Saturday, December 29, 2012

The Later Matisse

I've been reading the second volume of Hilary Spurling's biography of Henri Matisse: Matisse the Master: A Life of Henri Matisse: The Conquest of Colour, 1909-1954. I enjoyed the first one last year.

It is a good read. It is naturally a very different story to the first one, which is in essence about his struggles to get established and the initial fauvist radical break with the past. The first book is a bildungsroman about finding one's place in the world. This volume in contrast shows an established artist, dealing with collectors and coping with family problems, travelling to Morocco and Moscow and Tahiti, and contributing to exhibitions.

The most striking thing is not the discussion of his evolution as an artist. That is perhaps submerged beneath too much quotidian detail about his trips to Tangier, garden at Issy or apartments in Nice. For deeper insight into his art, I think I will have to return to Pierre Schneider's massive Matisse and finish it.

Instead, the beating center of this book is the human drama of the impact of both world wars on his life. He had to flee from a deserted Paris in the First World War, his mother and other family trapped in Bohain behind enemy lines. He expected an Italian fascist seizure of Nice in the Second World War. His daughter Marguerite was tortured by the Nazis and narrowly escaped with her life. Sometimes it is easier to understand large events by their smaller impacts.

What is also clear is that Matisse's obsessive dedication to "true painting" caused endless strife for himself and his family. He might have led a successful life, with immense fame and a lasting legacy. He had a happy marriage for forty years, which was much envied by other painters. He led an orderly bourgeois existence in terms of work habits, rather than sinking into dissipation or poverty.

But so much of his life was filled with sleeplessness and anxiety and enormous agonizing over his work. Great talent sometimes comes with great flaws and great pain. The Parisian critics dismissed him as a outdated painter of saccharine odalisques from the 1920s on, and some of his most important work was hidden in the USSR for decades. The late work, including the famous cut-outs , took time to be appreciated. The French state mostly ignored his work, and he did not receive large decorative commissions as he hoped after the famous Barnes murals.


I am also still a little puzzled by his split with his wife Amelie late in life. Amelie grew increasingly resentful of his reliance on model Lydia Delectorskaya. Spurling insists Matisse was never sexually involved with his models. And certainly working for him gave a purpose to the exiled Russian. But something doesn't ring true here.

Still, now is the time to see the superb Matisse exhibition at the Met. The paintings are luminously brilliant. They stand quite apart from any biographical details.


Krugman, Robots and Redistribution

There's a lot of attention to this post by Paul Krugman on long-term growth.

And this means that in a sense we are moving toward something like my intelligent-robots world; many, many tasks are becoming machine-friendly. This in turn means that Gordon is probably wrong about diminishing returns to technology.

Ah, you ask, but what about the people? Very good question. Smart machines may make higher GDP possible, but also reduce the demand for people — including smart people. So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.

Perhaps at some stage there will be a deeper discussion of these issues. He says in a related column he will talk more about long-term growth in due course. But, he concedes, economists know very little about long-run prospects.

The great bulk of the economic commentary you read in the papers is focused on the short run: the effects of the “fiscal cliff” on U.S. recovery, the stresses on the euro, Japan’s latest attempt to break out of deflation. This focus is understandable, since one global depression can ruin your whole day. But our current travails will eventually end. What do we know about the prospects for long-run prosperity?

The answer is: less than we think.

The long-term projections produced by official agencies, like the Congressional Budget Office, generally make two big assumptions. One is that economic growth over the next few decades will resemble growth over the past few decades. In particular, productivity — the key driver of growth — is projected to rise at a rate not too different from its average growth since the 1970s. On the other side, however, these projections generally assume that income inequality, which soared over the past three decades, will increase only modestly looking forward.

It’s not hard to understand why agencies make these assumptions. Given how little we know about long-run growth, simply assuming that the future will resemble the past is a natural guess. On the other hand, if income inequality continues to soar, we’re looking at a dystopian, class-warfare future — not the kind of thing government agencies want to contemplate.

Yet this conventional wisdom is very likely to be wrong on one or both dimensions.

An additional problem is economics has very little understanding of the drivers of productivity. I don't know how many times senior officials have told me that it is a "residual of a residual" in quantitative terms.



We've looked at these issues before, such as here and here.

In particular, we looked at an excellent survey of technological developments here. Diamandis and Kotler conclude their book Abundance: The Future Is Better Than You Think with this:

Our problem is not that we don’t have enough stuff—it’s that we don’t have enough ways for people to work and prove that they deserve this stuff.

However, simply transferring money from "the rich" to the middle class or the poor is ultimately self-defeating. It undermines self-reliance and self-respect and the fact that living is more than just having stuff.

Redistribution is going to be the core issue in coming years - but even the word itself is tainted with leftist welfarism.

Instead, we need a better conception of how people earn a living, especially if the labor market is in trouble. And that means a better idea of value. And that entails some idea of the good life for people, instead of liberal neutrality whose whole point is to avoid any discussion of value.

Economics has deep difficulty with this, because value is primarily an ethical issue which is not reducible to models. Indeed, we saw recently economics as a discipline sidestepped the problem of value in the marginalist revolution by replacing it with a poorly conceived mathematical treatment of utility.

The whole apparatus of pareto-equality and welfare economics is flawed. Liberal ethics is flawed. Both lack any conception of human flourishing. Automatic equality of respect destroys any prospect of a better life, because it corrodes value. If everything is equal, there is no value.


Wednesday, December 26, 2012

The Swerve: Off course

It's nice to have a few clear days over Christmas. In between airplanes and turkey I read The Swerve: How the World Became Modern by Stephen Greenblatt. I have mixed feelings about it, though.

I liked the evocation of late medieval and early Renaissance culture. The book centers on the rediscovery of Lucretius' De Rerum Natura on a monastery library and subsequent impact on thought. The book gives insight into the timeless nature of bureaucracy and court politics, as represented by the "lie factory" of the Vatican Curia at the time. And there is a wistfulness about the loss of so much from the ancient world, all the classics that must have been lost.

But I found the book to be a little shapeless on the whole. Some reviewers have been bitterly critical of its factual claims.

