Roc: An Opening

Due west of the Etherian Mountains, in the southern regions of the Kingdom of Teresco, there was an area known as the High Tops. This was a wild place – even by the standards of that desolate, spell-ridden kingdom – and uninhabited save for a few goats and the relics of forgotten religion. Broad, semi-circular valleys cut the land, separating the hills that stood like great rising fists of stone. These valleys were riddled with fast streams and their edges draped with many tiny spumes of waterfall. Bracken grew thick in the valleys and heather grew fast against the stone.

It was early spring, and the wind channeled down the valleys buffeted the ears as if in malice. Again, as if in recompense for this ill-treatment, the wind also brought with it the delicate scents of heather, and the pleasing songs of dactyls and curlew. What the landscape of the High Tops took in hostility, it repaid in beauty.

In one particular valley, far overhead, there soared a bird, in appearance much like that of an eagle, though decidedly larger. The creature bore the brown feathers and yellow crown of the Mesperiman roc. Its breed were named for the angel Mesperimus who – it was said – had once come down from heaven to strike the Giants Etherium into stone. The Giants Etherium were – again, it was said – titanic monsters had made it their sport to roll great boulders out across the Kingdoms of Men. They had done so in the spirit of fun, and had kept tally of the destruction each had wrought upon mankind. It was said that the broad valleys of the High Tops, curved like the lower part of the letter U, were channels carved by these boulders as they rolled towards the towns and cities of that antique age.

The punishment the angel Mespirimus inflicted upon the giants was to transform them into rock, whilst retaining their capacity for thought and feeling. So that they were doomed to weather away, dying slowly over thousands of years. The glassy orbs that the giants had cast out across the Kingdoms of Men were shattered into crystals that had then sunk beneath the earth. This was rumored to be the source of Teresco’s uncommon mineral wealth, and – the crystals naturally being of a thaumaturgic nature – explained both the number and uncommon power of its magical practitioners.

And so stood the Etherian Mountains, out to the east, casting their rapidly diminishing shadows across the Tops. It was early morning, and the sun now shone down the valley, having arisen over the Etherian Mountains a mere hour ago. Great prisms of light lanced down through the morning mists, abolishing them like the Angel Mesperimus was said to have abolished the Giants Etherium.

The bird whose namesake had thwarted the giants now scanned the valley for the very small things it sought to eat. It knew, in a dim and birdlike manner, that it ought to be heading west with all speed, but it still needed sustenance. Its gaze detected movement, on one of the paths running alongside the valley.

What the roc saw there it judged too dangerous to be worth attacking, so it ignored it. The bird was only a juvenile, and had many decades yet to go before it grew to its full size. There would be easier prey elsewhere in the valley.

Whilst we may concur in some respects with the roc’s judgment, we shall not ignore what it saw, for what it saw was a young woman, marching up the side of the valley. We shall not ignore her because she is the subject of our story, and this seems as good a time as any to begin it.

Lars P. Syll and Brad de Long on True Keynesians

So I don’t fully understand the argument here. Brad de Long (BDL) seems to be claiming that Lars P. Syll (LPS) is claiming that to be a ‘true Keynesian’ one must believe that temporary demand-shocks lead to a permanent decline in output.

BDL says, in contrast to what LPS claims, John Maynard Keynes (JMK) himself did not believe that short-term demand-shocks lead to a permanent decline in output.

To this end, BDL quotes a passage from Ch22 of The General Theory in which JMK describes how a crisis can eventuate. In this description, business managers are disappointed at lower than expected profits (i.e. a ‘declining marginal efficiency of capital’). This causes them to reduce investment and increase their liquidity preference, which in turn causes unemployment.

I disagree with BDL’s claim that the quoted passage suggests Keynes did not believe that a temporary fall in aggregate demand could lead to a long term decline in output. In all honesty, the passage doesn’t seem to suggest anything one way or the other. Perhaps business manager’s profit-expectations were disappointed because of an unanticipated decline in demand. Or perhaps demand remained utterly constant and the business managers just duped themselves into thinking demand was about to take off, and then it didn’t.

