Vijay Govindarajan, Shivaram Rajgopal, and Anup Srivastava: Why We Need to Update Financial Reporting for the Digital Era: "The market caps of just four companies, Apple, Alphabet, Amazon, and Microsoft, now exceed $3 trillion...
Vijay Govindarajan, Shivaram Rajgopal, and Anup Srivastava: Why We Need to Update Financial Reporting for the Digital Era: "The market caps of just four companies, Apple, Alphabet, Amazon, and Microsoft, now exceed $3 trillion...
Not what I said at the Blum Center Development Lunch today: more what I wish I had said—albeit it is still incoherent and disorganized:
Let me begin with three direct responses to points Michael Nacht made. Let me then try to—briefly—propose a framework, perhaps a framework for analysis, perhaps merely a framework for convincing people in the national security community that they should take issues of economic development seriously, and so give large grants so that the Berkeley development community can do more things—things closely related to what we would be doing anyway.
Adam Tooze: Keynes and the Calculations of Liberalism: "We were once again living through a profound crisis of the liberal order.... I had Keynes on my mind and the thinker of liberal reconstruction... seemed in many ways more relevant than ever. This led me to put together a slide pack of notes on Keynes’s collection Essays in Persuasion (1931)...
...The slide pack is long, but the Keynes material is worth the effort!... The key to understanding Keynes’s politics is... the boundary between politics and the economy fluid.... In Keynesianism their manipulation becomes the key variable in liberalism’s updated repertoire of politics and government.... [In] the crisis of 2008... not only monetary and fiscal policy, but also a dramatic extension of the macroprudential regime in the name of financial stability.... Wherever there were activist central banks and an ability to withstand a currency devaluation the bond vigilantes were held at bay.... As Keynes said the key is to keep “minds flexible” and to push the argument in “detail”...
Kieran Healy: Data Visualization: A Practical Introduction: "You should look at your data. Graphs and charts let you explore and learn about the structure of the information you collect...
Note to Self: The Song of Everlasting Sorrow and Historical Patriarchy: I was reading, as one does—I do not remember why I was reading this, however—an English translation_ of poet, landlord, scholar, bureaucrat, drunkard Bai Juyi's Song of Everlasting Sorrow. And I was struck by four short lines:
The overturning of the natural order as a consequence of the love of Emperor Xuanzong for Lady Yang Guifei was so great that all cross the empire parents wished for girl- rather than boy-children...
This struck me as having obvious bearing on my ["Historical Patriarchy"] lecture...
Cedarbrook Notes: Occupy had zero impact on austerity budgets. Mont Pelerin was not important because they gathered by a lake, sang “kumbaya”, and felt a sense of solidarity. We should not pretend defeats were victories.
What can we do? I think there are three levels that we ought to be operating on—all, right now, understanding the world rather than trying to change it: understanding policies, understanding mobilizations, and understanding utopia:
The first is understanding the effects of policies: the policies adopted between 1980 and 2007 did not have the results that their advocates expected nor the results that their critics expected. We really do need to figure out how to understand what the social world is rather than what the models—both pro and con—in use during the neoliberal era said the social world was.
The second is understanding the vicissitude of mobilization. The standard political center-left plans to promote full employment, progressive taxation and social insurance, upward mobility, and infrastructure and public services—equitable growth—all these are things that should meet with near-universal applause. By contrast, con-game kleptocracy in the interest of plutocracy should not get 60 million votes. Fascism—the belief that you need a strong leader who is a bully, because he is your bully, and he will bully your enemies, who may be corporations, foreigners, people who look or think differently, and who are always the rootless cosmopolites—should not be attractive to a 21st-century electorate on any level. Yet, somehow, it, terrifyingly, is. The same social-science models that failed to adequately track the effects of neoliberal policies failed to predict the seductive attractiveness of 21st century neo-fascism. Thus we have two different levels at which we need to understand the societal world: the effects of neoliberal policies, and the possibilities for mobilization.
The third is the question of what our Utopia is. How will our different view of the social world change our goals for a good society? Our utopia will almost surely still include full employment, progressive taxation and social insurance, upward mobility, and lots of infrastructure. But it will also include other and deeper objectives—objectives that have not been on the New Deal and social democratic bucket lists.
These three tracks all need to be pushed forward. But they also very much need to be three tracks. And they need to be three different tracks.
Nils Gilman: The Toba Eruption, by Spawning the #Transformationofthehuman Known as Behavioral Modernity...: "'Never before have I encountered someone so gleeful about catastrophe. When we discussed the risk that the Yellowstone supervolcano might blow at any time, Keller’s eyes twinkled. "It’s a fun idea", she said' https://www.theatlantic.com/magazine/archive/2018/09/dinosaur-extinction-debate/565769/...
There are more problems with Twitter than the Nazis, the shrillness, the out-of-context mobs, the unhinged rants, the Nazi shrillness, the out-of-context Nazi mobs, the unhinged Nazi rants, the shrill out-of-contezt mobs, the unhinged shrill rants, the out-of-context unhinged rants, the shrill Nazi out-ofcontext mobs, the shrill Nazi unhinged rants, the unhinged rants by Nazi out-of-context mobs, the shrill out-of-context unhinged ranting mobs, and the Nazi shrill unhinged rants by out-of-context mobs.
When something good happens on Twitter, it has no positive externalities: it is too compressed and allusive to be of use to anybody not immediately and directly plugged in—and often it is not even of use to many who are engaged but who cannot follow the compressed and coded 280-character discourse. Back in THE DAY, debates between weblogs produced things of value to a large watching audience, and had large positive externalities.
For example, this day. Great for me and for a few others. But any good for a larger audience?:
Suresh Naidu: @CoreyRobin clarifies the s-word:
Corey Robin: The New Socialists: Socialists hear “the market” and think of the anxious parent... the insurance representative... decree[inig] that the policy... doesn’t cover her child’s appendectomy.... We bow and scrape, flatter and flirt, or worse—just to get that raise or make sure we don’t get fired.... Socialists want to... establish freedom from rule by the boss, from the need to smile for the sake of a sale, from the obligation to sell for the sake of survival.... The biggest boundary today’s socialists are willing to cross is the two-party system.... Democrats are also complicit in the rot of American life. And here the socialism of our moment meets up with the deepest currents of the American past.... It was said that liberalism was freedom plus groceries. The socialist, by contrast, believes that making things free makes people free.... Socialism is not journalists, intellectuals or politicians armed with a policy agenda.... It is workers who get us there, who decide what and where “there” is. That, too, is a kind of freedom. Socialist freedom.
Rakesh Bhandari: You mean the s-d compound word, right? And it's a pretty weak s-d too insomuch as the promise here seems to be that universal health insurance would make it easier for some employees to escape more-than-ordinarily abusive bosses. Not really the socialist critique of capitalism! It's pretty much the end of ideology where the leftist Jacobin and the Nobel economist both agree that capitalism can be fixed by universal health insurance that makes it easier to leave extraordinarily abusive bosses and restrictions on arbitrary sacks. Yet catastrophes await
Brad DeLong: Steering by the Socialist Idols in the Heavens Leads Us to Sail Not Towards but Away from the Shores of Utopia: (Early) Monday Corey Robin Smackdown: Robin writes of "the anxious parent, desperate not to offend the insurance representative on the phone, lest he decree that the policy she paid for doesn’t cover her child’s appendectomy". But that is not a problem with "the market": that is a problem with bureaucracy. National health systems face the same problems and make the same kinds of decisions with respect to "medical appropriateness" as do private insurers. Robin writes of freedom from "the need to smile for the sake of a sale". But that is not a problem with "the market": that is a problem with the need we have for a complex division of labor in order to be a rich society, in the context of the very human fact that people will not be eager to deal with you as a cooperative partner if you are a misanthropic grouch. The market provides a partial way around the unfreedoms generated by institutions of bureaucratic organization and social cooperation.... [But] the market pays attention to the wealthy and only the wealthy. But the problem then is one of poverty—that we have managed to arrange a very wealthy society in such a way that it has a lot of not-wealthy people in it. Contrary to what Robin claims, utopia is indeed the liberal dream of freedom plus groceries—with "groceries" standing in for enough wealth to route yourself around the unfreedoms created by bureaucracy and by your own misanthropic nature when they bind too tightly...
Cosma Shalizi: In Soviet Union, Optimization Problem Solves You: Capitalism, the market... bureaucracy... democratic polity... can be... cold monster[s].... We... live among these alien powers... try to direct them to human ends... find the specific ways in which these powers we have conjured up are hurting us, and use them to check each other.... Sometimes... more... market mechanisms, sometimes... removing... goods and services from market allocation.... Sometimes... expanding... democratic decision-making... and sometime... narrowing its scope.... Leaving some tasks to experts... recognizing claims of expertise to be mere assertions of authority... complex problems, full of messy compromises. Attaining even second-best solutions is going to demand “bold, persistent experimentation”, coupled with a frank recognition that many experiments will just fail, and that even long-settled compromises can, with the passage of time, become confining obstacles...
Suresh Naidu: The Shalizi and Robin essays are complements not substitutes. Borrowing your language: Corey is showing the undemocratic nature of negishi weighted swfs; Cosma is saying all feasibly computed swf are inefficient (criticizing both planning and markets).
Brad DeLong: Touché... Except that Corey's examples are flaws of bureaucracy and of the modes of sociability ("smile for a sale"), not flaws of market—which are externality, moral hazard, monopoly, negishi values, etc. Getting rid of markets won't tame bureaucracy or change modes of sociability.
Ilyana Kuziemko: Suresh to borrow our fave example of powerlessness and “nonfreedom,” I wonder if there is more joyless, dutiful laughing at the bad jokes of superiors in capitalism or socialism...
Brad DeLong: Now that is genuinely funny...
