Can somebody explain to me what's the point of the 'modern economy'?

Economics isn't particularly strong in metaphysics because there is no reason whatsoever that economics ought to give a flying crap about metaphysics, because it has absolutely nothing to do with economics.

Of course, there are many legitimate critiques of the pathetic scientific pretensions of economics (note, for instance, our resident economists' strongest arguments seem to be "I'm an economist, I say x, therefore x" :lol:), but "they don't know enough metaphysics" surely isn't one of them!

I did say that economics isn't particularly interested in metaphysics. I'm interpreting what you say here to mean that economics as it is set up has nothing to do with metaphysics. However, when we question its assumptions about how human beings operate within an economic system, I don't see how we can avoid metaphysical issues.
 
- we're producing millions of tuns of stuff we don't really need (cigarettes, flat-screen TVs, jet planes, hair-dyes, all kids of luxury [and junk] foods, etc.) for which we need to expend huge amounts of natural resources, and we call it 'economic growth'. Entire regions' economies depend on production of things that are simply unnecessary or are excessively consumed by first-world citizens.
Who are you to say it is useless stuff? Who will decide what’s useless? A new totality?

All the stuff you named are symptoms of human playfulness and creativity— toys, one can say — but toys are not useless!
You are Czech, so reread Comenius and think hard about Schola Ludus and its application in economics.

- we've created entire sectors of our "service economy" to satisfy every whim of our lazy primitive nature. Some services are of course needed, but other are entirely useless in terms of greater development and progress of humankind. Yet again we count the value of these services and call their expansion 'economic growth'.
And these sectors of economy are very efficient laboratories which help us to develop better technologies.

- it follows that in the end, there are millions of people who provide non-essential and unneeded services to people who can only afford them by producing and selling non-essential and unneeded goods. All at the expense of the environment that sustains our civilization.
Once again, the unneeded services accelerate the technological progress to unprecedented levels.

- in the third world, the only thing its nations seem to be able to produce (except raw materials) is more and more malnourished people.
Malthusianism is dead. Even the third world countries are able to cope with their problems better than years ago. Don’t support the unsustainable population growth in that countries by some ill-conceived development aid, and the countries themselves will find the sustainable relation between population and economic growth (possibly the hard way, but they will find it).
The best thing you can do for them is to trade with them as with equal partners.

- very few people actually realize that the whole damn "modern economy" is an unsustainable bubble which can only be compared to a wildfire. Once there is no more trees and bushes (i.e. natural resources we depend on) to burn, the forest fire dies out.
There is no such a thing like modern economy. It’s the same economy all the time, only the people could be ensnared in some unsustainable trial. The nice thing about unsustainable things is they are unsustainable. After all, the series of trials and errors are good for economical development as well.

You seem to have problems with discounting economical growth, population growth, technological progress and even the wasting. Restrictions in using of resources tends to be very counterproductive in long terms. (Do you blame our ancestors for using all the flintstone?)

The 'economic growth' measured in GDP increase is essentially and indicator of our collective idiocy
Don’t blame statistics of people’s inability to read the statistics properly. GDP is very usefull indicator, if only because it is closely correlated with tax income.
On the other hand, the tendencies to perfect economy with respect to any single statistic are simply stupid.

- we've fooled ourselves into believing that expansion of our material wealth is unlimited even though the available resources to fuel this growth are very much finite. How big a fraction of any modern nation's GDP is actually just ballast - unneeded services and production of unneeded goods?
Who are the “we”? Be specific! I know people who support irrational production, people who support irrational restriction of production, but most of people I know try to find a balanced approach to it.

Let the people to make diverse trials and errors, and the market and the law of large numbers will work for you. Yes, the errors are costy, but there are always some costs. It will help you to find a more balanced approach to the environment than any government’s policy.
Don’t restrict people’s creativity — it’s the key to people’s adaptability!
 
I did say that economics isn't particularly interested in metaphysics. I'm interpreting what you say here to mean that economics as it is set up has nothing to do with metaphysics. However, when we question its assumptions about how human beings operate within an economic system, I don't see how we can avoid metaphysical issues.

ehm? why do we need metaphysics to study the interaction of people?

what are neurosciences for?
 
ehm? why do we need metaphysics to study the interaction of people?

what are neurosciences for?

I'm not saying we need metaphysics to study people's behaviour. I'm saying that there seems to be assumptions is economics that are not adequately accounted for, and that a treatment of them would bring in metaphysical issues.

