"Computers have saved us time, but what have we done with it?"

Here's a nice column by a philosophy professor in the Guardian about how time-saving technology somehow doesn't seem to save us any time.

I'm hardly the first to point out that instead of consuming the time-saving benefits of information technology by making the work day less pressured, we have found other ways of filling up the time. Now that we have such whizzy computers, university administrators can do valuable things that we had no time for before, such as making sure every member of the department has signed a piece of paper swearing that they know where the fire exits are.

After Virtue

I'd mentioned a few months ago that I wanted to read After Virtue: A Study in Moral Theory, Third Edition by Alisdair McIntyre. It is a book about moral philosophy, published in 1982, which argues that we should take an older Aristotelian tradition centered on the virtues more seriously.

I finished it yesterday, and I found it quite transformative.

Earlier skirmishes

I remember hearing vaguely about the book at college, although I never read it. It just didn't seem to be in the mainstream of interesting questions.

In fact, there was an extract from After Virtue in a book which otherwise had an enormous influence on me, Liberalism and Its Critics (Readings in Social & Political Theory).

But back then, the central issue in ethical and political philosophy was presented as a contest between a) several varieties of liberalism, including Rawls and Nozick, against b) "communitarianism", which centered on a more embedded, situated idea of morality and politics, principally represented by Amitai Etzioni.

Indeed, communitarianism was a side-show, a marginal interest. The really interesting discussions were about the conflict between left-liberalism (Rawls,A Theory of Justice: Original Edition ) and right-liberalism (Nozick,Anarchy, State, and Utopia. )

Above all else, I was influenced by Isaiah Berlin, whose famous essay "Two Concepts of Liberty" was included in that volume. McIntrye was included, but not noticed, at least by me. I'm not even sure I read the essay from After Virtue in that volume.

The question in the air was above all: Rawls or not-Rawls.

Why After Virtue is interesting

Fast foward to the last two weeks. I've been working my way through After Virtue and find that it answers many of the issues that I've been grappling with so far on this blog, including the neutrality of the liberal state, its lack of of interest or recognition of ends and purpose, and its inability to come up with good ways to restrain exploitative or anti-social behavior.

After all, I've been arguing one of the main things we need to move the economy forward is overcoming some of the roadblocks that our pervasive liberalism, broadly defined, throws in the way. This isn't a simple matter of left versus right. Most of the current political spectrum is a variety of liberalism. Libertarianism, for example, is a particularly extreme version of liberalism.

That liberal political theory may have been suited to the 20th century, but its rejection of any notion of purpose or the means to human flourishing means it is an obstacle to moving forward. In its Rawls-era guise, liberalism has lead to a vast welfare state which has sapped the energy and meaning out of life,and threatens to bankrupt the west.

So I've been looking for a way to talk about the purpose and meaning in peoples' lives in a more grounded way than contemporary liberal political philosophy allows.

The failure of the enlightenment project

So how does After Virtue change this? McIntye argues that most of our moral problems arise because we lost most of the underlying substance of moral philosophy in the 18th century. We abandoned the older tradition of thinking about morality in the West.

It is as if most of science had disappeared, he says, and we were just left here and there with isolated scraps or descriptions of relativity or the periodic table. We still have some of the language and the intutions. We have the simulacra of morality. But we have lost our comprehension of heart of the subject.

No wonder we are confused, he says, and bogged down in arguments about incommensurable principles, entitlement versus equality, freedom versus community.

And the reason is we have lost any firm sense of teleology, the ends and purposes that we strive towards. Kant and other enlightenment philosophers tried to banish it, and instead tried to ground morality on pure reason. They were likely influenced by Newton's example of reducing natural philosophy - science - to an ingenious rational system.

Kant and his successors consigned the much older classical tradition based on Aristotle and the medieval conception based on Aquinas to the garbage can.

This was a wrong turn.

We apparently cannot agree on moral or political issues these days, McIntyre says, partly because we mostly take an "emotivist" attitufde to morality . We maintain a sharp distinction between rational and non-rational discussion, and any discussions of purpose or ends belongs to the latter. We talk past each other in the langauge of ultimate rules and principles.

