"Productivity" is a perfect example of the pseudscience underpinning economics

boing
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He’s referring to the default (and highly flawed) economic assumption about productivity vis-a-vis workers’ wages that has been in place in the West for more than a century. His audience understands both that neoliberalism is grounded in part in the concept of productivity and also that it isn’t the only economic philosophy out there.

John Bates Clark was one of the creators of the marginal productivity theory. Fix’s audience can draw the line between him and modern neoliberal economists who’ve used his ideology-grounded theory as the basis for their own, even more flawed, ideology-grounded theories over the last 40 years.

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By the ‘default assumption’, do you mean the idea that power and informational imbalances do not exist?

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No. As I said, the default assumption being discussed here is that “raising productivity is essentially the same as raising workers’ hourly wage”. Neoliberal economists are very aware of power and informational imbalances – they just have to either pretend that they don’t exist (“bootstraps!”) or that they’re the rightful order of things as the occasion warrants. You don’t get a gig at the Mercatus Centre by doing otherwise.

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I think you are reading something very different into that sentence from what I intended - which is that the only way to substantially raise productivity in the medium term is by raising wages, hence policies like a higher minimum wage and so on actually raise productivity, instead of reduce it. Perhaps you can reword what you mean.

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No, that clarifies things. You’re probably in agreement with Fix, and clearly in disagreement with neoliberal economists, on that count. Fix is critiquing the obverse of that idea, that an increase in productivity drives an increase in wages.

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George Mason University makes good money hosting libertarian lobbyist parasites.

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It’s one thing to say that a philosophical* argument is circular, and it is another thing to say that when we check it’s conclusion with reality it doesn’t pass the smell test. Those things have nothing to do with one another, so you can both say an argument is unfalsifiable and attack it’s conclusion.

* I’m not calling this science.

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I’m sorry, it’s unclear to me: are you disagreeing with my satire, or are you explaining the joke?

Both John Bates Clark’s law and yours are begging the question (Aristotle FTW). Each law claims that it would be true, if it weren’t for the thing that prevented it from being true.

Anyway, my satirical intent was not to critique Clark’s supposition per se (easy as that is), but rather to point out the absurdity of the greater neoliberal myth that wealth ought to be distributed to only those who generate it. Exposing that Ayn Randian view of wealth distribution for the bullshit that it is helps make the case for what I believe is the more sensible distribution: asking from those according to their ability, and giving to those according to their need.

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I have to admit - it’s probably mostly the latter. It’s a bad habit which I’m trying to break myself of but I’m still struggling. I’m sorry.

I’m certainly not disagreeing with your satire except perhaps to the extent that John Bates Clark can’t really be criticised for saying something he didn’t say. The point being he expressly acknowledges that if the world worked perfectly, this is how the system would work.

His preface expressly sets out that this is not how the system actually works.

His claim is that he has been able to establish the theoretically “natural” rates to which the market would conform if labour and capital were to remain fixed in quantity, if improvements in the mode of production were to cease and if the wants of consumers were never to alter assuming that industry shall go on and that, notwithstanding a paralysis of the forces of progress, wealth shall continue to be created under a perfectly unobstructed competition.

His point as best I can understand it from a brief whizz through the relevant work is that if you can establish that - left to its own devices, without ‘unnatural’ interference - the value received by those who create something exactly equals their proportionate contribution to the value of the thing created - then we can be assured that the basic system is correct and we are then “just” left with the task of so perfecting the industrial system, after its kind, that exceptions to this prevalent rule may be less frequent and less considerable.

As in, he accepts that the system doesn’t work that way in the present reality of his time. He is interested in whether that is because the system just doesn’t work that way as a matter of natural law or whether it’s because we’re doing it wrong.

@anon50609448’s right that this is philosophy.

His work is essentially saying “I have proved that in a perfect system without people being people, the value distributed among those who make something would be distributed in proportion to the value they put in.”

Therefore if people aren’t getting out equivalent shares of what they put in, the system is being fucked with and needs fixing.

He does (very briefly) address “from each according to their ability; to each according to their need” - apart from saying that it would violate what is commonly regarded as a property right, he neatly sidesteps by saying that whether society should do that is a question of ethics not economics.

As you say, lots of people take that kind of stuff and say “Aha, clearly everyone gets what they deserve” which when you read the base texts generally turns out not to be what the base texts say at all.