If what you're saying is essentially that science can fully understand human behaviour without having to go into philosophy, I have no answer to that. However, behavioural science does bring in a lot of philosophical issues.
 
I did say that economics isn't particularly interested in metaphysics. I'm interpreting what you say here to mean that economics as it is set up has nothing to do with metaphysics. However, when we question its assumptions about how human beings operate within an economic system, I don't see how we can avoid metaphysical issues.

What the crap do you mean by "metaphysics"? Like, empirical questions on what humans are like? Kinda weird to call that stuff "metaphysics"!
 
What the crap do you mean by "metaphysics"? Like, empirical questions on what humans are like? Kinda weird to call that stuff "metaphysics"!

No, it's precisely because I don't think it's entirely an empirical matter. It brings in questions about why people behave this or that way in the first place, which I think are prior to what is empirically known. I don't know how else to describe such questions except as metaphysical, and I really don't know if they can be fully answered by behavioural sciences or something.
 
Welcome to the Environmentalist movement Winner.

I don't know why you commies are equating Environmentalism with Communism.
 
Welcome to the Environmentalist movement Winner.

I don't know why you commies are equating Environmentalism with Communism.

Because he is supporting the fact that we shouldn't destroy the Earth for future generations
 
Wiki is not an authoritative source. While, that is the definition of homo economicus. Homo economicus died when we began using models that allow for irrationality, first by relaxing a perfect information assumption and then later others. I don't know many practicing economists who would swear that we really are homo economicus

Even with all those relaxations and complexities in the models, don't economists still generally use the ideas of indifference curves and utility? Aren't they based in some way on the idea of a (semi-) rational agent with given preferences?
 
Fifty said:
Economics isn't particularly strong in metaphysics because there is no reason whatsoever that economics ought to give a flying crap about metaphysics, because it has absolutely nothing to do with economics.

Of course, there are many legitimate critiques of the pathetic scientific pretensions of economics (note, for instance, our resident economists' strongest arguments seem to be "I'm an economist, I say x, therefore x" ), but "they don't know enough metaphysics" surely isn't one of them!

What the crap do you mean by "metaphysics"? Like, empirical questions on what humans are like? Kinda weird to call that stuff "metaphysics"!

Well Kant is an example here, I think. People gush over Kant in theoretical ethics classes but they don't really read his Anthropology or writings on everyday stuff, lots of which is pretty horrendous. It's not just that he was a man of his times with outdated views; a lot of what he said followed directly from his metaphysics. Like if you read his "Science of Right," all the stuff in there follows directly from his Critique of Pure Reason and writings on metaphysics--how he thinks of an individual, a family, marriage, property, rights, etc...I'm haven't read much contemporary metaphysics, and at the empirical level at least there's no reason economics has to depend on metaphysics, but at the sort of "ground-level" understanding of human behavior, it would seem that we are using a metaphysics program, even just implicitly.

If anything, modern economics and metaphysics might have nothing to do with each other trivially speaking because they are taking a lot of the basic assumptions in common and don't need to fight over them, which is what aelf is getting at I think.
 
Even with all those relaxations and complexities in the models, don't economists still generally use the ideas of indifference curves and utility? Aren't they based in some way on the idea of a (semi-) rational agent with given preferences?

Semi-rational =/= Homo economicus...
 
Semi-rational =/= Homo economicus...

Well of course not, but it wasn't a 180-degree shift either. My question was how big is the difference, and how do we understand things like indifference curves and utility without some idea of a self-interested agent?
 
Wiki is not an authoritative source. While, that is the definition of homo economicus. Homo economicus died when we began using models that allow for irrationality, first by relaxing a perfect information assumption and then later others. I don't know many practicing economists who would swear that we really are homo economicus

I will make the small note that "making decisions under imperfect information" != irrationality. While a good number of papers use an uncertainty/expected value approach to utility maximization, that doesn't mean they throw out the basic rationality assumption altogether. It's just utility maximization on a constrained choice set, or utility maximization under uncertainty.

And in macro, of course, the bedrock of expectations analysis is the REH, which while unreasonable at the micro level is at least partially justified because of the nature of aggregation analysis. See, for example, NBER wp15388 on inflation expectations formation as it actually occurs.
 
Well of course not, but it wasn't a 180-degree shift either. My question was how big is the difference, and how do we understand things like indifference curves and utility without some idea of a self-interested agent?

The agent may be self interested, except, you know, not always. So you have bounded rationality, imperfect information, animal spirits, and other factors influence just how rational people act. There are simply too many things which are demonstrated in human behavior that are not in accordance with theories of fully economically rational behavior. How quantifiable that may be? I have no clue.
 