This is probably just me being dense, but I just don’t see why BDL thinks that passage proves anything about what Keynes thought about the ‘long term’ effects of ‘short term’ demand fluctuations. The marginal efficiency of capital is defined by Keynes as:

being equal to that rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life just equal to its supply price. This gives us the marginal efficiencies of particular types of capital-assets. The greatest of these marginal efficiencies can then be regarded as the marginal efficiency of capital in general. The reader should note that the marginal efficiency of capital is here defined in terms of the expectation of yield and of the current supply price of the capital-asset.

The ‘expected annuities’ here are going to depend on what business managers think future profits are going to be, which they determine by ‘projecting forward’ the situation at the present time. The situation at the present time could be the actual number of sales they had that period, which is (part of) aggregate demand. A sudden fall in demand will reduce the expectations of future profits and hence the marginal efficiency of capital.

On a broader point, the use of ‘short term’ and ‘long term’ is massively confusing. The ‘non Keynesian’ argument seems to be that a short term dip is cancelled out by another short term rise, so that the integral of the overall output level for the entire history of human civilization remains constant regardless of period-by-period fluctuations.

I genuinely don’t know (or even much care) what the ‘proper Keynesian’ argument is vis a vis the effect of short term fluctuations on the long term. It seems obvious to me that short term falls in output (i.e. unemployment) will sum to a fall in ‘long term’ output. Perhaps I’m wrong about that, and I’d be grateful if someone could explain why.

Learning to harass

Today as I was walking to the supermarket I happened to pass a group of young men. It was as I was about to walk up a set of steps, and four were sitting on the rails at the base of the steps, and another was sat on the rail at the top of the steps.

These are shallow steps, and running alongside them is a ramp for wheelchairs and prams and suchlike. It was late afternoon. The sky was overcast.

It should further be noted that when I describe these as ‘young men’, I mean they were probably – oh, I don’t know – 13 to 15 years old.

As I passed them heading up the steps a woman was walking down the steps. As she walked past him, the one sat perched on the rail at the top of the steps shouted down to his mates:

Oi Danny! I’d say that was at least a eight out of ten!

Or words to that affect.

In case the context isn’t clear, he was passing comment on the woman’s appearance and shouting his opinion of same down to one of his companions, while she was still very much within earshot.

As I passed the 14 (?) year old boy I considered pushing him slightly so that he fell off the railing. I then admonished myself for even considering such a thing. If I had done so he could easily have fallen onto the tarmac and split his skull. I then admonished myself for not telling him not to harass women in public.

In all honesty, I was never any more likely to give him a Good Talking To than I was to push him off the railing.

Then I went to the supermarket and bought my groceries, and thought no more about it until now.

What made me think of this again was reading this tweet by Laurie Penny:

I’ve seen enough instances of harassment of women by men to know that this must be a severe and ubiquitous problem. The fact that I – a man – have happened to witness this sort of thing going on several times must mean that it goes on all the time.

Cowardice and selfishness will always prevent me from “stepping in” when I see harassment happening*. I know how groups of stupid men act when they can claim to themselves they have been attacked by other men. I also know how individual men act in such circumstances. This is especially true of the kind of men who verbally harass women in the street.

Obviously this demonstrates that I am a terrible and inadequate person; I knew that anyway. But it also demonstrates something else.

What made me remember that particular incident was how young these lads were. I say 14 to 15, but they could have been even younger for all I know. A few years ago they probably thought girls were icky. And now they’ve learnt to treat women as objects in public.

Perhaps this particular chap will grow up and develop impulse control and spend less time hanging around on streetcorners with his mates. Perhaps he’ll learn to behave decently. Perhaps. But there’s a good chance he won’t. But he learnt to behave like this so quickly. It only took a couple of years to transform an innocent kid into a misogynistic gobshite.

This is patriarchy, I guess. Or an aspect of it.

I genuinely don’t know how to solve this problem. I suspect if it ever gets solved it will be through an endlessly frustrating, grindingly difficult process of teaching boys to be better men, and letting the bad men die off slowly.

* Excepting instances of out-and-out violence, where it’s obvious I’m the only person present able to do anything to stop the woman getting severely injured.

The General Theory Chapter 1

The first chapter of John Maynard Keynes’ The General Theory of Employment, Interest and Money is only a paragraph long; but it already exhibits one of the recurring themes of the book, which is Keynes’ insistence that what he calls the “classical theory” of economics is still valid on its own terms. Keynes’ argument is that the classical theory only applies to a “special case only and not a general case”.

