The same phenomenon can be found in other fields, e.g. an amateur would naturally assume that Sigmund Freud, with such reputation, must still have something in his theory that remains intellectually relevant today, completely oblivious to the fact that those pseudoscientific ideas have been superseded.
Today, the things that Freud got right sound like common sense and/or conventional wisdom, and most of the rest sounds batshit insane. Nobody really needs to read Freud himself these days because any Psych 101 textbook will have the good parts without the mistakes mixed in with it.
Examples of things Freud got right:
1) A lot of cognition is subconsious
2) People have desires that often conflict with each other
3) What people learn and experience in childhood affects how they act as adults
I agree. This is exactly why the “read the Classics” method is not a very good teaching technique, except among exceptionally gifted and motivated students. The vast majority of “Classics” were written before 1830, while the vast majority of our knowledge on domains other than philosophy was created after that year.
It is far better to read or listen to a summary than read the original (unless you have a great deal of time on your hand).
I like your reply despite being a long time fan of Mortimer J Adler , he of the “Great Books” approach to higher education . Adler was exceptionally motivated himself . Yet, he always maintained that the “not exceptional “ could and should deeply read classic texts , not just summaries. And Adler argued , read not just one or two but rather a group of them so as to educate oneself about several of the great ideas that people have grappled with for centuries . In theory , would it not be the case that classical liberal education can help an individual not fall prey to the bad ideas taking hold in one’s current political / social environment?
I absolutely agree with you that a general study of history does help the individual not fall prey to bad but popular ideas. That is exactly what my Substack is about!
I do not, however, think that reading the Classics is the best method to do so for the reasons that I mentioned above. I have a PhD and I struggle to read the Classics.
I think students can learn almost as much from a 5-minute summary as struggling to read a book for many days. More importantly, the method is far more time-effective, so students can absorb a much wider variety of topics and opinions.
I think this is a bizarre post and comment. Marx's theories (in some debased fashion) still undergird the largest manufacturing economy on the planet, and possibly the future dominant superpower of the 21st century. Imagine half the psychiatrists in the world were still practicing some version of Freud's teachings -- even if you think they're wrong, you sure as hell wouldn't be able to argue with them without reading their source material.
China's version of Marxism isn't what Marx and Lenin practiced, it's a highly-evolved version that replaces many of the obviously flawed ideas that were tried in past attempts. It may have replaced those ideas with further bad ideas. It might collapse from its own internal contradictions. But it's not completely divorced from Marx's theories either. You cannot possibly practice or think about economics in the 21st century without grappling with China's version of socialism, and you cannot understand China's version of socialism without reading Marx. Attempting to do so is like trying to do quantum physics without understanding the debates around the Copenhagen interpretation, because "that's just a piece of history."
ETA TL;DR: I think it is bonkers insane that Noah wrote an entire piece on Marxism without mentioning the word "China" even one time (excluding quotes.)
"Marx's theories (in some debased fashion) still undergird the largest manufacturing economy on the planet" <-- No they don't
"China's version of Marxism isn't what Marx and Lenin practiced, it's a highly-evolved version that replaces many of the obviously flawed ideas that were tried in past attempts." <-- Bro, what are you talking about
To quote Xi Jinping: "Marx and Engels' analysis of the basic contradictions in capitalist society is not outdated, nor is the historical materialist view that capitalism is bound to die out and socialism is bound to win."
Kevin Rudd. "[w]ith Xi Jinping, we have seen the return of Ideological Man with his own brand of Marxist-Leninist nationalism. This was clear from Xi’s earliest writings in 2013 which resulted in the reassertion of the party’s Leninist control of Chinese politics. His Marxist ideological worldview began extending to the economy after the 19th Party Congress in 2017 when he formally redefined the party’s ideological priorities away from the rip-roaring days of unconstrained 'reform and opening' to develop the economy, to a new era dealing with the 'imbalances of development' which the Deng Xiaoping, Jiang Zemin, and Hu Jintao periods had created."
I mean, what do I know. I would love to see a Noahpinion article on Marxism that actually grapples with the ideologies that influenced Xi Jinping. You could start by explaining to me why Xi's China is not really Marxist. You could explain what the differences are, in practice. You could explain why this isn't relevant for me and for my kids, who may very well be deeply affected by the coming clash between China and the West's ideologies. There are so many interesting things you could say, including "here's why you are wrong" that would be so much more informative than "Bro."
I'm guessing he means that China's economy isn't run as a command economy, as Marx would have envisioned. There is private property and a (somewhat) free market.
It's definitely run by an authoritarian party, which claims to be implementing a "dictatorship of the proletariat." But an analysis of that dimension of Marxism seems more like something for political science or history, not economics.
But the major news story of the 2020s is that Hu Jintao's China was moving towards market liberalism and Xi Jinping (who touts Marx as a major ideological influence) is now visibly moving backwards away from those reforms. You can see this in the expansion of SOEs and other economic "reforms" that are increasingly turning the economy more towards a command economy. Wealthier and middle-class Chinese families are visibly fleeing China because they no longer feel that their privacy rights will be respected. And this is only a dozen years in!
I can see a lot of things that Noah might be arguing. They could be:
1. None of this is happening. Despite the fact that it appears that China is centralizing many economic decisions *and* the guy running China says he's heavily influenced by Marx's teachings, we should not take any of this very seriously.
2. Sure, China is moving more towards a command economy, but there are still huge components of capitalism at the lower levels, so it isn't truly Marxism until you remove all/some/most of the capitalism. (AKA "it's not a rat pie unless it has 50% rat in it.")
3. Sure, it does look like China is re-centralizing economic decision-making under Xi, but that's not *Marxism*. Real Marxism comes from the Trier region of Germany, everything else is "sparkling central planning."
4. China's leaders don't have any ideology. Sure they're centralizing their economy in a manner reminiscent of Marx's ideas, but it's only because they like power/want to fight a war. (This is a restatement of #3, but I figured I'd write it out longhand.)
5. Some fifth thing that would probably make an amazing and nuanced blog post that I'd love to read.
He's covered the subject multiple times and has said it's 1, 2 and 4. They let prices dictate most markets. The government doesn't do centralised planning as much as direct lending towards favoured sectors and create paranoia through a security state/propaganda that can destroy industries they don't like overnight. It has backfired on them if you think in terms of general prosperity. It has worked out for them if you only think in terms of national power or national wealth. Some capitalists and companies have become obsenely rich but there's no way most people living in the West or much of the world would tolerate a quasi-capitalist economy that's hardly Marxist.
For China to be truly Marxist, they'd need to nationalise most companies and industries.
Other than her political rhetorics, can we really say that contemporary China is Marxist in any sense? "China's version of Marxism" sounds like a weasel term, much like "Socialism with Chinese characteristics".
I mean, if this were 2004 I'd understand your point of view. "Of course China isn't really socialist anymore, the last vestiges of centralized control will be gone soon" was the kind of optimistic wishful prediction people used to make back then. But history has been *nothing* like those predictions. The state is more powerful and repressive than ever. China's government has moved to suppress entire areas of the tech and finance sector in order to control the direction of the economy [1]. State-owned businesses (SOEs) have seen massive expansion over the past decade [2].
You can see all of these developments in a negative light. I certainly do. But you cannot look at China's expansion of state control vs. capitalist control and say "gosh, China isn't really socialist." They're a massive economy with a government that centralizes economic decisionmaking on huge areas of their industry, while also leaving limited-but-curated subsets of the economy open to semi-fettered capitalist management. To say anything interesting about China -- and hence global economics in the 21st century -- you need to first acknowledge what China's government is doing and then try to understand it. To understand it you need to have some sense of the ideology that's driving these decisions.
Germany in the 1930s under the Nazis was capitalist and moved towards a war economy. So did the western allies in the 1940 and during substation wars. Even in capitalist economies you can have command and control by the government. Command and control is not sufficient condition for implementation of Marxism/socialism/communism.
Right on spot. State ownership is neither sufficient nor necessary for a system to be Marxist (recall that, strictly speaking, true Communism would get rid of the state for good).
Karl Marx’s writings said virtually nothing about how to run an economy or even what socialism or communism would actually look like.
Marx spent almost all his time “proving” that Communism was the inevitable outcome of the internal contradictions with capitalism and arguing against other Leftist who had a different vision.
It was Vladimir Lenin who actually wrote about and implemented what Communism actually was in the real world.
And then Stalin copied Lenin’s model and so did Mao. That Leninist economic model died with Mao (except in a few scattered hold-outs), but the political model of a one-party totalitarian dictatorship lives on.
TLDR: The current leaders of China don’t give a damn what Marx wrote about how to run an economy.
Here is a better summary of Chinese economic policies:
Great comment. It is remarkable how terms like “Marxism”, “communism” and “socialism” are thrown around (and equated) despite the fact that each of these terms are applied subjectively, reflecting the lack of any consensus (or consistent) definition. Of course, the same is true of “capitalism”. That economists, including Noah, continue to use these terms as though they are universally understood in the same manner only serves to undermine the utility of any analysis or research that purport to apply them.
I remember seeing a claim that Freud originally had more obviously correct modern sounding theories about parental trauma, but they made everyone mad at him, so he took it back and put up nonsense instead.
I understand the conceit that Economics is a science. But let's be real: it isn't at all a hard science. And because it is not a hard science, many economists -- including both Marx as well as Noah Smith! -- spend as much of their time as philosophers and opinion writers as they do conducting actual controlled experiments to validate their theories.
The impact here is you cannot look at economic thinking and treat it the same way as the works of Newton. Economic texts literally write their own reality. If a bunch of Chinese bureaucrats read Marx, decide to organize half the world's GDP around Marx's ideas, then our world will have to grapple with those ideas for a long time to come -- whether they're good and bad. You can as soon "disprove" this as you can "disprove" the teachings of Islam using comparative religion as your tool. (And if your plan is to make broad policy decisions that impinge upon many people who do follow the teachings of Islam, you'd be wise to spend more time understanding it than disproving it.)
Newton himself "[spent] as much of [his] time as philosophers and opinion writers as they do conducting actual controlled experiments to validate their theories". Of the 6 million words collected by The Newton Project, 2 million words are theology.
