Macroeconomic experiments

In an earlier post I provided a list of 10 economic statements from famous economists. For this post I attempted to create a list of macroeconomic events that can be used to analyze each statement. I'm aware there are many confounding variables impacting these events, but I believe this list is a good starting point for compiling potentially useful macroeconomic experiments.

1. John Maynard Keynes (1883-1946):
"The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps [with fiscal and monetary policy] and thus keeping us permanently in a quasi-boom." (The General Theory of Employment, Interest and Money, 1936)

Key variable: GDP growth

Fiscal policy

• United States' New Deal (1933-1938)
• United States in World War II (1939-1949)
• United States' American Recovery and Reinvestment Act (2009)
• Greece austerity (2010-now)

Monetary policy

• Federal Reserve quantitative easing (2008-2014)
• Bank of Japan quantitative easing (2001-now)

2. Adam Smith (1723-1790):

"By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." (The Wealth of Nations, 1776)

Key variable: GDP growth

• Union of Soviet Socialist Republics communism (1922-1991)
• United States free trade (1776-now)

3. Milton Friedman (1912-2006):

"I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible... because I believe the big problem is not taxes, the big problem is spending. I believe our government is too large and intrusive, that we do not get our money's worth..." (Quoted in Conservatives Betrayed, 2006)

Key variable: GDP growth

• United States tax policy (1932-1988)
• Sweden tax policy (1939-1988)

4. Joseph Schumpeter (1883-1950):
"The innovation is hazardous, impossible for most producers. But if someone establishes a business having regard to this source of supply, and everything goes well, then he can produce a unit of product more cheaply, while at first the existing prices substantially continue to exist." (The Theory of Economic Development, 1934)

Key variable: comparison of new versus replaced businesses

• Walmart (1962-now)
• Microsoft (1975-now)
• Amazon (1994-now)

5. David Ricardo (1772-1823):

"Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each." (Principles of Political Economy and Taxation, 1817)

Key variable: GDP growth

• World Trade Organization and China (2001-now)
• Smoot-Hawley Tariff Act (1930)
• North American Free Trade Agreement (1994-now)

6. Friedrich Hayek (1899-1992):
"The misconception that costs determined prices prevented economists for a long time from recognizing that it was prices which operated as the indispensable signals telling producers what costs it was worth expending on the production of the various commodities and services, and not the other way around." (Coping with Ignorance, 1978)

Key variable: price of goods and services

• It's hard to think of what specific event can help test this statement. Maybe a good example could be the event that the popularity of an artist takes off and the price of their paintings greatly exceeds the cost of production.

7. John Kenneth Galbraith (1908-2006):
"In recent times no problem has been more puzzling to thoughtful people than why, in a troubled world, we make such poor use of our affluence." (The Affluent Society, 1958)

• I can't really think of any experiments to use for this statement.

8. Robert Owen (1771-1858):
"The advantage of pure, and the disadvantage of impure air are experienced each time we breathe, and all who understand the causes of disease know that an impure Atmosphere is most unfavourable to the enjoyment of health, and an efficient cause to shorten human existence within the natural life of man. It is therefore most desirable that decisive measures should be devised and generally adopted to ensure to all a pure atmosphere, in which to live during their lives." (The Book of the New Moral World, 1836)

Key variable: quality of life indicators

• United States quality of life
• Sweden quality of life

9. Robert Thomas Malthus (1766-1834):
"The employment of the poor in roads and public works, and a tendency among landlords and persons of property to build, to improve and beautify their grounds, and to employ workmen and menial servants, are the means most within our power and most directly calculated to remedy the evils arising from that disturbance in the balance of produce and consumption." (An Essay on the Principle of Population 2nd Edition, 1836)

Key variable: unemployment

• Europe's Marshall Plan (1948-1951)
• United States' New Deal (1933-1938)

10. Karl Marx (1818-1883):

"The worker's existence is thus brought under the same condition as the existence of every other commodity. The worker has become a commodity, and it is a bit of luck for him if he can find a buyer... " (Paris Manuscripts , 1844)

Key variable: unemployment

• Industrialization (1800-1900)
• Computerization (1900-now)

Tjalling Koopmans: pioneer of optimization models

Photo source: Wikimedia Commons, Eric Koch, CC0 1.0

Tjalling Koopmans (1910-1985) was an influential economist best known for optimization models and applying linear programming to general equilibrium models. He was also director of the Cowles Commission (1948-1955) and is 1975 co-recipient of the Nobel Prize in Economics. The Concise Encyclopedia of Economics said,

"Koopmans showed the conditions required for economy-wide efficiency in allocating resources. He like Kantorovich, used his activity analysis techniques to derive efficient criteria for allocating between the present and the future."

Economist Thomas Sargent said,

"Koopmans complained that macroeconomic models weren't satisfactory because they didn't handle randomness." (Conversations with Economists by Arjo Klamer)

The rest of this post is some quotes from Koopmans.

Philosophy of economics

"One is led to conclude that economics as a scientific discipline is still somewhat hanging in the air." (Three Essays, 1957)

"We looked upon economic theory as a sequence of conceptual models that seek to express in simplified form different aspects of an always more complicated reality." (Three Essays, 1957)

Pierre-Simon Laplace and probability theory

Photo source: Wikimedia Commons, Sophie Feytaud

Pierre-Simon Laplace (1749-1827) was an influential mathematician and scientist best known for his contributions to probability theory and celestial mechanics. Mathematician Morris Kline said,

"Laplace created a number of new mathematical methods that were subsequently expanded into branches of mathematics, but he never cared for mathematics except as it helped him to study nature." (Mathematical Through from Ancient to Modern Times, 1972)

Journalist Kathryn Schulz said,

"Pierre Simon Laplace refined the distribution of errors, illustrated by the now-familiar bell curve... Laplace used the bell curve to determine the precise orbit of the planets... By using the normal distribution to graph... individually imperfect data points, Laplace was able to generate a far more precise picture of the galaxy... aggregate enough flawed data, and you get a glimpse of the truth." (Being Wrong: Adventures in the Margin of Error, 2011)

The rest of this post is some quotes from Laplace.

