Showing posts with label LTV. Show all posts
Showing posts with label LTV. Show all posts

Wednesday, August 12, 2015

The D.E.N.N.I.S. System of Capitalism

I'm a pretty big fan of It's Always Sunny in Philadelphia being a 20-minutes-outside-of-Philly boy myself. The show itself centers around five sociopaths who run an Irish bar in the only city where it's worth getting a cheese steak.

One of the characters, Dennis, is an incredibly narcissistic womanizer. Throughout the course of the series, it is revealed that he has multiple bench warrants for sexual misconduct and keeps duct tape, a Maglight, and a bundle of zip ties in a hidden compartment in his car.

In one episode, he reveals that he has a systematized his pattern of abusive and manipulative behavior into a mnemonic eponymous acronym. Oddly enough, this system also works quite well to explain how the capitalist system conditions the working class into accepting their conditions of poverty.

Thursday, July 30, 2015

#tbt Matias Vernengo 2006 Technology, Finance, and Dependency: Latin American Radical Political Economy in Retrospect

Through my odd traverse through economics education, I admittedly haven't gotten into Dependency Theory. This past weekend, I decided to finally look into it. In general, I'm rather impressed. As an anarchist, I generally appreciate any theory which takes as its foundation relationships of power in thinking through social and political relations.

This paper by Matias Vernengo provides a great introduction to dependency theory. Vernengo, who maintains the blog Naked Keynesianism, outlines the development of Dependency Theory through the scholarship of primarily Latin American and US American neo-Marxist and structuralist thought.

Download the paper here

Thursday, July 16, 2015

#tbt Robert Hale 1923 Coercion and Distribution in a Supposedly Non-Coercive State

Okay, so admittedly this sort of strays from the realm of "economics" proper, but I think economists would do well to read it. In 1923, lawyer and economist (it was once possible to be both) Robert Hale argued that, despite platitudes to the contrary, the institution of property ownership itself is a coercive system.

Hale argues that the institution of private property is not so much about one's freedom to use particular objects, but rather one's ability to exclude their use by others with the backing of the violence of the state. Throughout the paper, Hale goes through several different iterations of potential conflicts of ownership and use to demonstrate precisely how coercive the supposedly non-coercive institution of capitalism is.

Download the paper here

Sunday, July 12, 2015


After weeks of googling myself, I am pleased to announce that my working paper on human capital augmented production functions is finally live on RePEc. You can view it here. You might recognize the theoretical proof from a previous post I wrote on here a few months ago while the paper was still in development.

What is in the paper that was not in the blog post are as follows:

  1. A reasonable review of the literature
  2. A simulation to drive the point home
  3. Zombie puns
Enjoy, and leave comments below. Or cite me in a rejoinder - that would be cool too!

UPDATE: In the interest of transparency and what I meant to do but just forgot (thanks to Robert Vienneau for reminding me), here are my R scripts. I apologize in advance about the run time of the second one:

Humbug Simulation
Success Simulation
If you have any trouble with the scripts, make sure you clear your R environment from one before running the other.

Wednesday, July 8, 2015

Shallow Green Resistance

I never really got into the radical environmental movement. I'm sympathetic, but by the time I became any sort of radical leftist, the green scare was in full swing. As national law enforcement cracked down and with virtually all militant environmental activism labeled an act of terrorism, much of the core of the radical environmental movement either went to jail, went soft, or steered clear of the brand of heroics that had become a right of passage.

As corporations continued their push against any and all environmental conservation, advocacy for the environment was left to increasingly out-funded non-profits.

Additionally, a conspiratorial, post-9/11, post-crash political climate filled the environmental movement with entirely too many new age weirdos. This shift brought with it a distinct taming of the movement into a syncretic hodge-podge of lifestyle environmentalists.

Thursday, June 25, 2015

#tbt A.W. Phillips 1958 The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957

Perhaps one of the most misremembered paper in macroeconomic theory is that which gave birth to the famous Phillips Curve. The original paper, which drew upon nearly a century's worth of UK data, demonstrated an empirical relationship between the rate of unemployment and the change in nominal wages (commonly referred to as wage inflation). The result - that money wages increase more rapidly with less unemployment - opens a few potential theoretical interpretations.

The Marxian interpretation would have it that larger pools of unemployed workers would make the overall workforce more disposable, hence reducing worker power to secure higher wages. This is largely the position that Phillips himself took although I don't believe he labelled it Marxian.

Another interpretation embraced by the mainstream of economics asserts that this relationship indicates the tendency for programs geared towards "artificially" reducing unemployment ultimately results in inflation. The underlying presumption here is that any sort of policy intervention to boost employment will necessarily be less productive than the private sector. Thus, additional workers employed at the going wage but producing less value will lead to more money chasing fewer goods. With a larger supply of money in the hands of workers but not as much to spend it on, these wage earners will simply bid up prices, leading to inflation.

