no third solution » Economic Theory
Marx and the Secret of Primitive Accumulation
Marx’s exploitation theory relies in part on the so-called crime of primitive accumulation, without which one struggles to explain the class dichotomy between the haves and the have-nots so crucial to the exploitation theory. The secret of primitive accumulation posits that the economic sins of some people have condemned them and their progeny to the hell of labor, whereas the economic virtues of the others have placed them in a situation far superior to that of the former, viz., in accordance with their virtues, the virtuous have become vicious and themselves worthy of condemnation:. In times long gone-by there were two sorts of people; one, the diligent, intelligent, and, above all, frugal elite; the other, lazy rascals, spending their substance, and more, in riotous living. The legend of theological original … Read entire article »
Filed under: Economic Fallacies, Economic Theory, Economics Lessons, Employment & Labor, Microeconomics
The Paradox of Economic Modeling
The Economist recently issued a “special report on the future of finance.” I’m going to comment on a few of these articles in the coming days. The section on the failure of mathematical modeling was really interesting. Benoît Mandelbrot, the mathematician who invented fractal theory, calculated that if the Dow Jones Industrial Average followed a normal distribution, it should have moved by more than 3.4% on 58 days between 1916 and 2003; in fact it did so 1,001 times. It should have moved by more than 4.5% on six days; it did so on 366. It should have moved by more than 7% only once in every 300,000 years; in the 20th century it did so 48 times. In Mr Mandelbrot’s terms the market should have been “mildly” unstable. Instead it was “wildly” … Read entire article »
Filed under: Economic Theory, Economics Lessons, Macroeconomics