conciertazo...

Mercantilism vs. Capitalism

Mercantilism is not a strict school of thought but rather a trend in thinking that occurred in the 1500s to 1750s. Basically countries focused on state building, and that a nation’s wealth was reflected primarily by its hold of precious metals (specie). Whichever country controls most of the world’s resources controls the world’s power. This leads to intense competition for the world’s resources. (Zero-sum relationships) (Gold, Silver, Sugar, Tobacco, Land)

Mercantilism views that there are three basic ways to increase state power: a strong army, a strong navy, and a productive economy. To have a productive economy with high employment, it was viewed necessary for a country to have a large hold of specie.

The Mercantilist economic system is composed of three sectors: a manufacturing sector, a rural sector, and foreign colonies. They viewed that economic activity should be highly regulated because if it were let to run on its own, a nation would lose power and wealth by importing too many consumption goods. In effect, many countries of Mercantilist thought monitored their trade balance so that it would always lead to a favorable balance of trade (This is known as bullionism).

One of the main reasons for colonization is based on this mercantilist way of governance. Also one of the reasons that Christopher Columbus was sponsored to sail to the Americas was so that whatever lands may be found or conquered may be stripped of their natural resources.

Government policies were therefore directed towards a nation’s wealth. There were subsidies on exports, and high tariffs placed on consumption goods from abroad. Note that there rarely were tariffs placed on raw materials because they were “worked up” and then exported at higher prices. (I.e. Britain would import cotton from India, process the cloth and then sold it at higher prices.) Governments want to control all areas of profit. States determined routes and times of trading, gave out trade licenses, and controlled the selling of boats.

Navigation policies also were aimed at controlling international trade, and to minimize the outflow of specie. An example of this is the British Navigation Act which excluded foreign ships from carrying merchandise to Britain and its colonies.

Mercantilism vs. Capitalism is that Mercantilism revolves around the acquisition of resources. It is an economic system that believes the world’s resources to be limited and whoever controls the most of the world’s resources has the most power.

Capitalism is a system where the government protects the right to life, liberty, the pursuit of happiness, and property. (Nothing else) Capitalism features the desire for efficiency, and capitalists look for cheap labor, good quality and efficiency. If the laws allow, they will go to any country in the world to produce a good with the cheapest and best quality inputs.

Valuation is Expectation and Expectation is Imagination?? Accountants: accounting for the unaccountable...

Accountants spend their lives placing values on both tangible and intangible assets, accounting precisely for every change in value, and that somehow value comes and goes with an explanation.

But, Shackle argues,

“The idea of an economic valutum arising ex nihilio or vanishing inexplicably is contrary to the whole meaning of the accountant’s operation.” (Shackle pg.8)

Supposedly according to accounting, values are produced by tangible industrial processes: adding materials, storing, dividing. Value can be lost by aging and consumption. BUT, isn’t value something mythological/”an act of the mind” as he puts it?

People in a certain market for a certain product agree on the value of an item as to its expected future potential. He argues, valuation is expectation; (Just as in finance, the value of stocks and bonds are equal to their expected future cash flows) which can change from moment to moment depending on circumstances. “VALUATION IS EXPECTATION and EXPECTATION IS IMAGINATION” (Shackle) which means that accountants are accounting for the unaccountable.

G. L. S. Shackle, author of Epistemics and Economics: A Critique of Economic Doctrines

Libros Pendientes

Quiero mantener una lista de libros, lo voy a hacer aqui para no perderlo.

Brandeis, Louis D. Other People's Money and How the Bankers Use It, Augustus M. Kelley Publishers, Reprints of Economic Classics. New York, 1971.

Brealey, Richard, Stuart C. Myers, and Franklin Allen. Principles of Corporate Finance, 8th edition. McGraw-Hill/Irwin, 2005.

Douglas, William O. Democracy and Finance. New Haven: Yale University Press, 1940.

Fabozzi, Frank J., Franco Modigliani, Frank J. Jones, and Michael G. Ferri. Foundations of Financial Markets and Institutions, 4th ed. Boston, Massachusetts: Prentice Hall, 2010.

Hawtrey, R. G. The Art of Central Banking. London: Longmans, Green and Co., 1932.

O'Barr, William M. and John M. Conley. Fortune & Folly: The Wealth & Power of Institutional Investing. Homewood, Illinois: Business-One Irwin, 1992.

Shiller, Robert J. Irrational Exuberance, 2nd edition. New York: Doubleday, 2006.

--- The New Financial Order: Risk in the 21st Century. Princeton: Princeton University Press, 2003.

Siegel, Jeremy J. Stocks for the Long Run, 4th edition, New York: McGraw-Hill, 2008.

Sullivan, Teresa, Elizabeth Warren and Jay Lawrence Westbrook. The Fragile Middle Class: Americans in Debt. New Haven: Yale University Press, 2000.

Swensen, David. Pioneering Portfolio Management. New York: Free Press, 2000.

Unger, Peter. Living High and Letting Die: Our Illusion of Innocence. New York: Oxford University Press, 1996.