Ilyana Kuziemko: There is a hell a lot of it under capitalism! :)
Steven Klein: Freedom as non-domination-Pettit is in the background. I think just saying "its bureaucracy" underestimates the difference between a for-profit companies bureaucracy and government health care subject to public accountability, however attenuated. And what about this core example: "we’re forced to submit to the boss"? There's an interesting debate about whether freedom as non-domination—being free not just from external restraints but from subordination—is furthered or hindered by the market: https://t.co/goUG5FkwRF. Robert Taylor defends market freedom: https://global.oup.com/academic/product/exit-left-9780198798736?cc=us&lang=en&. Gourevitch argues basically you need full workplace democracy to realize freedom: https://t.co/hWZJCE4QEg. And I advance basically a left-wing social democratic critique of Pettit and Taylor (although Pettit would say he is closer to my position than I think he is): https://t.co/Q720I6724Q.
Suresh Naidu: I find that Taylor book interesting, in that he basically rests his case on an ideal of perfect competition/complete contracts. If real world markets are rife with deviations from that (e.g. monopsony and efficiency wages), I think the neo-republican case for markets falls apart.
Rakesh Bhandari: I think the language Robin is reaching for to describe his annoyingly vague sense of freedom can be found in Sen's and Nussbaum's capability approach. I think you need that before you can coherently critique welfare functions 1 reply 1 retweet 0 likes Reply 1 Retweeted 1 Like Direct message
Steven Klein: It's freedom as non-domination-Pettit is in the background. I think just saying "its bureaucracy" underestimates the difference between a for-profit companies bureaucracy and government health care subject to public accountability, however attenuated.
Brad DeLong**: There are failures of insurance that are market failures—the inability to purchase insurance because of moral hazard is a big one. But "bureaucracy" ain't one. To pretend getting rid of markets will cure bureaucracy takes you in a very bad direction...
Steven Klein: Right, but I think the difference is between decisions on treatment being opaque and nebulous and them being made through some public procedure. Yes, public health systems ration - they key is in how the rationing is done.
Suresh Naidu: There are real limits to the traditional neo-republican notion of freedom when it comes to big impersonal institutions. i.e. the problem is the discretion/caprice available to the bureaucrat/boss, not the institutional logic being implemented by the bureaucrat/boss.
Brad DeLong: But the institutional logic can be as alienating and as large a source of unfreedom as the caprice of the boss... Cf.: Ursula K. LeGuin: The Dispossessed, passim...
Suresh Naidu: "Freedom as non-domination". Absolutely.
Rakesh Bhandari: Eduardo Porter gave the disturbing example of old age homes that go private overprescribing medications that rob the elderly of many of their remaining conscious hours so that they require fewer staff members to take care of them.
Steven Klein: when it comes to health care, I'd take a government quisling terrified of breaking the rules over some precarious worker incentivized to find ways to deny claims or limit payments
Suresh Naidu: Right, assuming the bureaucrat doesn't have any discretion, and is just implementing the agenda of his employer, it matters whether her employer is a democratic government or a profit-maximizing firm. But you can imagine both democratic or market failures that could go either way.
Scotrt Ashworth: This is where I declare Brad a better empirical political scientist than Steven.
Steven Klein: Give me my political theory idealizations :)
Scott Ashworth: If your defense of Corey here is that BS-ish but inspirational talk is politically valuable and the NYT is for politics not intellectualism, I will concede defeat. 😏
Suresh Naidu: Why is it BS-ish? I think it's putting in public an academic conversation about freedom and markets that has been happening for awhile.
Suresh Naidu: Scott, is it because there is no distinctive market/nonmarket solution to bureaucratic agency problems, so scope for arbitrary whims remain constant?
Pseudoerasmus: I'm sympathetic to the healthcare example but I wonder how much of the “smiling for the boss” stuff is really about having to deal with tyrannical employers who can threaten your livelihood, rather than just middle-class intellectuals’ distaste for hustling to acquire luxuries...
Brad DeLong: But the health care example is a problem with bureaucracy! Not with the market! We know where socialists who destroy the markets in an attempt to deal with the evils of bureaucracy wind up, and it is not a good place!'
Pseudoerasmus: I totally agree with that! Socialism does not eliminate people’s subjections to other people’s whims; but the guy thinks ‘democracy’ will, I guess.
Brad DeLong: But "democracy" subjects all minorities to the whims of the demos. The demos serves you a hemlock cocktail, you drink a hemlock cocktail...
Suresh Naidu: The neo-repubs have a broader definition of democracy than majoritarianism....in including robust checks and balances/civil rights
Ilyana Kuziemko: As we were discussing, I think the freedom argument is a clever argument in that it neutralizes a common defense of capitalism but isn’t an effective central theme for socialism...
Brad DeLong: Say, rather, that power is minimized by having multiple societal organizing mechanisms—wealth and market, direct democratic, representative democratic, by lot, technocratic, cultural, ideological affinity. The key is to keep one from subsuming all the others, as one or the other is wont to do...
Suresh Naidu: Yes I like this.... It's a variant of Walzer's spheres of justice..but in means putting up barricades against "markets in everything"...
Ilyana Kuziemko: Wasnt that Uncle Milton’s argument? That economic inequality helped check government tyranny by creating a separate power center? But then we got Citizens United.
Brad DeLong: Yep. And indeed...
Brad DeLong: Yes. Immense barricades...
Ilyana Kuziemko: Like confiscatory marginal tax rates on income over some very small multiple of one million or what?
Brad DeLong: Yup... But, as I said, Corey’s implicit claim that bureaucratic and mode-of-societal-cooperation forms of domination would melt away if not for "the market" strikes me as false and jejune. As I said: needed editorial attention... Read Cosma Shalizi instead...
Steven Greenhouse: Why so many young Americans are attracted to Socialism, Bernie Sanders and Alexandria Ocasio-Cortez.
Rakesh Bhandari: Except it's wrong. Clinton whom these new socialists (sic) hate proposed wildly progressive income taxes, stricter regulations on shadow banking than the putative socialist Sanders, and a massive green infrastructure program. They did everything to alienate the left from her.
Manu Saadia: More on the @CoreyRobin article and @de1ong rejoinder. To PK "socialism with American characteristics" is Western European social democracy…
Paul Krugman: Corey Robin and... Neil Irwin... get at a lot of what’s wrong with the neoliberal ideology... [of] low taxes and minimal regulation... that free markets translate into personal freedom.... In fact, the daily experience of tens of millions of Americans – especially but not only those who don’t make a lot of money – is one of constant dependence on the good will of employers and other more powerful economic players.... And it’s even more naïve now than it was a few decades ago, because, as Irwin points out, large economic players are dominating more and more of the economy.... What can be done about it? Corey Robin says “socialism” – but as far as I can tell he really means social democracy: Denmark, not Venezuela. Government-mandated employee protections may restrict the ability of corporations to hire and fire, but they also shield workers from some very real forms of abuse. Unions do somewhat limit workers’ options, but they also offer an important counterweight against corporate monopsony power. Oh, and social safety net programs can do more than limit misery: they can be liberating. I’ve known many people who stuck with jobs they disliked for fear of losing health coverage; Obamacare, flawed as it is, has noticeably reduced that kind of “lock in”, and a full guarantee of health coverage would make our society visibly freer.... Seriously, do the real differences between New York and Florida make New Yorkers less free?... If you’re a highly paid professional, it probably doesn’t make much difference. But my guess is that most workers feel at least somewhat freer in New York than they do in FL. Now, there are no perfect answers to the inevitable sacrifice of some freedom that comes with living in a complex society; utopia is not on the menu. But the advocates of unrestricted corporate power and minimal worker protection have been getting away for far too long with pretending that they’re the defenders of freedom–which is not, in fact, just another word for nothing left to lose...
I find Corey Robin smart most of the time. I find him annoyingly and profoundly stupid some of the time. Why? Because of occasional but stubborn blindnesses to very important parts of recent history and, indeed, very important parts of the world in which he lives—what seems to me a willful, trollish blindnesses.
For example, his piece in the New York Times last week. It really could have used some proper editorial attention it did not get: The examples presented of what is wrong with "the market" are simply... not examples...
Robin writes of "the anxious parent, desperate not to offend the insurance representative on the phone, lest he decree that the policy she paid for doesn’t cover her child’s appendectomy". But that is not a problem with "the market": that is a problem with bureaucracy. National health systems face the same problems and make the same kinds of decisions with respect to "medical appropriateness" as do private insurers.
Robin writes of freedom from "the need to smile for the sake of a sale". But that is not a problem with "the market": that is a problem with the need we have for a complex division of labor in order to be a rich society, in the context of the very human fact that people will not be eager to deal with you as a cooperative partner if you are a misanthropic grouch.
The market provides a partial way around the unfreedoms generated by institutions of bureaucratic organization and social cooperation. The market—if and only if you have wealth—allows you to be a misanthropic grouch and still get people to cooperate with you. The market—if and only if you have wealth—allows you to avoid having to work to make the gear-wheels of bureaucracy turn and yet still gain access to resources. It is certainly the case that if people are poor then the market does them no good at all. It cannot, then, be a way around bureaucracy or norms of social agreeableness. The market pays attention to the wealthy and only the wealthy. But the problem then is one of poverty—that we have managed to arrange a very wealthy society in such a way that it has a lot of not-wealthy people in it.
Contrary to what Robin claims, utopia is indeed the liberal dream of freedom plus groceries—with "groceries" standing in for enough wealth to route yourself around the unfreedoms created by bureaucracy and by your own misanthropic nature when they bind too tightly. The problem is not "the market" or "capitalism": Corey Robin: The New Socialists: "Under capitalism, we’re forced to enter the market just to live...
Potsdam this year is 7F warmer than it averaged in the century before 1980. Berkeley is now Santa Barbara: Stefan Rahmstorf: Europe’s freak weather, explained: "Naive.... The smoothed curve shows... global warming... the scattering of the grey bars... random variations of the weather.... Slightly more than half of the 4.3 degrees would be due to global warming, the rest to weather. That... likely underestimates the contribution of climate change...