There seems to be an underlying strain of anti-Christian bigotry. The book represents the redscovery of Epicurean atomistic doctrine as a liberation from Christianity, which apparently for Greenblatt represents everything cruel and backward and fearful. As other reviewers point out, classical wisdom had never been as wholly lost as Greenblatt implies, and many of the advances of learning at the time came from the church.

Of course, the medieval church has much to answer for. But so does modern progressivism, murkily bound up with eugenics in the early few twentieth century, let alone socialism or other anti-Christian ideologies.

There seems to be a kind of liberal who believes giving offense is wrong, except when it comes to attacking Christianity. I am not a regular churchgoer, but I feel the hypocrisy in this kind of attack. Liberalism should not be established as an official state religion, prone to its own inquisitions. The deeper rhythms of Western history are resonant with Christianity, and telling early modern history as a simple black and white tale of the revalidation of ancient Epicureanism is shallow. I get increasingly irritated at what seems to be prejudice on these matters.

That should not stop criticism of the church or Christianity, of course. But Harvard professors ought not to indulge in crude cartoonish history either. For all the erudition on display in the book, it sometimes swerves close to shallow caricature.

I doubt the book was worth a Pullitzer.


Monday, December 24, 2012

Wednesday, December 19, 2012

The rotten state of economics

"Something (Everything) Rotten in the State of Macro" says Paul Krugman on his blog. You don't say.

He takes a swipe at freshwater economists, but in just the same way has a complete inability to see any problems or limits with his own views. The profession turned into a sneering cult of irrelevant models, and he was part of that.


Monday, December 17, 2012

The Art of Choosing

I read Sheena Iyengar's The Art of Choosing last week. It is a stimulating and rewarding book about recent psychological investigation, often by Iyengar herself, into choice. She is a Professor at Columbia, and her work seems another prime example of the renaissance of psychology has a discipline in the last ten-twenty years. We looked, for example, at Martin Seligman's work here, and Daniel Kahneman has had a major impact on economics.

Iyengar is more interested in choice than happiness or heuristics, however.

Our deep need for choice

First, she emphasizes the profound importance of a feeling of agency, of having some control, to almost all creatures. Even zoo animals exhbit listlessness and distress if they do not have agency. One might think of a zoo as a paradise for wild animals, with food and material needs taken care of. Instead, this "perfect hotel" is anything but.

In spite of the dedication of their human caretakers, animals in zoos may feel caught in a death trap because they exercise minimal control over their lives. .. Due to these physically and psychologically harmful effects, captivity can often result in lower life expectancies despite objectively improved living conditions. Wild African elephants, for example, have an average life span of 56 years as compared to 17 year for zoo-born elephants. p11, 13

There are other examples. Lower ranks of the British civil service have worse health and die younger than the upper ranks, according to a famous piece of research, as they have less control over their daily tasks. Giving residents of an old people's home more control over trivial things - plants, movie screening times, TV - leads to significantly better outcomes in health and happiness.

This is fascinating. We need a minimal sense of control over our surroundings and workflow to be happy. A utopia that takes care of material needs but allows us no sense of control or agency is likely to be make us miserable.

A society built on keeping people in captivity is bound to be unhappy. People need to feel they have choice, or they shrivel. Material abundance alone is not enough to make people happy. It is more likely to be an existence like a captive zoo animal.

Cultural differences

However, cultures differ quite radically in how they think about choice. Most cultures emphasize collective needs and approval over individual needs. The United States, not unexpectedly, is at the individualist extreme.

She contrasts this with the SIkh wedding of her parents in India. All choices were made by the families and tradition. The first time the groom saw the bride was when he lifted her veil after the marriage ceremony.

These cultural predisposotions affects workplace behavior too. She studied worldwide employees of Citibank, carrying out the same tasks. They differed significantly in the amount of choice they perceived they had on their jobs, and how much they preferred management to exert.


"Freedom from" versus "freedom to"

She traces such cultural attitudes back to a more fundamental difference over "freedom from" versus "freedom to", which she says Erich Fromm postulated in his 1941 book Escape from Freedom (which I read as a teenager). "Freedom from", said Fromm, is "freedom from the political, economic and spiritual shackles that have bound men,", especially others interfering with the pursuit of our goals. "Freedom to" is an ability, the ability to "attain certain outcomes and realize our full potential."

A system tending too far in either direction can limit people's opportunities, Iyengar says. Capitalism tends towards "freedom from", but not everyone will have access to all the choices available. Communism tends towards "freedom to", including equality of outcomes rather than opportunities. The problem is there is little incentive to work harder or produce more, and it requires a strong government which may become corrupted by power.

She found strong differences still endure between West and East Berliners in her research, for example.

.. people's long-held assumptions about fairness can't simply be swapped for another set of beleifs. I consistently found that West Berliners, like Westerners in general, understand the world through the lens of "freedom from." On the other hand, East Berliners, and in particular the older people, focused on "freedom to", even though communism was now only a memory for them. p65

The American dream is all about "freedom from".

People who see themselves and others as having high personal control tend to favor "freedom from", not only because it provides more opportunities to attain their personal goals but also on grounds of justice - those who put in the most effort will be rewarded, while those who slack off won;t be able to ride on anyone else's coattials. p68

Americans as a whole arguably believe more wholeheartedly in "freedom from" than any other nation.. The basic premise is no one can stand in the way of your highest aspirations, provided that you have the ambition and skills to realize them. p70

This matters because it might mean potentially fundamental and irreconcilable cultural differences in what people believe about the good life, which is a primary interest of this blog. The good life in the Confucian tradtion would be very different from the good life in the Jeffersonian tradition, so perhaps it is better not to think about it at all.

Freedom to what?

I don't think that's true, though. The fact of abundance, the end of the struggle for material survival, is a challenge to every culture, whether one contronts it on an individual or social level. We face "freedom from" the traditional limits of material and social scarcity. That is a massive change from the lot of humanity for all the thousands of generations before we solved the "economic problem".

Since the 1960s, many of the traditional limits in society have been lifted. What have we achieved with it? TV and the welfare office.

We have abundance. Then the question is - what do we actually want? And "Freedom from" in isolation doesn't say anything at all about that. It suffers the traditional liberal blindspot about where preferences and tastes and wants and desires and pleasure actually come from.

