Wow, nice post. I am glad events turned out this way, as my post was essentially a rant.

Here's what I think about what you have in mind. The tendency for the rate of profit will actually accelerate... upwards.

Marx was a guy living in a time when productivity increases such as seen today were nil, zero, uncomparable.

You will most likely see the automatic stabilizers in the economy... failing to account for the deflationary spiral we will most likely experience (think Japan). After Japan will be South Korea, the Scandinavian countries, Germany France, and lastly the US. The US will be last because the greenback is still the unit of exchange across the world and their demographics are growth-oriented.

Fueling hamfisted growth will be from BRIC countries (except Russia, there's something economically downright fucked in that country).

The neocons are having an orgy given that they convinced the masses that trickle-down works. It does work; but, only through trade. Furthermore, since the whole world seems to have adopted the fiat system, and accepted the implicit neo-Keynesian sentiment that goes along with it, I see the Austrian school making a comeback sometime soon.

Everyone should be cumming in their pants.

@Landru Guide Us, where art thou?

Armed with this mathematical information, economists and politicians, plus national and world banks, can work together to tweak the economy to maintain a better balance. — Gnomon

Ah yes, just like with Climate Change the powers that be will totally happy to change the system they benefit from, for sure.

It assumes that economic inequities are the result of intentional exploitation of the masses by an evil minority. — Gnomon

Not at all, it posits that ongoing inequities are a result of systemic features of the political-economic system that reward and punish the respective sides of preexisting inequities. Everyone is just doing their best to get ahead, but the system rewards those who are already ahead allowing them to get even further ahead, and punishes those who are already behind making them fall even further behind. It’s not about mustache twirling evil villains, it’s about systemic injustice.

It’s like you’ve never even heard a Marxist critique before. E.g. the big banker villain of Mary Poppins Returns was widely criticized from the left as making it seem like it’s just a few bad actors like that behind all the problems and if they’re just defeated the system will work fine again, when really it’s the system that’s at fault and the individuals in charge of it are largely irrelevant.

Basically this “new” research is just reinforcing what Marxists have always been saying.

FWIW I agree with the conclusion that “free markets” as we have them today inevitably lead to inequality, but disagree that state intervention is the only solution. The problem is in the nature of the rules of allowable transactions in the “free” market, which still has all kinds of claim rights (e.g. to property) and powers (e.g. to contract), not just a complete free reign of unchecked liberty rights. Libertarian socialism and left libertarianism are views that address those underlying rules to fix the problem without state intervention, usually by limiting the claim right to property, but on my version by limiting the power to contract (especially contracts of rent and interest), in any case actually increasing the freedom of the market, not decreasing it, while undermining the systemic advantages that such claims or powers give to those who are already ahead in the game.

"Marx's systemic critique of the long term behaviour of capitalism is wrong, except for its central predictions, and how they assert themselves"

"lawless irregularity" in Marx = a general form of random variation.
"ideal average" in Marx = a driving trend that obtains all else held equal.

Other than that, and offering prayers to the oligarchy in the church of the market, nice post.

Marxism is old news, based on outdated science. — Gnomon

For example, Adam Smith's "Invisible Hand" theory suggested a more positive interpretation of self-interest inadvertently producing unintended social benefits. — Gnomon

Why is Marx old news but not Adam Smith?

Furthermore, Adam's Smith's invisible hand was about patriotism stopping capital flight from the imperial center, England towards their colonies.

And on this point, Marx was right that capital will relentlessly go where it's gonna get the best returns; i.e. patriotism be damned, to which any modern economist will say "of course". So Marx seems to have the modern view of things on the invisible hand business you bring up.

Furthermore, the central economic prediction of Marx is that capital accumulation is relentless and without an internal limiting natural balance (until the system destabilizes itself), exactly the same prediction the casino market arrives at.

Adam Smith also has this basic prediction and a large part of the Wealth of Nations is about what the sovereign needs to do (what state intervention is necessary) for the system to keep functioning.

Where Marx disagrees with Smith are on these potential fixes. Marx is a market economist who sees the market as more efficient than the previous feudal order.

As such, Marx and Smith are in complete agreement on the production capacity of free markets (for this reason Marx views the early stages of capitalism as a good thing). Marx's prediction that free markets will lead to large iniquities (large capital accumulations) and labour arbitrage and other advantages of capital will out-maneuver "parliamentary" (first-past-the-post representational systems) was essentially immediately proven correct in the 19th century leading to the predicted "destabilization" of WWI (which included a "communist revolution" that predictably failed due to not being global enough) and then repeat of the same processes leading to WWII with massive Smithian sovereign interventions that stabalize the system ... but, as predicted by Marx, capital accumulation wins out in first-past-the-post representational systems (but there are much more equal society's in direct democracy systems, that Marx viewed favourably).