I’m doing it again aren’t I.

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I’d agree (?) that I think Fix is being unfair to Clarke. As Clarke says in his preface, by natural he means ‘static’. Or perhaps, ‘equilibrium’. It’s a rhetorical trick to go from ‘natural’ to ‘good’ or ‘fair’.

https://www.econlib.org/library/Clark/clkDW.html

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Which is a pretty broad problem with philosophy. Plato/Socrates never advocated skepticism (“I know that I know nothing”) by actually just said it’s wiser to admit you don’t know something you don’t know than to pretend you do know it. Locke said that you own something if you mix your labour with the commons if you leave as much and as good for others (plus Locke’s example of mixing “your labour” is having your servants do it for you). Nietzsche’s vision of the overman would be disgusted by Rand and Rand would be disgusted by Randians (who are very often christian).

You have a base text (basically the philosopher’s personal diary where they are working through their anxieties) and then you have what the apostates (i.e. everyone) turn it into. In other words, it’s not the band I hate, it’s their fans.

It’s one of the first fallacies they’ll cover in an into to philosophy course because people do it all the time.

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Before both the dot bomb and the 2008 recession, most economists talking about the economy publicly were asserting that there wasn’t going to be a recession. To my knowledge, none of these people fundamentally rejected the flawed models and premises that led them to make these incorrect predictions.

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Because it is different this time… honest, really.
psst fred call the broker and sell now.

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Seems like a stretch. Care to elaborate? EDIT: I see now that someone else asked the same thing and your response was “Before both the dot bomb and the 2008 recession, most economists talking about the economy publicly were asserting that there wasn’t going to be a recession. To my knowledge, none of these people fundamentally rejected the flawed models and premises that led them to make these incorrect predictions.” I’d suggest that “most economists” weren’t talking about the economy publicly nor would “most economists” ever assert there would or would not be a recession in any particular timeframe. You seem to be confusing “economists” who appear on TV with actual economists.

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Sort of like how I confuse Mao and Stalin with actual communists. I’m sorry to any real economists that the Chicago school, austerity and declaring “the economy is doing well” when median wages are flat for 17 years is what economics looks like to the rest of us. But those idiots are the ones who have the ear of governments when they make real policy that affects our real lives.

If engineers at universities kept telling us that engineering really works while all the bridges collapsed, we’d have a pretty dim view of engineering as well.

(Also, I’ve taken university-level economics courses and the professors were just like the idiots on TV)

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When was the last time that, not just a single crank, but a majority of the public voices from physics, chemistry, or biology, were making public predictions about their specialties that a majority of their colleagues knew were wrong, and those colleagues didn’t publicly castigate and repudiate them?

For bonus points, when was the last time that any of these disciplines (to be clear, I’m not including medicine with biology here) publicly made predictions that turned out to be wrong, and then didn’t update and change their models afterwards to account for their mistake?

I’m going to suggest that, for the disciplines I listed above, this kind of thing hasn’t happened in living memory.

That is the difference between an actual science and an ideologically motivated pseudoscience like economics.

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^^^^^^ This.

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It’s also economics as theory. The theory keeps changing subtly to reach the desired conclusions and has since the beginning of economics as a formal discipline. It is a priesthood, not a science, no matter how many equations they toss into the blender.

And that is why I left in disgust.

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I’m not sure what you’re asserting “a majority of public voices” from economics were asserting. That a recession was impossible? Was unlikely? When exactly did this occur and how are you measuring the majority of public voices? In fact, economics explicitly expects “shocks” like the 2008 housing crisis and no credible economist would tell you that they can predict when a shock will or won’t happen. If they could, they would make huge money by using that information to play the markets and wouldn’t be crowing about it on TV. I’m not here arguing that economics is a real science the way physics is, nor that politicians of various stripes don’t misuse economic arguments and theories. I’m just saying that actual economists aren’t in the business of “predicting” recessions.

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Perfect example. Engineers tell us how to build bridges that won’t collapse. Yet bridges do collapse. Why? Because politicians are involved, and we have limited resources, and people make mistakes, and engineers fail to incorporate all relevant factors into their designs, etc.

That said, I think economics is more akin to psychiatry than engineering because its attempting to make sense of human behavior which isn’t as predictable and consistent as physics (and is more subject to being skewed by politics).