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January 31, 2019


Luis Enrique

I do try to resist my centrist impulses which can veer into conservatism, but I see Corbyn supports merrily talking about taking the majority of the means of production under 'democratic ownership' and not worrying so much about Brexit job losses in e.g. car manufacturers because large private firms won't be so important once Labour are in power .... and, well I fail to resit my centrist impulses.

I just like to see some caution, some show of awareness how such things can end badly. The response that centrism/neoliberalism ended badly is not good enough, we want to improve things not find new ways to get things wrong.


In the case of Marx, there is an opposite kind of wishful thinking. It’s when reality fails to be as precondition-for-revolution awful as you want it to be.

In the first edition of Capital (1867), Marx quotes various statistics up to 1865 or 1866, but with one glaring exception: the figures for wages, which stop at 1850. In the 1873 edition, the statistics are all updated, but again with that one glaring exception: wages, where again Marx stops at 1850.

Marx’s problem was that, after 1850 wages were going up - exactly the opposite of what his theory predicted. Marx wasn’t honest about this. Rather than confront the fact that reality wasn’t conforming to his theory, and try and understand why that was, he suppressed the inconvenient data.

Robert Mitchell

My wishful thought is that economists talked about derivatives more. The experiment with farmers and bakers for example should include derivatives. Farmers and bakers in the real world lock in future prices, they don't have to guess as economists assume.

See https://www.farm-europe.eu/travaux/are-futures-the-future-for-farmers-2/

"These hedging and price discovery functions thus enable farmers to fix their prices for the future, reduce their risks, and better plan their production and investment decisions."

Economists ignore derivatives, but derivative contracts are often more important in pricing than physical supply and demand:

" in 2008 wheat prices increased by 46% between January and February, fell back almost completely by May, rose again by more than 20% in June and fell back again from August onwards. Likewise, the price of rice rose by a staggering 165% between April 2007 and April 2008. The magnitude of these price fluctuations is so high that it is likely that they were largely driven by speculation, rather than being the result merely of market factors."

The answer to private speculation on wheat prices is for public institutions to express derivative positions that put downward pressure on prices while providing both farmer and baker with locked-in future prices.

Why do economists hardly ever talk about derivatives? My guess is ignorance and groupthink.

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