely, individuals are not forced to experience it simply as economic coercion - in both situations persons today usually abandon any attempt to make sense of the notion of a vocational calling altogether. The pursuit of gain, in the region where it has become most completely unchained and stripped of its religous-ethical meaning, the United States, tends to be associated with purely competitive passions. Not infrequently, these passions directly imprint this pursuit with the character of a sporting contest.

No one any longer knows who will live in this steel-hard casing and whether entirely new prophets or a mighty rebirth of ancient ideas and ideals will stand at the end of this prodigious development. Or, however, if neither, whether a mechanized ossification, embellished with a sort of rigidly compelled sense of self-importance, will arise. Then, indeed, if ossification appears, the say might be true for the 'last humans' in this long civilizational development:

-Narrow specialists without mind, pleasure-seekers without heart; in its conceit, this nothingness imagines it has climbed to a level of humanity never before attained.-

Max Weber, The Protestant Ethic and the Spirit of Capitalism, 1920


  1. Economy is the commonly accepted order in which people trade with each other and thus encourage each other to produce beyond and other products than subsistence products.

    Western countries use the "market" rule for most such activity, but there's also a huge "planning rule" minority (inside bureaucracies, be them state or corporation).

    The defects that you mentioned are market defects that happen because the rules are too crude or not enforced. Market failures include power asymmetries (corporation vs. unorganised labour, monopoly, oligopoly), externalities, obviously criminal activities, moral hazard, adverse selection, information asymmetry and many more.

    Many economic problems can be solved if market failures are being addressed properly. The U.S. was once pretty good at it (anti-trust laws), but has fallen behind a lot because old regulations were removed/softened/not enforced and few new regulations (thorough cap and trade, for example) not are missing.

    The whole rip-off society problem can be addressed with well-justified regulations, but the ideological component in U.S. politics and the "small state" ideology are powerful obstacles.

  2. I'm going to take a moment to amplify on Sven's excellent comment. We in the US are lacking two things: well-justified regulations (nice phrase, Sven) and reasonable enforcement of our existing regulations

    We always seem to vacillate between either:
    1) failure to enforce what we've got(ensuring failure) or
    2) waging a constant war between offenders finding loopholes (however ridiculous) and legislators trying to fill them (usually without the assistance of the regulators to avoid looking like they are being led instead of being leaders), creating failure through micro-management.

    To be honest, the most common and effective crimes in the US these days occur when people legally steal from each other. This can take the form of a $23 bank fee on a $1 transaction (this happened to me once) or can be somebody overestimating the amount they donated to charity so they pay less taxes.

    Sven's comment that was particularly accurate was that we used to be good at this sort of thing. Gentlemen, we've gone from best of breed to roughly the level of Russia (need government interference to succeed in most endeavors) in 40 years.

    What went wrong?

  3. To be honest, one sentence ("...not are missing.") clearly shows that I wasn't fully awake and was distracted. ;)

    What went wrong? Well, look at AT&T. It was split up into many companies in order t remove the monopoly. Those parts bought each other or merged. AT&T is essentially back - and high speed internet connection availability lags well behind the technically possible (similar problem in Germany - the South Koreans embarrass us all!).
    Another example: The separation of banking and investment "banking" was softened up as well, with well-known consequences.

    The problem is that old lessons become bleak while lobbyists retain their strength. Old regulations are being eroded and only economics profs keep talking about the old regulatory policy theory and principles.

    This can be corrected, but it requires that enough people (and the right ones) become aware of the factual needs and proven solutions again. It's a job for the media to inform these people.

    In short; money in politics and the media went wrong - as usual.

  4. Sven-

    So do the "gainful" and "meaningful" elements I've mentioned exist in your definition, or is it simply an ends/means mechanism of social interaction with "value" associated solely with "profit", "price", "savings" . . . things which can all be measured in terms of $$$?

    It is precisely this that gets to the heart of the answer to Pluto's question imo.

  5. Sven-

    Btw, any comment on your recently resigned Defense Minister? He was one of the up and coming stars of the CSU . . .

  6. "A fairy tale: Mr. IsNoGood - all kippers and curtains"

    His successor already fired Guttenberg's Parliamentary State Secretary (officially for unknown reasons, but most likely for the crap he produced and called "reform"). If only they would hire me. ;-)


    Gainful/meaningful; economic science considers all trades as a win-win activity (or at least all involved persons expect to win).
    You seem to feel there's a disconnect between individual (trans)actions and the greater society's good. Well, this is the 'Adam Smith's invisible hand thing', and the long story short is that it works satisfactorily if you compensate for most market failures.

    Markets with market failures can be really ugly - and all markets experience market failures to some degree (information and power are never perfectly symmetric, for example).

    The specific U.S. problem in regard to this is imo the ideological approach to regulation.
    Ideology - no matter left or right - is a all-too-often misleading simplification of reality for those who are too lazy, uninformed or dumb to handle the real world.

    The days of simple answers for simple problems are gone. We need to prove able to handle the complexity of our mature and complex societies or else we'll fail at guiding them. The almost inevitable result of failure is decline and overall unsatisfactory performance.

    I'd advise to get rid of the ideological "big government vs. small government" thinking and think instead in terms of an informed case-to-case optimisation.

  7. As a university trained Political Economist, I would offer that not every activity involving money, goods or services should be thrown into the "Market Economy". I will expand on that in a moment. Second, using GDP as a measure of the "health" of the economy is balderdash. Take time to figure the "healthiness" of the trillions spent on Iraq/Afghanistan as well as the rebuilding of New Orleans. The former was the creation of human misery by intentional actions, and the latter a measure of human misery by natural consequences assisted by incompetence. Yet, they contributed to GDP.

    Now for those goods and services that need to be seen as outside the "market economy". They are essential services and infrastructure. Yet, we have tried to improve on these by applying "market techniques" to make them "more efficient". We don't need efficiency in essential services, we need effectiveness. We can convert the Postal Service into a profit maker by closing thousands of facilities and reducing the frequency of delivery until we are right up there with Somalia in terms of postal services. Heaven forbid we should all pony up a few tax dollars to have an effective Postal Service. Ehll, Bill Gates can afford a private courrier, so why can't Pluto?

    Sven hit on excellent points. For some bizarre reason, we Yanks actually think that regulation of services that are in the common interest is not necessary. At least until there is a crisis and it becomes bloody obvious that such services must be regulated. Anyone remember ENRON? Of course not.

    Paul B. Farrel gives his cynical view of where we have been and where we are going. It isn't pretty.