How do people find what they want, especially when older cultural institutions like the churches are in decline? What cultural influences or standards influence what people want to do with their lives after it becomes genuinely a matter of choice? Iyengar doesn't go into this.

For example, we looked some time ago at economist Tibor Scitovsky's work. People want the right level of stimulation, he argues, but it has to be genuinely novel stimulation, not simply quantitatively more. How do we achieve a system where there is more genuine choice, rather than people running faster and faster on hamster wheels for more of the same?

But at the same time, simply accepting traditional or collective notions of what "freedom to" means seems alien to our tradition in the West, and at risk from technological and cultural change. There is an impoverished group of choices for "freedom to".

In the past, "freedom to" has often meant spoilt aristocrats fighting futile dramas of status and prestige and honor, or rich trust fund kids subsiding into drugs and nihilism. It has meant religious extremism and monastric austerity and self-denial. At present, it often means crystal meth in small towns and people thinking of the office cubicle as a second home. In practice, it can lead to alcoholism and divorce and loneliness and pursuit of celebrity. As John Stuart Mill once pointed out, much rests on the quality of what we want.

There is, in fact, a longer history to these ideas. "Freedom from" is analagous to "liberty", whereas "freedom to" is more consonant with older ideas of "freedom", where being free has a positive meaning. (This reminds me of one of David Hackett Fisher's books, Liberty and Freedom: A Visual History of America's Founding Ideas (America: A Cultural History)which I must look at again. ) America was at the forefront of liberty in the eighteenth century, with lingering social consequences. It ought to be at the forefront of what freedom means now.

Everyone has to answer the question of "what next?". Perhaps the Woodstock Festival or the ABC Fall Line-up or the Google free snackbar in their Silicon Valley offices is the highest point people will ever achieve. Perhaps not. We do not discuss what we should aspire to any more, beyond egailtarianism.


"Freedom to" is not necessarily egalitarian or traditionalist

Iyengar's conception - and the traditional view - of "freedom to" is too limited. "Freedom to" is not necessarily socialist or egalitarian. It is not necessarily about minimal provision for all, or Rawlsian maximin welfarism. After all, we've seen that Aristotle's account of the good life has been criticized since for being so unconcerned with equality.

Instead, I think this is an example of where we have taken such a wrong turn. As soon as any suggestion of material sufficiency or abundance has appeared, the first response has been equal distribution. It seems to set off an egalitarian mania, in terms of welfarism and rights and taxation. Yet egalitarianism is not the only vision of the good life, or indeed, a particularly inspiring or just one.

There are deep potential problems with "freedom to", particulalty if people are coerced into a state vision of what it means. But once "freedom from" has been achieved, the only alternative to more discussion of "freedom to" is an unthinking default socialism or nihilism. We need a new conception of "freedom to" that will also correspond to an answer to the conundrum of "value" in economics which we were discussing recently.

I think that has to be centered on people developing their skills and capacitiies to their full potential, and that has to be connected to a conception of virtue and the good life.

We'll look at more of the book tomorrow.




No flying cars, but there is still progress

Virginia Postrel writes that a spate of gloom about the rate of technological innovation is wrong. People lament the fortieth anniversary of the moon landings.

“You promised me Mars colonies. Instead, I got Facebook,” reads the cover of the current issue of MIT Technology Review. In an essay titled “Why We Can’t Solve Big Problems,” editor Jason Pontin considers “why there are no disruptive innovations” today.

But we hardly notice many of the improvements around us, she says.

The world we live in would be wondrous to mid-20th-century Americans. It just isn’t wondrous to us. One reason is that we long ago ceased to notice some of the most unexpected innovations.

Forget the big, obvious things like Internet search, GPS, smartphones or molecularly targeted cancer treatments. Compared with the real 21st century, old projections of The Future offered a paucity of fundamentally new technologies. They included no laparoscopic surgery or effective acne treatments or ADHD medications or Lasik or lithotripsy -- to name just a few medical advances that don’t significantly affect life expectancy... The glamorous future included no digital photography or stereo speakers tiny enough to fit in your ears.


Monday, December 10, 2012

Walking with Cavemen

I watched the BBC-produced series Walking with Cavemen on Netflix last night. It's an interesting recreation of life as it must have been for early precursors of people, in the style of a wildlife documentary.

It starts with Lucy (on the left here), a young Australopithecus Afarensis female in her twenties. She was discovered 3.5 million years later by a French-American expedition in Ethiopia. It moves up through homo ergaster and homo habilis to the Neanderthals, and the eventual appearance of us.

A few things struck me about the series. The reason some varieties of human survived, it says - us - was adaptability. Our lineage was a jack of all trades, rather than being superbly adjusted to just one particular niche.

In the final episode, the series argues that homo sapiens eventually outdid the Neanderthals and other closely related species because of our capacity for imagination. It was a close-run thing, too. The species almost died out 75-100,000 years ago. There were as few homo sapiens in the whole world then as there are orangutangs now. Only the most adaptable of an inherently adaptable lineage made it through that chokepoint.

There is one scene in which two humans bury an ostrich egg filled with water in the ground, on the off chance that they will be passing that way again and need the water. No other living thing has the foresight to imagine and plan.

In a way, that is the origin of our whole idea of wealth as well. It is a side-artifact of our motivation to plan ahead and have choices in the future. It is probably connected to contingent aids to survival.

Of course, squirrels do the same when they store nuts for the winter, and more systematically. But perhaps the difference is that is predictable behavior for predictable outcomes, and pure instinct. For us, it is more a store of adaptability and choice and material survival, because for four million years has been our distinctive specialization.

One other thing becomes very evident. The reason for the evolution of the massive human brain is not so much dealing with the external environment, but the human environment: such as reading people's intentions, motivations, propensity to cooperate and form alliances. We can cooperate, and also drive each other crazy with office politics.

The physical world is much simpler and predictable than the human social world, and needs less brainpower. Bacteria can move towards opportunities. Cats are extremely good at instantaneously calculating where to pounce. Even we are good at solving the quite complex mathematics of the trajectory of a ball thrown high in the air so we can catch it, without being aware of it. It is hardwired into our brains, even if we would struggle with the formal mechanics of ballistic trajectories.

