It is interesting that when he says that books that are read for fun are better books than those forced to students by professors he is applying what he described before.... the professor doesn't bear the cost of his decision... also writing so that professors adopt your book is different than writing so people want to read your book... Friedman is great!
Hey, I'm an armchair expert. I just noticed that this channel is called 'Serious Science', so I'm going to accuse Friedman of thinking economics is the same as Physics. And hey, he may have a PhD in theoretical physics and be a professor of law and economics, but I know more about all those subjects because I took a sociology module at community college.
5:25 - Wait a minute... You begin the lecture saying that it is an impossible problem to solve by calculation... And now the conclusion is that the market calculate that... So, that's not impossible. But the real question is: If the market make this calculation correctly how do you know that it is correct? And if you can't know how do you trust the price system? And if you know that this calculation is correct why you can't calculate by yourself?
We can't calculate it because we don't have the information needed to solve it. The point is that the market solves it through prices. Prices, if they aren't manipulated by governments, monopolies, etc, will allocate resources efficiently. Free markets allocate resources efficiently.
@@jorgemachado5317 markets allocate efficiently because they work like this: imagine that there is some good that is available for 5 people (and suppose 5 of this good are ready to be bought). They all value this good differently. Suppose the price of this good is $2. And everyone values it more than $2. What happens? Everybody buys it. The person selling this realizes, “wow, I don't know why, but people really like this product!" So he raises the price to $5 per item. Now some people buy it, but others don't. That means, say, he has 2 of the item leftover. For the sake of the argument, suppose he would be better off if he lowers the price slightly, sells out, and makes more money. Now he sells it at $4.50. it sells out, he's made better off and presumably the people are made better off because now they have something that they value. This is a situation where markets have cleared and everyone has been made better off. Let's take that exact scenario but let's have 100 people. The other 95 only value that good at under $2 (whereas our original people still value it between $2-4.50). So they never buy it because the price is greater than their expected value. Markets have still worked efficiently because the people that valued the good the most have received it!
@@Tyler-hf4uc I think you missed my point completely. I don't disagree that people pay the price they think worth paying to buy a product. That's not my question. My question is how could we know the price is setted correctly by the market if we don't really know how to calculate those prices. I haven't any doubt people will act according to their interest. My problem is that to say that the market has allocated the resources correctly means that we know what resources should be allocated. Otherwise all we can say is that the market has allocated the resources. If it's well allocated or not we can't possibly know. Otherwise we would calculate ourself. Do you see what i mean?
@@jorgemachado5317 I know exactly what you mean and that's what I'm telling you. The fact that consumers and suppliers are maximizing their expected benefits IS HOW we know that resources are being allocated efficiently. We don't have the knowledge to solve the systems of mathematical equations, but we do know that at market equilibrium, everyone is maximizing their expected benefit (in the absence of monopolies, regulations, govt intervention, etc)
What theory? The ratio of scarcity to abundance determines trade-ratios in kind, vs. their demand; and the various ratios of COMPONENTS TO those traded products, including innovation and labor, DETERMINES their relative scarcity or abundance. Nobody pays for air, because there's no scarcity; unless it's for a tire, in which case the price is determined by the scarcity of tire-pumps and electricity.
Youre forgetting the element of humans actually demanding something or other at some point in time, as well as the relative ordinal time prefrence for Demand X vs Demand Y. Prices are not just made up of algebraic ratios of materials.
It is funny to me that many machine learning researchers agree that getting an algorithm to do what we might call "AI" (transcribing speech, locating and recognizing objects/people in photos, controlling robotic limbs, interpreting text, generating text, language translation, etc) requires a decentralized approach, (i.e., neural networks, with millions or billions of simple processors "trading" signals with each other), while at the same time, these researchers want to run an economy centrally (Socialism). In other words, many of these researchers appear to be Marxist to some degree or another (but certainly not all). Central planning is as much a failure for economies has it has been with Artificial Intelligence research; that is, "Expert Systems," which are roughly a centrally planned algorithmic system, cannot even begin to solve the problems mentioned above; for many decades, that approach was tried and failed, badly. Free Market Capitalism is a gigantic "hivemind" of individuals, each with their own minds (each composed of tens of billions of neurons/trillions of connections) all coordinating and doing computations, both subjective and objective, that no Socialist central planning board could even dream of doing. So why do politicians keep pushing Socialism? Total control and power. They become the "capitalists" - that is, State Capitalists, as they appropriate the capital from the Free Market entrepreneurs and investors who built the capital. It is a sickening ponzi scheme.
That's the PR narrative they tell you. Now look at the facts. What does an economy do in war time? Free markets on steroids? No of course not, they go to massive central planning. How did the US beat the Soviets in the space race? By doing what they did but better, a massive state project called the Apollo project. Manhattan project the same. How did the US compete with Europe just after it was established? Massive state interference and central planning. Same goes for most capitalist economies. Also innovation: contrary what most think they mostly come from the state sector (a lot of DARPA) before some enterprise commercializes it. The market is mostly good at acquiring information about the right price but in today's debt base economy that's also highly obscured. Oh and the difference between socialism and capitalism isn't necessarily whether the economy is centrally planned or not.
When I burned a ton of leaves there were consequences. My neighbor took a shit on my doorstep. And that judge that made the wrong decision had their reputation damaged. :) Amazing talk tho, I am truly inspired by your ideas
Can judges lose their jobs for their decisions? Do they have a point system that ranks their successes and failures? Is there a threshold in that system that makes them lose their job, or even go to jail, or get some economic punishment for their scores going low or being reduced? If not, it's not a very useful thing to say that "their reputation was damaged" because it has no consequence in their livelihoods whatsoever
I like David, but I don’t care about the group of people he belongs to because I’m not a collectivist. Loving an ethnicity seems just as silly as hating one.