    We deregulated the air transportation industry so that a passenger flying between Cities A & B would not be subsidizing a passenger flying between cities C & D. Over time, the industry, in order to turn a profit, began to unbundle the services we had come to expect in the price of a ticket on every flight, so that if you chose not to use said service, you did not pay for said service. Thus, if I checked no bags, I was not subsidizing those who did check bags. If I did not use the ticket counter, I did not subsidize those who did. And so forth. True fruits of deregulation, and they stink. Buying an airline ticket has become extremely complex. and what have we really gained, other than a ideological goal. Jobs have been lost, pension plans have been scrapped, and the like. There is no longer the concept of an air transportation network, but just vendors selling a commodity - cheap seats between points where demand is high enough to support seats at bargain prices. If you were to add up the actual personal costs born by stranded passengers from JetBlue's three major melt downs during the past four years, it would be 10 of millions. But, since they operate outside the "network", that's a chance the passenger takes to save a few bucks on a seat.

    The US is becoming a society without a social contract. It has nothing to do with "an economy", and everything to do with the economic rape of the masses.

  8. seydlitz: Actually, I'd argue that one of the long-term structural problems with most industrialized economies goes all the way back to your first example.

    Water is and has for a long time been treated as a "free" resource while for most people in most industrial economies the costs of procuring, treating, and providing water is significant. But water use regulation, and water allocation, is usually treated as if those costs were invisible. Much of the U.S. agricultural and industrial economy depends on "free" water which is in fact subsidized by a combination of taxes and fees, many of which fall on people and organizations that get marginal benefit at most from the subsidies.

    Even less consideration gets paid to the physical impact of water use; aquifer depletion and pollution, diversion from rivers and lakes.

    We do the same thing with land, which is why long-term questions of land use are typically either tabled or discarded entirely in favor of short-term profit-taking.

    Perfect example; The Willamette and Tualatin Valleys were once known for some of the richest farmland in the U.S. People came thousands of miles to farm here back when thousands of miles really WERE thousands of miles.

    Now I can drive from Portland to North Plains and see thousands of little brick houses where those farm fields used to be.

    Now that's fine so long as bunker fuel is $16.00/ton, diesel $3.50/gallon and the grapes the people in those houses eat come from Argentina, the beef from Ohio, the lettuce from Mexico.

    But what would happen if the fuel prices tripled? Quadrupled? How do you feed yourself from your Victory Garden in your little parcel of suburban heaven?

    John Robb loves to go off on this lack of foresight. I'll just second Sven and say that in an increasingly complex global economy nations, industries, and companies need to be MORE far-sighted, more flexible, more ingenious, and more adaptable, and the present mindset of the U.S. is locked onto short-term goals, especially short-term profits.

    We need good strategy and at best we're diddling with individual fire-and-movement technique.

    Not a good fit for the situation.

  9. Excellent points gentlemen-

    But imo "science" isn't going to be able to measure "gainfullness" or "meaningfulness" which gets to the root of the problem. True, Adam Smith's "invisible hand" was supposed to guide human passions and self-interest in providing for the actual material needs of society, but that is collapsing now . . . instead we have the riverboat which is why I choose that metaphor/analogy. Riverboats as floating gambling casinos of course require a larger support base in which to operate, are in essence parasitic . . . They are not self-contained systems as economies (actually Autarkic economies) can be at least in theory. Riverboats could in fact act as pirate vessels and simply rob what they need which allows for very interesting "boundary conditions" in terms of modeling.

    So in simpler terms, imo, one of the basic sources of our problem is that labor no longer has any substantive meaning outside of making money for a significant number of people. They would rather not work at all and simply entertain themselves at home in front of the boob tube. This is the basic reason in turn why they have seemingly so much tolerance for all the scamming and cheating going on around them. Because, "everyone would do it if they could in order to get what they want". In fact such con artists are considered clever for getting away with what they do . . .

  10. Regarding my assertion that ideology (and the sibling partisanship) has too much influence in the U.S., I'd like to point at the comments I did here
    out of boredom and because I thought sharing some knowledge for free would be a good deed for the day.
    Look how they reacted in the comments to my argumentation. I was "S O ". Search at the link for "S O " (Ctrl+f).

    Quote InsidiousProphet 1 day ago in reply to S O:

    "Hey factdenier, you should really give it a rest, nobody here is buying any of your bullsh*t. Just phuck off and die."

    This reminds me of this:

    It works both way; the left also has its 'not a good model' people.

  11. A couple of more points:

    I think my argument helps explain the situation as Farrell sees it, which is essentially as a moral problem.

    Sven's point about complexity is true, but our complex societies are so complex that they mask the transition we see taking place. This complexity is not sustainable as we see.

    FDChief brings up the subject of water as a commercial market. In my Advanced Business English class I had my students read Vandana Shiva's "Water Wars" and we watched some of the TED-India talks on water management. The goal was to come up with a market response to her argument and put together a convincing presentation countering her main points . . . The more we got into the subject the more depressing it became although some of her assumptions were very culturally bound. Our ultimate conclusion was that our current Western attitude/policies toward water resources and allocation were not sustainable. I shelved the project since it would not have been received well by the other BE classes. We are really, as Naomi Klein says, reaching the limits of the damage we can inflict.

    I'm wondering if something along the lines of E.F Schmacher's "Small is Beautiful" is not in fact our best option at this point . . .

  12. So in simpler terms, imo, one of the basic sources of our problem is that labor no longer has any substantive meaning outside of making money for a significant number of people.

    My Dad is a WWII combat veteran who came back to Denver after the war and got into construction because that's where the opportunities were. He thought he'd like to be a lawyer, but some job counselor guided him to construction. He started and ran a construction business for almost 30 years before handing it off to my oldest brother. He did it not because he loved it but because it brought home the bacon. Once my brother had the business my Dad started a travel agency because that's what he really wanted to do. That only lasted a few years though and was killed-off during the early 1980's recession.

    My brother is still running the construction business for pretty much the same reasons my Dad did - it was an opportunity and there wasn't much else available. Although they are both very good at the business (indeed, they'd have to be to survive for over half a century combined), they do it because it earns a living.

    Contrast that with me. I work part-time with the National Guard by choice. I have the clearances and experience that I could get six-figure job, or close to it, in the national-security apparatus tomorrow. If I had to, I would certainly do that and I might even enjoy it, but as it stands my wife makes plenty of money to give us the lifestyle we want. We save a lot of money, so we live more frugally than is typical for our income. I decided to prioritize my family and other values besides making money. I'm lucky that I have that choice because many don't. Many others do have that choice and choose the money.

    So I wonder how all this fits into your description. What do you mean by "substantive meaning" for labor? Most people I know aren't working because it's their calling - they stumbled into whatever they're doing and it's tolerable and earns a living. I honestly don't know which has more substantive meaning: The guy toiling away in cubicle-ville churning out TPS reports or the guy working in the steelmill 50 years ago. Maybe I'm jaded but I think for most people work is primarily about making money.

    Anyway, good post and excellent discussion so far.

  13. Andy: I think it's a bit of this and that. As with a lot of life in the U.S., the Golden Rule is that if you have more gold you get to bend more rules more often.

    So your choices are a little broader. Kids from families with little or no experience with professions have a harder time breaking out of the wage-work world. Kids from places where there IS little or no opportunity for work outside farms or factories have a tough task doing what they "like" rather than what's there.

