Coolz Media.
Welcome to take it after Here a podcast where I try to explain economics to you and Molly. I'm your host, bia Wung, and thank you Molly for agreeing to do this, especially on extremely short notice, so.
I appreciate it.
I am so excited to struggle to learn.
So, okay, there's good news and bad news.
The good news is that the central thing that this episode is about, nominally is a concept called monopsony.
And it's actually really easy.
No.
See you said that, you said that in the word chat earlier, you said monopsy and I was like, oh man, she's so tired.
That's not even a word.
Well, okay, this actually gets into the thing because this is a word that was made up specifically for this concept.
Unfortunately, I do also have.
To do the bad news, which is that to actually understand the history of this, we do have to explain stuff that's legitimately very complicated. So I'm locked in. Yay, but okay, okay, monopsony. The hook of this, this is part of the reason why you get paid like shit
is because of monopsony. So I first was interested in writing about this specifically for this show because Weirdly, NPR's Planet Money Like discovered the concept of monopsony and did it a couple of pretty interesting pieces on the history of the concept and the place that they go with it is they start talking about one of my favorite economists, Joan Robinson, who is really good and we're gonna spend
most of this episode talking about her. But one of the stories that they tell this is a very famous story in the circles of economists that I'm around, I guess, is about her sitting down with like a British classicist and inventing the term monopsony. So, okay, what is what is monopsony?
It's one something mono.
You know what a monopoly is. So monopoly is when one seller, right, So okay, it's like, yeah, you have I don't know, you have like Google, which is a monopoly on like search engines, right, And you know, monopoly doesn't necessarily and what we'll be getting into this more in a second, it doesn't necessarily have to mean that
there's literally only one right. But you know, like the US, like every market you are dealing with in the United States is some kind of monopoly where you know, sometimes there's like a big three, or sometimes there's like two, or sometimes there's maybe five, or sometimes it's.
Quite literal, like we only have one power company in Virginia.
Yeah, yeah, you know.
And sometimes monopolies are deliberately set up by the state, right where sometimes you know, the state, a state would just be like, yeah, fuck it, there's only one power company here.
Oh no, it's a private company. It's a private company.
Yeah right, yeah, but sometimes private companies will be hand at monopolies like this, right. Utility companies are a thing where it does kind of make sense because having two companies setting up rival ele grids is like a nightmare.
But well, that's why the state should do it.
Yeah.
Well it's like it's like, yeah, this is the issue though, right, And this is why monopoly in theory is like a thing that economists are not supposed to like, because monopoly screws up the sort of like perfect competition between all of these one million different companies that's supposed to like make your life good because they're all forced to sell everything at like the lowest possible price because they have to outcompete everyone else. And it's like all of this stuff.
But then if you if you have one monopoly. They can charge you whatever the fuck price they want because there's only one of them, and the alternatives are to you eat shit.
Or like like Amazon choking out. It was one hundred diapers, right, It was a diaper company that offered like affordable order diapers, I mean undercut them really hard, concentrated period of time. So they went out of business and they jacked with the prices on dipers.
Yep, yep.
This is basically just what the modern tech economy is is that some company will come in with like one hundred billion dollar there's worth of tech money. There were a bunch of ride share wars in India over this, where like all these rideshare companies were basically giving people for like really really low cost rides. I mean they're obviously still screwing the drivers, but like.
Oh yeah, naturally, yeah yeah.
And so they were just trying to like edge of when I was out of the market so that they could take control of it and raise the prices and stuff eventually.
Because it's like, you know, the capitalism enthusiast likes to imagine that the economy is like you know, Darwinian evolution, survival of the fittest, right, we evolve and compete and the best man wins. But actually it's more like intentionally introducing mongooses to the islands of Hawaii. Yeah, that's yeah, this is an evolution. You just introduce a giant weasel that aid all the bird eggs.
Yeah.
Right, And it's like, you know, if you look at how capitalism spreads historically, it's it's not even like capitalism doesn't outproduce other like economic systems. Usually what it does is like, you know, there's there's this line in the Communist Manifesto that I think Marx was extremely wrong about. We're just talking of like like trade is the cannon that will bring down Chinese walls. And he's talking about
like free trade will like destroyed China's trade bearers. It's like, well, no, like China's trade barriers were brought down by the Opium Wars, like the British Navy like sailed in and like besieged the capital, like you know, but when people talk about monopolies, they're talking about selling goods right, right. And what Chillan Robinson realizes very quickly is that hold on, this is
also true for employers, right. If you are trying to find a fucking job right under sort of like the models of perfect competition that like neoclassical economics, the economics that like you learned in school, they just normally assume that, oh, yeah, you can just switch jobs really easily.