The idea that markets always know best is basically a religious believe and not a scientific one. In practice markets are always centrally planned to a degree, including, or even especially those of the 'neoliberal' economy.
@@bane3991 well it's not trivial. First you need to define what you mean by flaw and what kind of outcome you desire. But generally the things ascribed to a free market like best efficiency and innovation cannot be supported empirically. There are all kinds of abstract reasons why that is, which you can investigate with abstract theories like game theory. I think one problem a system like a market has is that always regresses to cronyism without any oversight.
Just because you paid someone does not mean you did not impose a cost on them for you own benefit. That is exactly what wage labor is. The premise of your ideology rests on fairness. The Law of Value (also known as the labor theory of value) states that the prices of a commodity are directly proportional to their labor costs. This means that the only way to create economic value is through work. So where do Capital gains come from? Workers. Capital gains are the surplus value extracted from workers in the wage-labor exchange. This was proven empirically by Emmanuel Farjoun and Moshe Machover in 1983. See Laws of chaos, a probabilistic approach to political economy. So your system that supposedly involves everyone systematically benefits a small minority of people. At least Totalitarian Regimes are honest about who is in charge. Capitalists are afraid of admitting that they are in control. Its amazing you named your book "Hidden Order". The hidden Order is the ownership of production. Its is privatized Totalitarianism. Your crimes will not go unnoticed forever.
@Kinickylj None of those examples defunct Marx's Law of Value. Obviously markets determine prices. But why is a Computer 50-100 times more expensive than a Pizza? The oil field example is explained by Ricardo's Theory of Differential Rent. The law of value applies to the aggregate of all commodities in a market. It does not apply to individual commodities, so a diamond found deep underground is worth just as much as a diamond found in a field. But imagine if all diamond fields were depleted and the only way to find diamonds was to dig deep underground. Would the market value of diamonds remain the same? Pearl hunters dive anywhere from 12 to 40 meters to find pearl producing mollusks. Pearls go for around $300-1500 each. If pearls just washed up onto the beach, do you think they would still be worth $300-1500 each? The Law of Value determines the center around which prices gravitate. Value is an Emergent property of all commodities in a market. It is not a property of the individual units of commodities. If you are familiar with Physics, you know that Temperature is a measurable property of a collection of gas. But temperature tells you nothing about the behavior of individual gas molecules. The temperature of a gas system is homogeneous, even though the kinetic energy of the individual molecules are heterogeneous. Some molecules have high kinetic energy, while others have low kinetic energy.
@@codyedwards5827 ok you are a little confused and allow me to clear things up a little bit. First of all, Karl Marx's law of value is defined as a resource allocation principle. It was not a theory of commodity pricing as many Marxists assume it is. The law of value simply put is the social necessary labor to produce a commodity. Secondly, you are confusing the real issue at hand. The reason why the labor theory of value is ignored by economists is because it implies production costs as being the only cost that is responsible for exchange value and assumes utility. What Carl Menger and Bohm-bawerk's writings did was show that there is another cost which is now called opportunity cost of the marginal utility of the commodity with respect to the marginal utility of other commodities. Marx did not analyze marginal utility he was analyzing TOTAL utility. Diamonds are intrinsically less useful than water, but the amount of water that needs to be supplied to each individual exceeds the marginal ammount of diamonds that each individual "needs". Therefore it's marginal exchange value is higher than water. Furthermore, what Bohm-bawerk did was describe the consumption rate of the good as a factor of its marginal utility value. In this sense value is defined as price. Since apples are consumed immediately and diamonds are not consumed immediately there is a longer satisfaction of "needs" given by the diamond. The repurchasing rate of an apple is higher than a diamond therefore labor will direct itself more in the area of producing food. In other words a commodity with a higher rate of repurchase is cheaper than those that have a lower rate of purchase. Also the marginalist revolution took into account the intensity of labor rather than just total social necessary labor. Again Marx confused total social necessary labor time with marginal labor. If it takes 1,000 workers to produces 100,000 apples in a year and 100 workers to produce 100,000lbs of lumber in a year .... what is the marginal utility of labor between the two? Well it definitely is larger than the apple producers and the rate at which people by lumber is slower in so far as apples and other crops are concerned. The population size of labor varies within different sectors and capital accumulation varies also. So in fact the intensity of labor in very cheap priced commodities is higher than very expensive commodities by marginal ammounts. Total labor time disregards marginal labor units and the consumption rate of the commodity. Finally, what Bohm-bawerk showed was that Marx's labor theory of value did not take into account intertemporal exchange rates of labor and capital. That means, capitalists have accumulated past labor time and savings in order to reserve land and capital to advance it to their workers at an interest rate. Past labor advanced to present laborers is more valuable and rated at a premium because future satisfactions are cheaper dollar for dollar than present satisfactions. If I say I will give you an apple for remuneration today or a week from now certainly you will take remuneration for today's work in present time. But if I promise I will pay you with 10 apples a week from now you may delay gratification for a larger portion of future satisfactions. If it takes the capitalist 5 years to accumulate savings, land, and capital he in effect advances the means of production and removes the waiting time from the workers in exchange for future goods and they exchange their present labor for the remuneration of present goods. If the capitalist didn't accumulate land, savings, and capital the laborers would have to wait 5 years to do it themselves. Capitalists do not exploit the workers of their "full value" they simply advance workers the ability to work now rather than 5 years from now.