Marx also has extremely modern elements to his economic theory such as the roll of psychology in the free market: that the desire to accumulate more capital is a psychological feature that will dominate the market; in contrast to the "fair Aristocrat not motivated by money but rather honor and justice etc." view of the elite; that the Aristocratic elite of the time definitely viewed themselves as, going so far as to having a game of not touching money to symbolize this. Only recently are economists bothering to deal with this obvious fact (that people who have read Marx have pointed out but also people with a knowledge of philosophy) that simply because something has wide utility, such as money, doesn't justify accumulating as much as possible (one still needs a goal to justify this process and if one has a goal, one will presumably spend money on this goal rather than accumulate it indefinitely). It's fairly recent and extremely modern accepting indefinite capital accumulation is a psychological feature of the market and there is a modern psychological explanation for it which is people compare themselves to their peers and as they get richer they just continuously update their peers as equally rich. Marx doesn't have this modern scientific explanation, but the conclusion is accurate (that there are enough of these people to always push capital accumulation further, and whoever doesn't loses) and this psychological feature in his economics was proven correct with time and with modern psychological and sociological methods.

There's of course a lot of completely wrong predictions Marx makes and Marx mixes moral judgments into economic theory (again a very modern twist, but I agree not scientific in either case), but the unfair position of workers (most people) leading to ever greater and global concentrations of capital and so an oligarchic tendency of unregulated markets is pretty much the essence of Marx's critique of capitalism; the predicted market crashes happened, and the organizing of labour also happened, but the global communist revolution did not (and I don't think will) happen (rather I disagree with Marx's view that industrialism is good and workable, regardless of who owns the means of production, and so I predict either ecological collapse or de-industrialization and a return to more local economies that do not really fit in the Marxist conception of the future).

Now, I understand that in the States it is safer to approach foundations of social policy with "Marx was wrong ... but" or "socialism is wrong and can never work ... but" and also just assume Marx is all bunk without ever reading Marx; however, this is a safe space to get to know any thinker. It's a safe bet that Marx is not likely the most negatively propagandized (non-religious founder at least) thinker of all time because he had nothing accurate to say. The creation of the middle class was a Marxist project by people self-consciously using broad elements of Marx's economic theory, just differing with Marx on the moral objective of economic policy; and, inline with Marxist theory, almost immediately after the purpose of creating the middle class (avoiding Soviet expansion through communist revolution) disappeared, capital is immediately dominating labour through global labour arbitrage and even more intensely in first-past-the-post representational systems and the middle class is dwindling leading directly to labour agitation and instability (where is the middle class rising in contemporary times that proponents of capitalism point to as success? China, where every economists has read Marx and the sovereign intervenes extensively as Smith recommends).

This doesn't really have anything to do with your post, but if you want to preamble your with a digression about Marx I thinks it's fair to then expect responses that digress about Marx.

Why is Marx old news but not Adam Smith? — boethius

Both are "old news". Any 21st century solution to the problem of economic inequality will have to take into consideration the "invisible left hand" of the market casino.

Both are "old news". Any 21st century solution to the problem of economic inequality will have to take into consideration the "invisible left hand" of the market casino. — Gnomon

But this is what Marx is talking about: capital accumulation has no natural balance, market transactions are not fair (favour the owners of capital) and the system destabilizes itself.

What the casino paper seems to be doing is simply a numerical simulation of Marx's model of unregulated capitalism. I see nothing in the paper nor in what you present to lead to the conclusion that such a numerical simulation is needed to arrive at the conclusion (just as numerical simulation wasn't needed to find Neptune or to tell us the sun will rise in the East tomorrow, though will of course simply confirm these conclusions).

Again, I have no need to digress into Marx to discuss the casino paper's content or implication, but if you want to disparage Marx, for whatever your reason, this seems like a poor choice of disparaging. Perhaps I'm wrong, that Marx has the right conclusions for preposterous reasons and this casino model finally brings us the right conclusions for the right reasons, but that seems far fetched.

a new mathematical theory of economics surprisingly concludes that wealth inequity is inherent in any free market. — Gnomon

Someone should invent a game to illustrate this startling novelty. "Monopoly" has a nice ring for a name.

Basically this “new” research is just reinforcing what Marxists have always been saying. — Pfhorrest

I suspect that Marx may have been talking about a problem that was endemic in Europe prior to the French Revolution. "Under the ancien régime, ennobled families were granted privilege in the literal sense; that is, they answered to a different set of laws ("privy": private, "leges": laws). In particular, they were exempt from taxation." [see the article below]. The rich and powerful have always enjoyed special exemptions not available to the hoi poloi. And vice versa : The article quoted James Baldwin, "anyone who has struggled with poverty knows how extremely expensive it is to be poor."

