Learning something about economics

Why I like reading reviews: 

1. I learn something;
2. I may never get to see the movie or have time to read the book.

An example: Capitalism and Its Critics by John Cassidy review – brilliant primer on leftwing economics (The Guardian)

Half of the book is given over toMitteleuropa (where we meet Karl Polanyi and Rosa Luxemburg, both of whom are having a bit of a moment these days), India (JC Kumarappa, Gandhi’s crony and pioneer of ecological economics), and Latin America (whose dependency theorists argued that the developed world was scooping up the benefits of rising productivity at the developing world’s expense). Cassidy steers clear of the theoretical thickets of György Lukács and Louis Althusser as well as of the more idiosyncratic anti-capitalist paths taken by Milovan Djilas and José Carlos Mariátegui. Still, it would be churlish to complain about omissions in a book that finds room for 50 potted biographies. This is by far the best primer I have read on the luminaries of the economic left.

Early socialists, Cassidy shows, had little faith in government and equated the state with upper-class corruption. Many of them were sentimentalists or oddballs. The utilitarian socialist William Thompson, for one, thought it was possible to kill the “passion for individual accumulation” simply by substituting cooperation for competition; the humans he describes sound suspiciously like Sims characters. Carlyle’s anti-capitalism (“Mammon-worship is a melancholy creed”), meanwhile, led him to a pro-slavery position.

What is ecological economics? (Yale Insights):

Q: What is ecological economics?
Ecological economics is a trans-disciplinary field. It's not trying to be a subdiscipline of economics or a subdiscipline of ecology, but really it's a bridge across not only ecology and economics but also psychology, anthropology, archaeology, and history. That's what’s necessary to get a more integrated picture of how humans have interacted with their environment in the past and how they might interact in the future. It’s an attempt to look at humans embedded in their ecological life-support system, not separate from the environment. It also has some design elements, in the sense of how do we design a sustainable future.? It’s not just analysis of the past but applies that analysis to create something new and better.

Q: How does it differ from environmental economics?
Environmental economics is a subdiscipline of economics, so it's applying standard economic thinking to the environment. Mainstream economics, I think, is focused largely on markets and while it recognizes that there are externalities, they are external—they're out there. Ecological economics tries to study everything outside the market as well as everything inside the market and bring the two together.

Conventional economics doesn't really recognize the importance of scale—the fact that we live on a finite planet, or that the economy, as a subsystem, cannot grow indefinitely into this larger, containing system. There are some biophysical limits there. The mainstream view doesn’t recognize those limits or thinks that technology can solve any resource constraint problems. It’s not that we can't continue to improve the human situation. But we have to recognize that the environment creates certain limits and constraints on that, and we can define a safe operating space within which we can do the best we can.

Q: You just mentioned scale. Elsewhere you have talked about distribution and allocation as key parts of ecological economics. Could you explain those as well?
The three interrelated goals of ecological economics are sustainable scale, fair distribution, and efficient allocation. All three of these contribute to human well-being and sustainability.

***

Robert Frank, an economist from Cornell, offers a solution of changing the income tax rules so that we tax only consumption and not savings, and we tax consumptions at a very high, progressive rate. You could have as much income as you wanted, but if you chose to spend it on luxury goods, then you would be taxed at a very high rate. If you chose to invest it in things that are going to be socially more productive, then you wouldn't be taxed at all.

That last bit sounds very interesting. 

 Capitalism appeals because everyone loves the idea they can get rich. This, of course, ignores the fact that capital begets wealth and those without capital are not getting rich, Nietzsche said somewhere that human beings cannot survive without illusions, so capitalism prevails.

sch 5/25