Probability

"The theory of chance consists in reducing all the events of the same kind to a certain number of cases equally possible..." (Philosophical Essay on Probabilities, 1812)

"The most important questions of life... are indeed for the most part only problems of probability." (Philosophical Essay on Probabilities, 1812)

Expansion of knowledge

"All these efforts in the search for truth tend to lead it [the human mind] back continually to the vast intelligence... but from which it will always remain infinitely removed." (Philosophical Essay on Probabilities, 1812)

"Imaginary causes have gradually receded with the widening bounds of knowledge and disappear entirely before sound philosophy, which sees in them only the expression of our ignorance of the true causes." (Philosophical Essay on Probabilities, 1812)

Marie Curie and scientific discovery

Photo source: Wikimedia Commons

Marie Curie (1867-1934) was a Polish chemist best known for her pioneering work in radioactivity. Physicist Ernest Rutherford said,

"Marie Curie made a detailed examination by the electrical method of the great majority of known substances, including the very rare elements, to see if they possessed any activity." (Radio-activity, 1904)

The rest of this post is some quotes from Curie.

Scientific discovery

"If I see anything vital around me, it is precisely that spirit of adventure, which seems indestructible and is akin to curiosity." (Quoted in Madame Curie: A Biography by Eve Curie Labouisse)

"Life is not easy for any of us. But what of that? We must have perseverance and above all confidence in ourselves. We must believe that we are gifted for something, and that this thing, at whatever cost, must be attained." (Quoted in Madame Curie: A Biography by Eve Curie Labouisse)

"All my life through, the new sights of Nature made me rejoice like a child." (Pierre Curie, 1923)

"...humanity also needs dreamers, for whom the disinterested development of an enterprise is so captivating that it becomes impossible for them to devote their care to their own material profit. Without doubt, these dreamers do not deserve wealth, because they do not desire it. Even so, a well-organized society should assure to such workers the efficient means of accomplishing their task, in a life freed from material care and freely consecrated to research." (Wikiquote)

John von Neumann and mathematical science

John von Neumann (1903-1957) was an influential mathematician best known his contributions to game theory and working on the Manhattan Project during World War II. Von Neumann also made contributions to statistics and quantum mechanics. His daughter Marina von Neumann Whitman said,

"...throughout much of his career, he led a double life: as an intellectual leader in the ivory tower of pure mathematics and as a man of action, in constant demand as an advisor, consultant and decision-maker to what is sometimes called the military-industrial complex of the United States... He had the scientist's passion for learning and discovery for its own sake and the genius's ego-driven concern for the significance and durability of his own contributions." (quoted in Introduction to John von Neumann by Miklos Redei)

The rest of this post is some quotes form Neumann.

Philosophy of mathematics

"A large part of mathematics which becomes useful developed with absolutely no desire to be useful, and in a situation where nobody could possibly know in what area it would become useful; and there were no general indications that it ever would be so." (The Role of Mathematics in the Sciences and in Society, 1954)

"When we talk mathematics, we may be discussing a secondary language built on the primary language of the nervous system." (Quoted in John von Neumann, 1903-1957 by Oxtoby and Pettis)

"Young man, in mathematics you don't understand things. You just get used to them." (Quoted in The Dancing Wu Li Masters)

"The calculus was the first achievement of modern mathematics and it is difficult to overestimate its importance. I think it defines more unequivocally than anything else the inception of modern mathematics; and the system of mathematical analysis, which is its logical development, still constitutes the greatest technical advance in exact thinking." (Quoted in Bigeometric Calculus by James Stewart)

Philosophy of science

"Truth.. is much too complicated to allow anything but approximations." (Quoted in The Works of the Mind by R. B. Heywood)

"It is exceptional that one should be able to acquire the understanding of a process without having previously acquired a deep familiarity with running it, with using it, before one has assimilated it in an instinctive and empirical way… Thus any discussion of the nature of intellectual effort in any field is difficult, unless it presupposes an easy, routine familiarity with that field. In mathematics this limitation becomes very severe." (Quoted in The World of Mathematics by James Roy Newman)

"The sciences do not try to explain, they hardly even try to interpret, they mainly make models. By a model is meant a mathematical construct which, with the addition of certain verbal interpretations, describes observed phenomena." (Method in the Physical Sciences, 1955)

"If people do not believe that mathematics is simple, it is only because they do not realize how complicated life is." (Quoted in Archaeology of computers)

Isaac Asimov and science fiction

Photo source: Wikimedia Commons, Phillip Leonian

Isaac Asimov (1920-1994) was an influential writer and biochemist best known for writing science fiction books. Computer scientist Simson Garfinkle said,

"...the true value of Asimov's insight is his reflections on his life - and, in his mind, Asimov was first a genius, second a prolific writer, and only thirdly a sci-fi writer." (Asimov the Explainer Explains Himself, 1994)

The rest of this post is some quotes from Asimov.