Newton is remembered as a foundational figure in physics not unlike Paul Samuelson in economics, for "[being] the first to formulate it in a really simple mathematical model that a lot of people could work with". Physics models also "literally write their own reality": Newton wrote that light is particles, and refraction is caused by lateral acceleration upon entering a denser medium. We now know that he is wrong, but at his time, there was no way to tell which of his particle model or Huygens's wave model was reality. It was 1670s to 1690s. Thomas Young's double-slit experiment in 1801 was more than a century away. Maxwell published electromagnetism in 1865. It took about 150 years to "disprove" Newton's ray and particle model of light, which is still useful in computational graphics.
The terms "hard science" and "disprove" invite unscientific dichotomy. Rather I observe difference in cost and feasibility of experimentation, observation, and grounding when working with different topics. It takes a lot less time now to debug new physics models because physicists have invested in better instruments and experiments. It also takes less time to debug new economics models now because economists have also invested in better instruments and experiments.
"Physics models also "literally write their own reality": Newton wrote that light is particles, and refraction is caused by lateral acceleration upon entering a denser medium. We now know that he is wrong."
Are you arguing that Newton's writings *literally changed the fundamental nature of light*?
Of course you're not. In fact what you're saying is the exact opposite. Newton convinced some people to believe in a false model for a while, but physicists were ultimately able to replace his model with a better one. Why were they able to do this? Because light ignored the words Newton wrote and just kept on behaving like light. Nothing Newton wrote changed reality or the physical processes he was modeling.
What's different about economics is that the thing being measured is *human behavior.* Economics involves studying the things humans do and (in the case of successful applied economics) convincing them to change their behavior in response. Popular writing in economics isn't like the writing in physics. Even if Newton had written a trillion words, the behavior of light or gravity would remain the same. But Marx's writings re-wrote the entire economic history of the 20th century by changing human behavior.
> Are you arguing that Newton's writings *literally changed the fundamental nature of light*? Of course you're not.
We are on the same page here.
> But Marx's writings re-wrote the entire economic history of the 20th century by changing human behavior.
In the macro, humans still behave like humans, just as light still behaves as light. I do not believe Marx's writings change human behavior in a "fundamental nature" way. Marx's writings had some influence in some human behavior, only analogous to any interference in a quantum system changes parts of the quantum system. In other words, Marx's writings did not change human behavior writ large; rather they became famous because of human behavior.
> Economics involves studying the things humans do and (in the case of successful applied economics) convincing them to change their behavior in response.
Physics or optics also involves studying the things light does and in the case of successful applied optics changing the behavior of light for some practical purposes. I do not understand what you refer to by "in response".
I do not think human agency is any fundamental hurdle to scientific theory making. It is merely another source of nondeterminism, which scientists have always been facing. The recent century has seen much better tools developed to study nondeterminism. I am quite hopeful in this regard.
EDIT: I just realized this part in the article seems to describe your position to an extent:
> [...] many leftist academics in the humanities and social sciences see non-STEM [(not "hard science")] academia as [...] not a collection of knowledge-seeking efforts in different domains, but [an] activist political struggle ["in response" to something humans do]
The article has elaborated that the actual economics academia does not fit that perspective.
Rather than argue about every point, let me try to ground this by repeating what I said in the original post:
"Economic texts literally write their own reality. If a bunch of Chinese bureaucrats read Marx, decide to organize half the world's GDP around Marx's ideas, then our world will have to grapple with those ideas for a long time to come -- whether they're good and bad."
I don't think there's anything particularly controversial about this statement. If we assume that Marx writes down his ideas, and then (many steps omitted) half the world organizes an economic system around those ideas while the other half of the world re-organizes to oppose those ideas, then the impact on empirical economics is going to be substantial. We even tried this experiment in the 20th century and nearly burned the world down a couple of times.
And if you don't believe me that the choice of economic ideas matter, I urge you to go look at some pictures of East and West Berlin before the Wall fell. There was nothing "intrinsic" about the outcomes here, the people on both sides were related. Yet because they loaded different "software" into their brains you can still see the division in satellite maps today.
As for the idea that "...[economic] writings [do not] change human behavior in a 'fundamental nature' way," my response is: it really depends what you mean by “fundamental.” If you can prove that economic outcomes are majority determined by intrinsic features of human nature (and not by ideology or conscious economic planning) then two things will happen: (1) you will win the Nobel Prize in economics. And (2) you will eliminate the need for huge chunks of the field. After all, why would applied economics or economic policy-making even *need to exist* in a world where economic outcomes are purely determined by intrinsic human behavior?
TL;DR I think you believe in a lovely and idealistic dream. I love the idea that we can someday ferret out the "fundamental nature of human economics" from the DNA or brainstem or whatever, the same way the fictional Hari Seldon was able to devise a single equation that described all human behavior. I just don't believe that we can do this, nor will we *ever* be able to do so. In fact, I think the entire thing is a category error, like saying “here is a powerful programmable computer with no software loaded into it, tell me what it will do once people install some as-yet-to-be-determined code into its memory.” You can’t answer that question in a very useful way because the answer is “virtually anything within some extremely broad set of limits.”
I think with human brains, the ‘fundamental economic nature will always be swamped by conscious decisions that humans and societies make. We might someday be able to figure out which systems are most compatible with human nature or something like that, but even that much more limited goal is still far in the future.
I agree that "conscious decisions that humans and societies make" are key to the study of economics. For the rest, let's just agree to disagree.
Where I disagree:
1) Conscious decisions of **the aggregate** of a society is much more rooted in the local tradition of the society than any individual author: none of trade union, central planned economy, or suppression of private markets originated with Marx.
2) Modeling conscious human behavior in **the aggregate** is much more approachable than you believe: responses to central bank policies are well studied.
3) What I mean by "fundamental" is in **the aggregate**, not "from the DNA or brainstem or whatever".
Long ago I was taught that science is organized knowledge. Further, a scientific theory or hypothesis had to be falsifiable. Economics passes both tests. That it deals with human behavior in the mass does not disqualify it.
I agree with you that Economics is not a science, but it is also important to acknowledge that many scientific disciplines do not have the mathematical rigor of "hard science." Biology and geology are two examples of sciences that are perhaps less mathematically rigorous than economics.
Chinese bureaucrats did not "organize half the world's GDP around Marx's ideas." They gave up on that 50 years ago.
Here is a better summary of Chinese economic policies:
It's a little deeper than that: Often the current texts regarding a concept/whatever in the sciences are much clearer and often "better" (relative to reality) than the original publication. Lit crit types are right that there's an entire field for analyzing how this evolution happens (history of science) but when it comes to *doing science* usually the current version is better than the historical origin. And for that matter, some of the improvement is scrubbing the concept of various limitations and errors that the original researcher made due to his limited experience, i.e., his "identity dimensions".
Another way to put it is that most economists have read the work of John Nash because they know the proof that he created. His work is so timeless you don't need to read what he typed.
English is a discipline focused on putting texts in dialogue with one another, not trying to find good explanations of phenomena in the world; this may also explain this fellow's bias towards prescribing Smith and Marx.
I mean: it doesn't make sense to study dead ends either. Economics students studying Marx is like Physics students studying Aristotle. We've realized that branch is dead and gone a different direction.
The correct way to think of Marx (or really any economist from that time period, possibly any influential economic thinker *period*) is to view him as a very influential philosopher whose ideas are still being implemented today. Then you'd ask: *how important are the people who are implementing those ideas to my life, and hence do I need to understand them?* And finally: you'd start reading Marx.
Phlogiston theory is actually the source of modern elemental theory. Pursuing it wasn’t a dead end - it just required Lavoisier to do careful measurements and realize that phlogiston either had negative weight, or else what Priestley had discovered was not dephlogisticated air, but actually an element that was compounding with things rather than dephlogisticating them.
Marx sometimes talked about the labor theory of value in a more essentialist way that seems outdated, but he sometimes also talked about it in terms that can be read as just talking about what prices would be in a sort of idealized equilibrium model which can be taken as a kind of first approximation that can be a starting point for further analysis, not unlike the model of "perfect competition" in neoclassical microeconomics, which has the property that profits go to zero and all market prices are equal to production costs (so as in Marx, supply and demand would not be relevant to equilibrium prices, though if you modify the model to allow dynamic departures from equilibrium they'd play a role in restoring the equilibrium).
One way I like to think about the possible continued relevance of Marx's economics is to consider a near future science fiction scenario in which manufacturing becomes fully automated, so that you have some set of machines that are completely self-replicating: additional units of each machine in the set can be made by other machines in the set, given only the needed raw materials and energy. If any company or other organization owns such a complete set, they can make more of everything and their only production costs will be raw materials and energy, so in any sector of the economy that doesn't involve artificial monopolies due to things like intellectual property laws or trade secrets, market competition would tend to drive prices down until they were at or barely above the production costs, effectively ending any possibility of significant profits in that sector of the economy. This analysis doesn't involve the labor theory of value, but it does reach a conclusion similar to Marx on the "tendency of the rate of profit to fall" due to increasing "organic composition of capital" (which in his terminology just meant increasing automation in the production process).
We don't have any fully self-replicating sets of machines today, but presumably there is some sufficiently large set of machines, tools, and other goods such that every good in the set can be made by other goods in the set combined with human labor. If that's expanded to include the goods needed for mining raw materials and generating energy, then one could imagine a giant vertically integrated firm that replenished all the needed capital goods by manufacturing them in-house, and whose only production costs would be labor. If we think about such vertically integrated firms in the context of the neoclassical model of perfect competition, where prices are equal to production costs, and add the further simplifying assumption that all the different manufacturing jobs pay the same hourly wage (assuming it's all unskilled manual labor and that any initial imbalances in wages will lead to more workers applying to the higher-paying jobs, driving their wages down until an equilibrium is reached), then prices should end up being proportional to labor time in such a model.