    I think another thing that has hurt is that the downward pressure on wage work has made it difficult to get by on one income. I think a lot of people would like to make your choice but can't; they have to squeeze every penny out of both their incomes because those incomes are fairly small, and the cost of things like daycare and rent aren't getting smaller...

  14. "If I'm dying of thirst, I'm not going to be looking for entertainment, but water, which doesn't necessarily require an economy at all, let along $$$." I say it is necessarily all about economics. Your scenario cuts to the heart of economics. All economics, whether macro/micro, deal with scarcity. The "dismal science" is the relationship between ends & scarce means which have alternative uses. The classic econ 101 question is why is water, which is essential to life, so cheap. Why are diamonds, which aren't, so expensive. Consider your example. You're dying of thirst. You have x-amount of hydration units in you to use to find water before you die. Spend wisely. Do you go into an all out sprint, or do you maybe lay low, stay out of the sun, move only in the morn./eve. etc. And, if you're down to your last hydration unit (say 20 mins left to live) & you had $500 in your pocket & someone wants to trade that $500 with either a bottle of water or the hope diamond, what do you do. So no, that scenario IS what economics is all about.

  15. Good example of the problem with "market solutions" to economic problems beyond simple buying and selling; the Ogallala Aquifer.

    This thing is the major shallow aquifer of the central U.S., consisting of the saturated Cenozoic alluvial sand and gravel of the Ogallala Formation: "The saturated thickness of the Ogallala Formation ranges from a few feet to more than 525 feet (160 m). In general, the areas of greatest saturated thickness occur in the North Plains. In the South Plains, between Lubbock and Midland, the saturated zone varies from less than 50 feet (15 m) to 200 feet (61 m). Depth to water below the land surface can range from almost 400 feet (122 m) in parts of the North Plains to between 100 to 200 feet (30 to 61 m) throughout much of the South Plains."

    The Ogallala Formation reservoir was filled principally by the high rainfall and meltwater periods during the Pleistocene glacial periods; it is deep enough to be below hand-dug well depths, so initial well withdrawal came soon after cable-tool and rotary technology improved enough to drill below 200 feet - around 1900.

    Since then it has effectively enabled irrigated agriculture, industrialization, and large urbanization in the Plains states; about 30% of all irrigated land in the U.S. uses its water, as do 82% of the private and municipal well water systems in the region.'s the thing; we're not IN a glacial period now. And the discharge rate has exceeded the recharge rate for the aquifer since significant pumping began in the late 1940s: in 2005 the USGS estimated that total water storage declined about 253 million acre feet (312 km³), about 10%, over the fifty-five year period between 1950-2005. Hydrogeologists call this "mining" water, since you're pumping a resource that cannot be recharged under current conditions. The water in the Ogallala is "old" water - it has no tritium in it, meaning it predates the Trinity test in 1945. We cannot restore the water at our current rate of extraction.

    And dewatering aquifers isn't simple; remove the pore water and often the water-bearing unit will consolidate, permanently reducing both porosity (the capacity to hold water) and transmissivity (the capacity to move water to the wellhead) unless the reservoir is fractured with high-pressure injection, an expensive and difficult process.

    But Ogallala water is "free" - that is, the only thing restricting your access to it as a drill rig and a water right. And typically water rights are allocated by county; there's nothing to prevent the person in the next county over from pumping like hell to water his soybeans.

    I don't want to make the good people of the Midwest sound dumb; people do realize that this is a problem. But because we're Americans, and by God and the Continental Congress we believe in state's rights, we have yet to make the jump to the commonsense thing and accept that Ogallala water really isn't "free"; the price tag is just not in dollars, but in the resource itself, and that any long-term life on the Plains that includes groundwater will have to be keyed to the recharge rate of the aquifer.

    Can a "market" do that? I setting relatively low fees for users up to the recharge volume - and then prohibitively high fees for anything beyond that.

    But who sets and collects those fees? Who enforces the water rights? How do you get a single market across eight states and heaven knows how many cities, towns, counties, townships, and irrigation districts?

    And, frankly, right now the problem is that there is a hard core of 25% or so of the U.S. public that will not consider regulation, taxation, fees, conservation, or any other "impediment" on the "free market" as anything but Evil Communism. And there's probable another 20-30% who have this general unease that "there's a problem" but won't fight the noisy, angry 25%.

    So the caissons go rolling along...

  16. Lost me comment grrrrrr!

    Anyway, the thread is developing nicely and I think we are breaking some new ground.

    Andy's anticipating how I wish to develop my argument, but more on that below . . .


    Thanks for you comment. I guess you've caught me out on the "dying of thrist scenario", or maybe not. What I was attempting to do was to make a distinction between Maslow and the market, show that needs need not be so seen or addressed, a question of perception. So, does that not still hold? We can see all scarcity in terms of the market, and I would argue that we have been conditioned to see it so, to take this perspective as "natural" and the only one. The "Genie" appearing at the end with the enticement/solution for $500 is actually a necessary part of the paradigm . . . thanks again.


    Shiva in her book sses the USA as the boogy man in the Water Wars, the corporations more our evil hencemen. She uses examples from the USA or what she refers to as "cowboy economics" similiar to the one that you mention. To contrast the market view ("the Genie") and the "Statist" view (what is government going to do?) I showed my students this in regards to water management . . .

  17. seydlitz-

    Of course, on your second riverboat, you give the example of a society where withdrawals from the account are more prevalent than deposits to the account. In the main, that's a fairly accurate description of modern day socio-economic activity, especially in the US.

  18. Responses to comments:
    1. Tim Pawlenty is an ambitious empty suit with relatively few functioning brain cells.

    He's slowly learning that's not enough to become president. He mistook his success as governor of Minnesota for skill when it was mostly based on luck.

    He's really frosted that his national support is 4% and falling after two years of light campaigning while Michelle Bachman's support is 4-6% and growing after one month of light campaigning.

    The lesson here: Some people have it and some people don't...

    2. Andy's example from his own life is completely valid but drawn from the experiences of the lucky few (which make up the majority of the posters here). I already knew that Andy was a smart, capable guy. Now I know that he's also lucky.

    The lesson here: Never underestimate the value of luck or the general population's ability to throw away the benefits of their luck.

    3. The Ogallala Aquifer has been on the verge of running out of water for the last 30 years. The people of the great plains have simply taken the logical step of continuously improved their extraction technology to deal with the crisis.

    At the moment the cost of doing this is less than the benefit. As the Chief noted, this is obviously not going to be true forever.

    The lesson here: Like so many things in this country, the situation is obviously broken, but not broken enough to cause a crisis that will force us to resolve the problem.

  19. Al-

    Yes, and the gleaming, new, well-maintained riverboat also very appealing to investors/gamblers (but without the "advantages" of the other) could be seen as China . . .

  20. Minor side note on Mississippi riverboats: their owners considered them to be consumables. They rarely lasted more than 18 months (almost never more than 3 years) but they predictably earned at least 3 times the cost to build them.