Epistemology

"Science doesn't purvey absolute truth. Science is a mechanism. It's a way of trying to improve your knowledge of nature. It's a system for testing your thoughts against the universe and seeing whether they match. And this works, not just for the ordinary aspects of science, but for all of life." (Interview on Bill Moyers, 1988)

"I believe that every human being with a physically normal brain can learn a great deal and can be surprisingly intellectual. I believe that what we badly need is social approval of learning and social rewards for learning." (Quoted in Newsweek, 1980)

The future

"Science fiction writers foresee the inevitable, and although problems and catastrophes may be inevitable, solutions are not." (How Easy to See the Future, 1975)

"The machine is only a tool after all, which can help humanity progress faster by taking some of the burdens of calculations and interpretations off its back. The task of the human brain remains what it has always been; that of discovering new data to be analyzed, and of devising new concepts to be tested." (I, Robot, 1950)

"Well, I hope [the shuttle program] does get off the ground. And I hope they expand it, because the shuttle program is the gateway to everything else. By means of the shuttle, we will be able to build space stations and power stations, laboratory facilities and habitations, and everything else in space." (Quoted in Southwest Airlines magazine, 1979)

"All we need is the political go-ahead and the economic willingness to spend the money that is necessary [referring to space travel]. It is a little frustrating to think that if people concentrate on how much it is going to cost they will realize the great amount of profit they will get for their investment." (Quoted in Southwest Airlines magazine, 1979)

Philosophy of art

"The true artist is quite rational as well as imaginative and knows what he is doing; if he does not, his art suffers. The true scientist is quite imaginative as well as rational, and sometimes leaps to solutions where reason can follow only slowly; if he does not, his science suffers." (The Roving Mind , 1983)

"Books... hold within them the gathered wisdom of humanity, the collected knowledge of the world's thinkers, the amusement and excitement built up by the imaginations of brilliant people. Books contain humor, beauty, wit, emotion, thought, and, indeed, all of life. Life without books is empty." (Puzzles of the Black Widowers, 1990)

Jimmy Wales and Wikipedia

Photo source: Wikimedia Commons, Lane Hartwell

Photo license: CC BY-SA 3.0

Jimmy Wales (1966-now) is an internet entrepreneur and co-founder of the website Wikipedia. Tim Adams said in an article for the Guardian,

"The more time I spent on the site the more I came to think of Wales as some kind of Queen Ant, letting the vast colony go about its work, at the centre of a system where the knowledge of the community is infinitely larger than the sum of experience of all its individuals." (For your Information, 2007)

The rest of this post is some quotes form Wales.

What is Wikipedia?

"It turns out a lot of people don’t get it. Wikipedia is like rock’n’roll; it’s a cultural shift." (Quoted in Computerworld, 2006)

"Imagine a world in which every single person on the planet is given free access to the sum of all human knowledge. That's what we're doing." (Quoted in Wikimedia Founder Jimmy Wales Responds by Robin Miller 2004)

"Wikipedia is first and foremost an effort to create and distribute a free encyclopedia of the highest possible quality to every single person on the planet in their own language." (Wikipedia-l mailing list, 2005)

"Wikipedia is a non-profit. It was either the dumbest thing I ever did or the smartest thing I ever did."  (Keynote Speech, SXSW 2006)

"We are growing from a cheerful small town where everyone waves off their front porch to the subway of New York City where everyone rushes by. How do you preserve the culture that has worked so well?" (Quoted in ExpressIndia, 2005)

Thomas Edison and inventions

Photo source: Wikimedia Commons, Minivalley

Photo license: CC BY-SA 3.0

Thomas Edison (1847-1931) was a famous inventor best known for developing the phonograph, a longer lasting light bulb and many other things. Edison had 1,093 patents in the United States. Physicist Nikolai Tesla said,

"If Edison had a needle to find in a haystack, he would proceed at once with the diligence of the bee to examine straw after straw until he found the object of his search... I was a sorry witness of such doings, knowing that a little theory and calculation would have saved him ninety per" (Quoted in The New York Times, 1931)

The rest of this post is some quotes from Edison.

How to make an invention

"I find out what the world needs. Then, I go ahead and invent it." (Quoted in American Greats by Wilson and Marcus)

"I speak without exaggeration when I say that I have constructed 3,000 different theories in connection with the electric light, each one of them reasonable and apparently likely to be true. Yet only in two cases did my experiments prove the truth of my theory." (Quoted in Harper's magazine, 1890)

"I never did anything worth doing by accident, nor did any of my inventions come indirectly through accident, except the phonograph. No, when I have, fully decided that a result is worth getting, I go about it, and make trial after trial, until it comes." (Quoted in A Photographic Talk with Edison by Theodore Dreiser)

"Through all the years of experimenting and research, I never once made a discovery. I start where the last man left off... All my work was deductive, and the results I achieved were those of invention pure and simple." (Quoted in Makers of the Modern World by Louis Untermeyer)

"To invent, you need a good imagination and a pile of junk." (Quoted in in Behavior-Based Robotics by Ronald C. Arkin)

Leonhard Euler and observation

Photo source: Wikimedia Commons, Jakob Emanuel Handmann

Leonid Euler (1707-1783) was an influential mathematician best known for his contributions modern mathematical notation, calculus and graph theory. Mathematician Carl Boyer said,

"The Introductio does not boast an impressive number of editions, yet its influence was pervasive. In originality and in the richness of its scope it ranks among the greatest of textbooks; but it is outstanding also for clarity of exposition. Published two hundred and two years ago, it nevertheless possesses a remarkable modernity of terminology and notation, as well as of viewpoint." (Introduction to the Analysis of the Infinite, 1950)

The rest of this post is some quotes from Euler.

