Note Books 4

March 30, 2011

Johnny Keynes

Keynesian economics begins with the concept markets are not self-correcting. Because of this unemployment is a natural part of capitalism. Wages are downwardly inflexible because workers will resist any wage cut backs even if the solvency of the firm is a stake. Most capitalist are not risk takers as assumed. Investors for the most part do not like gambling too much on dicey markets.  Fall in the demand labor is caused by market insecurity and a lack of demand for what labor produces. This leads to a permanent state of underemployment.

 Changes in demand do not cause changes in prices. Ability to buy is more important if a rise in price does not overly stress the consumer most people continue buy a product they like. If the consumer is employed there will be a demand for desired products. In this way demand is critical in determining both output and thus output. Because income is important in influencing both consumption and savings, people save only when they have enough income to meet their other basic needs. When investments increase so do interest rates stimulating more investments. The meaning of all this is speculation and investments happens most when risks are minimal making best guess outlay of assets conservative thus risk avoidance.

By insuring demand production and employment is insured. Full employment further increases demand, which increases consumer spending. The hazard here then is overproduction leading to a failure to sell and thus economic recession. The government then has the responsibility to further create demand through government spending. This helps to sustain full employment and thus maintaining consumer demand. The market economy left alone develops stagnate economy and underemployment because investments are always unreliable and overly cautious.

Neoclassical economy begins with the assumption that people are rational and make the right decisions to maximize their wealth. This requires a society that offers the ability to pursue individual self-interest. The proper supply and demand agendas follow from this. All people enter the market as either buyers or sellers of something. Preferences determine demand and thus supply.  This in turn determines prices in a one-dimensional direction.  Prices are an interaction between consumer wants and production ability given the technology and the resources available. In this theory individual wants and production ability are given and not analyzed as to their historical origins.  Then preferences or choices of the consumers are not part the economic theory, but are assumed. Changes are acknowledged but not studied. Preferences determine demand and supply will be created to meet this demand. In this way supply and demand determine prices.

Production ability is the productive function which is the technology used in production. Productive racecourses are the materials used in production. The beginning is of course with choices at every point along the economic activity.  Choice is freed through a competitive market and private property and capitalism is the closest to human nature of any economic system in history. Everyone should be free to sell something on the open market. No can be allowed to control market prices. The market is above individual manipulation, making everyone price takers and not price makers.

Human nature works out that every individual has unlimited wants, but has limited means to satisfy those wants. In that way every one decided what is most important for them to spend their limit resources on, this is called diminishing rate of substitutions.  We all take maximum advantage of the opportunities we face.  Prices are then determined democratically by the cumulative set of choices of everyone.  This means the best possible set of choices is achieved through a free market given market restrictions.

Income or wages earned per hour times hours worked are determined by the market and set the common wage rate. In turn wage earners are consumers and will spend their money on commodities made by other capitalists and workers. This means each worker must decide between more income to spend and more leisure. The marginal cost of production set the demand for wageworkers.

Input and output and supply and demand are terms used to understand the market operations.  Supply to meet demand continues until satisfaction is reached. Production and rationality is assumed making over production impossible as long as the market remains free. Each worker and each capitalist get what they deserve based upon what they contribute to society. Poverty is a choice as is wealth. The capitalist delays gratification until investment shows a profit. Because of scarcity of everything rational choice to invest rather than consume means the capitalist get a just reward. Each worker who chooses leisure over work chooses poverty willingly.

The leverage or barrowing large amounts of money to buy up considerable quantities of stock to resale them at a profit before the loans are paid back is more common one would like to think. Instead of paying back past loans, this becomes collateral for new loans adding to over all debts. This becomes a desperate search for quick profits without any concern about long-term consequences.

The very large surplus of capital is reinvested in corporate buyouts only increasing overall profits which in turn needs to be reinvest in order to continue to grow. This has happened since the late 1970’s even when most of that time production was stagnate.

With production stagnate, and super profits creating so much capital it cannot easily be reinvested, then capital sets idle. This leads to ever more creative ways to reinvest idle capital to still more profit while production remains stagnate.

With production stagnate and super profits creating so much capital it cannot easily be reinvested, capital sets idle. This leads to ever more creative ways to reinvest the idle capital to create still more profit while production remains stagnate.

To much accumulation leads to swollen financial assets that continues to grow and is not tied to anything real. The stock market becomes a way to find a way of pooling savings while not increasing production. Buying and selling of stock means rapid movement of capital daily with little effect on production. Investors change holdings day after day. Paper holdings, which are liquid and easily transferable sources of wealth leading to investments that have no connection to any specific craft or industry.

Because of productive stagnation, the important place to make quick profits is in stock futures, options, derivatives and hedge funds.

Financial instability leads to investing heavily in highly unstable investments not supported by anything real. The market is going from a melt down to another crisis to new unstable investment opportunities.   

Financial speculation needs the entire planet open to speculative investments. The weaker the economy the less it can fight outside speculation into an already broken economy.

The International Monetary Fund, World Bank, World Trade Organization require poorer countries to cut out any social programs, social services without offering real solutions to job loss and the loss to basic social services not being met. This can work only by placing corrupt governments in power that are backed by militaries from advanced capitalist countries.

Worldwide crisis is followed by financial explosion and quick profits.

Monopoly is more than a word. Swollen profits have nowhere to go until artificial opportunities are created.

The government always stands ready as a lender of last resort. Government comes up with liquidity very rapidly if need be. This is because large firms are too big to fail.

Going from crisis to crisis with government stepping in with large amounts of investment capital to keep firms alive. Debts and credit become yet one more type of investments.

