Monday, May 26, 2014

Let's Go Surfing Now

From Keynes's biographer Robert Skidelsky, this:

The classical economists of the nineteenth century looked forward to what they called a “stationary state,” when, in the words of John Stuart Mill, the life of “struggling to get on…trampling, crushing, elbowing, and treading on each other’s heels” would no longer be needed.

Interesting. The stationary state of the classical economists is the same as Professor Commons' period of stabilization::
Professor Commons... distinguishes three epochs, three economic orders, upon the third of which we are entering.

The first is the Era of Scarcity... In such a period, 'there is the minimum of individual liberty and the maximum of communistic, feudalistic, or governmental control...'" This was, with brief intervals in exceptional cases, the normal economic state of the world up to (say) the fifteenth or sixteenth century.

Next comes the Era of Abundance. 'In a period of extreme abundance there is the maximum of individual liberty...'" During the seventeenth and eighteenth centuries we fought our way out of the bondage of Scarcity into the free air of Abundance, and in the nineteenth century this epoch culminated gloriously in the victories of laissez-faire and historic Liberalism. It is not surprising or discreditable that the veterans of the party cast backward glances on that easier age.

But we are now entering on a third era, which Professor Commons calls the period of Stabilisation... In this period, he says, 'there is a diminution of individual liberty....

"It is not surprising or discreditable that the veterans of the party cast backward glances on that easier age." One still sees this among conservatives today.

I stand by what I said four years ago:

Scarcity... Abundance... and Stabilization. If there are business cycles -- and cycles within cycles -- then there is a Cycle of Civilization. The Dark Age is a Great Depression. The Era of Scarcity is the long, slow, painful recovery. The Era of Abundance is the boom, the peak of the cycle. And the Era of Stabilization is the Professor's optimistic misnomer for crisis-and-decline.

If we're good, if we choose wisely, if we don't proceed blindly, then there is a chance we can ride the downslope of that economic wave like a surfer.

The cycle of civilization is a cycle in the dispersion and concentration of wealth. The inequality that troubles Piketty and the Pope is evidence of that cycle. The growth and decay of cities and nation-states is evidence of that cycle. The saucer-shaped pattern traced by interest rates during the course of ancient civilizations is evidence of that cycle.

Stabilizing the decline of the great cycle is a simple matter of stabilizing the distribution of wealth and income at optimum -- at levels that best drive growth and maximize individual liberty under capitalism.

Basically, in order to give the conservatives what they want, we have to give the liberals what they want.

Ain't it sweet?

No comments: