I would like to re-post an entry I made in another thread, as it was not exactly on track for the topic. It is still rolling around in my brain and I would like to get some input from those that are students of economic.
To set up the discussion, the original post was concerning the validity of global warming in light of the recent revelations of data manipulations. I veered off track with the following post...
"... The point is, where was the peer review when the numbers were being cooked. Was the incentives to this particular segment of the academic community too great for them not to skew the data? After all, if there is not a problem then "poof." There goes the money.
I sometimes look at this situation and compare it to Wall Street and the finance community. People debate constantly about the pros and cons of government regulation and free markets capitalism. I have always leaned toward the free market side. Of late, I have been rolling around a question in my head.
Capitalism, as we tend to generally think of it, was a philosophy born out of the Age of Enlightenment. Reason was king and freedom to live for ones own self interest was an idea whose time had come. Agrarian society was at the end of its run and the Age of Industry was in its birth stages. Real, tangible production was the key. Open markets and limited interference were certainly key for this stage.
Now we have moved from the Industrial Age to the Information Age. Industry had real, hard, tangible inputs and outputs. Manipulation was limited to what you could do with productivity, natural resources and distribution. What I am getting at is that rewards were based on real and tangible production. In the Information Age, these past limitations no longer hold true, at least in the cases I have in mind. The most prominent example would be in the world of finance. We are in a world of fiat currencies and monetary systems that are to a large degree made up of 1's and 0's in a web of computers. Here, manipulations are not limited to real tangible inputs. This is why we can have such things as fiat currencies and fractional lending. Can you imagine being able to produce 10 times an output with only 1/10 of the raw input? Could you produce ten cars with the steel and plastics that it takes to make one?
This is why a company such as Goldman Sachs can make such huge profits by what is essentially just moving around money. And again, in our current system, you could make the simplified argument that they are simply manipulating data.
Before you finance wizards come at me with guns blazing, I admit this is an overly simplistic overview. I am simply putting it out there for discussion. To tie things back to the original discussion, capitalism and the industrial age were regulated to a large degree by natural laws. It goes back to the old saying of "you can't have your cake and eat it too."
The question that then comes to mind is if this is still true in the information age. Can you have your cake and eat it too? Economies are driven by the cycle of addressing problems and coming up with solutions. What happens if in some instances, such as the academic/climatology industry and the financial industry, you can create and solve the problems all by manipulating information?"
To be clear, I do not want to discuss global warming. I am interested in ideas on whether capitalism as we know it was more suited for the industrial age and perhaps needs an overhaul in the information age. This presents a dilemma for me as I am not a big fan of government. However, I am also not fond of piracy either.
I am a big fan of Ayn Rand. I think she was an incredible intellect. She was, however, a product of the Enlightenment, the Age of Reason and the industrial revolution and a child of the old Soviet Union and its many dysfunctions. Objectiveism, along with capitalism is very neat and tidy, very flatland and very reductionist. If you can't see it, feel it or measure it, it doesn't exist. Very well suited for industrial production. The question I am starting to ask, is it as well suited for the information age?