@@codyedwards5827 if something became harder to get, theyd become more expensive...thats obvious. probably more expensive than usual difficult to obtain version if the commodity as they become scarce. and obviously if things are easier to produce its cheaper...idk whats your point? that people arent dumb? the person who invests capital incurs risk. lets not think in terms of currency, but something more tangible like wheat. me and my family farms and decides to trade our wheat for labor to build some houses. other smarty pants can do the same, but what if we all try to rip them off? collude! well some other farmers will take all the labor by giving them more wheat. maybe we can kill that farmer...anyways, that was our wheat and we ought to get what they promised in exchange. now we have homes and some people can live in them in exchange for working on our farm. things would be easier with some form of currency, so people did many millennia ago.
@@codyedwards5827 idk what i rly mean, but those group of guys mightve not built those homes without my (others) wheat. i grow my wheat to build these homes and people rent those homes to work and eat from my farm. they may also buy the home to live or otherwise. in quite small and very simple terms my real estate empire starting to grow, but no doubt many benefitted
cost is they worked, but they get paid. a crime? just use my faculties for free and get what u want out of it? the head of a corporation and fall anytime and so can the corporation itself and many of its subsidiaries. idk exactly what u propose, but lets assume vaguely a authoritarian regime...a member will stay so long he does the correct thing, not to be confused with the right thing. the correct thing keeps him in the regime as a head or councils determines what is correct, so the regime is slow to react as its members must be firstly loyal before right. even if given a lot of autonomy, who can say the person is the best or even fit for the job? a group of workers perhaps, but they need some leadership. they could choose to have a board of councils type thing, but no doubt the very brightest would soon shine, so that person will naturally take the role of leader. i used to go toss word salads first, but i find the smell test a faster indicator of things
But that's not the point. The capitalist enterprise, as you call it, responds to market incentives. Nobody is telling that enterprise to be in the business of doing whatever it is doing (in fact, it is not obligated to do business).
@@davidnmfarrell And that is not even the only explanation for the existence of the firm. One explanation is that the firm enables labour specialization beyond the extent which the market would allow.
On one watch of this I may have missed something, but this talk, if it's"serious science" feels more like he's describing economics with the same general feel that physicists talked about the speed of light or gravity before they had any idea what they were talking about. He seems quite convinced that he really knows how economics works but doesn't appear to be describing the same world I live in. To say that private enterprise occasionally makes decisions where others bare the negative costs and public enterprise much more often does... did the the people involved in each system speciate? Are they wholly different in their "individual centric vision and motivations"? He seems to ignore, say, the cost of developing technology and the profit benefit handed away. This is where both private and public enterprise ignores the cost, carried by the whole while the benefits go to the few. Or deterioration in working conditions from first world to third world production. Huge costs carried by the many, benefits to the few. The vast majority in the first world suffer growing poverty while third world suffers severely lowered safety standards, inhumane treatment of workers, environmental costs, has he missed this? Just for the couple of things I've mentioned, and I could mention more, many more. And the concentration of temporal power into the hands of the few, much of which wields power over production and life range of the vast majority, used at the expense of the vast majority, for the benefit and further concentration of wealth and power (the benefits) in the hands and lives of the few. If David here is correct, I'd look for the conditions in the world becoming more level across the board. If David here was way off his mark, daydreaming of some kind and generous world self determining world of equals, then I'd be looking for exactly the conditions I've pointed to grow and that growth of concentrated wealth and power to be excellerating. Now, I see the conditions excellerating. Is he wrong? Well, not if you include people and political will. The vast majority leveling the playing field at the expense of the few who have enjoyed the vast majority of the benefits. If this happens, even slowly, over decades, then I'd guess he's right. But I'm unclear if he is looking at such "tides" in the affairs of humanity. If he's not, then he's daydreaming, fooling himself. Still, those forces are present, the vast majority slowly weakens. We'll see I guess. He makes a great, if unconvincing description of economics that is more a rationalization human weaknesses, like the misnamed "greed" and "avarice". These, I think, are better seen as socialized instincts.
moonrakingmilksop seriously man. Contemporary monetary economics is a fucking joke through and through. It doesnt matter how logically thorough you are in examining and designing a corrupted system if its corrupted from the outset. Are you familiar with the concept of a resource-based economy?
'The vast majority in the first world suffer growing poverty while third world suffers severely lowered safety standards, inhumane treatment of workers, environmental costs, has he missed this?' A common belief, but false. Poverty rates have been declining for decades, overall and as a percentage of the total population. I think the level is around 10% currently, and was higher than 50% before 1970. Capitalism in China has lifted literally 100's of millions out of extreme poverty - much like we managed to do during the industrial revolution. Poverty is cured by knowledge. Freedom promotes the growth of knowledge.
Thank you for your reply. I admit that my language is stronger than it needs to be. Thank you for your input. I am commenting here for the purpose of discussion and I appreciate your input. I have checked the poverty rate on 2 sites, one document at the world bank as well as one document from the united nations. The numbers you offer appear to reflect the world bank's site. The united nation's numbers vary but don't appear to me to be significantly different. You are quite right, knowledge has its very real benefits. However, the numbers on either site do not have any reference point. Both sites claim that the number of people who live on less than $1.9 a day (wb) and $2 (un) a day have dropped since 1990 or 1970 respectively. These are not clearly stated in relative dollars. This would give me some idea how inflation has affected the evaluation of money in various times, indicate the buying power difference between 1990 or 1970 to now. I am not able yet to find this. Have you seen this kind of comparison? That would turn the numbers to at least a beginning of knowledge. It would also be helpful, if you have access to further data, how the poverty line is defined in purchasing power. I will look further myself and leave note here if I find these reference points.
