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I think that it is eminently true that we need
economic theory and method. It is just that at some point it seems me to
be useful to get beyond theory and method in the abstract and apply it to some
serious problem like income distribution.
Unfortunately, if you get into almost any
economic problem to find the causes you soon run into some institutional
arrangement created in some way through the use of political and/or
economic power and this situation is difficult to work neatly into
theories, especially those that stick to economics.
Harry
----- Original Message -----
Sent: Friday, August 30, 2002 4:24
PM
Subject: Re: Income distribution
With such obvious recognition of the problem economic I find it
particularly aggravating that economists refuse to accept that it is the
effect of taxes and subsidies [i.e. -- The costs that can be affected by
government policy.] on pricing decisions of producers. The simple tactic of
instituting policies that change the forms and quantitative determination of
taxes and subsidies that optimize lower "variable" costs of production and
increase the "fixed" costs of production while maintaining the total costs of
production will inevitably increase production while at the same time ensure a
more equitable distribution of the "rents" created by a viable society.
Gunnar Tomasson wrote:
Re. the following: The problem is the system - the framework of
political and economic institutions that is our political economy- and
unless we understand it, how it works and what makes it like it is, we can't
fix it. Agree. But that is
precisely why we need "economic theory and methodology" - or, more
generally, since the former is inconceivable without the latter, we need
"economic theory" of the kind of which Keynes wrote
(1922): "The Theory of
Economics does not furnish a body of settled conclusions immediately
applicable to a policy. It is a method rather than a doctrine, an
apparatus of the mind, a technique of thinking, which helps its possessor to
draw correct conclusions." Absent such theory, there is no way the system can be fixed except
by trial and error. In the
context of Paul Davidson's point the other day, "deductive logic" is of the
essence for working out the inner structure of such "doctrine" or "apparatus
of the mind." But, since
theory so construed "does not furnish a body of settled conclusions
immediately applicable to a policy", fixing the system is essentially
dependent on "plain common sense". Gunnar
----- Original Message -----
Sent: Friday, August 30, 2002 1:16
PM
Subject: Income
distribution With referance to
income distribution. Income distribution is a matter of
politics and ideology at least as much as it is economics.
Restricting discussion of economics in general, or income distribution in
particular, to economic theory and methodology may make for
intellectually amusing intercourse, but it is about as useful as doing the
cross word puzzles. Income distribution is largely determined by the interplay
of politics and economics within the framework of our political
economy. Our system may
be, and is, a lot better that many other systems, but it can be argued
that it has a long way to go to achieve satisfactory standards of fairness
and justice. The problem
is the system - the framework of political and economic institutions that
is our political economy- and unless we understand it, how it works and
what makes it like it is, we can't fix it. It seems to me that this is less methodology than
plain common sense and common observation, besides I am suggesting
specifically that we pay some attention what David Ricardo in the
opening lines of his Principles of Political Economy said was the
principal problem in political economy, namely income
distribution.
Harry L. Cook
--
-- jbod
Tax Privilege, Not People
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