Weekend Reading: Just for what it's worth, my view is: centaurs, yes...
Cosma Shalizi (2012): In Soviet Union, Optimization Problem Solves You: "Attention conservation notice: Over 7800 words about optimal planning for a socialist economy and its intersection with computational complexity theory. This is about as relevant to the world around us as debating whether a devotee of the Olympian gods should approve of transgenic organisms. (Or: centaurs, yes or no?) Contains mathematical symbols (uglified and rendered slightly inexact by HTML) but no actual math, and uses Red Plenty mostly as a launching point for a tangent...
...There’s lots to say about Red Plenty as a work of literature; I won’t do so. It’s basically a work of speculative fiction, where one of the primary pleasures is having a strange world unfold in the reader’s mind. More than that, it’s a work of science fiction, where the strangeness of the world comes from its being reshaped by technology and scientific ideas—here, mathematical and economic ideas...
Red Plenty is also (what is a rather different thing) a work of scientist fiction, about the creative travails of scientists. The early chapter, where linear programming breaks in upon the Kantorovich character, is one of the most true-to-life depictions I’ve encountered of the experiences of mathematical inspiration and mathematical work. (Nothing I will ever do will be remotely as important or beautiful as what the real Kantorovich did, of course.) An essential part of that chapter, though, is the way the thoughts of the Kantorovich character split between his profound idea, his idealistic political musings, and his scheming about how to cadge some shoes, all blind to the incongruities and ironies.
It should be clear by this point that I loved Red Plenty as a book, but I am so much in its target demographic that it’s not even funny. My enthusing about it further would not therefore help others, so I will, to make better use of our limited time, talk instead about the central idea, the dream of the optimal planned economy.
That dream did not come true, but it never even came close to being implemented; strong forces blocked that, forces which Red Plenty describes vividly. But could it even have been tried? Should it have been?
“The Basic Problem of Industrial Planning”
Let’s think about what would have to have gone in to planning in the manner of Kantorovich.
I. We need a quantity to maximize. This objective function has to be a function of the quantities of all the different goods (and services) produced by our economic system. Here “objective” is used in the sense of “goal”, not in the sense of “factual”. In Kantorovich’s world, the objective function is linear, just a weighted sum of the output levels. Those weights tell us about trade-offs: we will accept getting one less bed-sheet (queen-size, cotton, light blue, thin, fine-weave) if it lets us make so many more diapers (cloth, unbleached, re-usable), or this many more lab coats (men’s, size XL, non-flame-retardant),or for that matter such-and-such an extra quantity of toothpaste. In other words, we need to begin our planning exercise with relative weights. If you don’t want to call these “values” or “prices”, I won’t insist, but the planning exercise has to begin with them, because they’re what the function being optimized is built from.
It’s worth remarking that in Best Use of Economic Resources, Kantorovich side-stepped this problem by a device which has “all the advantages of theft over honest toil”. Namely, he posed only the problem of maximizing the production of a “given assortment” of goods—the planners have fixed on a ratio of sheets to diapers (and everything else) to be produced, and want the most that can be coaxed out of the inputs while keeping those ratios. This doesn’t really remove the difficulty: either the planners have to decide on relative values, or they have to decide on the ratios in the “given assortment”.
Equivalently, the planners could fix the desired output, and try to minimize the resources required. Then, again, they must fix relative weights for resources (cotton fiber, blue dye #1, blue dye #2, bleach, water [potable], water [distilled], time on machine #1, time on machine #2, labor time [unskilled], labor time [skilled, sewing], electric power…). In some contexts these might be physically comparable units. (The first linear programming problem I was ever posed was to work out a diet which will give astronauts all the nutrients they need from a minimum mass of food.) In a market system these would be relative prices of factors of production. Maintaining a “given assortment” (fixed proportions) of resources used seems even less reasonable than maintaining a “given assortment” of outputs, but I suppose we could do it.
For now (I’ll come back to this), assume the objective function is given somehow, and is not to be argued with.
IIA. We need complete and accurate knowledge of all the physical constraints on the economy, the resources available to it.
IIB. We need complete and accurate knowledge of the productive capacities of the economy, the ways in which it can convert inputs to outputs.
(IIA) and (IIB) require us to disaggregate all the goods (and services) of the economy to the point where everything inside each category is substitutable. Moreover, if different parts of our physical or organizational “plant” have different technical capacities, that needs to be taken into account, or the results can be decidedly sub-optimal. (Kantorovich actually emphasizes this need to disaggregate in Best Use, by way of scoring points against Leontief. The numbers in the latter’s input-output matrices, Kantorovich says, are aggregated over huge swathes of the economy, and so far too crude to be actually useful for planning.) This is, to belabor the obvious, a huge amount of information to gather.
(It’s worth remarking at this point that “inputs” and “constraints” can be understood very broadly. For instance, there is nothing in the formalism which keeps it from including constraints on how much the production process is allowed to pollute the environment. The shadow prices enforcing those constraints would indicate how much production could be increased if marginally more pollution were allowed. This wasn’t, so far as I know, a concern of the Soviet economists, but it’s the logic behind cap-and-trade institutions for controlling pollution.) Subsequent work in optimization theory lets us get away, a bit, from requiring complete and perfectly accurate knowledge in stage (II). If our knowledge is distorted by merely unbiased statistical error, we could settle for stochastic optimization, which runs some risk of being badly wrong (if the noise is large), but at least does well on average. We still need this unbiased knowledge about everything, however, and aggregation is still a recipe for distortions. More serious is the problem that people will straight-up lie to the planners about resources and technical capacities, for reasons which Spufford dramatizes nicely. There is no good mathematical way of dealing with this.
III. For Kantorovich, the objective function from (I) and the constraints and production technology from (II) must be linear.
Nonlinear optimization is possible, and I will come back to it, but it rarely makes things easier.
IV. Computing time must be not just too cheap to meter, but genuinely immense.
It is this point which I want to elaborate on, because it is a mathematical rather than a practical difficulty.
“Numerical Methods for the Solution of Problems of Optimal Planning”
It was no accident that mathematical optimization went hand-in-hand with automated computing. There’s little point to reasoning abstractly about optima if you can’t actually find them, and finding an optimum is a computational task. We pose a problem (find the plan which maximizes this objective function subject to these constraints), and want not just a solution, but a method which will continue to deliver solutions even as the problem posed is varied. We need an algorithm.
Computer science, which is not really so much a science as a branch of mathematical engineering, studies questions like this. A huge and profoundly important division of computer science, the theory of computational complexity, concerns itself with understanding what resources algorithms require to work. Those resources may take many forms: memory to store intermediate results, samples for statistical problems, communication between cooperative problem-solvers. The most basic resource is time, measured not in seconds but in operations of the computer. This is something Spufford dances around, in II.2: “Here’s the power of the machine: that having broken arithmetic down into tiny idiot steps, it can then execute those steps at inhuman speed, forever.” But how many steps? If it needs enough steps, then even inhuman speed is useless for human purposes…
The way computational complexity theory works is that it establishes some reasonable measure of the size of an instance of a problem, and then asks how much time is absolutely required to produce a solution. There can be several aspects of “size”; there are three natural ones for linear programming problems. One is the number of variables being optimized over, say n. The second is the number of constraints on the optimization, say m. The third is the amount of approximation we are willing to tolerate in a solution—we demand that it come within h of the optimum, and that if any constraints are violated it is also by no more than h. Presumably optimizing many variables (n >> 1), subject to many constraints (m >> 1), to a high degree of approximation (h ~ 0), is going to take more time than optimizing a few variables (n ~ 1), with a handful of constraints (m ~ 1), and accepting a lot of slop (h ~ 1). How much, exactly?
The fastest known algorithms for solving linear programming problems are what are called “interior point” methods. These are extremely ingenious pieces of engineering, useful not just for linear programming but a wider class of problems called “convex programming”. Since the 1980s they have revolutionized numerical optimization, and are, not so coincidentally, among the intellectual children of Kantorovich (and Dantzig). The best guarantees about the number of “idiot steps” (arithmetic operations) they need to solve a linear programming problem with such algorithms is that it’s proportional to
(I am simplifying just a bit; see sec. 4.6.1 of Ben-Tal and Nemirovski’s Lectures on Modern Convex Optimization [PDF].)
Truly intractable optimization problems—of which there are many—are ones where the number of steps needed grow exponentially. If linear programming was in this “complexity class”, it would be truly dire news, but it’s not. The complexity of the calculation grows only polynomially with n, so it falls in the class theorists are accustomed to regarding as “tractable”. But the complexity still grows super-linearly, like n^(3.5). Where does this leave us?
A good modern commercial linear programming package can handle a problem with 12 or 13 million variables in a few minutes on a desktop machine. Let’s be generous and push this down to 1 second. (Or let’s hope that Moore’s Law rule-of-thumb has six or eight iterations left, and wait a decade.) To handle a problem with 12 or 13 billion variables then would take about 30 billion seconds, or roughly a thousand years.
Naturally, I have a reason for mentioning 12 million variables:
In the USSR at this time  there are 12 million identifiably different products (disaggregated down to specific types of ball-bearings, designs of cloth, size of brown shoes, and so on). There are close to 50,000 industrial establishments, plus, of course, thousands of construction enterprises, transport undertakings, collective and state forms, wholesaling organs and retail outlets. —Alec Nove, The Economics of Feasible Socialism (p. 36 of the revised  edition; Nove’s italics)
This 12 million figure will conceal variations in quality; and it is not clear to me, even after tracking down Nove’s sources, whether it included the provision of services, which are a necessary part of any economy.
Let’s say it’s just twelve million. Even if the USSR could never have invented a modern computer running a good LP solver, if someone had given it one, couldn’t Gosplan have done its work in a matter of minutes? Maybe an hour, to look at some alternative plans?