Now even production companies are investing capital into financial schemes not tied to production. Ownership in large amounts of financial assets becomes an end in itself it doesn’t matter in what as long as it pays well.

Companies are already well established and these firms are already well stocked. They are selling to a falling demand for their commodities. Reinvestment is being reduced. This leads to speculations in non-productive financing into high-risk schemes.

Bailouts are such a common practice they can and will figure into investment schemes. Government buying up major amounts of the stocks held in banks is a part of this trend.

There are a lot of dollars worldwide that are setting around unused.

Lender of the last resort, Government offers quick cash (liquidity) to financial institutions to survive and grow.

Government makes the money and can distribute it to anyone it wants. This allows financial companies to sell off assets to gain cash to pay off debts; the price of the dollar and the assets fall meaning paybacks are much smaller than the original loan. Speculating on dollars is a good investment only wage earner and consumers need suffer.

The government rescue only creates more failed companies hoping in turn to be bailed out. Unemployment, declining wages increasing consumer debts follow.

Economists with a general lack ok knowledge in historical sociology are capable of understanding the crisis or offering solutions.

Economics is now a discipline saturated with meaningless abstractions and Models that work well on paper not in reality.

March 31, 2011

Hegel on Consciousness

History happens because of action taken by people. People make decisions in an already existing environment molded by past historical action. Within this environment a consciousness that is formed by experiences reflects upon itself. Thinking is a process that begins with a simple stimulus response developing stage-by-stage emergent in intricacy to examine complex theology or the delivery of awareness responsive to perception. At each juncture the closeness of fit between consciousness and reality defining the limitations of the current significant ideology and the next alternative set of ideas testing the existing overriding philosophy set up the next major movement in history. Through observation and testing of our conclusion we expose the limitations in our current worldviews. Due to watching and robust careful judgments in our actions in our everyday lives a current ideology change in many subtitle ways leading to a revolution in our understanding and accepted wisdom. As we become aware of the world around us our worldview in part defines not what we are conscious of but our consciousness itself. Each current body of knowledge fails in some way to grasp some part of reality. This creates problems we will try and solve. This correction of errors in our analysis of the current situation requires new ideas. With new ideas our conscious evolves.

Ideology is always changing, as the environmental need changes and new responses leads to changes in our worldview. This always begins a new at the level of stimulus response.   This is as uncomplicated as simple biological reaction to changes in our immediate experiences. It is with neurological sensations that is our direct connection to the world around us. With response a pattern of behavior is formed. These learned responses gives rise to future differences in any upcoming behavior that is the results of an external or internal stimulus in this changed environment.

In turn these new pattern of behavior are also the result of the changes in the way the experiences are interpreted based upon the changing generalizations of many experiences that are always changing with every new situation. With these new changed generalizations we create innovative alterations in our conceptual scheme. This arranges information into altered categories that followed newly distinct patterns of intellectual insight. As with any arrangement of patterns of thought reflecting our reality we create an abstract model of the way we but ideas together forming a logic that goes with this worldview. This helps the mind to interpret the experiences of the world we live in. Perceptions are used to classify objects and ideas as our consciousness continues to develop.

This is how faculty of apprehending by means of the brain and its consciousness with sympathetic understanding of the world is filtered. The filters continue to arrange information as we interact with our environment. This information can now be shared through language. Through language knowledge transcends our experiences, and culture is born.

We understand ourselves through knowledge that others exist. The Self needs a Non-Self in order to have self-consciousness.

Because the Other is important and is beyond the “Self”, the Other will become an object of our desire. The have the Other we try to learn about the Other. The Other being free of our will leads us to try to control the Other. Coercion, persuasion, influences, to glimpse afar or just gaining attention or all the option at our disposal. Because the Other exists there is a possible threat.  Desire leads to an attempt to control the world around us, including the Other. Whatever not me I hope on some level to possess, or at least not to lose oneself into the Other.  

Changing the environment will increase security. Understanding or some knowledge is one type of ownership. This is important to the development of consciousness. Self-consciousness leads to contact with other self-consciousnesses. Both the self-consciousness and the other self-consciousness are each other’s Other.

Through a mutually shared self-awareness a relationship is formed. Awareness of self and another becomes a changing interaction. Sometimes the more powerful person has more influence in defining the relationship. In this case the weaker person becomes the one who does the work and the powerful person reaps the benefits. Work is the connection with nature and thus the slave is more real. The worker now supports the elite person separated form that connection with nature. The stronger become the weaker by no longer having to work. The worker at some point comes to believe that the worker does not need the elite person. The elite person has no such realization because that would be false.  

In class society body and mind become separated and the mind becomes alienated form humanity. The mind becomes an object in our consciousness that is separated from anything real. The mind becomes an object of worship standing outside of real life. Our human minds are seen as small and petty compared to the mind of God. The mind of humanity slowly gains more control of our awareness by rationally ordering the environment we come to understand. We become increasingly linked to our environment through this understanding. The Divine Consciousness according to Hegel is the Absolute or Universal Consciousness, which all Consciousness is and has been a part of and through reason we come to understand the Divine. Feuerbach would later claim that what is universal is Nature, the Material Universe and the Divine is our own imaginary creation.  

Logic is the study of how we think. We interpret the objective world around us by us and through thinking we make sense of the world around us. If there is a close match between what we think is real and the material reality independent of our consciousness than our logic is sound.

We have something that now exists (being); however being is unstable. Because it is unstable it is breaking down (nothing) and as it breaks down the materials left over is always forming something new (becoming). At some point we are looking at something different and new (new being), which in turn is breaking down and forming something that is also new. This is how evolution works in the Universe, Nature, Biology, and Cultural History and how our mind develops over time.