    Maintenance was not usually a big issue for owners and loss of human life due to explosion or drowning was common.

  21. If only a truly "free market" existed in the United States...unfortunately, the mantra the Republicans and their patrons use when they say let the "free market" be free is, "oh, I loves me some free market...for the other guy, but I want my ass protected!"
    Lehman brothers was a victim of the Free Market, and Goldman Sachs who should have followed close behind them...saved by the "not free market."

  22. To all,
    I'm fairly uneducated on this topic but that won't stop me from jumping in.
    -ISTM that we all are assuming that economy is defined as a function of western capitalism, but a large part of the world doesn't do it that way. Or do they?
    -It further stm that we should try to determine what economy DOES NOT MEAN. Attack it from the rear.
    -In our system lately i'm vapor locked on how we reward failure thru stimulis ,how we reward finincial manipulators with Tarps etc, and glorify management, while at the same time attack labor unions and labor. Theres a disconnect , as if labor ain't a part of the capitalist economy. Can capitalism exist w/o organised labor?
    Just a few thoughts.
    With my background i could have cashed in,if i was willing to pimp myself out to the war.This is not an attack on any thing that you said, it's just a personal comment.
    As for dreams of our fathers- all mine ever wanted was to own a gas station. He never achieved this goal.

  23. Pluto-

    "loss of human life due to explosion or drowning was common"

    True, in fact it isn't hard to find stone monuments "in memory of ..." concerning riverboat disasters in old cemeteries across the South and Mid-west. There's a particularly impressive one in the town where I went to university.

    The riverboat is very much an American symbol, combining power, motion, excess, but also fragility, volatility, chance . . .

  24. Chief,

    Childcare is an interesting example of some of the tensions in what we're discussing. Childcare is one of those services that is very expensive but the people who work in that field do not receive good compensation. Childcare is also a cost of employment for those of us with kids. I have three kids and in my area childcare would run almost $20k a year. If I wanted to work full-time, that would be the biggest of several costs of employment. It's been a couple of years since I did the calculations, but when I was looking at this I did all the estimates and figured it would cost about $25-30k a year for me to work full-time. So if I get a job for $50k a year (about the US median income) then my work ends up contributing $25k to the family finances.

    Given the high cost, it's no surprise that people with a lot of children have someone at home full-time. It's also pretty obvious why single-parenting is so economically difficult. The cost to outsource childcare can easily become too expensive to justify working to begin with. This cost is especially sharp in an age where extended families no longer live in close proximity. I think out society has lost a lot of the benefits of more communal family living arrangements that spread the costs of things like childcare.

    There's a cause-effect tension here. Workers are mostly badly paid. If we want to pay them more, then childcare becomes more expensive. When childcare becomes more expensive then more people will be forced to quit their jobs or find some other alternative. So there are tradeoff's and it's the "market" that determines where the equilibrium is by balancing what people are willing and able to pay for childcare vs what compensation workers are willing to earn (ie, if compensation goes too low, no one will work those jobs).

    Now, enter government. Suppose government decides to subsidize childcare so that, in theory, workers can be paid more and at the same time, childcare costs consumers less. Sounds like a win-win. The subsidy is spread over the tax base so the cost is small and mostly invisible. Government already does this to a limited extent through the tax code and some other programs in various states (and government also regulates in other ways by mandating minimum child-provider ratios, for example). Ideally such a policy results in more people able to work with greater income at the expensive of a marginally-greater tax burden on society. Again, sounds like a great deal. However, translating the theory of subsidizing childcare into policy is not so easy. How exactly does government intervene to achieve the desired result? What is the appropriate level of government for the intervention - local, state or national? What about the negative side-effects of various options, both foreseeable and unforeseeable (for example, subsidizing child care would indirectly subsidize having more kids - is that good or band and what effects will that have long-term?). How will the policy affect all the other policies out there since childcare doesn't exist in a vacuum?


  25. My point is that I'm not necessarily opposed to these kinds of government interventions, but I will always be skeptical of government's ability to actually bring about the intended effects (not that "skeptical" does not mean "declaring it to be impossible"). I think much of the time the Congress, technocrats and wonks who design these policies don't adequately understand the complex systems they are trying to change. There is also the issue of influence and the inevitability that the final policy will be influence by political interests. The result is too often policy that doesn't do what it was intended to do while bringing along all sorts of unintended bad consequences.

    Now, before people jump all over that, I'm not advocating for no government intervention or for so-called "free market" ideology (which is a meaningless term IMO). Actually, I think government intervention is necessary in many areas. The problem, as I see it, is that interventions aren't well thought out and implemented. The proposals are often too complex and vulnerable to gaming and loopholes. That's great for lawyers and those with special knowledge to exploit the system, but it's not so great for the public. We also have a lot of legacy interventions that have entrenched constituencies but are probably not appropriate today - that's a nontrivial problem IMO. So frankly, I see too much wishful thinking about what policy and government can actually do as opposed to what it can theoretically do.

  26. Jim,

    I have the same feeling. I'm perfectly willing and able to fulfill my duties in the guard (soon I'll be back in the reserve) but I don't want to be a war pimp either. I really do enjoy intelligence work and it's the main reason I keep my foot in it, but I am burned the fuck out on these wars.

  27. Jim,

    Your comment reminds me of the husband of a close friend to my wife. He was an interrogator in the Army and got out of the Army right around 9/11. They converted and became Mennonites. He was getting cold-call offers of $250k a year and he turned them all down. Instead he works in a local general store.

  28. Sorry for the quadruple post, but I read this earlier today and thought it relevant to the discussion at hand.

  29. Andy-

    Government can do little that the population at large does not generally support. As my high school US Government teacher would say, "Values cannot be legislated. People may comply with a law, but that does not mean their values have changed, only their observed behavior." America is not a culture of individual sacrifice for the collective good. Never really has been. We exist for "Life, Liberty and the Pursuit of Happiness". Those are individual rights, not any notion of collective well being. There are many among us that really think a collection of self-serving individuals is a "society". Until "Strength in numbers" does not pertain to bank balances, we will continue to see the bulk of our fellow citizens stuck in neutral, while the rich get obscenely richer.

  30. Andy: I tend to agree with you about "government intervention"; it's nearly impossible to "manage" economies intelligently - there's just too many variables, and I don't know anyone smart enough to really do predictive multivariate analysis well.


    The alternative is to return to the pre-regulation times of the Triangle Shirtwaist fire and kid-warehousing...or even kids having to go to work with their parents. Let's try and be fair; for all that you say that government intervention has all these "unintended bad consequences" the good really does outweigh the bad; things like safer workplaces, liveable hours, reduced pollution, decent childcare, a huge decrease in poverty among old people...this stuff is not nothing. And I have absolute confidence that, unchecked, capital and industry would have taken generations to come anywhere close to where we are today, if they ever did. The 19th Century is a pretty-much unbroken legacy of defeats for the working folks. Only after the beginnings of the Progressive Era did things start to change. Government "interference" has brought us a lot of the things we take for granted today.

