Macro Platonification

Over on my physics website for Topological 4-Geon Theory (T4GU) I recently wrote about platonism (healthy for thinking) versus platonification (deadly for thinking, and for general living). I think that reference sentence just gave you a summary, so no need to feel compelled to read it, it is however background to this current blog post.

(BTW: I have more to write about the last topic, the Output Chasm , but it is a heavy topic, so took a break from it.))

A (very short) Account of Some macro Platonifications

It is more fun to spot them yourself. So have a go. I’ll just get off my chest a couple I recently spotted, but starting with the most obvious old one or two.

Neoclassical platonification

I think we come across a lot of platonification (miss-use or abuse of platonic thinking) in macroeconomics. Most MMT aware people, or anyone following Steve Keen or other heterodox economists, will recognize Neoclassical economics as one giant platonification (with some scattered remnants of legitimate platonic thought).

The main platonifications being the idea “currency is a veil over barter,” and all the consequences of perfect markets and rational agents, or the modern incantations of efficient markets, or the more nuanced almost opposite platonification of “zero knowledge agents” and “sticky prices”. Orthodox macroeconomics is a topsy-turvy world — mostly because it has no anchor in reality, just some vague platonic ideals that are very difficult to identify in the real world. In fact, they just are not found in the real world, except in the heads of fake economists (the olde textbook taught variety).

Because of this topsy-turviness we can simultaneously have orthodox economics schools talking about efficient markets (as an idealization of market clearing equilibria) as well as zero knowledge agents (a markets game theory idealization). That’s pretty hilarious if you are cognizant of the contrast.

Marxist platonifications

Some of the (perhaps unfair) critics of marxisms point out modern marxists have bastardized Marx and come close to treating marxism as a religion (with a few competing sects).

I think that is unfair framing, but there is some truth in the zealousness. MMT writers, and others (Steve Keen, foremost) have been pointing out for a long time that Marxists have the monetary system all backwards, and are closer to neoclassicals. They still think in terms of a gold standard or (roughly equivalently) fixed exchange rate regimes. These are inapplicable today for many nations, and those nations still operating fixed exchange rates or commodity pegs, are dong so by government choice, not out of any platonic need to treat the state’s tax credit platonically as a real substance.

It’s accounting records folks: the government currency has been, and will always be (probably) a tax credit. One reason is parsimony: an MMT system is a very simple system, low cost, and democratic and equitable provided your government is democratic and equitable (can’t ask for much more!).

((Of course I realize the word “equitable” is doing a lot of overtime work there.))

I agree modern marxists bastardize Marx. People point out how British economist Joan Robinson criticized modern “Keynesians” as being bastardized Keynesians (so in fact anti-Keynes). The same criticism could be levelled at many (not all) modern marxists. One thing Marx emphasized as a philosopher was that followers should not stay consistent to the original philosophical project. They should adapt and change according to the needs of the time and to changes in society. Wise advice.

Well, we’ve had radical changes since Marx’s day. For one thing governments are far bigger in size, as percent of investments. Governments have always been currency and legal fiat monopolists in some respects, and as oligarch influence over governments dwindles they become all the more so (a happy thing if you can get it).

This means monetary operations no longer even appear to operate like a gold standard. So almost all of Marx’s derivations based on commodity currency are wrong. I am sure he’d want his followers to update.

One drastic consequence is that the Falling Rate of Profit is no longer derivable. This is even if we ignore Steve Keen’s criticism that the labour theory of value is mechanically false.

The simple reason for the former is that governments are monopoly issues of non-convertible currencies, so can always bail out any capitalist whose profit rate plummeted. It’s a political choice, our governments make such choices from time to time. They could also choose instead to bail out the consumers, but hardly ever do, for no good reason other than false consciousness of the economic impacts. (Talk to an MMT’er about this — you want to bail out people who do, or organize, productive work, not the rentiers.)

The simple reason for the latter (fallacy of the LTV) is that energy is a major input into production, and we get most of our energy for free from Nature. The labour involved in transforming the Sun’s energy and fertility of soil, is near insignificant to the gain we get from industry. This is both in terms of raw energy as well as the numeraire for pricing energy production (the tax credit). So free exergy from the soil and Sun is the main source of surplus value.

What Marx got correct was that Labour is the only socially exploited source of surplus value — but that’s in monetary pricing terms, not energy terms. It takes very little energy to create a billion tax credits. In fact it takes about 60 watts I imagine. You don’t mine fiat currency out of the ground like gold.

This means not only is the LTV not platonic, we know how to compensate labour fairly for their contribution to society. Pay them a fair wage. If the employers cannot do this they should not be in business. One way to gradually eliminate (through competition) bullsh*t employers is with a government funded (but locally administered) Job Guarantee policy .

You won’t find that in Marx because he did not understand the monetary system. (Not entirely his fault, given the prejudices of his time.)

Trader Bro platonifications

Here I gleefully confess one inspiration for this post was Nassim Taleb (NNT). He likes to write about how foolish platonistic thinking is, and yet indulges in it himself, in some measure.

The thing is, as I wrote over on the physics blog , platonism is essential! (That’s a joke, but also serious.)

Some things should be essentialized. But if you essentialize concepts that have no essence then that’s false and possibly dangerous thinking which I call platonification (platonizing the non-essential).

The Natural Numbers, perfect circles, Pythagorean triples, vector spaces, the transcendentals like $\pi$, are all platonic essences. They refer to no things in the physical world. We have to use platonic thinking in mathematics, if not we lose a lot of expressive power and textbooks can multiply in tedious length in vain efforts to avoid mathematical platonism.

Things like nations, race, intelligence tests (IQ) are non-essential concepts, and should never be considered platonic, and we get horrors when people try to platonify these notions.

OK, but what about NNT and the Trader Bros?

Well, I think they platonify a lot of monetary concepts. NNT seems to be aware governments cannot be forced to default on obligations in their own currency. But he has been sucked into the “tax payer funded” mythology, which is a form of platonification of the purpose of taxation. it’s a libertarian Austrian School platonification. It is pretty darn evil.

I’ve grown a bit weary, so might add more examples later. But will finish for now by referencing an excellent article on James Robichaux's Substack pages where he writes about the Tax Payer Funded mythology. It’s good.

Guarding Against Platonification in MMT

Honestly, I do not come across too much platonification in MMT. Warren Mosler often uses the MMT Base Case for Analysis but that’s admitting no country is using the base case (job guarantee, permanent zero interest rate, non-convertible fiat currency, exchange rate float), so it’s not a platonification. It is just decent platonism. A “what if” scenario.

When people start talking about more specific policy measures, like forms the Job Guarantee can take, then ideology creeps in, which is always a platonification risk. So how to avoid those risks?

One way is to keep an open mind. Your conception of the Job Guarantee might not be incompatible with someone else’s. Say a libertarian’s JG conception versus a socialist’s JG. So allow for the gap between conceptions, and do not make a little difference be an obstacle to a greater good.

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