He also argues that “the characteristics of the special case assumed by the classical theory happen not to be those of the economic society which we actually live, with the result that its teaching is misleading and disastrous if we attempt to apply it to the facts of experience.” This is an amusingly roundabout way of saying that the traditional theory is pretty much worthless, without actually coming out and saying so.

I read this as a rhetorical gambit on Keynes’ part. He wants his new theory to be palatable to his professional colleagues, so he can’t just dismiss the classical theory as nonsense outright. He has to skirt around the issue. I think this need to conform to certain “economic” assumptions and modes of thinking hampers the presentation at various points later on in the book, but I’ll get into that later.

One particular line in the first chapter needs drawing out:

I shall argue that the postulates of the classical theory are applicable to a special case only and not to the general case, the situation which it assumes being a limiting point of the possible positions of equilibrium.

I don’t like economic equilibrium. It’s one of those tricky economic ideas that seems built on top of a whole raft of other tricky ideas. First you have to accept the existence of two unobservable entities: the demand curve and the supply curve. You then have to assume these two unobservable things have a particular set of characteristics (that they are functions, that they slope in a particular direction, that they are monotonic). You then have to assume they stay in the same shape for an extended but often unspecified length of time. Then you have to accept that there exists some (again more-or-less well described) set of forces causes prices to move to the point of equilibrium (the single point of intersection of these two curves).

So the fact that Keynes is talking about equilibrium at all is disappointing. The reference to a “limiting point” is interesting, but we’ll have to wait and see how this gets developed.

In a footnote to the first chapter Keynes writes that he’s decided to refer to both “classical” (i.e. pre-Marx) and “neoclassical” economists as “classical”. He admits this might be a solecism, but goes right ahead and does it anyway.

Morality, inequality, and charity

If Tim is correct that he has a higher IQ than Polly Toynbee, then this is unfair. Dissembling nature has blighted Polly with lesser abilities to perform certain kinds of cognitive acts, abilities that Tim has in such abundance that he is able to demolish my feeble arguments in less than a paragraph.

Polly and I both have powers of reasoning inferior to that of Tim Worstall. These are brute facts of reality. We are each born with a different set of endowments, and this places limits on what we can achieve. Life is unfair. And Tim is right that calling these brute natural inequalities “immoral” is a misuse of words, and I concede the point.

Something can be unfair without necessarily being immoral. We speak of something being “immoral” when it falls within the realm of human choice. It is unfair that Tim is cleverer than Polly Toynbee (as he assures us he is), but it wasn’t Tim’s decision (or anyone’s decision) that this should be so.

But sometimes things are both unfair and immoral. Society, being the product of human choice, is a realm in which we can say that because something is unfair it is immoral. Society is the way it is because people have chosen that it should be that way. Our society is riddled with inequalities of power and wealth that are not the result of nature. And this is unfair and immoral.


Readers will be familiar with the arguments of the philosopher John Rawls, whose big idea was that justice is fairness. There are arguments along Rawlsian lines that a certain degree of inequality is justifiable, because it is necessary to reward those gifted individuals who can improve the collective human condition to such an extent that even the very poorest are made better off than they would be in a more equal situation. But these arguments only enter into consideration after we have established the idea that the first and fairest way of distributing humanity’s finite resources is equally. Equality of resources should be the baseline, and any deviation from that equality should be determined on a case-by-case basis.


Put it like this: if, at some point in the future, humanity develops technologies that enable us to improve our cognitive capacities in various ways, including perhaps elevating poor old Polly Toynbee to the intellectual heights of the likes of Tim Worstall, then it would be fairest to distribute that technology as equally as possible. It would, I think, be immoral to restrict such a technology to only those with enormous wealth and power. At this point one’s IQ would cease to be a brute fact of nature, and would become a question of fairness. We – that is, humanity – would have  to choose how to distribute the gifts of intelligence, just as we now choose how to distribute the gifts of material wealth.