Mathematics and observation

"It will seem a little paradoxical to ascribe a great importance to observations even in that part of the mathematical sciences which is usually called Pure Mathematics, since the current opinion is that observations are restricted to physical objects that make impression on the senses." (Quoted in Induction and Analogy in Mathematics by George Polya)

"Yet, in fact, as I shall show here with very good reasons, the properties of the numbers known today have been mostly discovered by observation, and discovered long before their truth has been confirmed by rigid demonstrations." (Quoted in Induction and Analogy in Mathematics by George Polya)

"...we should take great care not to accept as true such properties of the numbers which we have discovered by observation and which are supported by induction alone. Indeed, we should use such discovery as an opportunity to investigate more exactly the properties discovered and to prove or disprove them; in both cases we may learn something useful." (Quoted in Induction and Analogy in Mathematics by George Polya)

"Mathematicians have tried in vain to this day to discover some order in the sequence of prime numbers, and we have reason to believe that it is a mystery into which the human mind will never penetrate." (Quoted in Calculus Gems by G. Simmons)

Knowledge and reality

"Although to penetrate into the intimate mysteries of nature and thence to learn the true causes of phenomena is not allowed to us, nevertheless it can happen that a certain fictive hypothesis may suffice for explaining many phenomena." (A conjecture about the nature of air, 1780)

"Since the fabric of the universe is most perfect and the work of a most wise Creator, nothing at all takes place in the universe in which some rule of maximum or minimum does not appear... there is absolutely no doubt that every affect in the universe can be explained satisfactorily from final causes, by the aid of the method of maxima and minima, as it can be from the effective causes themselves." (Quoted in The Anthropic Cosmological Principles by Barrow and Tipler)

Thomas More and utopia

Photo source: Wikimedia Commons, Han Holbein

Thomas More (1478-1535) was an influential lawyer and philosopher best known writing the book Utopia published In 1516. More was also counselor to Henry VIII 1529-1532 in England. Wikipedia says,

"Utopia contrasts the contentious social life of European states with the perfectly orderly, reasonable social arrangements of Utopia and its environs (Tallstoria, Nolandia, and Aircastle). In Utopia, there are no lawyers because of the laws' simplicity and because social gatherings are in public view (encouraging participants to behave well), communal ownership supplants private property, men and women are educated alike..." (Wikipedia: Thomas More, 8.16.21 UTC 16:38)

The rest of this post is some quotes from More.

Utopia

"The island of Utopia is in the middle two hundred miles broad, and holds almost at the same breadth over a great part of it, but it grows narrower towards both ends... The channel is known only to the natives; so that if any stranger should enter into the bay without one of their pilots he would run great danger of shipwreck." (Utopia, 1516)

"They have but few laws, and such is their constitution that they need not many. They very much condemn other nations whose laws, together with the commentaries on them, swell up to so many volumes; for they think it an unreasonable thing to oblige men to obey a body of laws that are both of such a bulk, and so dark as not to be read and understood by every one of the subjects." (Utopia, 1516)

"They have no lawyers among them, for they consider them as a sort of people whose profession it is to disguise matters and to wrest the laws, and, therefore, they think it is much better that every man should plead his own cause, and trust it to the judge, as in other places the client trusts it to a counsellor; by this means they both cut off many delays and find out truth more certainly." (Utopia, 1516)

Religion

"There are several sorts of religions, not only in different parts of the island, but even in every town; some worshipping the sun, others the moon or one of the planets." (Utopia, 1516)

"...he therefore thought it indecent and foolish for any man to threaten and terrify another to make him believe what did not appear to him to be true... he therefore left men wholly to their liberty, that they might be free to believe as they should see cause. "  (Utopia, 1516)

Gottfried Wilhelm Leibniz and calculation

Photo source: Wikimedia Commons, Christoph Bernhard Francke

Gottfried Wilhelm Leibniz (1646-1716) was an influential mathematician and philosopher best known for developing differential and integral calculus independently from Isaac Newton. Leibniz was also known for building calculating machines. Mathematician Michael Beeson said,

"Gottfried Leibniz is famous... for his slogan 'Calculemus', which means 'Let us calculate'. He envisioned a formal language to reduce reasoning to calculation, and he said that reasonable men, faced with a difficult question of philosophy or policy, would express the question in a precise language and use rules of calculation to carry out precise reasoning." (Quoted in Alan Turing: Life and Legacy of a Great Thinker by Christof Teuscher)

Beeson also said,

"...[Leibniz] designed and built a working calculating machine, the Stepped Reckoner... inspired by the somewhat earlier work of Pascal, who built a machine that could add and subtract. Leibniz's machine could add, subtract, divide, and multiply, and was apparently the first machine with all four arithmetic capabilities." (Quoted in Alan Turing: Life and Legacy of a Great Thinker by Christof Teuscher)

The rest of this post is some quotes from Leibniz.

Calculation

"...if controversies were to arise, there would be no more need of disputation between two philosophers than between two calculators. For it would suffice for them to take their pencils in their hands and to sit down at the abacus, and say to each other (and if they so wish also to a friend called to help): Let us calculate." (Dissertatio de Arte Combinatoria , 1666)

Mathematics

"Only geometry can hand us the thread [which will lead us through] the labyrinth of the continuum’s composition, the maximum and the minimum, the infinitesimal and the infinite; and no one will arrive at a truly solid metaphysic except he who has passed through this [labyrinth]." (Dissertatio Exoterica De Statu Praesenti, 1676)

"Music is a hidden arithmetic exercise of the soul, which does not know that it is counting." (Letter to Christian Goldbach, 1712)

"This miracle of analysis, this marvel of the world of ideas, an almost amphibian object between Being and Non-being that we call the imaginary number." (Quoted in Singularités by Christiane Frémont)

Epistemology

"I am convinced that the unwritten knowledge scattered among men of different callings surpasses in quantity and in importance anything we find in books, and that the greater part of our wealth has yet to be recorded." (Discours touchant la méthode de la certitude et de l'art d'inventer, 1688)

"There are two kinds of truths: those of reasoning and those of fact. The truths of reasoning are necessary and their opposite is impossible; the truths of fact are contingent and their opposites are possible." (The Monadology, 1714)

Blaise Pascal and persuasion

Photo source: Wikimedia Commons, Palace of Versailles

Photo license: CC BY 3.0

Blaise Pascal (1623-1662) was an influential philosopher and mathematician best known for inventing the first modern mechanical calculator in 1642. Regarding Pascal's philosophy, Thomas Molnar says,

"Pascal was no obscurantist, but he measured how far science (esprit de géometrie) may go and become irrelevant to the problems of human destiny. The achievements of science are not denied by this stand, nor are they dismissed as the ostrich with its head burrowed in sand dismisses reality. What is asserted is that our original endowments as they reflect on the data of experience, are, with all their limitations and imperfections, the only necessary and indispensable means by which we confront existence, the only weapon commensurate with our struggle."