The article reveals that the inequalities of economies is as old as bartering. So, the question now is, what are we going to do with this new insight? Join the class revolution, and hope the "inevitable" dialectic is swinging in our direction? Or join the political system and work together for a more equitable tomorrow? Pessimists will choose one solution, and optimists another. But the laws of statistics will always prevail. And the same law will apply to the Many and to the Few. Since mathematics is amoral, the "law" will be on the side of those who know the Law. At least now we know that the Casino is inherently rigged, and can make human laws to offset the "natural" physics of power . . . along with the artificial leverage of of politics : Privilege.

. . . and the dialectic goes on . . . :smile:


Privilege : https://hedgehogreview.com/issues/identitieswhat-are-they-good-for/articles/privilege

I see nothing in the paper nor in what you present to lead to the conclusion that such a numerical simulation is needed to arrive at the conclusion (just as numerical simulation wasn't needed to find Neptune or to tell us the sun will rise in the East tomorrow, though will simply confirm these conclusions). — boethius

Sorry, I have no training or aptitude for economics or politics. So this article was news to me. I was surprised to hear that laws of physics also apply to metaphysics, i.e. economics. :smile:

PS__I didn't intend to disparage Marx, but to promote the linked article.

Someone should invent a game to illustrate this startling novelty. "Monopoly" has a nice ring for a name — unenlightened

Maybe now kids on the short stack of the Monopoly bank will be able to calculate their way out of poverty. :joke:

The neocons are having an orgy given that they convinced the masses that trickle-down works. — Wallows

The article says, " these mathematical models demonstrate that far from wealth trickling down to the poor, the natural inclination of wealth is to flow upward, so that the 'natural' wealth distribution in a free market economy is one of complete oligarchy. It is only redistribution that sets limits on inequality." Now, the masses will have the authority of mathematics on their side of the debate about "confiscation" versus "redistribution".

But I'm putting my money on the house to win in the end. :wink:

As far as the same principles applying to physics, keep always in mind that human societies are just another physical system subject to the laws of thermodynamics, and that wealth is basically just an evaluative perspective on the same old matter and energy, so flows of wealth will be bound to the same rules as flows of energy in the end.

Excellent OP - a formal demonstration of the "trickle up" effect; which is quite the opposite of what conservatives would have us believe.

:cool:

Is Inequality Inevitable : https://www.scientificamerican.com/article/is-inequality-inevitable/

Rigged Economy : https://www.scientificamerican.com/article/the-american-economy-is-rigged/ — Gnomon

A new cri du cœur for rabble everywhere: "With mathematics (e.g. statistical mechanics) for us, who can stand against us?" :strong:

Basically this “new” research is just reinforcing what Marxists have always been saying.
— Pfhorrest

I suspect that Marx may have been talking about a problem that was endemic in Europe prior to the French Revolution. "Under the ancien régime, ennobled families were granted privilege in the literal sense; that is, they answered to a different set of laws ("privy": private, "leges": laws). In particular, they were exempt from taxation." [ ... ]. The rich and powerful have always enjoyed special exemptions not available to the hoi poloi. And vice versa : The article quoted James Baldwin, "anyone who has struggled with poverty knows how extremely expensive it is to be poor."

The article reveals that the inequalities of economies is as old as bartering. So, the question now is, what are we going to do with this new insight? Join the class revolution, and hope the "inevitable" dialectic is swinging in our direction? Or join the political system and work together for a more equitable tomorrow? Pessimists will choose one solution, and optimists another. But the laws of statistics will always prevail. And the same law will apply to the Many and to the Few. Since mathematics is amoral, the "law" will be on the side of those who know the Law. At least now we know that the Casino is inherently rigged, and can make human laws to offset the "natural" physics of power . . . along with the artificial leverage of of politics : Privilege.

. . . and the dialectic goes on . . . :smirk: — Gnomon

:clap:

¡Viva la revolución!

Perhaps I'm wrong, that Marx has the right conclusions for preposterous reasons and this casino model finally brings us the right conclusions for the right reasons, but that seems far fetched. — boethius

Perhaps.

Armed with this mathematical information, economists and politicians, plus national and world banks, can work together to tweak the economy to maintain a better balance — Gnomon

A new cri du cœur for rabble everywhere: "With mathematics (e.g. statistical mechanics) for us, who can stand against us?" — 180 Proof

Agree with the latter, not so much the former. The way to push for la revolución! is through mass movements and the politicians elected by them, not by a crossed-fingers faith in bourgeois economists, politicians and the...IMF.