So obviously companies have to pay.
You, right, But in most towns there's one major employer who kind of sets the bar.
Yeah, like here at TVA.
Yeah, like it'ss or like Walmart, and like, if you ever had to find a job, like you understand how this works.
I actually have it, but I understand in the theory.
To the listener, you've you've had to find a job.
Here you're speaking to you're speaking to the only person who's never applied for a job.
Literally never applied for a job.
It's a complicated situation. Yeah, I've never Like, oh wow, good for you.
I love this for you. This rules for everyone else.
Yeah, Like it's really obvious that you know, there exists conditions where you have monopolies, but for like hiring people, So Joan Robinson like at this meeting with this classes coins the term monopsony to be like okay, there's one seller, Okay, I'm.
Usually against a neologism, but I understand the need for this word.
I'm on board. Yeah, I'm on board with Joanne.
It's a good word. She she's really cool. Yeah.
I spread mentioned the caveat here, which is she does do the like classic n eighteen fifties communist thing of like going to China and then getting led around on like state sponsored tours and then coming back and assuming you understand what's happening in communist China, And that didn't go great, but you know, a lot the rest of
her work is really good. And this is kind of where Planet Money does a really interesting history skip where in their version of the story they go oh yeah, and then everyone just kind of ignored it until recently it got picked back up by these economists who were like, wow, we did peer reviewed research and we found out that, like, it turns out that yeah, actually there isn't perfect competition in the labor market and that yeah, labor markets are controlled by these like monopolies.
And I guess you have to do studies to prove things. You can't just vibe it out. But I would say just the general vibe, like I could have told you that I told you that.
Mollie, Okay, I have such bad news for you, which is we are going to it's the person in this story whose idea it was to be like, hey, we should like figure out how the economy works using data.
That was a new concept for them.
Yeah.
Yeah, was was invented by a guy. We're good to get to the story of the invention.
Of and it was in like nineteen seven.
This is a sign I got.
It was like the thirties, nineteen thirties when we invented this.
It was in two thousand and four. They brought math into it.
Oh god.
One of my absolute favorite stories of all time is, like, you know, in like the nineties, there was like the craze over chaos theory, which I think the only artifact of that is like the chaos theory guy in Jurassic Park, Mate of my Flashes, wings and all these things happened. Like a chaos theory is. It's a it's a like a genuinely very interesting math concept. But the thing about chaos theory is that it only applies to things that are third order equations.
A thing I definitely know what that is.
Yeah, we could go off in a tangent on this but I'm just I'm just gonna tell the econ joke.
So everyone economics to me was like, oh my god, there's this hot topic.
But the problem is it doesn't apply to the economic stuff people are doing in the nineties because they don't use third order equations. They only use second order ones because they're dumbasses. This is like one of the trends of the show is that the people who do mainstream economics are extremely dumb.
And I've always had that feeling, but because I don't understand the economy, it's hard for me to be sure.
Yeah, well it's it's because it's ideologically motivated, right, you know the reason that you study economics in high school?
Who studies economics in high school?
I didn't know there are like economics classes in high school, right, like that?
Right?
Sorry when I say studies, like yeah, like you had to take an economy greade school. Yeah. The reason there are economics classes in high schools is not to teach people economics.
It's specific it was specifically.
Designed as an anti communist thing, to like teach kids how capitalism really works through like again a model where they don't teach you that monopolies exist. And you know, obviously, like some of this has been incorporated into more modern stuff, like the couset of a monopol seed like kind of has entered into the lexicon of like the economics you get taught as like a little tiny baby child, which is not actually economics. It's literally propaganda. That's what it was designed to be.
I mean, how fun to get to pretend to be a scientist when you don't do real math and really you're just a propagandist.
Oh, it's so fun. It's so fun.
One of the other things, like if if you're ever like in university settings and you want to just like listen to someone complain about shit for a while, go talk to the math people about the ship people get Nobel prizes for in economics, where it's like this is like shit that like a child who studies mathematics could do. The math doesn't even have a Nobel prize, right if you want to get like a Fields Medal, there's not.
Nope, that's so sad for the math guys.
Matho doesn't have one. Yeah.
Well, and the other thing is econsolable price is fake too. This is this is another thing that's important. It's not one of the prizes that was set down by by Nobel, which I like the Nobel prices.
