Post # 2021 If we avoided the word “economics”

What if economics is unnecessary to understand economy? If we had no discipline of economics we might have common sense about the economy, the pragmatic relations of humanity and society to the material world in all its manifestations. “Economics” has been aligned with elite needs from its early use just after Wealth of Nations as the nation became an instrument of wealth centralization rather the good of the whole.

“Economy” goes back to the Greeks.  “Economics”, probably from Alfred Marshal, early 1800’s, was an attempt to  – by adding “ic” to be scientif- ic. (Economic and economics do no occur in Wealth Of Nations. The adjective “economical” does a few times  in the sense of austere management. “Economy occurs a few times, always in the context of a specific: “the economy of the rich” , “The economy of private people”, and a few times as “political economy”. 

(From Wikipedia – The discipline was renamed in the late 19th century primarily due to Alfred Marshall from “political economy” to “economics” as a shorter term for “economic science”. At that time, it became more open to rigorous thinking and made increased use of mathematics, which helped support efforts to have it accepted as a science and as a separate discipline outside of political science and other social sciences)

Interesting to imagine if accounting had been taken as the basis for understanding the economy rather than  economics .

As it is, economics has been a force for fragmentation (“separate discipline outside the other social sciences”) making it hard to understand the economy in all its relations between society, people and the material world). 

Economics has a strong tendency to be pulled into ideologies.

We miss out on common sense about how to make a good world, and we are left with  fighting fragmentation of social thought.

Post # 2020. Which scenario?  will economics help manage the choice?

Provocation # 171 which scenario?  will economics help manage the choice?

As the political situation deteriorates we can foresee several possible groupings of interests

1. The Democratic party of the professional class (The Clinton grouping)

2. The disaffected: economically injured or threatened. Ferguson, et al, described)

3. The progressives:  Scandinavian style  social democracy and identity politics.

4. The Catastrophe grouping: global heating, tech replaces workers, government is broken and illegitimate, collapse of food production.

5. The holders of assets.

How will mainstream economics play among these four? Can it help manage the choice, or will it simply work to maintain continuity and existing momentum?  

Seems to me like a serious opportunity for economics.

Post # 2017. Expanding the scope of economics?

Provocation 168. How to expand the scope of economics.

In the spirit of provocation..

Economics advanced by making assumptions that treated most of society as external to economics, but it turns out, as it has, that the dynamics of society profoundly affect the mainstream neo-classical economic model: ownership, wealth: interest, politics, people’s state of mind and taste, new inventions, state of the earth. How can we now bring the externalities back in to the thinking of current economics?

In a simple way economics started with a broad interest in society , Adam Smith, Ricardo, Malthus, and then in the mid 1800’s (and many others, see the flow in for example The Edinburg Review), then succumbed to formalism and math, looking scientific with equilibrium and “rational” economic man, and with these narrowing its scope of interest. But now, with a society in disarray because it is undone by the things economics (the understanding of an economy) excluded (people, politics, earth), the trend is back toward needing good narratives of what happened – and maybe even to what could happen. Since economics aligned itself with, even advanced, the dominance of models and formalism, what can economics do now to reorient its thinking around the issues of consequence – the interface between society and nature?
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Physics friend “ Physics models are relevant to circumstances which never change. Economics make models that sort of work – until circumstances change.”

The following from Andreas Malm’s essential book, Fossil Capital.

Re climate: “We are looking always at the impact of climate on society. It should be the other way – looking at the impact of society on climate.”

“The traditions of the dead are breathing down necks of the living, leaving them with two choices: smash their way out of business as usual – and the heavier the breath, the more extreme the measures must be – or succumb to an accumulated, unbearable destiny.”

Knock knock economics. Anybody home?

Post # 2014. Trump, unemployment and economics.

Provocation # 165.  Trump, unemployment and economics.

The argument is made that things like GDP, obviously flawed, nevertheless make possible graphs and computational models. In physics, basic assumptions, almost always get closer to the core of the phenomena. Weights falling in a frictionless vacuum for example. But in economics the assumptions , allowing for modeling, are basic distortions of the phenomena.

We tend to think that such assumptions are innocent, mere good faith attempts to help make economics scientific. But clarifying the models obscures the phenomena and makes science as well as public policy much more difficult.

This has serious consequences. Trump puts forth in all his public appearances that unemployment is at an all-time low and major news just quotes it as fact. Most economists know this is false but don’t go to the media with fuller pictures. The result is, Trump is moving closer to actual reelection. Economics, instead of being innocent and remote from society, is enmeshed in the flow of events.

post # 2012 Retrospective on economics’ failure to engage.

