Geoffrey Harcourt (1931-2021)

7 Dec, 2021 at 20:57 | Posted in Economics | Leave a comment

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A great scholar has passed away.

R.I.P.

Tod dem Sparschweinesystem …

6 Dec, 2021 at 17:35 | Posted in Varia | Leave a comment

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Räddaren i nöden

5 Dec, 2021 at 15:10 | Posted in Varia | Leave a comment

radioI dessa tider — när ljudrummet dränks i den kommersiella radions pubertalflams — har man nästan gett upp.

Men det finns ljus i mörkret.

I programmet Text och musik med Eric Schüldt — som sänds på söndagsförmiddagarna i P2 mellan klockan 11 och 12 — kan man lyssna på seriös musik och en programledare som verkligen har något att säga och inte bara låter foderluckan glappa. Att få höra någon med intelligens och känsla tala om saker som vi alla går och bär på djupt inne i våra själar — men nästan aldrig vågar prata om — är en lisa för själen.

Jag har i flera år nu lyssnat på Erics program varje söndag. En helg utan hans tänkvärda och ofta lite melankoliska funderingar och vemodiga musik har blivit otänkbart.

För några veckor sedan kunde man bland annat höra filmmusik av vår egen Stefan Nilsson, vars musik till Ingmar Bergmans och Bille Augusts Den goda viljan är bland det vackraste och mest suggestiva i filmmusikväg som gjorts.

Som så ofta de senaste åren är det den eminente Eric Schüldt som får mig att hitta nya ljudintryck. I en tid — många kallar den ‘modern’ — då alla förväntar sig omedelbar behovstillfredsställelse här och nu, njuter jag av att få gå och längta efter nästa söndags musikupplevelse och betraktelser över tillvarons mystik.

Tack Eric!

To thee we sing

5 Dec, 2021 at 14:56 | Posted in Varia | Leave a comment

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Monnaie d’hier, monnaie de demain

5 Dec, 2021 at 10:48 | Posted in Economics | Leave a comment

Bitcoin consumes 'more electricity than Argentina' - BBC NewsEnfin, pour ce qui est de la dangereuse privatisation de la monnaie qui adviendrait avec les cryptomonnaies, demandons-nous si la monnaie légale est le bien public qu’elle prétend être. C’est à son accaparement par le secteur bancaire et financier qu’entendent répondre des innovations financières comme les cryptomonnaies ou les monnaies complémentaires, aussi différents soient leurs projets sous-jacents.

Alors, plutôt que de reprocher aux crypto-actifs ce qui peut l’être tout autant à la monnaie légale, interrogeons-nous sur les raisons de leur développement, sur le projet de société qui les sous-tendent. De quelle société voulons-nous donc ? Quelles monnaies seraient propres à porter les transformations dont nous avons besoin ? Si la cryptomonnaie n’est pas forcément la monnaie de la sociéte de demain, la monnaie bancaire est celle de la société d’hier.

Jézabel Couppey-Soubeyran / Le Monde

Does it take a theory to beat a theory?

4 Dec, 2021 at 15:55 | Posted in Economics | 1 Comment

George Stigler quote: Theories are not rejected by cirsumstantial evidence: it  takes a...If the substantive theories and methods you use, given their ontological presuppositions, are appropriate to the nature of those aspects of social reality you are addressing, then fine. The only methodological ‘dictum’ I support is tailor methods to the nature of the phenomena you are addressing. Certainly, I would offer no ontological critique. Specifically, if the five sets of properties you list do characterise the phenomena you address, and your methods do not carry ontological presuppositions that are so different as to be contradictory (for example that require of the phenomena that you are addressing that they take the form of isolated atoms [causal factors that have the same independent, invariable effect no matter what the context or anything else that is going on]) then fine. It remains the case though that almost all methods of mathematical modelling employed in modern economics (not matter how simple of complex, linear or non-linear, stochastic or dynamic, simulative, predictionist or otherwise) do carry such presuppositions. Where/if bits of reality so conform to a system of isolated atoms then limited use of such methods might be fine. Of course, you suggest, indeed, that this is your approach. The mainstream of modern economics (and let us face it the only coherent account of the modern mainstream is a reliance, indeed dogmatic insistence on, methods of mathematical modelling) determines its methods a prior independently of the natures of the material that are to be addressed. That’s different. And it’s no wonder that the project results in little insight …

I believe you have often explicitly written that “it takes a theory to beat a theory”, and you see that as a challenge to people like Lars and myself to engage in substantive economics. I do not think it is. Yes, it takes a theory to beat a theory, but the theories being contrasted must be comparable. The continuing problems of modern economics do not reduce to this particular mathematical model or that particular model but the whole modelling emphasis. The commonality of all such modelling is the widespread commitment to deductivist forms of reasoning/explanation that, to be relevant, presupposes a social reality composed largely of closed systems of isolated atoms. This is the ontological theory of the modern mainstream whether recognised or not. It is this theory to which we must apply your dictum ‘it takes a theory to beat a theory’. And that, or so I claim and argue, is precisely what critical realism (CR) does. Thereafter very many (often competing) theories of substantive phenomena can be constructed all of which draw on CR (just as many substantive economic modelling exercises abound). If CR is correct then almost all modelling exercises will be irrelevant (so CR is efficacious), whereas those underpinned by CR will be merely more of less correct or false. It is not up to Lars and myself to produce these accounts (even though I have produced some). I would claim that figures as diverse as Marx, Keynes, Veblen, and Hayek have all in their own ways both criticised deductivism (as vulgar economics, pseudo-science, neoclassical economics and scientism, respectively) and its ontology, and produced (very different) substantive accounts consistent (I argue) with CR.

This of course feeds into the reason that Lars, and also myself, are almost always negative in referring to the mainstream. From the perspective we adopt, it is simply a huge error to adopt unthinkingly – and especially to insist that we all do so — methods that carry ontological presuppositions that rarely if ever hold in the social realm. So, a largely critical orientation to the mainstream (as here understood) is surely warranted. But I myself can be and am very positive towards anything more relevant.

Tony Lawson / RWER Blog

Bei mir bist du scheen

4 Dec, 2021 at 12:01 | Posted in Varia | Leave a comment

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Poor economics

3 Dec, 2021 at 10:12 | Posted in Economics | Leave a comment

Few volumes in contemporary economics have been more lauded, and have summarised a zeitgeist, as much as Abhijit Banerjee and Esther Duflo’s Poor Economics …

buThe implicit premise of the book is that interventions that work in one place can be expected to work in another. This presumes not only that the results of such “micro” interventions are substantially independent of the “macro” context, but also that a focus on such interventions, as opposed to those which reshape that context, is sufficient to address poverty. These premises of “separability” and “sufficiency”, although non-trivial, go largely undiscussed by the authors. The causal relations at work in relation to individuals or households cannot be understood in atomic isolation …

Not surprisingly, one consequence of the approach to development economics championed by the authors is that the questions asked by the discipline have become much smaller. The authors’ position appears to be that this is quite all right, since the small questions are in fact large in importance. It is not easy to accept this, however. The larger questions once asked within the discipline … have been pushed to the background in favour of such questions as whether bed-nets dipped in insecticide should be distributed free of charge or not, or whether two schoolteachers in the classroom are much better than one …

One may argue, in fact, that the style of metropolitan development economics celebrated in this book leads not so much to increasing rigour as to rigor mortis, by severely limiting the questions that can be asked and shoring up a practical philosophy that is quiescent in relation to many important questions that cannot readily be analysed using the authors’ favoured method. These include questions related to the structure and dynamics of markets, governmental institutions, macroeconomic policies, the workings of social classes, castes, and networks, and so forth. Although such questions can only be approached through other methods, they are not the less important for that.

Sanjay Reddy

Most ‘randomistas’ — like Duflo and Banerjee — argue that since random or as-if random assignment in natural experiments obviates the need for controlling potential confounders, this kind of “simple and transparent” design-based research method is preferable to more traditional multivariate regression analysis where the controlling only comes in ex post via statistical modelling.

The point of making a randomized experiment is often said to be that it ‘ensures’ that any correlation between a supposed cause and effect indicates a causal relation. This is believed to hold since randomization (allegedly) ensures that a supposed causal variable does not correlate with other variables that may influence the effect.

