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"Left-vs.-Right" is not the only false paradigm!

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Geolibertarian
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« on: August 25, 2010, 06:20:54 pm »

So, if Marxist, Keynesian, and Austrian School economics, respectively, are not the only options, then what else is there?

There are several other options from which to choose. Webster Tarpley, for instance, advocates the so-called "American School" of economics (which I partly agree with).

I, on the other hand, advocate Georgism:

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http://www.politicaleconomy.org/gaffney.htm

Excerpts from The Corruption of Economics

by Mason Gaffney

Neo-classical Economics as a Stratagem against Henry George

Neoclassical economics is the idiom of most economic discourse today. It is the paradigm that bends the twigs of young minds. Then it confines the florescence of older ones, like chicken-wire shaping a topiary. It took form about a hundred years ago, when Henry George and his reform proposals were a clear and present political danger and challenge to the landed and intellectual establishments of the world. Few people realize to what a degree the founders of Neoclassical economics changed the discipline for the express purpose of deflecting George and frustrating future students seeking to follow his arguments. The stratagem was semantic: to destroy the very words in which he expressed himself. Simon Patten expounded it succinctly. "Nothing pleases a ... single taxer better than ... to use the well-known economic theories ... [therefore] economic doctrine must be recast" (Patten 1908: 219; Collier, 1979: 270).

George believed economists were recasting the discipline to refute him. He states so...in his posthumously published book, The Science of Political Economy (George, 1898: 200-209). George's self-importance was immodest, it is true. However, immodesty may be objectivity, as many great talents from Frank Lloyd Wright to Muhammad Ali and Frank Sinatra have displayed. George had good reasons, which we are to demonstrate. George's view may even strike some as paranoid. That was this writer's first impression, many years ago. I have changed my view, however, after learning more about the period, the literature, and later events.

Having taken shape in the 1880-1890s, Neo-Classical Economics (henceforth NCE) remained remarkably static. Major texts by Alfred Marshall, E.R.A. Seligman and Richard T. Ely, written in the 1890s, went through many reprintings each over a period of 40 years with few if any changes….

Not until 1936 was there another major "revolution," and that was hived off into a separate compartment, macro-economics, and contained there so as not to disturb basic tenets of NCE. Compartmentalization, we will see in several instances, is the common NCE defense against discordant data and reasoning. After that came another 40 years of Paul Samuelson’s “neoclassical synthesis.” J.B. Clark’s treatment of rent, dating originally from his obvious efforts to refute Henry George (see below), “has been followed by an admiring Paul Samuelson in all of the many editions of his Economics” (Dewey, 1987: 430).

Clark's capital theory "... gives the appearance of being specially tailored to lead to arguments for use against George" (Collier, 1979: 270). "The probable source from which immediate stimulation came to Clark was the contemporary single tax discussion" (Fetter, 1927: 142). "To date, capital theory in the Clark tradition has provided the basis for virtually all empirical work on wealth and income" (Dewey, 1987: 429; cf. Tobin, 1985). Later writers have added fretworks, curlicues and arabesques beyond counting, and achieved more isolation from history, and from the ground under their feet, than in Patten's dreams, but all without disturbing the basic strategy arrived at by 1899, tailored to lead to arguments against Henry George.

To most modern readers, probably George seems too minor a figure to have warranted such an extreme reaction. This impression is a measure of the neo-classicals' success: it is what they sought to make of him. It took a generation, but by 1930 they had succeeded in reducing him in the public mind. In the process of succeeding, however, they emasculated the discipline, impoverished economic thought, muddled the minds of countless students, rationalized free-riding by landowners, took dignity from labor, rationalized chronic unemployment, hobbled us with today's counterproductive tax tangle, marginalized the obvious alternative system of public finance, shattered our sense of community, subverted a rising economic democracy for the benefit of rent-takers, and led us into becoming an increasingly nasty and dangerously divided plutocracy.