Here, we have the recipe for the bastardization of the Phillips Curve by the likes of Ned Phelps and Milton Friedman. These two reinterpreted the Phillips Curve to be a relationship between unemployment and price inflation. This version of the model broke down soon after it was developed during the oil price shocks of the early 70s. Hence, a new breed of economists, led by the likes of Robert Lucas, Finn Kydland, and Edward Prescott, proclaimed that discretionary economic policy could not work because the model that economists had (over)developed failed to predict inflation due to structural changes. These economists attributed this to reactions to policy pronouncements by economic actors on the basis of their expectations. Hence, this later breed recommended policy rules that would set incentives for individuals to work around.

Anwar Shaikh has shown, however, that although the later versions of the Phillips curve don't hold, the original model still holds.

Download the article here

Friday, June 12, 2015

Interview on Unemployment with Orchestrated Pulse

Yesterday, I sat down for an interview with Robert Stephens II of Orchestrated Pulse for an interview on how unemployment fits into the capitalist system. We talked about what unemployment is, and why the unemployed are necessary for the power of the boss over workers. Needless to say, I threw some Kalecki into the mix and somehow managed to work in a shout-out to Ed Baptist's new book.

R: What is unemployment?

Mike: Everyone, workers and business owners, needs employment, but for different reasons. The workers need consistent employment so that they can buy the things they need to survive. Business owners need employment because it is ultimately human effort that creates the things that they sell for a profit.

Thus, we can take two perspectives on employment. First, it can be for the purpose of determining how much work is needed for bosses to maximize their output. Second, it can be for the purpose of determining how much work is needed for workers to maintain a given standard of living. Whichever version we choose, unemployment becomes the amount of labor that we believe society isn’t producing.

To speak of unemployment, we need a very specific type of economic system. It has only been within the last 400-600 years that “employment” has become a necessity as an end in itself.

Check out the interview on Orchestrated Pulse

Thursday, June 11, 2015

#tbt Joan Robinson 1972 The Second Crisis of Economic Theory

More often than not I find my curmudgeonly self channeling the snark of Joan Robinson. To me, Robinson was the best economist to ever live.

First, Robinson, unlike many (dare I say most?) economists is actually concerned with economic history and the history of economic thought. To her, a theory was only as good as it was able to explain a particular situation that actually happens in the real world.

Second, Robinson rarely, if ever used math. The distinct advantage to this approach is that she actually talks about real things. So focused was Robinson on real things instead of math, that she led the charge on the UK side of the Capital Controversy which ultimately demonstrated the folly of neoclassical production functions theoretically, mathematically and empirically.

In this particular piece, she takes on the economic orthodoxy's response to the "Second Crisis" - that of increasing inflation coupled with economic stagnation. To her both crises - that of the great depression and that of the great stagflation - evidence a fundamental failure to seriously consider the questions Keynes tried to evoke: How do we maintain near-full employment, and what is employment for?

Download the article here

Monday, May 11, 2015

March Against Monsanto

So it appears I'm going to be leading a teach-in with Alexandria Eisenbarth after the March Against Monsanto on Saturday the 23rd. It's gonna be at C-Squat downtown. Never been there before, so I'm kind of excited.

It's kind of a weird topic for me to be talking about since I don't do environmental economics. It's not that I don't care about the environment, nor is it that I think that the environment is somehow separate from the economy. I'm just kind of bored by economic models of the environment. To be honest, I don't really think that "economic" considerations should take all that much precedence over environmental issues.

Instead, I'm going to be talking about how ownership structures in capitalism necessarily lead to the exploitation, impoverishment, and disenfranchisement of the majority of the world. I plan to touch on how and why this inequality tends to manifest along identitarian and geographic lines. Then I'm going to explain how this tendency for exploitation to intensify makes the capitalist system fundamentally unstable.

Monday, April 6, 2015

Sol Invictus

Looks like LK of SD21C has come up with a sun theory of value based on an admittedly amusing caricature of the labor theory of value. While this theory might provide insight into how a solar deity might account for the exploitation of his energy release, it doesn't seem all that useful for understanding capitalism as an actually existing social system:

The source of most energy that reaches the earth is clearly the sun. Without the sun and the energy it provides, there wouldn’t be any production of any kind.

Energy can be embodied in raw materials and we can measure human work as energy expended and machine work in terms of energy expended too. So therefore all commodities must have a “physically-necessary sun energy” value. All commodities are just embodiments of the “physically-necessary sun energy” required to produce them. We can even – unlike the hopeless Marxists – use a real homogenous unit to calculate energy straight from the natural sciences: the joule.

Certainly, the mythologizing "ruthlessly exploiting the poor, oppressed and innocent sun" might make one admire the odd coincidences required for life on earth. What the labor theory of value is intended to address was the social relations required to explain capitalism. What the labor theory of value states, very simply, is that all value is brought into production through human labor, and that all labor can be measured (and therefore, compensated for) in units of time.