I think Marx can be read as implicitly using a model similar to this, but with the tweak that one doesn't assume goods are being manufactured at exactly the same rate as they are consumed, but rather that numbers of all goods are increasing in a proportionate way, as is common for self-replicating systems (bacteria in a petri dish, say), which allows for an overall rate of profit or interest. John von Neumann, a mathematician who was also the first to offer a serious analysis of the problem of self-replicating machines (see https://en.wikipedia.org/wiki/Self-replicating_machine#Von_Neumann's_kinematic_model ), once proposed an explicit mathematical model of proportional growth for a closed loop of goods like this combined with labor, originally published in German in 1937 and later translated in English as "A Model of General Equilibrium". I couldn't find a free copy of his paper online but there is a paper discussing his model and comparing it to other economists' models and thoughts at https://www.jstor.org/stable/90002525 (can be read if you sign up for a free jstor membership). Page 9 notes the relevance of von Neumann's model to Marx's thought (though von Neumann was no Marxist!), as well as that of the 20th century "neo-Ricardian" economist Piero Sraffa:
'A typical example of a similar quasi-stationary economic model is Marx’s scheme of simple and extended reproduction, which in turn was inspired by the work of Quesnay. Sraffa (1960) also used a similar model to analyse some features of long-term equilibrium prices. He defined a “self-reproducting standard system”, in which production expands at an equi-proportional rate of growth, but that was not mean to be a model of actual production. (See Kurz and Salvadori, 2001 for a comparison of the models of Sraffa and von Neumann, and also for further references.)'
When it comes to teaching STEM fields, it's important to start with the most up-to-date ideas, and add history later as enrichment. (I include in the category "most up-to-date" Newtonian mechanics and other useful approximations that are still workhorses of daily progress.) Early ideas are often intuitively attractive, but also wrong. When students are exposed to seductive falsehoods first, even with appropriate caveats, it's hard to get them out of their heads later.
This is especially true when it comes to fields that were originally non-technical but which have become quantitative recently. Students should learn the fruits of modern cognitive science and evolutionary psychology before being exposed to Freud.
It's a bold move to quote Delong's maxims from 2013..."[Marx thought that] social democracy would inevitably collapse before an ideologically-based right-wing assault, income inequality would rise, and the system would collapse or be overthrown…But I think this, too, is wrong…"
...8 days before Trump takes office. Does Delong still think the right wing assault is not a big deal 12 years later? Maybe link to one of his more recent posts.
Like we are watching the ongoing victory of the right wing assault.
Is reading Marx the antidote? Probably not, but we are observing in real time as the billionaire owners of capital take control of the US government.
It would help the case against reading Marx if you could point to a a foundational 20th century economic paper from Samuelson etc. that points out why this is probably bad.
No one is denying that right wing assaults exist. What Noah is denying is Marx’s claim that the right-wing assault will inevitably be successful very soon after any transfer policy is attempted, and thus there is no point in even trying social democracy in a capitalist context.
Delong is actually wrong in claiming this as Marx’s view (point 2 of ‘Marx the political activist’ at https://www.bradford-delong.com/2013/05/understanding-karl-marx-hoisted-from-the-archives-from-four-years-ago-may-day-weblogging.html ), in reality Marx and Engels were very invested in the effort to build power for various worker’s parties and try to make wins in the legislature, and thought that they would be able to make significant strides, at least in countries with universal male suffrage (unlike those countries that tied voting rights to property ownership, or didn’t have any sort of democratic system). Their idea of the future in such countries was that as these parties made further and further gains by legal means, there would come a breaking point when some faction associated with the capitalist class would attempt to “overthrow legality” to stop the changes (maybe something analogous to the ‘Business Plot’ during the FDR years, or the actual fascist takeovers that took place during that era), and that this would lead to a “revolutionary” period, one in which significant factions of the military or other power structures might side with the left wing since it had a claim to political legitimacy.
For example, here’s a comment from Marx (from https://archive.org/details/MarxEngelsCollectedWorksVolume10MKarlMarx/Marx%20%26%20Engels%20Collected%20Works%20Volume%2024_%20M%20-%20Karl%20Marx/page/n277/mode/2up ): ‘If in England, for instance, or the United States, the working class were to gain a majority in PARLIAMENT or CONGRESS, they could, by lawful means, rid themselves of such laws and institutions as impeded their development, though they could only do so insofar as society had reached a sufficiently mature development. However, the "peaceful" movement might be transformed into a "forcible" one by resistance on the part of those interested in restoring the former state of affairs; if (as in the American Civil War and French Revolution) they are put down by force, it is as rebels against "lawful" force.’
And one from Engels (from https://archive.org/details/MarxEngelsCollectedWorksVolume10MKarlMarx/Marx%20%26%20Engels%20Collected%20Works%20Volume%2050_%20Ka%20-%20Karl%20Marx/page/n55/mode/2up ): ‘Do you realise now what a splendid weapon you in France have had in your hands for forty years in universal suffrage; if only people had known how to use it! It’s slower and more boring than the call to revolution, but it’s ten times more sure, and what is even better, it indicates with the most perfect accuracy the day when a call to armed revolution has to be made; it’s even ten to one that universal suffrage, intelligently used by the workers, will drive the rulers to overthrow legality, that is, to put us in the most favourable position to make the revolution.’
I was about to make the same point. Living in the UK, the right-wing assault and increasing income inequality are real. Picketty's arguments about increasing social instability in the face of increasing wealth inequality leading to revolution or war seem increasingly prescient.
Not sure about the UK, but income inequality has significantly decreased in the US since 2019 and hasn't increased since 2014. We'll see what it does in the next recession.
Income inequality slightly decreased, mostly due to the transfers made as part of the COVID response. There's no reason to imagine this will be a change in the long-term trend. But the original poster did not refer to income inequality, they said *wealth inequality.* Wealth inequality has substantially increased.
Trump is a narcissistic populist entertainer, not right-wing (with so many on the left, such a bird couldn’t fly) and has no real ideology other than saying whatever he thinks keeps making audiences cheer at his rallies. And I don’t think the system will collapse next week.
Did you miss the part where Trump plans to stock his administration with random conservative billionaires?
The system will not "collapse" next week, but the contention from Brad DeLong 12 years quoted with such surety by Noah Smith was that social democracy wouldn't inevitably collapse under right wing assault. We are now seeing that assault move from victory to victory.
Are you going to argue that the US is going to move anywhere but away from what little social democracy we have in the next four years?
When picking people to run the government, you want people who are successful and therefore they may be wealthy. Chris Wright, Elon Musk, Howard Lutnick are all successful in their fields. The ones who aren’t billionaires like RFKjr, Matt Gaetz, Pete Hegseth and Tulsi Gabbard are the ones I think are poor choices.
I don’t know what they mean by ‘social democracy’, that’s like saying ‘funny comedy’ or ‘violent warfare’, but how would you say it is about to collapse? Is Trump going to force through photo ID requirements for voting, or do you think Congress will let him start rounding up and imprisoning his detractors?
I am starting to think that Noah's post-election posts are aimed more at soothing his right-wing Substack subscribers than they are at conducting any sort of intellectual project.
What's evident is that your constant posting in defense of Marx is because you're a cult member, and your failed religion is being offended by people with a clear sense of economics, history, humanity and justice - all things lacking in Marxists and especially the many failed Marxist national projects and empires.
Yes, it should be evident from my posts that say "Marxism is a terrible idea and I am extremely concerned about China" that I'm a Marxist. Put down the nitrous.
Just a side point, but I do think econ and philosophy phds should read Smith, especially Wealth of Nations.
Even in the public goods paper, Samuelson gives a nod to WoN. On the question of why the math would be simpler in a world of private goods, he writes that:
"each individual, in seeking as a competitive buyer to get to the highest level of indifference subject to given prices and tax, would be led as if by an Invisible Hand to the grand solution of the social maximum position."
In the opinion of ^this^ economist, Akerlof's "The Market for Lemons" is either the most or the second most important development in social science since WW2. Information asymmetry doesn't just explain why finding a used car can be positively sisyphean. It also explains insurance markets, why bosses and managers exist, and the 2008 financial crisis. It also motivates the CARES act, social insurance, and counter-cyclical fiscal policy even in the absence of a Keynesian AD/AS model.
In terms of importance I'd rank it right next to game theory.
1. Moskowitz should learn that to properly historicize our field we should read Jevons, Menger, Walras, Edgeworth, and Pareto. (Especially Mathematical Psychics - the most amusing economic theory of the 19th century.)
2. Maurice Allais wrote down the overlapping generations model about a decade before Samuelson did, but unfortunately for him, in French.
3. Ken Arrow once told me he thought Marx was the first great general equilibrium theorist.
4. On DeLong: "[S]ocial democracy, progressive income taxes, a very large and well-established safety net, public education to a high standard, channels for upward mobility, and all the panoply of the twentieth-century social- democratic mixed-economy democratic state can banish all Marx’s fears that capitalist prosperity must be accompanied by great inequality and great misery." Marx's point was that these things may be great while they last, but the logic of history is that they won't. The data of US and Scandinavia today teaches us that such social states are neither globally stable nor even locally stable. Marx's long run is longer that DeLong's.
5. Branko Milanovich points out that Smith was the first to connect the economic success of the state with the welfare of its citizens. But one doesn't have to read the entire book to appreciate that contribution. Beyond that, think of all the damage that has been done by people who think that acute observations of 18th century Glasgow have manifold implications for the modern world.
For sure, people should read Marx but the early Marx, not "Das Kapital." Why? Because early Marx writes about alienation & reification: how capitalism alienates men & women from their selves & turns them & their lives into objects. This is important because these ideas are hardy perennials: Patrick Deneen, for example, embraces them, although he blames not capitalism alone but the whole 18th century enlightenment, which produced democracy & individualism. Once you see how early Marx resonates in subsequent social/political/economic criticism, you can an important perspective.
And the later Marx and his followers shows how these ideas of alienation and reification are easily shaped into a very dangerous totalitarian idea that destroys entire societies, so maybe we are better off skipping the early Marx.
Michael, you're right, although I don't remember Marx discussing alienation or reification in "Kapital." In any event, I think that people like Deneen, who build analyses on alienation & reification and then propose political solutions are just as dangerous as Marists-in-reality. Are you familiar with Deneen?
Yes, by Das Kapital, Marx was more interested in assuming the internal contradictions within capitalism would inevitably lead to revolution. The alienation and reification were assumed.
Michael, I suggest you take a look. Obama recommended his first book, "Why Liberalism Failed"; Vance has embraced the ideas presented in his second, "Regime Change: Toward a Post Liberal Future." It's in the second that he blames the enlightenment (democracy, capitalism, individualism) for the alienation & reification which makes life miserable so many folks.