No. The difficulty is that there aren’t merely 12 million variables to optimize over, but rather many more. We need to distinguish between a “coat, winter, men’s, part-silk lining, wool worsted tricot, clothgroup 29—32” in Smolensk from one in Moscow. If we don’t “index” physical goods by location this way, our plan won’t account for the need for transport properly, and things simply won’t be where they’re needed; Kantorovich said as much under the heading of “the problem of a production complex”. (Goods which can spoil, or are needed at particular occasions and neither earlier nor later, should also be indexed by time; Kantorovich’s “dynamic problem”) A thousand locations would be very conservative, but even that factor would get us into the regime where it would take us a thousand years to work through a single plan. With 12 million kinds of goods and only a thousand locations, to have the plan ready in less than a year would need computers a thousand times faster.
This is not altogether unanticipated by Red Plenty:
A beautiful paper at the end of last year had skewered Academician Glushkov’s hypercentralized rival scheme for an all-seeing, all-knowing computer which would rule the physical economy directly, with no need for money. The author had simply calculated how long it would take the best machine presently available to execute the needful program, if the Soviet economy were taken tobe a system of equations with fifty million variables and five million constraints. Round about a hundred million years, was the answer. Beautiful.So the only game in town, now, was their own civilised, decentralized idea for optimal pricing, in which shadow prices calculated from opportunity costs would harmonise the plan without anyone needing to possess impossibly complete information. [V.2]
This alternative vision, the one which Spufford depicts those around Kantorovich as pushing, was to find the shadow prices needed to optimize, fix the monetary prices to track the shadow prices, and then let individuals or firms buy and sell as they wish, so long as they are within their budgets and adhere to those prices. The planners needn’t govern men, nor even administer things, but only set prices. Does this, however, actually set the planners a more tractable, a less computationally-complex, problem?
So far as our current knowledge goes, no. Computing optimal prices turns out to have the same complexity as computing the optimal plan itself. It is(so far as I know) conceivable that there is some short-cut to computing prices alone, but we have no tractable way of doing that yet. Anyone who wants to advocate this needs to show that it is possible, not just hope piously.
How then might we escape?
It will not do to say that it’s enough for the planners to approximate the optimal plan, with some dark asides about the imperfections of actually-existing capitalism thrown into the mix. The computational complexity formula I quoted above already allows for only needing to come close to the optimum. Worse, the complexity depends only very slowly, logarithmically, on the approximation to the optimum, so accepting a bit more slop buys us only a very slight savings in computation time. (The optimistic spin is that if we can do the calculations at all, we can come quite close to the optimum.) This route is blocked.
Another route would use the idea that the formula I’ve quoted is only an upper bound, the time required to solve an arbitrary linear programming problem. The problems set by economic planning might, however, have some special structure which could be exploited to find solutions faster. What might that structure be?
The most plausible candidate is to look for problems which are “separable”, where the constraints create very few connections among the variables. If we could divide the variables into two sets which had nothing at all to do with each other, then we could solve each sub-problem separately, at tremendous savings in time. The supra-linear, n^(3.5) scaling would apply only within each sub-problem. We could get the optimal prices (or optimal plans) just by concatenating the solutions to sub-problems, with no extra work on our part.
Unfortunately, as Lenin is supposed to have said, “everything is connected to everything else”. If nothing else, labor is both required for all production, and is in finite supply, creating coupling between all spheres of the economy. (Labor is not actually extra special here, but it is traditional4.) A national economy simply does not break up into so many separate, non-communicating spheres which could be optimized independently.
So long as we are thinking like computer programmers, however, we might try a desperately crude hack, and just ignore all kinds of interdependencies between variables. If we did that, if we pretended that the over-all high-dimensional economic planning problem could be split into many separate low-dimensional problems, then we could speed things up immensely, by exploiting parallelism or distributed processing. An actually-existing algorithm, on actually-existing hardware, could solve each problem on its own, ignoring the effect on the others, in a reasonable amount of time. As computing power grows, the supra-linear complexity of each planning sub-problem becomes less of an issue, and so we could be less aggressive in ignoring couplings.
At this point, each processor is something very much like a firm, with a scope dictated by information-processing power, and the mis-matches introduced by their ignoring each other in their own optimization is something very much like “the anarchy of the market”. I qualify with “very much like”, because there are probably lots of institutional forms these could take, some of which will not look much like actually existing capitalism. (At the very least the firm-ish entities could be publicly owned, by the state, Roemeresque stock-market socialism, workers’cooperatives, or indeed other forms.)
Forcing each processor to take some account of what the others are doing, through prices and quantities in markets, removes some of the grosser pathologies. (If you’re a physicist, you think of this as weak coupling; if you’re a computer programmer, it’s a restricted interface.) But it won’t, in general, provide enough of a communication channel to actually compute the prices swiftly—at least not if we want one set of prices, available to all. Rob Axtell, in a really remarkable paper, shows that bilateral exchange can come within h of an equilibrium set of prices in a time proportional to n^2log(1/h), which is much faster than any known centralized scheme.
Now, we might hope that yet faster algorithms will be found, ones which would, say, push the complexity down from cubic in n to merely linear. There are lower bounds on the complexity of optimization problems which suggest we could never hope to push it below that. No such algorithms are known to exist, and we don’t have any good reason to think that they do. We also have no reason to think that alternative computing methods would lead to such a speed-up.
I said before that increasing the number of variables by a factor of 1000 increases the time needed by a factor of about 30 billion. To cancel this out would need a computer about 30 billion times faster, which would need about 35 doublings of computing speed, taking, if Moore’s rule-of-thumb continues to hold, another half century. But my factor of 1000 for prices was quite arbitrary; if it’s really more like a million, then we’re talking about increasing the computation by a factor of 1021 (a more-than-astronomical, rather a chemical, increase), which is just under 70 doublings, or just over a century of Moore’s Law.
&If someone like Iain Banks or Ken MacLeod wants to write a novel where they say that the optimal planned economy will become technically tractable sometime around the early 22nd century, then I will read it eagerly. As a serious piece of prognostication, however, this is the kind of thinking which leads to”where’s my jet-pack?” ranting on the part of geeks of a certain age.
Nonlinearity and Nonconvexity
In linear programming, all the constraints facing the planner, including those representing the available technologies of production, are linear. Economically, this means constant returns to scale: the factory need put no more, and no less, resources into its 10,000th pair of diapers as into its 20,000th, or its first.
Mathematically, the linear constraints on production are a special case of convex constraints. If a constraint is convex, then if we have two plans which satisfy it, so would any intermediate plan in between those extremes. (If plan A calls for 10,000 diapers and 2,000 towels, and plan B calls for 2,000 diapers and 10,000 towels, we could do half of plan A and half of plan B, make 6,000 diapers and 6,000 towels, and not run up against the constraints.) Not all convex constraints are linear; in convex programming, we relax linear programming to just require convex constraints. Economically, this corresponds to allowing decreasing returns to scale, where the 10,000 pair of diapers is indeed more expensive than the 9,999th, or the first.
Computationally, it turns out that the same “interior-point” algorithms which bring large linear-programming problems within reach also work on general convex programming problems. Convex programming is more computationally complex than linear programming, but not radically so.
Unfortunately for the planners, increasing returns to scale in production mean non-convex constraints; and increasing returns are very common, if only from fixed costs. If the plan calls for regular flights from Moscow to Novosibirsk, each flight has a fixed minimum cost, no matter how much or how little the plane carries. (Fuel; the labor of pilots, mechanics, and air-traffic controllers; wear and tear on the plane; wear and tear on runways; the lost opportunity of using the plane for something else.) Similarly for optimization software (you can’t make any copies of the program without first expending the programmers’ labor, and the computer time they need to write and debug the code). Or academic papers, or for that matter running an assembly line or a steel mill. In all of these cases, you just can’t smoothly interpolate between plans which have these outputs and ones which don’t. You must pay at least the fixed cost to get any output at all, which is non-convexity. And there are other sources of increasing returns, beyond fixed costs.
This is bad news for the planners, because there are no general-purpose algorithms for optimizing under non-convex constraints. Non-convex programming isn’t roughly as tractable as linear programming, it’s generally quite intractable. Again, the kinds of non-convexity which economic planners would confront might, conceivably, universally turn out to be especially benign, soeverything becomes tractable again, but why should we think that?
If it’s any consolation, allowing non-convexity messes up the markets-are-always-optimal theorems of neo-classical/bourgeois economics, too. (This illustrates Stiglitz’s contention that if the neo-classicals were right about how capitalism works, Kantorovich-style socialism would have been perfectly viable.) Markets with non-convex production are apt to see things like monopolies, or at least monopolistic competition, path dependence, and, actual profits and power. (My university owes its existence to Mr. Carnegie’s luck, skill, and ruthlessness in exploiting the non-convexities of making steel.) Somehow, I do not think that this will be much consolation).
The Given Assortment, and Planner’s Preferences
So far I have been assuming, for the sake of argument, that the planners can take their objective function as given. There does need to be some such function, because otherwise it becomes hard to impossible to chose between competing plans which are all technically feasible. It’s easy to say “more stuff is better than less stuff”, but at some point more towels means fewer diapers, and then the planners have to decide how to trade off among different goods. If we take desired output as fixed and try to minimize inputs, the same difficulty arises (is it better to use so less cotton fiber if it requires this much more plastic?), so I will just stick with the maximization version.
For the capitalist or even market-socialist firm, there is in principle a simple objective function: profit, measured in dollars, or whatever else the local unit of account is. (I say “in principle” because a firm isn’t a unified actor with coherent goals like “maximize profits”; to the extent it acts like one, that’s an achievement of organizational social engineering.) The firm can say how many extra diapers it would have to sell to be worth selling one less towel, because it can look at how much money it would make. To the extent that it can take its sales prices as fixed, and can sell as much as it can make, it’s even reasonable for it to treat its objective function as linear.
