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Thanks for the response, Scot. I agree with much of what you said. But one thing caught my attention. What is the ‘intrinsic value of money’? Does this not require some absolute standard for judging value?
Since this is about Colin’s thesis, perhaps he has more to add.
I take your point, Colin. Yes, gold is an extremely important status symbol. And that has to do, in part, with its properties. But the same goes for anything that is desired. It is partially due to the properties of the thing … but it also has to do with cultural values.
There is an strong connection between rarity and price, as the graphic below show. Does this connection say something about the ‘inherent’ value of a commodity? Or does it say that, all things being equal, things that are more difficult to find will cost more?
I am not familiar with the ‘abstraction thesis’, but am interested to learn more. Would you say that in ‘Debt’, David Graeber voices this thesis, as he proposes that abstract credit was the first form of money?
Interesting questions and ideas, Scot. I haven’t read Drumm’s dissertation, so I can’t comment on his ideas. But I do have some questions for you.
First, if we’re going to talk about the ‘nature of power’, how do you define power?
Second, what is the ‘nature of money’?
My own take is that focusing on money itself is a bit of a distraction. My view is that money is nothing but a quantification of property rights. Part of the development of capitalism involved making the unit of quantification progressively more abstract. But really, the abstraction has been there all along. There is nothing in gold that makes it valuable. But it is convenient (for the human mind) to give a unit a physical dimension.
The more interesting element of money, at least for me, is the progressive expansion of property rights — the ability to own and therefore quantify anything.
To get back to the question of power, I agree that power is essentially the same everywhere, in that it is simply the ability to influence others. But what is not constant is the ideology that motivates the followers.
My issue with this argument is that we have to pretend, in Soddy’s thought experiment, that cows have no ability to generate cash flows.
Like many natural scientists, Soddy thought mostly about commodities, not investments and the property rights that come with them. Obviously, if you have property rights that ‘generate’ an exponentially growing income stream, then paying off interest is not a problem. But I agree that Soddy’s arguments have limited use.
Strike density is inversely correlated with Nitzan and Bichler’s power index — the ratio of stock prices to wages. In other words, stocks tend be higher relative to wages when strike density is low.
Here’s my analysis: https://economicsfromthetopdown.com/2020/10/05/how-the-history-of-class-struggle-is-written-on-the-stock-market/
Interesting thoughts, Pieter.
When it comes to policy, capital-as-power research is in a very different place than most economics research. Since CasP research focuses explicitly on analyzing power, it is most practical for bottom up activists who are critical of power. Using CasP research to implement policy (i.e. wield power) would be odd … kind of like an anarchist becoming a CEO. When you’re critical of power, you are self selected from becoming powerful.
That said, I do hope that CasP research becomes influential among the non-powerful. If it ever became widely recognized, it would be a sign that capitalism is in trouble.
Thanks for this research, Pieter. You’ve uncovered some important landmarks for how the practice of discounting evolved.
There is no better training for doing research than simple doing it. Sure, you’ll make mistakes (visible in hindsight). But that’s science. I hope you share more research in the future.
I typically take a multi-pronged approach, which is to release a working paper in many places. I like to host the preprint on the Open Science Framework, where I also post the supplementary material. I then release the same paper as CASP working paper (which will also be hosted on the bnarchives.) Finally, I also post it to my blog.
This is the advantage of publishing things in the creative commons. Your work can be in multiple locations to suite the habits of your readers.
Regarding the SSRN, I avoid it because it is owned by the monopolist publisher Elsevier. The Open Science Framework, in contrast, is a non profit, as are other preprint services like the arXiv.
Also, a question about methods. Could you clarify how you calculate the markup of the Compustat 500? Do you sum all profits (across companies) and divide by the sum of all sales? Or do you calculate the markup for each company, and then calculate the mean across companies?
Thanks for updating this research, Jonathan. I wonder if you would be able to share the underlying data. Particularly the IRS historical data seems to be difficult to get, and I vaguely recall that you and Shimshon compiled it manually from old documents. It would be nice for researchers to have that data available in one place.
On a technical note, when I’m dealing with a dataset that’s too big for my computer’s memory, I use the Unix split command, which divides the file into more manageable chunks: https://kb.iu.edu/d/afar
Really interesting analysis, James. A few questions.
1. Are you chunking the data so you can run the analysis in parallel? Or to reduce the memory load on you computer?
2. I wonder what you’d find if you calculate the ratio of trademarks to dollars of profit (or some other measure of income). It would be interesting to see how that changes the results.