The problem with that simplistic view on randomization is that the claims made are exaggerated and sometimes even false:

• Even if you manage to do the assignment to treatment and control groups ideally random, the sample selection certainly is — except in extremely rare cases — not random. Even if we make a proper randomized assignment, if we apply the results to a biased sample, there is always the risk that the experimental findings will not apply. What works ‘there,’ does not work ‘here.’ Randomization hence does not ‘guarantee ‘ or ‘ensure’ making the right causal claim. Although randomization may help us rule out certain possible causal claims, randomization per se does not guarantee anything!

• Even if both sampling and assignment are made in an ideal random way, performing standard randomized experiments only give you averages. The problem here is that although we may get an estimate of the ‘true’ average causal effect, this may ‘mask’ important heterogeneous effects of a causal nature. Although we get the right answer of the average causal effect being 0, those who are ‘treated’  may have causal effects equal to -100 and those ‘not treated’ may have causal effects equal to 100. Contemplating being treated or not, most people would probably be interested in knowing about this underlying heterogeneity and would not consider the average effect particularly enlightening.

• There is almost always a trade-off between bias and precision. In real-world settings, a little bias often does not overtrump greater precision. And — most importantly — in case we have a population with sizeable heterogeneity, the average treatment effect of the sample may differ substantially from the average treatment effect in the population. If so, the value of any extrapolating inferences made from trial samples to other populations is highly questionable.

• Since most real-world experiments and trials build on performing a single randomization, what would happen if you kept on randomizing forever, does not help you to ‘ensure’ or ‘guarantee’ that you do not make false causal conclusions in the one particular randomized experiment you actually do perform. It is indeed difficult to see why thinking about what you know you will never do, would make you happy about what you actually do.

• And then there is also the problem that ‘Nature’ may not always supply us with the random experiments we are most interested in. If we are interested in X, why should we study Y only because design dictates that? Method should never be prioritized over substance!

Randomization is not a panacea. It is not the best method for all questions and circumstances. Proponents of randomization make claims about its ability to deliver causal knowledge that is simply wrong. There are good reasons to be sceptical of the now popular — and ill-informed — view that randomization is the only valid and the best method on the market. It is not.

Identitätspolitik und Cancel Culture 

2 Dec, 2021 at 18:02 | Posted in Politics & Society | Leave a comment

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The first 30 minutes gives you an interesting critical discussion on how the left should tackle wokism and identity political issues (when the interview then turns to the corona pandemic, Wagenknecht’s brain is obviously on vaccation and she just presents a standard mumbo jumbo anti-vaxx argumentation).

Mauricio Rojas — historierevisionisten som fick avgå efter 94 timmar

2 Dec, 2021 at 08:48 | Posted in Politics & Society | 1 Comment

Protestvågen tvingade regeringen att acceptera folkomröstningar om en ny demokratisk konstitution … I författningskonventet som omfattar 155 medlemmar gäller paritet mellan män och kvinnor, ursprungsbefolkningen garanteras sjutton mandat …

Mauricio Rojas är ny integrationsrådgivare hos Liberalerna – LiberalernaDen chilenska högern vill undergräva konventets legitimitet. En framträdande kritiker är de svenska liberalernas nya ledargestalt och riksdagskandidat Mauricio Rojas. Han kallar författningsprocessen för ett populistiskt spektakel, en kapitulation för gatans parlament och för ”pöbeln.”

Rojas rekommenderade i ett tv-uttalande kraftiga och våldsamma polis- och militäringripanden mot demonstranter, också om det krävdes dödsoffer …

Rojas utsågs 2018 till kulturminister i Chile, sedan han givit ut en hagiografisk bok om Chiles president Sebastian Piñera (en kopia av Italiens Silvio Berlusconi) och tjänat denne som talskrivare.

Chiles kulturvärld protesterade. Rojas hade fördömt och förlöjligat Minnesmuseet som dokumenterar våldet, morden, deportationerna och tortyren under militärdiktaturen. De angrep honom under parollen: ”Vi försvarar minnet”. Också den breda högerliberala alliansen Evópoli tog avstånd från Rojas. Han avsattes som kulturminister efter 94 timmars tjänstgöring. I Chile 2018 kunde inte en historierevisionist vara minister.