    That said, I think we're coming back to where we were on the "Arc of a Diver" post; in a "closed" industrial economy with adequate resources and a reasonable management plan for them you can maintain a fairly high level of economic "good" for a fair number of people.

    But we don't have that.

    Instead we have:

    1. An economy that has roughly doubled in overall wealth in the past 30 years...but where has that wealth gone? The bottom 90 percent of Americans about $280 more per year than they did thirty years ago; +1 percent. Families are doing somewhat better but that’s only because so many families now have to rely on two incomes. The richest 1 percent’s share of national has doubled – from 10 percent in 1977 to over 20 percent now.

    The richest 0.1 percent? Tripled. The 150,000 households that comprise the top one-tenth of one percent now earn as much as the bottom 120 million put together.

    Combine that with

    2. An economy that has been opened (through changes in tariffs and technology) to competition - not WITHIN the U.S. but - with economies with MUCH lower overall costs and wages. That's a guarantee that the pressure on that 120 million isn't upwards, it's downwards.

    So to return to seydlitz's riverboat analogy, we're talking THREE riverboats, and the third one is a Panamanian flag operation, stuffed to the gunwales with flammable cargo, crewed by desperate lascars paid in rice and fish, but offering the gamesters a 500% return on their investment. So what is the American shipowner going to do? Insist that the savvy consumer will choose the safer, more reliable vessel? Or start tossing out the marine safety manual and figuring on an insurance scam to pay himself when the fucking firetrap runs around and burns racing the Panama Hattie into Memphis?

  31. Chief,

    The alternative is to return to the pre-regulation times of the Triangle Shirtwaist fire and kid-warehousing...or even kids having to go to work with their parents. Let's try and be fair; for all that you say that government intervention has all these "unintended bad consequences" the good really does outweigh the bad

    No, that's not the alternative. This isn't an either-or, black vs white proposition and I think you're setting up a false choice - acceptance of the "mostly good" status quo or a return to the 19th century. That dichotomy doesn't allow any room for improving the current system much less considering alternatives.

    There is also a big difference in kind, which I should have made more clear: Regulations mandating safety standards for childcare facilities are not the same as regulations or policy designed to make childcare affordable (those two goals may work at cross-purposes). Government MUST be involved in some way with the former type of activity; whether it should be involved in the latter is a value judgment but the two are certainly related. This goes back to what one believes is the proper role of government and on that question there is no national consensus.

    As for the rest, read the link I posted earlier, it addresses some of your points. I'm not convinced the analysis is correct, but I think the basic arguments are compelling.


    Sure, I agree you can't legislate values, yet we still do it all the time. Politics is all about competing values, is it not?

  32. Thread's going rather nicely . . .

    Anyway, had a party at my place tonight. Ya'll were all invited . . . Mostly British ex-pats showed up though . . . with a Canadian, one US Southerner as host along with a Dutchman . . .

    I'm thinking along the lines of Weber's Protestant Ethic . . . perhaps a summary and an up-date . . . but first with a bit of bush to clear . . .

  33. Postscript added: a lengthy quote from the conclusion of Max Weber's "Protestant Ethic and the Spirit of Capitalism" of 1920 (the Stephen Kalberg translation with a couple of slight changes.) I find Kalberg's handling of PE to be very informative . . .

    I think Andy may notice something in regards to the quote . . .


    What is "uneducated"? Lacking a degree in the subject field? I have no degree in strategic studies and I have academics posting my work and coming to me for advice. I have no degree in sociology, and I talk about Max Weber all the time, in fact there is no such thing as a degree in Weberian sociology, most of what passes for sociology today, Weber (one of its "founding fathers") would have a hard time recognizing as his progeny . . . You're an autodidact like me and others here, our ideas stand or fall on their own merit, not on the support of a sheepskin . . . nothing against academics mind you . . .

  34. Just to make clear: the nice enough to "post" my stuff, and the "coming to me for advice", academics are two distinct groups . . .

    This of course is Weber's "Iron Cage" quote . . .

  35. "Chief talks about "securing needs" at the beginning of his post, but that's more human focus and motivation than economy. If I'm dying of thirst, I'm not going to be looking for entertainment, but water, which doesn't necessarily require an economy at all, let along $$$." In my previous post, forgot to point out the obvious. In your scenario, you simply revert to Maslow's 1st level. Obviously, @ each level your demand curves change. Again, it is all about economics, which is all about scarcity.

  36. Anon: Again, it is all about economics, which is all about scarcity.

    Now, I would ask you to define "scarcity". Is routine healthcare naturally scarce, or economically scarce? I would offer that is is an artificial scarcity created by the massive wealth that can be generated by high prices. In short, an advanced society has more than sufficient resources to provide a reasonable public health service, but that would mean that the poor would have the same access as the rich, and that just doesn't cut it. As Ron Paul recently claimed, "Health care is not a right. It must be earned." Thus, we create artificial service scarcity in health care with neat little tricks such as "Concierge Medicine".

    Yes, when we speak of certain resources, there is indeed finite quantities, even though in some cases, such as oil, the champions of individual liberty refuse to admit it. But much of our so called "scarcity" is about allowing far beyond basic or even moderately plush desires (i.e. greed) to trump all else.

    I have to chuckle about Americans discussing Maslow's "Basic Physiological Needs". Most who discuss them have never come close to being so poor that they could emerge to motivate their behavior. Great abstract thought, but no concrete experience. Even Maslow himself knew it was totally abstract to virtually all who read his work.

  37. Anon's and Al's comments on Maslow got me thinking . . . the original paragraph in my post that Anon commented on is the following . . .

    -Exactly what the economy is hasn't been defined. Chief talks about "securing needs" at the beginning of his post, but that's more human focus and motivation than economy. If I'm dying of thirst, I'm not going to be looking for entertainment, but water, which doesn't necessarily require an economy at all, let alone $$$.-

    Chief introduces Maslow's pyramid to describe needs, which is fine and fitting since US business management has been using it since perhaps the mid-1950s, something that was originally - as Al points out - an abstract framework for psychologists. I'm not arguing the validity of Maslow's concept, although putting sex at the same level as eating and breathing probably tells us more about the American high achievers who were the usual subjects of Maslow's studies, than humanity in general.

    So, what's my point? I live in a very traditional culture. Northern Portugal goes back a long way, has one of the most homogeneous cultures/ethnic backgrounds in Europe. They don't particularly like change and are very slow to adopt to change. Modern notions of business/economics/society in general are resisted. They are falling behind the rest of Europe "economically" for this very reason, but what some see as weakness others see as strength, especially should this whole globalization experiment go south.

    So, if you're thirsty in Northern Portugal the answer is social interaction (where's the nearest spring?/Do you have any water?) and not "economics", in fact looking at it from this perspective would be needlessly complicating the issue, thus "which doesn't necessarily require an economy at all, let alone $$$".