They created their own.
And the dynamite guy knew what he was doing.
Yeah, but it's like literally like the Central Bank of Sweden made their own and called it a Nobel and it's not a real one.
It's a fake one.
Wait, so you're saying that if we are confident enough.
In our assertion, oh, yeah, we could just make a Nobel.
We could tell people that we are Nobel laureates in podcasting.
Yeah, I mean as a huge thing.
You also have to have an extraordinarily large amount of money to do to do propaganda.
For this, because the reason this works.
Is that the Nobel Prize in economics is also a propaganda effort, right, And one of the ways you can tell us a propaganda effort is that they didn't give what a Joanne Robinson, who was one of the most influential economists who has ever lived. Justice for Joanne genuinely
like it's it's outrageous. It's just like one of the few things even to the people who hate her are like, yeah, no, she should have gotten one, because she's one of the people who invents the idea that competition isn't perfect, like she invents imperfect competition where there's like monopolies and shit, say this is all like there's something that's like foundational to like everyone's to some extent understanding of economics, but most of our ideas are completely ignored and saying like
monopsony is like a thing that you put in textbooks. But then when you're trying to like you know, you're you're an economist that like not even like the fucking Heritage Institute or Hairriage Foundation or whatever, you're at like a just like a random economics think tank, right, like you don't take Knopsony into account when you're like, hey, we can't raise the minimum wage because if you raise
the minimum wage, then everyone's going to get fired. And it turns out to like, well, no, that's not true. And the reason that's not true is because if you assume that neoclassical economics is real, is that companies aren't hiring people at like the lowest possible wage that like that they could do without someone going to somewhere else.
They're hiring them even.
Lower than that because they can suppress the wages because where the fuck else are you going to work right?
Right?
But also like people like human behavior is not subject to the rules of mathematics in that straightforward kind of way either.
No, it's very dumb and like, because this goes back to something that's important to all of this, which is that like, economics as a field is not it's not a science. It doesn't come from science. It comes from moral philosophy. The economy guys, they're always saying stuff. They're just like confidently asserting something and showing me a graph that's just like does not reflect my lived reality at all, But they're very confident about the graph.
No.
Well, and that's the thing because because because it's originally philosophy.
It's like, no, the economy is going great.
It's like not, we're right, not.
From not in my house.
No, it's like it's fucking bullshit.
That's a reflection of the fact that economics as a discipline works backwards from the way that a science works, which is economics starts out with assumptions about how humans work. Right, It starts out with the assumption that like everyone's like a rationally calculating actor who's like seeking to maximize their own utility.
And I've never met that person. Yeah, it's philosophy. I actually no, I love maximizing utility. Don't get me started on maximizing my economic utility.
It's literally utilitarianism, right, It's not something that's derived from from empirical data. It starts with an assumption about how things work and then projects that assumption onto the world.
I don't want to be melodramatic, but I'm having a breakthrough here in my understanding of what economics is. I thought they were just being dumb before suddenly I see it completely differently.
Yeah, it's ideologically motivated reasons. They have a philosophy. They were attempting to mathematically define, like project their philosophy onto the world, and it doesn't work very well because it's philosophy. It's not right.
They're trying to prove a conclusion rather than map reality.
Yeah, they're going backwards. Yeah, and this is something that we're going to get into in a second. But first we're going to get into are the products and services that support this podcast?
Wow?
Speaking of the economy.
Woo, we are back.
So one of the things that's actually interesting about the story of Joan Robinson.
Is that there's a reason why almost no one.
I mean, I don't know that people people listening to this podcast have a higher likelihood of knowing who Joan Robinson is than like almost any other group of people on Earth. But like, there's a reason why she's not extremely well known by normal people.
I'm gonna be so honest with emia.
The only economists I know are the ones that Jabier and Malay named his clone dogs after.
That makes sense. Well, like people like you've heard of you, like you've heard of like Adam Smith. Right, that's true.
That's not one of the clone dogs.
John Robinson is an economist who is important enough that like you should know who she is.
Yeah, but he would not have named one of the clone dogs after her. I think they're I think they're all boys. No, absolutely not. He probably like he would chainsaw her.
It's bad.
But the reason that you don't know who she is, and the reason that Monopsony kind of like sat in the closet of Mainshon economics until people started digging it out recently, is because John Robinson is part of a tradition of heterodox economics, which is it's you know, the economics that's not the mainstream ones and all of those people who got systematically purged from every academic institution over the span of about thirty years by the neoclassical economists because.
