Capitalistic Musings

Capitalistic Musings

The Project Gutenberg EBook of Capitalistic Musings, by Sam Vaknin
(#10 in our series by Sam Vaknin)
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Title: Capitalistic Musings
Author: Sam Vaknin

Release Date: June, 2005 [EBook #8214] [This file was first posted on
July 3, 2003]
Edition: 10
Language: English
Character set encoding: US-ASCII
*** START OF THE PROJECT GUTENBERG EBOOK,
CAPITALISTIC MUSINGS ***

(c) 2002 Copyright Lidija Rangelovska.

Capitalistic Musings
1st EDITION
Sam Vaknin, Ph.D.
Editing and Design:
Lidija Rangelovska
Lidija Rangelovska
A Narcissus Publications Imprint, Skopje 2002
First published by United Press International - UPI
Not for Sale! Non-commercial edition.

(c) 2002 Copyright Lidija Rangelovska.
All rights reserved. This book, or any part thereof, may not be used or
reproduced in any manner without written permission from:
Lidija Rangelovska - write to:
[email protected] or to
[email protected]
Visit the Author Archive of Dr. Sam Vaknin in "Central Europe
Review":
http://www.ce-review.org/authorarchives/vaknin_archive/vaknin_main.
html
Visit Sam Vaknin's United Press International (UPI) Article Archive
ISBN: 9989-929-37-8

http://samvak.tripod.com/guide.html
http://economics.cjb.net
http://samvak.tripod.com/after.html
Created by: LIDIJA RANGELOVSKA
REPUBLIC OF MACEDONIA
C O N T E N T S
I. Economics - Psychology's Neglected Branch
II. The Misconception of Scarcity
III. The Roller Coaster Market - On Volatility
IV. The Friendly Trend
V. The Merits of Inflation
VI. The Benefits of Oligopolies
VII. Moral Hazard and the Survival Value of Risk
VIII. The Business of Risk
IX. Global Differential Pricing
X. The Disruptive Engine - Innovation
XI. Governments and Growth
XII. The Distributive Justice of the Market
XIII. The Myth of the Earnings Yield
XIV. Immortality and Mortality in the Economic Sciences
XV. The Agent-Principal Conundrum
XVI. The Green-Eyed Capitalist
XVII. The Case of the Compressed Image
XVIII. The Fabric of Economic Trust
XIX. Scavenger Economies, Predator Economies
XX. Notes on the Economics of Game Theory
XXI. Knowledge and Power
XXII. Market Impeders and Market Inefficiencies
XXIII. Financial Crises, Global Capital Flows and
the International Financial Architecture
XXIV. O'Neill's Free Dinner - America's Current Account Deficit
XXV. Anarchy as an Organizing Principle
XXVI. Narcissism in the Boardroom
XXVII. The Author
XXVIII. About "After the Rain"
Economics - Psychology's Neglected Branch
By: Dr. Sam Vaknin

Also published by United Press International (UPI)
It is impossible to describe any human action if one does not refer to
the meaning the actor sees in the stimulus as well as in the end his
response is aiming at.
Ludwig von Mises
Economics - to the great dismay of economists - is merely a branch of
psychology. It deals with individual behaviour and with mass
behaviour. Many of its practitioners sought to disguise its nature as a
social science by applying complex mathematics where common sense
and direct experimentation would have yielded far better results.
The outcome has been an embarrassing divorce between economic
theory and its subjects.
The economic actor is assumed to be constantly engaged in the rational
pursuit of self interest. This is not a realistic model - merely a useful
approximation. According to this latter day - rational - version of the
dismal science, people refrain from repeating their mistakes
systematically. They seek to optimize their preferences. Altruism can
be such a preference, as well.
Still, many people are non-rational or only nearly rational in certain
situations. And the definition of "self-interest" as the pursuit of the
fulfillment of preferences is a tautology.
The theory fails to predict important phenomena such as "strong
reciprocity" - the propensity to "irrationally" sacrifice resources to
reward forthcoming collaborators and punish free-riders. It even fails to
account for simpler forms of apparent selflessness, such as reciprocal
altruism (motivated by hopes of reciprocal benevolent treatment in the
future).
Even the authoritative and mainstream 1995 "Handbook of
Experimental Economics", by John Hagel and Alvin Roth (eds.) admits
that people do not behave in accordance with the predictions of basic
economic theories, such