1869. The need for economics – if we change.

Last week I wrote:

Would economics be able to shift focus to deal with such shifts in the economy, ….

This week..

Provocation 94 :The opportunities for economics: the need.

Caveat. I see things from my place in and around Silicon Valley where I am in daily conversations about climate, corruption, security, control, and the future of tech and society. . Half of the people are appalled. Half are looking for ways to make money from this. The two halves are intermingled. So this provocation of mine comes from my participation and I think the perspective is already widely shared.

“Stimulate growth”
“keep th economy rising”
“its a job”

 

Image Copied on 2017-07-16 at 10.40 AM.jpeg

In many of these discussions people are quite clear about the problems we face – climate, inequality, population, energy and automation. Governance is rarely mentioned. Policy plus tech it is assumed can solve any problem. But when it comes to talk of what to do, proposals seem weak. The usually proposed solutions don’t scale to the required effects, and take too long.

Interdependencies are not considered. The talk about what progressives (or democrats) need to do to win elections leaves out the things the population is savvy to, that the economy and the climate and automation are in a complex collision course. Almost everyone sees that the political power is in the hands of the .0001%. If alternatives to Trump (parties, candidates, government officials, press, professions and Universities) do not discuss these (For example stressing growth without consideration of the complexities) it is seen as almost – or maybe in some ways worse – than the Trump destruction machine. (The best current source on this – among many – is Chris Arnade’s Twitter postings from his travels around the States. @Chris_Arnade)

The problems are interconnected. Growth* means, given today’s tech, more pollutants and more climate heating. Renewables will take time to scale up. Do we have the time? Cutting energy now means most people are doing the wrong job. Imagine cutting energy use by 80% as would perhaps be necessary to meet climate goals of “only” a 2 degree Celsius increase. Such an increase is not evenly distributed and is forcing the collapse of some especially vulnerable regions of the world. Increased temperatures mean increased air conditioning means… uh oh. Feedback loops. But the loss of jobs if energy use is curtailed is hardly discussed. (An example of an opportunity for INET). The fate of “stranded assets” , oil in the ground or newly built but already abandoned factories with many more to come,  is also not much discussed. What will happen to the value of the parking lots and extra lanes, garages and supporting infrastructure that Lyft/Uber will “liberate”.

It is hard to imagine a way to cut energy use and not instantly increase unemployed. Joblessness will create more foreclosures. There go the banks. Maybe the state takes over the banks and redirects investments in green or at least greener technologies. Huge struggle taking lots of time.

Food chains are vulnerable, often produced in the hottest place and energy use for transportation my have to be cut.

Will technology help? It might, but tech is also a means to concentrate wealth in the hands of the one percent. That enhances their political power to create lifeboat earth for themselves and dump the rest of us.

Growth. Any increase in demand for product and service will motivate managers to look for automating solutions. No hassle with workers (such as the accounting and legal issues) And the companies will own the machines. A return to slavery. Growth will not create many new jobs but eliminate many that exist by speeding up the substitution of algorithms for employees. Another analytic opportunity for INET?

I think most people are already thinking most of this. Part of the alienation in politics is because people don’t see the politicians, nor the press, nor the universities, talking about these problems.

It is of course very hard to hold the problems in mind in a systemic way, and very hard to imagine solutions. The major resistance to change, I think, is the judgement that people will want their cars, their energy, their on line retail, and resist giving it up. It is assumed that the alternative is imagined to be – nada. The possibilities of cooperation and community are not allowed in to our assumptions about the capacities and the imagination of other.

There are proposals to decentralize to smaller units, perhaps bioregions where with community interest and support, imagination can cope and use the Internet to distribute ideas and opportunities (needs) across the world to learn from each other and distribute surplus. Bucky Fuller said we have few billion people and the globe. Putting them tougher is just a design problem. But doing so is a threat to our egos. We really assume we are better and the number cable of innovation and management are few. This is a limiting and probably wrong assumption.

As it is, we are playing musical chairs. We are engaged in class warfare.

Can we as a species rise to manage the world in a humane way? What is thee role of economics? What would the common sense philosophy of the Scottish enlightenment and Adam Smith have to say?

Perhaps we are facing square on the human condition; given who we are, product of local adaptation to trends over a million years, not systemic planning. Given our DNA we were bound to get an evolving society with technology, opportunities for egos and property, organized in hierarchies, all running as can till the system breaks. Maybe this is just us. No way out. Speed the dance. Musical chairs enhanced. (Fred Hoyle once wrote the reason we are not visited by aliens is because no civilization in the history of the universe has been able to both develop the technology to get here and survive socially)

But I think we can do better – Recognizing that each person is interesting and capable and worth fighting for – and they will help. We need to spread health and education and and the skills to participate in an open experimental economy whose goal is not the one percent but the whole. “Without a vision the people will fail..” Imagine an economic discussion that compares the outcome of this broad participation with the outcome we currently have.

