Post # 2011. How do we get to a more inclusive economics?

Provocation 164. Beyond economics.

 

Economics fails to look at key social phenomena: capitalism, ownership, quality of life, preferences, political power. In the few cases that reach outside to social consequences, the symptoms are discussed by not core consequences.

A few examples: Steve Keen’s revising economic models feels bloodless, absent people, or Stiglitz/ Ocasio-Cortez who raise key issues but do not discus core causes. As if we can fix inequality or climate within the framework of normal econ speak.

Core causes not discussed: capitalism, class structure: A few own the leading edge of society’s innovation, and they hold on to ownership for their own benefit. Society can create innovation and create new wealth but society is organized so only a few really benefit. The rest are asked to put in labor in order o survive , and are now being replaced by automation and algorithms, and are expected to spend their dwindling income on things sold by the few.

Economics does not look at the most important phenomena. There are things we need to be thinking about, does economics encourage, or at least support such thinking, or does it dull us? Is economics so ideologically model bound , sealed away from social phenomena, that it can’t discuss them? Because of this avoidance it also acts as a barrier to inquiry. And society, absent serious economic inquiry. A simple example.a carpenter working on a house here gets a ticket for sliding ing through a stop sign, not having come to a “complete stop.”. The cost is $350. He doesn’t have it. It is almost a week’s pay. Rob the poor to keep taxes low. He loses his license fr failure to pay, can’t show up on the job and immediately is given eviction on his house. The policeman giving the ticket is on a quota incentive system, his salary needs to be paid. Income to the county means keeping taxes on property lower. Isn’t this an aspect of economy we need to understand ?
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Highly recommend Roberto Unger’s last lecture of the spring quarter at Harvard Law. He opens to a discussion with the class, gets off to a slow start but very worth the time.

Unger https://youtu.be/Y4CCl6vVHkM

His view includes that we are in a counterrevolutionary period and progressives have no program, having dropped the ball after the New Deal.

Post #2002. Why can they get so rich?

Provocation #149 Why can they get so rich?

In the spirit of provocations..

Cook, Bezos and Musk all want to use money pulled from society and blow it off into outer space, abandoning earth and humanity. As Bezos has said, basically there is nothing on earth worth investing in. Some jobs are created by their space orgasm. But no Parthenon, no Museum of Modern Art, no university, no rising wages are carried into the future.

What rationale for marginal value can locate such wealth in such people? Why does such concentration not lead to a serious examination of the regulations and tax policies of ownership logistics, such value concentrating justifications, not get more serious examination? There is no way that their billions represent a well thought out return on effort. A german real-estate developer, asked if the income gap between him and one of his employees, was reasonable, answered

“I work 20 hours, the employee only 8, so of course its fair. ( a factor 2.5 in time resulting in a factor of 10,000 (10 to the 9th / 10 to the 5th ) in income? “ (Paraphrase from
https://www.youtube.com/watch?v=AFIxi7BiScI)

Do economists admire this so much they can’t make the critique?

Hard to image that it is a an income difference based on skills. Their management expertise doesn’t seem that unusual., but it might have been a kind of tenacity, bull headedness, even meanness, that got them to their position.

Tim Cook couldn’t make a dime at Apple if there were not customers. And customers are an essential part of the cycle and the customer is expensive paid for by society that does not get a return because it all goes to the top: lots of education, social position, all from of a larger society that has paid for those customers to be able to buy, but who do not share in the profit. I don’t see any literature about why Cook is such a great manager.

Increase in stock price? f the increase were distributed proportioned to the actual contributions of society and workers the result would be very different. Obviously a high evaluation of stock depends on lots of customers, and they are created by many other factors that are not being compensated but taxed.

It might be that the top positions in largest corporations have to be filled by somebody and the logic of size yields such high benefits to those who, like a winning run in a pinball machine, got there. If this is so, where is economics exploring the cause and the awkward consequences of such concentration?

1993.Not facing issues leads to megacide.

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.

1991. Progress vs cycles. Implications for us.

Provocation # 143Progress vs cycles. Implications for us

The current state of society brings into question the necessity, even the likelihood, of progress. But is progress actually so wonderful? Paul Valery wrote in 1900, “We later civilizations, we too know that we are vulnerable.” This was a shock to me when I read it in high school. It has continued to put an edge to all my thinking. My current thinking about “progress” is pushed by recent research on the quality of life – better diet, few working hours – of hunter gatherers, and their obvious resistance to settlements (James C. Scott, Against the Grain).

We of course are too formed by the goods of modern society to be able to become cooperative foragers, and the world is too crowded to escape the needs of technological supports, but that doesn’t prevent us from looking at other lives as preferable, even if not for us. We do not know the extent of changes in living that will be demanded of he next generations, but they may be extreme. It is our opportunity to be helpful by pointing out things that may be positive in these forced changes. Aristotle wrote “We can have growth without development and development without growth.” Instead of struggling to get more which has led to inequality and climate damage, a rearrangement of what we have. Intriguing, as we are looking for clues to what, in difficult times, we can do.

