Suchergebnisse

Milton Friedman už viac ako desaťročie nie je medzi nami, ale stále nás prenasleduje jeho duch. V 60-tych rokoch Friedman vyhlásil, že inflácia je "vždy a všade monetárnym fenoménom" – problém spočíva v tlačení priveľa peňazí. Odvtedy so železnou pravidelnosťou, vždy keď začne strašiť inflácia, určite sa nájde niekto, kto vyvoláva Friedmanovho ducha a obviňuje vládu, že má priveľké výdavky. Keby to však s infláciou bolo také jednoduché. Ako mnohé závery ekonomickej teórie, aj toto Friedmanovské myslenie vyzerá na prvý pohľad rozumne. Inflácia je všeobecný rast cien. A keďže ceny nevyjadrujú nič iné, len peňažné transakcie, keď je v obehu viac peňazí, znamená to, že ceny musia byť vyššie. Preto inflácia je "vždy a všade monetárny fenomén". Je smola, že pri podrobnejšom preskúmaní tohto fenoménu musíme toto myslenie zavrhnúť. Hlavný problém je v tom, že s infláciou narába ako s rovnomerným zvýšením cien. Toto je pohodlné pre teóriu, ale empiricky to nie je pravda. V reálnom svete je inflácia veľmi nerovnomerná. Napríklad v určitom čase si všimneme, že cena jabĺk stúpla o 5 %, ale zároveň cena áut o 50 %, pritom cena oblečenia mohla klesnúť o 20 %. Ak chceme pochopiť skutočnú podstatu inflácie, nesmieme študovať ekonomické učebnice, ale si musíme všímať údaje z reálneho sveta. Presne toto urobil začiatkom 90-tych rokov politický ekonóm Jonathan Nitzan počas svojej práce na PhD. Jej výsledkom bola dizertácia Inflation As Restructuring (Inflácia ako reštrukturalizácia). Nitzan si všimol, že v skutočnom svete sa ceny menia veľmi rozdielne, čo znamená, že vždy na tom niekto získa a niekto stratí. V dôsledku toho inflácia nie je len "monetárny fenomén", ako prehlásil Milton Friedman. Inflácia reštrukturalizuje sociálne usporiadanie. Práve táto vlastnosť inflácie je v reálnom svete najdôležitejšia, lebo jej pričinením inflácia signalizuje zmenu v mocenskej štruktúre spoločnosti. Podľa očakávania, práve tento jav z reálneho sveta ekonómovia hlavného prúdu ignorujú – do veľkej miery preto, že to nezodpovedá ich úhľadnej ...

Here are three stories about how the stock market works. The first story says that the stock market reflects the productivity of the underlying economy. When stocks go up, the thinking goes, everyone should celebrate because the tide of productivity is rising. This is the story that neoclassical economists believe. The second story is that the stock market is actually disconnected from the 'real' economy, fluctuating in ways that have nothing to do with actual productivity. Stock prices represent 'fictitious capital'. This is the story Marxists believe. The third story is that stock prices are neither about productivity nor are they 'fictitious'. They are about power. This is the hypothesis proposed by Jonathan Nitzan and Shimshon Bichler. The basic idea is that what capitalists really care about is not productivity. They care about income. Capitalists look at their income and then, through the ritual of capitalization, turn it into a lump sum — the capitalized value. [.] If great (capitalist) power does bring great fear, the systemic fear index ought to rise and fall with the power index — Bichler and Nitzan's measure of capitalist power. Looking at the United States, Bichler and Nitzan find that this is exactly what has happened. [.] Impressed by Bichler and Nitzan's findings, political economists Joseph Baines and Sandy Hager wanted to know if the results generalized beyond the United States. They assembled data to calculate both the power index and the index of systemic fear in France, Germany, Great Britain and Japan. Their results poured cold water on the concept of 'systemic fear'. [.] Intrigued by Baines and Hager's results, James McMahon (who cut his empirical teeth researching Hollywood) recently took another look at the idea of 'systemic fear'. He was able to assemble a dataset that was both wider in scope (including 12 countries) and had greater historical depth than anything used before. With this more expansive dataset, McMahon subjected the idea of systemic fear to a bevy of tests.

According to neoclassical economics, the most efficient way to organize human activity is to use the free market. By stoking self interest, the theory claims, individuals can benefit society. This idea, however, conflicts with the evolutionary theory of multilevel selection, which proposes that rather than stoke individual self interest, successful groups must suppress it. Which theory better describes how human societies develop? I seek to answer this question by studying the opposite of the market: namely hierarchy. I find evidence that as human societies develop, they turn increasingly to hierarchical organization. Yet they do so, paradoxically, at the same time that the language of free markets becomes more common, and culture becomes more individualistic. This evidence, I argue, contradicts free-market theory, but only if we treat it as a scientific doctrine. If instead we treat free-market theory as an ideology, the pieces come together. Free-market thinking, I speculate, may stoke the formation of hierarchy by cloaking power in the language of 'freedom'.