Understanding people is the most difficult task the brain has. And that is why it evolved to be so large, despite the huge demands in terms of energy.

Tuesday, December 4, 2012

"More Heat than Light": the failure of modern economics

I'm going to turn now to Philip Mirowski's More Heat than Light: Economics as Social Physics, Physics as Nature's Economics, which is a quite devastating critique of mainstream neoclassical economics.

The heart of modern economics, he argues persuasively, was lifted wholesale from physics in the late nineteenth century. The trouble was that the main figures of the marginalist revolution, such as Walras, Jevons and Marshall, didn't quite understand all the math they imported into political economy.

The neoclassical founders almost all came from an engineering or natural science background. But they had a limited grasp of the state of the art of physics even at the time. Above all, says Mirowski, they failed to understand the importance of conservation principles in the math. To accurately measure change, something must stay the same. That means most of the edifice of neoclassical economics is based on stale physics contaminated by basic errors.


Substance and fields

What happened was basically this. Natural scientists struggled in the early nineteenth century with ideas of heat and motion, imagining fluids or ethers or substances. By the 1870s, that had given way to a unified view centered on energy, and the conservation of energy as it was transformed from one kind to another. Instead of fluids or other kinds of substance, physicists now thought of fields and forces, and worked out the vector math of kinetic and potential energy.

The heart of neoclassical economics, says Mirowski, is that economists replaced energy with utility in the same equations, and lifted the framework wholesale. The marginalist revoluton paralled the revolution in physics in preceding decades. Classical economists saw Value as a substance, such as the equivalent of wheat for the physiocrats or the labor theory of value for Ricardo and Marx. But for neoclassicals, Value was a field, like electromagnetism in physics. Kinetic energy was essentially spending and income; potential energy was utility.

He quotes several of the major marginalists who explicitly acknowledged that this is how they thought. But later economists mostly forgot these origins. The discipline has never been that historically self-conscious.

There were two main problems with all this, however. First, without a conservation principle, the math didn't work. Conserving energy implied income and utility were a constant - so essentially the same thing. That would mean utility would be superfluous as a separate measure to money, which was not at all desirable. The point was often lost in a technical debate about "integrability". Leading physicists tried to explain the point to economists, who appeared to have been mostly baffled and nonplussed at the argument.

Secondly, physics moved on from its 1870-vintage "proto-energetics" state, as Mirowski termed it. The second law of thermodynamics implied entropy was always increasing, so interactions were not easily reversible. Special relativity, general relativity and quantum theory all upset the mechanical "Laplacian dream" of 1870s physics, bringing frames of reference, probability, indeterminacy and the role of the observer into the picture. Symmetries and conservation principles could be broken. Matter could decay. Particles could pop in and out of existence. In contrast to notions of inherent "scarcity", the whole universe might be a "free lunch", something which came from a temporary variation in nothing.

None of these could easily be incorporated into the neoclassical framework. However, economists insisted all the more stridently that they were pursuing disciplined science, in contrast to sociologists or anthropologists, while actual scientists were increasingly doing something quite different.

As long as the Laplacian Dream was their dream, they clutched neurotically at their portrait of persons as irrotational mental fields suffusing an independent commodity space, as science ebbed ever further away toward a world subject to change, diversity and indeterminacy, and at one with the observer. P275

And the outcome?

In brief, the practical dissolution of the energy concept in advanced twentieth-century physics has painted neoclassical economics into a corner. p388

Mirowski wrote the book in 1989. Of course, the metaphor of utility as (potential) energy looks even more strained today. We now know that the visible universe of 1870s physics is only 4% of the universe. The rest is dark matter and dark energy that we cannot as yet observe and don't understand.

So what? Some mainstream economists concede to his argument about the origin of the neoclassical model, notes Mirowski, but they claim it is not relevant to the subsequent evolution of the discipline.

But it is. They still want the appearance of science, while being stuck with a model which is increasingly divergent from science in reality, he claims. To talk about analogies to entropy, said Samuelson, for example, is always the mark of a crank. But Mirowski points out that Samuelson frequently published articles with tenuous links to physics himself. Indeed, the key to Samuelson's career was maintaining the appearance of scientism.

Economists have produced various ad-hoc conservation principles in the twentieth century, according to Mirowski, "but in the final analysis this is all one big shell game, with the offending conservation principles passed from one assumption to another." p274



The metaphor of utility as an energy field is too embedded to be given up by neoclassical economics, he says The trouble is it is also a metaphor of instantaneous exchange, and as such it has proved consistently difficult to reconcile with production, which had been the focus of classical economics. Classical economics thought that value was created in production, circulated in trade, and consumed in consumption. Neoclassical economics was focused on exchange, and found it hard to explain production at all.

That inconsistency explains a proliferation of production functions in postwar economics, and difficulties with temporarily and the existence of firms through time.

Economists have effectively tried to reinvent a substance theory when it comes to production, says Mirowksi. But this is bound to be inconsistent with utility as a potential energy field. So the profession has not been able to settle on a satisfactory answer.

The situation was embarrassing, but no neoclassical was willing to come right out and say that production was superfluous or irrelevant in their scheme of things. (Lionel Robbins came the closest). p272


There are also implications for scarcity. The idea of scarcity as the heart of the economic (and human) condition was largely an artifact of the neoclassical approach, he says.

Prior to that time, scarcity as some sort of primordial state of mankind did not play any signficant role in the value theory of classical political economy. Only with the dominant impression that Nature enforced a general state of dearth, say, rather than the physiocratic notion of Nature's bounty, could it become possible to even think of economic equilbrium as a state of psychological counterpoise, hemmed in by the urgent necessity to clear markets in a state of stringent limitations. p240

This caused obvious problems.

The metaphor of utility as potential energy was predicated upon a Weltanschauung of a closed, bounded system that exemplified the natural state of mankind as enduring ineluctable scarcity. If and when production was to be introduced into this morality play, it had to be done in such a way as to prevent the contravention of the scarcity principle, all the while maintaining the field theory of value. p293

Of course, I think this is fascinating given I think one of our main challenges now is thinking through the implications of abundance.

