Abstractions, Things, Wealth, And Deindustrialization
Economic theory is dominated by abstract structures. Underneath, there is no firm foundation. Above, there is a lack of rigorous confrontation with established fact. Basic theoretical concepts have no acknowledged definition. The apparatus of graphs, algebra and technical vocabulary are often vehicles for rhetoric rather than descriptions of truth. In this abstract world, it seems to be accepted without embarrassment that all opinions are possible, while adopting the style of science in delivering each conclusion as if it was a fact. The closest parallel is perhaps with theology, where also each practitioner presents his story as fact, but there are differing stories. This paper illustrates this theme, with particular reference to "deindustrialization". It points out that it is tangible things which are the primary measure, literally the sine qua non, of all material, cultural and intellectual progress. Official statistics necessarily aggregate market transactions involving tangibles and intangibles at monetary exchange values. However it is an error, in the sense of being a misperception leading to wrong action, to mistake this equivalencing of things and non-things as more than a necessary procedural fiction. In this system, one opera performance equals, say, 100 lorryloads of gravel, but the logical reality is that gravel is part of the primary inventory, opera and all other intangibles are secondary or consequential. This inversion of the important and the estimable lies behind the paradox of the deindustrialization which is in process and the deagriculturalization which has already run its course in some parts of the world - namely that our entire civilisation rests (and logically and factually must always rest) on the output of this (in employment terms) disappearing sector. Eventually, the sector which ultimately produces all value will appear in the statistics as one which adds zero value in current terms. Fortunately, the real word of affairs shows no sign of acting on this erroneous perception. For those accustomed to see the world in abstractions, misperceptions still seem to obscure the reality.
|Date of creation:||30 Apr 1998|
|Note:||Type of Document - Word document; prepared on IBM PC; to print on HP540; pages: 18; figures: none|
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- Robert J. Barro, 2013.
"Inflation and Economic Growth,"
Annals of Economics and Finance,
Society for AEF, vol. 14(1), pages 121-144, May.
- Robert J. Barro, 1995. "Inflation and Economic Growth," NBER Working Papers 5326, National Bureau of Economic Research, Inc.
- Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
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