But what about the planners? Even if they wanted to just look at the profit (value added) of the whole economy, they get to set the prices of consumption goods, which in turn set the (shadow) prices of inputs to production. (The rule “maximize the objective function” does not help pick an objective function.) In any case, profits are money, i.e., claims, through exchange, on goods and services produced by others. It makes no sense for the goal of the economy, as a whole, to be to maximize its claims on itself.
As I mentioned, Kantorovich had a way of evading this, which was clever if not ultimately satisfactory. He imagined the goal of the planners to be to maximize the production of a “given assortment” of goods. This means that the desired ratio of goods to be produced is fixed (three diapers for every towel), and the planners just need to maximize production at this ratio. This only pushes back the problem by one step, to deciding on the “given assortment”.
We are pushed back, inevitably, to the planners having to make choices which express preferences or (in a different sense of the word) values. Or, said another way, there are values or preferences—what Nove called “planners’ preferences”—implicit in any choice of objective function. This raises both a cognitive or computational problem, and at least two different political problems.
The cognitive or computational problem is that of simply coming up with relative preferences or weights over all the goods in the economy, indexed by space and time. (Remember we need such indexing to handle transport and sequencing.) Any one human planner would simply have to make up most of these, or generate them according to some arbitrary rule. To do otherwise is simply beyond the bounds of humanity. A group of planners might do better, but it would still be an immense amount of work, with knotty problems of how to divide the labor of assigning values, and a large measure of arbitrariness.
Which brings us to the first of the two political problems. The objective function in the plan is an expression of values or preferences, and people have different preferences. How are these to be reconciled?
There are many institutions which try to reconcile or adjust divergent values. This is a problem of social choice, and subject to all the usual pathologies and paradoxes of social choice. There is no universally satisfactory mechanism for making such choices. One could imagine democratic debate and voting over plans, but the sheer complexity of plans, once again, makes it very hard for members of the demos to make up their minds about competing plans, or how plans might be changed. Every citizen is put in the position of the solitary planner, except that they must listen to each other.
Citizens (or their representatives) might debate about, and vote over, highly aggregated summaries of various plans. But then the planning apparatus has to dis-aggregate, has to fill in the details left unfixed by the democratic process. (What gets voted on is a compressed encoding of the actual plan, for which the apparatus is the decoder.) I am not worried so much that citizens are not therefore debating about exactly what the plan is. Under uncertainty, especially uncertainty from complexity, no decision-maker understands the full consequences of their actions. What disturbs me about this is that filling in those details in the plan is just as much driven by values and preferences as making choices about the aggregated aspects. We have not actually given the planning apparatus a tractable technical problem(cf.).
Dictatorship might seem to resolve the difficulty, but doesn’t. The dictator is, after all, just a single human being. He (and I use the pronoun deliberately) has no more ability to come up with real preferences over everything in the economy than any other person. (Thus, Ashby’s “law of requisite variety” strikes again.) He can, and must, delegate details to the planning apparatus, but that doesn’t help the planners figure out what to do. I would even contend that he is in a worse situation than the demos when it comes to designing the planning apparatus, or figuring out what he wants to decide directly, and what he wants to delegate, but that’s a separate argument. The collective dictatorship of the party, assuming anyone wanted to revive that nonsense, would only seem to give the worst of both worlds.
I do not have a knock-down proof that there is no good way of evading the problem of planners’ preferences. Maybe there is some way to improve democratic procedures or bureaucratic organization to turn the trick. But any such escape is, now, entirely conjectural. In its absence, if decisions must be made, they will get made, but through the sort of internal negotiation, arbitrariness and favoritism which Spufford depicts in the Soviet planning apparatus.
This brings us to the second political problem. Even if everyone agrees on the plan, and the plan is actually perfectly implemented, there is every reason to think that people will not be happy with the outcome. They’re making guesses about what they actually want and need, and they are making guesses about the implications of fulfilling those desires. We don’t have to go into “Monkey’s Paw” territory to realize that getting what you think you want can prove thoroughly unacceptable; it’s a fact of life, which doesn’t disappear in economics. And not everyone is going to agree on the plan, which will not be perfectly implemented. (Nothing is ever perfectly implemented.) These are all signs of how even the “optimal” plan can be improved, and ignoring them is idiotic.
We need then some systematic way for the citizens to provide feedback on the plan, as it is realized. There are many, many things to be said against the market system, but it is a mechanism for providing feedback from users to producers, and for propagating that feedback through the whole economy, without anyone having to explicitly track that information. This is a point which both Hayek, and Lange (before the war) got very much right. The feedback needn’t be just or even mainly through prices; quantities (especially inventories) can sometimes work just as well. But what sells and what doesn’t is the essential feedback.
It’s worth mentioning that this is a point which Trotsky got right.(I should perhaps write that “even Trotsky sometimes got right”.) To repeat a quotation:
The innumerable living participants in the economy, state and private, collective and individual, must serve notice of their needs and of their relative strength not only through the statistical determinations of plan commissions but by the direct pressure of supply and demand. The plan is checked and, to a considerable degree, realized through the market.
It is conceivable that there is some alternative feedback mechanism which is as rich, adaptive, and easy to use as the market but is not the market, not even in a disguised form. Nobody has proposed such a thing.
Errors of the Bourgeois Economists
Both neo-classical and Austrian economists make a fetish (in several senses) of markets and market prices. That this is crazy is reflected in the fact that even under capitalism, immense areas of the economy are not coordinated through the market. There is a great passage from Herbert Simon in 1991 which is relevant here:
Suppose that [“a mythical visitor from Mars”] approaches the Earth from space, equipped with a telescope that revels social structures. The firms reveal themselves, say, as solid green areas with faint interior contours marking out divisions and departments. Market transactions show as red lines connecting firms, forming a network in the spaces between them. Within firms (and perhaps even between them) the approaching visitor also sees pale blue lines, the lines of authority connecting bosses with various levels of workers. As our visitors looked more carefully at the scene beneath, it might see one of the green masses divide, as a firm divested itself of one of its divisions. Or it might see one green object gobble up another. At this distance, the departing golden parachutes would probably not be visible.
No matter whether our visitor approached the United States or the Soviet Union, urban China or the European Community, the greater part of the space below it would be within green areas, for almost all of the inhabitants would be employees, hence inside the firm boundaries. Organizations would be the dominant feature of the landscape. A message sent back home, describing the scene, would speak of “large green areas interconnected by red lines.” It would not likely speak of “a network of red lines connecting green spots.”
This is not just because the market revolution has not been pushed far enough. (“One effort more, shareholders, if you would be libertarians!”) The conditions under which equilibrium prices really are all a decision-maker needsto know, and really are sufficient for coordination, are so extreme as to be absurd.(Stiglitz is good on some of the failure modes.) Even if they hold, the market only lets people “serve notice of their needs and of their relative strength” up to a limit set by how much money they have. This is why careful economists talk about balancing supply and “effective” demand, demand backed by money.
This is just as much an implicit choice of values as handing the planners an objective function and letting them fire up their optimization algorithm. Those values are not pretty. They are that the whims of the rich matter more than the needs of the poor; that it is more important to keep bond traders in strippers and cocaine than feed hungry children. At the extreme, the market literally starves people to death, because feeding them is a less”efficient” use of food than helping rich people eat more.
I don’t think this sort of pathology is intrinsic to market exchange; it comes from market exchange plus gross inequality. If we want markets to signal supply and demand (not just tautological “effective demand”), then we want to ensure not just that everyone has access to the market, but also that they have (roughly) comparable amounts of money to spend. There is, in other words, a strong case to be made for egalitarian distributions of resources being a complement to market allocation. Politically, however, good luck getting those to go together.
We are left in an uncomfortable position. Turning everything over to the market is not really an option. Beyond the repulsiveness of the values it embodies, markets in areas like healthcare or information goods are always inefficient (over and above the usual impossibility of informationally-efficient prices). Moreover, working through the market imposes its own costs (time and effort in searching out information about prices and qualities, negotiating deals, etc.), and these costs can be very large. This is one reason (among others) why Simon’s Martian sees such large green regions in the capitalist countries—why actually-existing capitalism is at least as much an organizational as a market economy.
Planning is certainly possible within limited domains—at least if we can get good data to the planners—and those limits will expand as computing power grows. But planning is only possible within those domains because making money gives firms (or firm-like entities) an objective function which is both unambiguous and blinkered. Planning for the whole economy would, under the most favorable possible assumptions, be intractable for the foreseeable future, and deciding on a plan runs into difficulties we have no idea how to solve. The sort of efficient planned economy dreamed of by the characters in Red Plenty is something we have no clue of how to bring about, even if we were willing to accept dictatorship to do so.
That planning is not a viable alternative to capitalism (as opposed to a tool within it) should disturb even capitalism’s most ardent partisans. It means that their system faces no competition, nor even any plausible threat of competition. Those partisans themselves should be able to say what will happen then: the masters of the system, will be tempted, and more than tempted, to claim more and more of what it produces as monopoly rents. This does not end happily.
Calling the Tune for the Dance of Commodities
There is a passage in Red Plenty which is central to describing both the nightmare from which we are trying to awake, and vision we are trying to awake into. Henry has quoted it already, but it bears repeating.
Marx had drawn a nightmare picture of what happened to human life under capitalism, when everything was produced only in order to be exchanged; when true qualities and uses dropped away, and the human power of making and doing itself became only an object to be traded. Then the makers and the things made turned alike into commodities, and the motion of society turned into a kind of zombie dance, a grim cavorting whirl in which objects and people blurred together till the objects were half alive and the people were half dead. Stock-market prices acted back upon the world as if they were independent powers, requiring factories to be opened or closed, real human beings to work or rest, hurry or dawdle; and they, having given the transfusion that made the stock prices come alive, felt their flesh go cold and impersonal on them, mere mechanisms for chunking out the man-hours. Living money and dying humans, metal as tender as skin and skin as hard as metal, taking hands, and dancing round, and round, and round, with no way ever of stopping; the quickened and the deadened, whirling on.… And what would be the alternative? The consciously arranged alternative? A dance of another nature, Emil presumed. A dance to the music of use, where every step fulfilled some real need, did some tangible good, and no matter how fast the dancers spun, they moved easily, because they moved to a human measure, intelligible to all, chosen by all.
