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A.steve

Other Economic Paradigms...

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Over the past decade, we've experienced some extraordinary economic and monetary events... yet, on the surface, at least, everything appears to continue much as before. It feels as if the tangible effects from the political and economic situation only expose themselves in subtle ways - and, if one were disinterested, one might even fail to notice changes.

This left me thinking about the 'big picture' - wondering if civil society is (gradually) shifting towards some new paradigm... a 'new way of thinking' that will result in new ways of conducting one's life - with new kinds of opportunities and challenges.

Having identified this powerful, if ill-explained and inadequately researched idea... I turned my attention to the task of identifying any new paradigms... with the ultimate goal of forecasting their effects. A snag is that massive, global, monetary "stimulus" is unprecedented... which has prompted me to want to find out about other examples of significant economic paradigm shifts.

One of my first thoughts was "The USSR" - because (during the 20th century, especially) Russian civil society must have been very different to my contemporary experiences in Britain. I was recommended to read "The Russian Economy From Lenin to Putin" by Steven Rosefielde. It is interesting, but not quite what I'd hoped it would be - from the title... the economics it addresses is more 'textbook theorem' than 'colourful history.'

Can anyone recommend apt material on Russia? Are there other examples of civil societies which, either underwent massive changes - or, perhaps, are (or were) significantly different to the perspective one gets from the secular West? Am I alone in being inquisitive about such things?

Edited by A.steve

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Well, I`m sure it`s all going to kick off in a year or two but can`t see why you`re comparing it to the good old USSR. Can`t you leave those poor buggers in peace ?

 

Even brexit is more interesting....

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A.Steve is on to something. Are we de-facto communist now? With money being essentially free, there has been a great levelling among the lower orders. My savings bring me no benefit, and people without assets can still borrow, so there is no difference between people. The drug addicted, dog beating, council house dwelling psycho who lives near my mum now has a shiny German car.

This is all enabled by the patronage of our government and their ZIRP or NIRP. People with no job or low skilled seem to have incomes that rival mine.

There must be a big picture cause. Perhaps it is technological redundancy (which will only get worse)....there are certainly loads of non-jobs out there, even in the private sector. Perhaps these have arisen deliberately out of government legislation? Rather than Keynesian government central planning and the commissioning public works, we are encouraged to spend on entertainment or complete rubbish that we don't need...it's just a less wise way of keeping people occupied.

Meanwhile, the elite obey different rules and prosper, just like in all communist regimes.

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Those with little or nothing are now having to be given the means to obtain what they normally would not have been able to obtain, that is a promise to repay one day.....keeps those at the top forever wealthy....selling their wares and profiting today when today cannot pay.;)

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Those with little or nothing are now having to be given the means to obtain what they normally would not have been able to obtain, that is a promise to repay one day.....keeps those at the top forever wealthy....selling their wares and profiting today when today cannot pay. ;)

No, you have it wrong...everything is now free..so long as you're happy to have more debt.

Edited by TheCountOfNowhere

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If the new arrangement is no limit debt with no need to repay and no bankruptcy then savers will disappear overnight.

Sounds good - where does one opt in. Blimey it would be just like being a banker woohoo.

Edited by billybong

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A.Steve is on to something. Are we de-facto communist now? With money being essentially free, there has been a great levelling among the lower orders. My savings bring me no benefit, and people without assets can still borrow, so there is no difference between people. The drug addicted, dog beating, council house dwelling psycho who lives near my mum now has a shiny German car.

This is all enabled by the patronage of our government and their ZIRP or NIRP. People with no job or low skilled seem to have incomes that rival mine.

There must be a big picture cause. Perhaps it is technological redundancy (which will only get worse)....there are certainly loads of non-jobs out there, even in the private sector. Perhaps these have arisen deliberately out of government legislation? Rather than Keynesian government central planning and the commissioning public works, we are encouraged to spend on entertainment or complete rubbish that we don't need...it's just a less wise way of keeping people occupied.

Meanwhile, the elite obey different rules and prosper, just like in all communist regimes.

Why?

Your question could be simplified to is it cockup or conspiracy, and I think I know the answer.

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I always think that the abolition of slavery in The US as being the inflection point during the transition from 'muscle power' to machine power. That was a true paradigm shift. The subsequent decline of the rural society and the rise of the Industrial Age transformed the human condition in the leading economies. I suspect what we are now experiencing is that transformation beginning to reach its natural conclusion which will include the decline of full time paid employment for the masses. As usual the vast majority are oblivious as they are sated with modern day bread & circuses, while the elite are busy making out like bandits. As for predicting the future and profiting from it, that's a mug's game.