Keynes, he says. succeeded in introducing a kind of value substance in the guise of "national income". That allowed the idea of an economic process to be reintroduced. There has been an immense effort in recent decades to link macro with rational choice "microfoundations." But this is doomed to failure, says Mirowski.

Keynes generated a theory of an unstable economic process by the instrumentality of his reversion to a substance theory of value, a tactic that allowed the joint conceptualization of production, growth and the passage of time in (relatively) internally consistent manner. In contrast, it is the avowed intention of the microfoundations school to renounce all value substances and to recast all macroeconomic analysis in the format of production and utility fields. It is precisely this choice that prohibits the logical modeling of process in priduction, in growth, and in exchange, as explained earlier in this chapter. The field metaphor cannot represent a circular economy where outputs become inputs and so on, ad infinitum. It cannot specify precisely what it is that grows in an economy. p346

Fields are just not suitable when time is involved.

.. the formalism of the field is useful only in cases where one can safely abstract away all considerations of process and the passage of time. p346


Mid-twentieth century neoclassical economics would have found an alternative to utility if it could, he says. The mainstream forgot how widespread concern about utility had become in the profession before the second world war. Mirowski quoted Viner as saying economists' understanding of utility was comparable to "the knowledge of heat prior to the discovery of the thermometer." It could not be satisfactorily measured. There had always been concern at how locating value in a purely mental framework came close to idealism or solipsism.

The development of the indifference curve approach and Samuelson's theory of revealed preference were not durable responses, either, and only served to obscure the origin of the utility metaphor. Revealed preference was not empirically tractable, for one thing, and confused preferences and behavior.

In the absence of the metaphor of utility as nineteenth-century potential energy, there is no alternative theory of value, no heuristic guide to research, no principle on which to base mathematical formalism, no causal invariant in the Meyersonian sense, and most threatneing, no basis for the claim that economics has finally become scientific. p368

So what does this lead to? There is, Mirowski says, no scientific method that can guarantee economics' scientific status.

This lesson is the legacy of the decline of positivist philosophies of science in the late twentieth century. Juxtapose this fact with the hypothesis that economic research has always met with the greatest difficulties in establishing the credibiliy of its results and fending off charges of charlatanism and quackery. p357

It is hard to revise the neoclassical framework without undermining it. New approaches do not have that problem. This means, he says, neoclassical economics will be vulnerable to new contenders for the role of social physics.

Theories of Value

And is there an alternative theory of value? Mirowski says there are two main alternatives. One is to deny any separate value, rarely advocated, but as represented by someone called Samuel Bailey (who I have never heard of).

This position argues that no economic phenomenon is conserved through time, and therefore scientific analysis is impossible. Whatever one might think of the truth of this option, it should be clear than the nihilism inherent in the program assures that in this instance there can be no legitimate research program called economics. p400

The other alternative is a "social theory of value", he says, based not on scientific or social metaphors , but in social institutions such as accounting conventions or property rights.

I doubt myself whether this is true. I imagine evolution is the main contender for an alternative scientifc framework, together with the notion of adaptability and "fitness" of some kind or another.


Overall, it is a very bracing read. It seems, at least to me, highly persuasive - but I would want to read some reviews and responses to make sure I am not overlooking flaws in Mirowski's own analysis. .

What it underlines is that utility and scarcity were chosen not so much because of their psychological or social accuracy, but because the math "worked". And if the math worked there was more scientific respectability. I have always had the firm impression that this was the driving force of major parts of the discipline, which is likely the main reason I did not become an academic economist. It did not ring true. It was about the aesthetics of models rather than genuine insight. It was about a particular quasi-religious view of rationality rather than solving problems.

The book is also highly illuminating , not to say shocking, about the origins of utility in modern economics. I've often talked before about how ethical theory went off the rails in the eighteenth and nineteenth centuries, dropping the older tradition of the virtues and the good life for a more utilitarian, neutral and welfarist approach. Mirowski excavates a much deeper layer of intellectual history underlying current economics. It was not a matter of an import from Bentham. It was an import from physics, and just more or less happened to be called utility.

The metaphor of potential energy as a utility field locked economics into an increasingly less productive path for a century - and to a large extent still does. I knew most of the arguments about indifference curves, production functions and revealed preference, of course, but I was much less familiar with the intellectual history of the arguments. It is fascinating. And disturbing.

Perhaps most of all, it shows how value theory is the great unsolved problem at the heart of economics. That is what I have been grasping toward in my own terms on this blog. To understand the future of the economy , we have to be back up into ethics and the question of the good life and human flourishing. That, after all, is the only place a valid notion of value can come from.


Monday, December 3, 2012

Dark social

This is a different view of the significance of Facebook and the social web that I only just noticed, by Alex Madrigal of the Atlantic. In summary:

1. The sharing you see on sites like Facebook and Twitter is the tip of the 'social' iceberg. We are impressed by its scale because it's easy to measure.

2. But most sharing is done via dark social means like email and IM that are difficult to measure.

3. According to new data on many media sites, 69% of social referrals came from dark social. 20% came from Facebook.

We should rewrite the history of the web, he says. People have shared ever since its early days. What Facebook does is provide a way to archive and monetize that sharing.

Art and Value

I felt like a change from political theory, so read The Value of Art: Money, Power, Beauty by Michael Findlay, an art dealer who used to be head of Christie's in New York. He discusses the art market and how art is valued, broken into commercial value, social value and essential value.

It's an interesting read. One of the things which is most striking (unsurprisingly) is the uncertainty of the enterprise. He quotes James Rosenquist, who said the process of art is " working like hell towards something you know nothing about." P175

Rosenquist also has a striking piece of advice for students:

Fine art is not a career. You may be very good and no one looks at your work until you are dead. Most artists don't cut it. I have had thirty-five assistants in the course of my fifty years as a painter and not one of them has achieved any success as an artist. What you need is luck. Nothing is guaranteed or automatic. P175

Findlay argues there is social value in art, such as the benefits for families of having art in the home, the social circles it brings, the opportunity for philanthropy and legacies. I was thinking about small-time art on holiday in New Mexico back in the early summer, and much of the value of art far from the auction houses of London and New York is social and personal in character.

