“[P]eople who are interested in political speech have found thinking about the concept not in terms of how it represents the world, but rather of the circumstances of appropriate application. For instance, if you’re interested in the concept of property, the inferentialist analysis says the notion of property is really a bundle of rights and responsibilities, and we should look at the circumstances under which we say that someone owns something and what the consequences of saying that they own it are. One of the advantages of that is that we see there may be other equally natural bundles of rights and responsibilities. We needn’t treat ownership of real property as coming with all the rights and responsibilities a piece of portable property would have. Maybe if the land that you own has wetlands on it, you don’t have as many rights with respect to it. With that notion of ownership, you would have to unbunble some of the rights and responsibilities that went before, whereas if you are just thinking in representational terms, you don’t get that insight. The meaning of property is a matter of inference from the circumstances to the consequences of application that’s curled up in it.” – Brandom, p. 385.

“A final reason for the failure to develop a theory adequate to handle the problem of harmful effects stems from a faulty concept of a factor of production. This is usually thought of as a physical entity which the businessman acquires and uses (an acre of land, a ton of fertiliser) instead of as a right to perform certain (physical) actions. We may speak of a person owning land and using it as a factor of production but what the land-owner in fact possesses is the right to carry out a circumscribed list of actions. The rights of a land-owner are not unlimited. It is not even always possible for him to remove the land to another place, for instance, by quarrying it. And although it may be possible for him to exclude some people from using “his” land, this may not be true of others. For example, some people may have the right to cross the land. Furthermore, it may or may not be possible to erect certain types of buildings or to grow certain crops or to use particular drainage systems on the land. This does not come about simply because of government regulation. It would be equally true under the common law. In fact it would be true under any system of law. A system in which the rights of individuals were unlimited would be one in which there were no rights to acquire.” Coase, p. 134.

“Institutional rules are prescriptive statements that forbid, require, or permit some action or outcome (E. Ostrom 1986a). One of the three deontic operators – forbid, require, permit – must be contained in a statement for it to be considered a rule. All three deontic operators are used in this definition of rules.

Some analysts limit their conception of rules to prescriptive statements containing only required or forbidden actions and outcomes. With that limited conception, some recurring situations are rule-governed, and others are not. By including all three deontic operators in a definition of a rule, it is always possible to identify the set of rules that constitute a situation: (1) Is this action or outcome (or its negation) required? (2) Is this action or outcome (or its negation) forbidden? Any action or outcome (or its negation) that is not required or forbidden is permitted. Consequently, the absence of a rule forbidding or requiring an action is logically equivalent to the presence of a rule that permits an action.” – Ostrom, p. 140.

~

Brandom, Robert & Williams, J. J. (2013). “Inferential Man: An Interview with Robert Brandom.” symploke. 21(1), pp. 367-391.

Coase, Ronald H. [1960] “The Problem of Social Cost.” in Chennat Gopalakrishnan (ed.) (2000) Classic Papers in Natural Resource Management. Palgrave, Macmillan. pp. 87-137

Ostrom, Elinor. (1990). Governing the commons: The evolution of institutions for collective action. Cambridge university press.

NewAPPS comment

December 10, 2013

The comment of mine pasted below doesn’t seem to have made it through moderation at this NewAPPS post. I trust it will, in time – but I thought I’d archive it here just in case:

UPDATE: The comment’s now visible at NewAPPS, retrieved from the spam folder.

~~

This petition has been organised by the ‘Institute of Science in Society’ (ISIS) – see their page here.

In promoting it, you should probably also make your readers aware of ISIS’s advocacy of alternative therapies for AIDS, (“herbs, minerals, mushrooms, probiotics, exercise and even simply better nutrition”), based on “the truth of the many anecdotal stories about these compounds”; the organisation’s important research about ‘water memory’ and homeopathy; and the “remarkable theory of everything that claims to relate all forces of nature” discussed in the organisation’s director’s book ‘Living Rainbow H20′; as well as the various other ‘unconventional’ scientific breakthroughs published by the site, and likewise endorsed by lists of people with ‘PhD’ after their names.

This may allow readers of NewAPPS to make a more informed initial assessment of the types of reasoning likely to be behind this petition’s claims, as against those of the French High Council on Biotechnology.

That last link does have the benefit of basing its claims on legitimate scientific methodology.

Economics as Science

October 29, 2013

The recent Nobel Prize [1] in economics has prompted a fair bit of commentary/discussion along the lines of ‘is economics a science’? I thought I’d add to that commentary. The extremes of the commonly articulated positions are roughly:

“Of course it is – and a stronger, more manful, more mathematical science than your [puny / relativistic / fraudulent / etc.] [psychology / sociology / history / etc.]“

“Of course it isn’t – it’s a series of barely coherent apologies for the interests of the powerful, detached from any reference to or understanding of the suffering inflicted upon billions by the policies it advocates and sophistically excuses”

With of course a range of other positions too.