The government doesn't want you to know their ideas.
I mean, like well, like like genuinely, what happened was it was like it was, it was a bunch of these people like hired by capitalists in order to do propaganda for them, and they went through and systematically took over and purged all of the country's economics departments.
If what she's saying is the entire framework of your worldview just like functionally doesn't work. Yeah, yeah, that's that's not a good vibe for them.
So let's talk about.
The kind of tradition that John Robinson operates in, because this is actually a story that really really tangentially the planet money people kind of allude to and then never talk about again, even though it's fascinating. So John Robinson is I guess you could call her one of the sort of first people in what you would call the post Kinesian tradition.
Absolutely, I'm always saying that, do you know who Canes is an economist? Was his name Maynard?
Yeah? John Maynard Kinesa.
He's like, like, if you remember one thing about Canes, like if you need to just be like you have a flash card, you need to be like someone says, Canes he's the I guess like decidagal terms like countercyclical spending.
But he's he's the.
Guy who's like, when economy bad, government should spend money in order to make economy not bad. Again, that's like the most basic part of Kanesianism.
And that's all I need.
Yeah, But like to think about.
Canes is that like he wants like a nicer version of capitalism, but he is like a capitalist, and so there's a sort of milieu around him that John Robinson is kind of part of. But there's a lot of elements of it, and people who Canes like take stuff from who are extremely obscure now because you know, kines did a version of it that like took the radicalism out.
I promised earlier you were going to get to the guy who like invented the concept of actually doing scientific studies for macroeconomics.
That reach that makes me.
So mad that the answer to that question isn't the first.
Guy who put math in who just had that we should do math and economics.
Oh, the first guy that did it, the first economists, right, the guy even been in economics.
Right, economists do a bunch of math. It's just not math, that's.
But like, we should study the currently existing reality.
Yeah, the world first.
Right, it's just like trying to force reality into this chart that I made. That's awesome.
Yeah.
And so the guy who was like, hey, what if we observed reality? His name is Michael Kleecki.
Good for him, great job. Michael rocks.
Yeah, he has a long and convoluted history of stuff. Yeah.
I'm gonna go ahead and say I don't indorse everything he did. I don't know anything about him. Honestly, he kind of rocks.
He's so he COLLECKI like foundationally is a Marxist, right, It's not sure that he's from this school, but he's the guy from which one of the major schools of Marxist economics is born, which is called the Monopoly capital school, who are kind of the Marxist version of the people who were like, oh my god, hold on, monopoly has gotten so out of hand. We have to change how our economics work. Robinson kind of discovers Kaleki a little
bit later in her career. It's sort of like a forties thing, right, She's originally writing about emperor competition and like monopsony in like the thirties, But Colleki's one of the people who is responsible for a bunch of these ideas around, like him and Robinson are responsible for a bunch of these ideas around. Like okay, yeah, Actually it turns out that everything we've been talking, like the world is composed of monopolies and monoposes and everything exists at
best in the state of hypercompetition. And this this becomes kind of its own school, and like you know, it branches out in a bunch of different ways through the work of some other people who who start to look at like how is price set? And this is something that we've talked about on this show before. So so like, okay, if you've ever seen the graph that like all of the econ people use where it's like prices, supply and demand, right, what is it?
Well, okay, so at a certain.
Point, and we've talked about this on the show before, our friends as Strange Matters, the magazine Strange Matters, I have written.
About this a lot. If you like, ask a person. It's funny.
I actually did this by accident with a fringe who runs like a very very small business. Well it's not that small, but like run runs runs like a very very small business. And I asked her like she was talking about, like, okay, how do we figure out how to like price something? And I talked to her about it and she goes, yeah, it's cost plus markup, right.
And the thing about price, right is price is not set by a graph like prices are set by a person in an office who figures out what the price is going to be right, And the way that they do that is cost plus markup. It's like, how expensive was the item for us to obtain, and then what's the like additional price that we need to sell it for in order to both make profit and pay everyone. And this is really obvious to like anyone who's done a job, but like, well, yeah, no, shit, of course
it's costless markup. In economics, this is considered an extremely radical idea.
Oh I guess you know this.
In the supply and demand model, it's just like whatever people are willing to pay, you just keep increasing the price until demand drops off, and then you back off a little.
Yeah.
In economics, that's called like companies being like price takers. The theory and like normal economics quote unquote is that companies they don't set prices. They take the price from like what people are willing to pay. And that's objectively not true.