I am interested in discussion and information. I would be interested in any information you have to offer. I will admit that my language was needlessly strong. If poverty rates are dropping in first and third would countries, I am not able to find this information where the poverty line in either first or third world countries is made in comparative dollars or purchasing power over time. I would be grateful for this. I am very interested in changes in rates of buying power to population in the first world middle class and lower income, as well as concentration of wealth. As to safety standards, humane treatment and environmental costs, I would again be grateful for even a lead on where to find information regarding this. And one last thing, would you please define what you mean by "marxist" and "neo-communist"? There seems an enormous range of what people mean by these terms. I don't personally use either term to define myself.
MrGuvnah a resource-based economy is based solely on empirical data and literally nothing else. It is not derivative of marxism in any way. Marx had an intuition that social stratification and socioeconomic inequality was socially detrimental. Just because that ended up as empirically validated later doesnt make that acknowledgement and anyone who makes it a marxist
No, no and no. Please stop misguiding people by treating these theories as theories of physics or something. First of all as a social scientist you should never preach these concepts in this sense as shown in the video. Secondly, as a small student of economics I even know that your example is complete rubbish. When you compare US with China and how the Chinese guy was puzzled that US has no ministry for resources you completely ignore the facts the government itself is managing resources whether it manages the labour for pencil makers through immigration policy, it manages the quality of labour through investment in public goods, it manages the material required through domestic production incentives and through trade regimes and it backs the invisible hand with the rule of law hence your argument completely breaks down but once could argue that these pencil maker can still exist without these centralised planner but this itself is another debate. So please revise your example. In the end I would say that mid developing countries are perfect examples where invisible does not always work. As even though in such market gov intervention is limited and implementation is quite feeble but still people fail to allocate resources as efficiently as required. Many businesses fail to exist because business do not have access to basic infrastructure and etc. So please revise your argument. Thanks
Yes, the government ATTEMPTS to manage resources, Friedman's argument is not that they don't try, but that they do it badly. The pencil argument is an illustration of the complexities of the market and how government lack information to allocate resources efficiently. That the government interferes in said resource distribution does not discount said information problem. Friedman is not against "the rule of law", you are presenting a straw man argument. Friedman is simply raising the possibility that the current "rule of law" is not the most efficient solution (mostly because its a monopoly). He is simply proposing an alternative. I don't know what you mean by "mid developed countries", but there is a general trend that the more economically "free" a country is the better of it tends to be that can't be ignored. "Many businesses fail to exist because business do not have access to basic infrastructure" I don't know what that is supposed to imply, I mean you can't have a "beam me up scooty" delivery service without beaming technology which sadly does not exit yet. But that does not mean that if the technology ever becomes feasible that it would have to be provided by government. There is no economic law that says that a enterprising individual can not build a road. And if a business depends on a possible road whose resources are more efficiently allocated elsewhere (opportunity cost), then it should not exist anyway. Point being, government subsidizing a business through infrastructure building is inefficient.
Emperor Picard I think my point was related to your point. I made it clear that I am not going into that system cannot exist without market interventions. All i was referring that the gentleman in the video is talking as such that USA or other western countries have fully non interventionist economies. With my examples I was implying how much government intervenes even in the so called free world and there is no such thing as free economy. I also agree less government intervention could lead to better outcome but only after a certain stage of development. Finally on your point on developing countries, my example, also related to second para here, was that a government led projects can encourage more output which was never existed. Coming back to a developing country, lets say Village A and Village B are seperated by a lake and if the two villages were connected increase in output would be 100 fold hence beneficial for all residents. In a free world, how would you suggest this bridge should be built. Who should fund it and what would be the pricing structure. Solution to this scenario could provide an answer to the problem of government intervention. Thanks.
I just adore how he smiles while teaching economics. I truly shows how much he cares
*He reminds me a little bit of a dude coincidentally with the same surname called Professor Milton Friedman.*
@Nature's Infinite WELLth And Rose's son
You should look at some of his older speeches - he is very much like his father in those
It is interesting that when he says that books that are read for fun are better books than those forced to students by professors he is applying what he described before.... the professor doesn't bear the cost of his decision... also writing so that professors adopt your book is different than writing so people want to read your book... Friedman is great!
I noticed this as well.
Books are usually just one sentence stretched into 300+ pages.
Thank you, Prof Friedman. Your eloquence is only second to your father's.
David ain't dead yet, he has time to surpass :P
Good luck David that's like dunking over Michael Jordan.
@@kylewatson5133 True, it's not impossible that David would surpass his father in the subject but it highly improbable. Milton was one of a kind. :)
@@Atanu Milton was a minarchist, David is an anarchist so he already surpassed his father in having a moral philosophy.
@Elias Håkansson Okay well they both at least considered anarchy, but David took it a step further and chose it.
Hey, I'm an armchair expert. I just noticed that this channel is called 'Serious Science', so I'm going to accuse Friedman of thinking economics is the same as Physics. And hey, he may have a PhD in theoretical physics and be a professor of law and economics, but I know more about all those subjects because I took a sociology module at community college.
Haha my man
Lol
Economics is a science just as serious as physics.
@@libertarianschizo8566 'Serious' sure. But not the same.
Price theory is everything. You can’t sustain the free market system in a democracy unless the electorate understands it. We’re screwed.
Same as his father
I'm reminded of another speech... "Look at this lead pencil"
I can't wait to read; The Pencil disquisition is, well #priceless.
I wonder what the chain would look like for Graphics cards. . .