Olle Svenning/Aftonbladet

Och så undrar folk varför liberalerna under Nyamko Sabuni är på väg ut ur riksdagen …

‘Vår ekonomi’ — nationalekonomisk lärobok med stora brister

1 Dec, 2021 at 17:25 | Posted in Economics | Leave a comment

Varje höst håller your truly sedan fler år tillbaka en introduktionskurs i nationalekonomi för blivande gymnasielärare. Förutom några av mina egna böcker, står även Klas Eklunds Vår ekonomi på litteraturlistan.

Vår ekonomi - 9789144140858 | StudentlitteraturVår ekonomi kom år 2020 ut i sin femtonde upplaga. Imponerande och i sig ett bevis på bokens många förtjänster, inte minst de pedagogiska.

Men tyvärr har boken också — fortfarande — några riktigt stora brister. Framför allt när det gäller metodologiska och monetära frågor.

Nationalekonomi är en vetenskap som i hög grad bygger på användandet av modeller. Eklund presenterar modellanvändandet som ”en sorts förenklade beskrivningar av verkligheten” med vars hjälp ekonomen kan ”göra tanke- och räkneexperiment och testa sina hypoteser”. Om dessa modeller ska fungera och ge överblickbara resultat

måste de göras enklare än den komplicerade verkligheten … Ekonomerna brukar följaktligen, då de konstruerar sina modeller, införa en rad förenklande antaganden för att göra modellerna så klara och entydiga som möjligt … Självklart är sådana antaganden orealistiska … Ändå är ett visst mått av modellbyggeri nödvändigt … Verklighetens komplexitet och svårigheten att utföra kontrollerade experiment gör det därmed ofrånkomligt att den som vill sätta sig in i samhällsekonomin måste vara beredd att lära sig ett visst ’teoretiskt’ och ’abstrakt’ tänkande.

Den enkla utbuds- och efterfrågemodellen har i sin mer sofistikerade form

utgjort kärnan i den nationalekonomiska teorin under hela det senaste århundradet. Orsaken är inte att den exakt skulle avspegla verkligheten, utan att den på ett enkelt och slagkraftigt sätt leder fram till klara slutsatser, som på en rad olika sätt kan tillämpas vid analysen av ekonomiska problem.

Eklund medger att verkligheten inte ser ut som de ekonomiska modellerna, men att dessa har ett berättigande som ett slags referens- och utgångspunkt utifrån vilken den ekonomiska analysen kan visa ”vilka hinder som ligger i vägen för människor och företag att följa de grundläggande beslutsregler” som beskrivs i dessa modeller. Modellerna ska ses som ”analytiska hjälpmedel, vilka hjälper till att abstrahera fram väsentliga grunddrag i hur olika ekonomiska mekanismer fungerar”.

Redan i inledningskapitlen av boken introduceras den gängse mainstreamteorins utbuds- och erfterfrågemodell, där ett av kärnantagandena är att företagens kortsiktiga utbudskurva utgörs av den del av marginalkostnadskurvan som överstiger den genomsnittliga rörliga kostnaden. Hur det fortfarande är möjligt år 2020 påstå något sådant som vet redan sedan Richard Lesters forskning på 1930-talet har noll med verkliga företags utbudskurvor att göra är hårresande. Faktaresistensen är monumental och ur ett vetenskapligt perspektiv sett fullständigt obegriplig. I vilken annan vetenskap som helst utanför nationalekonomin hade en lärobok som så flagrant presenterar modeller och teorier utan den minsta förankring i verkligheten snabbt försvunnit ur kurskatalogerna.

Det är intressant hur Eklund ofta i förbigående nämner en rad problem men sedan snabbt går förbi dem. Om nu inte modellen avspeglar verkligheten, hur kan vi då ha glädje av den? Är ”enkelhet” och förmågan att leda till ”klara slutsatser” den mest relevanta aspekten att lägga på modellen? Hur kan vi vara säkra på att det är de ”väsentliga” grunddragen som modellen abstraherar fram? Och så vidare. Det finns något förrädiskt i denna undanglidande framställning, därför att den ger sken av att kvalificera bruket av modeller inom nationalekonomin, men egentligen vid närmre analys inte alls gör det. Problemen omnämns och sedan går man glatt vidare som om de inte fanns.