They're just constantly standing there tweaking the dial.
Yeah, it's like no, no, no, no no no, like like just just on an objective level, what's happening is is you know this, this is what's called like administrative prices, right, and this is this is like the basic like one of the basic revelations of like post Kanes and economics.
Is that price is set by a person who sets it by cost plus markup.
And why there's the precog who floats at a pool of goo and just into it's the prices.
Yeah, they like see the data.
It's like no, no, no, no, no, it's literally just a person they set the price. It's costlus markup. There's some like psychology stuff there about like what kinds of prices will break a consumer's loyalty to like a store, right, because if you like raise the price at a store too much, people will stop shopping at the store. But like that's like the way this stuff actually works. And this is one of the big post knesy and innovations is like, Hi, we're trying to figure out how price works.
So we went and we asked a bunch of people how it works.
A remarkable choice.
Yeah, right, ah God, But this is an issue for neoclassical economics because the whole like supply and demand setting price, is like the basis of their whole thing, and it's the basis of all of their politics. Now, at this point, we need to talk about the thing that's legitimately complicated. Before we get into that, We're going to talk to something that's not complicated, which is how to use these products and services.
Wow, we're actually doing the economy right now.
We are. We are back.
Okay, so we're gonna stop doing the economy. And the reason we're going to stop doing the economy is that, you know, when I talked about there being an ideological purge, right people, A Strange Matters wrote about this economist named Frederick Lee who was an IWW member and who was one of the sort of I don't know, like the guy trying to pull the five thousand different strands of heterodox economics together, and he writes a really really detailed,
in depth analysis of at each individual school, how did the neoclassical people come in and purge everyone and then maintain control of it. And one of the ways you can tell that this isn't about who is correct, it is about who has power is something called the Cambridge capital controversy, which I'm going to assume Mali, you haven't heard of this.
No, I was just really sort of marveling and turning that phrase over in my mind. It's not about who is correct, it's about who has power. Yeah, I'm gonna store that one away. That's a good turn of phrase.
It's a good way of understanding this, and it's a good way of understanding the central thing of like, hey, why did everyone kind of ignore monopsony for eighty years? And it turns out that the answer is that being right doesn't do anything in economics.
That's heartbreaking.
Yeah, it's bleak. And some of these people are people who have institutional power. So one of the things that Joan Robinson is most famous for doing is her and her collaborator Piero Saraffa, who's another whole story, who's an extremely wild guy. Saraffa is the other person who a bunch of this, like heterodox economics is based off of.
There's a large extent to which heterodox economics means that, like you think Saraffa was right instead of the Chicago School people and like the neoclassical people or Marx or you're sort.
Of like fusing the two of them.
And she and Joe and Robinson are writing out of Cambridge, the one in England. But then there's also a whole bunch of neoclassical economists are at Cambridge, the one in Massachusetts.
They really can't be doing that. Yeah, well, we got to rename at least one of them.
And they fight it out. That's why it's called the Cambridge Capital Controversy.
They go to more.
Yeah, so, okay, the thing that they're fighting about is extremely convoluted. At some point, Mollie, I'm gonna drag you on here and we're gonna do the actual full version of it. But the short version of it is really funny. And the short version of it is that this is a fight about Okay, so you have like two different kinds of what are called capital goods. So you have like I don't know. I think the capital's power one.
It's like tools that make ice cream and tools that make airplane, and the question is, how do you figure out how much those tools are worth together?
Well, are you selling ice cream on the airplanes?
You know they where you're selling them doesn't taste really, I'm just.
Thinking, is there synergy a play here? Like, well, I'm actually.
One of the Legitimately, the idea that you could use the same equipment to do multiple things is like a really serious problem for an enormous number of economic schools.
Like it's like real bad.
It's like kind of it's kind of even bad for like the mathematics behind like classical Marxist political economy. It's it's it's really bad for like the neo classical people, it's not great.
So my new airline where everyone gets a free ice cream is really throwing a wrench into this.
Yeah, well, as long as long as as long as the same machines can either be making ice cream or you can be making airplane and you can't tell which one.
What are they teaching at economy school?
What is even happening?
So we were arguing about ice cream machines, Well so.