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`making out like bandits`.

I don't think that`s any kind of plan. I`d prefer being a council dweller, much safer existence.

(see `rise and fall of the Roman empire)

In fact `rise and fall` is the closest we`ve got.

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The current economic paradigm is essentially a return to the feudal system, with the Christian church replaced by capitalism.

That is, our feudal leaders preside over a feudal economy, but the moral justification comes from a nominally capitalist ideology of convenience, with economists as priests and 'the market' as father son and Holy Ghost.

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If you're looking for a new paradigm, the so-called Sharing Economy might be a revival of capitalism. Like Airbnb and Uber enabling millions of owners of capital to leverage it on a small scale for profit in new ways and for less effort than starting up a more traditional business. All based on a market much less corrupted and regulated than the banks have become. And with its low marginal costs, it should be quite resistant to interference short of outright outlawing.

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If you're looking for a new paradigm, the so-called Sharing Economy might be a revival of capitalism.

That is an interesting observation. LETS and local currency seem to have been in decline for a few years, whereas AirBnB & Uber are growing. The former was oriented towards exchanging skills and labour: the latter about putting capital work.

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That is an interesting observation. LETS and local currency seem to have been in decline for a few years, whereas AirBnB & Uber are growing. The former was oriented towards exchanging skills and labour: the latter about putting capital work.

The problem with local currencies is there's no real point. Noone actually benefits from them.

But the sharing economy certainly extends to skills and labour. You could argue that the Yellow Pages and similar directories, or the small-ads, are an earlier incarnation of it. Now there are lots of online sites in that space: in software development, find-a-freelancer sites have been around since sometime last century. And just look at the number of wannabes seeking to crowdfund right now!

I think the main point here is that, in the absence of barriers to entry, the "sharing economy" tends to become a race to the bottom. Find-a-freelancer sites are well known for it. Where there are high barriers to entry (e.g. serious professional qualifications), the "sharing economy" has yet to make inroads into more traditional means: I guess a more complex situation is less amenable to simplistic solutions, and linkedin is probably the most successful attempt. But where the barrier is simply capital (like uber and airbnb), it's kind-of a happy medium where something works.

Edited by porca misèria

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I would add tainters collapse of complex societies and jarred diamonds collapse.

The idea those references propose is definitely interesting... though it isn't quite the angle I'm considering.

I'm not anticipating collapse, per-se, but I am anticipating the importance of ideas, institutions and people, who were once considered very important, to wane - and for new ideas, institutions and people to replace them. I'm not expecting that the changes that will have most effect will be 'events' - but, rather, a steady transformation of 'accepted norm' from one paradigm to another.

I think that, if we consider the basis of the monetary system to have shifted significantly (with NIRP, ZIRP, QE and nation states acquiring commercial banks) that there will be considerable implications for the structure of civil society. While the specific, systemic, policy changes are unprecedented... I anticipate that there should be lots of documented precedent for what happens in the wake of fundamental change to political and economic foundations. I'm surprised that I'm finding it difficult to find out about them.

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A.Steve, you might find this link interesting:

https://europeanhistory.boisestate.edu/reformation/economics/overview.shtml

It deals with the transition from the Medieval economy c. 1200 to the 'modern' age c.1780. This period covers a number of 'transitions' and a number of economic shocks (e.g. New World and German Silver, Reformation, Agricultural Revolution) including periods of population growth and stagnation, inflation, as well as the reformation of course.

FWIW its my view that economic paradigms are just stories we tell ourselves after the fact to rationalise where we're at at any given time. No-one invents and follows a 'paradigm' for any length of time before the grinding gears of reality sweeps us all along the path of economic and social evolution they would have followed anyway. So on that basis I reckon your best bet is to look at the last big couple of transitions which are the Agricultural revolution in late 18th century and the Renaissance from the very late 15th century. Lots of grist for your mill there. Everything before that is a fairly monotonous (from an economic perspective) period of subsistence agriculture.

If you might like taking your history lesson in narrative form, I highly recommend Neal Stephenson's 'Baroque Cycle' trilogy which deals entertainingly (if you're the kind of person who likes reading 4 inch thick books about the Renaissance, that is) with the late 16th and early 17th century. It covers economic changes against a backdrop of Newton and Leibniz, industrialisation and war.

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I'm not anticipating collapse, per-se, but I am anticipating the importance of ideas, institutions and people, who were once considered very important, to wane - and for new ideas, institutions and people to replace them. I'm not expecting that the changes that will have most effect will be 'events' - but, rather, a steady transformation of 'accepted norm' from one paradigm to another.

That has happened in the UK within most of our lifetimes.

