Author: @Web3Mario

Summary

This week is really exciting. Trump issued coins in person on January 18, two days before he was officially inaugurated as president, and in just a few days the price increased by as much as 400 times! First of all, I would like to congratulate all the friends who have seized this wave of wealth opportunities, and I also wish you a Happy New Year in advance. There has been a lot of discussion over the past few days about the potential impact of this phenomenal event, and I would like to use this opportunity to start the discussion. In general, the author believes that "Trump issuing coins" marks the official return of American neoliberalism, and survival of the fittest and barbaric growth will become the main theme of this new era. More specifically, in the context of deregulation, Web3 will carry the banner of financial innovation in the new cycle of the United States.

The history of the development of mainstream economic doctrines in American history - the continuous exploration of the relationship with the market

In order to help friends have a deeper understanding of the impact of this change, the author believes that it is very necessary to understand the relationship between the United States and the market. A brief overview of the changes and development of mainstream economic doctrines in history. In fact, the history of the development of economic theory is a history of exploring the relationship with the market. With different historical stages and different internal and external conflicts in society, modern sovereignty often adopts different economic strategies to deal with internal and external pressures. Ensure social stability and maintain relative competitive advantages in international geopolitical games. The so-called mainstream economic theory is the abstract summary made by some of the most insightful people based on specific economic phenomena to provide theoretical basis for policymakers to formulate policies. They are not some eternal truths in Neo-Confucianism, but rather belong to the category of sociology and are applicable to a certain area at a certain historical stage.

After clarifying the above premise, let’s take a look at the development history of mainstream economic doctrines in American history. In fact, it can be roughly divided into six stages:

1. Puritans Evacuating the colonial era in the European context: the process of resistance to the colonial economic exploitation of the mother country under mercantilism (1600-1776)

Friends who are familiar with Western history will know that, unlike most, the United States is a migrant. The uniqueness of immigration is that its birth usually depends on certain internal irreconcilable contradictions in the immigrant's home country in a specific context, which leads to large-scale migration of vulnerable interest groups. This means that the cohesion of immigrants is usually much higher than that of immigrants at the beginning of their establishment. There are two reasons. First, they are a group of selected interest groups with common ideologies and values. Secondly, because at the beginning of the establishment of the immigration system, the distributable benefits were still abundant, and all classes could enjoy the objective distribution of benefits, so they had a strong sense of satisfaction.

The birth of the United States can be traced back to the colonial era when the British Puritans evacuated the European continent in search of a new "Promised Land". The iconic event here is naturally the familiar "Mayflower" The event established the first virgin colony of English Puritans in North America, Virginia. Here we need to talk a little bit about the background of the Puritans. We know that the European continent during the Middle Ages was the so-called theocracy.During the Roman Empire, the background of the beginning of this stage was that the Western Roman Empire used foreign mercenaries to resist barbarian invasions from the perspective of interests and costs, which led to the decline of its own military power and gave rise to the rise of barbarian kingdoms on the European continent. In order to deal with this background, the rulers of the Western Roman Empire chose to use the empire's surplus value to transform their identity and governance model. By promoting Catholicism originated in the Middle East, they found legitimacy and authority for their rule in order to relieve themselves. The embarrassing situation of insufficient military strength. The result was that with the conversion of most of the "barbarian kingdoms", the old ruling class of the Western Roman Empire transformed into the Holy See, and the ruling model also changed from forceful suppression to ideological control.

How is this done? This is because although the barbarian kingdoms have advantages in force, they are not good at culture. Therefore, regardless of the East or the West, the barbarian kingdoms have an advantage in certain cultures by virtue of force. areas with certain status will be assimilated, and whether it is top-down or bottom-up, once most of the group is assimilated by a certain dominant culture, the source of authority of its ruling class will no longer have autonomy, and had to rely on the intervention of external forces. Specifically, because most of the barbarian tribes converted to Catholicism, such as the Germans, Gauls, Celts, Angsans, etc. The ruling class legitimacy of its sovereignty will not depend on self-consciousness but on the coronation of the Holy See to confer legitimacy on it. This model is actually similar to the Western Zhou Dynasty's control of the vassal states through Zhou rites.

