Kiinnostavia väittämiä Paul Ormerodin kirjasta The Death of Economics (1994):
The view that society is made up of individuals acting on the rational calculation of their own self-interest pervades modern economics. Indeed, to an economist, just as to Mrs Thatcher, there is no such thing as society, only the individuals that constitute it. ... this notion was quite alien to the philosophy of Adam Smith, now eulogised as the intellectual discoverer of the powers of the free market. For Smith, the restraint of public morality on individual behaviour was innate. When industrialisation conspired to erode this framework, the state had a very clear duty to try to rebuild and strengthen it. (s. 34)
The benefits of co-operative behaviour are a key proposition of the environmentalists, who in sharp contrast to the individualistic behavioural model of orthodox economics,
have stressed from the outset the fundamental interdependence and interconnectedness of human actions. (s. 35)
---------------------
The Limits of Growth Team (MIT 1970, 1972) argued that five basic factors determined the ultimate limits of growth: population, agricultural and industrial production, natural resources and pollution. A change in any of these factors, had through complex connections in the system, implications for all the others. The conclusions were that, on then existing trends, the most likely scenario for the planet involved the limits of growth being reached during the next century, which would be followed by a sudden decline in population and production. It was possible to avoid this outcome and to bring stability, only by people and governments acting co-operatively to generate beneficial rather than harmful feedbacks in the system.
Many criticisms can be - and indeed have been - made of the initial Limits of Growth exercises. (...) But whatever the particular criticisms, the true and lasting significance of The Limits of Growth work was the development of a fundamentally different approach to understanding the workings of the economy to that of orthodox economics. (s. 36)
---------------------
The behaviour of the system may well be quite different from what might be anticipated from extrapolation of the model of the behaviour of individuals.
Individual behaviour does not take place in isolation. On the contrary, there are impacts on the behaviour of other individuals, which in turn cause feedback elsewhere in the system, and so on and so forth. Behaviour is altogether too complex to be captured by a mechanistic approach.
But it is not environmentalists who have adopted this complex model as a practical method of analysis. Increasingly, hard-headed mathematicians working in biology, climatology, chemistry and even physics are coming to see it as a more powerful way of understanding the world. (s. 37)
Smith argued that free markets, in which everyone, whether a buyer or seller, of labour or of produce, followed his or her own self-interest, would lead to outcomes which were to the benefit of all. It was this part of his contribution to economics that was translated into mathematics in the "marginal revolution". The mathematics refined and sharpened the assumptions which were required for this result to hold, and, given these assumptions, appeared to prove Smith's conclusion in a more rigorous way than possible with purely verbal argument. But in so doing, much of the richness and complexity of the original analysis was lost. Smith's insistence on the importance of the institutional framework and the overall set of moral values in which free markets operate was neglected, for such concepts do not convert readily into the language of mathematics. Neither was his deep interest in the process of economic growth and the processes by which some nations become rich while others remain poor addressed by the new system of economic analysis. The problem of growth was assumed to be solved, and a new central question for economics was therefore assumed:
how to allocate the resources generated by growth in the most efficient way. (...)
The initial success and attraction of marginal economics were essentially due to three factors.
First, by appearing to demonstrate the superiority of the pure, free-market economy, it served valuable ideological functions. For example, the less interference there was from government in the running of the economy and of society, the closer the real economy would be to the theoretical free-market ideal, and so, it was argued, the more efficient it would be. (...)
Marginal economics appeared to "prove" that business should be left as much as possible to its own devices, without help or hindrance from the state, and that the level of taxation should be as close to zero as possible, sentiments which exactly suited the Victorian philosophy of self-help and self-reliance.
The second reason was, as we have seen, that the concepts of harmony and equilibrium on which marginal economics is based were very much in keeping with the scientific spirits of the times. The third reason for the success of marginal economics was that it represented a formidable intellection achievement.
As an example of abstract human thought, even at this distance in time, it is truly impressive. (...)
The theoretical constructions introduced to economics over a century ago continue to pervade discussions of policy. They provide both a strong bias towards and apparently a strong rationale for policies which move towards the creation of a free, competitive market. For example, the political and social agendas of Ronald Reagan and Margaret Thatcher were powerfully motivated by the logic of free-market economics.