    Imo what Anon's perspective actually shows is the relentless rationalization of the "economy" (which for me is very much more a social interaction) along economic lines, where in fact all human activity becomes calculated, measurable, ends to means rational, in other words "economics". This is precisely Weber's argument and this particular rationalization provides a large element of the "iron cage" . . .

    More to follow . . .

  38. Andy: Your link was about technologic innovation. Not sure I understand: how does this relate to regulation of commercial activity? Most regulations are designed to prevent the recurrance of some sort of tort; death, injury, fraud...the increase in technologic innovation might be regulated, but only if (as in the case of electronic transactions which allowed others to access your personal financial information) it led to increased hazard.

    My point was (and is) that most regulation has produced benefits in excess of harm. Not sure how the link refutes this.

  39. Seydlitz,
    I am not a autodidact- thats illegal in these neck of the woods.
    As for maaslows heirarcy and your cmts on Amies not knowing poverty- well you shoulda seen coal miners company houses when i was a kid.

  40. Actually, Maslow himself admitted that 99% of Americans could not envision what it was like not to have "Basic Physiological Needs" not fully satisfied, and was unable to offer a way to describe it.

    Several years after his death, a colleague of his had an experience that approximated how a basic physiological need could blot out virtually all other thought and needs. Driving on a toll road about 25 miles from the next exit, he found he had a powerful need to defecate. Not only was it the longest 25 minutes of his life, but he realized that it was all he could do to concentrate on driving the car, no less think about the matters he had been previously focused on. I'm sure each of us has had a similar experience. Now, translate that 25 minutes in to days, weeks or months of not being able to satisfy a basic physiological need such as food, clothing, shelter or escape from pain. Do you think you are going to worry about seeking satisfaction of the next level of need? People who cannot address basic physiological needs are more than just poor. They are destitute and without a path out of same.

  41. Chief,

    The link was more about the state and trajectory of the economy as a whole, about cause and effect, not regulation. Sorry for the confusion.


    That's an interesting quote, especially considering when it was written. Contemporize the writing style and it would surely fit today.

    I do think, however, that there is a distinction between capitalism and consumerism and when I read that passage it's consumerism I think of. Capitalism is a bit further up the hierarchy IMO. To me, capitalism is the system in which we operate - paraphrasing Mao, it's the water in which we swim. As individuals we don't have much choice or opportunity to change that system except at the margins, particularly in the US where federal power is more limited. Within that system, however, we do have a choice along the continuum between consumerism and asceticism, and it seems to me that we Americans are overwhelmingly biased toward the former over the latter. I think traditional cultural values serve to check consumerism in many parts of the world but consumerism in the US has become the "traditional" value. Witness the baby boomers, who are the poster children for consumer culture.

    I do think, though, that capitalism does encourage and enable consumerism (to such an extent that even "tradition" is a commodity to be consumed), but I don't think it's determinative.

    "Sustainability" is a big theme of mine. I complain a lot about unsustainability; probably too much, but it's hard for me to ignore. I have to wonder if the unsustainable practices that I believe I see in the US are really just signals for a culture that is unsustainable. I mean, how long do we Americans think we can keep this "have it all" culture up?

  42. Andy-

    Consumerism is the ultimate dream of capitalism. There is no growth potential in "sufficiency". A pure "needs satisfaction" based economy can only grow with population. A "wants and desires satisfaction" based economy has much greater business potential. Where we become unsustainable is when business' profit "wants and desires" result in the excesses we recently saw in the mortgage business. We are, by the way, still scratching the surface in the wanton and reckless excesses that came into practice in the mortgage industry. If and when "The Rest of the Story" is ever known, I am confident it will be ugly. The total collapse of accurate recording keeping found in MERS, in order to speed up and reduce costs (and thus increase profits) is shocking.

    Yes, I would tend to agree that the unsustainability is in a great measure cultural. Are there enough resources in the world to meet and sustain "The American Dream" for 300 million people, or is it really just a dream? But then, isn;t the goal of Marketing to stimulate dreams and then offer products to fulfill them?

  43. Anyway, so here goes with first comment on Max Weber's PE & SC . . . I only wish to do it justice. I find this argument very applicable to a lot of what we have been discussing on various threads.

    First off, I think we need to understand that Weber makes a distinction between "traditional capitalism" which is global and goes back a long time, and "modern capitalism" which started in the West and has spread throughout the world. As Stephan Kalberg writes in his introduction to Weber's classic (xvii-xviii), "Capitalism, as involving the exchange of goods and calculations for profit and loss balances in terms of money, has existed in civilizations in all corners of the globe, from ancient times to the present." Now this calculation might have been quite primitive and involved guesswork, but a calculation of income and expenses did take place with the goal of profit.

    Compare this to Weber's view of modern capitalism: "a relatively free exchange of goods in markets, the separation of business activity from household activity, sophisticated bookkeeping methods, and the rational, or systematic, organization of work and the workplace in general. Workers are legally free in modern capitalism rather than enslaved. Profit is pursued in a regular and continuous fashion, as is the maximization of profit in organized, productive businesses". There is also the high probability that profit will not be spent for pleasure, but will be re-invested in the business to make it ever more efficient/productive.

    A short example will suffice to indicate the differences. A traditional enterprise would be run by the owner for profit, but more on a case by case basis. Opening hours could vary as to how the owner feels. Sellers/Customers are treated according to their individual relationship with the owner. Transactions could be handled in a variety of ways: cash, trade, credit, reciprocity or whatever agreeable to the owner. Record keeping might be quite haphazard. The owner has his set ways of operating, probably inherited and would not think of changing anything. The business's goal is to provide livelihood and profit as well as maintaining a certain status within the community (although this could vary much according to culture). Profit is not saved or reinvested in the business but spent on personal necessities/pleasure.

    The modern capitalist enterprise would be different in every respect. How to explain this revolutionary change? It is much more than what Weber calls the "economic form" or economics, but rather due to a new economic ethic "a particular frame of mind that strives systematically and rationally in a calling for legitimate profit" or simply the "spirit of capitalism".

  44. Seydlitz-

    One of my organizational behavior undergrad profs said the three primary objectives of a business should be:

    1. A reasonable quality product/service at a fair price.
    2. Stable employment at a fair wage
    3. A reasonable return to the community.

    Making a profit is only a means to achieve the above indefinitely, not an end in itself.

    Needless to say, the profs in the accounting department thought he was nuts, as none of his goals could be quantified with their tools, but were actually dependent on a qualitative outside judgment. The org beh prof said that perhaps we'd all be better off if the accountability was not merely to the owner/stock holder, as is the case with profits alone, but to the community.

  45. I think the issue of sustainability comes up in relation to modern capitalism because one thing that happens when your economy gets large enough to transcend local limits/boundaries is that you almost immediatly begin to lose the link between the immediate benefit in profit and the long-term risk in damage to the locality.