In this context, since there is no option of intimidation by force, in order to ensure the stability of its rule, the Holy See must design complicated rituals to achieve absolute control over people's thoughts and completely eliminate These armed "barbarians" resisted. Therefore, we will find that under the background of the Middle Ages, there was basically no bottom-up resistance similar to that in Eastern civilization on the European continent, because the minds of the people at the bottom were firmly controlled by Catholicism.

However, as a metaphysical subject, different people will naturally have different views due to their different life backgrounds. Once another opposing thought is formed, it will inevitably change the old mainstream thought. Authority has a fatal impact, and this opposition is irreconcilable. Therefore, throughout the Middle Ages, the so-called "chaos" was not the chaos of the internal order of society, but the long-term differences in metaphysical values ​​between alliances with different views. years of senseless and bloody wars.

With the huge impact of the cruel war on society, some progressive people have reflected on this status quo, which also gave birth to the "Enlightenment" and "Renaissance", and Cultural changes with liberalism and rationalism at their core began to impact the Catholic system in all directions. The so-called Puritans are the product of this background. They refer to a group of radicals in the UK. Their radical thoughts focus on the issue of the ownership of the right to interpret the Bible. They believe that the Bible is the only authoritative one. , everyone can interpret the Bible, while non-traditional ones can only be directed by the Holy SeeOnly certain official churches can have the right to interpret it. Naturally, this was suppressed by the Catholic group, which resulted in these radicals being expelled from the church, so they were called Puritans. Moreover, it coincided with the Age of Discovery, and European navigation technology was developing rapidly. These suppressed people were anti-authority. , interest groups pursuing freedom chose to come to the distant North American colonies to re-establish their "promised land". This is the beginning of the story, and it also established that anti-authority, self-awareness, and the pursuit of freedom are the American spirit.

After introducing this background, we can understand why Americans seem to have a certain paranoia about liberalism. Closer to home, although they had a free environment, economically, the North American colonies at that time were still under the colonial economic system of their mother country. At this time, Britain was pursuing mercantilism. The core idea of ​​mercantilism was to increase its power by exporting more than importing through the use of war and force, and using the two precious metals of gold and silver as the standard. On this theoretical basis, the United Kingdom usually requires colonies to focus on raw material industries such as agriculture and mining, and curb the development of their manufacturing industries. In this way, it can import raw materials and export industrial products with higher added value to achieve economic development in the colonies. Predation and control, this is what is called the colonial economy, such as restrictions on the colonies' freedom of trade through the Navigation Acts. Therefore, at this time, an agricultural-based landlord class gradually formed in the North American colonies, as well as a group of progressive people who advocated the development of industry to get rid of the economic control of the metropolitan country. A large number of landmark events in this stage revolved around the conflicts between progressives and the sovereign state, such as the Boston Tea Party. In the end, after a series of struggles and pulls, coupled with the influence of France's strong intervention in North American affairs, the United States won the War of Independence as a symbol, and the United States was officially born.

2. The early days of the founding of the People's Republic of China when subjects were integrated: the national dispute between Physiocrats and Heavy Industrialists (from the end of the 18th century to the middle of the 19th century)

After gaining independence and sovereignty, at this time In fact, the United States is still very weak and must rely on its alliance with France to gain a certain sense of security. At this time, the United States Two mainstream economic theories gradually emerged. Above we have discussed the formation of the two classes, progressives and traditional landlords, so the two economic theories are supported by these two groups of people respectively.

Due to the superior agricultural development advantages in the southeastern United States, its economic system is mainly based on slave agriculture and plantation. Naturally, the landlord class has obvious advantages among the social classes in the region. Moreover, this coincided with the honeymoon period between the United States and France. At this time, France was at a disadvantage in the colonial competition with Britain, so it changed its views on mercantilism and put forward physiocrats. There is a big difference between physiocrats and mercantilists. First of all, physiocrats believe that agriculture is the only industry that generates value, because the raw materials of agriculture are natural and free, such as sunlight, rain, land, etc., while agriculture The output is valuable, it is a process from scratch,Industry only processes raw materials and only changes their form. No value is generated in this process. Therefore, the measurement of strength should be based on the assessment of agricultural output, which is very different from the concept of mercantilism that the accumulation of precious metals represents strength. Second, regarding the attitude towards the market, Physiocrats believe that although industrial products do not produce value, they are the lubricant of economic operation, affecting the efficiency of value circulation, and a relatively free market system is beneficial to enhancing turnover efficiency. , which is also very different from the exports encouraged by mercantilism and the practice of curbing imports. Of course, from the perspective of hindsight, we can also see that Physiocrats was an optimal choice when industrial technology was relatively backward compared to Britain at that time, but it had a demographic dividend. It is conceivable that the landowning class in the American South would naturally support this doctrine.