I found Deneen's first book meh & the second one bananas. The second one is of interest only because Vance embraces it; so it's a warning of what his presidency would be like & a demonstration of just how much he & Trump disagree.
Though there's a recent paper out surveying people on how they trade-off the pay for a job vs. the "meaningfulness" of a job. It turns out that most rate meaning pretty low; they say they get meaning out of the things they spend their income on, not their jobs.
I would steelman his argument as saying that STEM could do more teaching of philosophy of science. Understanding how our models are just models, and paradigms are mediated by the state of tools and observational techniques is important to teaching the next generation. His specific example of Marx is pretty bad, because as you say, his legacy is one of “ultimately leaving little mark on the field’s overall methodology or basic concepts”.
But, for example, I think it is good to explore the evolution of DSGE models, or if there anything to be aware of when doing large data set analysis, event studies, or use of AI simulations, not from a technical perspective, but from the kind of understanding of the knowledge production processes and institutions (that could cause technical issues to be downplayed) that is a valid criticism from the comment.
Mao, Stalin, Pol Pot, Chavez.... If it looks like a duck.....
There is something about Marxist Leninism that seems to attract these people. also, don't forget Lenin. He was very much the Party being the point of the spear leading the proletariat who obviously could not lead themselves
Unfortunately, "isms" is such a broad category that if you take away everything that can broadly be described as one, what you're left with is either a random number generator or a rock.
Very enlightening post. But I saw stuff along the way.
UNCLEAR MEANING AND OBSERVATION: the best thing to do would be to transfer money from each young generation to each old generation in turn, so they’d have enough money to lend each other.
1. You emphasized that it is old people who lend to young people, and then you end the sentence by saying they lend to each other.
2. Samuelson's theory works because most old people gain far more from Social Security than they would by investing their SS contributions as young people.
People who just get by on Social Security will lend nothing to young people— their accumulated wealth is negligible.
Rich old people don't need incoming Social Security to be able to lend to young people.
I assume there's a group in the middle who receive enough from SS to be able to lend substantially more to young people.
QUERY: buyers won’t pay full price for used cars because they might be getting sold a “lemon”, so used car dealers keep their high-quality cars off of the market entirely.
What financial advantage is it for used car dealers to keep their high-quality cars off the market entirely? What do they do with them? Just let them sit for a couple of years when people are less afraid to buy them?
POINT OF INFORMATION: Laws like the Affordable Care Act (Obamacare) that penalize people for not buying health insurance are aimed at preventing the exit of healthy people from the market, based on exactly the kind of principle Akerlof talks about in his paper.
The penalty for not buying health insurance was taken out of the ACA by Congress in 2017.
TYPO: (Arrow implies, but doesn’t state, that both patients and may not be good at making rational decisions under that kind of extreme uncertainty.)
There is a word missing from this sentence: both patients and...
TYPO: medical care is a universal a human right,
Delete excess “a.”
QUERY: increasing returns to scale
What does this mean? If it is an economic term, I have never encountered it before.
BTW, anytime you want to give me a free subscription as a proofreader, I'm open to the deal. I work for $100 a year. But apparently, I also work for $0 a year.
"What financial advantage is it for used car dealers to keep their high-quality cars off the market entirely? What do they do with them? Just let them sit for a couple of years when people are less afraid to buy them?" <-- Yes, because they are durable and hold their value well over time
Friendly feedback: I actually used to sell used cars, & am friends not with the owner, but with the sales manager at the time (the guy your salesman runs back & forth with while trying to make a deal).
They do not just let them sit because they hold value. They have to be moved & serviced, because just sitting for long periods is hellish on cars. You also must have space to store them. If they don't move off the lot, they start getting progressively more discounted. If they can't move after long enough, they go to auction. There is absolutely a clearing price; they don't just sit there & accumulate.
All good questions - the bit about the best used cars being kept off the market (black market, perhaps?) puzzled me as well. Good catch on the second typo - I caught the first, but looked right past the second. You're definitely due a free subscription!
Finely reasoned; as is the norm with the writing of Noah Smith. But as we happily descend into yet another Gilded Age, where a tiny handful of men possess more wealth than the populations of entire continents, perhaps we should at least acknowledge the observation of Marx that capitalism, despite its superiority over all other economic systems, is still capable of generating enormous yet possibly avoidable amounts of human suffering.
Perhaps it is just that economics cannot yet design a version of capitalism that does not involve a few citizens living in golden palaces, while others, despite working their fingers to the bone, live on sidewalks. Even with modern labor-saving technological advances of such brilliance that Marx himself might have viewed them as magical.
I really wish Americans would stop mistaking their problems as a problem of capitalism instead of just problems with their governance. Plenty of capitalist countries have significantly low levels of inequality. America just chooses differently.
The natural state of humanity is deprivation and suffering, which was only eliminated by capitalism (see OurWorldInData portion of world living in extreme poverty graph). The only continent with less wealth than Elon Musk or Jeff Bezos is Antarctica. And if you go to Pyongyang or Caracas, there will be millions living on the streets or in dank prisons working their fingers to the bone while Kim and Maduro are in their golden palaces reading themselves to a dreamy sleep with Das Kapital and the old Manifesto.
Don't overstate your case, though. Musk is now worth $400G or so (per the headlines), but the GDP of sub-Saharan Africa is nearly $2,000G (per the first hit from Google). So every year, Africa "earns" something like five times what Musk has earned over a lifetime. But also, a dollar flowed is a lot more valuable than a dollar stocked -- the interest off Musk's $400G is likely less than $20G per year, so if you divided it among all the s.s.Africans, you'd only raise their income by 1%.
Capitalism did not “generate enormous yet possibly avoidable amounts of human suffering.” That existed long before capitalism. Suffering in poverty, ignorance and violence is the human condition.
It is only relatively recently that we have gotten beyond that for the majority of humanity.
This essay is so poor in so many ways, but it illuminates Michael Sandel's as well as Martha Nussbaum's critiques of economists intellectually and morally. So Dr. Smith, you don't read Marx for his economics any more than we should read you for your policy rants. You read Marx, first, for his observations of the social, economic, and political events of the 19th century (try _Dispatches for the New York Tribune_ as your starting point). You read Marx for political philosophy, for the questions he asks not so much the answers he composes.
There are few if any political philosophers since Marx who have not studied him and who have not engaged with him. Try Martha Nussbaum, Debra Satz, Elizabeth Anderson, or Amartya Sen among the great political philosophers of our time (oh yeah, forgot, Sen picked up a Nobel Prize in economics as his side job). Of course, one can also read Rawls who towered over them all (see Forester's critical and somewhat resentful philosophical history _In the Shadow of Justice_ for a narrative on his importance. You might respond with a what about Robert Nozick (who essentially but quietly disavowed _Anarchy, State and Utopia - and as far as I can tell was pretty much ignored by Rawls).
Maybe your economic heroes are Hayek or Friedman the right-wing versions of Marx's economic determinism as well as proponents of a sort of moral nihilism with their love affair not just with Reagan and Thatcher but even more notably, Pinochet. See Hayek's _The Constitution of Liberty_ and try to imagine the kind of society that would produce, or you can just read the far shorter introduction and critique by Mathew Sharpe, "Is Neoliberalism a Liberalism, or a Stranger Kind of Bird?".
You don't read Marx to agree with him nor to cherry pick all the things you don't like that (or that you misconstrue) any more than you read Adam Smith that way -- which as I think about it is what orthodox economists do. It's why we have a "received wisdom" about Marx and Smith. You don't read any of these guys for their answers -- not even Rawls. You read them for the questions they pose and the questions they explore. Quick, what was the question that motivated Rawls's _Political Liberalism_? Answer: " “How is it possible for there to exist over time a just and stable society of free and equal citizens who remain profoundly divided by reasonable religious, philosophical, and moral doctrines?” He wrote that in 1993 long before we started sliding into our contemporary abyss. He tried to answer it. I don't think he was successful; his belief about human nature was wildly optimistic. But, that question haunts us today. And Marx's questions about the social misery and material inequalities of the 19th century are still pertinent into the 21st century.
And to your snide critique of Marx's ponderous writing style, you're absolutely write -- save for Dispatches -- his stuff is difficult. Get over it. They guy grew up in the 19th century and cut his teeth on Kant and Hegel. Basically, you either need to stick to contemporary economics with its quantitative failures and quit with the pontificating about public policy when you have only most superficial foundation regarding the problem of the "good", the problem of "justice" or you need to read more deeply and more widely including Marx. Satz and Anderson left economics in large part because of its intellectual sterility. Sen just swallowed and integrated economics and political philosophy. but he is a generational intellect. You should read him if not Marx, though I can assure you Sen read Marx.
The same phenomenon can be found in other fields, e.g. an amateur would naturally assume that Sigmund Freud, with such reputation, must still have something in his theory that remains intellectually relevant today, completely oblivious to the fact that those pseudoscientific ideas have been superseded.
Today, the things that Freud got right sound like common sense and/or conventional wisdom, and most of the rest sounds batshit insane. Nobody really needs to read Freud himself these days because any Psych 101 textbook will have the good parts without the mistakes mixed in with it.
Examples of things Freud got right:
1) A lot of cognition is subconsious
2) People have desires that often conflict with each other
3) What people learn and experience in childhood affects how they act as adults
I agree. This is exactly why the “read the Classics” method is not a very good teaching technique, except among exceptionally gifted and motivated students. The vast majority of “Classics” were written before 1830, while the vast majority of our knowledge on domains other than philosophy was created after that year.
It is far better to read or listen to a summary than read the original (unless you have a great deal of time on your hand).
I like your reply despite being a long time fan of Mortimer J Adler , he of the “Great Books” approach to higher education . Adler was exceptionally motivated himself . Yet, he always maintained that the “not exceptional “ could and should deeply read classic texts , not just summaries. And Adler argued , read not just one or two but rather a group of them so as to educate oneself about several of the great ideas that people have grappled with for centuries . In theory , would it not be the case that classical liberal education can help an individual not fall prey to the bad ideas taking hold in one’s current political / social environment?
I absolutely agree with you that a general study of history does help the individual not fall prey to bad but popular ideas. That is exactly what my Substack is about!
