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Can Philosophy Save the Markets?
The document discusses the disparity between the first world, third world, and middle world economies, highlighting key issues such as poverty, income inequality, and philosophical perspectives on market structures and economics. It emphasizes the need for a reevaluation of economic paradigms to address fundamental inequalities and societal challenges. The author suggests that while philosophy might offer solutions to these market issues, the implementation is hindered by entrenched interests and a lack of political will.
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Can Philosophy Save the Markets?
- 1. Can Philosophy Savethe Markets? Philorum 19 November 2008
- 2. Philosophy: Need forParadigms • Like Road Maps – Bearings – Directions • Principles • Foundations • Assumptions
- 3. If the WorldWere a Village of 100 • The demographics would look a bit like this: – The village would have 60 Asians, 14 Africans, 12 Europeans, 8 South Americans, 5 from the USA and Canada, and 1 from the South Pacific – 51 would be male, 49 would be female – 82 would be non-white; 18 white – 67 would be non-Christian • 5 atheist • 17 non-religious http://www.familycare.org/news/if_the_world.htm
- 4. If the WorldWere a Village of 100 – 80 would live in substandard housing – 67 would be unable to read – 50 would be malnourished and 1 dying of starvation – 33 would be without access to a safe water supply – 39 would lack access to improved sanitation – 24 would not have any electricity (And of the 76 that do have electricity, most would only use it for light at night.) – 7 people would have access to the Internet – 1 would have a college education – 1 would have HIV http://www.familycare.org/news/if_the_world.htm
- 5. If the WorldWere a Village of 100 – 20 of the richest: 75% of the income of the village (US$11,250 or US$31 a day) • 5 would be US citizens controlling 32% of the entire world’s wealth (US$19,200 or US$52.50 a day) – 33 of the poorest: 3% of the income of “the village” (US$600 or less than US$2 a day) – 47 middle class: 22% of the rest of the income of the village (US$2,444 or US$6.70) http://www.familycare.org/news/if_the_world.htm http://www.hewett.norfolk.sch.uk/curric/NEWGEOG/global/global.htm
- 6. Conflicting Interests? • FirstWorld • Third World – Inflation, Unemployment, – Food Crisis & Massive Recession Poverty – Financial Market Instability – Debt Burdens & Political & Lack of Confidence Oppression – Climate Change/Emissions – Health-Jobs Trade-Offs & Mitigation & Capture Perceived Overpopulation • “Middle” World: e.g., Brazil, Russia India, China, Argentina & ASEAN (BRICAA) – Preserving Substantial Material Gains – Maintaining Momentum of Growth – Socio-political Stability of Regimes that Made Progress in Their Own Terms Possible
- 7. Why Is ThereImbalance/Disharmony? • First World • Third World • Cut your population! • Liberalize & globalize! • Pay your debts! • Reduce your emissions (Don’t grow • “Middle” World too fast)! • Respect human rights! • Play by “our” WTO/GATT Rules!
- 8. Why Is ThereImbalance/Disharmony? • First World • Third World • Open your borders like we do ours! • Give us a fair go/fair trade! • Justice before repayment! • Reduce your emissions! • Lead by • “Middle” World example! • Re-write “your” rules/We have our own!
- 9. Why Is ThereImbalance/Disharmony? • First World • Third World • Give us a better deal! • Don’t interfere! • Let’s do more business! • Let’s “respect” • “Middle” World each other!
- 10. What Do thePeople Want? • First World • Third World – Recession: Job Security – Basic Necessities – Inflation: Purchasing Power – Livelihood & Consumer Confidence – Education – Environment – Happiness & Peace – Well-Being • “Middle” World – Livelihood – Lifestyle – Education – Aspirations JB’s anecdotal observations
- 11. Global Financial Meltdown •Crisis of Confidence • G20: “Looking over each • Antithesis of IMF other’s shoulders” Prescriptions to the • Epileptic seizure-like Highly Indebted Third market decline World Countries • Ultimate burden falls on – Liberal Government taxpayers Spending • The greatest beneficiaries – Tax Cuts of the boom & are – Lower Interest Rates unaccountable ... Til now – Except for “More Trade!”