For the emotivist modern self,

to be a moral agent is, on this view, precisely to be able to stand back from any and every situation in which one is involved and every characteristic that one may possess, and to pass judgment on it from a purely universal and abstract point of view that is totally detached from all social particularity. (p32).

If there is a purpose, there are rational "oughts"

The trouble is the enlightenment project to produce a neutral ethics compelled by reason alone was bound to fail, he argues. Hume, Kant,Diderot, Kierkegaard, Smith all

share the project of constructing valid arguments which will move from 'premises concerning human nature as they understand it' to 'conclusions about the authority of moral rules and precepts.'

But McIntryre argues that this could not work because of a discrepancy between these two principles. You need some element to move from human-nature-as-it-is , to man-as-he-could-be-if-he realized-his-essential-nature, because otherwise human nature is discordant with the rational principles of ethics. There is a gap between lofty principles and actual human behavior.

Far from being universal, in fact the enlightenment project was a reflection of particular social circumstances in Northern Europe in the 18th century.

McIntyre rejects the argument that you cannot derive an "ought" from an is. He cites an older example: "he is a sea-captain", and "he ought to do whatever a sea-captain ought to do" do entail each other.

The self is now "abstract and ghostly", "because the kind of telos in terms of which it was once judged and acted is no longer thought to be credible." (p33).

You need three things for a moral system to be successful, he says - and one of them is a sense of purpose to make sense of the other two.

Each of the three elements of the scheme - the conception of untutored human nature, the conception of the precepts of rational ethics and the conception of human-nature-as-it-could-be-realized-its-telos- requires reference to the other two if its status and function are to be intelligible. (p53)

And that is why the enlightenment project stripped out the heart of our moral tradition, leaving us with the language and outer form alone.

The older classical tradition was different.

Within this tradition moral and evaluative statements can be called true or false in precisely the same way in which all other statements can be so called. But once the notion of essential human purposes or functons disappears from morality, it begins to appear implausible to treat moral judgments as factual statements. (p59)

And without some rational way to discuss ends, in time all we are left with is subjective emotivism and the will to power.

I'll discuss the next stage of his argument in the next post. But for now his main point remains: without some sense of telos, some sense of purpose, most of our moral language does not make sense and we are left with a range of incommensurable rational principles. We have forgotten all the rest.

Change of Pace Photo

Roof of one of the cloisters, Musee National du Moyen Age, Paris

Dividing the economy into different kinds of goods

	Excludable	Non-Excludable
Rival	Private goods food, clothing, cars, personal electronics	Common goods (Common-pool resources) fish stocks, timber, coal
Non-Rival	Club goods cinemas, private parks, satellite television	Public goods free-to-air television, air, national defense

Because it's so important, here is a table (via a previous Wikipediaentry) which I eventually figured out how to do in html.

It builds on the discussion of rival and excludable goods in the previous post.

As more of the economy migrates from private goods to the other quadrants, the institutions and questions need to change.

Rival and Excludable Goods

Talking of Nobel Prizewinners in Economics, one shoo-in for a future gong is Paul Romer, who has written some of the most influential work on economic growth in recent years. A reference in the Brynjolffson and McAfee book reminded me that I'd never read his original papers, although of course I'm familiar with the ideas. For all I complain about academic economics, some of it is extremely useful.

And one of the most important ideas for understanding economic change is a clearer understanding of rival goods and excludable goods. A rival good is " a good whose consumption by one consumer prevents simultaneous consumption by other consumers." (wikipedia). Most goods for sale in the store are rival goods. If I buy a packet of packet of fettucine, you can't have the same packet as well.

But some goods are non-rival, especially many kinds of intangible goods.

As for excludable goods, " a good or service is said to be excludable when it is possible to prevent people who have not paid for it from having access to it, and non-excludable when it is not possible to do so". (wikipedia again).

The music industry has, gradually and very unwllingly, been moving from an excludable model of paying for songs to coping with illegal copying and a non-excludable model. Bands increasingly give their music away, or tolerate copying, and make their money through live performances and concerts and t-shirts which are excludable.

Many of the key developments in the economy can be understood as a matter of how we should deal with nonrival, partially excludable goods.

