2006. From math to narrative in economics.

Schumpeter’s meme, that economy is about creative destruction should suggest that math, which requires stability of the variables in order to be applied, won’t work.
Mainstream economics, neoclassical – wants to treat the world in some form of A=kB, where k is some constant and A and B are variable in an unrealistic world where ceteris paribus, everything else is equal. But players in the economy are trying to innovate: taste, technology and product, managerial style, and use war as a last resort. As a result A and B are anything but stable in their role as major independent and dependent variables. In much of economics what looks like A or B has to be replaced by variables that are actually determinant at any one time, but not in the next.
The result is that mathematizing the economy, a slow process anyway, does not fit a dynamics of open systems with constantly new variables. What is needed is the ability to tell meaningful stories about what is happening, which means narrative, characters, social shifts, complexity. The major economists: Smith, Marshal, Mill, Keynes, among many others, have all argued that the use of math is not quite legitimate and gives a distorted view of the unfolding facts.

But we have a further problem. For whom is the current neoclassical done? Not only are most economic papers not widely read, they are not widely read by economists. What then is their purpose? I think it is clear that the publishing mafia that controls the main journals is interested in a regime of methodology and publishing that makes economics look substantial, delivering prestige while supporting the 1% that wants to believe that the economy is ok if we just fix a few glitches. Economics is also, in its neoclassical/mainstream form, an aid to career alignment and departmental management of hiring and tenure.

The serious problem is, what would the content and education of a narrative focused economics look like?

Dani Rodrik writes in Project Syndicate

What’s Been Stopping the Left?
Apr 10, 2018 DANI RODRIK
If progressive political parties had pursued a bolder agenda in the face of widening inequality and deepening economic anxiety, perhaps the rise of right-wing, nativist political movements might have been averted. So why didn’t they?

Yet the lesson of recent studies is that beliefs about what the government can and should do are not immutable. They are susceptible to persuasion, experience, and changing circumstances. This is as true for elites as it is for non-elites. But a progressive left that is able to stand up to nativist politics will have to deliver a good story, in addition to good policies.

2005. People’s stock ownership

We need new economics sufficient to make a significant difference. In provocation #129 I appended a short paragraph that proposed that we enter into a new stock plan for the nation (and as a model for others to follow).

The plan is simple and as I tried it out with people during the week I got a surprising amount of encouragement. 

It starts with two facts:

1. Few people feel part of society. To live in a society where you don’t own a part is pathetic. The people should own their own society.

2. Capitalism is once again  feeling the punch of serious criticism, since it has engendered oligopoly, climate change, and increasing inequality (Piketty 2018) .

Can we include the people and save capitalism?

The idea is simple: requisition ten percent of all the stock ownership in the US (that would be about $3 trillion in value) and put it in a federal holding agency paying dividends once a year to every citizen in the country. (Payout would be,   given  total stock of $30T, ten percent of that is 3 trillion and earning about 2% pay out to each person would be about $2,000. Family of four would be $8,000. (This idea is  a modification of Peter Barnes, first in his Capitalism 3.0, which is based on the Alaska citizen’s fund, and further back, to Henry George, Progress and Property)

The holding agency would not have to do any management beyond being a holder. Normal corporate management would be left in place. But the managers and regular owners would feel the national pressure, now that ownership is spread to all the people  to make decisions in the long-term interest of the country. Since we have to move  the economy in a green direction, now there would be a large constituency coming to bear on the corporations to have sensible polices, including reasonable executive compensation plans. 

This would eliminate some welfare needs and shift people from being welfare recipients to being owners.  I am more willing to sacrifice (say in response to  climate change) if I anticipate that I will benefit

Meanwhile the morale of the country would go up and everyone would be a capitalist, not welfare recipients,  in that they actually are collectively owners of stock that pays out

An advantage of giving dividends rather than stock is that many people would, pressured by economic necessities  sell the stock, as happened in Russia. Provisions would have to be made to keep them however for selling future anticipated payout for current cash. There are probably other pitfalls and corruptions to cope with. The banks obviously would try to turn that stream of income to themselves.

The one percent, the primary losers in this transaction, have to compare this loss to the loss of social upheaval and much stronger taxes and potential loss of everything through social system collapse. Ten percent seems politically feasible because it is reasonable. 

This can be justified by returning to older values of equality,  as Emma Rothschild writes

For Arthur Condorcet O’Connor, the Irish general who married Condorcet’s daughter Eliza, “the Turgots, the Condorcets, the Smiths” were the “fathers of the science” of political economy, whose principles, including “the eternal principle of equality,” had been overturned by the “new sect of so-called economists” of the post- Revolutionary reconstruction. (Economic Sentiments page 4) 

Capital begins with the fruits of cattle breeding. The new head, cap, is new surplus and can be re-bred. The question since Mesopotamian times has been,  how is the herd and it surplus to be managed? The “divided”, the divided, is part of the answer, but how distributed is the key, to social morale.The use of the word “stock” is inherited from  that cattle culture.

2003. Petra.

https://www.bbc.com/ideas/videos/welcome-to-petra-a-little-bit-of-heaven-on-earth/p05zn715

Screen Shot 2018-04-10 at 10.05.54 AM.png

The blend of architecture and greening. Then we have

Writing early in the first century A.D., the Greek historian Strabo reported that while foreigners in Petra are “frequently engaged in litigation,” the locals “had never any dispute among themselves, and lived together in perfect harmony.” Dubious as that may sound, we do know that the Nabateans were unusual in the ancient world for their abhorrence of slavery, for the prominent role women played in political life and for an egalitarian approach to governing. Joukowsky suggests that the large theater in the Great Temple that she partially restored may have been used for council meetings accommodating hundreds of citizens.

Strabo, however, scorns the Nabateans as poor soldiers and as “hucksters and merchants” who are “fond of accumulating property” through the trade of gold, silver, incense, brass, iron, saffron, sculpture, paintings and purple garments. And they took their prosperity seriously: he notes that those merchants whose income dropped may have been fined by the government. All that wealth eventually caught the attention of Rome, a major consumer of incense for religious rites and spices for medicinal purposes and food preparation. Rome annexed Nabatea in A.D. 106, apparently without a fight.

Read more: https://www.smithsonianmag.com/history/reconstructing-petra-155444564/#HhkZ84fTQEhbOPzh.99

2002. Picasso’s Woman throwing a stone.

Intersting puzzle. Commentary on today’s identity politics.

Screen Shot 2018-04-10 at 9.51.38 AM.png

we have from Zizek’s Return To Plato As Materialist?

A Woman Throwing a Stone, a lesser known painting by Picasso from his surrealist period in the 1920s, offers itself easily to a Platonist reading: the distorted fragments of a woman on a beach throwing a stone are, of course, a grotesque misrepresentation, if measured by the standard of realist reproduction; however, in their very plastic distortion, they immediately/ intuitively render the Idea of a “woman throwing a stone,” the “inner form” of such a figure. This painting makes clear the true dimension of Plato’s philosophical revolution, so radical that it was misinterpreted by Plato himself: the assertion of the gap between the spatio-temporal order of reality in its eternal movement of generation and corruption, and the “eternal” order of Ideas.

 

We ned to nudge our thinking into .   terrains.

2001. The political regime is the major product of the economy

The political regime is the main product of an economy.

Most are aware that the history of economics since the marginalists and classical economics has striven to separate the political from the economics.  Economics is the realm of balance and equilibrium and politics the realm of messy conflict. Also fairly well-known, if not affirmed, the motive has been to keep economics “simple” so it can be subject to the mathematics of the dynamics of just a few variables. 

The problem for us as we enter a twilight zone of obscure complexities involving climate, inequality, automation and the weakness of the governance of nations is that we have to face the fact that – 

the politics we have, the regimes, are the main product of  the economy, producing narrow ownership and political power in the hands of people with money – not so often direct but  through representatives and lobbyists who owe their careers to the money of the major asset holders. It really is a plantation model obscured by a vulnerable middle class.

