Ideas, interests and capital

One of the problems with being a Marxist is one so rarely gets intelligent criticism. So I was delighted to see Eric Lonergan’s thoughtful reply to my review of Angrynomics.

In many ways. I agree with him. He’s right that there is a “vacuum of thought” about economics – a vacuum filled by snake-oil peddlers of nationalism. But this vacuum is much more evident in politics & the MSM than it is among economics. Angrynomics itself is a treasure trove of policy ideas. If we add the work of people such as Diane Coyle, Ian Mulheirn, Geoff Mulgan, Radix, Stian Westlake and Sam Bowman (among others) we are struck by the almighty chasm between the intellectual heft of centrists outside of politics with the vacuity of centrists within politics. This surely warns us that there are powerful filters which select against good ideas.

Eric’s also right that there is no equivalent today of Keynes or Friedman, men who provoked revolutions in economic policy. But this reflects the general decline of the public intellectual – a decline we can at least partially attribute to the neoliberalization of academia and the media. If there were an equivalent today of Keynes, he would be snowed under by bureaucracy and under pressure to publish journal articles nobody would read except to show that their findings were unreplicable. And he certainly wouldn’t get a multi-part TV series to promote his ideas, as Milton Friedman got.

But, but, but. Whilst I welcome new thinking such as Eric’s, this under-rates the utility of good old ideas, many of which are excluded by political forces. Take four examples:

 - The case for higher bank capital ratios (supported by Eric) was made convincingly by Anat Admati and Martin Hellwig. It’s not been adopted because of lobbying by bank executives.

 - Even mainstream economists (most obviously Simon Wren-Lewis) knew that post-2010 fiscal austerity was a stinking idea. Their thought did not gain sufficient political traction, in part because of the influence of what Simon calls mediamacro.

 - You can’t walk out of your house without tripping over somebody advocating a universal basic income. But we’re stuck with the cruel and inadequate Universal Credit.

 - We have strong evidence that greater worker ownership and control can often raise productivity. But – despite the efforts of John McDonnell – this remains marginalized by the MSM.

There is one point where I think Eric hits the nail of the head. It’s that “the specific interests of ‘capital’ at the current juncture of history are very unclear.”

This is right in two senses, on top of the fact that (as Eric says) there can be a conflict between the interests of bosses and shareholders.

First, what policies and institutions best increase profit rates?

From 1945 to the 1970s, the answer was full employment and wage-led growth. The promise of high demand encouraged investment in capital and innovation. But this broke down in the 70s, to be replaced by profit-led growth, characterised by efforts to raise profit margins by weakening labour. But as Michael Roberts shows, this did little to restore aggregate profit rates.

So what’s the answer? Fordist mass-market capital might require wage-led growth. But extractive financialized capital would prefer low interest rates. What’s the balance of influence between the two? Does capital require low taxes and small government, or does it need bigger investment in infrastructure? Does it require deficit financing to produce high and stable growth, or does it (as Kalecki thought (pdf)) require “sound finance” to ensure that governments are dependent upon business confidence?

Secondly, to what extent does capital need greater legitimacy? One reason for high top taxes and full employment after 1945 was that governments thought they needed to inoculate capitalism against the threat of revolution – a threat that faded as the USSR weakened and collapsed.

It is now, though, an open question how much legitimacy now needs shoring up. (You can read Brexit as a project of legitimation at the expense of accumulation.) The fact that some companies are keen to greenwash or to pay lip-service to the BLM movement suggest many feel the need to appease their critics. But how much further does capital need to grow? Would more redistributive taxes raise legitimacy and help stabilize demand, or would they reduce incentives to invest and capitalists’ sense of their own entitlements? Does a big state help stabilize demand and provide legitimacy, or does the need for profits require privatization – what David Harvey has called “accumulation by dispossession”?

This are all open questions. Which is where there might be reasons for optimism. It might be possible to build an alliance of social democracy with the more progressive elements of capital to advance the sort of agenda Eric and I would both support. And I’d add that this would be something the left should also support, as the transition to socialism will come via social democracy. But that’s another argument…

Comments

[Postkey]

"From 1945 to the 1970s, the answer was full employment and wage-led growth."