Marxism is old news.... It assumes that economic inequities are the result of intentional exploitation of the masses by an evil minority. — Gnomon

Except Marx's argument in Capital is that, under the basic assumptions outlined in a free market economy, a Capitalist system will inherently produce inequality because of the social relationship between the proletariat and the bourgeoisie, and the latter's drive towards profit in order to remain within the bourgeois class, not necessarily or exclusively the "intentionality" to exploit or immiserate.

"Marx's systemic critique of the long term behaviour of capitalism is wrong, except for its central predictions, and how they assert themselves" — fdrake

:snicker:

But really, OP is 150 years too late.

Of course income inequality is inevitable. Luck certainly plays a role, but so do thousands of other factors. There is even income inequality between siblings. If we cannot get equality between two brothers how could we hope to get it between millions? Billions?

No amount of statism and legislation can correct inequality, and worse, we risk burying ourselves beneath more regulations and rules designed by technocrats, most of which already hinder our chance at income mobility.

No amount of statism and legislation can correct inequality, and worse, we risk burying ourselves beneath more regulations and rules designed by technocrats, most of which already hinder our chance at income mobility. — NOS4A2

The linked articles make the opposite argument: That State intervention is necessary, because there is no intrinsic mechanism in a capitalist economy to keep inequality from rising.

How do you account for that finding?

But I'm putting my money on the house to win in the end. :wink: — Gnomon

Yeah, but you don't ever want to know who lives there.

We're way past an oligarchy people. It's a plutocracy at this point.

Did anyone mention tax havens with some 15 trillion in wealth held in the Bahamas.

The upside is entrapment. Let's see if anyone knows what I mean by that.

It really isn't obvious that this model accurately represents what goes on in reality, we can come up with plenty of different mathematical models starting from different premises that lead to centralization of wealth, so the fact that one particular model predicts centralization of wealth does not imply that the premises at the basis of this model are the root cause of wealth centralization.

For one it is based on the yard sale model, in which wealth is never created, it is only exchanged, can we really see that as an accurate representation of reality? For instance it basically means that you are always paid what your work is worth (plus or minus a tiny amount), so if you force 1000 people to build a luxurious palace for you and you give them $1 a day in compensation for their work, supposedly that palace would be worth about the total amount you gave to the workers, which is obviously wrong. Say they build it in 1000 days, that palace would surely be worth much more than $1 million.

This model would have luck or randomness as the main force driving economic inequality, while ignoring the forces that actively act to create and maintain that inequality for their own self-interests. The other article you linked gives a much more plausible account of what actually goes on:

The political system, coupled with high initial inequality, gave the moneyed enough political influence to change laws to benefit themselves, further exacerbating inequality

Are we really to believe that the rich do not exploit the poor, always pay them what their work is worth, do not act to profit at the expense of others and are only innocently exchanging wealth in a big yard sale?

We have the technology to produce basic necessities much more efficiently than in the past, why do so many people struggle so much to get them still? It's not the result of an unfortunate law of mathematics written into the fabric of the universe, it's by design. The vast majority are made to struggle, so that they earn just enough to pay rent and food and a tiny surplus to keep them entertained and prevent them from revolting. The more they struggle without revolting, the more the rich can profit off their work and enjoy the results. The surplus of wealth produced by the workers doesn't go back into the hands of the workers, it goes and stay in the hands of those they work for, so that the workers keep struggling and producing a surplus that they never get to enjoy.

People don't realize the upside of all this. If the house wins, then eventually that money has to enter the M1&2 stream.

Money held in offshore tax havens can sit there till it rots, which nobody wants.

This is fundamentally an issue about fractional lending and credit. As long as there are people willing to work (something that will never end), the economy will grow.

As I posted in another thread, then there's deflationary tendencies ongoing that will supply the prole with unimaginable goods.

All in all, here's the takeaway. If money is kept and stored, then it isn't doing any work, and hence deflation takes place. I'm quite content with letting the house win everything because it increases my purchasing power through deflation.

And here's the grand takeaway. Once productivity increases saturate, then all those trillions and billionaires will be angry that their purchasing power levels with a prole's meager income.

The linked articles make the opposite argument: That State intervention is necessary, because there is no intrinsic mechanism in a capitalist economy to keep inequality from rising.

How do you account for that finding?

I give the articles the full benefit of the doubt. I just don’t think giving the state more power over our private affairs is the answer.

So you support some kind of libertarian socialism then?

So you support some kind of libertarian socialism then?

I don’t think so. I suspect my views would be more anarcho-capitalist, though I wouldn’t call myself one.

That sounds like you're just choosing to ignore the problem then, if you admit that unregulated "free" markets inevitably cause runaway inequality, but you're against both regulation and fixing the structural problems of the market.