Are we now in a kind of early lock-in to nations and corporations and elite structures of inheritance, education and rewards? I sense a shift in atmosphere, rather than an easy to describe shift in consciousness and categories. The West seems riddled with lack of leadership. The past looms. Europe seems small and the US seems rapidly weakening and uneducated. Note that nation comes from natal, to be born, and hence is a racial/cultural term, and corporations based on corpus, body, also draws on the mythical and organic power of old concepts. Lots to think about .
In retrospect people will ask – why did economics keep supporting the system, or at best making small tweaks (tax rates, bank reserves ) but nothing capable of doing the obvious: modeling and discussing what needs to be done to stop the momentum toward crises, to prepare for a post crisis world.The critiques of what’s wrong in society, the economy or economics are good, but stop short of proposing actions.
There is widespread agreement that the .01% have too much wealth which has been achieved through a combination of policies and taxes, but are there any proposals on how to get it back in a timely fashion capable of preventing disasters? Or is there the widely shared understanding that anything done to recalibrate the system would lead to cascading side effects that would bring the system down anyway?
Who does some interesting thought experiments? For example,
“As of this date no house can be sold for more than was paid for it.”
There is of course no way yet this could be done. But lets imagine and learn from the imaginings.
Immediate consequences are easy to imagine. Buying a house as an investment rather than as a place to live would cease. Totally unfair for example for people who have owned heir house for a long time and paid very little for it. Draconian? Messy. Yes. But are not the consequences of not doing anything radical also going to be very messy, maybe even messier? I think we learn from such experiments.
Look at the curves: global temperatures, population, adaptation of automation, lack of living wages, civil strife, student debt, bad management of the overall production process: raw materials, manufacturing, disposal – all terrible, and mutually reinforcing.
There is a tendency to avoid social engineering (mechanical socialism soviet style), but forget that the US Constitution was a social invention, now not going so well. Part of the goal of that invention was to create a system impossible to change (especially redistribution of property). So we are up against the limits of that design. Can the invention of America and the Constitution be redesigned?
Good background is Garry Wills’ book, Inventing America.
Will we solve the crises of next hundred years? asked Krulwich. “Yes, if we are honest and smart,” said Wilson. “The real problem of humanity is the following: we have paleolithic emotions; medieval institutions; and god-like technology. And it is terrifically dangerous, and it is now approaching a point of crisis overall.” Until we understand ourselves, concluded the Pulitzer-prize winning author of On Human Nature, “until we answer those huge questions of philosophy that the philosophers abandoned a couple of generations ago—Where do we come from? Who are we? Where are we going?—rationally,” we’re on very thin ground.
The goal of recreating the Garden of Eden (as nice a life for humans as we could achieve) has long been replaced by turning it over to bankers and developers. The result is a megacide. This is an economy issue. We are not managing the estate well, we are exploiting the land and the people. Economics should be about how to manage the planet, for the good of people. (The nomos part of economy comes from early Greek meaning equal distribution.)
But without a clear sense of goal and necessary steps to get there we are playing the game with blank cards. We don’t seem to be able to make tough arguments and think them through to their implications.The people and the policy makers need us to be doing this thinking and sharing it widely.
The use of oil for transportation for example must be drastically cut IF we are to limit global warming. Do more than a handful of people really disagree? (Global warming is only one part of the megacide. The biomass of all fish falling by half or sea birds by 2/3 is not primarily climate. driven. )
Have any economists modeled out what would happen if gasoline use were to be cut enough by Jan 1 to reach the goal of no more warming by 2020?
(You probably already know that if we were to cut fossil fuel use by 100% global warming would continue to increase because existing co2 will continue to trap heat.)
We would need to look at some rough numbers as to how big the cut would have to be. And, as a first conversation starter, we could model out what would happen if we (sic) cut gasoline use in half by Jan1? (I am not sure that would be enough to prevent the suicidal bullet we have launched at ourselves from reaching its target.) What would happen to existing cars and their use, how would people and institutions cope,
reconfiguring the tasks the cars are used for, and the existing loans that have supported the purchase of the cars? Many loans would default because people won’t pay for cars they can’t drive. That brings down banks. The beginning of chaos. Is this so chaotic that we can’t begin to model the consequences of such a necessary action?