The rest of this post is some quotes from Pascal.

Epistemology

"In order to enter into a real knowledge of your condition, consider it in this image: A man was cast by a tempest upon an unknown island, the inhabitants of which were in trouble to find their king, who was lost; and having a strong resemblance both in form and face to this king, he was taken for him, and acknowledged in this capacity by all the people." (The Art of Persuasion)

"Logic has borrowed, perhaps, the rules of geometry, without comprehending their force... it does not thence follow that they have entered into the spirit of geometry, and I should be greatly averse... to placing them on a level with that science that teaches the true method of directing reason." (The Art of Persuasion)

Knowledge and emotion

"God only pours out his light into the mind after having subdued the rebellion of the will by an altogether heavenly gentleness which charms and wins it." (The Art of Persuasion)

"Of the truths within our reach... the mind and the heart are as doors by which they are received into the soul, but... few enter by the mind, whilst they are brought in crowds by the rash caprices of the will, without the council of reason." (The Art of Persuasion)

"It is necessary to have regard to the person whom we wish to persuade, of whom we must know the mind and the heart, what principles he acknowledges, what things he loves; and then observe in the thing in question what affinity it has with the acknowledged principles, or with the objects so delightful by the pleasure which they give him." (The Art of Persuasion)

Franz Kafka and the frozen sea

Photo source: Wikimedia Commons

Franz Kafka (1883-1924) was a famous writer best known for his analysis of emotion and surrealism. Wikipedia says,

"His work, which fuses elements of realism and the fantastic. It typically features isolated protagonists faced by bizarre or surrealistic predicaments and incomprehensible social-bureaucratic powers. and has been interpreted as exploring themes of alienation, existential anxiety, guilt, and absurdity." (Wikipedia: Franz Kafka, 8.20.21 UTC 19:29)

Writer Marthe Robert said,

"The only way Kafka could envisage of creating his in every respect impossible writing possible was to demarcate the area of impossibility by making a language without a particular color, without a local tone, without qualities, as it were." (As Lonely as Kafka, 1953)

The rest of this post is some quotes from Kafka.

Emotion

"I think we ought to read only the kind of books that wound and stab us. If the book we are reading doesn't wake us up with a blow on the head, what are we reading it for? ... we need the books that affect us like a disaster, that grieve us deeply, like the death of someone we loved more than ourselves, like being banished into forests far from everyone, like a suicide. A book must be the axe for the frozen sea inside us." (Letter to Oskar Pollak, January 1904)

"We are as forlorn as children lost in the woods. When you stand in front of me and look at me, what do you know of the griefs that are in me and what do I know of yours. And if I were to cast myself down before you and weep and tell you, what more would you know about me than you know about Hell when someone tells you it is hot and dreadful? For that reason alone we human beings ought to stand before one another as reverently, as reflectively, as lovingly, as we would before the entrance to Hell." (Letter to Oskar Pollak, November 1903)

Epistemology

"The right understanding of any matter and a misunderstanding of the same matter do not wholly exclude each other." (The Trial, 1920)

"Truth is indivisible, hence it cannot recognize itself; anyone who wants to recognize it has to be a lie." (The Zürau Aphorisms, posthumous)

"The whole visible world is perhaps nothing more than the rationalization of a man who wants to find peace for a moment. An attempt to falsify the actuality of knowledge, to regard knowledge as a goal still to be reached. " (Parables and Paradoxes, posthumous)

Jean-Baptiste Say and markets

Photo source: Wikimedia Commons

Jean-Baptiste Say (1767-1832) is an influential economist best known for Say's Law. Economist John Kenneth Galbraith said,

"Say's major, and for a full 130 years his lasting and exceedingly influential, contribution was his law of markets. To this day reference survives in the textbooks to Say's Law... Say's Law held that out of the production of goods came an effective (that is to say, actually expended aggregate of demand sufficient to purchase the total supply of goods. No more, no less. There could, in consequence, be no such thing as general overproduction in the economic system." (A History of Economics, 1987)

Economist Robert Heilbroner said,

"[Say believed] for every good that was produced cost something - and every cost was some man's income. Whether that cost was wages, rent or profits, its sale price accrued as someone's income. And so how could a general glut ever occur? The demand for goods existed and the incomes to buy them existed as well." (The Worldly Philosophers, 1953)

The rest of this post is some quotes from Say.

Demand and supply

"A man who applies his labour to the investing of objects with value by the creation of utility of some sort, can not expect such a value to be appreciated and paid for, unless where other men have the means of purchasing it. Now, of what do these means consist? Of other values of other products, likewise the fruits of industry, capital, and land. Which leads us to a conclusion that may at first appear paradoxical, namely, that it is production which opens a demand for products." (A Treatise On Political Economy 4th edition, 1832)

"Demand and supply are the opposite extremes of the beam, whence depend the scales of dearness and cheapness; the price is the point of equilibrium, where the momentum of the one ceases, and that of the other begins." (A Treatise On Political Economy 4th edition, 1832)

"I have made no distinction between the circulation of goods and of money, because there really is none." (A Treatise On Political Economy 4th edition, 1832)

Critique of mathematical economics

"It is, perhaps, a well founded objection to Mr. Ricardo, that he sometimes reasons upon abstract principles to which he gives too great a generalization." (A Treatise On Political Economy 4th edition, 1832)

"Some writers maintain arithmetic to be only the only sure guide in political economy; for my part, I see so many detestable systems built upon arithmetical statements, that I am rather inclined to regard that science as the instrument of national calamity." (A Treatise On Political Economy 4th edition, 1832)