Or, to be more precise, free-market economics was used to underpin the ideological preconceptions of these politicians.
The deregulation of the financial markets in the 1980s in the Anglo-Saxon economies; the deregulation of and increased flexibility in labour markets,
a topic which is presently the topic of fierce debate among the political classes of Europe; the privatisation of state-owned industries; reductions in welfare programmes
- all these themes flow from the logic of the theory of competitive equilibrium. (s. 45-47)
The most powerful reason for the continuing appeal of the theory is that, despite their problems, Western market economies are clearly the most successful form of economic organisation yet invented. There is increasing power in the environmental critique of economic development, but ... mixed economies have delivered enormous benefits to their citizens over the past two centuries.
It cannot be emphasized too strongly that, in practice, the competitive model is far removed from being a reasonable representation of Western economics in practice.
By definition, any model necessarily abstracts from and simplifies reality. But the economy model of competitive equilibrium is a travesty of reality. The world, does not consist, for example, of an enormous number of small firms, none of which has any degree of control over the market in which it is operating. Small firms may be fashionable at present, but it is the large multi-national companies such as Ford, BP and Sony which dominate the world economy. It is entirely illegitimate to make the link between the model and the observed success of Western market economies. The theory introduced by the marginal revolution was based upon a series of postulates about human behaviour and the workings of the economy. It was very much an experiment in pure thought, with little empirical rationalisation of the assumptions. Designed as a logical description of how rational individuals and companies ought to behave, the emphasis lies equally on the words "rational" and "individual". The individual is considered to be the key building block of the system, the behaviour of the economy as a whole being simply the summation of the behaviour of its component parts. (s. 48-49)
---------------------
The public sector in Singapore has behaved in many ways like an exemplary Chandlerian (Alfred Chandler) company. It has had clear goals with which to judge its progress and achievements, and it has invested heavily in a number of dimensions in order to achieve these goals. It has shaped its own markets and created its own competitive advantage. Too often in the West, the public sector operates in a bureaucratic way, stifling initiatives, with the workforce itself having the primary interest of preserving the cartel structure which preserves its jobs, rather than in serving the public. In Singapore, salary increases of public-sector workers are linked to the overall performance of the economy, an important symbol of the role which the public sector is expected to play, namely through its own efficiency and vision to enhance the effectiveness of the private sector. (s. 64-65)
The New Right in the West have had so may easy targets in the public sector that their eulogy of the free market has attracted widespread political support. But their policy package contains two quite distinct offers. First, to eliminate the waste and inefficiency in the public sector. Examples of this is are both widespread and transparent. (...) The second part of the The New Right's policy package has been the belief that free-market solutions are always best.
It is this latter view which is profoundly mistaken. Markets and profits are crucial, the _pure_ free-market model itself is deeply flawed. (s. 65)
---------------------
There is such a thing as a society. Two hundred years ago, Adam Smith intuitively believed this to be true. Sociologists have long taken this proposition for granted.
At the other opposite pole to orthodox economics, with its focus on the rational, purposeful behaviour of individuals, sociology has been informed by the view that it is social and group norms rather than self-interest that drive behaviour. (s. 91)
---------------------
The classical economists, for example, understood the potential power of market economics, in practice, but they also understood the vital significance of the moral in which economies operated. Adam Smith's message in particular has been grotesquely distorted over the past 200 years. As we saw in the first part of the book, the overall moral framework in which individuals acted was of enormous importance to him. The state had an important duty to promote and enhance such a framework, both intellectually and culturally. The idea, clear to Mrs Thatcher's heart, that there is "no such thing as society" is quite alien to this view of the world.