I do not, however, think that reading the Classics is the best method to do so for the reasons that I mentioned above. I have a PhD and I struggle to read the Classics.
I think students can learn almost as much from a 5-minute summary as struggling to read a book for many days. More importantly, the method is far more time-effective, so students can absorb a much wider variety of topics and opinions.
I think this is a bizarre post and comment. Marx's theories (in some debased fashion) still undergird the largest manufacturing economy on the planet, and possibly the future dominant superpower of the 21st century. Imagine half the psychiatrists in the world were still practicing some version of Freud's teachings -- even if you think they're wrong, you sure as hell wouldn't be able to argue with them without reading their source material.
China's version of Marxism isn't what Marx and Lenin practiced, it's a highly-evolved version that replaces many of the obviously flawed ideas that were tried in past attempts. It may have replaced those ideas with further bad ideas. It might collapse from its own internal contradictions. But it's not completely divorced from Marx's theories either. You cannot possibly practice or think about economics in the 21st century without grappling with China's version of socialism, and you cannot understand China's version of socialism without reading Marx. Attempting to do so is like trying to do quantum physics without understanding the debates around the Copenhagen interpretation, because "that's just a piece of history."
ETA TL;DR: I think it is bonkers insane that Noah wrote an entire piece on Marxism without mentioning the word "China" even one time (excluding quotes.)
"Marx's theories (in some debased fashion) still undergird the largest manufacturing economy on the planet" <-- No they don't
"China's version of Marxism isn't what Marx and Lenin practiced, it's a highly-evolved version that replaces many of the obviously flawed ideas that were tried in past attempts." <-- Bro, what are you talking about
To quote Xi Jinping: "Marx and Engels' analysis of the basic contradictions in capitalist society is not outdated, nor is the historical materialist view that capitalism is bound to die out and socialism is bound to win."
The Economist: "Xi Jinping is trying to fuse the ideologies of Marx and Confucius". https://www.economist.com/china/2023/11/02/xi-jinping-is-trying-to-fuse-the-ideologies-of-marx-and-confucius
Kevin Rudd. "[w]ith Xi Jinping, we have seen the return of Ideological Man with his own brand of Marxist-Leninist nationalism. This was clear from Xi’s earliest writings in 2013 which resulted in the reassertion of the party’s Leninist control of Chinese politics. His Marxist ideological worldview began extending to the economy after the 19th Party Congress in 2017 when he formally redefined the party’s ideological priorities away from the rip-roaring days of unconstrained 'reform and opening' to develop the economy, to a new era dealing with the 'imbalances of development' which the Deng Xiaoping, Jiang Zemin, and Hu Jintao periods had created."
I mean, what do I know. I would love to see a Noahpinion article on Marxism that actually grapples with the ideologies that influenced Xi Jinping. You could start by explaining to me why Xi's China is not really Marxist. You could explain what the differences are, in practice. You could explain why this isn't relevant for me and for my kids, who may very well be deeply affected by the coming clash between China and the West's ideologies. There are so many interesting things you could say, including "here's why you are wrong" that would be so much more informative than "Bro."
I'm guessing he means that China's economy isn't run as a command economy, as Marx would have envisioned. There is private property and a (somewhat) free market.
It's definitely run by an authoritarian party, which claims to be implementing a "dictatorship of the proletariat." But an analysis of that dimension of Marxism seems more like something for political science or history, not economics.
But the major news story of the 2020s is that Hu Jintao's China was moving towards market liberalism and Xi Jinping (who touts Marx as a major ideological influence) is now visibly moving backwards away from those reforms. You can see this in the expansion of SOEs and other economic "reforms" that are increasingly turning the economy more towards a command economy. Wealthier and middle-class Chinese families are visibly fleeing China because they no longer feel that their privacy rights will be respected. And this is only a dozen years in!
I can see a lot of things that Noah might be arguing. They could be:
1. None of this is happening. Despite the fact that it appears that China is centralizing many economic decisions *and* the guy running China says he's heavily influenced by Marx's teachings, we should not take any of this very seriously.
2. Sure, China is moving more towards a command economy, but there are still huge components of capitalism at the lower levels, so it isn't truly Marxism until you remove all/some/most of the capitalism. (AKA "it's not a rat pie unless it has 50% rat in it.")
3. Sure, it does look like China is re-centralizing economic decision-making under Xi, but that's not *Marxism*. Real Marxism comes from the Trier region of Germany, everything else is "sparkling central planning."
4. China's leaders don't have any ideology. Sure they're centralizing their economy in a manner reminiscent of Marx's ideas, but it's only because they like power/want to fight a war. (This is a restatement of #3, but I figured I'd write it out longhand.)
5. Some fifth thing that would probably make an amazing and nuanced blog post that I'd love to read.
He's covered the subject multiple times and has said it's 1, 2 and 4. They let prices dictate most markets. The government doesn't do centralised planning as much as direct lending towards favoured sectors and create paranoia through a security state/propaganda that can destroy industries they don't like overnight. It has backfired on them if you think in terms of general prosperity. It has worked out for them if you only think in terms of national power or national wealth. Some capitalists and companies have become obsenely rich but there's no way most people living in the West or much of the world would tolerate a quasi-capitalist economy that's hardly Marxist.
For China to be truly Marxist, they'd need to nationalise most companies and industries.
Other than her political rhetorics, can we really say that contemporary China is Marxist in any sense? "China's version of Marxism" sounds like a weasel term, much like "Socialism with Chinese characteristics".
I mean, if this were 2004 I'd understand your point of view. "Of course China isn't really socialist anymore, the last vestiges of centralized control will be gone soon" was the kind of optimistic wishful prediction people used to make back then. But history has been *nothing* like those predictions. The state is more powerful and repressive than ever. China's government has moved to suppress entire areas of the tech and finance sector in order to control the direction of the economy [1]. State-owned businesses (SOEs) have seen massive expansion over the past decade [2].
You can see all of these developments in a negative light. I certainly do. But you cannot look at China's expansion of state control vs. capitalist control and say "gosh, China isn't really socialist." They're a massive economy with a government that centralizes economic decisionmaking on huge areas of their industry, while also leaving limited-but-curated subsets of the economy open to semi-fettered capitalist management. To say anything interesting about China -- and hence global economics in the 21st century -- you need to first acknowledge what China's government is doing and then try to understand it. To understand it you need to have some sense of the ideology that's driving these decisions.
[1] https://www.noahpinion.blog/p/why-is-china-smashing-its-tech-industry
[2] https://sccei.fsi.stanford.edu/china-briefs/rise-state-connected-private-sector-china
Germany in the 1930s under the Nazis was capitalist and moved towards a war economy. So did the western allies in the 1940 and during substation wars. Even in capitalist economies you can have command and control by the government. Command and control is not sufficient condition for implementation of Marxism/socialism/communism.
Right on spot. State ownership is neither sufficient nor necessary for a system to be Marxist (recall that, strictly speaking, true Communism would get rid of the state for good).
Karl Marx’s writings said virtually nothing about how to run an economy or even what socialism or communism would actually look like.
Marx spent almost all his time “proving” that Communism was the inevitable outcome of the internal contradictions with capitalism and arguing against other Leftist who had a different vision.
It was Vladimir Lenin who actually wrote about and implemented what Communism actually was in the real world.
And then Stalin copied Lenin’s model and so did Mao. That Leninist economic model died with Mao (except in a few scattered hold-outs), but the political model of a one-party totalitarian dictatorship lives on.
TLDR: The current leaders of China don’t give a damn what Marx wrote about how to run an economy.
Here is a better summary of Chinese economic policies:
https://frompovertytoprogress.substack.com/p/understanding-the-chinese-economic
Great comment. It is remarkable how terms like “Marxism”, “communism” and “socialism” are thrown around (and equated) despite the fact that each of these terms are applied subjectively, reflecting the lack of any consensus (or consistent) definition. Of course, the same is true of “capitalism”. That economists, including Noah, continue to use these terms as though they are universally understood in the same manner only serves to undermine the utility of any analysis or research that purport to apply them.
I remember seeing a claim that Freud originally had more obviously correct modern sounding theories about parental trauma, but they made everyone mad at him, so he took it back and put up nonsense instead.
> The most useful concepts in science stand alone, divorced from the thought process of their originators.
Beautifully put. Likewise from their nationality, race, gender, or any other identity.
I understand the conceit that Economics is a science. But let's be real: it isn't at all a hard science. And because it is not a hard science, many economists -- including both Marx as well as Noah Smith! -- spend as much of their time as philosophers and opinion writers as they do conducting actual controlled experiments to validate their theories.
The impact here is you cannot look at economic thinking and treat it the same way as the works of Newton. Economic texts literally write their own reality. If a bunch of Chinese bureaucrats read Marx, decide to organize half the world's GDP around Marx's ideas, then our world will have to grapple with those ideas for a long time to come -- whether they're good and bad. You can as soon "disprove" this as you can "disprove" the teachings of Islam using comparative religion as your tool. (And if your plan is to make broad policy decisions that impinge upon many people who do follow the teachings of Islam, you'd be wise to spend more time understanding it than disproving it.)
Newton himself "[spent] as much of [his] time as philosophers and opinion writers as they do conducting actual controlled experiments to validate their theories". Of the 6 million words collected by The Newton Project, 2 million words are theology.
Newton is remembered as a foundational figure in physics not unlike Paul Samuelson in economics, for "[being] the first to formulate it in a really simple mathematical model that a lot of people could work with". Physics models also "literally write their own reality": Newton wrote that light is particles, and refraction is caused by lateral acceleration upon entering a denser medium. We now know that he is wrong, but at his time, there was no way to tell which of his particle model or Huygens's wave model was reality. It was 1670s to 1690s. Thomas Young's double-slit experiment in 1801 was more than a century away. Maxwell published electromagnetism in 1865. It took about 150 years to "disprove" Newton's ray and particle model of light, which is still useful in computational graphics.
The terms "hard science" and "disprove" invite unscientific dichotomy. Rather I observe difference in cost and feasibility of experimentation, observation, and grounding when working with different topics. It takes a lot less time now to debug new physics models because physicists have invested in better instruments and experiments. It also takes less time to debug new economics models now because economists have also invested in better instruments and experiments.
