The Economic Schools of Thought

[Anonymous_Coward]

Argh…you’re killing me here DriftWood…

Such a fine collection of fallacy and strawman arguments and I have to go to bed.

I would suggest you find another source of your economic ‘knowledge’ and not to rely so heavily on that messed up site.

[Torsten]

Does anyone know what “associative economics” is?

I found the following on the net:

With its many and wide-ranging implications for modern economic life, associative economics places human beings at the centre of all economic processes. Our capacity to be both free and responsible means we can make conscious what is otherwise left to the unconscious working of market forces and that we can therefore regulate our own behaviour and thus obviate the state’s role in this regard.

As represented in the Centre, the nature and significance of associative economics takes full account of wide ranging views from Aristotle to Adam Smith, Karl Marx to J M Keynes and Milton Friedman, as well as the ‘sustainability critique’ and the sophistications of modern finance. It also owes much to the observations of
Rudolf Steiner, the Austrian ‘renaissance man’ whose seminal work was concerned with the advent of global economics.

http://www.cfae.biz/associative_economics/

and

Associative Economics – economic arrangement which fosters interaction among producers, traders, creditors and consumers and where appropriate price, true human needs, poverty eradication, equity and impact on the environment are explicitly addressed in the process.

[Stolz2525]

@DriftWood

It sounds like some optimum unchanging value for the size of the money supply is possible, when its clear (to some of us) that the size of the money supply should not be set by a constant value, but by the variable called demand for money.

This is a simple (and possibly stupid question), but why? Prices are set in the marketplace on a good by supply and demand, but that is assuming the money is a constant. If you continuely vary the money supply then you make it much harder for anyone in the marketplace to find an acceptable price for any particular good.

@DriftWood

Its just that his ideas about monetary policy is so destructive (because deflation of the value of the currency),

This is actually a false statement. The definition of deflation is a decrease in the monetary supply, and he was for keeping it constant, supporting neither inflation nor deflation.

What I think you aren’t seeing is that there can be different causes of price decreases (what you call price deflation). One is an actual contraction of the monetary supply, or deflation. This is almost always the result of a previous inflationary period and is very bad. However, while the deflation is bad, it’s just a syptom of the inflationary policy. The second reason prices decrease is because of advances in production. For instance, a computer today costs half of what it did 10 years ago and its 20 times as powerful. No one seems to have a problem with this, but without inflation this is what you’d be seeing in other industries too. Their growth just isn’t fast enough to beat inflation like the computer industry can.

A constant money supply also gives people incentive to save for the future, because the value of their money isn’t constantly being eroded. This creates more reserves for banks to lend, which would lower interest rates, creating cheaper money for businesses. This is a good signal to businesses that investment at that time will pay off in the future. Because of the way things are now, they lack that signal. In reality, the signal is reversed because generally when the economy is doing poorly and people have low savings, that is when the FED cuts the interest rates.

Of course all this is assuming it really matters what is “best” for society as a whole. Many central planners will tell you that they do in fact know, and that they can spend your money better than you can. The overarching issue in my mind is that theft is wrong, and whether or not it is good for society is of no consequence. When you inflate a currency you steal from everyone holding that currency in order to give to the few whose “demand” you are satisfying.

[Jon_Irenicus]

From that description, it seems very vague; mayhap it’s just another school promising the world whilst offering little of substance? A lot of heterodox schools other than the Austrians (and perhaps the Marxians and Institutionalists) do not seem to have much depth to them.

-Jon

[Torsten]

@Jon Irenicus

A lot of heterodox schools other than the Austrians (and perhaps the Marxians and Institutionalists) do not seem to have much depth to them.

I dug a bit further and I think they are kind of a special breed of institutionalists. The key concept seems to be a threefolding of civil society (culture), state (politics) and market (economics).

http://www.cadi.ph/threefolding.htm

[BlackSheep]

DriftWood, people here are giving you a hard time, picking on every little irrelevancy. I just want to point out that I find your points interesting and well studied, so I hope you don’t give up on us. Anyway, I wished these different strategies on money could co-exist; I don’t see it as a chaotic change at all, because people wouldn’t just exchange their money for another, one day to the next. It seems like it would be a smooth change, unless the current central really messes things up, that might change region to region, and the currencies that provide the most stable prices would tend to win. Possibly there could be other monies, like precious metals, used for storage…

[Jon_Irenicus]

Check on his posting history before assuming anyone is giving him a “hard” time.

-Jon

[liberty_student]

Yeah, if someone wanted to give him a hard time, they would send Nicky his way. [:D]

[Jon_Irenicus]

Sort of like the nuclear last resort option. [:P] Speaking of him, wonder where he’s disappeared off to these days.

-Jon

[Anonymous_Coward]

@Jon Irenicus

Sort of like the nuclear last resort option. Speaking of him, wonder where he’s disappeared off to these days.

-Jon

Firebombing police stations I would imagine…

[wombatron]

@Anonymous Coward

@Jon Irenicus

Sort of like the nuclear last resort option. Speaking of him, wonder where he’s disappeared off to these days.

-Jon

Firebombing police stations I would imagine…

I wish him well nonetheless. I miss his charming ad hom arguments [:P]

[krazy_kaju]

Drift, I don’t mean to insult, but you’ve really gone into the realm of the absurd when you began saying that the value of something “in paper” can be more than “in reality.”

I don’t think you understand the fact that the value of a commodity “in paper” represents the value of a commodity “in reality.” For example, when the price of crude oil goes up in the stock market, what happens? Well, gas costs more. Why is that? Because the paper value (and therefore the real value) of a key ingredient in gasoline became more expensive.

Likewise, gold ETFs and real gold have the same value. Why is that? Because as people buy more gold ETFs that translates into a higher demand of real gold also because the value of gold and gold ETFs are linked in every possible legal and economic sense.

[krazy_kaju]

@Jon Irenicus

From that description, it seems very vague; mayhap it’s just another school promising the world whilst offering little of substance? A lot of heterodox schools other than the Austrians (and perhaps the Marxians and Institutionalists) do not seem to have much depth to them.

-Jon

Well, technically speaking, every school of thought except the neoclassical school is “heterodox.” So I’d include Austrians, Keynesians (and their derivatives), monetarists, and new classicists in what I would consider heterodox schools of thought that have depth.