Once the role of the “free entry and exit” assumption so characteristic of orthodox labor economics is understood, it becomes apparent that it is anything but an innocent “simplifying assumption.” Rather it is a substantive assumption, in the sense that much of what passes for “knowledge” about the operation, efficiency, and fairness of contemporary labor markets is based upon it. Without full employment, relative bargaining power becomes a crucial determinant of the market process. It follows that policies derived from an ill-considered presumption of full employment must be rethought and even reconsidered if the facts do not support that assumption. At the most abstract level there is a simple and direct lesson in all of the above. In an economy without full employment it is relative bargaining power, not “skills” or “productivity,” that determines the wage structure. Moreover, supply and demand models that implicitly assume full employment necessarily obscure this fundamental reality and for that reason can lead us to erroneous conclusions and flawed policies.
Classical and neo-classical economics, as dominant today, has used
the deductive methodology: Untested axioms and unrealistic assumptions
are the basis for the formulation of theoretical dream worlds that
are used to present particular ‘results’. As discussed in Werner (2005),
this methodology is particularly suited to deriving and justifying
preconceived ideas and conclusions, through a process ofworking backwards
fromthe desired ‘conclusions’, to establish the kind ofmodel that
can deliver them, and then formulating the kind of framework that
could justify this model by choosing suitable assumptions and ‘axioms’.
In other words, the deductive methodology is uniquely suited for manipulation
by being based on axioms and assumptions that can be picked
at will in order to obtain pre-determined desired outcomes and
justify favoured policy recommendations. It can be said that the deductive
methodology is useful for producing arguments thatmay give a scientific
appearance, but are merely presenting a pre-determined opinion.
If you get a flow of credit increasing, as we’ve seen in the last few years —that flow of credit didn’t go to more wealth accumulation as we normally use the term in economics, as capital goods. What you got is an increase in bubbles of one kind or another.
What has happened repeatedly in recent years is that we’ve had monetary authorities allowing — through deregulation and lax standards —banks to lend more. But this lending has not gone for creating new business, not for capital goods. Disproportionately it has gone to increase the value of land and other fixed resources (buildings, real estate, etc). And that’s what everybody was worried about.
En viktig poäng som vi historiskt verkar ha glömt, eller som det pratas alldeles för lite om, är hur den konsumtionskultur vi lever med idag är ett resultat av medvetet planerande och formande av människor. Detta är viktigt eftersom bristen av detta försvårar för oss att tänka alternativ till det vi lever idag, när vi inte har något att jämföra det med, eller förstår att det har uppkommit lämnas det under slöjan av vad vi lärt oss, våra vanor, inlärda reaktioner och aspirationer, det som är ”normalt”.
Läs därför Victor Lebow’s ”Price Competition in 1955” och lägg märke till han beskriver vår konsumtionskultur som medvetet skapad för att upprätthålla industriernas produktivitetsökningar. För att producera något måste en också ha köpare, när ens produktionskraft ökade mötte industrialister alltså utmaningen att skapa konsumenter till deras produkter för utan dem vore produktionen meningslös. För att se hur psykologi och vetenskap varit tätt kopplat till detta projekt ”of molding the American mind” titta på Adam Curtis dokumentärserie ”The century of self”, eller läs om Public Relationsgrundaren Edward Bernays och hans bok Propaganda vilket på den tiden var ett positivt laddat ord vilket sedan ersattes efter andra världskriget av ”public relations”. Lägg även märke till de extremt odemokratiska och manipulerande dragen en finner i texter likt Lebow’s här under.
Our enormously productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfactions, our ego satisfactions, in consumption. The measure of social status, of social acceptance, of prestige, is now to be found in our consumptive patterns. The very meaning and significance of our lives today expressed in consumptive terms. The greater the pressures upon the individual to conform to safe and accepted social standards, the more does he tend to express his aspirations and his individuality in terms of what he wears, drives, eats- his home, his car, his pattern of food serving, his hobbies.
These commodities and services must be offered to the consumer with a special urgency. We require not only “forced draft” consumption, but “expensive” consumption as well. We need things consumed, burned up, worn out, replaced, and discarded at an ever increasing pace. We need to have people eat, drink, dress, ride, live, with ever more complicated and, therefore, constantly more expensive consumption. The home power tools and the whole “do-it-yourself” movement are excellent examples of “expensive” consumption.
What becomes clear is that from the larger viewpoint of our economy, the total effect of all the advertising and promotion and selling is to create and maintain the multiplicity and intensity of wants that are the spur to the standard of living in the United States. A specific advertising and promotional campaign, for a particular product at a particular time, has no automatic guarantee of success, yet it may contribute to the general pressure by which wants are stimulated and maintained. Thus its very failure may serve to fertilize this soil, as does so much else that seems to go down the drain.
As we examine the concept of consumer loyalty, we see that the whole problem of molding the American mind is involved here.