Philosophy of science

"A science only advances with certainty, when the plan of inquiry and the object of our researches have been clearly defined; otherwise a small number of truths are loosely laid hold of, without their connection being perceived, and numerous errors, without being enabled to detect their fallacy." (A Treatise On Political Economy 4th edition, 1832)

Leonardo da Vinci and nature

Photo source: Wikimedia Commons, Francesco Melzi

Leonardo da Vinci (1452-1519) was an Italian artist best known for painting the Mona Lisa. He is also credited with many inventions including parachutes, helicopters and tanks. Leonardo da Vinci's interests included painting, sculpting, architecture, mathematics, anatomy, geology, music, astronomy and botany. Historian Sherwin Nuland says,

"The more the manuscripts of Leonardo are studied, the more one begins to see him not so much as a transcendent artist, but primarily as a man of science, whose skills and commissions as an artist and engineer enabled him to support his fascination with nature." (Leonardo da Vinci, 2000)

Writer Edward MacCurdy says,

"What thinker has ever possessed the cosmic vision so insistently? He sought to establish the essential unity of structure of all living things, the earth an organism with veins and arteries, the body of a man a type of that of the world." (Quoted in The Notebooks of Leonardo da Vinci)

The rest of this post is some quotes from da Vinci.

Nature

"Human subtlety... will never devise an invention more beautiful, more simple or more direct than does nature, because in her inventions nothing is lacking, and nothing is superfluous." (Quoted by The Notebooks of Leonardo da Vinci by Rudolf Flesch)

"The eye, which is called the window of the soul, is the principal means by which the central sense can most completely and abundantly appreciate the infinite works of nature; and the ear is the second, which acquires dignity by hearing of the things the eye has seen." (Quoted by The Notebooks of Leonardo da Vinci by Rudolf Flesch)

Invention

"Though I may not, like them, be able to quote other authors, I shall rely on that which is much greater and more worthy - on experience, the mistress of their Masters. They go about puffed up and pompous, dressed and decorated with [the fruits], not of their own labours, but of those of others. And they will not allow me my own. They will scorn me as an inventor." (Quoted by The Notebooks of Leonardo da Vinci by Rudolf Flesch)

"We, by our arts may be called the grandsons of God." (Quoted by The Notebooks of Leonardo da Vinci by Rudolf Flesch)

10 economic statements

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Photo license: CC0 1.0

In an earlier post I said that economics is essentially a two step process:

1. Make an economic statement
2. Analyze evidence to determine the validity of the economic statement

For this post, I created a list of 10 statements about economic phenomena from famous economists. The statements are divided into two parts: markets and quality of life. I tried to find quotes that are central to economics. I'm not exactly sure how to test each of these statements, but it will probably involve analyzing empirical evidence and natural experiments.

Markets

1. John Maynard Keynes (1883-1946):
"The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps [with fiscal and monetary policy] and thus keeping us permanently in a quasi-boom." (The General Theory of Employment, Interest and Money, 1936)

2. Adam Smith (1723-1790):

"By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." (The Wealth of Nations, 1776)

3. Milton Friedman (1912-2006):
"I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible... because I believe the big problem is not taxes, the big problem is spending. I believe our government is too large and intrusive, that we do not get our money's worth..." (Quoted in Conservatives Betrayed, 2006)

4. Joseph Schumpeter (1883-1950):
"The innovation is hazardous, impossible for most producers. But if someone establishes a business having regard to this source of supply, and everything goes well, then he can produce a unit of product more cheaply, while at first the existing prices substantially continue to exist." (The Theory of Economic Development, 1934)

5. David Ricardo (1172-1823):
"Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each." (Principles of Political Economy and Taxation, 1817)

6. Friedrich Hayek (1899-1992)
"The misconception that costs determined prices prevented economists for a long time from recognizing that it was prices which operated as the indispensable signals telling producers what costs it was worth expending on the production of the various commodities and services, and not the other way around." (Coping with Ignorance, 1978)

Quality of life

7. John Kenneth Galbraith (1908-2006):
"In recent times no problem has been more puzzling to thoughtful people than why, in a troubled world, we make such poor use of our affluence." (The Affluent Society, 1958)

8. Robert Owen (1771-1858):
"The advantage of pure, and the disadvantage of impure air are experienced each time we breathe, and all who understand the causes of disease know that an impure atmosphere is most unfavourable to the enjoyment of health, and an efficient cause to shorten human existence within the natural life of man. It is therefore most desirable that decisive measures should be devised and generally adopted to ensure to all a pure atmosphere, in which to live during their lives." (The Book of the New Moral World, 1836)

9. Robert Thomas Malthus (1766-1834):
"The employment of the poor in roads and public works, and a tendency among landlords and persons of property to build, to improve and beautify their grounds, and to employ workmen and menial servants, are the means most within our power and most directly calculated to remedy the evils arising from that disturbance in the balance of produce and consumption." (An Essay on the Principle of Population 2nd Edition, 1836)

10. Karl Marx (1818-1883):

"The worker's existence is thus brought under the same condition as the existence of every other commodity. The worker has become a commodity, and it is a bit of luck for him if he can find a buyer... " (Paris Manuscripts , 1844)

Auguste Comte and positivism

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Auguste Comte (1798-1857) is an influential philosopher best known for his contributions to praxeology and positivism. Positivism is the theory that reality is guided by general laws which can be learned through empiricism. Praxeology is a method analyzing human behavior through purposeful behavior. Writer Leo Tolstoy said,

"The only true and scientific method according to Comte is therefore the inductive method and science is only such as is based on experiment. Secondly, the aim and apex of science is the new science of the imaginary organism of humanity or of the super-organic being-humanity: this new imaginary science being sociology." (What then must we do? 1886)

The rest of this post is some quotes from Comte.