- 12. Is Economics aFailure? Neutral Perspective • Microeconomics • Policies – Profit Maximization – Purpose/Objectives – Utility Optimization – Incentives/Disincentives – Cost Minimization • Institutions – Satisficing: Compromise – Information & • Macroeconomics Knowledge – Economic Growth – Systems/Procedures – Price Stability • Processes – Sustainable – Infrastructure Development – Resource Mobilization – Global Dynamics
- 13. Is Economics aFailure? Dismal Economics • Information Asymmetry • No Ethos – Manipulation of the – Morality: Capital Sins & Naivete & Ignorance of Condemnation Others • False Science – Conquest – Ability to “Predict” or • Exploitation of the Forecast due to Too Much Powerless & Marginalised Assumptions • Rent-Seeking • Too Politically Diverse – Economic Gains from – Too many cooks spoil the Political Favor/Largesse broth: neo-libs; socialists; • Economist as Professional religious Mercenary
- 14. Is Economics aFailure? Normative Economics • Rights: from Property- • Ethos Based to Rights & Needs- – Empathy Based – Positive-Sum Gaming • Disclosure: Knowledge of • Science One’s Interests & of – Models/Scenarios Others – Analyses, Estimates • Politics: How to Pursue – Question Assumptions One’s Interests without • Politics Infringing on the Similar – Core Principles or More Basic Rights of – Reflexivity: Cause-Effect Others Cycles
- 15. Conceptual Vicious Cycleof Poverty Low Productivity of Capital Low Income Underdeveloped Physical & Low Savings Social Infrastructure
- 16. WB/IMF & ODAModel Higher Productivity of Higher Income Capital Better Physical & Social Higher Savings Infrastructure Loans, Aid, Grants Direct Foreign Investments Policy Changes
- 17. The Real ViciousCycle of Poverty Low Productivity of Capital Low Income of the to the Farmer, Worker, Consu Farmer, Worker, Consumer mer & & Microenterpeneur Microenterpeneur Low Savings of the Underdeveloped Physical & Farmer, Worker, Consu Social Infrastructure mer & Microenterpeneur Benefits Benefits Usurious Lending & Patronage Political Oppressive Monopoly- Structures Monopsonist Middlemen Entrenches
- 18. Cooperation in Micro-systems Higher Productivity of Higher Income of the Capital to the Farmer, Worker, Consu Farmer, Worker, Consumer mer & & Microenterpeneur Microenterpeneur Savings of the Self-Help Cooperative Capitalizes& Farmer, Worker, Consu Enterprises & Institutions Governs mer & Microenterpeneur Diminished Dependence Usurious Lending & Patronage Political Oppressive Monopoly- Structures Monopsonist Middlemen
- 19. Cooperation in Micro-systems Higher Productivity of Higher Income of the Capital to the Farmer, Worker, Consu Farmer, Worker, Consumer mer & & Microenterpeneur Microenterpeneur Savings of the Self-Help Cooperative Capitalized & Farmer, Worker, Consu Enterprises & Institutions Governed mer & Microenterpeneur Diminished Dependence Loans, Aid, Grants Direct Foreign Investments Policy Changes
- 20. Lessons for theFirst World Economic Performance Business Incomes Improves Physical & Social Household Incomes Infrastructure Savings; Superfunds Attraction Raise Labor Cost Competitiveness = Cut Labor Costs; Privatise Investors
- 21. Mutualization: Cooperative Privatisation Economic Performance Business Incomes Improves Patronage Physical & Social Household Incomes & Infrastructure Stock of Wealth Invest Household Savings = Superannuation
- 22. Intro to theMeltdown: Balance Sheet Debts Assets Capital
- 23. Proper Accounting WorkingCapital Debts Earning Assets Reserves Fixed Non-Earning Share Capital Assets Income
- 24. What Happened Working Capital Optimised Valuation Debts of Earning Assets Inadequate reserves because of credit default insurance Fixed Non-Earning Share Capital Assets Spectacular Incomes
- 25. The Reckoning ReducedWorking Capital to Pay Debts Ballooning Deflating Value of Value of Earning Assets as Defaults Occurred Unserved Debts Fixed Non-Earning Assets
- 26. The Proposed Rescue Reduced Working Capital to Pay Debts Ballooning Deflating Value of Value of Earning Assets as Unserved Defaults Occurred Debts Fixed Non-Earning Assets Cash from Government Government Capital
- 27. The More JustProposal Reduced Working Capital to Pay Debts Ballooning Deflating Value of Value of Earning Assets as Unserved Defaults Occurred Debts Fixed Non-Earning Assets Government Bonds Government Capital Counterpart Private Capital Private Debt Converted to Capital or Fresh Capital
- 28. At the Coreof the Problem Less Produced Goods & Income Services Current Private Property Savings/Capital Practice on Land/Commons Speculative Incomes
- 29. Monetary Economics • MV = PQ • Personal Level/Analogy • Money Supply • Payslip • Velocity • Times received annually • Price levels = Inflation • Cost of what’s acquired • Quantity of • Price of what’s acquired goods/services
- 30. A Common WealthBased on Real Values More Produced Goods & Personal Incomes Services Access to Land/Commons Savings/Capital Based on Productive Activity Than On Speculation Land Rent “Tax”
- 31. Can Philosophy Savethe Markets? • IMHO, yes ... • Problem is that it is always easier said than done ... • And those with the power do not have the will to contradict their vested interests • Owning up to one’s decisions is difficult • But just because it hasn’t doesn’t mean it will never happen.