Why don’t we see this kind of conversation? My guess is it is taking place, but I haven’t found it.If you know of such, please let me know.
The US that trump attacks is the US that in fact has been in many ways the enemy of the people who voted for him, or support him now. The country was run for the benefit of the 1% and the professional class and is most associated with the Clinton’s, Obama and less well known, Geithner and Larry Summers.
If we are to recreate the country as a good place to live we must take on this issue, which requires recognizing the legitimacy of Trump support in the concrete details of what was happening to the majority prior to Trump’s announcing his candidacy. As we know, peple were losing out, incomes down, social mobility less, and – let’s give people some credit – climate change not being addressed, hence not serious. Remember, a support in politics always is in the context of the alternatives. The Democratic party has not been presenting itself as – well, as anything. Not a good alternative.
I am reading The Crisis of the European Mind 1680-1715 by Pail Hazard, It contains the wonderful
“Spain alone had dimmed her radiance. We will not say that even now she did not fling over Europe some rays of a light that could not be extinguished; but it is a hard task for a nation to go on indefinitely keeping ahead of her rivals. It means she must never falter, never exhaust her strength, never cease to keep bright, and to diffuse around her far and wide the radiance of her pristine glory. But by this time Spain had ceased to live in the present. The last thirty years of the seventeenth century, and, for the matter of that, the first thirty of the eighteenth, were with her well-nigh completely barren. Never before, throughout her whole intellectual history, says Ortega y Gasset, had her heart beat so feebly. Wrapt up in herself, she presented an attitude of lofty indifference towards the rest of the world. Travellers continued to visit her, but they did not conceal the disdain with which she inspired them. They harped on her defects—a populace wallowing in superstition, a court sunk in ignorance. They enlarged on the decay of her commerce and spoke contemptuously of the sloth and vainglory of her people. As for her writers, he foreign critics repeatedly gave instances of their pretentious and affected style.. people were begining to say not only that Spain had lost her power and influence, but that she was a traiter to her wn genius Her romantic spirit, her national pride, her nice sense of honour, her love of justice, her complete unselfishness—all those qualities which had been her particular pride and glory, Cervantes in his Don Quixote had held up to ridicule. And the Spaniards by applauding Don Quixote had belied their nature and disowned their birthright. Absurd as it was, this idea was not more absurd than a host of other reproaches with which nations competing for leadership have sought to give the coup de grâce to their already weakening rivals.”
Provocation #142 Three thoughts
Physics is a social creation and so we get histories of physics, which are different from say the history of the evolution of the atoms of the elements starting with the big bang and producing in turn hydrogen to helium to oxygen, etc.) Economics is the thinking about something – the economy, but a history of economics is very different from a history of economies. These histories are nearly totally absent in economics (but do exist in history departments, works such Braudel’s and Hobsbawm’s.) It is obstructionist to leave these histories of economies out (heterodox thinking stays close to the existing boundaries) because new economic thinking should take us outside the current economy and consider others. One can guess that the reason is that a history of economics can be written from within the boundary of thinking from Smith to Keynes, Hayek, Hirschman, etc, but to write of economies would lead to comparisons reminding us all that the economy we have is not the only one possible. Uncomfortable. But to cope with the current complexities and possible solutions, we need to go there.
On market dynamics, the market is seen as the interplay of supply and demand, but real markets of course are infused with the dynamics of interest, ownership, taste. The apparent attractive arrangement of a market in equilibrium leaves out those things which lead to concentration of wealth: rich pay lower interest rates and have access to better information. If these are added into the dynamics the equilibrium point of a market – unless there is government action – is one person ends up owning it all. This is simple dynamics. Why is this (so it seems to me) so rarely acknowledged?
A further note, a bit more obscure. The Christian New Testament used the word economia frequently, but this was ignored within post Smith economics because the word was translated from the Greek of Athens and the New Testament into the English of the King James as “administration”. No wonder economists did not see the possible subtle infusion of Christian theology and metaphysics on economic thinking.