5:25 - Wait a minute... You begin the lecture saying that it is an impossible problem to solve by calculation... And now the conclusion is that the market calculate that... So, that's not impossible. But the real question is: If the market make this calculation correctly how do you know that it is correct? And if you can't know how do you trust the price system? And if you know that this calculation is correct why you can't calculate by yourself?
We can't calculate it because we don't have the information needed to solve it. The point is that the market solves it through prices. Prices, if they aren't manipulated by governments, monopolies, etc, will allocate resources efficiently.
Free markets allocate resources efficiently.
@@Tyler-hf4uc Ok. But if we don't know how the market calculate prices how do we know that they "allocate resources efficiently"?
@@jorgemachado5317 markets allocate efficiently because they work like this:
imagine that there is some good that is available for 5 people (and suppose 5 of this good are ready to be bought). They all value this good differently. Suppose the price of this good is $2. And everyone values it more than $2. What happens? Everybody buys it. The person selling this realizes, “wow, I don't know why, but people really like this product!" So he raises the price to $5 per item. Now some people buy it, but others don't. That means, say, he has 2 of the item leftover. For the sake of the argument, suppose he would be better off if he lowers the price slightly, sells out, and makes more money. Now he sells it at $4.50. it sells out, he's made better off and presumably the people are made better off because now they have something that they value. This is a situation where markets have cleared and everyone has been made better off.
Let's take that exact scenario but let's have 100 people. The other 95 only value that good at under $2 (whereas our original people still value it between $2-4.50). So they never buy it because the price is greater than their expected value. Markets have still worked efficiently because the people that valued the good the most have received it!
@@Tyler-hf4uc I think you missed my point completely. I don't disagree that people pay the price they think worth paying to buy a product. That's not my question. My question is how could we know the price is setted correctly by the market if we don't really know how to calculate those prices. I haven't any doubt people will act according to their interest. My problem is that to say that the market has allocated the resources correctly means that we know what resources should be allocated. Otherwise all we can say is that the market has allocated the resources. If it's well allocated or not we can't possibly know. Otherwise we would calculate ourself. Do you see what i mean?
@@jorgemachado5317 I know exactly what you mean and that's what I'm telling you. The fact that consumers and suppliers are maximizing their expected benefits IS HOW we know that resources are being allocated efficiently. We don't have the knowledge to solve the systems of mathematical equations, but we do know that at market equilibrium, everyone is maximizing their expected benefit (in the absence of monopolies, regulations, govt intervention, etc)
What theory? The ratio of scarcity to abundance determines trade-ratios in kind, vs. their demand; and the various ratios of COMPONENTS TO those traded products, including innovation and labor, DETERMINES their relative scarcity or abundance.
Nobody pays for air, because there's no scarcity; unless it's for a tire, in which case the price is determined by the scarcity of tire-pumps and electricity.
There is a lot more to it than this lmao.
Did you even watch the video?
Youre forgetting the element of humans actually demanding something or other at some point in time, as well as the relative ordinal time prefrence for Demand X vs Demand Y. Prices are not just made up of algebraic ratios of materials.
Need or want make up the price high if not a need and affordable if it is a need
I prefer David D Friedman and my dad prefers Milton Friedman. I don't know if you couldst call this paradromic ; but it sort of is...
Well you probably like anarchy better since David is an anarchist and Milton was a minarchist.
It is funny to me that many machine learning researchers agree that getting an algorithm to do what we might call "AI" (transcribing speech, locating and recognizing objects/people in photos, controlling robotic limbs, interpreting text, generating text, language translation, etc) requires a decentralized approach, (i.e., neural networks, with millions or billions of simple processors "trading" signals with each other), while at the same time, these researchers want to run an economy centrally (Socialism). In other words, many of these researchers appear to be Marxist to some degree or another (but certainly not all).
Central planning is as much a failure for economies has it has been with Artificial Intelligence research; that is, "Expert Systems," which are roughly a centrally planned algorithmic system, cannot even begin to solve the problems mentioned above; for many decades, that approach was tried and failed, badly.
Free Market Capitalism is a gigantic "hivemind" of individuals, each with their own minds (each composed of tens of billions of neurons/trillions of connections) all coordinating and doing computations, both subjective and objective, that no Socialist central planning board could even dream of doing.
So why do politicians keep pushing Socialism? Total control and power. They become the "capitalists" - that is, State Capitalists, as they appropriate the capital from the Free Market entrepreneurs and investors who built the capital.
It is a sickening ponzi scheme.
That's the PR narrative they tell you. Now look at the facts. What does an economy do in war time? Free markets on steroids? No of course not, they go to massive central planning. How did the US beat the Soviets in the space race? By doing what they did but better, a massive state project called the Apollo project. Manhattan project the same. How did the US compete with Europe just after it was established? Massive state interference and central planning. Same goes for most capitalist economies. Also innovation: contrary what most think they mostly come from the state sector (a lot of DARPA) before some enterprise commercializes it. The market is mostly good at acquiring information about the right price but in today's debt base economy that's also highly obscured. Oh and the difference between socialism and capitalism isn't necessarily whether the economy is centrally planned or not.
Can you help me make a reaction paper about this. 😥
No, that would be at a cost to me to help you. 😉
When I burned a ton of leaves there were consequences. My neighbor took a shit on my doorstep. And that judge that made the wrong decision had their reputation damaged. :)
Amazing talk tho, I am truly inspired by your ideas
Can judges lose their jobs for their decisions? Do they have a point system that ranks their successes and failures? Is there a threshold in that system that makes them lose their job, or even go to jail, or get some economic punishment for their scores going low or being reduced? If not, it's not a very useful thing to say that "their reputation was damaged" because it has no consequence in their livelihoods whatsoever
Live without taking other life or lives
What i say to all anarcho-capitalists is, "price theory isnt theory. That is history. Economic princples are no more theory then the laws of physics"
@@pergrinepi3130 lawd=laws
@@pergrinepi3130 price theory=facts
Theory arent facts
Price theory needs to be called price princple
Using the pencil as an example like his father
0:42 - We don't solve it. It's impossible remember?