The Imperative to Put Down Henry George

Neo-classical economics makes an ideal of "choice." That sounds good, and liberating, and positive. In practice, however, it has become a new dismal science, a science of choice where most of the choices are bad. "TANSTAAFL" (There Ain't No Such Thing As A Free Lunch) is the slogan and shibboleth. Whatever you want, you must give up something good. As an overtone there is even a hint that what one person gains he must take from another. The theory of gains from trade has it otherwise, but that is a heritage from the older classical economists.

Henry George, in contrast, had a genius for reconciling-by-synthesizing. Reconciling is far better than merely compromising. He had a way of taking two problems and composing them into one solution, as we lay out in detail below.

[Continued...]


http://www.monetary.org/henrygeorgeconceptofmoney.htm

HENRY GEORGE’S CONCEPT OF MONEY
And Its Implications For 21st Century Reform

by Stephen Zarlenga
American Monetary Institute
2001

Preface and Synopsis:

Attesting to the importance of Henry George’s life and work are his 5 million books in print; the active Henry George organizations and schools around the globe with thousands of supporters and uncountable others who still respond to his name with “Oh yes - the single tax”. A man considered important enough to require the attention of one of the political establishment’s most potent operators to derail his 1886 campaign for Mayor of New York City. George was influential enough to merit that POPE LEO XIII direct a section of a Papal encyclical at his work in 1891.

This kind of effect, I’d suggest, was not generated by the economic theorizing or theoretical observations of any individual or school, but has resulted from what was really a great moral crusade for economic justice.

To George, the land question was the key means to that end, and his name is rightfully associated with land tax reform -- with the “single tax”, described below. But although that was his main focus, there was a lot more to George than that. As Ken Wenzer pointed out “An important element of Georgism was reform of the banking and monetary system”  That’s the main focus of this paper.

My task has been to find and present George’s monetary views, within the context of his own times and values; and to evaluate their relevance to present day questions. A task made more complex by the confusion and misinformation in which the monetary subject has traditionally been shrouded. For this reason it was necessary to organize the paper into several steps. Step one describes George’s major views and values; step two describes the real monetary context of his time, separating out the monetary myths. George’s explicit monetary views are presented in step three. Step four draws some “Georgist” conclusions on monetary reform today and offers suggestions for consideration.

This study was proposed because several years ago on first reading George, I found indications that his monetary views might have been quite advanced and potentially relevant to present day arguments over the proper monetary role of government. This research has confirmed that -- to a much larger and clearer extent than I had imagined.

His monetary viewpoint may be especially important to the divergent monetary prescriptions advocated from participants within the present day Georgist movement. Some prominent Georgists advocate a move to “free banking”; a quite radical change from our present monetary system. Other prominent Georgists advocate the establishment of a gold standard. Some support establishing forms of locally circulating moneys often referred to as LETS (Local Exchange Trading Systems). An awareness of George’s viewpoint could be an important factor in such discussions.

The conclusion of AMI’s monetary research to date is that such monetary systems cannot be reconciled with two of George’s overriding requirements: that social institutions be consistent with individual self-determination; and with the principle of equal rights.

True monetary reform must take a better path. AMI’s research indicates that money, properly defined, is a legal institution of society and government, not a commodity or economic good of the markets; that if money is a legal institution, then the control of monetary systems can be rightfully viewed as a proper function of government; much as the law courts are. This broad definition or attribute of money leads directly to conclusions on what is needed for a monetary system to operate justly; not favoring one or another group through the establishment of special monetary privileges. This study finds (repeatedly in his own words) that Henry George in large part shared this view.

This viewpoint does go counter to the current idolization of free markets, and the faith being placed in them to automatically create optimum results for mankind. But the overwhelming body of historical evidence that we’ve studied indicates that while some things can and should be left to free markets, a society’s monetary system is emphatically not one of them.