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*Growth. “Need to grow to eliminate poverty”. But growth in the last few decades as gone along with wealth concentration at the top and stagnation in the lower 80%. Why will this pattern not continue if we get “growth”? Watch

Third world poverty. People lifted out of poverty. What has happened in much of the world is local elites aligned with multinationals exploiting their own people, People don’t live villages for opportunities in the city. They are driven off the land for state=corporate agriculture and forced to live in dreadful high-rise. Try raising a family on the 50th floor,

Growth accelerates the motives to automate. Some jobs will emerge, but the rate of loss in the “growing” sector will be faster and more, to slower and less.

Growth is a problem for climate. Growth would of necessity use mostly older technologies, at least for a while. Diesel trucks for example.

There is a path to growth with greater equity and as part of a serious break on global warming. But the argument is not being made. We are getting fragmented rather than systemic thinking.

The result will be cancerous rather than healthy growth. More one percent, more global warming. More inequality. Class warfare. Migration wars. Serious inter-state rivalry.

Bronco is arguing “Economic growth is key for reducing global poverty (and even global inequality.” H writes

If one really believed in, and wanted to argue for the incidental nature of economic growth (“whether or not the economies grow”), then he or she should start by trying to change the bases on which our (global capitalist) civilization has been built, namely insatiability of needs and commodification. But these features have become so strongly ingrained that I cannot see how they can be changed in any foreseeable future. All the rest is romanticism.

In http://glineq.blogspot.com/

It will be very useful to watch carefully how these issues play out – or don’t – in the Inequality CUNY conference.

Seventh Meeting of the Society for the Study of Economic Inequality (ECINEQ)
New York City
July 17-19, 2017

 

1868. Economics needs to be an open system, more narrative and less quantified, if it is to cope.

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.

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“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

 

 

1867. The education of economics.

Provocation #92 The education of economics.

Most of the criticism of current economics comes down to – maybe we are teaching the wrong stuff.   Designing education for economists and for those who rely on understanding economics is hard. The various communities that lean on economics have different needs and motives. These are not resolvable into a small set of correct  beliefs and a large set of wrong ones because the range of needs is very broad – from numerical accuracy for sophisticated computations to policy discussions about the quality of life. There are undergrads, graduate students, the press, public servants,  corporations and finance all needing guidance. To cope with the future they need more practice in conversation and inquiry than indoctrination.  In future careers they will need flexibility in policy and creativity and empathy in management, not rote learning of canned approaches. Too much of economics is like boot camp.We have  sold out both undergrad education and later post degree professional education  (seminars, conferences, on line courses) to academic standards, not real world appreciation. A little like teaching chords without music appreciation.  But as it is, economics is one of the narrowest departments in terms of its outreach to other departments: history, psychology, arts, anthropology, philosophy, politics – and technology.. At its best economics could aspire to being the soul – the “uni” – of  the university because the range of its interests ought to be inclusive.  The economics department often has access to the office of the university president, but come giving only narrow advice on finance,  not broad advice on the relationship of the university to the good society. Economics could be seen as the application of the understanding of all the departments  in the university to the problems of managing the species on the planet.

The economics of economics is not in the economics curricula.The profession itself  is part of an economic structure  of careers that is part of the social mechanism of distributing benefits and opportunities in society.  The psychoanalyst Eric Erikson once said “Mankind prefers enlightenment away from itself.”

Those entering economics are not arriving on a tropical island, a kind of paradise of refinement and nature, but at a fast moving train (Internet sub-network?) that is in rapid motion,  dropping Keynes, picking up complexity theory, and packaging it all under Darwin with differential equations and game theory. Yet it is taught as a kind of steady state tool box of relatively stable methods. The dramas  of society and its interesting economic issues are not discussed. The first job the young economist after  economic education is likely to include  “what do you think we should do?” This question is rarely discussed in the standard courses. Why do some people have capital and others don’t Why are the rich so admired when so many of them don’t work? Why do we talk about labor productivity but not the productivity of the rich?  We are seeing a massive transfer of wealth to trust  fund youth. What will that imply? What are these children being taught about  the meaning of one dollar one vote?

Students are asked to accommodate to and make part of their identity abstract formalistic  thinking that has evolved in a process that is antiseptic: reduced life forces replaced by abstract concepts.   Think of the new student who wants to take economics because her father lost his job and she wants to understand why society is so organized in such a mean spirited and family destroying mode. As soon as we get to emotions economics wants us out of the picture because emotions lead to politics and criticisms of essential things like capitalism. So the emotional side of her quest goes unanswered. 