For more than a century, political economists have sought to understand the nature of capital. The prevailing wisdom is that there must be something 'real' – some productive capacity – that underpins capitalized values. This thinking, I argue, is a mistake. Building on Jonathan Nitzan and Shimshon Bichler's theory of capital as power, I argue that capitalization is an ideology. It is a quantitative ritual for converting earnings into present value. Although the ritual is arbitrary, it gives rise to astonishing empirical regularities, reviewed here.

Milton Friedman has been dead for more than a decade, but his ghost still haunts us. In the 1960s, Friedman declared that inflation is 'always and everywhere a monetary phenomenon' — a problem of printing too much money. Since then, whenever inflation rears its head, you can count on someone to reanimate Friedman's ghost and blame the government for spending too much. If only inflation were so simple. Like much of economic theory, Friedman's thinking appears plausible on first glance. Inflation is a general rise in prices. And since prices are nothing but the exchange of money, more circulating money means prices must increase. Hence, inflation is 'always and everywhere a monetary phenomenon'. Unfortunately, this thinking falls apart on further inspection. The problem is that it treats inflation as a uniform rise in prices. That's theoretically convenient, but empirically false. In the real world, inflation is wildly divergent. At the same time that the price of apples rises by 5%, the price of cars could grow by 50%, and the price of clothing might fall by 20%. To understand inflation as it actually exists, we must look not to economics textbooks, but to real-world data. That's what political economist Jonathan Nitzan did during his PhD research in the early 1990s. His work culminated in a dissertation called Inflation As Restructuring. In the real world, Nitzan observed, price change is always 'differential', meaning there are winners and losers. The consequence is that inflation is not purely a 'monetary phenomenon', as Milton Friedman claimed. Inflation restructures the social order. It is this real-world feature of inflation that is most important, because it means that inflation signals a change in society's power structure. Predictably, it is this real-world feature that mainstream economists ignore — largely because it conflicts with their tidy theory of inflation as a 'monetary phenomenon'. Fortunately, the evidence is clear. Inflation is (and has always been) overwhelmingly differential. Inflation is restructuring. Today, as inflation fears return and Friedman's ghost is resurrected, it's worth reminding ourselves of the real-world facts.

In his essay, Suaste Cherizola explores a puzzle in political economy — the neglect of assets. Why, he asks, do most radical political economists focus on commodities, when capitalists themselves care about assets? The answer, Suaste Cherizola proposes, owes to a bad decision made by Karl Marx. In formulating his theory of capitalism, Marx insisted that capitalism's 'laws of motion' must be grounded in production. The way to do this, Marx decided, was to focus on commodities — the things that workers produce and capitalists sell. Marx's obsession with commodities caused some embarrassing problems. It led him, for instance, to dismiss the stock market as 'fictitious capital'. (He saw stocks as a kind of 'false' commodity — something that had a price but was not backed up by 'real' production). In hindsight, this decision was dubious. Fictions aren't supposed to impact the real world. And yet the motion of the stock market dominates our lives. Something is amiss. Suaste Cherizola thinks the solution is to turn Marxist theory on its head. Rather than ignore 'fictitious capital', he argues, we should ignore the Marxist idea of the 'commodity'. The reason is simple. Commodities are a small subset of the things that have a price. When you use this small subset to explain everything in capitalism, weird things happen. You end up invoking 'distortions' to explain all the prices you've excluded from your theory. This 'distortifying' is standard practice in neoclassical economics. Sadly, it's also part of Marxism — an unavoidable consequence of Marx's focus on commodities. According to Susate Cherizola, "… once the commodity-form has become the basis of our understanding of exchanges, the other forms of economic transactions can only be considered as distortions or mystifications. … The 'commodity' thus becomes a theoretical fetish — a concept endowed with supernatural explanatory powers." A century ago, Marx chastised people for 'fetishizing' commodities — treating commodity exchange as a relation between things rather than a relation between people. But perhaps the true 'fetishism of the commodity', Suaste Cherizola proposes, is how Marxists have reified the commodity itself. The commodity's true 'secret', Suaste Cherizola argues, may be that it has nothing to reveal.

Some exciting personal news. In July, I will be starting a postdoctoral fellowship at York University. I'll be studying the hierarchical origins of income inequality [. . .] The basic idea of my research is that there is a disconnect between our working lives and how political economists understand the distribution of income. In our working lives, we have jobs within hierarchies and get paid according to our status. Everyone knows that's how it works … at least implicitly. But when political economists model the resulting distribution of income, they somehow forget about these hierarchies. Odd, right? I'm trying to build a theory of income distribution that doesn't forget about the hierarchical facts of life. Stay tuned for the interesting results to come.