This was the reason suggested by AMI to the Schalkenbach Foundation, that we do this study rather than just requesting others much better versed in Henry George’s work to simply look up what he wrote about money. His monetary views need to be examined in the light of their implications for present day questions. The local currency advocates would find some very limited support from George’s actions. The free bankers and the gold advocates would probably both tend to characterize George’s monetary position as primitive. But according to AMI’s research, this is a misreading -- perhaps not so much of George’s views, but of monetary theory -- of the nature of money.

GEORGE’S WORLD VIEW

We now step back a bit from our monetary topic to note the major aspects of George’s work which will later help place his monetary ideas into context. Bear with me -- those of you who know George like the back of your hand. This paper does not assume the reader is well versed in his work.

THE MORAL CRUSADER

“(Political Economy) may be argued in a great many different ways, but I prefer the ground that its opponents have taken, the ground of justice. I believe that justice is the supreme law of the universe”, wrote Henry George

One of George’s important accomplishments was the re-introduction of moral issues into economic thought. From Adam Smith’s Wealth Of Nations (1776) and earlier, there had been a tendency for moral questions -- evaluation of the right or wrong -- the good or evil of economic policies to be largely ignored or shunted aside and replaced by a questionable utilitarianism which generally ended up supporting the status quo of the power structure.

Thus Ingram wrote of Adam Smith that “He does not keep in view the moral destination of our race, nor regard wealth as a means to the higher ends of life.”

One of Smith’s contemporaries -- economist Reverend Thomas Malthus -- twisted morality to preach that the poor must choose between what he called “vice” -- having children and therefore engaging in sex -- or starvation. Economics rightly earned the title of “the dismal science”.

In The Scholastic Tradition

But there is nothing dismal about George’s writings, which can be seen as in the much older tradition of the Catholic “Scholastics” or “Bookmen” -- the church scholars of about 1100 to 1500 AD who were very familiar with the existing written works available in the west. The Scholastics made the first attempt at a science of economics to build a rationally based moral code of business behavior and determine what should be, rather than what was. To their credit, they were much more influenced by Aristotle than by the bible, and many of them such as Albert the Great of Cologne and his student Thomas Acquinas were later canonized as saints.

Though George was generally well read, I didn’t find indications that he was aware of this body of work which has become better known in the English speaking world since the 1940’s.  When George uses the term “Scholastic” it is to refer negatively to the university economists of his day.

While the content of George’s work differed greatly from that of the Scholastics, their form was very similar. George did not focus on the issues of concern to the Scholastics -- mainly usury, and the “just price” -- but he would have probably felt very much at home with their method, and especially with their deep concern for justice. Their method -- a reliance largely on theoretical reasoning -- is useful for investigating questions of morality, but not as useful in determining questions of fact or of utility. Interestingly, most 19th and 20th century economists continued using the Scholastics theoretical method, but ignored the moral questions and inappropriately applied it to other matters. George, concentrating on moral issues, generally avoided this error.

GEORGE’S GUIDING PRINCIPLES

Also diverging from the Scholastics was the manner in which George’s guiding principles were framed. The great goal of justice was shared by both, but the Scholastic’s aims were more socially oriented -- a just order of society, in conformity with reason, observation, tradition and law -- natural, human, and sacred law. George’s primary guidelines on the other hand, are framed in a much more individualistic fashion.

The two core principles which are George’s anchors, are evident -- and explicit -- throughout his writings:  The principle of equal rights, and of individual self determination. George expresses this as “The law of human progress…the moral law…the equality of right between man and man …(and) the perfect liberty which is bounded only by the liberty of every other…” (P&P, 526).

[Continued...]

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« Last Edit: February 17, 2011, 01:07:45 pm by Geolibertarian » Report Spam   Logged

"For the first years of [Ludwig von] Mises’s life in the United States...he was almost totally dependent on annual research grants from the Rockefeller Foundation.” -- Richard M. Ebeling

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