Phil Forum : Rigged Economy
Posted: Sun Nov 03, 2019 12:41 pm
https://thephilosophyforum.com/discussi ... vitability
NOTE : I was working on this reply to "tendency for the rate of profit to fall" when the thread suddenly disappeared. So I'm posting it here under a new title.
Now, a new mathematical theory of economics surprisingly concludes that wealth inequity is inherent in any free market. An article in Scientific American magazine (Nov 2019), is entitled The Inescapable Casino. The mathematician author concludes that, in a market economy "you win some and you lose some, but the longer you stay in the casino, the more likely you are to lose. The free market is essentially a casino that you can never leave." And the house always wins. This surprising conclusion is based on his economic model of modern wealth transfer, which indicates that "after a large number of transactions, one agent ends up as an 'oligarch' and the other 999 end up with virtually nothing." This result was despite initial equality of opportunity. So the bias seems to be inherent in the nature of statistics (luck). I would call that occult force the "invisible Left-hand of Economics".
The author notes that the same statistical patterns are found in physics, involving "phase transitions" and "symmetry breaking". So, it seems that economic inequality is essentially inevitable. Which is why the system will ultimately break without artificial (government) redistribution of wealth. The article notes that most developed nations today are near the critical break-point. And the US economy has one of the highest coefficients of inequality in the world. Hence, the author concludes that "it may be that inequality naturally increases until oligarchies begin to form, at which point political pressures set in, preventing further reduction of equality." In a democratic system with a mixed economy, those adjustments can be made without violent revolutions, but tend to barely maintain the status quo.
The bottom line here is that "the notion that individuals bear all responsibility for their economic outcomes simply because they enter into transactions voluntarily" is misguided. Instead, "luck plays a much more important role than it is usually accorded." Hence, the unfairness is "inherent in market economies." No need to despair though. 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. Let's hope they get a handle on the problem before a new world war, or multiple civil wars, do the bloody surgery for us.
Oligarchy : rule by a few super-rich people
Is Inequality Inevitable : https://www.scientificamerican.com/arti ... nevitable/
Rigged Economy : https://www.scientificamerican.com/arti ... is-rigged/
NOTE : I was working on this reply to "tendency for the rate of profit to fall" when the thread suddenly disappeared. So I'm posting it here under a new title.
Marxism is old news, based on outdated science. It assumes that economic inequities are the result of intentional exploitation of the masses by an evil minority. While there may be some truth to that presumption, there are also other forces at work. For example, Adam Smith's "Invisible Hand" theory suggested a more positive interpretation of self-interest inadvertently producing unintended social benefits.Wallows;d6972 wrote:This one is a biggie. In Marxist economics it essentially means that the labor force is starved from the means of production, reentering, and blatant and merciless exploitation starves the economy pool, that you end up with a plutocracy holding 90+% of all wealth.
Now, a new mathematical theory of economics surprisingly concludes that wealth inequity is inherent in any free market. An article in Scientific American magazine (Nov 2019), is entitled The Inescapable Casino. The mathematician author concludes that, in a market economy "you win some and you lose some, but the longer you stay in the casino, the more likely you are to lose. The free market is essentially a casino that you can never leave." And the house always wins. This surprising conclusion is based on his economic model of modern wealth transfer, which indicates that "after a large number of transactions, one agent ends up as an 'oligarch' and the other 999 end up with virtually nothing." This result was despite initial equality of opportunity. So the bias seems to be inherent in the nature of statistics (luck). I would call that occult force the "invisible Left-hand of Economics".
The author notes that the same statistical patterns are found in physics, involving "phase transitions" and "symmetry breaking". So, it seems that economic inequality is essentially inevitable. Which is why the system will ultimately break without artificial (government) redistribution of wealth. The article notes that most developed nations today are near the critical break-point. And the US economy has one of the highest coefficients of inequality in the world. Hence, the author concludes that "it may be that inequality naturally increases until oligarchies begin to form, at which point political pressures set in, preventing further reduction of equality." In a democratic system with a mixed economy, those adjustments can be made without violent revolutions, but tend to barely maintain the status quo.
The bottom line here is that "the notion that individuals bear all responsibility for their economic outcomes simply because they enter into transactions voluntarily" is misguided. Instead, "luck plays a much more important role than it is usually accorded." Hence, the unfairness is "inherent in market economies." No need to despair though. 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. Let's hope they get a handle on the problem before a new world war, or multiple civil wars, do the bloody surgery for us.
Oligarchy : rule by a few super-rich people
Is Inequality Inevitable : https://www.scientificamerican.com/arti ... nevitable/
Rigged Economy : https://www.scientificamerican.com/arti ... is-rigged/