Of course, as Findlay is a former leading auctioneer, his description of the commercial process of valuing art is very interesting and makes up most of what is absorbing about the book.

Naturally, considerations of quality and - especially - rarity apply. Dealers will know which private individuals own what, and which paintings may come back on the market in the next ten years. Provenance, condition, whether it was an "important" point in an artists' career, whether it has been shown in prominent musuem exhibitions, even previous ownership make a difference to valuation.

But so much has to do with titanic waves of wealth and booms in the art market. It is more a story of the vagaries (and pathologies) of the super-wealthy more than anything else, despite his occasional claims that anyone can collect art. It is a story of substantial extra spending by the auction houses on PR, glossy catalogues and private dinner parties in the last twenty years, and broad shifts in taste and fashion.

Art can overlap with branding and short-term financial speculation, although art investment funds, interestingly, almost never do well. Most of the market is still private, without public auction prices, he says. And choosing the few artists who will do well out of thousands is hard. And then sellers find the market is illiquid and the transaction costs enormous.

He comes from a side of the business which has to be able to make valuations which will satisfy IRS scrutiny for tax purposes, or insurance: a very prosaic angle of a very ephemeral and glamorous field. And purely financial motives are most often self-defeating.

The heart of it is the boundary of practical and eternal value - auction day stories and logistics and snobbery as against insight and talent and beauty.

He insists in the end perception is more important than information; art history, gallery labels, knowledge about the artist or the market are no substitute for, and can't replace, the experience of sustained attention to a piece of art.

Ultimately, he argues, there is essential value to the greatest art. it does not necessarily come from the twenty second glance that is usual in art galleries, however. Indeed, that may be the advantage of collecting and owning, he says: you get to live with a work of art. You get to feel it over time, rather than just have a right-brained summation of information in a quick glance.

Language can be a barrier. He quotes Barnett Newman: "The meaning must come from the seeing, not the talking."

It all sets up in clear terms the deeper issue of "what is value?", which economics often struggle with, as we shall see next.


Friday, November 30, 2012

Welfare and the Good Life


We're looking at Charles Murray's Coming Apart: The State of White America, 1960-2010, starting here.

Against the European Welfare model

The connection between the four basic social institutions and happiness leads Murray to argue for American exceptionalism, as against the European welfare model.

The tacit assumption of the advanced welfare state is correct when human beings face starvation or death by exposure. Then, food and shelter are all that count. But in an advanced society, the needs for food and shelter can be met in a variety of ways, and at that point human needs can no longer be disaggregated. The ways in which food and shelter are obtained affects whether the other human needs are met.

People need self-respect, but self-respect must be earned—it cannot be self-respect if it’s not earned—and the only way to earn anything is to achieve it in the face of the possibility of failing.

This is of course a version of what I have talked about before, a change in needs as we rise up Maslow's hierarchy. The welfare state ramified in the 1960s as one response to abundance. Given sufficient wealth, the main political drive has been towards equal distribution rather than new flourishing and possibility.

Upper class people still generally practice these four institutional virtues, he says. They are much more likely to be married, see a job as a calling and work hard, practice religion, and believe others can be trusted. In a sense, getting ahead requires them.

The new upper class still does a good job of practicing some of the virtues, but it no longer preaches them. It has lost self-confidence in the rightness of its own customs and values, and preaches nonjudgmentalism instead.

He thinks this view, nonjudgemental "niceness", is living on borrowed time, however, as science produces more results which refute it.

Here are some more examples of things I think the neuroscientists and geneticists will prove over the next few decades: Human beings enjoy themselves when they are exercising their realized capabilities at the limit of those capabilities. Challenge and responsibility for consequences is an indispensable part of human motivation to exercise their realized capabilities at the limit of those capabilities. People grouped by gender, ethnicity, age, social class, and sexual preference, left free to live their lives as they see fit, will produce group differences in outcomes, because they differ genetically in their cognitive, psychological, and physiological profiles. Regardless of whether people have free will, human flourishing requires that they live in an environment in which they are treated as if they did.

So he thinks it will become obvious that nonjudgemental welfarism will be understood to undermine the crucial institutions of society.

The institutions surrounding marriage, vocation, community, and faith will be found to be the critical resources through which human beings lead satisfying lives. It will be found that those institutions deteriorate in the advanced welfare states for reasons that are intrinsic to the nature of the welfare state. It will be found that those institutions are richest and most robust in states that allow people to work out their lives on their own and in company with the people around them.

Putting it together

So what do we make of this? As a rule I consider libertarianism a horrible mistake. But Murray is a strange kind of libertarian. He is not so much arguing for the market and voluntary Ayn Randian contractualism, as strengthened independent social institutions.

He calls for an emphasis on virtue, which I like, but it in practice he means strengthening his four core institutions rather than the Aristotelian virtues as such. It is sociology more than ethics. He does not have much of the rest of virtue ethics, such as the golden mean, or an emphasis on the multiplicity of virtues.

What he does have is a kind of sociological vision of the good life, of flourishing, which I think makes him divergent from full libertarianism. Flourishing for him means strengthening those four institutions and reducing the role of government and bureaucracy in life.

I think this is what my friend, who I mentioned at the beginning of the post, was hostile to. Murray says people have to make their own choices in life, but his view is much less sympathetic for radical innovation in lifestyles. He believes in marriage, in standard jobs, in the churches, in stability.

But there is a basic confusion here. People do not work out their lives on their own, or even just in the company of those around them. They do so in the context of an ethical vision of the good life, of what contributes to happiness. We do not start off from year zero every time we make a decision.

Government and bureaucracy cannot run our lives for us. That much is true. But we still need a conception of the common good. Traditional libertarianism does not do that. It is just about process. Murray's distaste for government means he throws much of the possibility of common culture out as well.

I've said a number of times I think the debate between government and the market is a stale 20th century debate. Instead, the real issue is what we do about abundance and what flourishing means. Murray contributes some hard statistical evidence to that question, about the value of social institutions. But it correlation, rather than explanation.

It is a good argument against welfarist government. But it does not make any case for the positive possibilities of abundance, or how institutions need to adapt. What becomes of work if the demand for medium-skilled jobs is being hollowed out, for example? How do you promote social trust?