However, as an important North American trade transit center for the United Kingdom, the northern United States is naturally greatly influenced by British economic concepts. Therefore, the northern United States naturally formed an industrial structure based on trade and primary manufacturing. And because they were deeply affected by the dangers of the colonial economic system, progressive people in the northern United States had a clear preference for industry. Therefore, after gaining independent economic status, they naturally vigorously developed industry to get rid of the shadow of the colonial economy. In this era of mercantilism and Under the dual influence of the colonial economy, the economic theory of heavy industry was formed in the northern United States. It believed that industry was the embodiment of strength, and the difference in added value brought by industrial products and raw materials was the only way to increase strength. Therefore, protective measures such as Tariffs, etc., to encourage the development of local industry as much as possible.

With the passage of time, two cultural groups with great differences gradually formed in the north and south of the United States. The north was called Yankee. This term originally meant the descendants of the residents of the New England region in the northern United States; Later, its folkloric significance extended to all residents of the northeastern United States (New England, the Mid-Atlantic states, the Upper Great Lakes region, etc.), as well as to northern Americans during and after the American War. The South calls itself Dixie, which refers to the southern states of the United States and the people in this region. Cultural differences eventually led to complete divisions, and eventually the Civil War broke out in the United States, which ended with the absolute victory of the Yankee cultural group in the north who advocated heavy industry doctrine. So far, the mainstream economic doctrine in the United States is dominated by heavy industrialism. The landmark event was US President Hamilton's "Report on Manufactures" (1791), which proposed protectionist tariffs and a federal bank, laying the foundation for American industry. This included, of course, the Tariff Act of 1816, which protected manufacturing from cheap imports.

3. Manifest Destiny’s era of expansion and the Roaring 20s: laissez-faire and classical economics (mid-19th century to early 20th century)

As the United States relied on the richness of the North American continent With the supply of raw materials and the rapid development of industrialization, the national power of the United States has achieved great development. At that time, there was a huge sense of superiority and the inherent sense of mission of Christianity. At this time, the United States wasA widespread imperialist sentiment arose, and the United States has now entered the era of Manifest Destiny's western expansion. At that time, the central and western parts of North America were controlled by indigenous tribes, and most of these indigenous tribes had long-term dealings with Western colonists, especially those with Spain, France and the United Kingdom are represented. The United States passed the "Homestead Act" and other laws to encourage independent westward expansion to seize indigenous lands. Under this vigorous westward movement, the U.S. territory started from the Mississippi River and guided the Taiping Sheep to stop the pace of expansion, spanning the entire North America. mainland.

At this time in continental Europe, the rise of classical economics also deeply affected American society. The so-called classical economics is a system of economic thought formed from the late 18th to the 19th century, and is also the founding theory of modern economics. It emphasizes the spontaneous regulation of the market, free competition and economic freedom, laying the theoretical foundation for the capitalist economic system. This school of thought mainly explores core economic issues such as production, distribution and growth.

In fact, the birth of classical economics was not accidental. It is not difficult to find out by referring to the experiences of its representative figures. Taking Adam Smith as an example, he was born in Scotland and was naturally deeply influenced by mercantilism. However, due to the strong intervention in industry under mercantilism and the increasing financial pressure to maintain the colonial system, Adam Smith was also deeply inspired by French Physiocrats during his exchange in France, and he absorbed the core ideas of Physiocrats. , such as the meaning of free market, attitude towards market intervention, analysis logic of commodity value, Of course, there are differences in analyzing economic conditions through mathematical models. For example, classical economics believes that agriculture is not the only industry that generates value. The real source of value for commodities is labor.