How did he get so smart?
IQ man. and genetics play a big role. his father had... a Nobel prize
He did not get smart. The very first breath he took was as a (exceptional) smart individual much like his father. It’s mostly genetic.
He's a physicist.
Love them Jews. How does such a small minority of people do so much? AND so many of them are so decent. I guess that's why Jesus was a Jew.
Lol
I really do love them too.
jesus the ultimate jew
I like David, but I don’t care about the group of people he belongs to because I’m not a collectivist. Loving an ethnicity seems just as silly as hating one.
The idea that markets always know best is basically a religious believe and not a scientific one. In practice markets are always centrally planned to a degree, including, or even especially those of the 'neoliberal' economy.
Free markets always know best. Not all markets because different interventions from the government exist.
@@bane3991 It's a bit like saying a perfect super conductor conduct perfectly. That's nice an all, but it cannot exist.
@rolyars What do you mean? Like what flaws do you see in the free market for example?
@@bane3991 well it's not trivial. First you need to define what you mean by flaw and what kind of outcome you desire. But generally the things ascribed to a free market like best efficiency and innovation cannot be supported empirically. There are all kinds of abstract reasons why that is, which you can investigate with abstract theories like game theory. I think one problem a system like a market has is that always regresses to cronyism without any oversight.
Reduce induced cost of process of service or worthiness of producing it. Republicanism is better than open democracy
Just because you paid someone does not mean you did not impose a cost on them for you own benefit. That is exactly what wage labor is. The premise of your ideology rests on fairness. The Law of Value (also known as the labor theory of value) states that the prices of a commodity are directly proportional to their labor costs. This means that the only way to create economic value is through work. So where do Capital gains come from? Workers. Capital gains are the surplus value extracted from workers in the wage-labor exchange. This was proven empirically by Emmanuel Farjoun and Moshe Machover in 1983. See Laws of chaos, a probabilistic approach to political economy.
So your system that supposedly involves everyone systematically benefits a small minority of people. At least Totalitarian Regimes are honest about who is in charge. Capitalists are afraid of admitting that they are in control. Its amazing you named your book "Hidden Order". The hidden Order is the ownership of production. Its is privatized Totalitarianism.
Your crimes will not go unnoticed forever.
@Kinickylj None of those examples defunct Marx's Law of Value. Obviously markets determine prices. But why is a Computer 50-100 times more expensive than a Pizza?
The oil field example is explained by Ricardo's Theory of Differential Rent.
The law of value applies to the aggregate of all commodities in a market. It does not apply to individual commodities, so a diamond found deep underground is worth just as much as a diamond found in a field. But imagine if all diamond fields were depleted and the only way to find diamonds was to dig deep underground. Would the market value of diamonds remain the same?
Pearl hunters dive anywhere from 12 to 40 meters to find pearl producing mollusks. Pearls go for around $300-1500 each. If pearls just washed up onto the beach, do you think they would still be worth $300-1500 each?
The Law of Value determines the center around which prices gravitate. Value is an Emergent property of all commodities in a market. It is not a property of the individual units of commodities. If you are familiar with Physics, you know that Temperature is a measurable property of a collection of gas. But temperature tells you nothing about the behavior of individual gas molecules. The temperature of a gas system is homogeneous, even though the kinetic energy of the individual molecules are heterogeneous. Some molecules have high kinetic energy, while others have low kinetic energy.
@@codyedwards5827 ok you are a little confused and allow me to clear things up a little bit.
First of all, Karl Marx's law of value is defined as a resource allocation principle. It was not a theory of commodity pricing as many Marxists assume it is. The law of value simply put is the social necessary labor to produce a commodity. Secondly, you are confusing the real issue at hand. The reason why the labor theory of value is ignored by economists is because it implies production costs as being the only cost that is responsible for exchange value and assumes utility. What Carl Menger and Bohm-bawerk's writings did was show that there is another cost which is now called opportunity cost of the marginal utility of the commodity with respect to the marginal utility of other commodities. Marx did not analyze marginal utility he was analyzing TOTAL utility. Diamonds are intrinsically less useful than water, but the amount of water that needs to be supplied to each individual exceeds the marginal ammount of diamonds that each individual "needs". Therefore it's marginal exchange value is higher than water.
Furthermore, what Bohm-bawerk did was describe the consumption rate of the good as a factor of its marginal utility value. In this sense value is defined as price. Since apples are consumed immediately and diamonds are not consumed immediately there is a longer satisfaction of "needs" given by the diamond. The repurchasing rate of an apple is higher than a diamond therefore labor will direct itself more in the area of producing food. In other words a commodity with a higher rate of repurchase is cheaper than those that have a lower rate of purchase.
Also the marginalist revolution took into account the intensity of labor rather than just total social necessary labor. Again Marx confused total social necessary labor time with marginal labor. If it takes 1,000 workers to produces 100,000 apples in a year and 100 workers to produce 100,000lbs of lumber in a year .... what is the marginal utility of labor between the two? Well it definitely is larger than the apple producers and the rate at which people by lumber is slower in so far as apples and other crops are concerned. The population size of labor varies within different sectors and capital accumulation varies also. So in fact the intensity of labor in very cheap priced commodities is higher than very expensive commodities by marginal ammounts. Total labor time disregards marginal labor units and the consumption rate of the commodity.