There have been two main views of the structure of history: progress and cycles. The West is strongly committed to the perspective that history is a progression: if we can just keep going, things will continue to get better. We have accepted the idea that there is “progress”: fire, electricity, railroads, smartphones. And yet there is concern now that progress may have stalled. Most societies outside the West seem to have held on to a belief in the dominant role of cycles. Rome believed that emperors came in cycles – good, mediocre, bad, good mediocre bad. I think China had a similar sense of emperors coming in cycles. Christian culture has only one: from God’s creation of the world to his ending it. This is a true suicidal wish for a society. The Christian view of dominating the earth and the needs of the mission made growth seem essential.

Our Western civilization is very materialist and technological. Often we hear that a new tech can save the situation. But the human side of history is largely ignored by our dehumanized culture. All societies made of humans show people in roles of leadership, follower-ship, dominated and submissive that are easy to recognize.

Proposition: while material culture changes and some sense of “progress” can be discerned (though nuclear war, surveillance culture, iatrogenic diseases, our inability to cope with climate and population should lead us to question this), the range of human types does not. The inter-generational and cross class dynamics are easy to understand in all societies. Stephen Greenblatt’s new book Tyrant is about how deeply Shakespeare explored these moments. (And its resonance with Trump is constantly present in the book but not stated.)

Put differently: however radical the shifts in technology, the human repertoire of responses remains constant. The benefits of materialism may be seductive but illusory if the quality of lived life of humans with each other is the goal.

All civilizations go through a rise and a fall. Anthropologists explore how the rise starts and writers like Joseph Tainter have explored some of the aspects of the Fall In his Collapse of Complex Societies as does Castells in his book about network induced collapse,  Aftermath. Toynbee in his Study of History uses civilizations as the unit of analysis (he discusses 23, most of which I had never heard of).

As a first approximation lets look at empires (civilizations) as having three phases. (This is of course arbitrary, and much is still to be said about how the phases move from one to the next. Eric Voegelin has written extensively about the mythic structure of three part histories) The three phases are start, middle and end, or rise, stability and decline.)
The major human repertoire within all society are the recognizably the same. In the phase of rising: euphoria and awe and thanking the gods mixed with fear of change and loss of the old; a feeling of stability and smugness and superiority during the middle phase, and fear, dread and scapegoating (see Rene Girard on imitation of desire) during decline. The phases are long enough that people and intellectuals come to accept the quality of the phase as the way things are. The transitions between phases are long and chaotic. Cycle-minded societies, such as the Aztec or classical Greek have ready explanations for change, but the linear minded West, mostly through Middle Eastern influence, has held on to progressive explanations even through bad times. The current mood in the West assumes progress is normal and asks why we are stalled. Asking to speed up progress might actually hasten decline.

As decline begins to be noticed elites restructure law so they continue to benefit at the mid phase rate, but since there is actual decline they must extract more from the poor in order to maintain the illusion of progress. This speeds up the decline. In all societies we can say that there has been progress on the material side (though the collapse of the environment, wars, plagues should put even this in question.) But on the human side the emotional philosophical and political feelings and thought are fairly much the same for every culture’s phase in the cycle. The culture of the phase tends to be perceived as human nature by the people living it. This is actually a barrier to imagination about human possibilities. We get for example books with titles like Religion in Human Evolution (Robert Bellah), assuming evolution and hence progress. (The word evolution implies the un-folding of predetermined structure.) The unit of thought is the species, not empires or civilizations.

Toynbee’s unit of analysis – the civilizations, shows a different approach criticized by most historian who do not want to think outside the boundaries of the single civilization of which they are a part. We get for example the very good history The Rise of the West, by McNeill, made confusing by his sub-titling it A history of the Human Community. Gibbon’s famous history, The Decline and Fall of the Roman Empire, by focusing on one phase (or Is that two?) makes it easier to not see that there is a whole cycle. I remember in school that the book was treated a fairly irrelevant since the Romans made mistakes leading to their decline but we, having had the Enlightenment, were not going to make similar mistakes and so we had nothing to learn from Rome. Toynbee’s view takes on more relevance as we begin to question the possibilities for Western Civilization now. Can we imagine we are at the end? Many people think so and having a hard time with it. Westerners who study Asia can more easily deal with cycles for empires as in the very interesting book, Strange Parallels by Victor Lieberman ,which actually compares rise and falls in the West with those in Asia.