“Administration was at times the meaning of “economy” but it was in the context of the proper arrangement of God’s project for humans which allowed god’s practical administrative tasks to also characterize the universe, which has echos in the physics-lust of later economics and tells us more about the invisible hand metaphor in Smith. We of course do have administration but it has lost any sense of a shared goal towards which administration should aim. For the early christians it was god’s plan for humanity to develop itself.
The modern scientific use of “economy” gets in the way of seeing economy as the administration of things, not a science, not an episteme, but as a practical activity of the arrangement of the earth to meet human needs.
We might be better off (Keynes says “like dentistry”) if we had sophisticated accounting and good engineering and planning in the place of a theoretical and detached math appropriate to physical forces. With the math focus one can imagine an infinite series of journal articles that detail after detail never get to the question: what kind of an arrangement of the physical and social world should we have for human being as they are?
This morning’s email had an article from Scientific American, almost ironic.
How Physics Lost Its Way
Scientific American · by John Horgan · July 2, 2018
Does anyone who follows physics doubt it is in trouble? When I say physics, I don’t mean applied physics, material science or what Murray-Gell-Mann called “squalid-state physics.” I mean physics at its grandest, the effort to figure out reality. Where did the universe come from? What is it made of? What laws govern its behavior? And how probable is the universe? Are we here through sheer luck, or was our existence somehow inevitable?
Link to the rest..
Economics looks at the world segment called economy and thinks of it as a system of a finite number of discrete variables that can be dealt with a few or a handful at a time.. These might share correlations or work with or against each other. It compares to the constraints of golf. A real economy is different from what economics presupposes. A real economy has people moving against each other, looking for gaps in the system, trying to break out into new possibilities for profit or capital gains. The real economy is more like soccer, where some go for where the ball is, others for where it might be, than like golf. There must be equations? Stubborn. The real sport is in the scatter, Schumpeter’s “creative destruction”.
Economy is not just trends toward stability. These exist but are constantly undone by human action, from corruption to creativity. The economy is not a closed system of quantifiable parts, a single representative agent, but like a warm pond in springtime, buzzing, confusing, mating, devouring. The literate would say economics is baroque. Economics would be better off if it tried to characterize the economy. We desperately need good stories of what is actually happening. Quantification can be a powerful helper, but not if its culture dominates the field. As it is, Economics is mostly a submaximizer: more wealth for the wealthy at the expense of the whole. More for the whole, but existing and forseeable distribution means less for the majority.
Capital began as the birthing of cattle. The question then and now is, who owns it? It has always been an elite organized against the rest. As Rosencrantz and Guildenstern ask, “was there ever a time we could have said ‘no’?”
Provocation # 134
In a time of crises, what is the role of institutions, in particular economics? To the extent economics maps adequately onto the real world as it has recently existed, what happens to that mapping when the world rapidly changes? The models that have been in use tend increasingly to not fit, and cannot be made to fit because they use existing “variables” that are not representative of the new world? Does economics just drag its feet as it is pulled forward reluctantly, actually being part of the conservative momentum?
Economics could be an amazingly challenging and interesting social science as it spans both theoretical – like science – and pragmatic – like journalism and law and lets face it, interesting gossip – No other social science is as close to the pragmatics of human action yet much of the time so far removed in its concepts from the phenomena of the economy.
We tend to believe that there is some substantial permanent world and we have found it. Hence we are smarter than the others, closer to power, closer to the core of unfolding events. Probably not true: all is flux, some long term, some short, and we get it all mixed up. Certainly smugness is one of the chief sins of many economists. As such we miss much of what is interesting and worth study.
Here is a beautiful example of cross boundary thought, from Seaford Richard Seaford-Money and the Early Greek Mind_ Homer, Philosophy, Tragedy-Cambridge University Press (2004)
“Whereas gifts create solidarity between individuals from different groups, solidarity within the group is created by distribution, or redistribution. “
The Geeks of Athens believed that civilization starts with legally mandated redistribution toward equality. First came hunters who shared the kill, then sacrifice which maintained the tradition of distribution, and the use of law – the nomos of eco-nomos came originally from neimen, equal distribution. There would not be a law created if not needed, in this case equal distribution mandated against greed and inequality.
This is so rich because it hints at ways out of our current dysfunction.