So what what What they're what they're arguing about, right, is if you are doing like normal neoclassical economics, can you point at like factories and go how much is this worth? And this is a real problem because it turns out that the way the neoclassical economists do this is circular. So, okay, you're trying to figure out how much money a factory is worth. I'm going to quote here from the book Capital is Power, which has a
very good explanation of what's happening here. The money value of any capital good, that is, the amount investors are willing to pay for it, is the present value of its expected future profits, computed by discounting this profit by the prevailing rate of interest. So value equals expected profit divided by rate of interest. So basically what they're saying here is that, like, okay, you're trying to figure out
how much money is the factory worth. The amount of money that the factory is worth depends on how much money you make from using the factory to make plane or make ice cream. That's like basically what that's saying. And then there's a discounting rate because you're making that money in the future.
The problem with all of these principles is it's a perfect blend of stuff that's like completely fucking obvious, like statements of observed reality. Yeah, and then also stuff that somebody just made up based on a feeling that they had, and you can never tell which one you're doing, you know what I mean? Like, yeah, like what the factory is worth is based on how much money it can make, obviously.
But here's the problem.
This is one of those you know, you know the calendar at Hawes Meme where it's like you can divide everything into two categories. This one surprisingly seems like it observed reality is actually bullshit because because the problem is all right, so okay, so in order to find out the value of the factory, you need to know what the profits are going to be.
Well, I thought the value of things.
I thought the price of things was set by supply and demands, the value of the factories whatever, someone's willing to pay for it.
Right, But here's the issue though, Like that's like sort of true.
No, I'm just making a jug that, like prices and values appear to be disconnected.
Legitimately, that is drilling into the problem with what's happening here. Which is that okay, but how do you know how much money the factory is going to be worth.
So we're saying like the factory has an inherent value versus the factory has a price.
Yeah, so our price is not reflect an inherent value.
So this is also kind of the core of this issue, right, which is like.
That money isn't even real.
Well, yeah, but it's like, okay, if if you want to compare how much two different types of machinery are worth, you need to compare them in terms of money because they're making two different things.
You have to be able to compare them.
But the problem is the moment you start doing that, you then have to go, Okay, how much is it worth?
And how much is it worth?
In theory is like it's it's like marginal utility, right, So in order to know how much the machine is worth, you have to know how much money it can make. But in order to know how much money it can make, you need to know how much the machine is worth.
The issue here, right, is that you're trying to find one price for how much the factory is worth, but you can't find that one price without knowing how much profit you're getting from using the factory to make the thing, but you could have multiple different levels of profit from that same factory. The problem is, how do you determine. You know, you could make ten dollars in the factory, but the factory could also make twenty dollars. How do
you figure out which one of those it is? Because that's what determines the value of the factory is how much money it makes. So, okay, you turn around to the neoclassical theory of of how you figure out what the profit is. But that theorem requires you to know the marginal utility of the factory. So it requires you to know how much profit you're going to get from using the tool. Right, you have to know how much the tool is worth in order to figure out how much a profit is.
But then you have to figure out in order to figure out.
So this is why they just make stuff up, because otherwise they get trapped in the infinite loose.
Yeah, it's worse than that because the value of the factory depends on how much money you're going to make from the ice But how much money you make from the ice cream depends on how expensive it is to have the ice cream machine.
Right, So they're both set by each other.
Right, if you only have one of them, you can't calculate the other one.
They're both like X and y.
And in order to figure out what one of them is worth, you already have to know the other.
One, right, you need a constant at some point.
Yeah, and legitimately, and this is a shit show because it means that you actually can't figure out how much the capital goods are worth in order to move on to stage two of the process, where you figure out the profit, because you already need to have the answer to the question you are asking. And so like, this is an issue bad enough that the IMF publishes these or I think it's maybe it's the World Bank publishes these like giant tables of like the value of capital stocks right in a country.
Well, they'll go through there.
They're trying to produce economic data about like a country, and they're like, okay, like how much are.
The factories worth?
And the people who are trained to produce these books, there's multiple different values that these factories could have depending on how much money they make, and they're literally just chose to choose one of them, like at random.
They're like, fuck it, pick one this is.
Not making me more confident about the economy.
No, Well, but this is a shit show because because this is what this fight is about. It's about like the whole Cambiseh capital controversy is is like Joan Robinson going hold on. In order in order to like figure out your equation for how price works, you need to know something that you can only figure out by knowing the price already.
Well, that's why you just feel the price in your heart.
Well yeah, but this causes, this causes like a decade of like fighting about this, all of the like famous neoclassical economists actually had.
Can you list a Xavier's dogs?
Yeah, okay, so Milton from Milton Friedman, Murray from Murray, Rothbard, and two dogs one Robert, one Lucas for Robert Lucas Junior.