As Romer says in the AER last year discussing the progress of growth theory:

..the defining characteristic of an idea, [is] that it is a pure nonrival good. A given idea is not scarce in the same way that land or capital or other objects are scarce; instead, an idea can be used by any number of people simultaneously without congestion or depletion.

In fact, the more people use a nonrival good, the more useful it is. There are increasing returns to scale.

No matter how it is communicated and reused, nonrivalry by itself creates strong incentives for economic integration among the largest possible group of people. As we will argue in the next section, this is the best candidate explanation for ... the relentless pressure for expansion in the extent of the market.

The existence of nonrival goods can cause problems for our usual view of markets and efficiency.

recall that the increasing returns to scale that is implied by nonrivalry leads to the failure of Adam Smith’s famous invisible hand result. The instiutions of complete property rights and perfect competition that work so well in a world consisting solely of rival goods no longer deliver the optimal allocation of resources in a world containing ideas. Efficiency in use dictates price equal to marginal cost. But with increasing returns, there is insufficient output to pay each input its marginal product; in general, price must exceed marginal cost somewhere to provide the incentive for profit maximizing private firms to create new ideas. This tension is at the heart of the problem: a single price cannot simultaneously allocate goods to their most efficient uses and provide the appropriate incentives for innovation.

An important unresolved policy question is therefore the optimal design of institutions that support the production and distribution of nonrival ideas.

(my bold). I think this is very important indeed and, naturally, could not agree more.

Romer also says we are far off having a clear idea of what such institutions ought to be.

In practice, most observers seem to agree that some complicated mix of secrecy, intellectual property rights that convey partial excludability, public subsidies through the institutions of science, and private voluntary provision is more efficient than any corner solution like that prescribed for rival goods. We are, however, very far from results we could derive from first principles to guide decisions about which types of goods are best served by which institutional arrangement.

The key thing, for me, is that as the economy evolves the relative balance between different kinds of goods are changing. The more value comes from ideas, arts, knowledge and other intangibles, the more we are in uncharted territory for understanding how to run the economy.

Most of these new sources of value are only imperfectly excludable, if at all.

Less and less of what we want falls into the category of rival, excludable goods like Rolex watches or apartments on Central Park West, where market transactions are such an efficient, effective way to allocate resources. And many more kinds of good which could be made excludable, such as gmail, can be delivered at such low marginal cost it makes more sense to give them away free and pay for them by ancillary activities, such as advertising.

And other huge areas of the economy are abstract and intangible, such as most financial products. Pricing depends less on supply and demand than attributes such as risk, real interest rates and correlations.

Less and less of the economy is the familiar marketplace where we hand over cash for a specific physical thing.

And that's why we have problems. We haven't evolved the institutions to cope with that change. The incentives to handle non-traditional goods are missing or poorly developed.

The frightening (and invigorating) endlessness of knowledge

Incidentally, one feeling I have all the time is the almost ungraspable vastness of the amount of thought and literature on any topic.

For any given point one might make in a minute or two, people have spent entire careers delving into that one detail. It is increasingly hard to bring things together into a coherent whole, all the more so when there is such an edifice of experts and prestigious received opinion on any one point. And so often the edifice is a fortress built to keep out other perspectives and protect those within. The inhabitants build elegant towers mostly oblivious of other currents of thought or related disciplines.

I watched some sessions recorded at a meeting of Nobel Prizewinners in Economics in Lindau, Germany a few weeks ago. There the brilliant winners sat, surrounded by official adulation and the rapt attention of three hundred economists from the younger generation who had been selected to bask in their glow.

And the winners deserve praise. But it also seems so hermetically sealed and invulnerable to anybody who has not spent thirty years painfully working themselves up within the academic discipline. It almost seemed like a visible incarnation of "normal science", as Thomas Kuhn put it (The Structure of Scientific Revolutions). "Paradigm shift" may be one of the most overused and abused words in intellectual enquiry. But you can see why they are so difficult and rare, as the Nobel Laureates sit on their airless summit.

A lot of the problem is that academia (at least in economics) rewards consistency of theories - rigor - which is only tenuously related to truth.