This kind of economic theory is obviously more suitable for the civilized West that has completed the Enlightenment in the new era. And as the human rights movement accelerates, aversion to intervention gradually forms a social consensus. At this stage, most of the West pursues as little intervention as possible, more open international trade, and reliance on the market. The power allows the economy to develop freely. This is also called laissez-faire. This also gave rise to the rapid rise of the capitalist class. Influenced by Ricardo's comparative advantage theory, countries also support their own advantageous industries based on their own industrial advantages. At this stage, like most of the Western world, various industries in the United States are developing in an all-round way and showing a thriving trend. However, the contradiction between the working class and business owners brought about by the development of industrialization has gradually increased, and a red cloud has enveloped the sky over the European continent.

The proposal of Marxist economics is an inheritance and dialectical criticism of classical economics, and its core idea continues the labor theory of value in classical economics. He also used materialism to explore production relations and developed the theory of surplus value to reveal the mechanism of capitalist exploitation. Its essence is a kind of institutional change. In response to the criticism of some phenomena in classical economics pointed out by Marxist economics, classical economics has also evolved, and some deficiencies in classical economics have been improved by introducing "marginal theory".For example, the analysis of commodity value has transitioned from the labor theory of value to the marginal value theory, how the market regulates prices, etc. This is also known as neoclassical economics. But in fact, both ideas have entered a stage of independent development. Markian economics has found a ground for dissemination in the East, while neoclassical economics has penetrated the development of the West.

4. The Turbulent Great Depression Era: Great Depression and Keynesianism (1929-1980)

With the rapid development of industry, the pace of financial innovation has not stopped, among which U.S. stocks The vigorous development of the market is the most representative. Due to the free market concept emphasized by classical economics, intervention is minimized, which makes capital development appear to be out of control.

In the 1920s, also known as the "Roaring Twenties", the U.S. economy experienced rapid growth and the stock market was highly prosperous, but much of the growth was based on speculation and excessive credit. On top of expansion. Moreover, with the rapid development of industry, most industries have shown a certain degree of oversupply, but residents' income growth lags behind and purchasing power is insufficient. With the support of these two situations, the U.S. stock market has entered a stage of irrational exuberance. The value of most corporate stocks is much higher than its actual value, and speculation accounts for a very high proportion.

This capital feast eventually ended in the Great Depression. The so-called Great Depression refers to a global economic crisis that occurred in the 1930s. Its center was in the United States, but for The impact on economies and societies worldwide has been profound. This period was characterized by economic depression, surges in unemployment, and widespread social unrest. On October 24, 1929 ("Black Thursday"), the stock market began to crash and a large number of investors went bankrupt. The decline accelerated on October 29 ("Black Tuesday"), marking the beginning of the Great Depression. Until 1933, the unemployment rate in the United States was as high as 25%, and industrial production dropped by nearly 50%. Thousands of banks collapsed, depositors lost their savings and credit markets froze. Many families are unable to pay their mortgages and basic living expenses, and a large number of homeless people have emerged.

This crisis has also had a profound impact on a global scale, and the economies of Europe, Latin America and Asia have also been severely hit. International trade is on the verge of collapse, with total global trade falling by about two-thirds. It is not an exaggeration to say that the fuse of World War II was attributed to this.

In response to this crisis, Keynesian Economics was born. Keynesianism is one of the most influential economic theories of the 20th century, developed by British economist John Maynard Keynes. (John Maynard Keynes) proposed it in "The General Theory of Employment, Interest and Money" published in 1936. This theory focuses on how to intervene throughTo achieve full employment and economic growth, it is a criticism and revision of the "market self-regulation" of classical economics.

Since the trigger of this crisis is the stock market bubble caused by insufficient demand and excessive speculation, the core theory of Keynesianism is mainly built around these two aspects. One is the effective demand theory, Keynes It is believed that the fundamental cause of economic recession is insufficient effective demand rather than production capacity issues. Effective demand consists of four aspects, total consumption (C) + total investment (I) + expenditure (G) + net exports (NX). Therefore, when private behaviors such as consumption, investment, and net exports weaken, the economy will When there are signs of recession, effective social demand can be boosted through intervention and pointing out. The second is to provide strong monitoring of capital expansion to avoid excessive speculation in the financial market, thereby causing systemic risks.