Wow.
I think he actually dodged all of them. I think I think he meant by bye by not naming someone. Paul Samuel said, I think he actually dodged it.
He considers these dogs to be Conan's offspring, so these are all clones of his dog Conan. He considers the dogs to be Conn's offspring and thus his own grandson's because he believes the dog is his son.
He's fucking Christ anyway.
Yeah, but that's the only reason I know any of those people are.
Oh my god, wait, hold on, hold on, I'm sure I'm not looking at which Robert is this named after.
Robert Lucas Junior from the University of Chicago.
Oh, he dodged it. It was It was mostly the other Robert Robert Slowell. Slowow, God damn. I think I think he actually dodged having any of his dogs be named after the people who got their asses kicked in this.
I think he managed to do it.
So Paul Samuelson is like after Milton Friedman and maybe Hyek. He's like probably the third most influential neoclassical economists, and he's like one of the people at the American Cambridge who are like arguing with like neoclassical people and they lose. They just straight up lose this fight because they're wrong. And the consequence of them being wrong is every single
thing they've ever written is wrong. Because if you can't calculate how much a factory is worth, literally nothing you've ever written.
Functions that's so funny.
They can't do it.
Didn't even kill themselves like you would.
Think, but they were just like, oh, well, we'll.
Just guess because I like a lot of people were like at the end of their careers. Right, you're like sixty seventy years old, you're like professor Emeridith of macroeconomics at Cambridge or we're Nora the fuck and do you find out that everything you've ever written was no longer like all we all agree.
That everything you ever said was wrong?
How do you do Here's the thing. They just kept writing as if they didn't lose. Okay, this is why I was saying, it doesn't matter because.
Who can say who wins or loses because it's all fame, yeah and so and so.
Like Literally what they did is is that this stuff, this fight never like broke out of like academic economist circles, and so no one today has any idea any of this shit happened.
Good. No, because it doesn't mean anything.
Yeah, well, I mean, idiot, it does in the sense that life, to me, you can demonstrably prove that, like these people can't tell you how much a factory is worth.
I've read the Wall Street Journal. I know there's no such thing as an economist.
Yeah, part of what's happening here is like the reason we all intuitively do that is because these people win.
Right, So this entire like academic field just kind of shrugged and said, it doesn't matter.
What we're saying doesn't mean anything.
Yeah, there were like a couple of people who tried to like actually work with it, and everyone eventually just stopped paying attention. Legitimately, the answer for like modern economics is just to pretend that it never happened and then go like, oh, well, these people never produced anything of note academically, and it's like, well, on the one hand, that's like not true, because the stuff that they did write is really good, but also their descendants, yeah, didn't
get academic positions because you purged them all. And this is this is one of these things where like part of the reason that the new classical people took over in the first place was because they thought that they were right about this argument of like what caused the
seventies economic collapse, which had like supposedly disproved Keanesianism. But then in this time period they got just obliterated, Like they have taken an l the size of which, genuinely I don't know if anyone in an academic field has ever taken a bigger l than these people did in this fight. They got just like beaten into pulp and it just didn't matter.
Like Naiolmi Wolf finding out live on air that her entire book was based on misunderstanding of a term.
Yeah, it's it's like that shit like except this. This is like every economist.
Except this, except in this case, they went on to continue to produce work based on that premise.
Yeah, you know, but but the this is the part of the story that like isn't in the accounts, you know, when Planet Money has to explain, like why the work of Joan Robinson, like isn't something that mainstream economists pay attention to?
Oh full circle, okay, yeah, that's where we were going.
Yes, it's it's because like John Robinson had the temerity to ab a woman BB a leftist and seeing not be one of these like neoclassical freaks and and d she beat them. Like John Robinson is one of the major people in this fight.
I should I should have had more faith that we were coming back around. I thought we were I thought we were lost. I was confused. No, I get it now. So when they're writing about, like it's so crazy that nobody uses this term anymore. The underlying truth there is that they are This is why lossing over the fact that the reason this term isn't better known is because the entire field of economics is based on suppressing challenging truths.
Yeah, and there's one other aspect too, which is the economics is an example of how this works on like a small scale, right, But this this happens on a macro scale with just about everything that you consume, which is there are two models for sort of suppressing how information spreads and how like you know, how social group has developed, where one you just suppress them, or to you co opt them and you do what's called recuperation.
