| Attachment | Size |
|---|---|
 First draft of article for New European Welfare | 206 KB |
Dear Orio and Ivo
I am attaching the first draft of an article on Need for New Economic Theory for The New Welfare. I have gone through all correspondence and many of the articles exchanged within our group and tried to draw out as many salient points as possible, with emphasis on raising questions to be answered by the new theory. I was amazed at the scope of issues raised in our initial discussion and found the review and effort at consolidation quite enlightening. Since this is a collaborative effort, please feel free to modify the article as you feel appropriate to reflect our joint thinking or tell me the changes you would like made in it. Since we did not discuss length, Orio will have to tell me whether he wants it to be abridged to any specific size.
Best regards
Garry
Re: Article
Dear Garry and dear Orio,
I read your draft and here are my comments:
1) It is an excellent work, done scholarly with references and it does show why we started the entire initiative.
2) I also read Orio's email to the two of us and also to several other persons involved in David's work.
3) Based on that I have a general observation that this piece is much more comprehensive than I anticipated when I propose that we write a summary of our ideas and progress. You are right, Garry, we did a lot.
I have the following suggestions:
3.1. I suggest that we explictly mention that we started this endeavor also based on a larger effort by WAAS and the CoR, that we are in a process, that more work has to be done, this is work ion progress. I would almost like to see somewhere written phrases like: A list of open issues, and what you wrote eg wealth creation, real vs phantom wealth, can wealth be "limited" to nations or it is a global wealth, employment, money etc. You speak of all of them, but possibly we want to stress that all this is still open.
3.2. The final section deals with integration of politics, economy and society. This is a crucial section and at least I have to think more about it.
3.3. Obviously, service sector has to be discussed more - Orio is right there. Service sector now includes too many disconnected area, eg standard services, bureaucracy, but also R&D, academia, the entire knowledge sector.
3.4. Orio is right in emphasizing the importance of risks and uncertainties.
3.5. I adore Human welfare, but in economy one is concerned with human welfare thru wealth creation.
3.6. Additional points that can be made:
3.6.1. Waren Buffet "When my secretary pays taxes at a higher rate than I do, it is clear we need to restore some sense of fairness to our economy that will allow all American a chance at an American dream."
3.6.2. Example with a poor person coming with his car to get free food correctly shows a change in what our basic needs are now. It can be mentioned that now an average person spends more than 10% often 15% of income to communicate in various ways. That did not require any expenses previously.
Points dealing with science:
3.6. fragmentation of knowledge is now a problem but it is not arttificial.
3.7. Analogy between money and kinetic energy requires much more thoughts.
cordially ivo
Reply to Ivo
...for your information.....
....and referring to the email of Ivo of february 16:
- point 3.1. ....yes , all this is still open !
- 3.5 .....yes, wealth creation ( and distribution ) is key : the trap to fall into typical "intellectual" generalities and abstractions is very much still there !.....sorry, but even in the case of Korten, there something of it . He sent me a short, kind comment, but it comes from a different world....clearly he has very different experience from mines.
3.6.1.....OK!
3.6.2.....another good exemple to underline the need to understand the passages from the non-monetarized ( and non-monetized ) world in a monetarized/monetized one AND VICEVERSA.
NB : monetized is when there is an echange ( taken as basis by economists ) Exchange can happen without explicit use of money: in this case the implicit value is non monetized. This is why Samuelson pretend that economics covers also non monetary goods : he is wrong. Because there are a lot of values where you cannot identify any sort of exchange ( it is a non-monetaRIzed world). Big exemples : the value of the oceans, of air, etc. All this is easier to understand when you are aware that economic traditional value is based on a flow ( value added ) . In macroeconomics there is no value of stocks: at best only when it is, sold, depleting and repared "value" appears......( as flow )
3.6 :fragmentation of knowledge......yes, you need specialisation, but goals and results ( and understanding, and control of vulnerabilities ) command integration of knowledge in various forms. In any case many scientists have underlined the importance of inspiration at the beginning of any important process, which is a kind of integrated survey.....
3.7 : money and kinetic energy - I would like to know more .....
Best wishes
Orio
Reply to Orio
Your comments, Orio are very good. Korten does come from a different world but that world is about half or third of all of us, so it is important. I am sure that Garry will masterfully include our comments in the next version I am looking forward to receive. Cordially ivo
Re: Article
Dear Ivo and Orio
I have been traveling for the past few days and take this opportunity to thank you both for your comments on the draft article for New Welfare. I fully recognize and accept the challenge we face to exchange views and identify a commonalty of understanding by email while simultaneously carrying out so many other responsibilities. I purpose to start work on the revised draft early next week. Meanwhile, for the sake of clarity I would like to comment below on the feedback received so far and summarize some of the issues to be addressed in revising the article, so that you can provide additional feedback before I start.
I fully agree that the article should make clear that we are at the initial phase of discussion where emphasis is on identification of issues and formulation of questions to be addressed rather than on final answers. I thought I had made that clear but will strive to make it more evident.
List of open issues: I will try to compile a comprehensive list of questions raised in the paper and send it to you so we can ensure it is complete.
We can certainly mention WAAS and CoR, but I agree with Ivo’s initial view that we do not bind ourselves at this stage to any organizational affiliation.
Orio’s perspective regarding the historical evolution of economics and the significance of the transition from industrial to service economy needs to be brought out more clearly.
I will study Orio’s paper on Service Sector and try to incorporate additional content in the next draft.
Orio has been rightly emphasizing the important of the question of valuation in his articles and emails. This issue has many dimension that can be brought out more strongly.
Limitations in GDP as a measure
Monetized, non-monetized, monetarized and unmonetartized activities
Primary focus of current economics on flow (income) rather than stock (wealth)
Difference between valuation in industrial and service economy in terms of risks and limits to certainty
It should be made clear that our focus is on human welfare through real wealth creation.
I too disagree with some of Korten’s views. I mentioned his work primarily to raise questions that are on the minds of many who are unsatisfied with current theory. He mixes notions of real vs. phantom money and real vs. phantom wealth which are very different things. In the revision, I will try to separate out and clarify distinct issues which he lumps together in his article related to
Real vs. phantom money and real vs. phantom wealth
Speculative financial activities
The incestuous relationship between money creation and speculation aggravated by bank deregulation
I agree the analogy between money and kinetic energy needs further work. I will try to develop it more clearly, so you have something more substantial to comment on. Then we can decide whether it should be included.
I will look out for intellectual generalities and abstractions that need to be pruned
Please let me know any further items to be added to this list.
Best regards
Garry
Add new comment