And, cheap energy?
{“A barrel of conventional crude oil contains the equivalent of roughly 4.5 years of continuous human labour; or around 11 years at 35 hours per week, 48 weeks of the year.  But the capitalist doesn’t pay for the value of the fuel, merely the cost of extracting it.  For a mere £49 (at pre-pandemic prices) the capitalist purchases £330,000 worth of work (at the current UK median wage).  It is the exploitation of fossil fuels rather than the exploitation of labour which generates the vast majority of the surplus value in an industrial economy. . . .

As Nicole Foss once put it – if conventional oil was like drinking draught beer from a glass, fracking was the equivalent of sucking the spilled dregs from the carpet.”

https://consciousnessofsheep.co.uk/2020/05/26/two-money-tricks/?fbclid=IwAR1rOz0jexO2dIIldSlseh-8-EqES4oYZcBTvHMtW-JyBgMHB6xgfOOsbBI }

No longer?

'The first principle is that all forms of economic output – literally all of the goods and services which comprise the ‘real’ economy – are products of energy.
Nothing of any economic value or utility can be supplied without using energy. . . .

If you want a succinct answer to this question, it is that ECoE (the Energy Cost of Energy) is rising, relentlessly and exponentially. The exponential rate of increase in ECoE means that this cannot be cancelled out by linear increases in the aggregate amount of total or gross (pre-ECoE) energy that we can access. The resultant squeeze on surplus energy has been compounded by increasing numbers of people seeking to share the prosperity that this surplus provides.
As a result, prior growth in prosperity per person has gone into reverse. People have been getting poorer in most Western advanced economies (AEs) since the early 2000s. With the same fate now starting to overtake emerging market (EM) countries too, global prosperity has turned down. One way of describing this process is “de-growth”. '
https://surplusenergyeconomics.wordpress.com/

[ltr]

Nicely done, so now I'll read the book which I had too little interest in before. I appreciate this follow-up.

[Robert Mitchell]

"Nothing of any economic value or utility can be supplied without using energy. . . ."

The problem is that less and less energy is needed to do more and more with information. The energy costs of running a program are trivial compared to what the program can do. The energy cost of this message I'm writing, for example, is insignificant compared to the knowledge within it.

Thinking about energy too much leads you to absurd conclusions like: compressing a file increases its entropy, so decompression should cost more energy. But does anyone care? The energy difference in compressing and decompressing files are so minuscule as to be irrelevant to the informational content of the file. Focusing on the physical energy needed to compress files misses the point that the information is far more important than the energy needed to store it.

Also, if the Energy Cost of Energy is rising, why do oil prices drop? Why do decoupling policies explicitly decouple energy supply from demand for retail pricing? Why does two-thirds the electricity produced go to waste? (See https://flowcharts.llnl.gov/content/assets/images/energy/us/Energy_US_2019.png : 37 quads produced, 12.7 quads demanded.)

[LJC]

@Robert Mitchell

Why does two-thirds the electricity produced go to waste?

You have misunderstood the flowchart. It is not 2/3 of the electricity that goes to waste, it is 2/3 of the energy used to generate electricity that goes to waste. The main sources of energy for electricity generation in the US are natural gas (11.7) coal (10.2) and nuclear (8.46), all of which are thermal and so as heat engines are subject to the Second Law of Thermodynamics. For example coal-fired power stations have an efficiency of 37%. Add in transmission losses and it is easy to get down to 33%. Existing nuclear power stations have similar efficiencies to coal-fired power stations; natural gas power stations have a higher efficiency if they use combined cycle gas turbines which use the waste heat from the gas turbine to drive a steam turbine (up to 60% efficiency), but the open cycle gas turbine has a similar efficiency to other thermal power stations.

[ltr]

People have been getting poorer in most Western advanced economies (AEs) since the early 2000s. With the same fate now starting to overtake emerging market (EM) countries too, global prosperity has turned down. One way of describing this process is “de-growth”.