A more vital economics would start with a vital view of the human as emotional to understand the dramas of life (Kenneth Burke,  Stephen Toulmin) , and mathematical (Piaget, Helmholtz) in order to understand the architecture of things in relation to each other. One cannot replace the other.

Aristotle began with eco-nomics, estate management, a holistic concept embracing everything -people – land – animals – plants – having to do with the well being of the estate. Adam Smith in Wealth of Nations  saw the nation as a place where moral sentiment and  character development, was encouraged and the wealth, not dollars but quality of life for all, of a society was more important than the wealth of those who chose to play finance.

Over time the human has been stripped out of economics in order. [A favorite word of mine is etiolated .  [(of a plant,  pale  due to a lack of light: “etiolated seedlings”. Having lost vigor or substance; feeble: “a tone of etiolated nostalgia.”)]

This reduction of the human has not been innocent, but motivated

1. To keep from raising issues of equity – who gets what, or of caste , assuming the division in to labor and capital is somehow (how was that again?) natural in a two caste society.

2. To make calculation easier and hence appear like science, under the shadow of Newton, and free of value discussions. 

We don’t even get to thermodynamics. Our science education supporting economics is antique. Take for example  a distinction worth making:   In a mechanical system the parts maintain their integrity when they are integrated into a  larger whole, but in an organic system parts do not maintain their integrity when integrated into a larger whole (Manuel De Landa). The goal of economics research and teaching often appears to fit Philip Mirowski’s view that the goal is to turn the world economy to a single giant machine of interconnected parts. Like Kevin Kelley’s What Technology Wants, as though it can move through history without human participation.

One might think that economics is a kind of helpful fix it profession that starts with interesting problems

What is wealth

What is social hierarchy

How does economics affect politics mediated through the 1 % and their lawyer-lobbyists?

What is the relationship between 

  • material quality of life and 
  • aesthetic and relationships?
  • Hey what about the climate
  • And urban ugliness?
  • Does competition demand losers

What if we started with core problems.

  • Energy
  • Making of things
  • Infrastructure
  • Governance needs to embrace externalities whereas business wants to exclude them. 
  • Why does wealth tend to concentrate?
  • Quality of life beyond a basket of utils.
  • The use and ownership of automation
  • Debt and sustainability

And treated economics 

  • As  the appropriate engineering to deal with these problems.
  • As estate management where the estate is the planet and climate is crucial – how should humans and the planet interact?
  • The sophisticated accounting to make sense of it, for transparency (rather than treating profit as good but wages as a cost)
  • The economics of health, education and geolocation as enablers of good living.

There should be some room for model builders and for sophisticated  accounting to help make sense of what is happening.

The  education economists need and society needs from them is an expansion, not contraction, from Aristotle’s management of the whole (in his time the Estate – basically a cattle ranch – was the largest unit for production of life and its support). The marrow of economics is in is breadth and depth, not in the bare bone of formalism.  At time formalism can pry deeper or paddle out to the edges, but mostly it lies inert.

 An amazing thing happened with Christianity. The word economics was extensively used starting in about the second century for “god’s house”, its structure, purpose and management. Even Jesus was seen as part of God’s economy, as the incarnation of its principles so humans could see it. That idea, of human habitation under ethical guidance is still with us – but oh so etiolated. Many people still desire some such pragmatic vision, but it is very weak in articulation. Many economists across generations would be uncomfortable talking or teaching this, but it is real. To some extent an economist is like a doctor and – you gotta take time with the cadaver – and at the same time be more philosophical and cultural.

Rethinking economic education might go under three goals

1. To understand society

2. To understand formal methods appropriate to a dynamic society moving rapidly in history

3. To understand the history, not as triumphalism (ain’t we great) but with a critical understanding of why we have ended up with a system that is killing us – and killed sixty million in the 20th century and is destroying the planet. 

Economics, as global warming continues,  will be called upon to make sense of climate niche breakdowns, migration wars, new approaches to food chains, security, income distribution, use of technologies, land ownership under regime collapse.. We need to keep asking, the core of the education question, what do we need to know?

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If you want some serious thinking,  connect the idea of Aristotle’s estate management  through Christianity and seeing the connection between capital – from cap head as new head of cattle, with the birth of Christ (the lamb of God) as a new head of humanity, and  the transition from estate management to homeland security, father land, mother land and the home of the gods.

This is Western civilization. The advanced conversation is to see this depth in the other cultures of world. Quite different, but as deep. Lots to learn. Is this economics? or am I in the wrong classroom?

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1866. Democrats need a bigger shift

Jobs and education won’t do it. Population knows too much. A new platform must begin with

Serious response to the climate crisis

A coordinated response to  inequalities

New ways of thinking about income because jobs under automation cannot do it

A new approach to national security based on much increased diplomacy and decreased reliance on war and military sales contracts.

