Provocation # 83

Economics  as science and as narrative.

Economics leans towards its identity in science because it allows for management of the discipline, especially by allowing for criteria for advancing careers. It also seriously enhances the prestige of the field despite the fact that the public that gives economics the status is not very interested in the results, nor are the other social sciences (and maybe even economists are less than enthusiastic about the next publication).

The claim for economics  to be a science got a boost from coming into public consciousness at the same time as Newton’s few equations for gravity with its mesmerizing magical  instantaneous  action at a distance. The mystery of the night sky puts the motion of the planets, including earth,  smack in front of us, and we can almost feel the curves of gravitational balance. Newton’s work on optics was much more observational.

The time of Newton/Adam Smith was  a period when the Catholic view of the universe with its secure place for humans was giving way. The post-christians of that generation were looking for a new security, a new grounding in invariance.  The universal and timeless achievements of science seemed to give that security.

But economics was also giving images of how circular flow and invariance across systems  (dollars from here to there and back again. c-m-c, m-c-m). As always, the system was owned mostly be elites  who set the rules, and the great fear was always that the peasants,  workers, army of the unemployed, would try to take charge and ruin the whole thing.

But if the whole thing were god made, not man-made, then it was a natural object and humans should let it function, just as the planets were set in notion by god and should not be interfered with.

This was an old logic. For example the great ancient empires always tried “law”, man made, as a natural object. The confusion between lw for things and law for humans is near universal, and of course we still use the same word for each. Persia, Egypt, referred to their city as a microcosm, a kind of fractal of the cosmos, so don’t disrupt the organization of the city or you will upset the universe. It is bad to challenge or question the system. Sound familiar?

Because the economy, or the market is considered to be a natural phenomena, it should not be interfered with or chaos might ensue. The message: don’t touch the system. About as pure a conservative principle as one can imagine.

While economics was aware of change, it was suppressed in favor of constancies. It took Schumpater to force awareness of creative destruction. Yet today most economists still assume most of the system will not change. We will have capitalism, ownership, interest, debt, conceptual instruments, like credit default swaps,  to manipulate within those constants. But the constraints are assumed to be timeless.

Economics do not, for the most part, act as scientists. Scientists are primarily driven to understand phenomena, things that can be seen (often with sense amplifying instruments). The effort starts with something not understood and then thought about and experimented with. The phenomenon is always in the center. Economists are –  a tendency – more drawn toward formalisms of models and equations. My own undergraduate years at Caltech in physics and  working 20 hours a week as a lab assistant exposed me to a world unlike the classroom physics, but an environment of poking and pushing, “What would happen if…. ?” One does not often hear from economists “what would happen if we forgave the debt?”

One could easily think that economics should be a mix of accounting and engineering: how to make things that work for society. But economists show little intent in the phenomena of society. GDP is  useful for calculating but deeply misleading about the welfare of a disaggregated society – dealing with real people rather than averages or means. So GDP becomes normative.

As engineering economics would be concerned with how to make social organization in interaction with the material world work for humanity. Good accounting would be a support to that system. Take for example the balance sheet. Profit on one side as a benefit, wages on the other as a cost. The message: increase profit decrease wages. But in fact business exists to meet the needs of humans and managing business for the benefit of both owners and workers should be obvious  but it isn’t.

As the neoliberal view once again is under pressure there is a move to embrace complexity there and evolution as a safe island for economics. The reaction to complexity theory divided people into two groups: first, wow, ok, with complexity many more things are now within he scope of the calculable than previously thought. The other reaction was, wow, many things we thought were calculable turn out to not be. Economics leans towards the first as a new orthodoxy.

probability theories are often assumed to help in that effort, but any model that includes probabilities also includes some assumption of invariance. The sample space for example. If we really understand change and probability we recognize tat the real story keeps moving out of any space of assumptions. Economics should be about change.

This given force to the argument hat we need to learn to have better descriptive narratives of what is happening and what could happen. Such narratives can be clarified with mathiness,  but the center should be on the quality of the narrative. Imagine if comics was a healthy mix of engineering, accounting, investigative journalism. Most  of economic research including as published in the journals –  has a more or less implicit to explicit narrative. Yet very little effort goes into training for making better narratives. If we are to have an economics that works for all it has to gt beyond its easy alignment with the interests of the one parent.

On top of economics as engineering, accounting and journalism, there is space for a very much needed broad perspective of the great philosophical questions of the meaning of life, the possibility of belief systems. These require study of anthropology, literature, arts, history.

But notice how the circle moves. If economics were to be like this, engineering to make things that work for society, good numerical analysis to guide and evaluate, and journalism to ferret out the way our engineering is working or not to make a better society –  it would be a much better science.

notes ——

As we know economics comes from eco-nomos: estatemangament for Aristotle. Deeply organic holism. Tecne is also organic.

“The invention of agriculture was the first act of what we call technology. The Greek word techne not only described a form of knowledge (logos), as we have seen; it is also the abstract form of tikto, to “generate” or “engender.” Men, like the gods, were the teknotes, the creators, and what they made, the tekna, were their creations. The simple act of cultivation thus marked the beginning not only of humans’ independence from nature but of their long struggle to make themselves masters of nature. It was the beginning of the belief upon which, although it has been constantly challenged down through the centuries, the whole of modern society now rests: that nature exists, as the great astronomer Nicolaus Copernicus put it bluntly, “for our use,” propter nos. More prosaically, this newfound mastery over the natural world also demanded the “division of lands” or, as it was sometimes called, the “creation of nations,” since unlike hunting and pastoralism, agriculture, and the property rights it had created, could not easily be pursued without also establishing boundaries between one piece of territory and another. The hunter could, whenever he chose, pick up his bow, take his family, and move; even the shepherd could, as Condorcet phrased it, “drive his flocks before him.” But the agriculturalist is necessarily and inescapably “attached to the land he cultivates.”

From Pagden,  The Enlightenment and why it matters.

As you are tired of hearing me say,  capital comes from latin cap, head, used as in new head of cattle. Economic activity is a modification of early organic processes. We might do better seeing the continuity as we search for alternative formulations of our interechange with nature  rather than imposing a break in development from past to present.

 

and hinting at the humanism we have lost.. This capacity for empathy

“As Smith recognized, once the basic necessities had been satisfied, the main stimulus to further acquisition lay in the desire for social prestige and approval. “The desire of becoming the proper objects of this respect, of deserving and obtaining this credit and rank among our equals is, perhaps, the strongest of all our desires.” But the importance attached to status made the possibility of loss of status appear “worse than death.” Man’s suffering was more intense, Smith declared, “when we fall from a better to a worse situation than we ever enjoy when we rise from a worse to a better.”  The desire of becoming the proper objects of this respect, of deserving and obtaining this credit and rank among our equals is, perhaps, the strongest of all our desires.” But the importance attached to status made the possibility of loss of status appear “worse than death.”

As always love to have notes back.