[ This is quite incorrect. When I have time, I will show the data. ]

[ltr]

https://fred.stlouisfed.org/graph/?g=tuxl

August 4, 2014

Real per capita Gross Domestic Product for Euro Area, Japan, United States and United Kingdom, 2000-2018

(Percent change)

https://fred.stlouisfed.org/graph/?g=tuxm

August 4, 2014

Real per capita Gross Domestic Product for Euro Area, Japan, United States and United Kingdom, 2000-2018

(Indexed to 2000)

[ltr]

https://fred.stlouisfed.org/graph/?g=oydX

August 4, 2014

Real per capita Gross Domestic Product for China, India, Brazil and South Africa, 2000-2018

(Percent change)

https://fred.stlouisfed.org/graph/?g=oye1

August 4, 2014

Real per capita Gross Domestic Product for China, India, Brazil and South Africa, 2000-2018

(Indexed to 2000)

[ltr]

People have been getting poorer in most Western advanced economies (AEs) since the early 2000s. With the same fate now starting to overtake emerging market (EM) countries too, global prosperity has turned down. One way of describing this process is “de-growth”.

[ No; this is incorrect. ]

[Blissex]

«If there were an equivalent today of Keynes, he would be snowed under by bureaucracy and under pressure to publish journal articles nobody would read»

Part of the JM Keynes story is that he was almost a "principal", that is a member of the english elite who worked within and for the government. Kalecki or Kaldor for example weren't, and this made a big difference as to their influence.

«And he certainly wouldn’t get a multi-part TV series to promote his ideas, as Milton Friedman got.»

It is horrifying to raised to the same level as JM Keynes someone like M Friedman, a shameless propagandists regurgitating old and discredited claims, and being given a huge platform only because he was vocally on the side of rentiers and against "communism".
Hayek on that side at least *tried* and partially succeeded to do some political economy advancements, and as to liberal/conservative people like JM Keynes I would put H Minsky and J Robinson, or some of the continental political economists.

[ltr]

«If there were an equivalent today of Keynes, he would be snowed under by bureaucracy and under pressure to publish journal articles nobody would read»

There is a Keynes today and the British have been doing all they can to forget and deny that. There has been and still is Keynes. But try claiming that and watch what happens in the media of Rupert Murdoch from Australia to America and especially to Britain. Watch the media and Tories and Tony Blair folks ruin a Keynesian like Jeremy Corbyn.

[Robert Mitchell]

LJC: there is still a problem with too much rejected energy from wind, hydro, and solar, which are much higher efficiency than gas or coal plants, and which can supply almost half of the electricity demand.

Compare a flowchart for Germany: http://www.sankey-diagrams.com/energy-flows-germany-2018/

German transmission losses are about 20% and overall efficiency of final energy consumption to primary energy consumption is 62% or about double US efficiency.

Thus potential energy efficiency is much higher than the US chart shows. A lot of electricity must be being sent to ground.

I see windfarms turned off; I read reports of large consumers such as Microsoft getting paid to burn off electricity. Decoupling policies explicitly disconnect supply and demand forces for retail energy prices. Energy prices not infrequently go negative (see https://www.next-kraftwerke.com/energy-blog/negative-electricity-prices).

Surplus electricity generation mote than makes up for the rising energy cost of energy that you reference. Energy availability is not much of a constraint on anything ...

[Robert Mitchell]

P.S. from https://www.compasslexecon.com/wp-content/uploads/2018/04/Growing-Evidence-of-Increased-Frequency.pdf :

"The proportion of negatively-priced hours in California has grown in each year and in each of CAISO’s zones over the period 2013/14-2016/17 (Figure 1A). In 2013/14, between 1.7% and 2.3% of all hours were priced negative. By 2016/17, between 6.3% and 8.3% of hours were priced negative"

I claim such negative prices indicate the rising energy cost of energy is not a significant concern. Overproduction is the norm, and governments have to implement decoupled rates to keep utility profits high despite market forces driving down prices. Decoupled rates mean the regulators administer a rate of return for electricity generation, regardless of supply and demand.