We will have to give up much to gain much. The population knows this. The population sees the scurrying of the Democrats as rearranging the checker pieces on the chessboard. People know the times are going to be hard and Are looking for leadership to cope.

 

 

 

 

1865. The deeper cultures of “economy”.

Provocation # 90
Aristotle, as most economists know, used an existing greek word economy from oiko=house = nomos=rules… By it he and other Greeks meant estate management which we know both by the way the word was used and by the surrounding society which was organized in what we today would see as cattle ranches. Cattle was the chief food for the Greeks, and “sacrifice” as a ritual act honoring the gods while feeding the people, was , to us, shockingly central. Athens at the time of Plato had a herd of 100,000 cattle for those events.(see Mcinerny, The Cattle of the Sun:Cows and culture in the world of the Ancient Greeks and Richard Seaford Money and the Early Greek Mind. The following is a paraphrase of some of Dotan Leshem’s very helpful book The Origins of Neoliberalism)

Plato and Aristotle realized that a well managed estate could produce a surplus. What was that? New thought, because nature did not seem to produce a surplus, using up everything it produced. It was recognized that the surplus could free up time that could be used – and the two key categories for time spending were philosophy and Politics. Note the economy produced the surplus to be used for these social and individually developmental projects.

[Interesting that the three key terms, economics, politics and philosophy – were Athenian in origin.]

The purpose of estate management then was to free up citizens (not slaves or women) for contemplative or political time. There was no sense of using it to further expansion the economy. More leisure could be gained with more surplus by prudent management and the control of desires for spending. These were seen as the source of surplus, not innovation, which was unknown.

Comes along Rome and shift of economy from the encompassing polis to being embedded in empires. The practicality of that raised the stakes for political participation and philosophy fell to the side[1]Next came early Christianity, much more important than we were taught. The idea was that the surplus created by the economy , used in Greece for philosophy and politics, could now be used, in the community of the faithful, to support prayerful and meditative. time. Since the world was given by god, the economy was the world, the meditation was to be in touch with gods’ plan – economy- (I am not making this up. The greek word, economia – was used widely in this sense .)

Imagine starting with the Garden f Eden, God’s economy, and then passed on… Important to see that we are talking about words and meanings that pervaded whole societies – and changed. These ideas, strange to us, should not be. Foucault and Arendt basically covered this territory up to this point, and made the connections with the modern economy and politics. ). Since economy was about cosmos and materiality and god created the world, gods plan – the word used was economy – also included God’s giving Jesus to humanity as an incarnation of his plan for humanity:  this was, fr the time, a coherent understandable project. Remarkable how much current economics can sound the same – growth through economy to meet the limitless expansive needs of society. As society grew more complex and populated, the idea of the economy and the value of surplus moved outside the christian communities of the faithful into the broader society (you could see it happening, and this required new thinking. The INET of the era.) The result is the economy we have now, with its displacement of philosophy and politics as economy became more central to the management of the empire.

As I have been poking around in various literatures I keep finding things we really need to know. If economics could move from being subservient to philosophy and politics to the incarnation of Christ and the community of the faithful and then to society writ large in growth and surplus seeking, not for the use of leisure time for thought and personal development, but for filling the garage with toys and the skies with weapons, then we need to know about this. If economics used to be subservient to politics and philosophy, it certainly is not now. It speaks to the idea that economy can be different and we are freer to choose, if we can bring ourselves to see it. This perspective means new economic thinking at a scale larger than Marginalism, Keynes, even Marx. There is a feast here.

Here from Leshaem is one of the many readings that have helped me clarify.

https://www.dropbox.com/s/spculc5mh4lwmhw/leshem%20From_Oikos_to_Ecclesia_to_Market.pdf?dl=0

p.s.
And

“None of the world’s top industries would be profitable if they paid for the natural capital they use.”
By David Roberts on Apr 17, 2013

None of the world’s top industries would be profitable if they paid for the natural capital they use

If so are we ecnomists?

1864. Example of math and society

A new Ted talk.My view, very intersting, but facile. Gives the illusion that because cities grow, and we understand the math, that all is determined. But it doesn’t give us any capacity to talk about why our experience of a good painting and a good poem are not quite the same. The tendency is to incrase the reach of math itno social undersanding, and the market for big data is right there. This shift from a literary humanistic undersanding of society to a mechanistic quantifiable one iS fateful.

1863. Philosophy?

Socrates got us off to a good start. “What is the fit life for a human being” But the conservative moved in with “Hiw do you know?” And evcer since philosophy has been trying to answer that question, not the previous question.

A teacher of mine Mexico 1966-68. Painted a year ago from memory.

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Erich Fromm