And this brings us back to charity. If you accept that chosen inequalities are morally objectionable, then any situation where one person has surplus wealth that they can choose to give to someone in need of that wealth, in turn becomes morally objectionable. Charity becomes an issue of private virtue and public vice. On an individual basis, charity is laudable, but when politicians start praising charity or calling for a ‘big society’, we should be more condemnatory. Politicians should be in the business of making a better society, not in perpetuating the inequalities of existing society. The better society is one with robust and non-voluntary social supports, not soup kitchens.


Anyway, Merry Christmas.



Worstall’s cold, grey, loveless thing


Tim Worstall asks:

And what the fuck’s wrong with voluntary collective action rather than State enforced collective action?

Answer: charity presupposes a condition in which some people have stuff which they can do without, and some people lack stuff that they really need. This inequality (which, like all inequalities, is morally objectionable on the face of it) is only sustained by the actions of the capitalist state in enforcing property rights through its monopoly on the legitimate use of force. In a more just world, there would be no need for charity because you would not have a situation in which some people have, whilst others need.

Aside from this obvious point, I honestly don’t see any moral difference between a spontaneous, voluntary urge to do good on the part of certain individuals, and a reflective, truly collective urge to do good as manifest in a legal requirement to provide support to those in need through the existing system of taxation and welfare.

There is however, a practical difference, in the sense that the former option has more failure modes than the latter. If we, as a community of individuals, choose to rely on charity as the means to ensure that those in need do not starve, then there is a greater chance that certain unfortunates will slip through the system, or be denied what they need because they’re ugly, or smell bad, or are for whatever reason thought to be undeserving by the ‘charitable’ individuals left to dispense their support.

As Britain’s greatest ever prime minister once wrote:

Charity is a cold grey loveless thing. If a rich man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim.

The dearth of *monetisable* investment opportunities

Isn’t the problem here that there is a lack of monetisable investment opportunities, rather than a lack of investment opportunities per se?

I mean, the Internet is a great invention, but a lot of the benefits it brings people’s lives aren’t directly exploitable by capitalists. The blogosphere has been a huge benefit to my personal education and self-actualisation, but none of those benefits have resulted in profit going to capitalists. People write blog posts for free and I read them for free (modulo the cost of an Internet connection and PC). Both bloggers and readers get something beneficial out of the exchange, but no actual money changes hands.

This highlights one of the big problems with capitalism: investment isn’t directed towards things that are actually useful or beautiful, but towards things out of which capitalists believe they can make money. A classic example of this problem is the development of new antibiotics. Because of the development of drug-resistant bacteria, we need new antibiotics, and we need new ways of combating bacterial infection.  But these new ways aren’t being developed because there isn’t any obvious way for private businesses to profit. “Antibiotics are a one-and-done treatment, and are far less profitable for Big Pharma than drugs taken daily to treat chronic conditions and, preferably, have no competition to keep costs down.”

Another acute technological problem lies in transport. This guy has a good explanation as to why private-sector companies won’t invest in Elon Musk’s Hyperloop concept, but he can’t seem to recognise that the obvious solution is to simply have government pay for it. Investing in uncertain, expensive, and speculative technologies is one of the things that government is for.

One of the most frustrating things about the privatisation vs. nationalisation debate is how irrelevant it is. Ultimately, you’ll still have scientists and engineers in labs and workshops trying to solve the problem. It is not clear to me that there is any systematic difference between private and public enterprise in this regard. Great innovations have come out of both publicly and privately-funded initiatives (although it should be noted that most of the really big, important innovations have been paid for by the government; aerospace, the development of the electricity grid, the Internet, the World Wide Web, GSM, most of the early work in computers…).

The solution to both anti-bacterial resistance and the transport problem and global warming is to “just get on with it”. If the private sector won’t pay for it then democratically-accountable governments should. Ultimately someone needs to pay for and manage the research and technological investment programmes necessary to solve our problems. Rather than dicking about playing at shops, we (i.e. humanity) should just get on with it.

Hobbes endorses the ISO

The following extract is from Thomas Hobbes’ The Elements of Law:

In the state of nature, where every man is his own judge, and differeth from other concerning the names and appellations of things, and from those differences arise quarrels, and breach of peace; it was necessary there should be a common measure of all things that might fall in controversy; as for example: of what is to be called right, what good, what virtue, what much, what little, what meum and tuum, what a pound, what a quart, &c.