The agent may be self interested, except, you know, not always. So you have bounded rationality, imperfect information, animal spirits, and other factors influence just how rational people act. There are simply too many things which are demonstrated in human behavior that are not in accordance with theories of fully economically rational behavior. How quantifiable that may be? I have no clue.

Ok, but those are all just adjustments away from the rational-actor perspective. We're individual brains with bodies and legal protections and privileges under the law, so it's not as if we don't think of "agents" with interests; we just append a whole lot of adjustments to get more accurate models. It's not about information or bounded rationality; it's about whether at any point the buck stops with the idea of an individual making individual choices for his or her own utility. I mean, it's stupid but I'm saying that it's obviously not the case that within mainstream economics you'll get problems like:

"John's utility function is F(b,v,k)=________. What is the marginal rate of substitution/etc...

Answer: John is actually in the grips of false ideology and doesn't want any of these things. With perfect information, we know that what he really wants is..."

My original question was pretty basic and I think I phrased it wrong or it was read too much into: it was just whether within standard concepts in consumer choice theory like indifference curves we still have some assumptions of the self-interested agent, given that indifference curves are based on things such as that bundles can be compared to each other through an individual's preferences, preferences are consistent, etc. Of course, that is what it is based on--all the adjustments and limitations come into play on top of that to get a more accurate read-out with empirical data.
 
Unfortunately, we can't do anything about the past. We should, however, stop doing the same mistakes over and over again. Hence why I believe we absolutely need to stop the population growth in the poorest parts of the world - it only perpetuates poverty, human underdevelopment, environmental destruction, authoritarianism, etc. I don't care what it takes, but the population explosion must stop if we want to actually help these countries develop (and thus prevent an apocalyptic collapse of our civiluzation).

How do you propose we stop making the same mistakes without making the same mistakes? The mistake itself is totalitarian agriculture. The massive surplus of food that it produces is what is fueling population growth at such an undesirable rate.

I think you're also contradicting yourself. The cause of enviromental destruction is directly related to population growth and our so-called "standard of living". If you want to raise the standard of living among the poorest to that of ours, then you are going to continue to see the destruction of the environment.


Sadly, each time I say this someone calls me a racist while other people refuse to even consider population control, as if it was something inherently evil. In fact, some of the most successful past societies practised it in one way or another.

I agree with you entirely, but we have to control the population on a global scale. With our economic system, there will always be a poor, impoverished population that is needed to support the richest. We cannot do without it, without developing a completely new economic system.



As for the first world, it must do what I mentioned earlier, plus it should help the other parts of the world skip the destructive phases of industrial development. Earth simply cannot afford more "Western-style" modernization, with its polluting, environment-devastating phases (and wars).

Not only can the world not afford more people living in the "Western-style", it cannot afford those already living in that style. That lifestyle is causing the extinction of thousands of species per year, already.


The problem with my proposal is that it requires a wide cooperation between countries with different social, cultural and political systems, which usually don't trust each other and refuse to listen to the message of reason simply because they hate or mistrust the messenger.

The problem with your proposal is that you underestimate what actually needs to be done and have an unrealistic view of what the problem actually is and how to resolve it.


One way to overcome this is to lead by example. So far the example we've given to the rest of the world has been the worst we could have given. A huge part of our contemporary problem is that developing countries are trying to mimic the Western consumerism and flamboyant lifestyle without realizing how destructive and unsustainable it is.

This part, I agree with. Change has to start with YOU. Then you have to change the minds of others. Then, America can lead by example.
 
My original question was pretty basic and I think I phrased it wrong or it was read too much into: it was just whether within standard concepts in consumer choice theory like indifference curves we still have some assumptions of the self-interested agent, given that indifference curves are based on things such as that bundles can be compared to each other through an individual's preferences, preferences are consistent, etc. Of course, that is what it is based on--all the adjustments and limitations come into play on top of that to get a more accurate read-out with empirical data.

I'm pretty sure that preferences over consumption bundles are still reflexive, complete, and transitive, yes. Maybe there's some playing around with completeness, but that's about it.
 
And these sectors of economy are very efficient laboratories which help us to develop better technologies.

However, these technologies are not entirely necessary and they ARE part of what is destroying our world.



There is no such a thing like modern economy. It’s the same economy all the time, only the people could be ensnared in some unsustainable trial. The nice thing about unsustainable things is they are unsustainable. After all, the series of trials and errors are good for economical development as well.