"Physics models also "literally write their own reality": Newton wrote that light is particles, and refraction is caused by lateral acceleration upon entering a denser medium. We now know that he is wrong."
Are you arguing that Newton's writings *literally changed the fundamental nature of light*?
Of course you're not. In fact what you're saying is the exact opposite. Newton convinced some people to believe in a false model for a while, but physicists were ultimately able to replace his model with a better one. Why were they able to do this? Because light ignored the words Newton wrote and just kept on behaving like light. Nothing Newton wrote changed reality or the physical processes he was modeling.
What's different about economics is that the thing being measured is *human behavior.* Economics involves studying the things humans do and (in the case of successful applied economics) convincing them to change their behavior in response. Popular writing in economics isn't like the writing in physics. Even if Newton had written a trillion words, the behavior of light or gravity would remain the same. But Marx's writings re-wrote the entire economic history of the 20th century by changing human behavior.
> Are you arguing that Newton's writings *literally changed the fundamental nature of light*? Of course you're not.
We are on the same page here.
> But Marx's writings re-wrote the entire economic history of the 20th century by changing human behavior.
In the macro, humans still behave like humans, just as light still behaves as light. I do not believe Marx's writings change human behavior in a "fundamental nature" way. Marx's writings had some influence in some human behavior, only analogous to any interference in a quantum system changes parts of the quantum system. In other words, Marx's writings did not change human behavior writ large; rather they became famous because of human behavior.
> Economics involves studying the things humans do and (in the case of successful applied economics) convincing them to change their behavior in response.
Physics or optics also involves studying the things light does and in the case of successful applied optics changing the behavior of light for some practical purposes. I do not understand what you refer to by "in response".
I do not think human agency is any fundamental hurdle to scientific theory making. It is merely another source of nondeterminism, which scientists have always been facing. The recent century has seen much better tools developed to study nondeterminism. I am quite hopeful in this regard.
EDIT: I just realized this part in the article seems to describe your position to an extent:
> [...] many leftist academics in the humanities and social sciences see non-STEM [(not "hard science")] academia as [...] not a collection of knowledge-seeking efforts in different domains, but [an] activist political struggle ["in response" to something humans do]
The article has elaborated that the actual economics academia does not fit that perspective.
Rather than argue about every point, let me try to ground this by repeating what I said in the original post:
"Economic texts literally write their own reality. If a bunch of Chinese bureaucrats read Marx, decide to organize half the world's GDP around Marx's ideas, then our world will have to grapple with those ideas for a long time to come -- whether they're good and bad."
I don't think there's anything particularly controversial about this statement. If we assume that Marx writes down his ideas, and then (many steps omitted) half the world organizes an economic system around those ideas while the other half of the world re-organizes to oppose those ideas, then the impact on empirical economics is going to be substantial. We even tried this experiment in the 20th century and nearly burned the world down a couple of times.
And if you don't believe me that the choice of economic ideas matter, I urge you to go look at some pictures of East and West Berlin before the Wall fell. There was nothing "intrinsic" about the outcomes here, the people on both sides were related. Yet because they loaded different "software" into their brains you can still see the division in satellite maps today.
As for the idea that "...[economic] writings [do not] change human behavior in a 'fundamental nature' way," my response is: it really depends what you mean by “fundamental.” If you can prove that economic outcomes are majority determined by intrinsic features of human nature (and not by ideology or conscious economic planning) then two things will happen: (1) you will win the Nobel Prize in economics. And (2) you will eliminate the need for huge chunks of the field. After all, why would applied economics or economic policy-making even *need to exist* in a world where economic outcomes are purely determined by intrinsic human behavior?
TL;DR I think you believe in a lovely and idealistic dream. I love the idea that we can someday ferret out the "fundamental nature of human economics" from the DNA or brainstem or whatever, the same way the fictional Hari Seldon was able to devise a single equation that described all human behavior. I just don't believe that we can do this, nor will we *ever* be able to do so. In fact, I think the entire thing is a category error, like saying “here is a powerful programmable computer with no software loaded into it, tell me what it will do once people install some as-yet-to-be-determined code into its memory.” You can’t answer that question in a very useful way because the answer is “virtually anything within some extremely broad set of limits.”
I think with human brains, the ‘fundamental economic nature will always be swamped by conscious decisions that humans and societies make. We might someday be able to figure out which systems are most compatible with human nature or something like that, but even that much more limited goal is still far in the future.
I agree that "conscious decisions that humans and societies make" are key to the study of economics. For the rest, let's just agree to disagree.
Where I disagree:
1) Conscious decisions of **the aggregate** of a society is much more rooted in the local tradition of the society than any individual author: none of trade union, central planned economy, or suppression of private markets originated with Marx.
2) Modeling conscious human behavior in **the aggregate** is much more approachable than you believe: responses to central bank policies are well studied.
3) What I mean by "fundamental" is in **the aggregate**, not "from the DNA or brainstem or whatever".
Agreed and thank you!
It's not Physics, but in the spectrum of Islam to Physics it is closer to one that the other in it's rigor, falsifiable claims, etc.
Long ago I was taught that science is organized knowledge. Further, a scientific theory or hypothesis had to be falsifiable. Economics passes both tests. That it deals with human behavior in the mass does not disqualify it.
I said it wasn't a hard science, and then gave some specific criticisms.
I agree with you that Economics is not a science, but it is also important to acknowledge that many scientific disciplines do not have the mathematical rigor of "hard science." Biology and geology are two examples of sciences that are perhaps less mathematically rigorous than economics.
Chinese bureaucrats did not "organize half the world's GDP around Marx's ideas." They gave up on that 50 years ago.
Here is a better summary of Chinese economic policies:
https://frompovertytoprogress.substack.com/p/understanding-the-chinese-economic
It's a little deeper than that: Often the current texts regarding a concept/whatever in the sciences are much clearer and often "better" (relative to reality) than the original publication. Lit crit types are right that there's an entire field for analyzing how this evolution happens (history of science) but when it comes to *doing science* usually the current version is better than the historical origin. And for that matter, some of the improvement is scrubbing the concept of various limitations and errors that the original researcher made due to his limited experience, i.e., his "identity dimensions".
Another way to put it is that most economists have read the work of John Nash because they know the proof that he created. His work is so timeless you don't need to read what he typed.
You had me with the first sentence, but…
No one had a “ the thought process of their originators” for “race and gender.”
Those both stem from biology and preceded modern thought.
Nation-hood was established by a human though process, though.
Yes!
I meant it in a narrow sense that there is no "German-ness" about Planck's (radiation) law. There is a "Russian-ness" about Anna Karenina.
Edit: Though Tolstoy is also universal :)
English is a discipline focused on putting texts in dialogue with one another, not trying to find good explanations of phenomena in the world; this may also explain this fellow's bias towards prescribing Smith and Marx.
I mean: it doesn't make sense to study dead ends either. Economics students studying Marx is like Physics students studying Aristotle. We've realized that branch is dead and gone a different direction.
The correct way to think of Marx (or really any economist from that time period, possibly any influential economic thinker *period*) is to view him as a very influential philosopher whose ideas are still being implemented today. Then you'd ask: *how important are the people who are implementing those ideas to my life, and hence do I need to understand them?* And finally: you'd start reading Marx.
I was hoping that someone will make references to the theory of humour or phlogiston
Phlogiston theory is actually the source of modern elemental theory. Pursuing it wasn’t a dead end - it just required Lavoisier to do careful measurements and realize that phlogiston either had negative weight, or else what Priestley had discovered was not dephlogisticated air, but actually an element that was compounding with things rather than dephlogisticating them.
Marx sometimes talked about the labor theory of value in a more essentialist way that seems outdated, but he sometimes also talked about it in terms that can be read as just talking about what prices would be in a sort of idealized equilibrium model which can be taken as a kind of first approximation that can be a starting point for further analysis, not unlike the model of "perfect competition" in neoclassical microeconomics, which has the property that profits go to zero and all market prices are equal to production costs (so as in Marx, supply and demand would not be relevant to equilibrium prices, though if you modify the model to allow dynamic departures from equilibrium they'd play a role in restoring the equilibrium).
One way I like to think about the possible continued relevance of Marx's economics is to consider a near future science fiction scenario in which manufacturing becomes fully automated, so that you have some set of machines that are completely self-replicating: additional units of each machine in the set can be made by other machines in the set, given only the needed raw materials and energy. If any company or other organization owns such a complete set, they can make more of everything and their only production costs will be raw materials and energy, so in any sector of the economy that doesn't involve artificial monopolies due to things like intellectual property laws or trade secrets, market competition would tend to drive prices down until they were at or barely above the production costs, effectively ending any possibility of significant profits in that sector of the economy. This analysis doesn't involve the labor theory of value, but it does reach a conclusion similar to Marx on the "tendency of the rate of profit to fall" due to increasing "organic composition of capital" (which in his terminology just meant increasing automation in the production process).
We don't have any fully self-replicating sets of machines today, but presumably there is some sufficiently large set of machines, tools, and other goods such that every good in the set can be made by other goods in the set combined with human labor. If that's expanded to include the goods needed for mining raw materials and generating energy, then one could imagine a giant vertically integrated firm that replenished all the needed capital goods by manufacturing them in-house, and whose only production costs would be labor. If we think about such vertically integrated firms in the context of the neoclassical model of perfect competition, where prices are equal to production costs, and add the further simplifying assumption that all the different manufacturing jobs pay the same hourly wage (assuming it's all unskilled manual labor and that any initial imbalances in wages will lead to more workers applying to the higher-paying jobs, driving their wages down until an equilibrium is reached), then prices should end up being proportional to labor time in such a model.