    Think of it in military terms. A company commander has to balance the accomplishment of the mission with the welfare of the troops; while he understands that the mission comes first, if he spends the troops' lives (or health, or comfort, or trust) wastefully he risks not being able to accomplish the mission, either - or, more likely, accomplishing today's mission but destroying his company in the process, making tomorrow's mission - and all the rest - losses before they occur.

    But his division commander doesn't see it quite that way; he may not understand the effect of his orders on the company, or he may not care. One of the real issues that Vietnam exposed was the "squad leader in the sky" problem, where a battalion or brigade commander would call down and order a platoon or company "Go this way now" without understanding the terrain or the enemy, and would get the unit decimated for no gain.

    Or, even worse, if the higher commander has NO real attachment to the unit at all - a battalion commander in Korea with a Ranger company attached to him. The Rangers aren't his troops, they're not his he may be tempted to just waste them when he gets in a jam.

    Thus especially with things like "free" resources; air, water, forests, pastures, people...large corporations, run for the benefit of distant stockholders, have no real incentive to be conservative of these. They're the Ranger company - if they get wasted, who gives a fuck? Not the stockholders; they just want their 9%. Not the executives; they just want the bonuses - and for those, they need the 9%.

    So capitalist or consumerist, I'd argue that the problem is as much or more one of scale as one of culture. Almost any economy will respond poorly and weakly to local problems as the overall scale increases.

  46. And let's not forget that, like the most expendable private walking point or forced to unmask first, that most low-end jobs aren't just poor-paying; they're also nearly always dangerous or demeaning, tenuous, grinding, miserable ways to put (what) food (you can afford) on the table:

  47. PE & SC comment 2-

    Two things I want to bring out in this installment. First is that we are dealing here with an "ideal type", which is Weber's basic methodological tool. Ideal types accentuate what is characteristic for the group involved, is in fact an unreal yardstick with which reality is then compared, leading to analysis. Ya'll have to be use to this from me . . . Both "traditional capitalism" and "modern capitalism" are ideal types. This does not mean that we are talking about "ideals", you could also have an ideal type whorehouse . . .

    Second, what was the "Protestant Ethic"?

    There are two aspects to this, first being for the Calvinist the "calling", that is organizing one's live according to "God's laws" and bearing witness to His goodness though this action, this way of life. At the same time, the Calvinist believing that only a certain number are "select" tries to recognize "God's grace" through the success of his actions. Thus, success in business could be seen as "God's blessings" on his select . . . We see very much the pure Christian concept here with the total emphasis not on success in this life, but rather on salvation in the next. At the same time the select were expected to build "God's kingdom" here on earth.

    Weber goes to some length to show that Lutheranism and Catholicism are not included in this very specific ethic, actually had contradictory elements to it. I think in time though both, or rather the former and "northern European Catholicism" became part of the social carrier group, but more on that later.

    That basic argument is that the Protestant (expanding over time to include other Protestant sects besides the Puritans) was very motivated by religious concerns to participate in capitalistic enterprise, but not with the motivation to make a profit and be a material success, but rather as to achieve an indication of God's grace, of proof of one's own status before God . . .

    Now, consider the fragments of this notion still rattling around in our attitudes towards material success in the market today and how it allows for a certain self-righteous callousness which is otherwise inexplicable . . .

    More to follow . . .

  48. Seydlitz: but not with the motivation to make a profit and be a material success, but rather as to achieve an indication of God's grace, of proof of one's own status before God . .

    Which, at it's core, is very easily co-opted into a highly, if not totally egocentric philosophy, which has indeed happened. Rather than face the "uncertainty" of standing before the Judgment Seat at the Second Coming, as was the belief for the first 1,500 years, that judgment can be materially demonstrated here and now to one's self and all around through material evidence in life. Thus, any sociocentric imperatives melt away, and self indulgence becomes a sign of virtue and "grace".

    Not making a case for any religious belief, but commenting on the dramatic shift in focus following Calvin.

  49. Al-


    PE & SC Comment 3-

    So we have "Puritanism" (since it included other Protestant sects as well) giving birth to the "Protestant Ethic" whereby the purpose of life on earth was to live according to "God's laws" by way of a calling which served the establishment of "God's Kingdom" on earth. This allowed for a meaningful total relationship between and among the community of believers which regulated not only family, and social, but also economic relations. By Benjamin Franklin's time the PE has spread from small Protestant sects to entire communities in New England, Holland and parts of Britain. Kalberg writes that Protestant families became the "social carrier" for the PE. "For this reason, these values remained central in childhood socialization even as a gradual secularization occurred. Parents taught children to set goals and organize their lives methodically, to be self-reliant and shape their own destinies, to behave in accord with ethical standards, and to work diligently. They encouraged children to pursue careers in business and see virtue in capitalism's open markets, to seek material success, to become upwardly mobile, to live modestly and frugally, to reinvest their wealth, to look toward the future and the 'opportunities' it offers, and to budget their time wisely" (xlv).

    Concerning the definition of social carrier, Kalberg writes, "Ideas are important causal forces of historical change, for Weber, but only if they are 'carried' bd demarcated and influential groupings, strata, and organizations (Calvinists or a middle class, for example). Weber wishes to know in PE what groups carried specific types of vocational ethics. A central concept in Weber's sociology. (lxxx)

    So to bring us up to the present, 16th Century Calvinism represented by individual sects passed the PE to 17th Century Churches and sects and on to 18th Century communities. This was passed on in diluted form (an "affinity" remaining) to the 19th Century industrial revolution and finally 20th Century industrial society. During the 19th and early 20th Centuries we see Lutheran and Northern European Catholic communities acting as social carriers of this idea as well (my view).

    In the end (let's set the date at circa 1917) we have the secular "spirit of Capitalism" but with religious elements which still provide people with important meanings as well.

  50. So, it's been a few days and I've been thinking about the conclusions I've drawn from this thread:

    First, imo the riverboat analogy does a fairly good job in describing what passes for the US economy today, that is more the nature of an increasingly ramshackle scam job than a social system providing for goods and services. In other words as the system deteriorates further the scam element only becomes more predominate and obvious.

    Second, Weber's PE & SC thesis does an adequate job in describing the religious base of modern capitalism, but at the same time provides us with a "yardstick" with which to measure how much has changed since circa 1917.

    Third, increasingly the social nature of the economy has been replaced with the ends to means rationality of economic, an attempt to make this particular social system into a "science" with all the attendant confusion and false assumptions/conclusions. This is not to say that "economics" does not exist, but simply that it is one (the instrumental rational) element of a much more complex social system.

    Finally . . .

  51. Finally I agree with Andy's comment as to how Weber's quote reminds him of consumerism. If we think of Weber's Spirit of Capitalism as still existing in 1917, what best describes the changes in modern society since that time? Consider that the Spirit of Capitalism was transferred within a social carrier to society in general, with the social carrier in 1917 being the middle class family. This would not btw limit this to the middle class, since many "working class" families could also aspire to middle class status. The point is that these values were transferred within families from parents to children with the parents being supported by churches, schools, an extended family, and the larger community in general . . . that is in 1917.