While true, something that is unsustainable is not always so nice to the population, at large. Our unsustainable market system collapsed in 2008 and caused a lot of suffering. Given a severe enough collapse, such as the Great Depression of the 1930s, it could cause the deaths of millions, or more.


You seem to have problems with discounting economical growth, population growth, technological progress and even the wasting. Restrictions in using of resources tends to be very counterproductive in long terms. (Do you blame our ancestors for using all the flintstone?)

The use of flintstone was a very minor part of the way of life of human beings of that time period. Once it ran out, they were able to survive, with minor disruption. This obviously is so, because here we are. But, we are not talking about flintstone. Those things are we are about to lose are the pillars of our economy and our society. When we lose them, it will be more than just a minor disruption.



Let the people to make diverse trials and errors, and the market and the law of large numbers will work for you. Yes, the errors are costy, but there are always some costs. It will help you to find a more balanced approach to the environment than any government’s policy.
Don’t restrict people’s creativity — it’s the key to people’s adaptability!

That, I cannot argue with, but the government is among those restricting the people's creativity. Through the threat of force, we are required to live a certain way, because most people think it is the one right way to live. Wherever others have tried to live differently, they have been all, but wiped out. Of course, the government is not the only enforcer. The people themselves enforce this way of life. So, minds have to be changed so that the world will change.
 
How do you propose we stop making the same mistakes without making the same mistakes? The mistake itself is totalitarian agriculture. The massive surplus of food that it produces is what is fueling population growth at such an undesirable rate.

Hmm, I am not sure about that. I am under impression that the highest population growth in today's world occurs at countries that can barely feed their own population (and thus experience periodic famines).

The massive surplus of food in developed countries is mostly consumed by first-world citizens, who no longer breed like rabbits.

You're certainly right that such surpluses are bad thing - for the economy (how much money are we wasting on agricultural subsidies? In the EU, it's 40-50% of its budget...) and for the environment. If we adopted sensible policies in agriculture, we could abandon at least 1/3 of the cultivated land (perhaps even more) and restore it to its original condition (forests and meadows). Of course that would probably destroy the traditional rural way of life in many regions, but in exchange for that we'd have healthier environment to live in (not to mention that the expansion of forests would consume some of the CO2 we're releasing to the atmosphere).

I think you're also contradicting yourself. The cause of enviromental destruction is directly related to population growth and our so-called "standard of living". If you want to raise the standard of living among the poorest to that of ours, then you are going to continue to see the destruction of the environment.

Not necessarily. A subsistence farmer who scratches a living by burning swathes of rainforest in order to farm the land for few years before moving on is on average pretty destructive.

Of course the poor countries can't go the same way we did, because Western-style industrialization is impossible to sustain if the whole world was to do it. So we need to help them skip the most destructive and polluting phases and move directly to the "cleaner" type of industrialized economy.

I agree with you entirely, but we have to control the population on a global scale. With our economic system, there will always be a poor, impoverished population that is needed to support the richest. We cannot do without it, without developing a completely new economic system.

I don't think so, at least not as far as the future is concerned. With a sensible economic system (yeah, I mean the evil called 'welfare state') in which human development is of the highest priority, even 'poor' people could enjoy a pretty good standard of living without the need of excessive damage being made to the environment. Of course this assumption is based on my belief that technology can actually help us improve the efficiency of our industry and remove the need to employ people in menial tasks.

Not only can the world not afford more people living in the "Western-style", it cannot afford those already living in that style. That lifestyle is causing the extinction of thousands of species per year, already.

True. Which why the Western way of life needs to change profoundly. Hence what I said about leading by example.

The problem with your proposal is that you underestimate what actually needs to be done and have an unrealistic view of what the problem actually is and how to resolve it.

I don't underestimate it - I am actually pretty sceptical about our future. Collapse is on the horizon, it will take roughly 50 years to get to it, if we don't change our ways.

This part, I agree with. Change has to start with YOU. Then you have to change the minds of others. Then, America can lead by example.

Not just America. Europe, Japan, Korea, Australia and other developed parts of the world need to present a new model, a new way of life based on the things we discussed in this thread.
 
Hmm, I am not sure about that. I am under impression that the highest population growth in today's world occurs at countries that can barely feed their own population (and thus experience periodic famines).

Then what do you propose that these people are made of? Stones? It is not as though the entire population of these countries are starving, all at once. It is small segments of the population, usually when there is drought or crop failure, usually due to poor farming technique. Of course, your other problem is that you're looking at rate.

