Provocation # 93 Economics needs to be an open system, more narrative and less quantified, if it is to cope.
So much good writing. Every perspective on economics and the economy is in print somewhere. The problem is, most economists seem to move along within their niche and are not looking to reach out to other perspectives. The result is that the larger dialog fails to happen while efforts go into the smaller. My personal favorite example is the work of Philip Mirowski, which is full of implications for almost all economics. Yet the implications of his work on the terrible trend of treating society as a single computer or his critique of the application of physics principles of conservation to economics. If Phil is right, and I think he is, then much of economics is looking down the wrong rabbit hole. Most economists seem to feel ok about ignoring the implications. Staying aligned with elites is I think the best explanation, and that because after the fall of feudalism, mankind has been, and still is, looking for new forms of economic and political stability.
Take private property. Property comes from “what is proper for a man of rank to show his status in society.” Only when alienated from the person, a long historical process, does it become “property”. “Private” from latin pri-vatus to remove from the public sphere. Public comes before private. Very dynamic, yet economics persists in treating property as an invariant property (sic) of all things that must be defended without question. We rely on John Locke’s sophomoric view that property is there for the taking, and hence belongs to the taker – unless such taking interferes with someone else’s taking. This is the logic behind a bedrock part of economics. Our thinking is not terrific. We all know that the use of antibiotics leads to stronger resistance and also to increasing population. We all know that putting new chemicals into the soil end up in the human body. Yet we continue on.
We all know the story of the seven blind men and the elephant they encountered on the road. One thinks they have found a tree another a wall another a snake and another a bell rope and the last perhaps a leaf from a tobacco plant. Can we meaningfully make the story fit Economics? perhaps it is the other elephant, the one in the room everyone sees but nobody talks about. maybe the real elephant is society.
The economy is, just because of the existence of the word, easily taken to be a closed system but in fact it is a jumble, an ensemble, put together over centuries of pragmatic procedures and regulations. Treating the economy as a thing implies stability and coherence. But this will strip out all the interesting things that might be the subject of science. Public policy, and historical understanding certainly require looking at economics as an open holistic system. The output of a factory for example is influenced by changes in taste, changes in the ability of the population to pay, changes in technology and changes in management theory. It does not take much imagination to extend this list to things like climate, war, population, struggles among the owners for control and the rise of competition. The attempt to isolate part of this ensemble as meaningful pushes all the interesting factors into the background. The output of the factory is treated as a continuous variable but a quick analysis shows that the buying and selling are enmeshed in a complex fabric of fairly rigid contracts. As a manager shifts out of one contract and into another the impact is much more like a quantum jump then like a continuous drift. This hardly matches a supply-demand curve.
The dynamics of careers and the realities of research funding force us to pick up a piece out of the puzzle and to try and make sense out of it, especially quantitative sense, ignoring all other aspects. Aristotle said that in science one should use a method that is adequate to the subject matter. If the subject matter is a complex ensemble, treating it like a closed coherent whole is bad science. and it is public policy pushed by a politics that, as we all know, serves the existing elite, not the whole population.
(Governing things is hard so perhaps what we get is the best that we can get for the whole population but I think we can do better.)
This attribution of coherent thing status to “the economy” is reinforced by if not led by the corporate dominated media and the political process that seeks to isolate the economy from the rest of society in order to prevent any kind of redistribution. From the beginning of economics in the 1600’s till now, the description of an economy shows both forces at work. Treating the economy as a natural rather than man-made ensemble, a “law” of nature rather than laws of society, is a fundamental flaw in thinking implying “keep government interference away from it.”
Manuel de Landa writes (In A New Philosophy of Society), a mechanical part maintains its integrity even when part of a larger assemblage. An organic part does not maintain its integrity in a larger assemblage.” This principle of demarcation is very helpful if used. But in economics we have aligned with those that requires that we hold most things constant as we explore the pieces one by one or correlation by correlation. If this is bad science and bad public policy and bad history perhaps we need to re-center our research approach on narratives that encourage rather than inhibit flexibility.
Take for example the postulate in economics that what people want is 100% met by the market. but as we know what people want is love, beauty, truth, sincerity, humor, memories, the pleasures of thinking, walking, talking and that a meal served with good spirit is much better than the same food served without.
This is all really important because it looks like society is going to go through a number of traumas simultaneously and the kind of economics that will be helpful will the one that can easily recognize that what people want in such circumstances is not the same stuff they wanted before.
For example, to seriously deal with global warming, probably 80% of the population, I’m speaking loosely, will have to change jobs because the job they have is making the wrong use of energy. In fact dealing with climate change might require that half of that 80% should have no jobs at all for the benefit of society and curtting down global warming. Property values go to free fall, tTansportation has to be re-defined along with supply chains and distribution systems. there will be lots of local experimentation driven by a mix of necessity and opportunity. Some will be democratic, some will be local mafia’s.
All of this is clearly in the economy but can economics cope with it? Look at the way Economics usually describes the shift from agriculture to industry in the 1870s. In Economics it looks like a continuous bloodless process of people painlessly transferred from Kansas to Chicago but in sociology and novels it is clear people are being jerked around, family is destroyed, bad behavior encouraged and the law used to protect the wealthy in the process.
It is not just the economic perspective on the past that has become bloodless, but the future. “Market incentives will correct environmental imbalances?”
Under severe climate change I see the emergence of three key categories for human employment.
1. greening everything
2. caring for the large part of the population that is dislocated by the process
3. managing the first two
Obviously there would be others, such as education, and the arts.
But there will be lots of dislocation that puts people in trouble for serious amounts of time while it continues to sort out. Automation both helps, and exacerbates, the pain and dislocation.
Would economics be able to shift focus to deal with such shifts in the economy? ; to see the elephant in the room that everybody can see but not talk about while the economists use inappropriately narrow methods to understand the parts ? Or are we trapped between The helicopter view and the drill down view, both of which tend to miss the dynamics of daily life of society,
The elephant is not the economy, it is the society. And economics does not see society nor its politics nor its art.
“I arise torn between a desire to improve the world and a desire to enjoy the world. This makes it hard to plan the day.” — E. B. White