The former of the two positions above is articulated principally by economists; the latter principally by left critics of economics. I’m in many respects on the left [2] – but I’m also in training to become an economist. Where does that place me? [Well - not to build up suspense: I think economics is indeed a science (that's why I think it's worth doing economics). But the longer version follows.]

Prior question: what does it mean for something to be a science? As a first pass, I take a disciplinary research-space to be a science if:

1) The object it studies is a real phenomenon that can actually be empirically studied.[3] [4] (So astrology doesn’t count – because the relationships between celestial objects and human personality is not a real phenomenon; but astronomy does count, because celestial objects are real things.) (What’s actually real is of course itself a scientific question – but so it goes; there’s no paradox there – just the usual Neurath’s Boat principle of there being no discursive ‘outside’.)

2) There exists a set of established norms and research practices for testing claims about these objects against empirical evidence – for an endeavour to be scientific, claims must be vulnerable to rejection in the light of empirical findings.

3) There’s a discursive space, for researchers, within which those norms for testing claims against evidence can themselves be debated, contested and transformed.

Science is therefore a communal endeavour – it can’t exist outside of a community of research. Science relies on the collection of evidence; the positing of claims on the basis of and for testing by evidence; and the collective ongoing assessment of the evidence, the claims, the methodological connections between the two, and the norms governing the whole endeavour, within a community of researchers.

This definition of science does not require the following things:

- That practitioners of scientific inquiry be particularly rational. All else being equal it’s better for practitioners to be reasonable and informed than not, but the ‘rationality’ of the system resides principally in the possibilities made available by the overall institutions of the system, rather than in the virtues of individual researchers. (It is necessary, though, for a sufficiently large number of members of the community to be committed to reproducing those broad institutional practices enumerated above, that the practices are indeed reproduced.)

- That scientific claims be correct. The whole point of the scientific endeavour is that claims (including both empirical claims and the methodological claims that inform empirical claims) are open to revision.

- That members of a research community be capable of predicting the future behaviour of the phenomena studied. Some phenomena are amenable to this, in the current state of knowledge; others are not. It is not a requirement of science that predictions of future events be created, only that evidence (including evidence generated by future events) be capable of modifying our claims.

- Relatedly, that ‘general laws’ be discovered. Science can study unique specificity just as scientifically as it can study general principles; one is not more sciencey than the other.

- That there be broad consensus on most major topics within the research community. One hopes that warranted consensus can be established, but an important part of the mechanism from which it might emerge is disagreement.

None of those things just listed need apply for a community to count as a group of scientific researchers.

In these terms, is economics a science?

I think the answer is: clearly yes, economics is a science. There is a real object of study (the economy, however that’s understood). There are established principles for collecting evidence and testing claims against evidence. There are ongoing (quite sophisticated) debates about the methodological principles involved in these tasks. So I think economics is pretty unambiguously a science, and I’m happy to be a member of and participate in that research community of scientific practitioners.[5]

What about the second objection, though? The objection that economics is just serving the interests of the powerful, etc.?

Well – just because a community of research meets all the criteria for science, doesn’t mean that it isn’t full of bullshit – nor does it mean that the kinds of bullshit dominant in a field are in any way accidental. Here, as often, it’s important to distinguish between best practice and actual practice. Best practice is not something that exists independently of actual practice – it is generated in and emerges out of actual practice. But it is also something that actual practice can be judged against – and often judged severely. Like any discursive space, the discursive space of economics is variegated – it contains many voices in dispute. In participating in that discursive space, we add our own voices and evaluate those voices already in contention. The norms of evaluation – and, therefore, the conclusions – that we take away from engagement in that space may be minority views relative to the space overall.

So it’s important to distinguish between the claim that economics is a science, and the claim that economics in general has things right, or is even on the right path. It’s important to have an account of the many things wrong with economics too – which I’ll start to talk about in a future post.

[1] The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel

[2] This post articulates my politics I think reasonably well – although I’m losing patience with left positions and figures sufficiently rapidly that, while I don’t think I’m on the classic ‘Trot to neocon’ ideological trajectory here [not least because I was never a Trot, but you know what I mean], it’s hard not to see why some such view would look reasonable, from the outside.

[3] “What about mathematics?” Well, mathematical objects (whatever their status – as it happens, I have a conventionalist line on the status of mathematical objects, but nothing here relies on that) can’t be empirically studied, so mathematics isn’t a science in this sense. What gives mathematics its objective character (on my account at least) is the degree of consensus that can be (and has been) attained around mathematical norms – math is pretty much unique in this respect. This is what distinguishes mathematics from, say, theology, which also has an object of study of ambiguous status (real? fictional? social? supernatural?) but where the degree of consensus is far lower, even within specific religious communities, let alone between religions.

[4] “What about the SCIENCE OF BEING that myself and three other graduate students in this Heidegger course are developing?” Sorry – that’s not a science.

[5] Note, though, that economics is not a more manful or vigorous science than any other social science, even if it involves a lot of math.