Finally, what Bohm-bawerk showed was that Marx's labor theory of value did not take into account intertemporal exchange rates of labor and capital. That means, capitalists have accumulated past labor time and savings in order to reserve land and capital to advance it to their workers at an interest rate. Past labor advanced to present laborers is more valuable and rated at a premium because future satisfactions are cheaper dollar for dollar than present satisfactions. If I say I will give you an apple for remuneration today or a week from now certainly you will take remuneration for today's work in present time. But if I promise I will pay you with 10 apples a week from now you may delay gratification for a larger portion of future satisfactions. If it takes the capitalist 5 years to accumulate savings, land, and capital he in effect advances the means of production and removes the waiting time from the workers in exchange for future goods and they exchange their present labor for the remuneration of present goods. If the capitalist didn't accumulate land, savings, and capital the laborers would have to wait 5 years to do it themselves. Capitalists do not exploit the workers of their "full value" they simply advance workers the ability to work now rather than 5 years from now.
@@codyedwards5827 if something became harder to get, theyd become more expensive...thats obvious. probably more expensive than usual difficult to obtain version if the commodity as they become scarce. and obviously if things are easier to produce its cheaper...idk whats your point? that people arent dumb? the person who invests capital incurs risk. lets not think in terms of currency, but something more tangible like wheat. me and my family farms and decides to trade our wheat for labor to build some houses. other smarty pants can do the same, but what if we all try to rip them off? collude! well some other farmers will take all the labor by giving them more wheat. maybe we can kill that farmer...anyways, that was our wheat and we ought to get what they promised in exchange. now we have homes and some people can live in them in exchange for working on our farm. things would be easier with some form of currency, so people did many millennia ago.
@@codyedwards5827 idk what i rly mean, but those group of guys mightve not built those homes without my (others) wheat. i grow my wheat to build these homes and people rent those homes to work and eat from my farm. they may also buy the home to live or otherwise. in quite small and very simple terms my real estate empire starting to grow, but no doubt many benefitted
cost is they worked, but they get paid. a crime? just use my faculties for free and get what u want out of it? the head of a corporation and fall anytime and so can the corporation itself and many of its subsidiaries. idk exactly what u propose, but lets assume vaguely a authoritarian regime...a member will stay so long he does the correct thing, not to be confused with the right thing. the correct thing keeps him in the regime as a head or councils determines what is correct, so the regime is slow to react as its members must be firstly loyal before right. even if given a lot of autonomy, who can say the person is the best or even fit for the job? a group of workers perhaps, but they need some leadership. they could choose to have a board of councils type thing, but no doubt the very brightest would soon shine, so that person will naturally take the role of leader. i used to go toss word salads first, but i find the smell test a faster indicator of things
Every capitalist enterprise has an authority figure telling people what to produce and how much to produce.
But that's not the point. The capitalist enterprise, as you call it, responds to market incentives. Nobody is telling that enterprise to be in the business of doing whatever it is doing (in fact, it is not obligated to do business).
u want decisions generally from the ppl closest to the information, so going too far up doesnt work
just like he said in the vid....
Yes, business entities are formed to avoid transaction costs as Friedman's colleague Coase explained in his article "the nature of the firm".
@@davidnmfarrell And that is not even the only explanation for the existence of the firm. One explanation is that the firm enables labour specialization beyond the extent which the market would allow.
On one watch of this I may have missed something, but this talk, if it's"serious science" feels more like he's describing economics with the same general feel that physicists talked about the speed of light or gravity before they had any idea what they were talking about. He seems quite convinced that he really knows how economics works but doesn't appear to be describing the same world I live in. To say that private enterprise occasionally makes decisions where others bare the negative costs and public enterprise much more often does... did the the people involved in each system speciate? Are they wholly different in their "individual centric vision and motivations"? He seems to ignore, say, the cost of developing technology and the profit benefit handed away. This is where both private and public enterprise ignores the cost, carried by the whole while the benefits go to the few. Or deterioration in working conditions from first world to third world production. Huge costs carried by the many, benefits to the few. The vast majority in the first world suffer growing poverty while third world suffers severely lowered safety standards, inhumane treatment of workers, environmental costs, has he missed this? Just for the couple of things I've mentioned, and I could mention more, many more. And the concentration of temporal power into the hands of the few, much of which wields power over production and life range of the vast majority, used at the expense of the vast majority, for the benefit and further concentration of wealth and power (the benefits) in the hands and lives of the few. If David here is correct, I'd look for the conditions in the world becoming more level across the board. If David here was way off his mark, daydreaming of some kind and generous world self determining world of equals, then I'd be looking for exactly the conditions I've pointed to grow and that growth of concentrated wealth and power to be excellerating.
Now, I see the conditions excellerating. Is he wrong? Well, not if you include people and political will. The vast majority leveling the playing field at the expense of the few who have enjoyed the vast majority of the benefits. If this happens, even slowly, over decades, then I'd guess he's right. But I'm unclear if he is looking at such "tides" in the affairs of humanity.
If he's not, then he's daydreaming, fooling himself. Still, those forces are present, the vast majority slowly weakens. We'll see I guess.
He makes a great, if unconvincing description of economics that is more a rationalization human weaknesses, like the misnamed "greed" and "avarice".
These, I think, are better seen as socialized instincts.
moonrakingmilksop seriously man. Contemporary monetary economics is a fucking joke through and through. It doesnt matter how logically thorough you are in examining and designing a corrupted system if its corrupted from the outset. Are you familiar with the concept of a resource-based economy?
