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Towards A New Dialectic

Two basic questions: Do economies evolve? And if they do, what drives them?

Clearly they do change over time, in patterns that seem to repeat themselves in various circumstances. Karl Marx (among many others - although he was not the first, he was one of the first to try to describe it in a thorough way) have noticed that there is a regularity in how economies go from being based in agricultural to being based on mass industry. We can even call economic evolution a dialectic after Marx's use of the term.

But Marx's dialectic and that of others who criticized him lacks something basic. As Thorstein Veblen pointed out when criticizing the economic wisdom of his day (a criticism that still largely holds) that people, as economic actors do not change, and are not changed by their participation in the economy. Veblen said according to the standard theory, consumers exist to consume, and they consume because it gives them pleasure. When they are done consuming they return to the exact state they were in before they started, and pursue more opportunities to consume.

This rigid view of human nature does not at all match what psychologists have told us about the complex dance of consumption, status, positional goods, pleasure, the fluidly adaptive nature of the marketplace, the subjective nature of value and the subjective process that creates prices,.

That failing becomes massively debilitating once we consider how an economy is changed when a bulk of it's participants change - once the center of psychological gravity shifts among a group of economic actors, much more than a change in taste has taken place. And we may be experiencing an important shift of this kind, as many manufactured goods become so common as to make them unimportant as markers of status.

analysis/economics/towards_a_new_dialectic.txt · Last modified: 2013/07/15 08:11 by ram