And you know, it is interesting, Like the concept monopsony will appear sometimes, like in like textbooks, but they'll just be like, oh, yeah, this is an everything that can exist, and like monopolies can also exist. Let's go back to spending all of our time dealing with like a bunch
of stuff that's incredibly fake. And they will strategically like misuse the concept of monopsony in order to deal with it, like as a critique they'll recuperate like the word, but then they won't use any of the political conclusions of it.
That's clever of them.
That's clever of them, so that you don't go looking for more about the term because you have it and it's defanged and you don't need to worry about it.
Yeah.
And the thing is that the political consequences of it is this is the thing I talked about at the beginning, which is like, yeah, I menopstinally as a concept is why you get paid.
One of the reasons you get paid like shit.
And Joan Robinson's inclusion is like, yeah, capitalism is an inherently exploitive economic system.
Yeah, that's the logical.
Conclusion there, right, Yeah, but that's not allowed, no.
And so you know, like Robinson's legacy is that part of her work is co opted and recuperated in a way where they teach the tiniest part of it that can't be used challenge a system, and the part of it where she deals a kind of intellectual death blow to an entire field of economics that in like the history of academia. I don't know if anyone has ever been so decisive.
We defeated intellectually, and yet they just sort of brashed it off and moved on. Yeah, which I feel like that is so damning right that you're just I mean, you've just admitted that everything you've ever said is based on nothing.
If you can just disregard this.
Yeah, God, I can't find the exact quote, but Samielson has this line about how like they need to just treat it as an article of faith that this can be done, and they just kept going, and it.
Is just so you can't tell me this is a science if you're like, well, it's just based on you just have to have faith.
You just have to believe.
Yeah, I mean the economy has always put on tinker Bell rules, right, like you have to believe or it won't work.
You have to clap for her.
Yeah, in order for the entire system that these people are paid to propagate, because this entire school of economics is created by a bunch of right wing billionaires to get them together in order to push against like both communism and like the Kynesian idea they should pay taxes. This is something also, I guess I kind of want
to conclude about this. It's like there are a lot of times where you see like like a newspaper columnists they're saying the most unhinged thing you've ever seen, or like, you know, I'm gonna take I take a very incendiary example and you look at like Ezra Kleine, and Ezra Kleine is like being like, oh, you have to like take the ideas of like some random fucking nazi seriously, and so I don't, No, you don't. But the reason he's saying this, it does it's not even about what he believes.
Oh, these people believe nothing.
Yeah, this is what they're being paid to say, because Klein's job is to is to act as a way to sell like fascist tech oligarchy to liberals, like and this is the same thing with like you get these newspaper columnists who will like say, like the most unhinged shit you've ever seen. And yeah, they're saying that because it's their job to produce this, right, Like they're not acting as individual people. They're acting as it cutouts and projections of like the people who they've been hired by.
And those people have a monopsony on opinion.
Yeah, well every opinion, every opinion writer is saying the dumbest shit you've ever heard because of monopsis.
Well yeah, I mean but like literally it's because they can they can choose who the fuck to hire, right, Like that's the actual reason. And you know, and like journalism is one of these things where it's like, you see, newspapers have an incredible amount of power because there's like seven fucking newspapers left. And if you want to do journalism,
like you're fucked. You either like fall in line and accept them paying you like absolute dogshit, or you go unemployed, or you're like one of the very few people who was able to like make a living doing this independently, but like.
Or you're us, we found a way, yeah, or.
Like a rich and successful podcaster picks you out and goes, hey, we're gonna pay you to do this, right.
Like no, But I think I think about it all the time that it really this is such a unicorn job because almost every job in media you do, you you have to you have to suck it up and eat the shit, and you have to say the dumbest thing anyone's ever heard, because that's how you keep your job.
And that's not our reality. And I'm so grateful for that.
Yeah, I think I think that's a good place to end. I guess, I don't know.
We're gonna end on a hopeful note, which is we got well, okay, We're gonna end on the cynical note, which is, like, the only way to have an even sort of good job in this economy where employment is controlled by employers is to get.
Incrediblyned luck like be the most lucky person in the entire world. Yeah, uh so.
I don't know if, if, if you want to live in a world where you don't have to win the lottery in order to have like a pretty well paid in order to I am so close to hitting the median salary of assists white dude in the US.
I'm so close. I can see, I can taste it. If you want that.
I love my union podcasting jobs.
Gotta you gotta win the lottery, or you got to build a world where that's not how any of the shit works, which is what.
John Robinson would have wanted.
Sorry, Joanne, it could happen.
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