Paradigms

The philosopher of science Thomas Kuhn hit a home run in 1962 when he published The Structure of Scientific Revolutions. Part of his theory was that in any given period, people make us of dominant models or paradigms to explain the world.

When problems grow with the older paradigm, some innovators develop alternate paradigms to better account for observations. From time to time, the new model triumphs and the old paradigm is put on the shelf--often after a bitter fights and with some people still clinging to the old.

In American economic history, we've seen three paradigms rise and fall (and maybe rise again). One was the classic idea of lassez faire or unregulated capitalism, in which there was little government interference with the economy--although, as I argued in yesterday's post, in reality the government often intervened on behalf of the wealthy.

It wasn't that bad a model in an age of small, independent producers and a truly competitive economy. But as economic power centralized and as economic crises became more and more serious--and even threatened the survival of capitalism itself--another paradigm emerged.

The new model is associated with the great English economist John Maynard Keynes and it recognized that sometimes markets could totally melt down. Keynes advocated a role for regulation, public investments, and transfer payments to promote economic stability and a rising standard of living for all.

This model was dominant from the New Deal era to the Reagan era and it enjoyed considerable success until the oil-related stagflation of the late 1970s. Meanwhile, there were those who were hostile to the Keynesian paradigm from the beginning, even though it may have saved capitalism from an even more serious crisis in the 1930s.

A coalition of right wing politicians and "free market" economists mounted a political and economic assault, promoting a model that is sometimes called "neo-classical." It called for deregulation, tax cuts, reduction or elimination of the social safety net, etc. and has been the dominant model from around 1980 until the latest economic meltdown.

For the life of me, though, I'm amazed that it lasted this long or took so long to crash. At this moment that paradigm is pretty much dead and it's not clear whether the next one will be a revived and updated Keynesianism or something else. Our situation is like that of the old Chinese curse: "May you live in interesting times."

SPEAKING OF KEYNES, here's New Republic writer John B. Judis on the continuing relevance of his ideas.

DEAD ENDERS. Opponents of a the American Recovery and Reinvestment Act, the economic stimulus package developed by the House and supported by President Obama, are pulling out the stops and plugging the failed policies of the past.

COUNTRY MATTERS. Here's an interview with writer Wendell Berry on rural life, community and such.

HERE WE GO AGAIN. WV Supreme Court Justice Brent Benjamin is planning on hearing another case involving Massey Energy. Benjamin, then a political unknown, was elected in 2004 after Massey CEO Don Blankenship spent over $3 million to elect him. The US Supreme Court has agreed to hear a case that questions the propriety of Benjamin participating in cases involving Massey.

SPEAKING OF WHICH, some Mingo County residents are going to sue Massey for polluting their water with coal sludge.

GOAT ROPE ADVISORY LEVEL: ELEVATED

A BEAUTIFUL MIND

Baruch Spinoza, courtesy of wikipedia.

El Cabrero recently took the plunge into the serene but bracing waters of one of history's greatest philosophers, Baruch aka Benedict Spinoza, who lived from 1632 to 1677.

Despite having lived over 300 years ago, his thought is strikingly modern. His view of the universe influenced Einstein and many other scientists and thinkers and is in some respects very similar to Buddhism. He has been called both an atheist and a "God-intoxicated man." (Official Goat Rope verdict: he was definitely the latter.)

Spinoza descended from a Jewish family forced to flee the persecutions of Inquisition in the Spain or Portugal. He was born in Amsterdam at a time when Holland was a relative bastion of religious freedom and a haven of safety for Jews.

He attended the Rabbinical School and studied the Hebrew Bible and Talmud as well as the works of Jewish and Arab medieval philosophers who were influenced by Aristotle, Plato and the neo-Platonists. Spinoza learned Latin in order to read the philosophical, scientific and mathematical works of Renee Descartes, who was widely considered to be the founder of modern philosophy.

His rabbinical teachers were disturbed by his lack of interest in traditional studies as well as his embrace of unorthodox ideas and his rational treatment of the supernaturnal stories of the Bible. In all probability, they were also concerned about testing the limits of Christian tolerance--which has often been an oxymoron--in one of the few places tolerant of Jews. After repeated warnings, he was excommunicated from the Jewish community.

And what an excommunication it was. Here's a sample:

By decree of the angels and by the command of the holy men, we excommunicate, expel, curse and damn Baruch de Espinoza, with the consent of God, Blessed be He, and with the consent of the entire holy congregation, and in front of these holy scrolls with the 613 precepts which are written therein; cursing him with the excommunication with which Joshua banned Jericho and with the curse which Elisha cursed the boys and with all the castigations which are written in the Book of the Law. Cursed be he by day and cursed be he by night; cursed be he when he lies down and cursed be he when he rises up. Cursed be he when he goes out and cursed be he when he comes in. The Lord will not spare him, but then the anger of the Lord and his jealousy shall smoke against that man, and all the curses that are written in this book shall lie upon him, and the Lord shall blot out his name from under heaven. And the Lord shall separate him unto evil out of all the tribes of Israel, according to all the curses of the covenant that are written in this book of the law. But you that cleave unto the Lord your God are alive every one of you this day.

In other words, they were kind of upset with him.

The excommunication also included the following warning to the faithful:

That no one should communicate with him neither in writing nor accord him any favor nor stay with him under the same roof nor within four cubits in his vicinity; nor shall he read any treatise composed or written by him.

After that, Spinoza lived an austere life of reclusive scholarship, supporting himself by grinding lenses until his death by consumption at the age of 45. Some of his main works were not published until after his death.'

More about his thought next time around.

WE'RE ALL KEYNESIANS NOW from the near consensus on the need for some kind of economic stimulus. But as this item from the UK Guardian argues, we're leaving out the main part of the great economist John Maynard Keynes' ideas: the need for shared prosperity.

A MISSING PIECE in the debate about dealing with recession and stimulus is the role of debt. Harvard law professor and debt expert Elizabeth Warren points out here that never has a recession occurred in American when so many people were so much in debt. Factoid: in 2006, credit card companies collected $90 billion in fees, interest and late charges from American families.

STATING THE OBVIOUS. An AP poll shows most Americans think the best way to stimulate the economy is to get out of the Iraq war.

HARD TIMES FOR VETERANS. From the Chicago Tribune:

Strained by war, recently discharged veterans are having a harder time finding civilian jobs and are more likely to earn lower wages for years due partly to employer concerns about their mental health and overall skills, a government study says.

The Veterans Affairs Department report, obtained Thursday by The Associated Press, points to continuing problems with the Bush administration's efforts to help 4.4 million troops who have been discharged from active duty since 1990.

The 2007 study by the consulting firm Abt Associates Inc. found that 18 percent of the veterans were unemployed within one to three years of discharge, while one out of four who did find jobs earned less than $21,840 a year. Many had taken advantage of government programs such as the GI Bill to boost job prospects, but there was little evidence that education benefits yielded higher pay or better advancement.

There's more to the article.

ON THE POSITIVE SIDE OF THE LEDGER, it looks like two baby Komodo dragons were born without male fertilization.

GOAT ROPE ADVISORY LEVEL: ELEVATED (ALTHOUGH THE KOMODO DRAGON THING IS KIND OF COOL)