In this sense the economy, aided by economics – has done what it was supposed to – protect “private property.”  Of course the idea that a chain of factories across the world, or digitalized assets in the world’s computer banks are “private” is fairly ludicrous.

Amazing how economics has avoided a more straightforward analysis of debt, ownership, and the supporting politics, but there are hints this is changing. 

The state of affairs produced by the economy:  climate damage, wars on the horizon, inequality, bad government, all make us feel that we need to do better. The danger is that wealth will circle the wagons and co-opt the political budget for defense of enclaves.

Yet we hold on to keeping politics separate from economics. We could start modeling what a major disruption could look like, a world where corporations have more power than states, a world where migrations throw land ownership into deep disarray, a world where a thousand variables come into play simultaneously , where prediction is not possible and attempts at prediction show more about old ideology than emerging reality, 

 We might model policies preferring flexibility in everything we do to defensible but breakable  rigidities we are building in most of our systems..

Recent articles like the Guardian’s. 

The demise of the nation-state http://www.theguardian.com/news/2018/apr/05/demise-of-the-nation-state-rana-dasgupta

and books like

Climate Leviathan: A Political Theory of Our Planetary Future

Point to the scale of the problems we face.

———

Here is a simple idea, still schematic, but suggestive. How much of our problems could be solved if we distributed ownership of stock broadly, making everyone a partner in society and its economy, everyone a part owner, everyone a capitalist? Just appropriate existing stock,  say ten percent, and putting those stocks in a federal fund that pays out the accumulated dividends to all citizens an equal amount? After all, most companies, take Apple, are built on public property like patents on military technology, and thousand of people participated as employees. Those employees were mostly educated at public expense, The customers are part of society and supported by society, yet the corporation benefits.. Why should not all who participate also be owners?  As it is, we have  that a small sub set of society can own the whole society. 

(There is some parallel thinking with Peter Barnes. 

With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don’t Pay Enough

1999. Bureaucrats and war.

Professionals assume that the outcome of their work is some effect of their part of the bureaucracy. Those who plan for war assume war. The result is that the future is predictable: it is what the segments of the bureaucracy are working to make happen.

Given the way the press is handling China-US rivalry  war seems to be the only possible outcome.  We need to treat China as a co-worker with us focused on the world’s problems. No co-worker is perfect (twin of ourselves) but we have to make do, and can. Trump’s way of seeing the world as bullies and losers is very dangerous. These are countries, not corporations.

1998. End of the nation state.

Another serious article that needs to be considered.

https://www.theguardian.com/news/2018/apr/05/demise-of-the-nation-state-rana-dasgupta 

The nation state arose as a response, the Tretay of Westphalia, 1648 I think,  to the mainly dispersed wars in Europe of the 1400-1600’s. But the solution made each king an autocratic, especially with religion. The wars since can be attributed to the weaknesses in that arrangement, which created local identities rather than European ones, And so here we are.

What is at stake here and in the 1997 post is the fate of state consortia to deal with climate change or corporate consortia to do the same. Both are weak. Is the California experience providing hope that instead of either states or corporations moving toward a  solidly authoritarian consensus, can we get a more democratic response that can still deal with climate change?

These are in response to the important book

Climate Leviathan: A Political Theory of Our Planetary Future

1997. as california goes…

He is saying that those that lose out in the political divide are likely to rebel and if strength is on their side prevail, And that the death of the Republican Party in California is likely to be followed by the rest of the country. He puts the timeframe of 15 years on this development but I don’t think we have 15 years.

https://medium.com/s/state-of-the-future/the-great-lesson-of-california-in-americas-new-civil-war-e52e2861f30

The Great Lesson of California in America’s New Civil War

Why there’s no bipartisan way forward at this juncture in our history — one side must win