Innovation, entrepreneurship and profits are still essential. Economic competition exists on a global scale, and economies must be equipped for it. But economic success can be achieved, and achieved more successfully, within a broader and more beneficial framework than that driven by the pure, individual rationality of economic textbooks. (s. 205)
Many Europeans, while admiring the strength and power of the American economy, undoubtedly feel that the system of social values which prevails in the United States, manifested in the acute problems evident in the inner cities and the level of violent crime, for example, leaves much to be desired. (s. 206)
---------------------
The existence and development of social norms are issues which have more typically been addressed by sociologists than by economists. Sociologists have always focused upon behaviour at the aggregate level, on analysing social norms and social conventions. The recognition that aggregate behaviour of systems can be qualitatively different to that implied by its individual components taken separately has been made by many other disciplines. Environmentalists emphasized from the outset the fundamental interdependencies and complex feedbacks which exist in the world's economy. Increasingly, the mathematical tools of non-linearity required to analyse such phenomena are applied in sciences such as biology, chemistry and physics, enabling deep new insights to be obtained. The implications for economic analysis are profound. (s. 207-208)
---------------------
Behaviour of the system in aggregate cannot be deduced by simply summing up the behaviour of its individual component parts.
The promotion of the concept that the untrammelled, self-sufficient competitive individual will maximise human welfare damages deeply the possibility of ever creating a truly affluent, cohesive society in which everyone can participate.
The historical tradition of Western political parties, other than those of the extreme right or left, recognises and understands the importance of this point. But it is a tradition which is being eroded by the idea that the operation of a market economy is incompatible with collective responsibilities. The name of Adam Smith is regularly invoked by those who subscribe to this latter concept. But Adam Smith was a philosopher as well as an economist, famous in his time for his "Theory of Moral Sentiments" as for "The Wealth of Nations". And as he understood so well, society is more than the sum of its individual parts. (s. 211-212)
(Paul Ormerod studied economics at the universities of Cambridge and Oxford and for several years was Head of the Economic Assessment unit at the Economist.
He was Director of Economics at the Henley Centre for Forecasting from 1982 to 1992 and has been a visiting Professor of Economics at London and Manchester.
He has published widely in academic journals, both on orthodox topics and less orthodox ones, including neural networks, non-linear systems and artificial intelligence. Paul Ormerod is also a successful businessman.)
PS. Omat taitoni eivät valitettavasti riitä kohtien suomentamiseen. Ehkä joku muu ottaa haasteen vastaan. ; )
The view that society is made up of individuals acting on the rational calculation of their own self-interest pervades modern economics. Indeed, to an economist, just as to Mrs Thatcher, there is no such thing as society, only the individuals that constitute it. ... this notion was quite alien to the philosophy of Adam Smith, now eulogised as the intellectual discoverer of the powers of the free market. For Smith, the restraint of public morality on individual behaviour was innate. When industrialisation conspired to erode this framework, the state had a very clear duty to try to rebuild and strengthen it. (s. 34)
The benefits of co-operative behaviour are a key proposition of the environmentalists, who in sharp contrast to the individualistic behavioural model of orthodox economics,
have stressed from the outset the fundamental interdependence and interconnectedness of human actions. (s. 35)
---------------------
The Limits of Growth Team (MIT 1970, 1972) argued that five basic factors determined the ultimate limits of growth: population, agricultural and industrial production, natural resources and pollution. A change in any of these factors, had through complex connections in the system, implications for all the others. The conclusions were that, on then existing trends, the most likely scenario for the planet involved the limits of growth being reached during the next century, which would be followed by a sudden decline in population and production. It was possible to avoid this outcome and to bring stability, only by people and governments acting co-operatively to generate beneficial rather than harmful feedbacks in the system.
Many criticisms can be - and indeed have been - made of the initial Limits of Growth exercises. (...) But whatever the particular criticisms, the true and lasting significance of The Limits of Growth work was the development of a fundamentally different approach to understanding the workings of the economy to that of orthodox economics. (s. 36)
---------------------
The behaviour of the system may well be quite different from what might be anticipated from extrapolation of the model of the behaviour of individuals.
Individual behaviour does not take place in isolation. On the contrary, there are impacts on the behaviour of other individuals, which in turn cause feedback elsewhere in the system, and so on and so forth. Behaviour is altogether too complex to be captured by a mechanistic approach.
