And it only came to me as a realization that, throughout the economic readings and novels presented throughout the course, I realized the progressive evolution of economic theories and ideas. They often attempt to replace or negate each other, just as much as previous theories negated. Take a close look, and you’ll realize that during Defoe’s era, one of the only economic ideas present is the notion that “credit is merely the populace’s confidence and trust in each other’s ability to repay, with the crown as the figurehead to place in our trust”.
The novels Emma and Mill on the Floss introduce social classes. The matters of business become more tangible and countable, such as loans, interest, and land/capital, as the various classes. Economics also expands, taking into consideration social aspects such as reputation, class, family, and marriage. Each has intrinsic value that can signal potential economic gains in all traits.
And now we arrive at Keynesian theory. In class, I can only ponder why his name rang a bell, that I’ve heard this name before. Only later on have I realized that Keynes is one of the most important contributors in Macroeconomics and Government Economic Policy, and that the majority of the content in ECON 102 or 311 is based on his theories. In fact, the Keynesian Range is the level of aggregate supply in an economy that remains constant – until a massive shift of consumer demand takes place.
I quickly skimmed through the remaining economic readings and found that Friedman’s reading is simply a crash course in money theory and micro/macro economics. The New Yorker article is an exposition of how genius financiers have managed to utilize mathematics and current economic theories to “hack” finance to their benefit. And only disciples of finance and economics can decipher these schemes; otherwise, it appears as complex as “this asset’s worth is equal to X equities, backed by a hedge fund Y for each Z security that has W probability of raining in Guatemala while conversing with the Sultan of Brunei.”
And so I wonder. In today’s era, what will the next economic evolution look like?
Good question, Roberto.
I would think that the next phase of economics will have something to do with a) alternative currencies, like Bitcoin, that don’t require the interference of banks, brokers, or third party interference and b) socially responsible investment institutions, like Tridos Bank in the Netherlands.
I think the common trend seems to be a recognition that the current system, like Keynes speaks to in his article, affects different groups of people differently. The problem with our current system is that it is creating a growing distance between the rich and the poor (in terms of individuals and nations).
I think we are entering an era where we can no longer be naive to the consequences of our purchasing and investment decisions. Our choices, as consumers, have consequences for other communities, individuals, the environment, politics, etc. As we begin to grasp the vast implications of the world’s systems of trade, we start to see the need for something different.
For some ideas of where I’m going with this, check out these links:
Tridos Bank
https://www.youtube.com/watch?v=VRP5E0EF8kc
Bitcoin
http://www.bbc.com/news/business-22366064
CBC Ideas * I owe some of these ideas to this episode, it’s worth a listen if you have time.
http://www.cbc.ca/radio/ideas/the-illusion-of-money-part-2-1.3462405
I’m glad that you mentioned Bitcoin because I find that the arguments for it as a currency are very similar to the arguments surrounding the standard for the value of money during the late 18th and into the 19th century. Once again, we have this discussion about what constitutes the value of money but adopted for the digital age. Since no bank or government regulates Bitcoin, its value is not backed up by actual physical money. Its value is entirely dependent upon public inclination; it only has worth as a currency if everyone accepts that Bitcoin is worth something as a medium of exchange. It’s interesting to me because I agree that Bitcoin, and other digital currencies, may be the next big revolution in money, as it finally severs ties with money as something material to something completely abstract. The abstraction of money appears to be a trend that continues to grow with the passing of time and as global economies develop. However, I do believe that digital currencies need regulations and refinement. For example, since the amount you have is simply represented by a digital number, if someone was to hack your account they could just “download it all”. It’s not like robbing a bank where they would have to carry physical money.
I don’t fully understand the ins and outs of Bitcoin and digital currencies, but I do believe that it is an interesting topic that concerns modern economies.
To be honest, I have my doubts about the efficacy of Bitcoin or other digital currencies as well.
The fact that there is no regulating body means that:
1. Bitcoin is ripe for unscrupulous usage
2. Bitcoin is more vulnerable to fluctuation since it is not tied to a stabilizing entity such as a nation/state.
However, as a citizen of a country with a relatively (note the use of the word relatively) transparent and non-corrupt government, I am prone to put more faith into my national currency than into a digital currency with no ties to a governing body.
However, if I were a citizen of a country with a more questionable government, I would be far more inclined to buy into Bitcoin as this currency does not carry with it the baggage or precariousness of my own country’s currency.
Also, no one knows who “created” Bitcoin, which also makes me nervous. I would want to know who the author was of the digital script that defines Bitcoin before I bought into it.
I love how we’re talking Bitcoin! From what I’ve read from this post, it seems like a big concern lies in the next “economic evolution”‘s lack of centralization, like what Liam said. By that, I mean its status of not being issued by any central bank or public authority; something which the majority of our readings have included/depended upon in their discussion in some form. With something like Bitcoin, there’s an underlying question of who/what is accountable?
Obviously, I think that is a concern that many natural/legal persons have. And it’s amazing, because it of course follows the formula economic evolutions tend to have; a debate! In this case, on its regulation because there is an uneasiness which arises from such a virtual change. Anyhow, in the future I would expect some form of regulatory body for the mining and transaction of Bitcoin, just because it would fall in line with what we’ve seen so far in economic evolutions…For instance, the U.S. defines Bitcoin not as currency, but as a money services business which requires it to adhere to certain protocol. For now, Bitcoin’s legal status still varies from country to country.