Economics dominates our conversation about the state of society and we are not good at discussing history (the stories of what happened), anthropology (observations of how others had or still live), Philosophy (thoughts about who we are and how then to live). Much is being written, driven by the expanding awareness of crisis. At times it seems to me we would be better off without the word “economics” – just drop it all, all of which makes it look like the experts are in control and making sense. We could continue to discuss things more specific like interest, money, investment, class, technology, trade, but not using the awkward vocabulary of economists such as marginalists, GDP, utility.
But I have come to a different view. That there is lots of good in the idea of “economy”, just that it has been co-opted by those who are the supporting cast for the seriously wealthy who use economics as a justification to legitimate their exploitation.
The history of economics shows that the discussions started, with the Athenians around Plato and Aristotle, as a larger self-conscious reflection on the purpose of the use of land to feed us, and the emerging social organization to manage the whole. They were able to discuss the role of elites and the meaning of community good in the same conversation. But over time generations of economists reduced economy from being a natural part of life to being a mechanical system of a few forces in quantifiable interactions.
This evolution of economic thought made some sense because the relative importance of the land-food-families logic was slowly overshadowed by trade, manufacturing and finance. The early debate – just prior to Adam Smith’s Wealth of Nations in 1776, was about those thinkers, pamphleteers really, called the physiocrats who maintained stubbornly that all wealth came from land, and that manufacturing was just a rearrangement of what was already produced.
The industrial-minded won that argument stressing abstract aggregates, contracts and tax policies, trade balances and resources, but at the cost of avoiding the realities of the impact of these on land used to grow food of quality to support families’ well being. The best known egregious example , clearest from England, was producing more wealth from the land by forcing local farmers off the land and out of their houses so there could be more sheep. Interesting that the kings and queens of the time tried to prevent such policies, because of their concerns (of sorts) for the well-being of the whole, whereas the policies were of clear benefit to large land holders, who won out in the Parliaments
The conflict was about which image of society helped manage the wealth – in one case the wealth of owners of large estates, in the other of the wealth of new factory owners who saw the opportunity to get rich by putting new technology on large enclosures called factories with steam-driven belt manufacturing for example. The general good of society, which was at least a part of the earlier thinking about economics in a line from Aristotle to and including Adam Smith, was being forgotten. It has been as though there was a new merry-g-round emerging in the middle of society, and economics was for those managing it and their support staff (the lawyers, accountants, teachers, police) and not for those who failed to get a ride and play a role in the flow of wealth.
Nature for early economic thought was around food, land and families and all that went with it. Imagine a country scene with cows and calves, and men with scythes cutting hay, little cottages. But the nature important to manufacturing was the nature being explored in in the natural philosophy which became physics: energy, heat, speed, mechanics – not sexual reproduction. The nature of Newton was about timeless differential equations, energy and force. It was as though economics became the operation manual for those who were or wanted to be rich – obviously a part, not the whole, of the population.
Pamphlets were written starting in the 1600’s with lead sentences like “X is about wealth and how to obtain it, ”wher X could be commerce, trade, manufacuring. The word econmy had not yet reentered the mainstream. This shift in focus, fitting the needs of an industry as a machine for wealth creation (at the expense of society), has basically ruined us. The human aspects of a full life in society has been stripped out of economics, reducing economics to a mechanical rather than organic perspective. Many are making this complaint. I take for example
“What they care about is what it means to be human, what it mean have relationships, what it means to live life, to have loves, or to tell lies. If you want to engage such people, YOU have to tell a story about culture and values—who we are, how we got that way, where we’re headed and What makes us tick. That’s what has always interested me; it’s what my reporting has always been about. The gee—whiz technology is just a Win:dow through which to gaze upon human nature.” – Joel Garreau in Radical Evolution.
What has gone missing..