Positivism

"It lays down, as is generally known, that our speculations upon all subjects whatsoever, pass necessarily through three successive stages: a Theological stage, in which free play is given to spontaneous fictions admitting of no proof; the Metaphysical stage, characterized by the prevalence of personified abstractions or entities; lastly, the Positive stage, based upon an exact view of the real facts of the case." (A General View of Positivism, 1848)

Mathematics

"We may therefore define Astronomy as the science by which we discover the laws of the geometrical and mechanical phenomena presented by the heavenly bodies." (The Positive Philosophy of Auguste Comte, 1853)

"Every attempt to refer chemical questions to mathematical doctrines must be considered, now and always, profoundly irrational, as being contrary to the nature of the phenomena... but if the employment of mathematical analysis should ever become so preponderant in chemistry (an aberration which is happily almost impossible) it would occasion vast and rapid retrogradation... (System of positive polity, 1852)

"Mathematical analysis is... the true rational basis of the whole system of our positive knowledge." (System of positive polity, 1852)

Francois Quesnay and the Tableau économique

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Francois Quesnay (1694-1774) is an influential economist best known for publishing the Tableau économique in 1758. Economist John Kenneth Galbraith said,

"At the time, the Tableau seemed a wonderful thing - an insight as from the gods. Victor Riquetti Mirabeau - Mirabeau the elder, an important figure among the Physiocrats - was perhaps the most extravagant in his comment. He thought that Quesnay's invention, along with the inventions of writing and money, was one of the three great achievements of the human mind." (A History of Economics, 1987)

Economist David Warsh said,

"The French court physician Francois Quesnay rendered it [estimating national income accounts] at least theoretically measurable... with his Tableau économique, a zigzag diagram designed to serve as a blueprint for measuring the flows of income among various sectors of the French economy." (Knowledge and the Wealth of Nations, 2007)

The rest of this post is some quotes from Quesnay.

Physiocracy

"Productive expenditure is employed in agriculture, grasslands, pastures, forests, mines, fishing, etc, in order to perpetuate wealth in the form of corn, drink, wood, livestock, raw materials for manufactured goods... Sterile expenditure is on manufactured commodities, house-room, clothing, interest on money, servants, commercial costs, foreign produce etc." (Tableau économique, 1758)

Mathematical economics

"Calculations are to the economic science what bones are to the human body. Without them it will always be a vague and confused science, at the mercy of error and prejudice." (Letter to Victor Riquetti Mirabeau)

Free markets

"To secure the greatest amount of pleasure with the least possible outlay should be the aim of all economic effort... when everyone does this the natural order, instead of being endangered, will be all the better assured." (Quoted in Economics Modern Business by Vassie and Chadburn)

Karl Marx and communism

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Karl Marx (1818-1883) was an influential sociologist best known for his and analysis of labor and class struggle. Che Guevara said,

"The merit of Marx is that he suddenly produces a qualitative change in the history of social thought. He interprets history, understands its dynamic, predicts the future, but in addition to predicting it (which would satisfy his scientific obligation), he expresses a revolutionary concept: the world must not only be interpreted, it must be transformed. Man ceases to be the slave and tool of his environment and converts himself into the architect of his own destiny." (Notes for the Study of the Ideology of the Cuban Revolution, 1960)

Economist Paul Samuelson said,

"From the viewpoint of pure economic theory, Karl Marx can be regarded as a minor post-Ricardian." (Economists and History of Ideas, 1962)

Philosopher Ayn Rand said,

"[When] Karl Marx, the most consistent translator of the altruist morality into practical action and political theory, advocated a society where all would be sacrificed to all, starting with the immediate immolation of the able, the intelligent, the successful and the wealthy - whatever opposition he did encounter, nobody opposed him on moral grounds. Predominantly, he was granted the status of a noble, but impractical, idealist." (For the New Intellectual, 1961) 

The rest of this post is some quotes from Marx.

Analysis of labor

"The worker's existence is thus brought under the same condition as the existence of every other commodity. The worker has become a commodity, and it is a bit of luck for him if he can find a buyer... " (Paris Manuscripts , 1844)

"He becomes an appendage of the machine, and it is only the most simple, most monotonous, and most easily acquired knack, that is required of him." (The Manifesto of the Communist Party, 1848)

Support for Communism

"Communism differs from all previous movements in that it overturns the basis of all earlier relations of production and intercourse, and for the first time consciously treats all natural premises as the creatures of hitherto existing men, strips them of their natural character and subjugates them to the power of the united individuals." (The German Ideology, 1845)

"Communism... is the genuine resolution of the antagonism between man and nature and between man and man; it is the true resolution of the conflict between existence and essence, objectification and self-affirmation, freedom and necessity, individual and species. It is the riddle of history solved and knows itself as the solution." (Paris Manuscripts , 1844)

"The proletarians have nothing to lose but their chains. They have a world to win." (The Manifesto of the Communist Party, 1848)

Analysis of money

"Money does not arise by convention, any more than the state does. It arises out of exchange, and arises naturally out of exchange; it is a product of the same." (Grundrisse, 1857)

"The circulation of commodities is the original precondition of the circulation of money." (Grundrisse, 1857)

Philosophy of science

"The philosopher, who is himself an abstract form of alienated man, sets himself up as the measure of the alienated world." (Paris Manuscripts , 1844)

"Ideas do not exist separately from language." (Grundrisse, 1857)

"The product of mental labor - science - always stands far below its value, because the labor-time necessary to reproduce it has no relation at all to the labor-time required for its original production." (Relative and Absolute Surplus Value, 1861)

Joseph Schumpeter and innovation

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Joseph Schumpeter (1883-1950) is an influential economist best known for his analysis of innovation and business cycles. Economists Joseph Stiglitz and Carl Walsh say in their textbook,

"Schumpeter argued that the economy was characterized by a process of creative destruction. An innovator could, through a new product or lower costs of production, establish a dominant position in a market. But eventually, that dominant position would be destroyed, as another new product or process was invented." (Economics 4th edition, 2006)

The rest of this post is some quotes from Schumpeter.