The Roosevelt New Deal marked that Keynesianism officially became the mainstream economic theory in the United States. President Roosevelt adopted large-scale economic intervention measures through the "New Deal". For example, many investments in public infrastructure have stimulated domestic demand, rebuilt the financial credit system, promoted financial system reform, established new regulatory frameworks (such as the Securities and Exchange Commission), and strengthened control of the financial market. This is also the familiar SEC.

With the introduction of Roosevelt's New Deal, the United States quickly got out of the Great Depression, and with the help of the two world wars, it formed one of the world's two poles. Keynesianism also established its historical position.

5. The Stagflation Era under the Bipolar Cold War: Neoliberalism and the Supply-side School

Time continues to develop. After World War II, the world entered the bipolar Cold War stage under the Iron Curtain. The main theme of world politics and economics is the struggle between left and right, the confrontation between the socialist camp and the capitalist camp. Although there was no direct conflict between the United States and the Soviet Union, proxy wars occurred frequently. After each experienced rapid development brought about by post-war reconstruction, the United States was the first to encounter a bottleneck period in the 1970s. This was the dominant stage of the socialist camp. After suffering the defeat in the Vietnam War, the United States entered a stage of strategic contraction and defense. There were two triggers at this time. First, the collapse of the Bretton Woods system (1971). As the United States abandoned the dollar peg to gold (the Nixon shock), the fixed exchange rate system collapsed, leading to increased instability in the international economic system in the capitalist camp. Secondly, the oil crisis caused by the war in the Middle East caused oil prices to skyrocket, further raising inflation.

In this context, the United States has encountered severe stagflation, economic growth has come to a standstill, and inflation and unemployment have continued to rise. To deal with this dilemma that Keynesianism cannot solve, the economics community has proposed another solution. A group of economists represented by the Chicago School and the Austrian School proposed the so-called neoliberalism. The former was mainly committed to the construction of economic theory, while the latter focused on criticizing the system. Because the core idea of ​​neoliberalism believes that the cause of stagflation is the excessiveIntervention has seriously affected the vitality of corporate innovation, which in turn has led to higher production costs for supply-side companies, and the market has not entered a state of full competition. Therefore, it advocates returning to the small economy, avoiding excessive regulation, advocating reducing corporate taxes, and controlling expenditures to revitalize the supply side, so it is also called the supply school. Of course, at the theoretical level, the biggest difference between neoliberalism and Keynesianism is that it advocates regulating the economy through monetary means rather than fiscal intervention.

From 1979 to 1980, the inflation rate in the United States was close to 14%, much higher than the historical average. The unemployment rate rose to 7.8% in 1980 and reached 10.8% in 1982, the highest level since the Great Depression. Republican candidate President Reagan won the U.S. election and chose to use neoliberalism as the basis of his governance, vigorously promoting "Reaganomics" and matching it with Federal Reserve Chairman Volcker's monetary tightening. The United States finally struggled to get out of the predicament of stagflation and finally won the Cold War. Let me add a little here. Trump’s policy has always been compared to Reagan’s policy.

6. The era of large-scale water release during the post-subprime crisis period: quantitative easing and post-Keynesianism

This period of history is more familiar to everyone. Along with loose money, As well as the relaxation of regulations, the U.S. economy driven by financial and technological innovation has entered a stage of rapid expansion of globalization. Financial institutions have spread risks around the world through innovative products (such as asset-backed securities), and the global financial system is highly interconnected. At the same time, the U.S. real estate market experienced sustained price increases in the early 2000s and was considered a safe investment area, attracting large amounts of capital.

Under this dual resonance, the United States created a huge asset bubble based on subprime loans represented by high-risk housing mortgage loans, combined with numerous financial derivative designs. However, the end of the story is already clear. As subprime loan defaults surged, the value of collateral fell, causing the value of a large number of asset-backed securities to shrink. The dominoes began to collapse, and eventually Lehman Brothers, the fourth largest investment bank in the United States, filed for bankruptcy protection, marking the climax of the crisis and triggering turmoil in global financial markets.