But, as we were just discussing, it is the process of recombination and synthesis that produces innovation, and that is what I'm trying to do in a tiny way here.

Creativity and Combination

I'm concluding a discussion of Erik Brynjolfsson and Andrew McAfee's book Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy.

So what does this all mean for the future? The answer is not to compete against machines, they say. Instead, it is to compete with them, using them to leverage up skills. This requires above all organizational change.

How can we implement a “race with machines” strategy? The solution is organizational innovation: co-inventing new organizational structures, processes, and business models that leverage ever-advancing technology and human skills.

There may also be opportunities for entrepreneurs to develop business models which use mid-skilled workers better, and new worldwide specialized niches to exploit.

As a result, technology enables more and more opportunities for what Google chief economist Hal Varian calls “micromultinationals”—businesses with less than a dozen employees that sell to customers worldwide and often draw on worldwide supplier and partner networks.

But the most essential and important way forward is the sheer power of combining and recombining existing ideas into new forms. The authors see this process in operation in the new economy:

New digital businesses are often recombinations, or mash-ups, of previous ones. ...Because the process of innovation often relies heavily on the combining and recombining of previous innovations, the broader and deeper the pool of accessible ideas and individuals, the more opportunities there are for innovation. ...We are in no danger of running out of new combinations to try. ..Combinatorial explosion is one of the few mathematical functions that outgrows an exponential trend.

And this leads to a fundamentally optimistic vision.

The economics of digital information, in short, are the economics not of scarcity but of abundance. This is a fundamental shift, and a fundamentally beneficial one. ..Every generation has underestimated the potential for finding new ideas. We consistently fail to grasp how many ideas remain to be discovered. … Possibilities do not merely add up; they multiply.

I think this is a reasoned, articulate response to change. It is very much consistent with W. Brian Arthur's explanation in his book The Nature of Technology: What It Is and How It Evolves of how technology advances by constantly replacing subassemblies and components of existing technologies.

It also reminds me of Matt Ridley's book The Rational Optimist: How Prosperity Evolves (P.S.), which discusses the evolution of exchange and specialization. In Ridley's fabulous phrase, "Ideas have sex" and evolve and grow following their own rules of natural selection. That cross-breeding and innovation constantly leads to better living standards, in contrast to many doom-sayers through the ages.

I agree with these optimistic takes. Recombination can take place at a higher rate than ever before. Sitting here with my little iPad and keyboard on a Sunday morning, I have much of the cumulative knowledge of humanity a few swipes away, from wikipedia to many of the most cutting edge academic papers to many of the great classics available free on kindle and hundreds of thousands more books available for a small amount. That was unimaginable when I was in college, twenty years ago.

But such recombination and innovation does not mean we keep all aspects of our current economic system. Rather the opposite.

Many people are likely to find startling new sources of value which will enrich everybody's life. But it will be harder to flow everything through the market, because the natural price for many of these innovations will be at or close to free.

We need an explosion of organizational and cultural innovation.

It comes back to the economics of abundance. How do you price something which is valuable but extremely abundant? We don't price air, and we only partially price water.

The standard economics answer is you define the property rights concerned, and the market will take care of the rest.

And that is right. But the problem is we haven't adequately defined the property rights or institutions or social technologies to make this new world work. Instead we have the world economy beset by high unemployment and insufficient demand in the developed countries.

So one problem with Brynjolffson and McAfee's book, brilliant as it is, is like many other commentators it primarily sees the issue as a labor market problem. In their view, we have to find new ways to educate people to produce new marketable skills.

In fact, it is more a problem of economic structure and the boundaries of the market, as the new goods the want are increasingly less discrete marketable goods and services. Standard goods and services are increasingly saturated and automated, as the sheer miracle of market efficiency makes them ever higher in quality and cheaper to produce with fewer people.

One book I plan to read shortly is Douglass' North's Understanding the Process of Economic Change (Princeton Economic History of the Western World) which came out in 2005. I read his classic Structure and Change in Economic History years ago, the book for which he largely won the Nobel Prize in Economics in 1993. I'm hoping the more recent book will help me think through the issues of institutional change more, or the evolution of social technologies as I've also been calling it.