[LJC]

@Robert Mitchell

You are comparing apples and oranges. The German flowchart is not comparable with the American one. There is no American electricity being sent to ground as you seem to think.

Negative electricity prices, like negative oil prices, come about because there is inadequate storage capacity. Until recently no-one had any reason to build storage of electricity (such as pumped storage or batteries) because it was too expensive for anything other than small-scale grid balancing. Now we have Tesla providing South Australia with a 100 MW battery (in 2017), which is going to be upgraded to 150 MW this year: https://www.abc.net.au/news/2019-11-19/sa-big-battery-set-to-get-even-bigger/11716784

Electricity storage is going to become big business.

Electricity generators are not concerned about brief periods of negative electricity prices; their interest is in what they are paid averaged over the contract. It is rather like the old concern with the 'balance of payments' where the difference between two large numbers was given an importance out of all significance to its size.

[Postkey]

ltr. Thanks for your comments and the graphs.

Here:https://consciousnessofsheep.co.uk/2019/05/20/divided-down-under/
is some evidence that discretionary income has been falling?
'Even the ACOSS/UNSW report underestimates the scale of the Australian inequality problem since, like many similar studies, it fails to distinguish discretionary and non-discretionary income.  What matters to most households – even wealthy ones – is not how much income they have; but how much money they have left after (all – not just income) tax and after essential bills have been paid.  While Australian incomes have been stable since 2008, the same is not true for discretionary income.  As Tim Morgan recently explained, when these considerations are taken into account, Australian prosperity has declined by 23.4 percent since 2007: “This discretionary effect helps to explain why the popular backlash has been so acute in France. At the overall level, the decline in French prosperity per person since 2007 has been a fairly modest 6.3%, less severe than the experiences of a number of other countries such as Italy (-11.6%), Britain (-10.3%), Norway (-8.4%) and Greece (-8..0%). Canadians (-8.1%) and Australians (-9.0%), too, have fared worse than the French…
“Take taxation into account, though, and France comes top of the league. Back in 2007, prosperity per person in France was €28,950, which after tax (of €17,350) left the average person with €11,600 in his or her pocket. Since then, however, whilst prosperity has declined by €1,840 per person, tax has increased (by €1,970), leaving the individual with only €7,790, a 33% fall since 2007.
“In no other country has this rapidity of deterioration been matched, though discretionary prosperity has fallen by 28% in the Netherlands, by 24% in Britain, by 23% in Australia and by 18% in Italy. If this interpretation makes sense of the popularity of the gilets jaunes (and makes absolutely no sense of the French authorities’ responses), it also suggests that the Hague, London and perhaps Canberra ought to be preparing themselves for the appearance of yellow waistcoats on their streets.” '

[Postkey]

«If there were an equivalent today of Keynes, he would be snowed under by bureaucracy and under pressure to publish journal articles nobody would read»
Prof. R.A. Werner's approach challenges the Keynesians, Neoclassicals and the Monetarist.
The 'essence' of his approach is here: https://eprints.soton.ac.uk/36569/1/KK_97_Disaggregated_Credit.pdf

“Economies that manage to focus credit creation on productive and sustainable use – i.e. not for consumption and asset transactions – are likely to achieve superior economic performance (high nominal GDP growth and comparatively low inflation, without asset price cycles and with financial system stability). As the World Bank (1993) indicated, and others have also found (Patrick, 1962; Wade, 1990; Werner, 2000a, b; Werner, 2003), at the heart of the East Asian economic miracle has been a process of guiding credit towards productive use and suppressing unproductive and unsustainable (hence systemically risky) use of credit. . . .
Werner (1992, 1997, 2005, 2011b), using Japanese data, shows that credit for GDP transactions explains nominal GDP well over several decades, while alternative explanatory variables (including interest rates and money supply) are eliminated in a reduction from a general to the parsimonious specific model.” P23.
https://eprints.soton.ac.uk/339271/1/Werner_IRFA_QTC_2012.pdf

