Hi Ed, Harry, Robert and any others who might be interested in the dismal
science of economics on this list,
. . . and Hi, indeed, to any others might possibly want to take an interest,
I joined Futurework List some six or seven years ago at the prompting of
co-founder Sally Lerner because I'd started the Job Society in England. The
JS is now defunct for lack of support from the Great and the Good (whom I
thought would help sponsor it) but I realised that in order to understand
the creation of jobs properly I would have to start to study economics --
which, in addition to Sanskrit and Lepidoptery, was one of the few subjects
I'd never given any attention to for the first 60 years of my life. But
joining Futurework, for my sins, is why I started taking an interest in
economics and what I've principally been doing ever since in odd moments
between managing one business and starting another -- and, of course, other
weighty matters known to FWers who read my stuff, such as quantum physics
and how to train my dog, Lottie, not to round up cars in the street as
though they were sheep.
I've even -- get this! -- bought three of the primary standard US texts
from which most of the important present-day practitioners of economics
have learned their stuff. I've even read them! Dreary though the books are,
and despite what I'm going to say about their basic deficiency below, I
have come out of the experience with a great deal of respect for the high
intellectual ability of many economists (whatever school they may belong to
-- even, so help me, Keynesians) and the subject itself has become
increasingly fascinating to me as I read more widely as to what has
actually happened in history and watch what actually happens around me in
the realms of big business, finance and politics, etc.
For the record, what are the three texts mentioned above? They are:
"Economics" by Samuelson and Nordhaus, "Principles of Economics" by Mankiw,
"Economics: Principles and Policy" by Baumol and Blinder. There are one or
two more "standard" texts, but those three are more than enough for any
individual in one lifetime.
Are you still sitting comfortably?
How do the above five authors define economics? It would be tedious indeed
to list their own individual definitions, but they're all much the same. A
paraphrase of them all would be something like:
"Economics is the study of activities that involve the production of goods
from scarce resources and their exchange."
Now I'm going to suggest that definitions along the lines of the one above
are simply not good enough. Mainly, they are far too vague. The definition
above would apply equally well to how animals go about surviving and
reproducing. It would be a reasonable definition of ecology, not economics.
Also, typical definitions are vague as to man's unique motivations in
driving the economic machine forward and thus how he complicates the normal
business of survival.
Also, the economic texts mentioned above use 99% of their pages in
explaining what happens when things are going fairly smoothly and largely
avoid trying to get to grips with the fundamental reason why deep economic
recessions come about and also how we emerge from them. (Or at least why we
actually emerged from them in the past. How we are going to emerge from the
present one [without using Gulf War II as an inflationary fillip] is
something that makes economics is even more interesting to me at the
present time.)
Right . . . you are probably shuffling in your seat now. You want me to cut
the cackle and tell you what economics is really about? Here it is, then:
"Economics is the study of the pursuit of novelty."
That's the definition of economics according to Hudson who, alone among the
great economists of our time, will probably not receive a Nobel prize for it.
"Novelty", for our purposes, needs a more precise definition. Here it is:
"Novelty is any good or service which engages the avidity of sufficient
numbers of individual consumers and is costly enough to be striven for with
more than usual energy, but not too costly for spare purchasing power."
An economic boom occurs whenever there are enough consumers with enough
spare purchasing power to pursue the latest popular novelty. An economic
recession occurs when there is not enough purchasing power to spend on the
latest novelty. (And, indeed, if the recession is severe enough and becomes
a depression, purchasing power can wind down sufficiently so that many
people can't even afford what they used to spend on ex-novelties and now
considered to be necessities.)
And there you have it. Note that the novelty doesn't have to be significant
in an obvious way (except in retrospect). It can, indeed, be quite trivial.
In fact, two novelties that were primarily responsible for two of the
greatest booms in history were trivial. Suffice it to say -- since the
economic text books above don't look at the fundamentals -- neither of
these two novelties are mentioned anywhere in all of 2,800 pages.
Now I suppose I could set to and start to write some sort of exegesis of
Hudson Economics but it would have to be book length, and the daily grind
being what it is, not forgetting the necessity of the afternoon dogwalk, I
must decline to write further.
However, let me mention the two novelties. The first was a primary factor
in getting the industrial revolution started in Europe. The second was a
primary factor in helping a ramshackle, deeply divided, war-torn country --
namely America -- become the swiftest growing and most successful economy
in the world (so far!).
And what were the two novelties? Spices and Ice. Neither was of any great
importance per se. They were as trivial consumer goods as anything could be
-- certainly of far lesser importance than any of the preceding goods that
were bought and sold. But both became supremely important economic goods,
involving huge profit margins and were traded across the world, thereby
promoting chains of subsequent novelties.
Now some will want to pooh-pooh Hudson Economics, and some will want to
examine the case constructively. But discussion of both novelties would
require at least two or three chapter-lengths to justify adequately. All I
would say to those who are seriously intrigued: study both of these
phenomena closely. If, then, you are sufficiently interested to take it
further and would like to associate with me in looking for other novelties
("trivial" or otherwise) that catalysed further chains of economic growth,
then please get in touch with me privately. Otherwise, I don't want to be
engaged in lengthy discussion on this list.
"And what a relief!" most will say.
Just one final comment. Apart from a relatively few extra genes than
chimps, the supremely significant development of the human species was the
vast enlargement of the frontal lobes of the cortex (our vertical
foreheads). They are *huge* compared with those of other primates. The
primary purpose of the frontal lobes is to deal with novel perceptions. The
frontal lobes have an avidity for novelty. Even while most of the
population of the world may continue to suffer poverty and extreme
deprivation, the economies of the developing countries of the world will
continue to be primarily motivated by the emergence of novelties and not by
the suffering of the rest of the world. And that's a fact that Messrs
Samuelson, Norhaus. Mankiw, Baumol and Binder don't address and never
discuss.
Keith Hudson
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Keith Hudson,6 Upper Camden Place, Bath BA1 5HX, England
Tel:01225 312622/444881; Fax:01225 447727; E-mail: [EMAIL PROTECTED]
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