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.
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Re E.O.Wilson. From
https://harvardmagazine.com/breaking-news/james-watson-edward-o-wilson-intellectual-entente

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.

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 #2008 Constraints within economics prevent engagement.

What are the self-imposed constraints on new economic thinking?

The purpose of science is to give as best we can a picture of relevant reality. It is not the results of applying a method to a problem only because the problem is tractable with the method. Aa Aristotle made clear, each un known has is appropriate method.The first criteria is to pick a good enough example of the problem that, if understood, would actually throw light on the problem, not just on the method.

Economics seems to operate under extreme constraints on what it can or should study. Big data can find the tiny fraction of you that correlates with the tiny fraction in many others, but it cannot find the Plato or Bob Dylan in you. So big data misses lots that is relevant to actual humans. The admonition to grad students and tenure seekers to find a good data set might be good careerism but bad science.

If we accept the constraints, like keeping economics separate from politics or the other social sciences, how can we live up to the challenge for new economic thinking? New economic thinking probably requires introducing new aspects of reality, new “variables”, into the discussion. To introduce new methods without considering new aspects of reality probably can’t bring us very far and reflect a conservative – “things have to change in order to remain the same” approach, which might provide an important clue as to the motive for the slow movement of new economic thinking.

Constraints emerge because we stay within assumptions that we do not violate:

The assumption of capitalism.
The assumption that ownership is not a legitimate category of economics
The lack of discussion of the caste system that divided us into owners and workers, labor and capital.The legitimacy of corporations

Economics bypasses all the interesting categories of how the day is spent by an unemployed spouse, by the retired, trust fund babies, artists choosing poverty, those filling out time to retirement by playing videos at their desks, adventurers. We don’t look at the content – much of which is not “economic”- of the lifestyles of the one percent.

Why do we stay within these constraints?

Good manners?
Not wanting to shake up colleagues?
Fear of consequences to career?
Fear of destabilizing society?

Put another way: the world needs managing of the relationship between humanity and the globe, which needs to be a mix if economics, ecology, politics, philosophy, historical understanding, dealing with human nature and civil society. Is economics up for it, or is it holding on to old assumptions that help prevent any integrated approach?

Is there a better way to frame the question?

Post # 2007. Numbers in physics and economics- the difference

Provocation #162 Numbers in physics and economics.

The fact of money as numbers is like catnip for the mathematically inclined. But for something to become a number subject to economic analysis it has to go through a very complex social process of culture building, trust, faith, shared intuition about the worth of something in dollar terms, and the growth of supporting institutions..
Physics is just the opposite.The numbers are given by nature. True, a social process of inventing physics is necessary to be able to see the numbers, but the numbers are not generated by a social process.

The result is that the potentially most interesting parts of economics are ignored: how trust develops, the interaction between the social and the physical worlds, how desires and needs are amplified by media, how style emerges, how preferences form (the Trojan Horse of a more human centered economics), for example the US style stand-alone house vs. the close structure of the European hill-towns. Reflexivity means dynamics of a social field, but people are treated as isolated with internal preferences a bit like Plato’s innate ideas.

Economics could be about how society works and how to manage the interactions between humans and environment more skillfully – but not if sych workings with all their complexity are not seen as a question.
Economics students are told “search for data bases” and apply math and create your career.

A a 50 to 150 million dollar severance package after sexual misconduct? This is a symptom, not the sex but the money, of a broken society. Does it get questioned? Or is it just the productive function working its logic and acquiesced to by economists?
I keep coming back to Tim Cook: where is the analysis that says his compensation is based on an adequate economic model of real contributions to Apple’s success? Its customers, for example, are able to use an iPhone because of an expensive education (yes, even a four year old has benefited from much of society allowing them to become customers), but that is treated by Apple as an external it can monetize without having to pay for it. Cook’s wealth is socially generated, privately consumed. This is crazy making – to wit, the current deteriorating state of society which is unnerving us all, and, as Stieglitz says, inequality will continue to get worse. As is often argued, being at the top of a large pyramid should pay more than being at the top of a small pyramid. but this ignores that the existence of both pyramids is the work of a whole society over a number of years. Even the increasing size of a hierarchy under the guidance of a leader pulls together people, ideas, and properties created by others. Each building block of an organization has a history before its incorporation.

“The economy is doing well but society is doing badly.” Employment and the stock market are up, but impact of new jobs on the environment is continuing to increase the stress.