There is a fundamental level at which Marx’s nightmare vision is right: capitalism, the market system, whatever you want to call it, is a product of humanity, but each and every one of us confronts it as an autonomous and deeply alien force. Its ends, to the limited and debatable extent that it can even be understood as having them, are simply inhuman. The ideology of the market tell us that we face not something inhuman but superhuman, tells us to embrace our inner zombie cyborg and loose ourselves in the dance. One doesn’t know whether to laugh or cry or running screaming.
But, and this is I think something Marx did not sufficiently appreciate, human beings confront all the structures which emerge from our massed interactions in this way. A bureaucracy, or even a thoroughly democratic polity of which one is a citizen, can feel, can be, just as much of a cold monster as the market. We have no choice but to live among these alien powers which we create, and to try to direct them to human ends. It is beyond us, it is even beyond all of us, to find “a human measure, intelligible to all, chosen by all”, which says how everyone should go. What we can do is try to find the specific ways in which these powers we have conjured up are hurting us, and use them to check each other, or deflect them into better paths. Sometimes this will mean more use of market mechanisms, sometimes it will mean removing some goods and services from market allocation, either through public provision or through other institutional arrangements. Sometimes it will mean expanding the scope of democratic decision-making (for instance, into the insides of firms), and sometimes it will mean narrowing its scope (for instance, not allowing the demos to censor speech it finds objectionable). Sometimes it will mean leaving some tasks to experts, deferring to the internal norms of their professions, and sometimes it will mean recognizing claims of expertise to be mere assertions of authority, to be resisted or countered.
These are all going to be complex problems, full of messy compromises. Attaining even second best solutions is going to demand “bold, persistent experimentation”, coupled with a frank recognition that many experiments will just fail, and that even long-settled compromises can, with the passage of time, become confining obstacles. We will not be able to turn everything over to the wise academicians, or even to their computers, but we may, if we are lucky and smart, be able, bit by bit, make a world fit for human beings to live in.
: Vaguely lefty? Check. Science fiction reader? Check. Interested in economics? Check. In fact: family tradition of socialism extending to having a relative whose middle name was “Karl Marx”? Check. Gushing Ken MacLeod fan? Check. Learned linear programming at my father’s knee as a boy? Check. ^
: More exactly, many optimization problems have the property that we can check a proposed solution in polynomial time (these are the class “NP”), but no one has a polynomial-time way to work out a solution from the problem statement (which would put them in the class “P”). If a problem is in NP but not in P, we cannot do drastically better than just systematically go through candidate solutions and check them all. (We can often do a bit better, especially on particular cases, but not drastically better.) Whether there are any such problems, that is whether NP=P, is not known, but it sure seems like it. So while most common optimization problems are in NP, linear and even convex programming are in P.^
: Most of the relevant work has been done under a slightly different cover—not determining shadow prices in an optimal plan, but equilibrium prices in Arrow-Debreu model economies. But this is fully applicable to determining shadow prices in the planning system.(Bowles and Gintis: “The basic problem with the Walrasian model in this respect is that it is essentially about allocations and only tangentially about markets—as one of us (Bowles) learned when he noticed that the graduate microeconomics course that he taught at Harvard was easily repackaged as ‘The Theory of Economic Planning’ at the University of Havana in 1969.”) Useful references here are Deng, Papadimitriou and Safra’s “On the Complexity of Price Equilibria” [STOC’02. preprint], Condenotti and Varadarajan’s “Efficient Computation of Equilibrium Prices for Markets with Leontief Utilities”, and Ye’s “A path to the Arrow-Debreu competitive market equilibrium”. ^
: In the mathematical appendix to Best Use, Kantorovich goes to some length to argue that his objectively determined values are compatible with the labor theory of value, by showing that the o.d. values are proportional to the required labor in the optimal plan. (He begins by assuming away the famous problem of equating different kinds of labor.) A natural question is how seriously this was meant. I have no positive evidence that it wasn’t sincere. But, carefully examined, all that he proves is proportionality between o.d. values and the required consumption of the first component of the vector of inputs—and the ordering of inputs is arbitrary. Thus the first component could be any input to the production process, and the same argument would go through, leading to many parallel “theories of value”. (There is a certain pre-Socratic charm to imagining proponents of the labor theory of value arguing it out with the water-theorists or electricity-theorists.) It is hard for me to believe that a mathematician of Kantorovich’s skill did not see this, suggesting that the discussion was mere ideological cover. It would be interesting to know at what stage in the book’s “adventures” this part of the appendix was written.^
: In particular, there’s no reason to think that building a quantum computer would help. This is because, as some people have to keep pointing out, quantum computers don’t provide a generalexponential speed-up over classical ones. ^
: I strongly recommend reading the whole of this paper, if these matters are at all interesting. One of the most curious features of this little parable was that Simon was red-green color-blind.^
: Let me be clear about the limits of this. Already, in developed capitalism, such public or near-public goods as the protection of the police and access to elementary schooling are provided universally and at no charge to the user. (Or they are supposed to be, anyway.) Access to these is not regulated by the market. But the inputs needed to provide them are all bought on the market, the labor of teachers and cops very much included. I cannot improve on this point on the discussion in Lindblom’s The Market System, so I will just direct you to that(i, ii).^
: To give a concrete example, neither scientific research nor free software are produced for sale on the market. (This disappoints some aficionados of both.) Again, the inputs are obtained from markets, including labor markets, but the outputs are not sold on them. How far this is a generally-viable strategy for producing informational goods is a very interesting question, which it is quite beyond me to answer.^..."
#shouldread #weekendreading #theshoresofutopia
Weekend Reading/Hoisted from 2006: Socialism with German Nationalist Characteristics: "I was supposed to contribute to Crooked Timber's seminar http://crookedtimber.org/category/sheri-berman-seminar/ on Sheri Berman (2006), The Primacy of Politics: Social Democracy and the Making of Europe's Twentieth Century (Cambridge: Cambridge University Press: 0521521106). But it never happened: I never produced anything I was happy with.
So let me, instead, point you over to the ongoing debate and post my favorite passage...
Question for the Universe: I dimly remember some time ago thinking that Peter F. Drucker sought the reconciliation between the advantages of capitalism—bold entrepreneurship and growth—and socialism—redistribution, common concern, and all pulling in the same direction—in the figure of the manager, whose social role was precisely to arrange things so that society could be an "association, in which the free development of each is the condition for the free development of all". But now I cannot find it. Did I just dream that I had written this down someplace?
Hoisted from them Archives: Should Kansas's (and Missouri's) Future Be "a Lot More Like Texas"?: That is one of Kansas Governor Sam Brownback's constant applause lines—that he wants Kansas to be a lot less like California and a lot more like Texas.And so I was reading Bryan Burrough on Erica Grieder: ‘Big, Hot, Cheap and Right’: What America Can Learn from the Strange Genius of Texas.... Burrough applaud's Erica Grieder's "counter[ing] much of this silliness" that "Texas is corrupt, callous, racist, theocratic, stupid, belligerent, and most of all, dangerous.” The problem is that three paragraphs later Burrough is writing of how:
Texas’s laissez-faire mix of weak government, low taxes and scant regulations is deeply rooted in its 1876 Constitution, which was an attempt to vehemently dismantle an oppressive post-Civil War government of Radical Reconstructionists…
What was most "oppressive" about the Radical Reconstructionists? It was, of course, that they thought African-Americans should vote, and enabled them to do so.
August 14, 2018 at 07:31 AM in #economicgrowth, #economics, #equitablegrowth, #highlighted, #moralresponsibility, #politicaleconomy, #politics, Economics: Inequality, Information: Better Press Corps/Journamalism, Philosophy: Moral, Streams: (Tuesday) Hoisted from Archives, Streams: Cycle | Permalink | Comments (10)
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DEVENG 215: Global Poverty Challenges and Hopes: A Perspective for Development Engineers:
Discussion: J. Bradford DeLong: TU 4:00 pm - 5:00 pm Mulford 230
Lecture: Fatmir Haskaj: TU, TH 2:00 pm - 3:29 pm Valley Life Sciences 2050
This graduate Development Engineering class has the following goals:
Assist students in orienting themselves to the current global debates about poverty and inequality by exposing them to alternative paradigms of development and welfare situated in their historical context.
Assist students in familiarizing themselves with the institutions and actors—from the World Bank to global social movements, from national and local governments to nonprofits and NGOs, from multinational corporations to philanthropic foundations—attempting to act to diminish global poverty.
Assist students in critically reflecting upon philosophies of global justice, the ethics of global citizenship, their own engagements with poverty action, and their own aspirations for social change.
Prevent students from maintaining or accepting the the comfortable perception that poverty exists elsewhere, can be contained at a distance, does not affect them and their communities every day.
The hope is to accomplish all these tasks at the graduate student level, with a focus on how the social-political-economic context constrains and opens opportunities for successful Development Engineering. The hope is to do this on the cheap, without committing lots of additional resources.
My idea is to do this by building on the lectures and readings of Fatmir Haskaj's undergraduate course GPP 115: Global Poverty: Challenges and Hopes in the New Millennium. We will add additional readings and a graduate-level discussion seminar to attempt to supercharge what Fatmir does. Hence this syllabus incorporates-by-reference the GPP 115 syllabus…
Fatmir's course describes itself as:
seek[ing] to provide a rigorous understanding of 20th century development and thus 21st century poverty alleviation. Students will take a look at popular ideas of poverty alleviation, the institutional framework of poverty ideas and practices, and the social and political mobilizations that seek to transform the structures of poverty...
