Finance and Economics after the Dotcom Crash
Fri, 21 Dec 2001 11:07:08 EST

In a message dated 12/21/2001 10:36:26 AM, writes:

>That is such a
>critically important aspect of economic history that it
>completely flabbergasts me that someone writing on
>finance would miss it.

Probably because of his Marxism. Marxism's fundamental flaw, IMHalf-bakedO, 
is that it ignores the roles of innovation and knowledge as assets and 
factors of production. The logic of the Marxist critique of 
capitalism--especially the inevitability of trusts and monopoly, the 
pre-condition for the radicalization of the urban proletariat--works only in 
an economy where innovation is minimal. Big organizations repress 
innovation--not only do they try to repress it from rivals, they try to 
repress it internally.  If they're not threatened, big companies fall behind 
the curve technologically. (Vide  companies in protectionist countries.) 
Innovation disrupts monopoly, and either forces big companies to wake up, or, 
more often (and with sporadic help from antitrust laws), undoes the hegemons. 
My very-much-armchair intellectual-historiographical hypothesis would be 
this. Marx--a superb  observer of social reality--saw how the rural peasantry 
was uprooted and moved into the cities, which were squalid, dirty places, 
alienated of ownership or influence over the means of production.Marx's early 
writings on this stuff are wonderful. The first half of the 19th century in 
Britain was a terrible time--the industrial revolution was built on the backs 
of two generations of Englishmen, an historian said. Later Marx saw how the 
industrialists worked and thought (and still do: We/they all want to 
eliminate competitors). He put those together, but then his imagination lead 
him down the wrong road--into the inevitability of a revolution led by the 
urban proletariat, which never happened anywhere, etc., rather than a road 
that saw how the very rise of a technological economy would add a potent new 
factor of production: science/innovation/new business formation. Why the 
failure? Maybe because he analzyed the newly industrialized world with an 
economic logic unwittingly distorted by the assumptions he grew up with, 
which were those of the pre-industrial,  ancien regime, where innovation was 
not a major factor of production or economic structure. There was a "new 
economy" in 1850, and Marx got it--but only half of it.