I think Marx can be read as implicitly using a model similar to this, but with the tweak that one doesn't assume goods are being manufactured at exactly the same rate as they are consumed, but rather that numbers of all goods are increasing in a proportionate way, as is common for self-replicating systems (bacteria in a petri dish, say), which allows for an overall rate of profit or interest. John von Neumann, a mathematician who was also the first to offer a serious analysis of the problem of self-replicating machines (see https://en.wikipedia.org/wiki/Self-replicating_machine#Von_Neumann's_kinematic_model ), once proposed an explicit mathematical model of proportional growth for a closed loop of goods like this combined with labor, originally published in German in 1937 and later translated in English as "A Model of General Equilibrium". I couldn't find a free copy of his paper online but there is a paper discussing his model and comparing it to other economists' models and thoughts at https://www.jstor.org/stable/90002525 (can be read if you sign up for a free jstor membership). Page 9 notes the relevance of von Neumann's model to Marx's thought (though von Neumann was no Marxist!), as well as that of the 20th century "neo-Ricardian" economist Piero Sraffa:
'A typical example of a similar quasi-stationary economic model is Marx’s scheme of simple and extended reproduction, which in turn was inspired by the work of Quesnay. Sraffa (1960) also used a similar model to analyse some features of long-term equilibrium prices. He defined a “self-reproducting standard system”, in which production expands at an equi-proportional rate of growth, but that was not mean to be a model of actual production. (See Kurz and Salvadori, 2001 for a comparison of the models of Sraffa and von Neumann, and also for further references.)'
When it comes to teaching STEM fields, it's important to start with the most up-to-date ideas, and add history later as enrichment. (I include in the category "most up-to-date" Newtonian mechanics and other useful approximations that are still workhorses of daily progress.) Early ideas are often intuitively attractive, but also wrong. When students are exposed to seductive falsehoods first, even with appropriate caveats, it's hard to get them out of their heads later.
This is especially true when it comes to fields that were originally non-technical but which have become quantitative recently. Students should learn the fruits of modern cognitive science and evolutionary psychology before being exposed to Freud.
Yes, I agree. This method is much more time-effective than “reading the Classics.”
It's a bold move to quote Delong's maxims from 2013..."[Marx thought that] social democracy would inevitably collapse before an ideologically-based right-wing assault, income inequality would rise, and the system would collapse or be overthrown…But I think this, too, is wrong…"
...8 days before Trump takes office. Does Delong still think the right wing assault is not a big deal 12 years later? Maybe link to one of his more recent posts.
Like we are watching the ongoing victory of the right wing assault.
Is reading Marx the antidote? Probably not, but we are observing in real time as the billionaire owners of capital take control of the US government.
It would help the case against reading Marx if you could point to a a foundational 20th century economic paper from Samuelson etc. that points out why this is probably bad.
Just a thought.
No one is denying that right wing assaults exist. What Noah is denying is Marx’s claim that the right-wing assault will inevitably be successful very soon after any transfer policy is attempted, and thus there is no point in even trying social democracy in a capitalist context.
Delong is actually wrong in claiming this as Marx’s view (point 2 of ‘Marx the political activist’ at https://www.bradford-delong.com/2013/05/understanding-karl-marx-hoisted-from-the-archives-from-four-years-ago-may-day-weblogging.html ), in reality Marx and Engels were very invested in the effort to build power for various worker’s parties and try to make wins in the legislature, and thought that they would be able to make significant strides, at least in countries with universal male suffrage (unlike those countries that tied voting rights to property ownership, or didn’t have any sort of democratic system). Their idea of the future in such countries was that as these parties made further and further gains by legal means, there would come a breaking point when some faction associated with the capitalist class would attempt to “overthrow legality” to stop the changes (maybe something analogous to the ‘Business Plot’ during the FDR years, or the actual fascist takeovers that took place during that era), and that this would lead to a “revolutionary” period, one in which significant factions of the military or other power structures might side with the left wing since it had a claim to political legitimacy.
For example, here’s a comment from Marx (from https://archive.org/details/MarxEngelsCollectedWorksVolume10MKarlMarx/Marx%20%26%20Engels%20Collected%20Works%20Volume%2024_%20M%20-%20Karl%20Marx/page/n277/mode/2up ): ‘If in England, for instance, or the United States, the working class were to gain a majority in PARLIAMENT or CONGRESS, they could, by lawful means, rid themselves of such laws and institutions as impeded their development, though they could only do so insofar as society had reached a sufficiently mature development. However, the "peaceful" movement might be transformed into a "forcible" one by resistance on the part of those interested in restoring the former state of affairs; if (as in the American Civil War and French Revolution) they are put down by force, it is as rebels against "lawful" force.’
And one from Engels (from https://archive.org/details/MarxEngelsCollectedWorksVolume10MKarlMarx/Marx%20%26%20Engels%20Collected%20Works%20Volume%2050_%20Ka%20-%20Karl%20Marx/page/n55/mode/2up ): ‘Do you realise now what a splendid weapon you in France have had in your hands for forty years in universal suffrage; if only people had known how to use it! It’s slower and more boring than the call to revolution, but it’s ten times more sure, and what is even better, it indicates with the most perfect accuracy the day when a call to armed revolution has to be made; it’s even ten to one that universal suffrage, intelligently used by the workers, will drive the rulers to overthrow legality, that is, to put us in the most favourable position to make the revolution.’
A lot more citations can be found in the following section of “The Anarchist FAQ”, which devotes a lot of its time to criticizing Lenin’s vision of socialism and often quotes Marx and Engels against him (though the FAQ authors are not Marxists): https://theanarchistlibrary.org/library/the-anarchist-faq-editorial-collective-an-anarchist-faq-full#text-amuse-label-sech310
I was about to make the same point. Living in the UK, the right-wing assault and increasing income inequality are real. Picketty's arguments about increasing social instability in the face of increasing wealth inequality leading to revolution or war seem increasingly prescient.
Not sure about the UK, but income inequality has significantly decreased in the US since 2019 and hasn't increased since 2014. We'll see what it does in the next recession.
Income inequality slightly decreased, mostly due to the transfers made as part of the COVID response. There's no reason to imagine this will be a change in the long-term trend. But the original poster did not refer to income inequality, they said *wealth inequality.* Wealth inequality has substantially increased.
It decreased because people moved out of bad jobs into better ones, not because of transfers. It was wages that improved.
And what happened with wealth inequality?
Do you always look for excuses to complain about anything good that happens?
Trump is a narcissistic populist entertainer, not right-wing (with so many on the left, such a bird couldn’t fly) and has no real ideology other than saying whatever he thinks keeps making audiences cheer at his rallies. And I don’t think the system will collapse next week.
Did you miss the part where Trump plans to stock his administration with random conservative billionaires?
The system will not "collapse" next week, but the contention from Brad DeLong 12 years quoted with such surety by Noah Smith was that social democracy wouldn't inevitably collapse under right wing assault. We are now seeing that assault move from victory to victory.
Are you going to argue that the US is going to move anywhere but away from what little social democracy we have in the next four years?
When picking people to run the government, you want people who are successful and therefore they may be wealthy. Chris Wright, Elon Musk, Howard Lutnick are all successful in their fields. The ones who aren’t billionaires like RFKjr, Matt Gaetz, Pete Hegseth and Tulsi Gabbard are the ones I think are poor choices.
I don’t know what they mean by ‘social democracy’, that’s like saying ‘funny comedy’ or ‘violent warfare’, but how would you say it is about to collapse? Is Trump going to force through photo ID requirements for voting, or do you think Congress will let him start rounding up and imprisoning his detractors?
I am starting to think that Noah's post-election posts are aimed more at soothing his right-wing Substack subscribers than they are at conducting any sort of intellectual project.
What's evident is that your constant posting in defense of Marx is because you're a cult member, and your failed religion is being offended by people with a clear sense of economics, history, humanity and justice - all things lacking in Marxists and especially the many failed Marxist national projects and empires.
Yes, it should be evident from my posts that say "Marxism is a terrible idea and I am extremely concerned about China" that I'm a Marxist. Put down the nitrous.
But it comes with a blast of whipped cream at the end!
Just a side point, but I do think econ and philosophy phds should read Smith, especially Wealth of Nations.
Even in the public goods paper, Samuelson gives a nod to WoN. On the question of why the math would be simpler in a world of private goods, he writes that:
"each individual, in seeking as a competitive buyer to get to the highest level of indifference subject to given prices and tax, would be led as if by an Invisible Hand to the grand solution of the social maximum position."
I agree
In the opinion of ^this^ economist, Akerlof's "The Market for Lemons" is either the most or the second most important development in social science since WW2. Information asymmetry doesn't just explain why finding a used car can be positively sisyphean. It also explains insurance markets, why bosses and managers exist, and the 2008 financial crisis. It also motivates the CARES act, social insurance, and counter-cyclical fiscal policy even in the absence of a Keynesian AD/AS model.
In terms of importance I'd rank it right next to game theory.
1. Moskowitz should learn that to properly historicize our field we should read Jevons, Menger, Walras, Edgeworth, and Pareto. (Especially Mathematical Psychics - the most amusing economic theory of the 19th century.)
2. Maurice Allais wrote down the overlapping generations model about a decade before Samuelson did, but unfortunately for him, in French.
3. Ken Arrow once told me he thought Marx was the first great general equilibrium theorist.
4. On DeLong: "[S]ocial democracy, progressive income taxes, a very large and well-established safety net, public education to a high standard, channels for upward mobility, and all the panoply of the twentieth-century social- democratic mixed-economy democratic state can banish all Marx’s fears that capitalist prosperity must be accompanied by great inequality and great misery." Marx's point was that these things may be great while they last, but the logic of history is that they won't. The data of US and Scandinavia today teaches us that such social states are neither globally stable nor even locally stable. Marx's long run is longer that DeLong's.
5. Branko Milanovich points out that Smith was the first to connect the economic success of the state with the welfare of its citizens. But one doesn't have to read the entire book to appreciate that contribution. Beyond that, think of all the damage that has been done by people who think that acute observations of 18th century Glasgow have manifold implications for the modern world.
For sure, people should read Marx but the early Marx, not "Das Kapital." Why? Because early Marx writes about alienation & reification: how capitalism alienates men & women from their selves & turns them & their lives into objects. This is important because these ideas are hardy perennials: Patrick Deneen, for example, embraces them, although he blames not capitalism alone but the whole 18th century enlightenment, which produced democracy & individualism. Once you see how early Marx resonates in subsequent social/political/economic criticism, you can an important perspective.
The early Marx also had an obsession with evil and the need to destroy the world in order to save it:
https://en.wikipedia.org/wiki/Oulanem
And the later Marx and his followers shows how these ideas of alienation and reification are easily shaped into a very dangerous totalitarian idea that destroys entire societies, so maybe we are better off skipping the early Marx.