Consider two worlds. How did we move from one to the other?

  • You are (largely) defined by your job. You progress through life up the corporate career ladder, or equivalent such as civil service. If you have a good degree, you have a reasonable expectation of a fast track. On the other hand, it's rude to push yourself forward, and the word for (what we now call) entrepreneur is "spiv".
  • The career ladder is clogged up by people already somewhere above you, and opportunities for progression are much-diminished. "Dead mens shoes" has become dark humour for a system that is broke, clogged up, and creating ever fewer new opportunities. A new paradigm is needed, oldfashioned politeness is swept away, and the age of the entrepreneur is born.

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I think the main point here is that, in the absence of barriers to entry, the "sharing economy" tends to become a race to the bottom.

It could be argued that 'the race to the bottom' is itself the new paradigm that has replaced the previous order- what is globalisation if not a planetry scale race to the bottom in terms of prices, wages and regulations? Technology is facilitating this as you point out by elininating barriers to entry and allowing ever more people to compete on a global basis for work.

I have always been critical of the idea of vested interests protecting their territories via artificial barriers of any kind- so it's very embarrasssing to have to admit that I am one of those vested interests, but it's true. I voted to exit the EU, for example, in part because the idea of an endless stream of EU workers having the ability to come to the UK and compete with me for work was something I found threatening.

Does that make me a racist or a realist? I would argue the latter but I am sure others would disagree. But perhaps the more interesting question might be this; Is a 'pure' form of capitalism in which all barriers to entry are eliminated even a viable idea? To the Neo Liberals this is of course Nirvana- the perfect world in which perfect competiton leads to wealth and stabiity for all.

But the actual lived experiance seems to contradict this ideal- those industries that have been stripped of their ability to erect barriers to entry via technology seem to exhibit not a growth in prosperity for their members but a damaging dilution of their members ability to profit from their labour. This dilution effect is often masked by the emergence of a small number of 'super winners' who gain massive market share, but behind them are a growing number of marginal players who find that the sheer number of market participants make it impossible for them to achive the leverage required to extract a living from their work.

The point is that income has never been determined by effort or virtue, it has always been a function of power, of the abilty to enforce a claim on the wealth one's labour has created- this is why things like Unions were created- not to enhance the ability of workers to create wealth,but to enhance their ability to hang on to a fair share of the wealth their labour created.

In my view the Globalisation paradigm is a monster that is eating itself because it's core proposition that labour must at all times be exposed to the largest possible market discipine in the form of zero protections and barriers is creating a world in which stable well paid employment is becoming less and less obtainable- a problem made all the more acute by the fact that a Globalised deregulated financial system has created debt on an industrial scale- debt that must somehow be serviced by those same poorly paid insecure workers.

What seems to happing right now is that the Globalisation construct is collapsing due to it's own internal contradictions- but it's hold on the intellectual elites that run the world is so entrenched that there seems to be no new paradigm in the works to replace it- and those few voices-like Jeremy Corbin- who are critical of it are genuinely seen as being out of touch with 'reality'- reality being defined, of course, by those same intellectual elites.

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It could be argued that 'the race to the bottom' is itself the new paradigm that has replaced the previous order- what is globalisation if not a planetry scale race to the bottom in terms of prices, wages and regulations?

Bla bla bla. Yes of course it could be argued. Marx did exactly that.

Sadly, Marx was one of those fine armchair strategists with a great insight into a problem but hopelessly impractical proposals to try and solve it.

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Bla bla bla. Yes of course it could be argued. Marx did exactly that.

Sadly, Marx was one of those fine armchair strategists with a great insight into a problem but hopelessly impractical proposals to try and solve it.

I don't think the idea that Globalisation is itself the problem is as mundane and widely accepted as you seem to imply- as far as I can tell the notion that prosperity for all can be best achived by eliminating all barriers to labour, trade and capital flows is still the dominant paradigm- the 'deregulate to accumulate' meme is as strong as ever among the ruling elites- and it has worked out really well- for them.

And to be fair it's hardly a Marxist insight to observe that increasing the supply of a commodity will tend to reduce it's market value- so those who voted to stop the unlimited flow of migrant workers into their communities were not applying marxist principles, they were simply making the most crude of all capitalist calculations- that their market value was being eroded by the increased avilability of labour from the EU.

What the Brexit vote made explicit is the reality that Globalisation and the deregulation that faciitates it is great for those who can take advantage of it- but a disaster for those who can't. The fact that virtually every politcal party wanted the vote to be remain makes perfect sense if you consider the fact that those who run these parties are in the main made up of those who are winners in the globalisation game, the well educated and well connected.

Edited by wonderpup

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