Fatfingers, I sent a hard serve at neoclassical free market theory. But Wing keeps yelling at me that I'm not scoring enough goals, you reckon I should be hitting sixes, and Mr. Grumpy about Governments wants me to bet on the quinella. So yeah, the game wasn't much fun and I went home. ;-)

Geoff Davies

Your hard serve at neo-classical free market theory was good and well taken.

But it doesn't justify either your major premise that the current economic crisis originates in unfettered markets rather than monetary policy, nor the minor premise that "we" ie the state could produce a better result.

"Economic affairs cannot be kept running by magistrates and police." Mises

Ultimately you have merely re-run fallacies that were refuted long ago by the Austrian school: mises.org

Your assumption that the defence of free markets depends on all that neoclassical rubbish about perfect knowledge, perfect competition, equilibrium etc is invalid.

Also your theory of what makes economics a science is the same as that of the neoclassicals, and is why both you and they fell into error.

Hint: there is no underlying constant quantity for the mathematics to measure.

Measurement of prices cannot avoid dealing with the problem (a) of the underlying subjective value judgments of the human agents inherent in the decisions, and (b) that such measurements are of economic *history* which it is erroneous to confuse with economic theory. This error of the neoclassical school inheres in your own empirical approach. So not only the economics is wrong, the underlying epistemology is wrong.

Only when and if you have refuted their arguments will you be in a position to make intelligent comment

It is clearly impossible to refute any of your arguments to your satisfaction, Wing ah Hume, as you blithely ignore any argument which does not match your paradigm.

"Grim, I quote from the article you cited:
"Nor was the Papacy, the world leadership of the Church, fighting against the debt-looting of the international banks then as it is today; in fact, at that time it was allied with, aiding, and abetting them."

"Thus the article you cite does not support the proposition that these bubbles are caused by the unhampered operations of free markets governed by the contracts of the parties. It shows clearly that the reason for the financial crises was not free markets as the author confusedly argues, but on the contrary, because the state 1. enforced a monopoly, ie illegalised free trade and competition in critical industries, and then 2. hocked up the entire population to pay off debts the state had contracted to the banks, by, in effect, pledging the state's monopolies to the banks."

This is an amazing example of taking quotes out of context. In the VERY SAME PARAGRAPH the article states:

"The critical difference between 1345 and 1995, was that in the Fourteenth century there were as yet NO NATIONS (italics in original). No governments had the national sovereignty to control the banks and the creation of credit; or, to force these banks into bankruptcy in an orderly way, and replace fictitious bank credit and money with national credit. Nor was the Papacy, the world leadership of the Church, fighting against the debt-looting of the international banks then as it is today..."

From this, you manage to claim that no one has refuted your arguments?
People have given up arguing with you, because your mind is made up, and nothing in the world will change it.

AND FURTHERMORE...
All those attacking Geoff Davies for the use of the term "Neoliberalism" are urged to go back to the link in the very first paragraph: "debunking of neoliberalism", an article written by Kevin Rudd.
What amazed me was the breathtaking hypocrisy of Rudd's essay. He spends several pages criticising neoliberalism since the early 1980's, then in the same essay praising the Hawke/Keating government (of the early 1980's).
To all intents and purposes, economic rationalism IS neoliberalism.
If Hawke, Keating and Howard didn't manage to take Australia as far down the same road as Thatcher and Reagan, it was largely due to opposition and mediation by the Australian Democrats.

Grim
Yes I acknowledge your last point is correct and I was wrong: I mis-read it.

Nevertheless I reject argumentation by mind-reading. It just diverts the discussion into personality, which goes nowhere. I could just as easily say it's you whose mind is already made up, and then where does the argument go? "Tis!" "Tisn't!" "Tis" etc.

The article is unclear because of the author's obvious bias. For example 'usury' is not an economic term: it simply means excessive from the point of view of the speaker. He uses the term "seizing and looting" to denote bank actions in relation to a king's property in that king's kingdom. So it's not clear whether they were contractual or consensual transactions or not. If they were consensual, then they're not "looting". And if they were not consensual, then that is not an argument against free trade. So he displays a fundamental bias on the critical issues which clouds everything he says.

Most of the article is about various banking shenanigans to do with governments, which does not establish an argument against a free market in money, banking, or anything else.

What I am looking for is evidence that the bubble was the result of a free market in money and banking, and not from governmental or public intervention or policy of some kind. Considering the temptation for kings and governments to get their fingers in the till if they can, considering how intertwined was government power, government monopolies over trade, government monopoly over tax, and banking, it would seem highly dubious to assume that government was not involved in the banking activities that produced the bubble. But maybe it wasn't.

The evidence I'm looking for is, if the people paying for the service are free to pay for it and have the benefit, or not pay for it and not have the benefit, then it's a free market situation. But if they are compelled to pay for the service by force or law, whether they want it or not, then it's not a free market situation.

It's obvious the historian is *trying* to demonstrate that the problem was 'endogenous', as Steve Keen would say, to the banks. But is he succeeding?

For example: "Venetian finance which, by dominating and controlling a huge international “bubble” of currency speculation from 1275 through 1350, rigged the great collapse of the 1340’s."?

And? What was the role of the government of Venice, and what the role of the banks? He doesn't say.

For example "Venice deliberately ensnared...".

What's that mean? Who is "Venice" supposed to denote? Was it coercive, or not? What part of the term denotes governmental as opposed to private control? He doesn't say.

Is that the best evidence that the bubble arose free of the enabling influence of government policy?

Thus as to evidence, we have the biased assertions of a non-economist historian who does not distinguish the critical factual issues. He not only fails to prove beyond reasonable doubt, he fails on the balance of probabilities too. His argument is of the same kind that the recent crisis is caused by “unregulated capitalism”, which is nowhere in evidence.

What do you say is the evidence he is providing that the bubble arose without the enabling influence of government monopoly powers affecting money or banking?

As to the reasoning, it’s easy to see how a bubble can arise where government is protecting the banks from redeeming deposits on demand.

Not so easy to see what stops the banks from going broke in a free market situation from the depositors withdrawing their deposits.

What do you say was stopping that from happening in the Venice history, and in the recent crisis?

What justifies government having a power to inflate the currency?