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Functional Understanding

January 7, 2012

Can Keynesian economist Abba Lerner’s principle of  Functional Finance help us beyond the narrow realm of monetary and fiscal policy?  I think it can; I like the way it opens the door into a direct and straightforward understanding of the wider world.  Here’s Lerner explaining his principle:

The central idea is that government fiscal policy, its spending and taxing, its borrowing and repayment of loans, its issue of new money and its withdrawal of money, shall all be undertaken with an eye only to the results of these actions on the economy and not to any established traditional doctrine about what is sound or unsound.  This principle of judging only by effects has been applied in many other fields of human activity, where it is known as the method of science as opposed to scholasticism.  The principle of judging fiscal measures by the way they work or function in the economy we may call Functional Finance.

We could expand his principle of functionality to the wider world by saying we would interpret all political events “with an eye only to the (actual or likely) results of these actions”.  We would disregard all rhetoric and avoid wasting our time trying to understand motivations of political actors beyond what the actual or likely results tell us.  Call it “Functional Understanding”.

Median income in the US has declined by 40% versus per capita GDP in the last 35 years.  Functional Understanding would tell us there’s been a concerted bipartisan attack against the population in this period.  Rulers in the US must therefore despise the population and seek only to advance the cause of those with great power.  Rulers in the European Union likewise despise their populations and are attacking them.

Global poverty persists because the ruling powers don’t care and see benefit to a dependent underclass.

The US maintains a military at about the same size as the rest of the world combined.  Functionality tells us it seeks to rule the world through military might.

The US has vastly increased its domestic surveillance apparatus far beyond the objectively small threat of a few bands of potential terrorists.  It therefore intends to constrict mass freedoms in line with its economic attack on the population and its global military goals.

These are just a few functional conclusions and there’d be many more.  Our infrastructure, for example, is decaying because those in charge don’t give two shits about its state as long as it doesn’t affect key goals.  The same with education – it doesn’t make too much difference for the type of jobs which will be available and a population can easily become too educated for its own good.

Too simple?  Perhaps.  But the history of humanity going back to the Greeks and before is one of minority exploitative rule over the majority.  That reality is lost to many today and the best way to advance widespread understanding may be through piercing the bullshit and, as Lerner says, “judging only by effects”.

2 Comments
  1. Dave permalink

    Wow, man. This funked up my day. Nasty.

  2. Yeah, a functional interpretation is pretty damn ugly. Sorry to say though, I don’t think it’s too far off the mark.

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