Schlagwort-Archive: Economic Theory

Allgemein

Read Coase

Lynne Kiesling (link section) posted this in her blog. She’s into transaction cost theory, I am into transaction cost theory. So I am going to spread the word about this illustration of the Coase theorem by Megan McArdle.

She also mentions a reference to Coase’s 1988 book “The Firm, The Market, And The Law“. She, like most people, including the Nobel Price committee, believes that “The Problem of Social Cost” is the most fundamental thing in the book (and most fundamental work he has written).

I tend to disagree with most people, and luckily, Coase is on my side (that is if I remember correctly, because I really can’t remember where I read this). Both of us think that “The Nature Of The Firm” is his most important paper. But first chapter in the book is one of the best things I have ever read in graduate school. All business and economics students should have read it. Probably before they start reading standard micro/macro textbooks.

A while ago someone on Brad DeLong’s guestbook was whining that he doesn’t understand why people learn about the optimum macroeconomic policy if it is never going to be applied “in the real world”. If you think so, too, check out Coase. He’ll tell you why. And after that you’ll also understand why Douglass North believes in the remarriage of economic and political thought (in the medium run, and I’ll post the source later).

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Political Theory

Hardwired Hirarchy

Thinking about coordination of human activities I can’t help but wonder – do we have a hardwired tendency for hirarchical coordination? Is there some sort of biological reason for people’s need to have an ordered society?

Is this simply about assigning responsibilities and easily finding the culprit(s) when the damage occurs or could it possibly have something to do with fundamental behavioral tendencies of the animal in us?

If Hayek is right that chaos is more effective and creative but humans can’t lastingly deal with the challenges of that chaos, could there be a biological element to the “centralising” movements that created vast socio-economic- all-encompassing-monopolistic hierarchies (Communism, Naszim)?

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Political Theory

Is the bottom line really chapter 32, in part VIII of volume one?

Oxford’s Niall Ferguson thinks that Marx’s thoughts about crisis prone capitalism should be given more attention in light of the not so recently past days of “CEOcracy” and increased income inequality in the US.

But today, Ferguson claims, the class struggle is not waged between workers and owners but between ordinary shareholders and their CEO and controlling oligarchs, so the Marxian acculmulation theory could have a point. In the end, he somewhat loses track and the article becomes more of a summary of recent estimates of American growth prospects. And he never tells us what the consequences could be if the analogy were correct.

But anyway. Could it be true? Could Marx be headed for big comeback in the digital age? I am very sceptical. Altough I do think that he has created a scary seductive beast whose feared return will likely scare this planet for some decades to come.

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Allgemein

Structure in motion.

fractalsNow we all know that structure is something precious in unstable times like these, don’t we?

And like some of the gold diggers during the glod rushes of earlier times were more successful than others, some people are able to identify the precious stability, the macro trends of development within which all the instability occurs. Think of a fractal image on which a micro pattern is infinitely embedded in a macro version of itself. Since our lives take place in unstable micro patterns most of us can’t see how these patterns are actually floating on much more stable macro patterns. But some can. And I think, with reference to the fractals of social development, a lot of them are interested in economic history.

You wonder what I am talking about? OK – here’s your macro pattern detection test. What does the following dialogue, taken from www.inpassing.org, August 8th, 2002, tell you about the future…


“Do you really save money by paying her to follow you around and remember what you already have in your wardrobe?”

“Well yes, because she reminds me of things like that I already have a black skirt.”

– Two women outside Berkeley Bowl (which is a grocery store, not a bowling alley, oddly enough.)

And now I recommend to compare your thoughts to Berkeley’s Brad DeLong’s.

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compulsory reading, post-modernism

Stuck somewhere in the middle. Growing up these days.

The German weekly “Die Zeit” this week provides a survey of the consequences of disappearing traditional family structures and socially predetermined gender roles for today’s youngsters.

According to the article, socio-athropologists and behavioral biologists alike now claim that kids these days are in dire need for authority and some sort of biographical structure. The price of freedom, of entirely open biographies, is apparently not a modest one – as rising suicidal attempts and a new autodestructive habits (German: “ritzen”) among both young boys and girls seem to indicate.

Now it is all too obvious that going back is not an option, and even the staunchest conservatives will agree on this point, at least in private. Even apart from the most obvious justifications from an economic and philosphical perspective, modern societies do need social variety as evolutionary organisational “market”.

But kids apparently need some sort of clear-cut answers about life and their position in society to grow up. Growing up does, of course, entail to question these previous certainties – but if there are none, no questions remain to be asked, no walls to be torn down.

But if going back is not an option – where are modern societies headed for? The one thing I think becomes obvious from reading accounts like the one cited above is that we are in need of a new social equilibrium – some sort of “steady-state-equilibrium”. One that is open and stable at the same time.

Don’t ask me for sketches as I don’t have any. But should that turn out to actually be an oxymoron, I fear we will have to witness more and more socially dysfunctional kids, grown ups and then parents – with a resulting negative feedback slope – until both people and society will have evolved in a way that can bridge the rising gap between our genetic and cultural endowments.

Now you might reply to this that no older generation in history has ever been able to understand their younger one and that the above article is simply an example of the classic generation-gap, reframed in modern scientific language by publication-hungry scientists.

That is quite possible. But I don’t think so.

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almost a diary

Off the phone. Off the market.

I just talked to a friend who is also suffering from the current anemia of the labour market.

These days, the streets are plastered with highly qualified graduates and post-graduates from the world’s best universities. As the Frankfurter Allgemeine Sonntagszeitung remarked two weeks ago the European elite is currently given the boot by the very same companies that bid up starting salaries to unprecedented amounts during the talent wars of the late nineties. So what goes up must come down? Maybe. Maybe it all does make sense. But we don’t care at the moment.

Isn’t it plainly unfair to have people spend years on their building outstanding CVs and then release them into a sluggish economy? Yes it is. But there you go. I know that markets are marvel and we all benefit from the way they work. They are not supposed to be fair to do their job. But that’s precisely why they do need a bashing from time to time, however unjustified it may be.

And if not now, when? I think I am going to help my fellow victims and go back to do my phd now. Hopefully I’ll finish it right on time for the next talent war…

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cinema, Political Theory

Sexy beast.

Sexy BeastOk, just another headline. But this is actually an addendum to the last entry and also a reminder to myself.

At some point I have to tell you why I believe the “new left” is not sexy in most countries. As a teaser – it’s about the victory of Oliver Williamson over Karl Marx (or at a more fundamental level about the behavioral assumptions both made).

Williamson is right in many aspects but his theory is complex, difficult to apply and assuming things about ourselves we don’t like. Entirely unsexy. Marx is wrong in many aspects, but his assumptions and his theory are appealing to what we want to think about ourselves. Communism is a Sexy Beast. And beware, it probably still bites.

(Note: No need to see “Sexy Beast“. It is only an average film and the only reason I can think of for Ben Kingsley’s Oskar nomination is that the eternal Gandhi continuously shouts entirely incomprehensible English insults. I guess that must have impressed the Academy’s jury.)

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