It is all very interesting and very important. But the siloed contributions found in most economic journal articles do not touch on these issues. If you Google “guaranteed annual income and inflation” simple issues like increases in rents and befits to owners and banks are not discussed or brushed over quickly. “The amount of cash put into society by a GAI is small in comparison to the overall GNP.” The reality of a homeless person with their GAI check trying to rent when all the spaces are rented is not explored. It is all gobbledygook with grammatical but not empirical integrity. Lets strive to be more relevant and interesting.

Meanwhile global temperatures and effects ratchet upwards where physics numbers and economic numbers occupy the same space.

Post #2006. Society without economics?

If economics moved in the direction responding to much of the current critique in so many books and articles it would be much less mathematical-and more narrative. Could such a transition be made? Who would teach what? And when done, what jobs would there be? I think this refocus is needed if we are to help prepare society for tough times coming (The simultaneity of climate, inequality, authoritarian governments, automation, pollution impacts)

We have made an economics that helps the flow of financialization but is self contained. The result is that much of the critique, and lots of the posting on INET reflect this, uses the current vocabulary to critique the current practices. Is it possible with the economic vocabulary to construct alternative approaches that go beyond critique? The vocabulary we use is adequate to the financialization of the economy but that vocabulary, for example economic man and rational expectations mandate stripping out human concerns. A common example is talking about income in developing countries in terms like “Income has gone from $1.25 to 1.65 in the last decade, ” with no concern for the surrounding prices, availabilities, or general living conditions, as though 1.65 tells us that. Imagine a good reporter from Buzzfeed or an anthropologist telling us what they see. Even the idea of inequality is inequality in money terms, which might be different from inequality focused on an economy of quality of life, or family quality (employment is up, hooray. Both parents of little children can now go to work. Uh oh.) rather than consumer centered.

I think it is important to reflect on how all societies were until quite recently able to function without economics. What would happen if we just removed economics but not the economy (leaving in place accounting and all the material conditions which form the ensemble economists reify as “the economy”) from this society?
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Post # 2005 Economics, management and home economics

Provocation # 150 management schools.
In the spirit of provocations

Perhaps the split off of management schools from economics put the operational stuff away from the guidance of theory, just as the management schools became control centers for profit making and the success of corporations. At the same time economics was kept pure, not sullied by pragmatic concerns. The result is management is not a thoughtful enterprise with real scope and reach but narrowed to the interests, not of society but of corporations. Economics becomes a somewhat grotesque ensemble of formalisms not giving guidance on how to govern the humanity in the context of our given planet.

Accounting also was given a lower place, full of skills but not guided by either theory (economics) or pragmatics of the business schools, but just a narrow set of skills.
I like the idea of bringing them all back together in an effort to manage the future for the broader good. This could mean a serious blending of science and the humanities. The best of the enlightenment.

As a footnote about the placement of disciplines, remember what used to be called “home economics.” Here are the first sentences of the wiki article on “Home economics.”

Home economics, domestic science or home science is a field of study that deals with home and economics. It deals with the relationship between individuals, families, communities, and the environment in which they live.

Not bad. What happened?

Family and consumer science was previously known in the United States as home economics, often abbreviated “home ec” or “HE”. In 1994, various organizations, including the American Association of Family and Consumer Sciences, adopted the new term “family and consumer science” to reflect the fact that the field covers aspects outside of home life and wellness. (Also wiki)

The field is also known by other names, including human sciences, home science, and domestic economy. In addition, home economics has a strong historic relationship to the field of human ecology, and since the 1960s a number of university-level home economics programs have been renamed “human ecology” programs, including Cornell University’s program. (More wiki).

Home economics emerged at the turn of the twentieth century as a movement to train women to be more efficient household managers. At the same moment, American families began to consume many more goods and services than they produced. To guide women in this transition, professional home economics had two major goals: to teach women to assume their new roles as modern consumers and to communicate homemakers’ needs to manufacturers and political leaders. The development of the profession progressed from its origins as an educational movement to its identity as a source of consumer expertise in the interwar period to its virtual disappearance by the 1970s.[6] An additional goal of the field was to “rationalize housework”, or lend the social status of a profession to it, based on a theory that housework could be intellectually fulfilling to women engaged in it, along with any emotional or relational benefits. (Wiki)

“Home economics” has for decades been a deeply dismissive name. Peculiar, since that is the meaning of economics in the original Greek as used by Aristotle and others. That dismissiveness gets in the way of looking at economics more holistically, a reorientation of economics away from a stress on narrow flows to a fuller exploration of how to manage the planet.

Imagine politics, economics and history along with management and accounting brought together as the integrative discipline of giving guidance on managing the planet as serious estate management , rather than the narrow discipline of exploiting the planet for the benefit of a few that economics has largely become.

Appreciate responses..