America is about new possibilities of freedom - and what that means substantively when material necessities are met.



Thursday, November 29, 2012

Virtue and the Founders

We're looking at Charles Murray's Coming Apart: The State of White America, 1960-2010, starting here.

Murray argues that mainstream America is seeing crucial social institutions erode. He gives a fascinating account of how the founders of the United States were convinced that the bedrock of the Republic was the virtue of the people. Naturally, I found this illuminating because of my continued interest in virtue ethics, like this post the other day. According to Murray,

Everyone involved in the creation of the United States knew that its success depended on virtue in its citizenry—not gentility, but virtue. “No theoretical checks, no form of government can render us secure,” James Madison famously observed at the Virginia ratifying convention. “To suppose that any form of government will secure liberty or happiness without any virtue in the people is a chimerical idea.”

For Benjamin Franklin, this meant that “only a virtuous people are capable of freedom. As nations become more corrupt and vicious, they have more need of masters.” On the other hand, virtue makes government easy to sustain: “The expense of our civil government we have always borne, and can easily bear, because it is small. A virtuous and laborious people may be cheaply governed.”

Washington emphasized the point too:

George Washington said much the same thing in the undelivered version of his first inaugural address, asserting that “no Wall of words, no mound of parchment can be formed as to stand against the sweeping torrent of boundless ambition on the one side, aided by the sapping current of corrupted morals on the other.” Or as he put it most simply in his Farewell Address: “Virtue or morality is a necessary spring of popular government.” In their various ways, the founders recognized that if a society is to remain free, self-government refers first of all to individual citizens governing their own behavior.

This shows, of course, how natural and widespread and unexceptional a belief in the virtues was before the utilitarian 19th century.

Now Murray believes virtue is eroding.

The success of America depended on virtue in the people when the country began and it still does in the twenty-first century. America will remain exceptional only to the extent that its people embody the same qualities that made it work for the first two centuries of its existence. The founding virtues are central to that kind of citizenry.


Four key institutions

He spends much of the rest of the book distingushing between the mores of an upper class suburb, which he calls Belmont, and a lower class one, Fishtown. The four core institutions of society - marriage, work, religion, and social trust - have all eroded markedly in Fishtown, he says. Marriage has declined:

For the first time in human history, we now have societies in which a group consisting of a lone woman and her offspring is not considered to be sociologically incomplete—not considered to be illegitimate—and so I will adapt and call them nonmarital births.

So too has the work ethic. One interesting thing is he emphasises work as a vocation, a calling, rather than just a means to pay the bills. He thinks that even low-paying work can give meaning if it helps support others.

Yes, you can overdo it. There is more to life than work, and a life without ample space for family and friends is incomplete. But this much should not be controversial: Vocation—one’s calling in life—plays a large role in defining the meaning of that life. For some, the nurturing of children is the vocation. For some, an avocation or a cause can become an all-absorbing source of satisfaction, with the job a means of paying the bills and nothing more. But for many others, vocation takes the form of the work one does for a living.

The data shows lower-class neighnborhoods have changed much more than upper-class ones.

In 1960, 81 percent of Fishtown households had someone working at least forty hours a week, with Belmont at 90 percent. By 2008, Belmont had barely changed at all, at 87 percent, while Fishtown had dropped to 60 percent. And that was before the 2008 recession began. As of March 2010, Belmont was still at 87 percent. Fishtown was down to 53 percent.

Religious adherence - Catholicism in the case of Fishtown, which is based on an actual inner suburb in Philadelphia - has declined sharply.

The jury is still out on the metaquestion of whether secular democracies can long survive. But the last few decades have brought forth a large technical literature about the role of religion in maintaining civic life and the effects of religion on human functioning.

Social trust has also plunged.

The scariest message from the GSS [survey] does not consist of declines in specific activities that make up social capital, but this: The raw material that makes community even possible has diminished so much in Fishtown that the situation may be beyond retrieval. That raw material is social trust—not trust in a particular neighbor who happens to be your friend, but a generalized expectation that the people around you will do the right thing. As Francis Fukuyama documented in Trust: The Social Virtues and the Creation of Prosperity, the existence of social trust is a core explanation of why some cultures create wealth and other cultures are mired in poverty.

Diversity, for all its positive qualities, also erodes social trust.

Another problem regarding social trust, and one that may help explain the decline, has surfaced more recently: The key ingredient of social capital, social trust, is eroded by ethnic diversity. In the years after Bowling Alone appeared, Robert Putnam’s research led him to a disturbing finding: Ethnic diversity works against social trust within a community—not only against trusting people of the other ethnicity, but against trusting even neighbors of one’s own ethnic group. In addition, Putnam’s research found that in areas of greater ethnic diversity, there was lower confidence in local government, a lower sense of political efficacy, less likelihood of working on a community project, less likelihood of giving to charity, fewer close friends, and lower perceived quality of life.

The erosion of these institutions diminishes happiness. And there is a common notion of what happiness means, says Murray.

... the core nature of human happiness is widely agreed upon in the West. It goes all the way back to Aristotle’s views about happiness in the Nicomachean Ethics. Distilling his discussion of happiness into a short definition leaves out a lot, but this captures the sense of Aristotle’s argument well enough for our purposes: Happiness consists of lasting and justified satisfaction with life as a whole. The definition in effect says that when you decide how happy you are, you are thinking of aspects of your life that tend to define your life (not just bits and pieces of it); that you base your assessment of your happiness on deep satisfactions with the way things have gone, not passing pleasures; and that you believe in your heart of hearts that those satisfactions have been worth achieving. It is not really a controversial definition—try to imagine a definition of happiness you could apply to your own life that is much different.

There seems to be a strong connection in survey evidence between the strength of Murray's four core institutions and happiness.

At baseline—unmarried, dissatisfied with one’s work, professing no religion, and with very low social trust—the probability that a white person aged 30–49 responded “very happy” to the question about his life in general was only 10 percent. Having either a very satisfying job or a very happy marriage raised that percentage by almost equal amounts, to about 19 percent, with the effect of a very satisfying job being fractionally greater. Then came the big interaction effect: having a very satisfying job and a very happy marriage jumped the probability to 55 percent. Having high social trust pushed the percentage to 69 percent, and adding strong religious involvement raised the probability to 76 percent.