There can be 100% 'crowding out'?
“ . . . whereby the coefficient for ∆g is expected to be close to –1. In other words, given the amount of credit creation produced by the banking system and the central bank, an autonomous increase in government expenditure g must result in an equal reduction in private demand. If the government issues bonds to fund fiscal expenditure, private sector investors (such as life insurance companies) that purchase the bonds must withdraw purchasing power elsewhere from the economy. The same applies (more visibly) to tax-financed government spending. With unchanged credit creation, every yen in additional government spending reduces private sector activity by one yen. “
. . . Thus record fiscal stimulation in the Japan of the 1990s failed to trigger a significant or lasting recovery, while interest rates continued to decline. ”
http://eprints.soton.ac.uk/339271/1/Werner_IRFA_QTC_2012.pdf

[ltr]

Postkey,

Thank you for the comment and response, both of which I will again consider. Tim Morgan however appears to be inventing a subject other than economics and to be ridiculous:

"The inference to be drawn from this is that China is a ‘ponzi economy’ like no other."

What China is, is a model for the most profound development any country has every experienced these last 42 years. A country of 1.4 billion now, that was far poorer than India in 1980, which is far, far wealthier than India now and which will have ended severe poverty through the country by the close of this year. China is a model for what development can be....

[ltr]

This is what Chinese growth and development is all about:

https://fred.stlouisfed.org/graph/?g=oWyh

August 4, 2014

Real per capita Gross Domestic Product for European Union, United States and China, 1977-2018

(Percent change)

https://fred.stlouisfed.org/graph/?g=oWyj

August 4, 2014

Real per capita Gross Domestic Product for European Union, United States and China, 1977-2018

(Indexed to 1977)

[ltr]

Postkey:

Prof. R.A. Werner's approach...

[ Agreed, but this is what Keynes is all about. ]

[ltr]

Postkey:

Prof. R.A. Werner's approach...

[ Managed hard and soft infrastructure and technology investment has been critical to development of the Asian tigers and China. China is orienting the Asia Infrastructure Investment Bank with just this purpose from here. This is worth studying carefully. ]

[Blissex]

«This is what Chinese growth and development is all about: [...] Real per capita Gross Domestic Product for European Union, United States and China, 1977-2018»

That actually is a subtle but important misunderstanding: the chinese ruling class is very "traditionalist" and their primary goal has not been to increase GDP as such, but to build the huge physical (and social) productive capital base (road, factories, power generation plants, hospitals, schools, communication systems, railways, research institutes, vocational schools, ...) that enables the long term production of high real, productive income; and they have done this with some balance between light industry (for export earning) and heavy industry (for domestic infrastructure building). Following largely the japanese model, which was adopted also by Taiwan island and south Korea and Singapore in somewhat different forms.

They have used as bait low worker wages and a no-strikes policy to have much of this capital development financed by western capitalists, always looking for labour arbitrage profits.

[ltr]

They have used as bait low worker wages and a no-strikes policy to have much of this capital development financed by western capitalists, always looking for labour arbitrage profits.

[ I know, I know, the Chinese never ever could have managed to develop China without the kindness of Britain and America. All that British-American capital financing what done it.

Duh. ]

[ltr]

This I agree with:

'That actually is a subtle but important misunderstanding: the Chinese ruling class is very "traditionalist" and their primary goal has not been to increase GDP as such, but to build the huge physical (and social) productive capital base (road, factories, power generation plants, hospitals, schools, communication systems, railways, research institutes, vocational schools, ...) that enables the long term production of high real, productive income; and they have done this with some balance between light industry (for export earning) and heavy industry (for domestic infrastructure building).'

As for the increase in per capita GDP that I portrayed from 1977 on, that reflects Chinese development. Also, the emphasis has been increasingly on technology advance. The farm base has the whole time been considered important and now an increasing technology focus.