Deep thinking says don’t get hysterical about the phase we are in as though continuous progress were possible if we would just do the right thing. For Example, the push for more innovation that just happens to be owned by corporations that are helping to concentrate wealth. Realize that the management, leadership, and cultural tasks shift with each phase. We should face where we are, and respond realistically
The shift to the next phase in the cycle can probably be hastened or delayed, but not overcome Human consistently respond with awe and delight in the beginning, self satisfaction and narrowness of theory in the middle, fear and blame as decline sets in. Leadership tends to share participation (everyone is needed) in the beginning, but starts to maneuver for advantage in the second, and abandons the society in the third.

This whole dynamic of human response is not part of physical nature but a blend of human cognitive, emotional and cultural capacity. “Education” is an attempt to overcome this dynamic but each generation, each person, starts to slowly wake from the dream of their own life into an awareness of the historical moment, and a new generation takes over before he process of education has gone very deep.

The proposal here is that for empires the way people are thinking and the felt quality of their life is determined by the phase they are in . “Progress” is understandable as a way of seeing the world as their society is in the rise and into the stability phase, just as fear and despair and blame are understandable as necessary reactions to decline.

People being what they are and organized into classes, will vary in their response since the poor will feel the effects (though maybe not the awareness) of decline first and the rich last, just as the rich will feel the effects and opportunities of the rise long before the poor (who will suffer even in an upward “progressive” era. Though a rise in expectations tends to draw in more participation from the poorer because of the increase in constructive activity requiring workers. This happened after the plague of 1340’s when the die off of workers led to a rise in wages as rebuilding required more effort.

This view, that progresses is limited to a phase in the life of empires, and that human nature shows itself in similar ways in all societies, has implications for leadership and policy.

The task :
1. Recognize the impact of empire rise and fall. Recognize that the cycles overlap and describe some segments of society but they are not all in synch. Decline can begin in one part of society while another part is still on the rise. But note the emotional reactions of people are fairly consistent with the phase their whole society is in. Contagion and imitation are powerful across a whole empire, even the globe. People across class lines are part of the same culture and there is a homogeneity to the emotions released by the phase the society is moving through.

2. Understand that the year does not come with a label as to where in the cycle we are. It is a question of comparing narratives, being intuitive, doing lots of reading and traveling, and still maybe getting it wrong. But we can do well enough that it is worth the effort.
2. Try to avoid the negative impact on the poor of the shift of society from one phase to the next. A major opportunity for serious thinking can happen as one empire gives way to another: Macedonia to Rome or Feudalism to Industrialization as examples. The tendency is for class interest to prevail through such transitions. Raymond Williams in The Country and the City describes how many country landholders became urban industrialists in England’s 18th and 19th centuries.

3. Design new institutions and governance, as well as infrastructure for flexibility because static “permanent” structures are actually frail under conditions of real change. Most of the world elites’ large estates were built with the idea of dynasty and continuity of inheritance across at least a few generations. In the US most of those became schools, institutes or condos within a generation as major changes were constantly at play.

4. Realize that lives have to be lived now , children born, food to be eaten sociably, sleep to be secure, building and participating should be encouraged and rewarding. Encourage belief in the value of coping in the rolling present (a few years back and a few years into the future.). Self development and social development should work together to make the best of what might be a bad situation.

1989. Iraq is Threatened by Catastrophic Drought

“I once rescued a friend from drowning when he was swept away by the force of the current as we were swimming in the Diyala river,” says Qasim Sabti, a painter and gallery owner in Baghdad. “That was fifty years ago,” he recalls. “I went back there recently and the water in the Diyala is
— Read on www.counterpunch.org/2018/07/04/iraq-is-threatened-by-catastrophic-drought/

we will get used to this. what ethos can we move toward?

Ethos is the moral climate we live in.

1981. Post crisis economics

Provocation # 140. Post crisis economics.

It is hard to discuss new economics when the tendency of most discussions is to reform enough to , as Giuseppe De Lampadusa said in the Sicilian-set novel The Leopard, “Things will have to change in order to remain the same.”

An alternative approach is to assume major shocks to the global society, and model what happens. For example, taking the US, if we lost the electric grid, what would happen, or better, how would the economy and economics respond? ? If food shortages emerged and the result was much less food delivered to poor communities and the current levels of food distribution to the 10% remained as they are protected by money and militarized police?
The purpose of such modeling is not to get the numbers right, but to raise questions and surface assumptions.

Along this line, interesting to read some discussions of art in 100 years.

https://news.artnet.com/art-world/art-in-2218-1296347?utm_content=from_newscta&utm_source=Sailthru&utm_medium=email&utm_campaign=Sunday%20Morning%20Newsletter%206.17&utm_term=artnet%20News%20Daily%20Newsletter%20USE

Maybe the question is, given “collapse” of climate, markets, finance, cities, can we put side by side models of what might then work and what would not work, and discuss the differences, discuss what makes the differences?

 

1972.How does economics change to fit new circumstances?

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.

1965. 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.