From the graduate Development Engineering Program perspective, this course—while completely fine for what it is—is not quite what we want. It is too "idealist"—incorporates too much of an implicit belief that once one understands the world, it will immediately become obvious how to change it, which belief is a common disease thought by academics like me. And it is too "macro"—individual development engineers are not going to lead social and political mobilizations and transform structures, but rather work in the context created by existing structures and mobilizations, in the hope of taking small steps in a good direction. Therefore post-lecture discussions will focus on: "OK. Very good. Now how does this affect how we will act when the rubber meets the road?"
Reading Adam Tooze's powerpoints for his _War in Germany, 1618-1648 course, and thinking about the Vexed Question of Prussia in World History...
For a bit over the first half of the Long 20th Century global history was profoundly shaped by the peculiarity of Prussia. The standard account of this peculiarity—this sonderweg, sundered way, separate Prussian path—has traditionally seen it has having four aspects. Prussia—and the "small German" national state of which it was the nucleus—managed to simultaneously, over 1865-1945:
Judith Shklar (1989): The Liberalism of Fear: "The liberalism of fear... does not... offer a summum bonum... but it certainly does begin with a summum malum, which all of us know and would avoid if only we could. That evil is cruelty and the fear it inspires...
Once the people—the male people at first, and the white people overwhelmingly, and the adult people always, that is—had the vote, what were they going to do with it?
5.2.1: Inequality in the First Gilded Age: The coming of (white, male) democracy in the North Atlantic was all mixed up with the coming of modern industry—the move out of agriculture and into industrial and service occupations—the coming of the modern city (the move from the farm to someplace more densely populated), and the coming of heightened within-nation income inequality.
James Madison: [Alexander Hamilton's Constitutional Convention Speech, 18 June 1787]](https://founders.archives.gov/documents/Hamilton/01-04-02-0098-0003): "Mr. Hamilton, had been hitherto silent on the business before the Convention, partly from respect to others whose superior abilities age and experience rendered him unwilling to bring forward ideas dissimilar to theirs...
Nils Gilman:" A largely hereditary elite: "A largely hereditary elite is anathema to the principles of meritocracy. But this much must be said: an elite that is secure in its prerogatives has a strong incentive to focus on the care and feeding of the system...
Aspen: Security: Nine Reactions to the Four Ex-National Security Advisors Panel: Most important:
And here are eight more:
A common thread in a bunch of the initial comments here was: valuation and assessment...: We need to settle on a single set of global societal indicators that will have the mindshare that the market financial and other indicators have. I have no answers. I only have a plea for coordination...
Introducing considerations of strategy into development is a very sharp two-edged sword...: The Cold War focused the attention of the entire American government on making the redevelopment of northwest and the development of southwestern Europe and of East Asia... a success...
I remember pressing the Treasury International people on how better funding and more substantive independence for multilateral institutions ought to be a much higher priority...: And then, lo and behold, Bob Dole unleashes Al D'Amato to make trouble about the Mexican financial crisis and the fallout from that leaves the US hobbled with 1997-8 comes around...
The extraordinary disjunction between the two acts of Chiang Kai-Shek's career...: The second act—Chiang Kai-Shek and his Guomindang as rulers of Taiwan after 1949—is one of the most glorious episodes of economic development...
The farmer and the cowman can be friends only when there is a matriarch with a shotgun in the picture...: One reading of world history is that a huge amount of the civilizing process is accomplished when people's mothers and aunts gain social power...
Aspen, CO: In the end, starting up the trail only 18 hours after landing in Aspen was probably a mistake...
Aspen: Development Finance: A common thread in a bunch of the initial comments here was: valuation and assessment. This is a piece of a much broader problem. We have absolutely powerful measures for assessment as far as things that go through the market. We see them every hour on practically every news channel: GDP, employment, wages, equity values, interest rates. We have no similar set of indicators that are brought in front of our eyes and injected into our consciousnesses with respect to any of the broader societal welfare measures that we really want to advance—and the things that we really want Mars to advance. I do not know what the solution to this is. Clearly it is not another report with another set of indicators to add to the cacophony. But I do think we need to settle on a single set of global societal indicators that will have the mindshare that the market financial and other indicators have. I have no answers. I only have a plea for coordination...
James Scott and Friedrich Hayek: My review of James Scott (1998), Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed (New Haven: Yale University Press: 0300070160):
There is a lot that is excellent in James Scott's Seeing Like a State.
On one level, it is an extraordinary well-written and well-argued tour through the various forms of damage that have been done in the twentieth century by centrally-planned social-engineering projects—by what James Scott calls 'high modernism' and the attempt to use high modernist principles and practices to build utopia. As such, every economist who reads it will see it as marking the final stage in the intellectual struggle that the Austrian tradition has long waged against apostles of central planning. Heaven knows that I am no Austrian—I am a liberal Keynesian and a social democrat—but within economics even liberal Keynesian social democrats acknowledge that the Austrians won victory in their intellectual debate with the central planners long ago.
I messed this up the first time. And I apologize to Stefania. Let me see if I can fix it:
The very sharp Stefanie Stantcheva gets trapped into linguistic quicksand, and disappears into the mire. Her Let me disagree with the very sharp Stefanie Stantcheva's statement that "it’s good to be clear... whether you are making an efficiency argument about the reaction to taxes or expressing a social value judgment..." is totally incoherent: so-called "efficiency" arguments rest on a social value judgment—that the existing distribution of wealth corresponds to utility and deservingness, so that reducing the areas of the economy's Harberger triangles would raise societal wellbeing, holding the distribution of wealth constant, while increasing the areas of the economy's Harberger triangles would raise societal wellbeing, holding the distribution of wealth constant. I think that is wrong: the Harberger triangles' changes go to and come from people with different marginal utilities of wealth. Thus whether the total of behavioral responses to balance-preserving fiscal interventions raise or reduce societal wealth, holding the distribution of wealth constant, hinges on who the Harberger triangles go to or come from . If the people they go to and come from do not have the same marginal utility of wealth, then:** "efficiency" can be inefficient.
And to claim the the current distribution of wealth corresponds to utility and deservingness ought to be a lie too big for anyone to swallow. **It's not anything Stefanie Stantcheva would ever say—rather the reverse—but it does implicitly underpin the belief that the sum-of-the-areas-of-the-economy's-Harberger-triangles is meaningful.
I think all these messes are potentially avoided by working in utility space rather than wealth space from teh get-go. But what do I know?
And, otherwise, her twitter thread is totally great: Stefanie Stantcheva: "Optimal Capital Taxation in 7 Tweets: "Simplifying a lot, but here is the core logic...
Ann Marie Marciarille: David Slusky on The Impact of the Flint Water Crisis on Fertility: "K.U.'s David Slusky gave an interesting talk on "The Impact of the Flint Water Crisis on Fertility". A 4.9% decrease in birth weight is hard to ignore...
Austin Frakt: Reagan, Deregulation and America's Exceptional Rise in Health Care Costs: "Why did American health care costs start skyrocketing compared with those of other advanced nations starting in the early 1980s?...
So let me procrastinate some more this morning...
Let me riff off of something that crossed my desk last night: Emily Wilson's reflections on her translation of the Odyssey, and on the Odyssey itself. There is one passage that always has been, to me at least, horrifyingly freaky in a very bad way. As David Drake—one of my favorite science fiction and fantasy authors—puts it:
Odysseus caps his victory by slowly strangling–the process is described in some detail–the female servants who have been sleeping with Penelope’s suitors. This is only one example (although a pretty striking one) of normal behavior in an Iron Age culture which is unacceptable in a society that I (or anybody I want as a reader) would choose to live in... a hero with the worldview of a death camp guard...
Emily R.C. Wilson: "After one of my recent 'Conversation' interviews (in Sydney), someone asked me if the hanging of the slave women in the Odyssey is 'right'...
...Summarizing my answer here on the recommendation of a friend, because it brings up a key distinction for thinking about any literary text. Literature 101: There are 3 separate questions intertwined:
Hoisted from a Year Ago: "Populism" or "Neo-Fascism"?: Rectification of Names Blogging: That is neither the post-WWII Latin American nor the pre-WWI North American form of "populism". I do not think we are well served by naming it such. What should we name it instead? There is an obvious candidate, after all...
Note to Self: Obama essentially turned monetary, fiscal, and housing policy over to two guys who were “calm down and hope for the best“ rather than “prepare for the worst“ guys: Ben Bernanke and Tim Geithner. Those were, in retrospect, disastrous choices—not because of what they did but because of their opposition to thinking well outside the box and preparing to deal with the worst case scenario’s. So when the “green shoots” of a strong recovery that both saw were not there at all—when they claimed the strong recovery glass was mostly full but in fact there was no glass—their position kept others who would have been preparing for the worst, and who might have been able to do better at dealing with the situation, from being able to take any effective action...
The problem with this is that I do not think that I have the story of Japan's successfully pre-WWI development path nailed, the way I have the Chinese story of failure nailed. Oh well:
The opposite of China in the pre-World War I years was Japan.
In the early seventeenth century the Tokugawa clan of samurai decisively defeated its opponents at the battle of Sekigahara, and won effective control. Tokugawa Ieyasu petitioned the—secluded Priest-Emperor to grant him the title of Shogun, the Priest-Emperor's viceroy in all civil and military matters. His son Hidetaka and grandson Iemitsu consolidated the new régime. From its capital, Edo—renamed and now Tokyo—the Tokugawa Shogunate ruled Japan for two and a half centuries.
At its very start, early in the seventeenth century, the Tokugawa Shogunate took a look to the south, at the Philippines. Only a century before, the Philippines had been independent kingdoms. Then the Europeans landed. Merchants had been followed by missionaries. Converts had proved an effective base of popular support for European influence. Missionaries had been followed by soldiers. And by 1600 Spain ruled the Philippines.
“We have traveled far...“ said Teddy Roosevelt, looking back at the Puritans.
And we today, looking back at Teddy Roosevelt, have reason to say the same thing.
We can hope that, were Teddy with us today and were he given an opportunity for sober reflection and consideration, he would agree.