Take one of your "hard to feed" nations such as Sudan, for example. They are growing at a rate of about 3 percent. With a population of roughly 42,000,000 (IIRC), that is about 1.25 million new mouths added to the rolls per annum. Just a one percent growth rate in the United States (which around where we hover) would add 3 milliom per annum. In China, at a paltry 0.5 percent (0.58% actual), they're still adding 7.5 million per annum. Pakistan, at 169 million souls, is adding almost 3.5 million per annum. Even France is adding 650,000 people per annum, at current rates. But this is all beside the point. The food being produced in the countries that have it, is making its way to the third world where it fuels further growth.


The massive surplus of food in developed countries is mostly consumed by first-world citizens, who no longer breed like rabbits.

This is true, but enough is sent abroad to fuel growth elsewhere. Of course, growth, even in the "first world" is still too high. At just 1 percent growth, per annum, the United States will have 400 million people in just 29 years. In just 52 years, we will have 500 million. In just 70 years, that number will top 600 million. In just 86 years, it will be 700 million. By the end of the century, we'd be well on our way to 800 million, having added 33 million in just 14 years.

It will have taken 29 years to add 100 million souls to reach 400 million total. Toward the end of the century, it will have taken just 16 years. Do you honestly think that, even what you consider to be low growth, to be sustainable? The numbers are even more frightening when you look at China. It is expected to slow, but even by 2050, it is expected to hover around 1/2 percent.

Here is a simple question, for you, that will help you understand.

Inside of a cup, you place a bacteria whose population will double every minute. The time, when you put the bacteria in there, was 11:00. The cup will be filled by 12:00. You had to use a microscope to make sure that you actually got it in there, it was that small. At what time is that cup half-way full?



You're certainly right that such surpluses are bad thing - for the economy (how much money are we wasting on agricultural subsidies? In the EU, it's 40-50% of its budget...) and for the environment. If we adopted sensible policies in agriculture, we could abandon at least 1/3 of the cultivated land (perhaps even more) and restore it to its original condition (forests and meadows). Of course that would probably destroy the traditional rural way of life in many regions, but in exchange for that we'd have healthier environment to live in (not to mention that the expansion of forests would consume some of the CO2 we're releasing to the atmosphere).

I don't think that we have to abandon the "rural way of life" moreso that what we have to do is revolutionize it. Turn our totalitarian farming system into organic farms that produce a wide variety of goods. Forget crop rotation, mix your crops among the various fields. This also goes a long way to take care of pests. Co-exist with the world around you.



Not necessarily. A subsistence farmer who scratches a living by burning swathes of rainforest in order to farm the land for few years before moving on is on average pretty destructive.

And I can assure you that in most cases, this farming is doing this either to produce a crop that he sells abroad, to wealthy westerners, or because the good farmland is already taken up for that purpose. In either case, the farmer is destructive, but you're never going to convince me that he does as much damage as the average citizen in the western world. Our consumption fuels the destruction of habit all over the world.


Of course the poor countries can't go the same way we did, because Western-style industrialization is impossible to sustain if the whole world was to do it. So we need to help them skip the most destructive and polluting phases and move directly to the "cleaner" type of industrialized economy.

Granted, but they are not going to willingly accept this as long as we're still living the same way that we are, today. Its a pipe dream to think so. We have to set the example and we have the leading minds and technology to figure out this new way of life.



I don't think so, at least not as far as the future is concerned. With a sensible economic system (yeah, I mean the evil called 'welfare state') in which human development is of the highest priority, even 'poor' people could enjoy a pretty good standard of living without the need of excessive damage being made to the environment. Of course this assumption is based on my belief that technology can actually help us improve the efficiency of our industry and remove the need to employ people in menial tasks.

We've been trying to come up with such a system for at least a hundred years. The only thing that such attempts have ever turned up was to make EVERYONE poor, with a smaller elite still at the top. The foundational economic system that we've been using for thousands of years, has to change.



True. Which why the Western way of life needs to change profoundly. Hence what I said about leading by example.

Then, we do, in fact, agree on something! :beer:


I don't underestimate it - I am actually pretty sceptical about our future. Collapse is on the horizon, it will take roughly 50 years to get to it, if we don't change our ways.

Another thing that we agree on.


Not just America. Europe, Japan, Korea, Australia and other developed parts of the world need to present a new model, a new way of life based on the things we discussed in this thread.

We cannot very well control what they do. We can only try to change their minds through leadership, at home. It WILL certainly take a worldwide effort, but it has to start somewhere. I am an American, so for me, it has to start, at home.
 
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