Comments on: New Economies, New Anxieties

By: Trish Francher

Trish Francher — Fri, 08 Feb 2008 00:47:06 +0000

Economics – scary! Good luck. I think I will stick to Freud and Lacan. You should totally write your final on the economics of LOLcats!

By: Geoffrey Hodgson

Geoffrey Hodgson — Fri, 08 Feb 2008 00:46:45 +0000

From my perspective, human motivations stand at the center of our economy. Keep them in mind, Jed, while you are learning about economic theory. The traditional neoclassical thought that Dr. Garcia is having you question is limited in its ability to account for things that happen outside of basic market transactions. I saw that Adam Smith posted a comment earlier – it certainly doesn’t get more traditional than that. As I am sure you are learning, his theories presume that individuals are always acting with their best market-interest in mind. Of course this is a ridiculous idea. How would Smith account for your work in your father’s office? Was that in your best market interest? Did you even have a market interest? Your father was clearly trying to act in his market interests, but I suspect that you and your siblings influenced those interests. Family and social life is one of many external factors that can influence this idea of always acting in one’s perfect market interest. Otherwise, how would we explain advertising? Social context is another important externality. I believe that it is responsible for the differences we see in the economies we see across different cultures around the world.

By: Paul Samuelson

Paul Samuelson — Fri, 08 Feb 2008 00:46:17 +0000

It is true that we should focus to a greater extent on the role of the consumer, but we must keep in mind that he is a rational actor. A lack of economic equilibrium doesn’t mean that consumers are acting out of self-interest. In fact, it is the conscientious consumer who gathers information with which to make the most informed decisions that challenges supply and demand. It then becomes an issue of access to information. In our new information age, doesn’t the technologically enabled access to information reinforce our traditional understandings of the economy?

By: Joseph Schumpeter

Joseph Schumpeter — Fri, 08 Feb 2008 00:45:15 +0000

It is my belief that capitalism is an evolutionary process, and so it makes sense that we are in a new economy. Marx, your theories fail to explain many of our current phenomena because they remain production focused. You are famous for your meticulous accounting of the commodities market in the Grundrisse, and we are indebted to you for that. But in my longitudinal analysis I found long waves of economic development. This development was highly correlated with the development of new technologies. This pattern of economic growth across time challenges much of what Adam Smith and Alfred Marshall believe. How can equilibrium or a “perfect economy” exist when economic growth restructures the economy itself? While there is merit to your argument about the mechanization of the workforce, keep in mind that the technologies not only replace the workforce, but older technologies as well. Those older technologies are abandoned, which lead to the further the diversification of the market place. So is there a new economy? I would say no. Our so called “new economy” has been here all along.

By: Jud Watkins

Jud Watkins — Fri, 08 Feb 2008 00:41:50 +0000

Hey, do you have Williamson’s book? I couldn’t find it at the library. (And how did Marx find your blog? You should totally Facebook him.)

By: Karl Marx

Karl Marx — Fri, 08 Feb 2008 00:41:13 +0000

The “perfect market” is clearly a fallacy, but I think that Freeman and Lazonick overstate the importance of dynamic factors on the capitalist economy. The nature of capitalism is one of structure and preference, and in this case preference is not given to the proletariat. The label of a “new economy” is simply the continued and increasingly exaggerated result of the capitalist system. Defining the new economy based on consumer behavior misses the consistent increase in the mechanization of production and the alienation of labor.

By: Chris Freeman

Chris Freeman — Fri, 08 Feb 2008 00:36:50 +0000

Everyone should remember that when we talk about the "new economy," we are talking about the results of innovation. Innovation occurs in clusters, and the adoption of these new technologies often results in economic turbulence. The advent of the Internet and the subsequent Dot-Com bust is an excellent example of this innovation adoption/turbulence cycle. Now that the Dot-Com bust is largely behind us, it will be interesting to see which technologies are adopted, discarded, and which ones will be replaced down the road in a future cluster of innovation.

By: Richard Swedberg

Richard Swedberg — Fri, 08 Feb 2008 00:33:28 +0000

Society has changed a great deal since Adam Smith first began talking about the invisible hand. The economy is an effect of society, and so it seems simplistic to insist that the economy hasn’t changed along with society. The ways in which we engage in transactions has reshaped traditional understandings of exchange and without a doubt supports the argument for a new economy.

By: Thorsten Veblen

Thorsten Veblen — Fri, 08 Feb 2008 00:33:05 +0000

This is ridiculous. Alfred, will we ever reach your “perfect market”? How do you account for changes in consumer behavior? You claim that the economy and its governing rules are static, but what about its participants? The expansion of the marketplace (that your hero Adam Smith said is the way to expand the economy) introduces new products that undermine the validity of your analyses of supply and demand and your definition of the “perfect market.” Instead, we need to look at economic changes from a perspective of cumulative causation. The recent changes to our economy are clearly influenced by social and cultural factors that make your idea of equilibrium a bit simplistic. How can your notions of equilibrium account for change?

By: Alfred Marshall

Alfred Marshall — Fri, 08 Feb 2008 00:30:50 +0000

Axelrod has some good advise. Our experience of the market does change, but this does not mean that the economy itself has changed. The economy is static, and governed by supply and demand to achieve equilibrium. Any claim that we are in a new economy is based on attacking this equilibrium. While the recent behavior in the economy has disrupted the equilibrium, any fault in economics is the result of our inability to fully examine the marginal costs and utility within market transactions. The understanding of these variables moves us increasingly toward a “perfect market”, one in which the supply and demand has established a consistent price point for every item across the entire market. The information revolution has helped us move toward that perfect economy, but I would hardly call it “new.”