Innovation

"Why do entrepreneurs appear, not continuously, that is singly in every appropriately chosen interval, but in clusters? Exclusively because the appearance of one or a few entrepreneurs facilitates the appearance of others, and these the appearance of more, in ever-increasing numbers." (The Theory of Economic Development, 1934)

"The swarm-like appearance of new combinations easily and necessarily explains the fundamental features of periods of boom." (The Theory of Economic Development, 1934)

"The innovation is hazardous, impossible for most producers. But if someone establishes a business having regard to this source of supply, and everything goes well, then he can produce a unit of product more cheaply, while at first the existing prices substantially continue to exist. He then makes a profit. Again he has contributed nothing but will and action, has done nothing but recombine existing factors. Again he is an entrepreneur, his profit entrepreneurial profit. And again the latter, and also the entrepreneurial function as such, perish in the vortex of the competition which streams after them. The case of the choice of new trade routes belongs here." (The Theory of Economic Development, 1934)

"All knowledge and habit, once acquired, becomes as firmly rooted in ourselves as a railway embanking in the earth." (Quoted in the Worldly Philosophers by Robert Heilbroner)

Business cycle

"...our analysis leads us to believe that recovery is sound only if it does come of itself. For any revival which is merely due to artificial stimulus leaves part of the work of depressions undone and adds, to an undigested remnant of maladjustment, new maladjustment of its own which has to be liquidated in turn, thus threatening business with another crisis ahead." (Depressions: Can we learn from pastexperience? 1934)

Jeremy Bentham and utility

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Jeremy Bentham (1748-1747) is an influential philosopher best known as the father of modern utilitarianism. Economist John Stuart Mill said,

"Yet in the first pages of Bentham it burst upon me with all the force of novelty. What thus impressed me was the chapter in which Bentham passed judgment on the common modes of reasoning in morals and legislation, deduced from phrases like 'law of nature', 'right reason', 'the moral sense', 'natural rectitude', and the like, and characterized them as dogmatism in disguise..." (Autobiography, 1873)

The rest of this post is some quotes from Bentham.

Utility

"Priestley was the first (unless it was Beccaria) who taught my lips to pronounce this sacred truth- that the greatest happiness of the greatest number is the foundation of morals and legislation." (Extracts from Bentham's Commonplace Book)

"Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do, as well as to determine what we shall do." (An Introduction to the Principles of Morals and Legislation, 1789)

"...every grain of enjoyment you sow in the bosom of another, you shall find a harvest in your own bosom; while every sorrow which you pluck out from the thoughts and feelings of a fellow creature shall be replaced by beautiful peace and joy in the sanctuary of your soul." (Advise to a young girl, 1830)

Alan Watts and mysticism

Alan Watts (1915-1973) was an English philosopher best known for his lectures on spiritualism. Philosopher William Warren Bartley said,

"I remember asking Alan why he was teaching. He just smiled at me, and pointed out the window, to a bird flying. There was no reason why he was teaching, he replied. He taught, he said, just as the bird flies." (Interview with Werner Erhard: the Transformation of a Man, 1978)

The rest of this post is some quotes from Watts.

Epistemology

"A person who thinks all the time has nothing to think about except thoughts. So he loses touch with reality, and lives in a world of illusion." (Alan Watts Teaches Meditation, 1992)

"...everyone has a religion, whether admitted or not, because it is impossible to be human without having some basic assumptions (or intuitions) about existence..." (In My Own Way: An Autobiography 1915-1965, 1972)

"The basic problem is to understand that there are no such things as things; that is to say separate things, separate events. That is only a way of talking. What do you mean by a thing? A thing is a noun. A noun isn’t a part of nature it’s a part of speech. There are no nouns in the physical world. There are no separate things in the physical world either." (Quoted in Watts on Wiggles Waves, 2007)

Johann Wolfgang von Goethe and poetry

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Johann Wolfgang von Goethe (1749-1832) was a famous writer best known for his tragic play Faust first published in 1790. Journalist John Morley said,

"All Goethe's work, whether poetry or prose, his plays, his novels, his letters, his conversations, are richly bestrewn with the luminous sentences of a keen-eyed, steadfast, patient, indefatigable watcher of human life." (Aphorisms, 1887)

Author Theodore Roszak said,

"Goethe wondered at what point our instruments might be creating what we think we see out there in the world... his question is still a good one. Every science of observation must take care not to get lost among its own artifacts." (The Gendered Atom, 1999)

The rest of this post is some quotes from Goethe

Poetry

"All poetry is supposed to be instructive but in an unnoticeable manner; it is supposed to make us aware of what it would be valuable to instruct ourselves in; we must deduce the lesson on our own, just as with life." (Letter to Carl Friedrich Zelter, 1825)

"One ought, every day at least, to hear a little song, read a good poem, see a fine picture, and, if it were possible, to speak a few reasonable words." (Wilhelm Meister's Lehrjahre, 1786)

Science

"They forgot that science arose from poetry, and failed to see that a change of times might beneficently reunite the two as friends, at a higher level and to mutual advantage." (On Morphology, 1817)

"Hypotheses are scaffoldings erected in front of a building and then dismantled when the building is finished. They are indispensable for the workman; but you mustn't mistake the scaffolding for the building." (Maxims and Reflections, 1833)

Goals

"Freedom and life are earned by those alone, who conquer them each day anew." (Faust, Part 2, 1832)

"Who strives always to the utmost, for him there is salvation." (Faust, Part 2, 1832)

"I love those who yearn for the impossible." (Faust, Part 2, 1832)

Emotion

"Life teaches us to be less harsh with ourselves and with others." (Iphigenie auf Tauris, 1787)

"So certain is it that he alone is great and happy, who requires neither to command nor to obey, in order to secure his being of some importance in the world." (Götz von Berlichingen, 1773)