    Starting in the 1920s with modern advertising and the beginning of consumerism, we see a significant shift from the value focus of the Spirit of Capitalism to the notion that consumption actually defines us as individuals, we are in essence what we buy. Also "freedom" is reduced to consumer/investment choices, which explains the role of $$$ in US politics today.

    So consider today in this line who is it as a group that most influences young people today in terms of how they see the economy? Their parents, of the advertising industry which bombards them with "information" every day? In fact it is very likely that their parents share a consumerist-focused view as well, since most grew up with TV advertising as children themselves . . .

    Since the consumerist view is all about the individual, each individual in turn is OK with the "riverboat economy" assuming that they too might "strike it rich" . . .

    This all feeds into a much larger pseudo-world which is solely based on corporate-generated images and notions of "freedom" and "empowerment" reduced to consumerism, since that is where the profit comes. The whole basis of our collective worldview is thus built on very shaky ground, lacks the social carrier element which had brought us to this point in 1917 and maintained communal/social stability (not to mention "meaning") in the past.

    In other words, imo, when this baby implodes we will be hard-pressed to replace it with anything else, which means it highly likely that people will be open to anything promising a return to the unreturnable . . .

  52. Seydlitz89,(Mar7,6:21am), Writes ,"I'm not arguing the validity of Maslow"s concept,allthough putting sex at the same level as eating & breathing probably tells us more about Amer. high achievers who were the usual subjects of Maslow"s studies, than humanity in general." Actually not. There"s nothing new or culturally specific to this concept.This is not specific to "high achieving Americans".Is universal.The ancient Hindus, & other ancient eastern folk,wrote/spoke of this. In their mysticism they have what are called chakras.Chakras are essentially spiritual/energy centers in the body.In the main eastern mystical systems there are 7 chakras (same # as Maslow"s hierarch). Each chakra can be seen as corresponding to a level/plain of consciousness.The lowest, or base/root chakra is associated with sexual energy & base needs. Here"s the quick,succinct,Wikiped explanation of this base/root chakra called muladhara. "Muladhara is related to instinct, security, survival and also to basic human potentiality. This center is located in the perineum, which is the region between the genital and the anus. Although no endocrine organ is placed here, it is said to relate to the gonads and the adrenal medulla, responsible for the fight-or-flight response when survival is under threat. There is a muscle located in this region that controls ejaculation in the sexual act of the human male. A parallel is charted between the sperm cell and the ovum where the genetic code lies coiled and the kundalini. Muladhara is symbolized by a lotus with four petals and the colour red. Key issues involve sexuality, lust and obsession. Physically, Muladhara governs sexuality, mentally it governs stability, emotionally it governs sensuality, and spiritually it governs a sense of security." Hence,whether we"re talking chakras,or Maslow"s 1st level, we"re talking your basic fight, flee, or fornicate response. Obviously, this isn"t specific to modern Amer. ubermensch/businessmen/capitalist. It"s universal across cultures,time & even species. Just your basic primal life force. As the book of Ecclisiastes says,"there"s nothing new under the sun". to be contd

  53. Seydlitz89, you & Aviator47 wrote that Maslow"s hierarchy is just an abstract model.Of course it is. No dispute there. However, aircraft, skyscrapers, bridges etc are conceptualized, designed, engineered in beginning using abstract models. I'm not a Maslow shill. Last time i spoke, wrote, or even thought much about him was probably for some school test, way back in the day. I only used Maslow"s model, & the fictionalized account of someone dying of thirst cuz you brought it up. I was giving a narrow response to your scenario. My focus there was on econ. alone cuz the title of your piece was "What is the Economy". How politics, culture, sociology, individual psychology effect econ. wasn"t my focus here. Thought it helpful, when asking "what is the economy", to define what economics is. This way we all know what we"re talking about. Obviously, words have meaning & consequences. If we use words willy nilly without regard to their meaning, then thoughts & concepts become muddled. Also,none of the cultural/societal referances you gave are mutually exclusive to the definition of economics i gave. For ex., consider that definition of economics, "the relationship between ends & scarce means which have alternative uses. Note, this says nothing about what those ends should be or how to employ the scarce means. That"s the realm of politics, informed by culture, society, values etc. Consider your example of N.Portugal. You are just describing how they answer the ends/scarce means with alternative uses question. This leads to a key econ. concept, that of opportunity costs. to be contd

  54. Man lives in a world of scarcity & death. Man exists in time.Man"s time is finite. He only has x-amount of breaths/units of time to expend. This means that all of man"s actions/choices have opportunity costs.For ex every minute you spend,say,blogging, is a minute you'll never get back. It's a minute you could"ve spent working as a laborer for a wage, digging a well, trying to learn to play an instrument, taking a nap,planting a garden, trying to find a cure for cancer etc.On a macro level, for ex.,every $ spent on,say, a NASA program could peraps be bragged about achieving x-results.But,question should be @ what costs? What were the alternative uses?(remember, it"s beyond my scope here to consider what the right/proper answers to ends/means question. just trying to consider the relationships). Hence @ it"s most basic, it's all economic decisions dealing with ends & allways @ least the 1 prime scarce resource for man,time. Time is money. Hence,like it or not, we"re all economic man & liking ain't got nothing to do with it. contd

  55. Seydlitz89, writes, "economy" (which for me is very much more a social interaction) along economic lines," I'm actually sympathetic to that outlook. Again, nothing i wrote is mutually exclusive.My intent was to simply define what econ is. If you or others wanted to pick up the ball & tie in politics, culture, sociology etc, fine. Btw, your stated perspective above is seemingly most congruent with Austrian econ. school. Most @ odds with Keynsians & Monetarists. The former also criticize the latter 2 for an over reliance on mathematical models. Also, in re. to your last paragraph in that comment, i never said ends have to be rational, calculable.

  56. Btw, Forgot to mention, great blog. Find the discussions thought provoking. I'd like to jump in them more. It's unfortunate that my blog time is limited.

  57. Aviator47, Mar7, 1:39AM, WRITES,"Now, I would ask you to define "scarcity". Is routine healthcare naturally scarce, or economically scarce? I would offer that is is an artificial scarcity created by the massive wealth that can be generated by high prices. In short, an advanced society has more than sufficient resources to provide a reasonable public health service,..." If you"re saying that politics,amongst other things, can exacerbate natural scarcity, i"d agree.

  58. Just noticed that the 1st part of my comments from Mar 18 no longer appear.

  59. I visited several websites however the audio
    feature for audio songs current at this web site is in fact excellent.

    My site;

  60. Τhe nautіcal staг tattoos foг desiгe have been аssociatеԁ with the ѕailors.
    If you are thе spiritual or myѕtіc sort, why
    nοt creаtе a tattoo to cаll down the blessings of the
    gods on yoursеlf. If you arе among one of them you would alѕο like to
    go with thе trend.

    Alѕο visit my blоg ρоst: angel tattoo designs