Tyvärr är det inte mycket bättre ställt med Eklunds framställning av de penningteoretiska frågorna.

Bilden Eklund ger av bankerna är att de i stort sett fungerar som “finansiella intermediärer” i en ekonomi där penningmängden bestäms exogent av centralbanken.

Så här resonerade mainstream (neoklassiska) ekonomer i stort sett fram till 1980-talet. Men mycket har hänt på penningteorins område sedan dess. Inte minst den nya så kallade Modern Monetary Theory (MMT) har sedan dess gjort upp med mycket av de gamla förlegade och helt verklighetsfrämmande inslagen i den gängse neoklassiska monetära teorin. Idag vet vi att pengar i moderna kreditekonomier i grunden är en “endogen” företeelse och väsentligen något som centralbanken inte alls kan styra på det sätt man trodde förr. Den gamla monetaristiska fixidén om pengar som något exogent givet är stendöd.

På sätt och vis är det extra märkligt att detta är en så påtagligt svag del i Eklunds bok, mot bakgrund av att han i flera år arbetat som centralt placerad bankekonom och borde veta bättre. Men kanske är det som John Kenneth Galbraith en gång utryckte det, att “studiet av pengar, mer än någon annan del av nationalekonomin, är ett studium där komplexitet används för att dölja eller undvika sanning, snarare än att avslöja den” …

Dessa brister visar också att även om Eklund på ett pedagogiskt och lättillgängligt sätt lyckas presentera grundstenarna i det neoklassiska modellbygget, så så saknas boken igenom en kritisk diskussion om hur dessa ‘Walt Disney’ modeller förhåller sig till verkligheten och hur de eventuellt skulle kunna hjälpa oss förstå nutida ekonomier. Ofta blir framställningen lite av logiken “anta att människor är gröna och kommer från Mars”. Visst kan vi göra det, men vad är vitsen? Förenklande antaganden är en sak, men rena fantasier hör inte hemma i en vetenskap. Precis som alla andra modeller och teorier måste de av Eklund presenterde mainstreammodellerna konfronteras med empiriska observationer för att vi ska kunna avgöra om de är adekvata representationer av verkligheten. Nästan unantagslöst visar det sig då att den modellmetodologi och monetära teori Eklund bygger sin framställning på fallerar påtagligt.

Mainstream economics — a harmful fantasy

1 Dec, 2021 at 16:25 | Posted in Economics | Leave a comment

The New Economics: A Manifesto: Keen, Steve: 9781509545285: Public Policy:  Amazon CanadaAnyone who accepts the Neoclassical definition of ‘rational’ has, to some significant degree, lost touch with reality. So, I was expecting an ‘irrational’ reaction from this young zealot to my talk …

He tried to engage me in further debate after the session, and shouted ‘But we have to make some simplifying assumptions!’ at me as I left the seminar room. My riposte, cast over my receding shoulder, was ‘Mate, you have to learn the difference between a simplifying assumption and a fantasy’.

Many mainstream economists working in the field of economic theory think that their task is to give us analytical truths. That is great — from a mathematical and formal logical point of view. In science, however, it is rather uninteresting and totally uninformative! The framework of the analysis is too narrow. Even if economic theory gives us ‘logical’ truths, that is not what we are looking for as scientists. We are interested in finding truths that give us new information and knowledge of the world in which we live.

Scientific theories are theories that ‘refer’ to the real-world, where axioms and definitions do not take us very far. To be of interest for an economist or social scientist that wants to understand, explain, or predict real-world phenomena, the pure theory has to be ‘interpreted’ — it has to be ‘applied’ theory. An economic theory that does not go beyond proving theorems and conditional ‘if-then’ statements — and do not make assertions and put forward hypotheses about real-world individuals and institutions — is of little consequence for anyone wanting to use theories to better understand, explain or predict real-world phenomena.