I'll conclude looking at the book tomorrow.


Wednesday, November 28, 2012

Coming Apart

I read Charles Murray's Coming Apart: The State of White America, 1960-2010 the other day. Murray, of course, is controversial. I had lunch back in late spring with a liberal friend from work who mentioned the book in passing - and spluttered in outrage. I wasn't sure why. My friend didn't give arguments, but radiated hostility to the book. So I decided I should read it at some point, although I looked at Murray before, here.

Murray repeats and extends his arguments in the book, with much more data. He argues that America is increasingly not divided by race, but by class. Hence he uses statistical evidence to demonstrate massive declines in social institutions among whites since the early 1960s (specifically, the date Kennedy was assassinated in Dallas, marking the end of an era), without needing to consider any racial differences or stereotypes about an underclass.

THIS BOOK IS about an evolution in American society that has taken place since November 21, 1963, leading to the formation of classes that are different in kind and in their degree of separation from anything that the nation has ever known. I will argue that the divergence into these separate classes, if it continues, will end what has made America America. ..

It is not the existence of classes that is new, but the emergence of classes that diverge on core behaviors and values—classes that barely recognize their underlying American kinship.

He has a marked libertarian view, but with a conservartive slant. Government is the enemy because it saps vitality out of the other institutions of society, the "little platoons" as Edmund Burke would have called them.

But the American project was not about maximizing national wealth nor international dominance. The American project—a phrase you will see again in the chapters to come—consists of the continuing effort, begun with the founding, to demonstrate that human beings can be left free as individuals and families to live their lives as they see fit, coming together voluntarily to solve their joint problems.

The most interesting thing by far is his discussion of the emergence of a new elite university-educated upper class which is heavily clustered into a few narrow districts, the "SuperZIPS". The value of brainpower started rising sharply in the postwar years, he says, as the economy developed from agriculture and manufacturing and towards more sophisticated services and technology. More people, and smarter people, went to college.

The average Harvard freshman in 1952 would have placed in the bottom 10 percent of the incoming class by 1960. The same thing happened throughout the college system.

And the graduates of selective colleges naturally associated with each other.

The human impulse behind the isolation of the new upper class is as basic as impulses get: People like to be around other people who understand them and to whom they can talk. Cognitive segregation was bound to start developing as soon as unusually smart people began to have the opportunity to hang out with other unusually smart people.

The shift in the upper class was dramatic and swift, with consequences that we are still feeling today. The new upper class is very different to the past, he says. He uses alumni data from Harvard and Yale, among other sources, to show that a huge proportion of the graduating classes live in just a few upscale suburbs and cities across the continent. Unsuprisingly, there are clusters in New York, Washington, Boston, San Francisco and LA.

The new upper class is liberal, but not notably more so in most of the country. It is very much the four principal major cities which have very liberal upper classes.

They have increasingly little exposure to the mainstream of American life.They are isolated, mostly talking and interacting just with each other. (I of course live in one of those "superZIPS" in Manhattan).

That is not an argument for turning the clock back, he says.

..I have described the America of 1960 in ways that have sometimes sounded nostalgic. But if a time machine could transport me back to 1960, I would have to be dragged into it kicking and screaming. In many aspects of day-to-day life, America today is incomparably superior to the America of 1960.

The increased presence of brainpower in the upper reaches of society starting in the 1960s made a major difference in daily life:

That brings us to the timing of changes in the American standard of living. From the early 1960s to the late 1970s, not much changed in the technology of daily life. ... Then things took off. Beginning around the mid-1970s—the appearance of the Apple II in 1977 is a good symbolic opening—the cascade of changes has been unending. They range from the trivial (it was still difficult to get a really good cup of coffee or loaf of bread in most parts of America in the late 1970s) to the momentous (the Information Revolution is rightly classified alongside the Industrial Revolution as an epochal event). The design, functionality, and durability of almost any consumer product today are far better than they were in 1960.

The social changes are not simply a product of wealth, however. Taxing the upper classes to achieve greater income equality would make little difference in behavior or culture.

The new-upper-class culture is not the product of great wealth. It is enabled by affluence—people with common tastes and preferences need enough money to be able to congregate—but it is not driven by affluence. It is driven by the distinctive tastes and preferences that emerge when large numbers of cognitively talented people are enabled to live together in their own communities. You can whack the top income centile back to where it was in the 1980s, and it will have no effect whatsoever on the new-upper-class culture that had already emerged by that time. Places like Marin County are not fodder for cultural caricature because they are so wealthy.

This is very interesting.

Education and cultural change

He essentially says the cultural change is a natural outcome of sorting and acculturation by higher education. As I see it, perhaps it is a shift in society in a more priestly direction - the triumph of the brahmins, as opposed to the warrior, merchant or lower classes in the traditional fourfold Indian classification , for example.

In the past, a military aristocracy has often dominated society. Now the ruling class is the one which is more skilled at symbolic manipulation and arguments and moral deliberation - traditionally the role of the priests. We have a secular religion with its own upper class factions.

We have discussed before whether the massive social changes of the 1960s came about because humanity for the first time was not impelled by immediate survival needs. The possibility of abundance caused an outbreak of aquarian utopianism, followed by backlash.

Part of it was also technological, like the new possibilities opened up by the contraceptive pill.

And part of it was the rise of a more intellectual, educated upper class.

I'm not sure that higher education is inherently liberal or egalitarian in orientation. Rather, it was in a particularly liberal and secular phase in the 1960s and since. Harvard started off as a training center for the hardline Calvinist ministry, after all. The Jesuits have been famously highly educated, and not particularly liberal. The same applies to Chinese scholar-officials educated in the classics, or many Jewish Rabbis or graduates of the old Islamic Universities like Al-Azhar.

But having an upper class that did pass disproportionately through a few key institutions means it is likely to be stamped with the ethos of those institutions at a point in time. Most of the people would never have attended those institutions had they not become meritocratic. Hence there was natural self-interest in reinforcing those values.

We'll look at more of the book tomorrow.