Tuesday, February 21, 2012

Cullen Roche — "What Is The True Goal Of A Modern Society?"


Cullen Roche ventures into social and political philosophy with the question, What is the true goal of a modern society? This is a worthwhile discussion to have.

Read it at Pragmatic Capitalism
What Is The True Goal Of A Modern Society?
(Crossposted at Modern Monetary Realism)
by Cullen Roche

This is a pregnant question in that it underlies stating public purpose in terms of values, norms and criteria, which is the basis of policy formulation. Economic policy is a subset of national policy, determined on the basis of the interpretation of founding documents, culture and tradition, desired direction, and a vision for the future.

Different countries will answer this question in different ways, and different faction within the countries also. Different answers to this question determine the political platforms of the various parties in a liberal democracy.

Economics, especially macroeconomics, sets forth policy options for meeting objectives determined by national policy. Different approaches to macroeconomics determine different sets of policy options. For example, New Classicalism sets maximizing growth consistent price stability as its highest priority, whereas Post Keynesianism sets full employment along with price stability as its highest priority, along with achieving distributed prosperity consistent with available resources and sustainability.

12 comments:

Ryan Harris said...

I thought Roche invented the MMR to avoid this discussion?

marris said...

Do you think that being Post-Keynesianism requires being some kind of egalitarian?

Also, does being MMT require this?

[I'm personally not any of these... just curious.]

Matt Franko said...

TB,

I think Roche sort of got "kicked out" of MMT related to his view of the JG part. Probably feels a bit "jilted".

I wonder if his efforts are a somewhat significant part of a series of events that led to MMT being mentioned finally this last weekend in the WaPo? If so there is a debt there. Hard to tell.

Or if it was J Galbraith who called in a marker that he had with the WaPo? Again hard to say.

I for one would like to know why D Matthews was tasked to write it up? Was it independently deemed newsworthy thru some kind of WWW "MMT" word search analysis, which Cullen would probably key to? Or was there some sort of political "pull" at work independent of what Cullen has been doing online?

I personally think that the MMR folks are over-reacting a bit to the JG as far as it being unmanageable and inflationary. There are many people out there that need access to it.

To be FAIR to them, as implementation of a monetary economy BY DEFINITION CREATES UNEMPLOYMENT, we should all advocate for a JG, again TO BE FAIR from where I'm coming from..

Resp

Truth Squad said...

I don't think societies have goals, neither do modern ones.

Maybe that's the problem, the lack of goals and clarity and the fall in a nihilistic spiral of self-destruction based on failed ideologies which try to manufacture false goals (the current dominant one being the neoliberal thinking of that travesty that is "free-market state capitalism", enforced since 2 or 3 decades ago)

Who knows, we will find out soon or later.

Tom Hickey said...

@ marris

I wouldn't say that either PK or MMT set egalitarianism as a goal based on a value judgment. Their concern is with maintaining effective demand, which requires distributed prosperity in order to insure the income level needed for maintaining effective demand sufficient to purchase potential output at full employment without expanding private indebtedness, which risks financial instability.

Keynes is famous for wanting to "euthanize the rentier." What he meant was that saving decreases effective demand in aggregate, given the paradox of thrift. Rewarding saving is counterproductive, since it is investment that result in saving rather than vice versa, and increased investment is a response to rising effective demand.

Randy Wray: "Keynes insisted that the premium paid to those who surrender liquidity rewards no "genuine sacrifice," instead pays the rentier for fundamentally anti-social behavior. 8 He wanted to eliminate this reward and, thus, euthanize the rentier as a class.

In the modern floating exchange rate economy, this is done by setting the overnight interest rate at zero, with other rates established above this to reward risk-taking. Keynes optimistically foresaw euthanasia of the rentier over "one or two generations."

Three generations later, we actually have proceeded ever further down an alternative path that has resulted in exaltation of the rentier, with the share of national income going to the "functionless investor" rising on trend, with policy devoted to encouraging more inequality to induce more tax-advantaged saving, and with attempts to inflation-proof rentier income with Fisher-adjusted rate targets!

Tom Hickey said...