[ltr]

Where has Chinese investment come from? From Chinese saving:

https://www.imf.org/external/pubs/ft/weo/2019/02/weodata/weorept.aspx?pr.x=45&pr.y=2&sy=2000&ey=2019&scsm=1&ssd=1&sort=country&ds=.&br=1&c=924%2C134%2C534%2C158%2C111&s=NID_NGDP%2CNGSD_NGDP&grp=0&a=

October 15, 2019

Total Investment & Gross National Savings as a Percent of GDP for China, Germany, India, Japan and United States, 2000-2019

[ltr]

China developed China:

https://www.imf.org/external/pubs/ft/weo/2019/02/weodata/weorept.aspx?pr.x=45&pr.y=2&sy=1980&ey=2019&scsm=1&ssd=1&sort=country&ds=.&br=1&c=924%2C134%2C534%2C158%2C111&s=NID_NGDP%2CNGSD_NGDP&grp=0&a=

October 15, 2019

Total Investment & Gross National Savings as a Percent of GDP for China, Germany, India, Japan and United States, 1980-2019

[Blissex]

«It’s that “the specific interests of ‘capital’ at the current juncture of history are very unclear.” This is right in two senses, on top of the fact that (as Eric says) there can be a conflict between the interests of bosses and shareholders. First, what policies and institutions best increase profit rates?»

Going back to the topic of "interests", they are indeed as a rule not as simplistic as "increase profit rates"; ruling classes are not monodimensional, the have indeed factions, and have both short and long term interests.

My guess is that the most of the current UK ruling classes are aiming to ensure (satisficing) their permanence and power as ruling classes first and foremost, and then to ensure their rents are high, and then to ensure that their profits are good.
the globalist whig "managerialist" faction is more into short termism, squeeze our as much as they can while they got their hands in the till.

Part of the problem of the ruling classes is that even if they had a single clear aim to maximize something like profit rates it cannot be clear to them what is the profit rate and how to maximize it, so my impression is that they use a "try this, try that" approach, quite reactively.

For example currently the ruling classes of the UK are overtly very much into property and finance rentierism, not so much because they planned to make it more valuable than business profits, but because it sort of emerged from thatcherite policies to create tory voters, and then they saw how much it was a good thing for them and cultivated it.

[Wen]

Sam bowman is a centrist! Hahahaha!

[Ken]

So the answer to the ills of contemporary capitalism is more capitalism?? Is this what passes for serious thinking nowadays??

[Blissex]

«Where has Chinese investment come from? From Chinese saving»

That's a rather superficial point of view, those "savings" are largely a dollar surplus from export earnings that the government accumulated (the huge by keeping wages low. Look at the amounts and the time these started accumulating:
https://upload.wikimedia.org/wikipedia/commons/d/d2/Foreign_exchange_reserves_of_China.svg

Zhao Ziyang is the guy who mostly designed the chinese growth plan, and in the second half of "Prisoner of the state" he describes how it was kickstarted; I remember a passage (which I can't find now) where Deng told him that the state did not have money but could give him favourable laws, so they created Special Enterprise Zones for foreign investors. Anyhow these quotes will clarify:

«On the issue of foreign investments, Chen Yun was completely at odds with [Deng] Xiaoping. Xiaoping believed in bringing in large-scale foreign investments. He believed it was difficult for a developing economy like China’s to take off without foreign investment.»

«During the early days of reform, the first problem in attracting foreigners to open factories and businesses was that our infrastructure was not good enough. In order to build up infrastructure, we needed large investments. Since we did not have this money, things were at an impasse. The development zones began in this way: first, the area was developed, making the land a commodity, then water, electricity, and roads were brought into the area, basic facilities were set up, then factories and office buildings were built. The calculation used at that time was that more than 100 million yuan per square kilometer was required; it’s probably more nowadays. Therefore, the pace of creating development zones was very slow. We also had a similar problem with urban development. We had no funds to build roads for cities or to bring in water and electricity. A lot of land was lying idle.»

«In the winter of 1987, I went on inspection tours of the coastal regions, after which, in January 1988, I proposed strategies for developing the coast. During those tours, I came to believe that the international market provides the right conditions for our coastal regions to accelerate their development, because labor-intensive production will always shift to places where labor is abundant and cheap. [...] That’s how the four Tigers took off.»