The impact of this financial crisis is far-reaching. The American public is extremely dissatisfied with the Republican Party's laissez-faire attitude toward capital, which has caused such a crisis. This has also affected the readjustment of mainstream economic doctrine in the United States. Post-Keynesianism is back. A core argument of neoliberal economists’ criticism of Keynesianism has always been based on the assertion of rational economic man. If monetary and fiscal matters are predictable, economic agents will adjust their behavior in advance to offset the effects. So fiscal stimulus to the economy is ineffective.

In response to these doubts, Keynesianism has also made new revisions, among which price and wage stickiness (Price and Wage Stickiness) and imperfectly competitive markets are the most influential. The former explains whyWhat fiscal impact on the economy has a lagged effect, and the latter makes it clear that there is an oligopoly problem in the market, and the impact on equilibrium prices under imperfect competition of the monopoly market type. Of course, post-Keynesianism also incorporates the most important theory of neoliberalism, which is to jointly influence the economy through currency and finance. At the same time, post-Keynesianism goes a step further and proposes rational expectations management, which is based on the new Liberal rational economic man's judgment, through the forward guidance of relevant officials, affects the expectations of rational economic man in the market, and then has the effect of intervening in the market in advance, thereby improving monetary and fiscal efficiency. Therefore, the features we are familiar with, such as the control of inflation by 2% and the observation of forward guidance by Federal Reserve officials, are all products of this background.

Of course, in this cycle, as a post-Keynesian For implementation, the Democratic Party mainly uses three arrows to address the impact of the financial crisis, namely large-scale fiscal spending and unconventional quantitative easing, extremely loose currency, and increasingly tightened financial regulatory measures. Helped the United States escape the impact of the financial crisis. The story has also come to the present.

The return of American neoliberalism under the leadership of Trump, Web3 will carry the banner of financial innovation in the new cycle of the United States

Looking at the evolution history of mainstream economic doctrine in the United States, it is not difficult to find that this is a battle about The process of continuous exploration of the relationship with the market is affected by different historical events and continues to swing between the market and the market. The theory that emphasizes the former focuses on highlighting the effect of economic intervention, while the theory that emphasizes the latter emphasizes that the market is more efficient in allocating resources. Considering Trump's own life experience, the stage when his important outlook on life was formed coincided with the low ebb of Keynesianism in the 1970s. The United States relied on President Reagan's promotion of neoliberalism to help the United States get out of trouble. Therefore, Trump’s original intention of helping America become great again through similar strategies becomes easy to understand.

In Trump’s argumentative framework, the Democratic Party’s economy has caused three fatal problems:

lThe large-scale fiscal stimulus bill and quantitative easing have plunged the United States into a debt crisis;< /p>

l The protection of high-tech industries in Silicon Valley has led to the misallocation of resources, over-allocation to high-tech industries and the complete abandonment of traditional industries, weakening American industry;

l The massive information gap caused by active intervention has led to horizontal capital redistribution between different industries, and the widening gap between rich and poor across industries has aggravated the unfairness;

So in such a situation In this context, the author believes that Trump’s issuance of coins two days before he officially took over as president is not just for the purpose of making money, but to send a signal, that is, he hopes to provide Web3 with a better future during its supply-side reform process of deregulation. It has set a tone for becoming the core position of a new round of financial innovation. The benefits of doing this are also obvious:

1. It can bypass the constraints of complex interest groups formed in the traditional financial field by the Democratic Party for many years;

2. The open, transparent and trustless nature of the Web3 technology paradigm coincides with neoliberalism. By eliminating the intervention of all authoritative organizations and completely adjusting the distribution of interests by market mechanisms, it will be more conducive to the implementation of neoliberalism. .

3. At present, most assets in the Web3 world are still priced in US dollars, so promoting related assets is also of positive significance for maintaining the hegemony of the US dollar;

4. The censorship-resistant characteristics of Web3 , making capital flows more efficient and bypassing other sovereign financial restrictions and give full play to the financial advantages of the United States;

Of course, the impact of this is also obvious. The most direct negative impact must be similar to that of 2008, and it is bound to be greater than the impact of the 2008 financial crisis. Far-reaching, higher financial systemic risks, and vertical wealth redistribution between rich and poor are inevitable. But the time period in which this risk occurs must be medium to long term. To sum up, the author is very interested in the direction of financial innovation based on Web3 and traditional American industries in the next two years, and will continue to pay attention. Interested friends are also welcome to discuss with the author.