Building theories and models on unjustified patently ridiculous assumptions we know people never conform to, does not deliver real science. Real and reasonable people have no reason to believe in ‘as-if’ models of ‘rational’ robot-imitations acting and deciding in a Walt Disney-world characterised by ‘common knowledge,’ ‘full information,’ ‘rational expectations,’ zero  transaction costs, given stochastic probability distributions, risk-reduced genuine uncertainty, and other laughable nonsense assumptions of the same ilk. Science fiction is not science.

Much work done in mainstream theoretical economics is devoid of any explanatory interest. And not only that. Seen from a strictly scientific point of view, it has no value at all. It is a waste of time. And as so many have been experiencing in modern times of austerity policies and market fundamentalism — a very harmful waste of time.

The nature of money

1 Dec, 2021 at 14:40 | Posted in Economics | 3 Comments

Money is a component of the community’s accounting system, formed by way of allocating some kind of thing to a money position … In short, a community’s money is identifiable as that kind of thing which is everywhere enabled to serve as a general means of payment, the latter property being its nominal essence or function; and money’s nature or real essence is the set of rights and obligations (of participants of the monetary community) in virtue of which the money so formed is enabled and oriented to serving this function.

What is money? Why do we use money? - Market Business NewsOf course, an occupant of the money position will usually be sought that is regarded as appropriate in some sense. The point, though, is that once a kind of thing is in place, then whether it is appropriate in some relevant sense or not, a money is formed. What kind of item might be sought to occupy the position? Basically, one that is expected to result in a money that flows easily and continually throughout a community …

Money, in short, is constituted and operates in much the same sort of manner as any other social phenomenon qua positioned item and community component … And as with these other items, in the case of money too, the adequacy of any instance of it to serve its associated function will depend on the nature of the particular kind of thing used to form it, that occupies the relevant (in this case the money) position.

Tony Lawson

Rom i regnet (personal)

29 Nov, 2021 at 17:22 | Posted in Varia | Leave a comment

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Till Anna — som fick mig att överleva tre ändlöst långa gymnasieår.

Och till Ulf — som skriver den sorts musik som glömskan inte rår på.

Rational expectations — the triumph of ideology over science

29 Nov, 2021 at 11:46 | Posted in Economics | 7 Comments

Senate Banking Subcommittee On Financial Institutions Hearing With Stiglitz For more than 20 years, economists were enthralled by so-called “rational expectations” models which assumed that all participants have the same (if not perfect) information and act perfectly rationally, that markets are perfectly efficient, that unemployment never exists (except when caused by greedy unions or government minimum wages), and where there is never any credit rationing.

That such models prevailed, especially in America’s graduate schools, despite evidence to the contrary, bears testimony to a triumph of ideology over science. Unfortunately, students of these graduate programmes now act as policymakers in many countries, and are trying to implement programmes based on the ideas that have come to be called market fundamentalism … Good science recognises its limitations, but the prophets of rational expectations have usually shown no such modesty.

Joseph Stiglitz

Those who want to build macroeconomics on microfoundations usually maintain that the only robust policies and institutions are those based on rational expectations and representative actors. As yours truly has tried to show in On the use and misuse of theories and models in economics there is really no support for this conviction at all. On the contrary. If we want to have anything of interest to say on real economies, financial crisis and the decisions and choices real people make, it is high time to place macroeconomic models building on representative actors and rational expectations microfoundations in the dustbin of pseudo-science.

For if this microfounded macroeconomics has nothing to say about the real world and the economic problems out there, why should we care about it? The final court of appeal for macroeconomic models is the real world, and as long as no convincing justification is put forward for how the inferential bridging de facto is made, macroeconomic modelbuilding is little more than hand-waving that give us a rather little warrant for making inductive inferences from models to real world target systems. If substantive questions about the real world are being posed, it is the formalistic-mathematical representations utilized to analyze them that have to match reality, not the other way around.

The real macroeconomic challenge is to accept uncertainty and still try to explain why economic transactions take place — instead of simply conjuring the problem away by assuming rational expectations and treating uncertainty as if it was possible to reduce it to stochastic risk. That is scientific cheating. And it has been going on for too long now.

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