We can hope that he would agree that many of his attitudes towards women come out of an ideological and cultural superstructure, erected largely for the benefit of men, built on top of a near-Malthusian biological regime in which the typical woman spent 20 years of her life eating for two.
We can hope that he would agree that all of his fears about “race“ and its impact on America in his day have been falsified by the history of America since his.
And we can hope that, as far as “improving the breed“ is concerned, Roosevelt today would understand that, even on the narrowest perspective of what maximizes the survival probability of the human species as a breeding population, our genetic diversity is already so low that we cannot afford to further reduce it along almost any dimension—that "eugenics" as he understood it is a big no-no.
And we can welcome the valuable things that Teddy Roosevelt tried to carry forward from his time into ours...
A brilliant 10 minute talk on economics as it really is—or should be: Trevon Logan: Ohio State University Masterminds: "Think of the first questions you ask someone when you meet them: 'What do you do?'...
Eagleton: "[Following Rorty,] I now object to nuclear warfare not because it would blow up some metaphysical abstraction known as the human race, but because it would introduce a degree of unpleasantness into the lives of my Oxford neighbors.... The campaign is no longer the bloodless, cerebral affair it once was, but pragmatic, experiential, lived sensuously on the pulses. If my bit of Oxford survives a nuclear catastrophe, I really couldn't care less about the University of Virginia..."
Hoisted from the Archives: Eagleton on Rorty http://www.j-bradford-delong.net/Politics/Eagleton.html: English literary critic Terry Eagleton has a very nice--a very effective--a very snide--a very sarcastic--demolition of U. Va. philosopher Richard Rorty. From Terry Eagleton (1996), The Illusions of Postmodernism (London: Blackwell: 0631203230):
pp. 85-86: ...postmodernism combines the worst of [liberalism and communitarianism].... It has, to begin with, an embarrassing amount in common with communitarianism.... The self for both doctrines is embedded in a purely parochial history, and moral judgements thus cannot be universal. Moral judgements, for [Richard] Rorty and his ilk, really say "We don't do that kind of thing around here"; whereas... to say "sexual discrimination is wrong" usually means that we do do that kind of thing around here, but we shouldn't...
Note to Self: Alexander Hamilton: America as "Grand Experiment": Ari Kelman: "The description of the United States as a Grand Experiment in democracy or sometimes as a lower-case grand experiment in democracy. I always assumed that one of the founders* said that, that it was a quote in other words. But no, it seems that’s not the case. Unless I’m missing something—which is entirely possible; no, really, it’s entirely possible—the whole thing is a charade..." How about this? Will it do?: Alexander Hamilton: "The advocates of despotism have... decried all free government as inconsistent with the order of society, and have indulged themselves in malicious exultation over its friends and partisans. Happily for mankind, stupendous fabrics reared on the basis of liberty, which have flourished for ages, have, in a few glorious instances, refuted their gloomy sophisms. And, I trust, America will be the broad and solid foundation of other edifices, not less magnificent, which will be equally permanent monuments of their errors..."
Current Versions of Chapters 1-3:
Outtakes and Deleted Scenes:
10000 words on why the 20th Century was not a Chinese century. Very few of these belong in a 20th Century history book, alas...
The sharp and well-intentioned Will Wilkinson still thinks that the name "libertarianism" is worth fighting for, or perhaps that "liberaltarianism" is worth fighting for. I, however, for one, think that "libertarianism" is poisoned in the same way that "fascism", "communism", "socialism", and "neoliberalism" are poisoned. Too many bad people have waved their banners in bad faith. In libertarians' case, the bad people waving in bad faith have been those who think that the only rights that matter are the rights to discriminate, to exchange, and to hold what you have no matter how you acquired it. Maybe "positive libertarians" has a chance, maybe not: Will Wilkinson: Liberaltarianism: Back the Future: "Misean economics,... filtered through Ayn Rand and Murray Rothbard's peculiar views of rights and coercion...
The twentieth century’s tyrannies were more brutal and more barbaric than those of any previous age. And—astonishingly—they had much of their origins in economic discontents and economic ideologies. People killed each other in large numbers over, largely, questions of how the economy should be organized. Such questions had not been a major source of massacre in previous centuries.
Twentieth-Century governments and their soldiers have killed perhaps forty million people in war: either soldiers (most of them unlucky enough to have been drafted into the mass armies of the twentieth century) or civilians killed in the course of what could be called military operations.
But wars have caused only about a fifth of this century’s violent death toll.
Do I have space for this in the ms.? Or do I need to go into kill-my-darlings mode?
3.1: The ca.-1870 Disjunction Between Production and Distribution
In the world as it stood in 1870 there was seen to be a huge disjunction between the growing effective economic power of the human race and the proper distribution of this potential wealth to create a prosperous and happy society. That science, technology, and organization could wreak miracles had become commonplaces. Best friends Karl Marx and Friedrich Engels probably put it best in 1848:
The business class, during… scarce 100 years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to [hu]man[ity], machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground—what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?…
This is as true now as it was half a century ago when Galbraith first began saying it: John Kenneth Galbraith (1963): Wealth and Poverty: "The modern conservative... not even especially modern... is engaged... in one of man’s oldest, best financed, most applauded, and, on the whole, least successful exercises in moral philosophy. That is the search for a superior moral justification for selfishness...
A small partial modification of Galbraith's dictum: Dan Davies: The Tribute that Vice Pays to Virtue: "The single most sensible thing said in political philosophy in the twentieth century was JK Galbraith's aphorism that the quest of conservative thought throughout the ages has been 'the search for a higher moral justification for selfishness'.... Then there are the tricky cases where the rightwingers happen to be on the right side because we haven't yet discovered a better form of social organisation than private property for solving several important classes of optimisation problem..."
I see no way to justify including this in the ms. But should any of it go in? Or does it just belong in some other intellectual project?
John Ball (1381):
When Adam delved and Eve span,/
Who was then the gentleman?
From the beginning all men by nature were created alike, and our bondage or servitude came in by the unjust oppression of naughty men. For if God would have had any bondmen from the beginning, he would have appointed who should be bond, and who free.
And therefore I exhort you to consider that now the time is come, appointed to us by God, in which ye may (if ye will) cast off the yoke of bondage, and recover liberty…
You need to understand three things to grasp the state of the world economy in 1870: that the drive to make love is one of the very strongest of all human drives, that living standards were what we would regard as very low for the bulk of humanity in the long trek between the invention of agriculture and 1870, and that the rate of technological progress back before 1870 was glacial, at best.
How to use and misuse the argument ad hominid: Belle Waring (2003): Just Not So Stories: "Like everyone else, I'm tired of hearing about how Darwinian pressures cause men to think that young women with a fetching hip-to-waist ratio...
John Maynard Keynes (1926): Trotsky On England: "A CONTEMPORARY reviewing this book says: 'He stammers out platitudes in the voice of a phonograph with a scratched record'...
Don't like the others? I have my neoliberal party card:
American religion, at least white Protestant and Catholic religion, is overwhelmingly a self-righteousness multiplier...
Becky Henderson to me: "You need to read moar Stiglitz on environmental degradation and nature capital...
The principal use of “neoliberalism” as a word is to erase the difference between the Mussolini-love of Ludwig von Mises and center-left technocratic economists who want to get the incidence of policies right. Why? So you can then have more freedom to propose policies that do not make technocratic sense......
We Should Not Call It "Populism": "Now is the time for the second hobbyhorse I promised myself I would ride at this conference...
Is there a good biography of George Stigler? Beatrice Cherrier says that Stigler’s autobiography is still the best......
On My Grand Counterfactuals: The most interesting question is not “do you know?” But “does Dora Costa know?”, which is very close to “is it knowable”?...
The late Rudi Dornbusch liked to say that: "German ordoliberalism was something an economist could recognize if there was a benevolent Kindlebergian hegemon stabilizing the global system.” But if not, not...
Keynes, Polanyi, Foucault, Again: Cedarbrook Notes: "... >...As a product of Harvard’s undergraduate Social Studies program, I realized around 30 that I had been perfectly prepared to understand reality and act in western Europe between, say, 1860 and 1950...
Angus Deaton: "Judea Pearl knows a lot that Jim Heckman does not. And vice versa...”
Needed: A Better Karl Polanyi: I wondered coming up here whether this conference would turn into Karl Polanyi bingo. I am now confident that it will. Indeed, it has. As someone who thinks the master social theorists for the mid-21st century are likely to be Foucault, Keynes, Polanyi, this is not unwelcome...
Convergence Weighting by People Divergence Weighting by Nations: Yes, the world as a whole has become more equal over the past generation. This is overwhelmingly because two very large countries—India and China—have harvested a great deal of the low-hanging fruit of development because of better policies...
Big Questions for Left Opposition Social Scientists: Occupy had zero impact on austerity budgets. Mont Pelerin was not important because they gathered by a lake, sang “kumbaya”, and felt a sense of solidarity. We should not pretend defeats were victories. What can we do? I think there are three levels that we ought to be operating on—all, right now, understanding the world rather than trying to change it: understanding policies, understanding mobilizations, and understanding utopia...
I, on Behalf of the Economists Thinking Correct Economic Thought, Plead Not Guilty: We—at least my fraction of economists—plead “not guilty” to the indictment: The Minsky tradition had the financial sector nailed.... Paul Krugman... spearheading the analysis of how great the risks posed by the zero lower bound were.... Economists had been tracking decreasing competition, increasing financialization, and rising income inequality.... The problem, as Simon Wren-Lewis of Oxford likes to say, is not that the economists did not know what was going on in real time, but rather that they were not listened to...
Don't Like My Neoliberal Party Card? I Have Others!: Don't like the others? I have my neoliberal party card...
#cedarbrooknotes #shouldread #highlighted #cedarbrook #politicaleconomy #polanyi
"I now know it is a rising, not a setting, sun" --Benjamin Franklin, 1787
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