“Economy” is suggestive of a more holistic interest and was used by Aristotle as estate management. The farm or estate was the major unit of social organization and production and Aristotle discusses everything: land, grain, animals, slaves, family members and relation to others – politics. It as an exploration of how to manage in order to produce the livelihood of human beings. All societies have an economy, but the many discussions such as in the marvelous book, Money Changes Everything by William Goetzmann, do not lead with a philosophical view built on reflections on the purpose of an economy. Much economic writing starts with a complex society but fails to look at origins. It talks of “tax changes…”, “interest rates retreated… , incomes rose, investment declined.” Just look at the vocabulary used in the sessions of the 2018 American Economic Association annual meeting (https://www.aeaweb.org/conference/2018/preliminary). No mention of real people and the way they deal. Quantification requires aggregation, not details.
A reintegration of humans with nature is the core task for this century. It implies a better understanding of people in relation to each other. it means people in the full scope of the human life cycle and the families in which these are lived. The imply a concern for the belief systems and meanings understood by the population , from births into community and out of the community through death.
Plato and Aristotle saw that well-managed estates produced a surplus. Simple analytics. People require food, the estate is organized to produce that food, but, if well done, there is a surplus beyond sustainability. The modern answer is to reinvest to make even more (of which scraps to the people, feasts to the very rich and scraps for the people) or buy stuff, from chocolate chip cookies to Yachts.
Plato and Aristotle’s answer was clear: the surplus should be used to create leisure time, and that time to be used in self-development, education and participation in the community in politics and philosophy. The surplus should not be spent on things because human development was more likely an outcome from surplus used to create leisure used for study and serious conversation than surplus used for buying things beyond the tools of production. The welfare of society depends on good thinking and community conversation.
This is very important because, as soon as we have two possible views of the uses of surplus, the conversation is opened up to further exploration. We are no longer stuck in the TINA – there is no alternative – world of Margaret Thatcher and We desperately need such a conversation to get out of our current mess. The key thought here is to resurrect the original meaning of the concept economics, which has become almost useless and dangerously misleading. Since most of us want to live in a healthy blend of civilization and nature, why don’t we use our wealth to go there? Amazing how economics avoids that idea and is not much help in us getting there. In fact the standard advice taught within economics is contrary to that goal.
Lets do better with ourselves, our society and our planet.We need clarity of purpose and clarity of means. We all have the responsibility to think about our future and manage the present? The purpose has to be growing good and interesting people, and that means developing our environment and society to support that goal. So we need an approach that is comprehensive, including understanding people, society, and the planet. Hence revitalizing economics. We need to break the vocabulary of economics out of its protective cocoon and be more of a butterfly.
Provocation #132. Economy across languages.
Most science begins with a phenomena and explores it. Economics begins with an economy that has been defined, redefined and refined again, always passing through the ideological filters of the times. The result is that Economy as we develop an economics to understand it is split off from society. The two, economics and society, have dangerously diverged. Over time, the holistic sense of economy as estate management (the original Greek) in all its organic details gave way to an economics of commerce and finance. This is the reason why economics is so destructive, by supporting a view of economic life that tears apart communities, families, individuals and the climate, and why the way the history of economics is written, as the triumph of the wonderful present, is only part, and a misleading part, of the story of economics and its attempts to understand economies..
Th very word economy hints at a coherent self-contained systemic concept of something separable from its context in society. Only those languages derivative from the Greek have the word for economy, such as French economie (which in French means both economy and economics). Other languages without Greek influence have to make up something to fit when translating from the English.
In Chinese two characters (as eco-nomos is also a combination of two words) that have been adapted for translation have very different implications from the western economy. .
The first, jing can mean To manage, to engage, or via, close to the nomos of economy, but also meaning “classical or sacred texts. It is one of the words in the title of Lao Tzu’s Dao De Jing The way (forward) and its power (to make things happen). The second, li, means to benefit, to cross a stream, to relieve, to help, to aid, to assist. So In Chinese the words used to translate economy can be read as effort to carry the great past into the future. Not completely different from the western economy which is the effort to make the future (good use of resources for production. Production means to make forward).The difference which may be important is that the Chinese makes it clear that what is carried forward is a great civilization.
This suggests that the West is uniquely burdened by the implication that economy is a coherent object for study and policy, mechanical and separable from society. It really is not a good slice of reality and in practice it has evolved over time from the holistics of estate management to the more limited mechanism of wealth treated as a physical system owned by capital but not by labor.
If we were to take modern society without the word economy or economics I doubt that we would put together the existing ensemble into such a concept.