For in these things private judgments may differ, and beget controversy. This common measure, some say, is right reason: with whom I should consent, if there were any such thing to be found or known in rerum natura. But commonly they that call for right reason to decide any controversy, do mean their own.

But this is certain, seeing right reason is not existent, the reason of some man, or men, must supply the place thereof; and that man, or men, is he or they, that have the sovereign power, as hath been already proved; and consequently the civil laws are to all subjects the measures of their actions, whereby to determine, whether they be right or wrong, profitable or unprofitable, virtuous or vicious; and by them the use and definition of all names not agreed upon, and tending to controversy, shall be established. As for example, upon the occasion of some strange and deformed birth, it shall not be decided by Aristotle, or the philosophers, whether the same be a man or no, but by the laws.

(my emphasis)

Shackle and uncertainty

Reading this interview with G.L.S. Shackle, I am struck by this point:

“involuntary unemployment” merely means that there are people who haven’t enough faith in their expectations to give employment.

Something I’ve always been unclear about with regards to Keynes is whether he (and the post Keynesians, and weird hybrids like Shackle) believed that uncertainty was the only barrier to full employment. There is no obligation on anyone to use all the resources at their disposal. You could argue that the only reason anyone ever maintains excess resources is because of uncertainty, but this presupposes that you – the individual entrepreneur – have direct control the quantity of the resources available to you.

In this context the “resource” is the population of employable people. The entrepreneurial class does not control the population of employable people, and it is not clear that they would necessarily choose to employ the entire population of employable people, even if they had perfect foresight. Indeed it could be argued that the *ahem* entrepreneurial class has an interest in keeping a reserve army of labour unemployed so as to maintain discipline within the ranks of those they do choose to employ.

Once again, economics ignores the political dimension.

Two economic realms

There is a real world of production, consumption, exchange, and distribution. At any given moment in time the economic system has a certain capacity. This capacity is determined by the total number of people available to work; and the total amount of tools, plant, and infrastructure they have available with which to work.


This capacity is not fixed in time. The total capacity can change through time. This change in total capacity can occur in several distinct ways:

  1. Changes in technology may enable more desirable economic outputs (or fewer undesirable outputs) with a fixed given set of inputs;
  2. Changes in the skills of the workforce may change the nature and quantity of the goods and services the economy is capable of producing; and,
  3. Changes the relative amounts of plant, tools, equipment, and infrastructure may change the nature and quantity of the goods and services the economy is capable of producing.

Point 1 is about changes in the quality tools through time, as well as the creation of new tools in response to new desires. Points 2 and 3 are about changes in the relative ratios of different existing desires. WWII provides examples of all three types of change. The war saw technological change, but it also saw changes in the type of outputs that the economies of the combatant economies were actually producing, and hence the skills and tools that were deployed.


Because this real world of production, consumption, exchange, and distribution involves people interacting and coordinating their efforts, there needs to be some way for them to communicate with each other. One of the unique features of the animal known as homo sapiens is our use of symbolic communication. This enables humans to coordinate their actions in ways that other animals are simply incapable.

There are lots of tools for symbolic communication. Books and instruction manuals are one example; prices and money are another. Although a particular form of symbolic communication will be instantiated in a particular way (for example, being recorded in a notebook, or stored in magnetic charges on a computer hard drive), it is their meaning, which is generated within human minds, that is really important as far as economics is concerned.

Symbols have meanings, and, depending on those meanings, symbols cause humans to behave in different ways. If I have lots of the symbol known as “money” (i.e. if my bank balance is high) I will behave differently than if I have little money. A share in a company is a symbol of the estimate of the real wealth that that company possesses at the moment and an estimate of the wealth it will generate in the future. This estimate is generated by the judgements of many different people, including accountants and market participants.

If I have purchased a share in a company I will behave differently depending on whether that symbolic value increases or decreases. If it decreases in value I may choose to “sell” my share in the company, thus cutting my losses, in doing so I will affect a small change on the collective estimate of that company’s prospects for generating real wealth.


There are two kinds of wealth; real wealth, and symbolic wealth. Real wealth is the ability to acquire a particular real good or real service at a time I wish. Symbolic wealth is the method by which we humans keep track of what our real wealth is, who is belongs to, and how it should be organised.