But it is not environmentalists who have adopted this complex model as a practical method of analysis. Increasingly, hard-headed mathematicians working in biology, climatology, chemistry and even physics are coming to see it as a more powerful way of understanding the world. (s. 37)
Smith argued that free markets, in which everyone, whether a buyer or seller, of labour or of produce, followed his or her own self-interest, would lead to outcomes which were to the benefit of all. It was this part of his contribution to economics that was translated into mathematics in the "marginal revolution". The mathematics refined and sharpened the assumptions which were required for this result to hold, and, given these assumptions, appeared to prove Smith's conclusion in a more rigorous way than possible with purely verbal argument. But in so doing, much of the richness and complexity of the original analysis was lost. Smith's insistence on the importance of the institutional framework and the overall set of moral values in which free markets operate was neglected, for such concepts do not convert readily into the language of mathematics. Neither was his deep interest in the process of economic growth and the processes by which some nations become rich while others remain poor addressed by the new system of economic analysis. The problem of growth was assumed to be solved, and a new central question for economics was therefore assumed:
how to allocate the resources generated by growth in the most efficient way. (...)
The initial success and attraction of marginal economics were essentially due to three factors.
First, by appearing to demonstrate the superiority of the pure, free-market economy, it served valuable ideological functions. For example, the less interference there was from government in the running of the economy and of society, the closer the real economy would be to the theoretical free-market ideal, and so, it was argued, the more efficient it would be. (...)
Marginal economics appeared to "prove" that business should be left as much as possible to its own devices, without help or hindrance from the state, and that the level of taxation should be as close to zero as possible, sentiments which exactly suited the Victorian philosophy of self-help and self-reliance.
The second reason was, as we have seen, that the concepts of harmony and equilibrium on which marginal economics is based were very much in keeping with the scientific spirits of the times. The third reason for the success of marginal economics was that it represented a formidable intellection achievement.
As an example of abstract human thought, even at this distance in time, it is truly impressive. (...)
The theoretical constructions introduced to economics over a century ago continue to pervade discussions of policy. They provide both a strong bias towards and apparently a strong rationale for policies which move towards the creation of a free, competitive market. For example, the political and social agendas of Ronald Reagan and Margaret Thatcher were powerfully motivated by the logic of free-market economics.
Or, to be more precise, free-market economics was used to underpin the ideological preconceptions of these politicians.
The deregulation of the financial markets in the 1980s in the Anglo-Saxon economies; the deregulation of and increased flexibility in labour markets,
a topic which is presently the topic of fierce debate among the political classes of Europe; the privatisation of state-owned industries; reductions in welfare programmes
- all these themes flow from the logic of the theory of competitive equilibrium. (s. 45-47)
The most powerful reason for the continuing appeal of the theory is that, despite their problems, Western market economies are clearly the most successful form of economic organisation yet invented. There is increasing power in the environmental critique of economic development, but ... mixed economies have delivered enormous benefits to their citizens over the past two centuries.
It cannot be emphasized too strongly that, in practice, the competitive model is far removed from being a reasonable representation of Western economics in practice.
By definition, any model necessarily abstracts from and simplifies reality. But the economy model of competitive equilibrium is a travesty of reality. The world, does not consist, for example, of an enormous number of small firms, none of which has any degree of control over the market in which it is operating. Small firms may be fashionable at present, but it is the large multi-national companies such as Ford, BP and Sony which dominate the world economy. It is entirely illegitimate to make the link between the model and the observed success of Western market economies. The theory introduced by the marginal revolution was based upon a series of postulates about human behaviour and the workings of the economy. It was very much an experiment in pure thought, with little empirical rationalisation of the assumptions. Designed as a logical description of how rational individuals and companies ought to behave, the emphasis lies equally on the words "rational" and "individual". The individual is considered to be the key building block of the system, the behaviour of the economy as a whole being simply the summation of the behaviour of its component parts. (s. 48-49)
---------------------
The public sector in Singapore has behaved in many ways like an exemplary Chandlerian (Alfred Chandler) company. It has had clear goals with which to judge its progress and achievements, and it has invested heavily in a number of dimensions in order to achieve these goals. It has shaped its own markets and created its own competitive advantage. Too often in the West, the public sector operates in a bureaucratic way, stifling initiatives, with the workforce itself having the primary interest of preserving the cartel structure which preserves its jobs, rather than in serving the public. In Singapore, salary increases of public-sector workers are linked to the overall performance of the economy, an important symbol of the role which the public sector is expected to play, namely through its own efficiency and vision to enhance the effectiveness of the private sector. (s. 64-65)
The New Right in the West have had so may easy targets in the public sector that their eulogy of the free market has attracted widespread political support. But their policy package contains two quite distinct offers. First, to eliminate the waste and inefficiency in the public sector. Examples of this is are both widespread and transparent. (...) The second part of the The New Right's policy package has been the belief that free-market solutions are always best.