For more than a century, political economists have sought to understand the nature of capital. The prevailing wisdom is that there must be something 'real' – some productive capacity – that underpins capitalized values. This thinking, I argue, is a mistake. Building on Jonathan Nitzan and Shimshon Bichler's theory of capital as power, I argue that capitalization is an ideology. It is a quantitative ritual for converting earnings into present value. Although the ritual is arbitrary, it gives rise to astonishing empirical regularities, reviewed here.

I recently had a lively Twitter debate with Jonathan Nitzan, Shimshon Bichler and Cory Doctorow about the future of big corporations in the United States. The debate was prompted by Doctorow's piece 'End of the line for Reaganomics', which I reposted on capitalaspower.com. Doctorow argues that we may be witnessing a sea change in the way governments treat big corporations. Since the Reagan era, the US government has taken most of the teeth out of antitrust enforcement [.] Jonathan Nitzan and Shimshon Bichler then entered the Twitter debate backed by their own research on corporate power. For their part, Nitzan and Bichler are less optimistic that the US government will seriously challenge the power of big corporations [.] Here's where I enter the debate. I am more optimistic than Bichler and Nitzan that the US government will challenge corporate power. The reason is that the COVID crisis has forced a drastic change in government policy. Let's have a look.

Although the determinants of income are complex, the results are surprisingly uniform. To a first approximation, top incomes follow a power-law distribution, and the redistribution of income corresponds to a change in the power-law exponent. Given the messiness of the struggle for resources, why is the outcome so simple? This paper explores the idea that the (re)distribution of top incomes is uniform because it is shaped by a ubiquitous feature of social life, namely hierarchy. Using a model first developed by Herbert Simon and Harold Lydall, I show that hierarchy can explain the power-law distribution of top incomes, including how income gets redistributed as the rich get richer.

Although the determinants of income are complex, the results are surprisingly uniform. To a first approximation, top incomes follow a power-law distribution, and the redistribution of income corresponds to a change in the power-law exponent. Given the messiness of the struggle for resources, why is the outcome so simple? This paper explores the idea that the (re)distribution of top incomes is uniform because it is shaped by a ubiquitous feature of social life, namely hierarchy. Using a model first developed by Herbert Simon and Harold Lydall, I show that hierarchy can explain the power-law distribution of top incomes, including how income gets redistributed as the rich get richer.

Free markets are, according to neoclassical economic theory, the most efficient way of organizing human activity. The claim is that individuals can benefit society by acting only in their self interest. In contrast, the evolutionary theory of multilevel selection proposes that groups must suppress the self interest of individuals. They often do so, the evidence suggests, by using hierarchical organization. To test these conflicting theories, I investigate how the 'degree of hierarchy' in societies changes with industrial development. I find that as energy use increases, governments tend to get larger and the relative number of managers tends to grow. Using a numerical model, I infer from this evidence that societies tend to become more hierarchical as energy use grows. This result is inconsistent with the neoclassical theory that individual self-interest is what benefits society. But it is consistent with the theory of multilevel selection, in which groups suppress the self-interest of their members.

Free markets are, according to neoclassical economic theory, the most efficient way of organizing human activity. The claim is that individuals can benefit society by acting only in their self interest. In contrast, the evolutionary theory of multilevel selection proposes that groups must suppress the self interest of individuals. They often do so, the evidence suggests, by using hierarchical organization. To test these conflicting theories, I investigate how the 'degree of hierarchy' in societies changes with industrial development. I find that as energy use increases, governments tend to get larger and the relative number of managers tends to grow. Using a numerical model, I infer from this evidence that societies tend to become more hierarchical as energy use grows. This result is inconsistent with the neoclassical theory that individual self-interest is what benefits society. But it is consistent with the theory of multilevel selection, in which groups suppress the self-interest of their members.

[Second of a two-paper series] Class struggle, Bichler and Nitzan observe, is a part of all hierarchical societies. But capitalism is the first social order to quantify this struggle. It does so through prices, which Bichler and Nitzan propose indicate power. Stock prices, Bichler and Nitzan argue, indicate the power of owners to earn income. If we're interested in class struggle, we want to compare this capitalist power to the power of workers. Here's a simple way to do so. We compare the price of stocks to the price of wage labor. Bichler and Nitzan call this ratio the 'power index'. My goal here is to test Bichler and Nitzan's thesis. Does the power index quantify US class struggle? Although a simple ratio of two prices, the power index, Bichler and Nitzan claim, tells us about class conflict at large. When the power index falls, workers are winning the struggle. When the power index rises, capitalists are winning. Is Bichler and Nitzan's claim true? In this post, I look at the evidence. I test how three different indicators of class struggle relate to the power index. Here's what I find. When workers strike more, win a living minimum wage, and get government to progressively tax the rich, the stock market declines relative to wages. My conclusion is that Bichler and Nitzan are onto something. The history of class struggle does seem to be written on the stock market. [The first paper, 'Stocks are Up. Wages are Down. What Does it Mean?' (September 4,, 2020), is here: http://bnarchives.yorku.ca/657/]