Oops. Forgot to include the link to Wray's paper.

A Post-Keynesian View of Central Bank Independence, Policy Targets, and the Rules versus-Discretion Debate

Tom Hickey said...

@ Truth Squad

Preamble: "We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence,[note 1] promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

Matt Franko said...

Tom,

" the premium paid to those who surrender liquidity rewards no "genuine sacrifice," instead pays the rentier for fundamentally anti-social behavior. "

Does that go for these zombies also?

http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

I think it would have to....

Resp,

Tom Hickey said...

@ Matt

Why are we paying interest to save in the dollar when we are trying to promote balanced trade? Doesn't make sense, especially when it is not necessary. IF they want to run trade surpluses, let them hold reserves instead of bonds.

Truth Squad said...

Tom,

That's what an old paper say, but in practice how does it work? In history there are periods where the people and even the establishment has common goals (a lot of times positive ones, others, not so much, for example wars).

Nowadays, in almost every developed nation, there is no goal beyond getting richer no matter what, corruption, power and amassing wealth is the ultimate endgame here nowadays.

Maybe some sort of catalyst is needed so the populations stops the bullshit and has real goals as nations, to increase welfare.

If you ask me, is about time we start sharing productivity gains, eliminate as much as we can dependencies on limited resources and learn to live without wasting the ultimate resource, time, working to amass paper wealth. In an era of automatization and mechanization inventing more endless bureaucracy (and I'm talking about private sector too, which has an huge deal of private bureaucracy and endless stream of bullshit) is not the answer. Add to that the spreading of wealth, which is a voluble concept, because wealth means quality free time spent in whatever you want with however you want. But without even covering basic needs this is yet out of reach, fixing the dynamics of money is a must first.

The big goal of our society should be to end all the frictions of the system to reach a healthy and happy society. Easier said than done.

Tom Hickey said...

Truth Squad: Maybe some sort of catalyst is needed so the populations stops the bullshit and has real goals as nations, to increase welfare.

The political catalyst for increasing economic welfare is social unrest. As you may have noticed from recent posts here, social unrest is rising globally. I expect this trend to continue at least until 2020 and increasingly shape the political process around the world. Especially as resource scarcity increases with growing global demand, e.g., cheap and abundant oil has already peaked, and the consequences of global warming becoming too noticeable to deny, prompting action.

The vise is closing on neoliberalism, or else neoliberalism will close the vise on political freedom in the name of economic freedom, i.e., the freedom of the ruling elite to oppress. This will be unfolding dynamic as I see it now. It's going to get increasingly intense.

Truth Squad said...

I posted this on MMR website, which applies to the discussion:

Golf and fishing are useful if they improve quality of life too. Anything that makes people live more full, healthier and in the end happier lives is good and that’s what the economy should be about.

Neither productivity, paper wealth, accumulation of goods or anything should be an end by itself. Now, free-market capitalism is, in theory allowing competition and freedom to develop things that make us happier.

But the question it’s if its done at the expense of what or whom, what improves happiness for one maybe makes other’s life harder. And this is where market-fundamentalists are wrong. If our society was sane it wouldn’t be over-medicated and so leaning to depressions and stress.

If we build golf camps at the expense of something else, or we amass wealth while dynamically (through worsening financial & labour conditions) making others poorer, is this sustainable?

Societies don’t have goals, individuals or groups of individuals do, but a whole modern civilized society does not have ‘goals’, because there is always a friction between what you get, what you could get, and what you would want to get, at the expense of others (time, wealth, whatever). There would not be a fix for a society where greed is infinity for each of its members, so the question is achieving a balance between each individual (or group of) greed.

Increasing chronic unbalances of trades is a perfect example of how individuals within society are abusing their position to feed their greed, accumulating savings (paper assets, exporters) or consumption (goods, importers) at the expense of others, that if continued can’t be returned. In the end what Lord Kaldor said is happening, everybody trying to live at the expense of others and a dysfunctional society. Maybe this is an economic sign that there truly is a lack of common goals, or at least a lack of agreement on what can and can’t be done (because that’s how a society can set up common goals, framing what can be done or not withing society).