It is this latter view which is profoundly mistaken. Markets and profits are crucial, the _pure_ free-market model itself is deeply flawed. (s. 65)
---------------------
There is such a thing as a society. Two hundred years ago, Adam Smith intuitively believed this to be true. Sociologists have long taken this proposition for granted.
At the other opposite pole to orthodox economics, with its focus on the rational, purposeful behaviour of individuals, sociology has been informed by the view that it is social and group norms rather than self-interest that drive behaviour. (s. 91)
---------------------
The classical economists, for example, understood the potential power of market economics, in practice, but they also understood the vital significance of the moral in which economies operated. Adam Smith's message in particular has been grotesquely distorted over the past 200 years. As we saw in the first part of the book, the overall moral framework in which individuals acted was of enormous importance to him. The state had an important duty to promote and enhance such a framework, both intellectually and culturally. The idea, clear to Mrs Thatcher's heart, that there is "no such thing as society" is quite alien to this view of the world.
Innovation, entrepreneurship and profits are still essential. Economic competition exists on a global scale, and economies must be equipped for it. But economic success can be achieved, and achieved more successfully, within a broader and more beneficial framework than that driven by the pure, individual rationality of economic textbooks. (s. 205)
Many Europeans, while admiring the strength and power of the American economy, undoubtedly feel that the system of social values which prevails in the United States, manifested in the acute problems evident in the inner cities and the level of violent crime, for example, leaves much to be desired. (s. 206)
---------------------
The existence and development of social norms are issues which have more typically been addressed by sociologists than by economists. Sociologists have always focused upon behaviour at the aggregate level, on analysing social norms and social conventions. The recognition that aggregate behaviour of systems can be qualitatively different to that implied by its individual components taken separately has been made by many other disciplines. Environmentalists emphasized from the outset the fundamental interdependencies and complex feedbacks which exist in the world's economy. Increasingly, the mathematical tools of non-linearity required to analyse such phenomena are applied in sciences such as biology, chemistry and physics, enabling deep new insights to be obtained. The implications for economic analysis are profound. (s. 207-208)
---------------------
Behaviour of the system in aggregate cannot be deduced by simply summing up the behaviour of its individual component parts.
The promotion of the concept that the untrammelled, self-sufficient competitive individual will maximise human welfare damages deeply the possibility of ever creating a truly affluent, cohesive society in which everyone can participate.
The historical tradition of Western political parties, other than those of the extreme right or left, recognises and understands the importance of this point. But it is a tradition which is being eroded by the idea that the operation of a market economy is incompatible with collective responsibilities. The name of Adam Smith is regularly invoked by those who subscribe to this latter concept. But Adam Smith was a philosopher as well as an economist, famous in his time for his "Theory of Moral Sentiments" as for "The Wealth of Nations". And as he understood so well, society is more than the sum of its individual parts. (s. 211-212)
(Paul Ormerod studied economics at the universities of Cambridge and Oxford and for several years was Head of the Economic Assessment unit at the Economist.
He was Director of Economics at the Henley Centre for Forecasting from 1982 to 1992 and has been a visiting Professor of Economics at London and Manchester.
He has published widely in academic journals, both on orthodox topics and less orthodox ones, including neural networks, non-linear systems and artificial intelligence. Paul Ormerod is also a successful businessman.)
PS. Omat taitoni eivät valitettavasti riitä kohtien suomentamiseen. Ehkä joku muu ottaa haasteen vastaan. ; )
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