I totally agree with Geoff. We must start again.

Deshoebox, you should know the complexity of product technology. Mainstream and heterodox economics tend to ignore how complex the state of technology in a country and a firm is. For example, designing a compact car is a form of closest packing, i.e., a problem of packing different kinds of parts and instruments as much as possible. In this packing, many necessary conditions must be satisfied. Even with one constraint (e.g., the total weight must be less than a pre-given limit), the closest packing problem is mathematically highly complex. The problem’s computing complexity was shown to be NP-complete. It means it is practically impossible to obtain the maximal solution if the number of parts exceeds a certain level. A car with an internal combustion engine typically consists of 10,000 to 15,000 parts and components. Designing an energy-efficient compact car is extremely difficult. American car makers were successful in providing big cars for customers who could use cheap gasoline. When the first and second oil shocks occurred in the 1970’s, customers changed their minds and began using smaller, more energy-efficient cars. German and Japanese car makers were more successful in providing such cars, simply because they had more experience. Since then, half a century has passed. Because American car makers could not compete in this compact-car market, they were obliged to make a profit in the big-car market and could not accumulate know-how in designing small cars. Evidently, there was a vicious cycle and a structure that prevented American car makers from designing cute, energy-efficient cars. Macroeconomics is incapable of elucidating these technological questions. Neoclassical microeconomics is also incompetent, because it typically assumes that people can easily solve any optimization problems, such as closest packing problems. We need a sound economics free from neoclassical assumptions. To obtain or construct such sound economics is not an easy task. Criticizing mainstream economics is not sufficient. We need more constructive, patient, and enduring efforts.

This book does not show up on the right-hand column. The claims for integrating macroeconomics with nature are yet one more way that this difficult subject is further confused and is ceasing to approach the true understanding of it as a real science. Without this understanding the way politicians try to guide a country will always be indistinct, because they cannot think logically about what is best for most of the population and instead promote policies only for benefit to their own parties.

However there is at last a much more logical way for investigating and finding how policies affect the WHOLE social business system, and not as before as if there is but one cause and effect. My part-time research as a retired engineer, using unbiased cold logic, has managed to make this past intuitively confused topic into a true science–one that is easier to follow and understand. This replaces what was previously included in its complex and confused pseudo version.

I will gladly share for free the 320-page book that is the result of my studies and discoveries. There is no obligation on the reader when he or she asks me for an e-copy, which I will gladly send. It will eliminate the past confusion and failure for good understanding, and even numerically derive what policy is best from an idealized government, should one ever exist! (Three example of policies are given in Chapter 12). Write to me at [email protected] for this free information.

You CAN make macro hypotheses and test them to see if they’re helpful. Steve Keen has been doing this for some time, and he gets real insights into little things like … oh … market crashes and stuff.

And even without understanding that, if you use a ‘representative agent’ then you can’t model inequality (one of the modern disasters, driving wars etc), just for example.

Really, you can’t start in the neoclassical mire and migrate to a sensible approach. You have to start again.

Have a look at Economy, Society, Nature, the green book in the right-hand column. It will help you to write something useful. Sorry to be blunt.

]]> https://rwer.wordpress.com/2026/03/13/weekend-read-economics-as-if-money-mattered/#comment-204422 Mon, 16 Mar 2026 15:44:59 +0000 http://rwer.wordpress.com/?p=47152#comment-204422 Marx remains highly relevant in his analysis of capitalist dynamics. His use of the labour theory of value worked as the basis for a normative criticism of capitalism. As a positive theory of how capitalism works it is less useful and was not essntial to his depiction of the realization problem.

People have legitimate concerns that AI will replace human labour in a swathe of activities. Shareholders will acquire more purchasing power while workers have less. That cannot happen unless the bots produce economic output. If that is not “value” then value is not relevant to the analysis. Marxist economists get into terrible contortions trying to retain the moral/persuasive purpose of the labour theory or value while accounting for its uselessness in explaining actual prices and resource allocation.