Michael, you're right, although I don't remember Marx discussing alienation or reification in "Kapital." In any event, I think that people like Deneen, who build analyses on alienation & reification and then propose political solutions are just as dangerous as Marists-in-reality. Are you familiar with Deneen?
Yes, by Das Kapital, Marx was more interested in assuming the internal contradictions within capitalism would inevitably lead to revolution. The alienation and reification were assumed.
Never heard of Deneen.
Michael, I suggest you take a look. Obama recommended his first book, "Why Liberalism Failed"; Vance has embraced the ideas presented in his second, "Regime Change: Toward a Post Liberal Future." It's in the second that he blames the enlightenment (democracy, capitalism, individualism) for the alienation & reification which makes life miserable so many folks.
Thanks for the tip, but I do not have time to read books anymore. Based on your summary, I will probably hate the book.
LOL
I take almost the opposite perspective:
https://frompovertytoprogress.substack.com/p/a-manifesto-for-the-progress-based
Michael, I agree with your thesis wholeheartedly.
I found Deneen's first book meh & the second one bananas. The second one is of interest only because Vance embraces it; so it's a warning of what his presidency would be like & a demonstration of just how much he & Trump disagree.
Though there's a recent paper out surveying people on how they trade-off the pay for a job vs. the "meaningfulness" of a job. It turns out that most rate meaning pretty low; they say they get meaning out of the things they spend their income on, not their jobs.
I would steelman his argument as saying that STEM could do more teaching of philosophy of science. Understanding how our models are just models, and paradigms are mediated by the state of tools and observational techniques is important to teaching the next generation. His specific example of Marx is pretty bad, because as you say, his legacy is one of “ultimately leaving little mark on the field’s overall methodology or basic concepts”.
But, for example, I think it is good to explore the evolution of DSGE models, or if there anything to be aware of when doing large data set analysis, event studies, or use of AI simulations, not from a technical perspective, but from the kind of understanding of the knowledge production processes and institutions (that could cause technical issues to be downplayed) that is a valid criticism from the comment.
Mao, Stalin, Pol Pot, Chavez.... If it looks like a duck.....
There is something about Marxist Leninism that seems to attract these people. also, don't forget Lenin. He was very much the Party being the point of the spear leading the proletariat who obviously could not lead themselves
It's not unique to Marxism. Islamism, Christian fundamentalism, Catholicism, liberalism....
Seems like isms are root of the problem.
Unfortunately, "isms" is such a broad category that if you take away everything that can broadly be described as one, what you're left with is either a random number generator or a rock.
Very enlightening post. But I saw stuff along the way.
UNCLEAR MEANING AND OBSERVATION: the best thing to do would be to transfer money from each young generation to each old generation in turn, so they’d have enough money to lend each other.
1. You emphasized that it is old people who lend to young people, and then you end the sentence by saying they lend to each other.
2. Samuelson's theory works because most old people gain far more from Social Security than they would by investing their SS contributions as young people.
People who just get by on Social Security will lend nothing to young people— their accumulated wealth is negligible.
Rich old people don't need incoming Social Security to be able to lend to young people.
I assume there's a group in the middle who receive enough from SS to be able to lend substantially more to young people.
QUERY: buyers won’t pay full price for used cars because they might be getting sold a “lemon”, so used car dealers keep their high-quality cars off of the market entirely.
What financial advantage is it for used car dealers to keep their high-quality cars off the market entirely? What do they do with them? Just let them sit for a couple of years when people are less afraid to buy them?
POINT OF INFORMATION: Laws like the Affordable Care Act (Obamacare) that penalize people for not buying health insurance are aimed at preventing the exit of healthy people from the market, based on exactly the kind of principle Akerlof talks about in his paper.
The penalty for not buying health insurance was taken out of the ACA by Congress in 2017.
TYPO: (Arrow implies, but doesn’t state, that both patients and may not be good at making rational decisions under that kind of extreme uncertainty.)
There is a word missing from this sentence: both patients and...
TYPO: medical care is a universal a human right,
Delete excess “a.”
QUERY: increasing returns to scale
What does this mean? If it is an economic term, I have never encountered it before.
BTW, anytime you want to give me a free subscription as a proofreader, I'm open to the deal. I work for $100 a year. But apparently, I also work for $0 a year.
"What financial advantage is it for used car dealers to keep their high-quality cars off the market entirely? What do they do with them? Just let them sit for a couple of years when people are less afraid to buy them?" <-- Yes, because they are durable and hold their value well over time
Friendly feedback: I actually used to sell used cars, & am friends not with the owner, but with the sales manager at the time (the guy your salesman runs back & forth with while trying to make a deal).
They do not just let them sit because they hold value. They have to be moved & serviced, because just sitting for long periods is hellish on cars. You also must have space to store them. If they don't move off the lot, they start getting progressively more discounted. If they can't move after long enough, they go to auction. There is absolutely a clearing price; they don't just sit there & accumulate.
All good questions - the bit about the best used cars being kept off the market (black market, perhaps?) puzzled me as well. Good catch on the second typo - I caught the first, but looked right past the second. You're definitely due a free subscription!
I welcome your support!
"He also has the repulsive presumption and arrogance which is displayed by all panacea-mongers without exception."
Karl Marx on Henry George, and in desperate need of a mirror.
Agreed. Marx said that kind of thing about a lot of people.
Finely reasoned; as is the norm with the writing of Noah Smith. But as we happily descend into yet another Gilded Age, where a tiny handful of men possess more wealth than the populations of entire continents, perhaps we should at least acknowledge the observation of Marx that capitalism, despite its superiority over all other economic systems, is still capable of generating enormous yet possibly avoidable amounts of human suffering.
Perhaps it is just that economics cannot yet design a version of capitalism that does not involve a few citizens living in golden palaces, while others, despite working their fingers to the bone, live on sidewalks. Even with modern labor-saving technological advances of such brilliance that Marx himself might have viewed them as magical.
I really wish Americans would stop mistaking their problems as a problem of capitalism instead of just problems with their governance. Plenty of capitalist countries have significantly low levels of inequality. America just chooses differently.
As a closet Nordic, it's not yet safe to come out in the USA.
Nations cannot choose their levels of inequality.
Nor can government policies do much to change it.
The natural state of humanity is deprivation and suffering, which was only eliminated by capitalism (see OurWorldInData portion of world living in extreme poverty graph). The only continent with less wealth than Elon Musk or Jeff Bezos is Antarctica. And if you go to Pyongyang or Caracas, there will be millions living on the streets or in dank prisons working their fingers to the bone while Kim and Maduro are in their golden palaces reading themselves to a dreamy sleep with Das Kapital and the old Manifesto.
Don't overstate your case, though. Musk is now worth $400G or so (per the headlines), but the GDP of sub-Saharan Africa is nearly $2,000G (per the first hit from Google). So every year, Africa "earns" something like five times what Musk has earned over a lifetime. But also, a dollar flowed is a lot more valuable than a dollar stocked -- the interest off Musk's $400G is likely less than $20G per year, so if you divided it among all the s.s.Africans, you'd only raise their income by 1%.
Capitalism did not “generate enormous yet possibly avoidable amounts of human suffering.” That existed long before capitalism. Suffering in poverty, ignorance and violence is the human condition.
It is only relatively recently that we have gotten beyond that for the majority of humanity.
This essay is so poor in so many ways, but it illuminates Michael Sandel's as well as Martha Nussbaum's critiques of economists intellectually and morally. So Dr. Smith, you don't read Marx for his economics any more than we should read you for your policy rants. You read Marx, first, for his observations of the social, economic, and political events of the 19th century (try _Dispatches for the New York Tribune_ as your starting point). You read Marx for political philosophy, for the questions he asks not so much the answers he composes.
There are few if any political philosophers since Marx who have not studied him and who have not engaged with him. Try Martha Nussbaum, Debra Satz, Elizabeth Anderson, or Amartya Sen among the great political philosophers of our time (oh yeah, forgot, Sen picked up a Nobel Prize in economics as his side job). Of course, one can also read Rawls who towered over them all (see Forester's critical and somewhat resentful philosophical history _In the Shadow of Justice_ for a narrative on his importance. You might respond with a what about Robert Nozick (who essentially but quietly disavowed _Anarchy, State and Utopia - and as far as I can tell was pretty much ignored by Rawls).
Maybe your economic heroes are Hayek or Friedman the right-wing versions of Marx's economic determinism as well as proponents of a sort of moral nihilism with their love affair not just with Reagan and Thatcher but even more notably, Pinochet. See Hayek's _The Constitution of Liberty_ and try to imagine the kind of society that would produce, or you can just read the far shorter introduction and critique by Mathew Sharpe, "Is Neoliberalism a Liberalism, or a Stranger Kind of Bird?".
You don't read Marx to agree with him nor to cherry pick all the things you don't like that (or that you misconstrue) any more than you read Adam Smith that way -- which as I think about it is what orthodox economists do. It's why we have a "received wisdom" about Marx and Smith. You don't read any of these guys for their answers -- not even Rawls. You read them for the questions they pose and the questions they explore. Quick, what was the question that motivated Rawls's _Political Liberalism_? Answer: " “How is it possible for there to exist over time a just and stable society of free and equal citizens who remain profoundly divided by reasonable religious, philosophical, and moral doctrines?” He wrote that in 1993 long before we started sliding into our contemporary abyss. He tried to answer it. I don't think he was successful; his belief about human nature was wildly optimistic. But, that question haunts us today. And Marx's questions about the social misery and material inequalities of the 19th century are still pertinent into the 21st century.
And to your snide critique of Marx's ponderous writing style, you're absolutely write -- save for Dispatches -- his stuff is difficult. Get over it. They guy grew up in the 19th century and cut his teeth on Kant and Hegel. Basically, you either need to stick to contemporary economics with its quantitative failures and quit with the pontificating about public policy when you have only most superficial foundation regarding the problem of the "good", the problem of "justice" or you need to read more deeply and more widely including Marx. Satz and Anderson left economics in large part because of its intellectual sterility. Sen just swallowed and integrated economics and political philosophy. but he is a generational intellect. You should read him if not Marx, though I can assure you Sen read Marx.