[ltr]

«Where has Chinese investment come from? From Chinese saving»

That's a rather superficial point of view...

[ China developed China, simple as that. I do understand though that it is near impossible for the British or Americans to acknowledge that.

Yes, China has been commercially opening for decades and, yes, trade became increasingly important, but the British and Americans built no infrastructure in China and repeatedly criticized what was being built. Chinese development was not the doing of Washington or London, though economic relations between the countries is mutually important and should be mutually valued. ]

[ltr]

That's a rather superficial point of view, those "savings" are largely a dollar surplus from export earnings that the government accumulated...

[ The Washington Consensus, which fortunately was not a consensus in China...

Openness and trade should be everywhere important and China intends to make these more so, but do credit China for the wonderful accomplishments of the decades from 1977. ]

[Robert Mitchell]

LJC said:

"Electricity generators are not concerned about brief periods of negative electricity prices;"

Of course not. Decoupling policies mean they raise retail rates to compensate. Also, they use financial derivatives to hedge and lock in prices.

I'm saying electrical generation is far more efficient than the 34% implied by the US energy flow diagram. Transmission losses alone do not account for the discrepancy. We are producing much more electricity than is demanded, and a lot of the excess is going to ground.

You are right that storage will change things, but prices should only go lower. However, decoupling has been designed to give private utilities a guaranteed profit and so retail rates will probably continue to go up because the rates are administered, not set by supply and demand.

[Blissex]

«My guess is that the most of the current UK ruling classes are aiming to ensure (satisficing) their permanence and power as ruling classes first and foremost, and then to ensure their rents are high, and then to ensure that their profits are good.
[...]
Part of the problem of the ruling classes is that even if they had a single clear aim to maximize something like profit rates it cannot be clear to them what is the profit rate and how to maximize it, so my impression is that they use a "try this, try that" approach, quite reactively.»

I have just discovered that now that they are retired and pretty much beyond retribution John Kay and Mervyn King have published what looks like a totally obvious yet important book that says exactly the same things with a lot of erudition and citations, having learned how the sausage is really made:

https://iea.org.uk/radical-uncertainty-decision-making-for-an-unknowable-future-book-review/

“In Radical Uncertainty, John Kay and Mervyn King, two well-known British economists, state that rather than trying to understand the ever-changing, uncertain and ambiguous environment by trying to understand “what’s going on here”, the economics profession has become dominated by an approach to uncertainty that requires a comprehensive list of possible outcomes with well-defined numerical probabilities attached to them. [...] Instead of trying to produce probability calculations to fill the unknown gaps in our knowledge, we should embrace uncertainty by adopting robust and resilient strategies and narratives to consider alternative futures and deal with unpredictable events. [...]
Drawing from their own academic and practical experience Kay and King state (pp. xiv-xv): “Although much can be learnt by thinking this way, our own practical experience was that none of these economic actors were trying to maximise anything at all … injunction to maximise shareholder value, or social welfare, or household utility, is not a coherent guide to action. Business people, policy-makers and families could not even imagine having the information needed to determine the actions that would maximise shareholder value, social welfare, or household utility. Or to know whether they had succeeded in doing so after the event.” [...]
Decision-making under “radical uncertainty” requires a wide range of skills that can rarely be found in a single individual. Successful decision-making under such conditions is a result of collaborative processes, collective intelligence and judgment.”

They also dump not just "rational expectations" and "maximizing utility" and the whole of "methodological individualism", but DSG models specifically, I guess that S Wren-Lewis, whose life apparently was saddened by having to get into them to get papers published, will feel better:

“Kay and King advance the argument that the use of the narrative and respect for diverse views can generate a better understanding of “what’s going on here” than an overreliance on rigid econometric models. This does not mean that we should toss out the models entirely as they can give us a sense of direction and insight”

So these two have "betrayed" mainstream Economics describing it fairly as a load of nonsense. Nobody will listen to them because that implies that "the rich" don't earn individually every penny of their loot with their superior marginal productivity, and luck matters a great deal to outcomes.