Sean Corrigan of Diapason Commodities presents an interesting metaphor for recent Keynesian measures to restart the world economy in his latest report.
Specifically he looks at cell biology and the role of adenosine tri-phosphate (ATP) in the body. As he explains, the body’s processes are intuitively tuned to the efficient division and distribution of labour, as well as available resources for the purpose of performance. Or as he puts it:
… consider now the exquisitely complex machinery of the mitochondrion, that tiny organelle nestling inside the larger cell, wherein the process of respiration takes place, by which is meant the oxidative extraction and storage of food energy in those little re-chargeable battery molecules known as Adenosine Tri-Phosphate, or ATP.
Taking as our ‘intermediate good’ a molecule of pyruvic acid (broken down elsewhere from the rather more familiar glucose) and by successively transforming it with the aid of a battery of enzymes and co-enzymes (the ‘machine tools’ of the cell, if you will), while transporting in and out the likes of CO2, oxygen, hydrogen ions, and water (the ‘complementary’ raw materials and their resultant waste products), we end up with a store of useful and transportable energy on which depends nothing less than the very essence of life itself.
In essence the intricate balance of natural processes — which more widely also relate to the finding, ingesting, digesting, transport and sometimes storage of foods in the first place — is essential for us not to get sick. This, in a sense, can be compared to the workings and cycles of the global economy.
So consider what happens if you take a Keynesian approach to resolving any breakdown when and if those processes do breakdown. As Corrigan puts it:
… to a Keynesian, the foregoing is merely superfluous detail for, should anything at all happen to go wrong with the system - should a disease pathogen, a toxin, a lack of some essential input, or an error of construction or repair, disrupt the metabolism — he believes that all that is needed is to increase the ‘effective demand’ made upon it by ’stimulating’ end-consumption, regardless of that latter’s composition. In other words, as long as the Krugmanite quacksalvers can get our gravely-ill patient running around the hopsital ward, burning up energy by discharging those little ATP batteries at a sufficiently rapid pace, they have done all that anyone can ever hope to do to secure his recovery, for the relevant capital structure and the requisite passage of ‘goods’ along his subcutaneous pathways will spontaneously coalesce out of what our Hermetic leech faciley presupposes to be homogenous cytoplasmic ‘gloop’ or readily-availhable, self-assembly constituents.
In other words, as Corrigan explains to us, a dynamic cycle full of inter-linked stages is not to be repaired simply by asking more output of it, especially when the ability to ask should come from the ability to contribute to the process in the first place.
This, Corrigan says, compliments the thinking of John Stuart Mill who said “what supports and employs productive labour is the capital expended in setting it to work, and not the demand of purchasers for the produce of the labour when completed.”
Deep thoughts, indeed.
Related links:
We don’t want no stimulus plan (or, the case against Keynes) - FT Alphaville
When the facts change, change the measures (and hope for the best) - FT Alphaville
