openDemocracy wants to tell us all that coronavirus has entirely upended the assumptions of neoclassical economics. This is because openDemocracy doesn’t have the first clue about the assumptions of neoclassical economics. This is not, therefore, a good starting point for a reordering of the economic assumptions we use when trying to deal with reality.
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Samizdata quote of the daySamizdata Illuminatus (Arkham, Massachusetts) · Economics, Business & Globalization · Slogans & Quotations October 5th, 2020 |
 3 comments to Samizdata quote of the day |
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“Open Democracy” claim that economics claims that “price determines value” – it is more the other way round, people value something and they are prepared to pay for it (less than they value it) and someone else is prepared to sell it (for more than they value it) – the value is different for both parties (economic value is subjective) so they BOTH benefit by the exchange. So it is more “value determines price” rather than “price determines value”.
As for Covid 19 – some governments, such as that of the United Kingdom and the Republic of Ireland, have proceeded as if their endless edicts (the lockdowns and so on) and vast government spending, has no real cost. Whereas some governments, such as those of Nicaragua, Sweden and Belarus, if have been far more concerned about the costs of intervention – costs that will involve human lives, for example the Daily Telegraph (some time ago) cited a report that some 200 hundred thousand people may die in the United Kingdom from non Covid illnesses – because of the panic measures and general hysteria spread by officialdom here.
It is ironic that “Open Democracy” (a leftist group) is siding with the SO CALLED “free market” governments of the United Kingdom and the Republic of Ireland (Eire is basically just a puppet of the “Woke” Corporations and the European Union these days),rather than such leftist regimes as Nicaragua, Sweden and Belarus (bad as they may be in other ways).
People here know that serving the vast “Woke” Corporations (close the local stores, or burn them down, so everyone has to shop via AMAZON) who are joined-at-the-hip with the bureaucracy of the “international community” has nothing to do with the Free Market – but “Open Democracy” do not know that.
Like the “assumptions” of gravity, those of economics will have the last laugh.
Actually, though, if you really do know your economics, you’ll know that the foundations of Samuelson/Solow neoclassical economics are fractured right at the very root. This was known at the latest in the early 1960s, and later acknowledged by no lesser cheerleader than Samuelson himself. But the excuse was: ‘yes, we know this, but look at what we can do, if we ignore that problem’.
PS. No, I’m not going to explain what the problem is. Be curious, find out for yourself. Start in Cambridge in the 1950s and work forward.