'The vast majority in the first world suffer growing poverty while third world suffers severely lowered safety standards, inhumane treatment of workers, environmental costs, has he missed this?'
A common belief, but false. Poverty rates have been declining for decades, overall and as a percentage of the total population. I think the level is around 10% currently, and was higher than 50% before 1970. Capitalism in China has lifted literally 100's of millions out of extreme poverty - much like we managed to do during the industrial revolution. Poverty is cured by knowledge. Freedom promotes the growth of knowledge.
Thank you for your reply. I admit that my language is stronger than it needs to be. Thank you for your input. I am commenting here for the purpose of discussion and I appreciate your input.
I have checked the poverty rate on 2 sites, one document at the world bank as well as one document from the united nations. The numbers you offer appear to reflect the world bank's site. The united nation's numbers vary but don't appear to me to be significantly different.
You are quite right, knowledge has its very real benefits. However, the numbers on either site do not have any reference point. Both sites claim that the number of people who live on less than $1.9 a day (wb) and $2 (un) a day have dropped since 1990 or 1970 respectively. These are not clearly stated in relative dollars. This would give me some idea how inflation has affected the evaluation of money in various times, indicate the buying power difference between 1990 or 1970 to now. I am not able yet to find this. Have you seen this kind of comparison?
That would turn the numbers to at least a beginning of knowledge. It would also be helpful, if you have access to further data, how the poverty line is defined in purchasing power.
I will look further myself and leave note here if I find these reference points.
I am interested in discussion and information. I would be interested in any information you have to offer. I will admit that my language was needlessly strong.
If poverty rates are dropping in first and third would countries, I am not able to find this information where the poverty line in either first or third world countries is made in comparative dollars or purchasing power over time. I would be grateful for this.
I am very interested in changes in rates of buying power to population in the first world middle class and lower income, as well as concentration of wealth.
As to safety standards, humane treatment and environmental costs, I would again be grateful for even a lead on where to find information regarding this.
And one last thing, would you please define what you mean by "marxist" and "neo-communist"? There seems an enormous range of what people mean by these terms. I don't personally use either term to define myself.
MrGuvnah a resource-based economy is based solely on empirical data and literally nothing else. It is not derivative of marxism in any way. Marx had an intuition that social stratification and socioeconomic inequality was socially detrimental. Just because that ended up as empirically validated later doesnt make that acknowledgement and anyone who makes it a marxist
ew
There's always someone in charge. We have tax to control price. Minimum wage, tariff, and targeted sales tax.
Assuming you missed the last 5 minutes of the video....
Life would be better without all of those things.
No, no and no. Please stop misguiding people by treating these theories as theories of physics or something. First of all as a social scientist you should never preach these concepts in this sense as shown in the video.
Secondly, as a small student of economics I even know that your example is complete rubbish. When you compare US with China and how the Chinese guy was puzzled that US has no ministry for resources you completely ignore the facts the government itself is managing resources whether it manages the labour for pencil makers through immigration policy, it manages the quality of labour through investment in public goods, it manages the material required through domestic production incentives and through trade regimes and it backs the invisible hand with the rule of law hence your argument completely breaks down but once could argue that these pencil maker can still exist without these centralised planner but this itself is another debate. So please revise your example. In the end I would say that mid developing countries are perfect examples where invisible does not always work. As even though in such market gov intervention is limited and implementation is quite feeble but still people fail to allocate resources as efficiently as required. Many businesses fail to exist because business do not have access to basic infrastructure and etc. So please revise your argument. Thanks
At what university are you a professor of economics?
@@anarchic_ramblings I fail to understand why you ask this question. Please point towards the flaw of my argument so I can learn from you. Thanks.
You didn't provide any argument. You just provided some statements. A statement =/= an argument.
Yes, the government ATTEMPTS to manage resources, Friedman's argument is not that they don't try, but that they do it badly.
The pencil argument is an illustration of the complexities of the market and how government lack information to allocate resources efficiently. That the government interferes in said resource distribution does not discount said information problem.
Friedman is not against "the rule of law", you are presenting a straw man argument. Friedman is simply raising the possibility that the current "rule of law" is not the most efficient solution (mostly because its a monopoly). He is simply proposing an alternative.
I don't know what you mean by "mid developed countries", but there is a general trend that the more economically "free" a country is the better of it tends to be that can't be ignored.
"Many businesses fail to exist because business do not have access to basic infrastructure" I don't know what that is supposed to imply, I mean you can't have a "beam me up scooty" delivery service without beaming technology which sadly does not exit yet. But that does not mean that if the technology ever becomes feasible that it would have to be provided by government.
There is no economic law that says that a enterprising individual can not build a road.
And if a business depends on a possible road whose resources are more efficiently allocated elsewhere (opportunity cost), then it should not exist anyway.
Point being, government subsidizing a business through infrastructure building is inefficient.
Emperor Picard
I think my point was related to your point. I made it clear that I am not going into that system cannot exist without market interventions. All i was referring that the gentleman in the video is talking as such that USA or other western countries have fully non interventionist economies. With my examples I was implying how much government intervenes even in the so called free world and there is no such thing as free economy.
I also agree less government intervention could lead to better outcome but only after a certain stage of development.
Finally on your point on developing countries, my example, also related to second para here, was that a government led projects can encourage more output which was never existed. Coming back to a developing country, lets say Village A and Village B are seperated by a lake and if the two villages were connected increase in output would be 100 fold hence beneficial for all residents. In a free world, how would you suggest this bridge should be built. Who should fund it and what would be the pricing structure. Solution to this scenario could provide an answer to the problem of government intervention. Thanks.