I’ve just started reading Elinor Ostrom’s ‘Governing the Commons’ – the 1990 book summarising the research program for which she won a Nobel Prize in 2009. Ostrom’s work is interesting, empirically oriented, methodologically and theoretically eclectic, and I think provides a valuable set of resources for those trying to think about institution-building.

At the start of the book, Ostrom summarises three standard ways to understand the problem of commons governance, in the economics literature:

1) Garrett Hardin’s fable of the tragedy of the commons (written from a position of anti-population growth; Hardin is also a signatory on the notorious ‘Mainstream Science on Intelligence’ letter to the Wall Street Journal – that is to say, an advocate of scientific racism); though Ostrom (like others) draws attention to earlier figures who had described the same dynamic, such as H. Scott Gordon:

“Wealth that is free for all is valued by no one because he who is foolhardy enough to wait for its proper time of use will only find that it has been taken by another” (Gordon 1954, p. 124; quoted in Ostrom 1990, p.3)

2) The prisoner’s dilemma game. This is the famous game-theoretic scenario in which two participants have to choose one of two courses of action (cooperate or defect). The game scenario is set up such that if the other player defects, one is better off defecting; and if the other player cooperates, there is no disadvantage to defecting (though no advantage either). In this circumstance, it seems ‘irrational’ not to defect; but if both players defect, both players are worse off than if they had cooperated. In Wikipedia’s always-useful words:

“[The prisoner's dilemma] was originally framed by Merrill Flood and Melvin Dresher working at RAND in 1950. Albert W. Tucker formalized the game with prison sentence rewards and gave it the name “prisoner’s dilemma””

(I need to read all this work.)

3) The logic of collective action. In his 1965 book of this name, Mansur Olson writes:

“unless the number of individuals is quite small, or unless there is coercion or some other special device to make individuals act in their common interest, rational, self-interested individuals will not act to achieve their common or group interests” (Olson 1965, p.2,; emphasis in the original; quoted in Ostrom 1990, p.6)

I haven’t read Olson and can’t summarise his arguments; I should look at all of that too.

Anyway – Ostrom has various criticisms of all this: notably that these various analyses of commons governance typical presuppose given, immutable rules that determine the choices available to actors in these scenarios; but in actual social life the social rules and institutional frameworks within which we must make our decisions and take our actions are themselves also determined by our collective actions. To put things crudely: if we’re faced with a ‘prisoner’s dilemma’, why can’t we do something about the prison?

I wanted to briefly mention another issue with the prisoner’s dilemma, and related models, though. In Ostrom’s words:

“those attempting to use these models as the basis for policy prescription frequently have achieved little more than a metaphorical use of the models” (Ostrom 1990 p.7)

The use of such models as metaphor, though, can have a specific ideological function beyond the occlusion of the possibility of institutional change. The basis of a prisoner’s dilemma or tragedy of the commons scenario, is a situation in which economic actors engage on more or less equal terms, and where it is indeed the case that absent cooperation no economic actor will be better off. This is what makes the ‘tragedy of the commons’ a tragedy, rather than simply the defeat of some actors by others.

In some commons scenarios, however, it may be (indeed it sometimes is) the case that some specific actor or actors, in taking the ‘defect’ strategy, will be better off in absolute terms. If a specific actor can benefit sufficiently from the extraction of resources from the commons, it may not matter if the commons is exhausted or destroyed in the process – the actor who benefits most may still be on top, relative to even the best-case ‘cooperative’ scenario. All else being equal, the greater the power differentials between the different actors (and the greater the resources to be appropriated), the more likely this scenario is. If we consider that actors can (in fact) move between different ‘commons’ extracting resources from each, and so an actor’s considerations don’t have to be restricted to the specific game we’re currently imagining, this scenario seems quite a bit more likely. (And, of course, there are plenty of examples of actual real-world resource depletion or appropriation that seem to fit this model very well.)

That is to say – this framing of the problem of commons governance can de-emphasise one central way in which such governance can fail: not lack of coordination, but simple domination. A full reckoning with the challenges of institution-building needs to take account of both of these issues (and many others).

I’m sure there’s lots of work that’s been done on this and similar scenarios – but I don’t know this work. I’d like to explore these issues – and, in general, I’d like to look at how power differentials can be given a more central place in this kind of modelling of economic phenomena.

~~

Works cited:

Gordon, H. Scott. “The economic theory of a common-property resource: the fishery.” The Journal of Political Economy 62, no. 2 (1954): 124-142.

Hardin, Garrett. “The Tragedy of the Commons∗.” Journal of Natural Resources Policy Research 1, no. 3 (2009) [1968]: 243-253.

Olson, Mancur. The logic of collective action: public goods and the theory of groups. Vol. 124. Harvard University Press, 2009.

Ostrom, Elinor. Governing the commons: The evolution of institutions for collective action. Cambridge university press, 1990.

Wikipedia contributors, “Prisoner’s dilemma,” Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Prisoner%27s_dilemma&oldid=574372985 (accessed October 2, 2013).

What about alternatives to the market? Are there better ways to organize the signaling and negotiation associated with the distribution of goods, and the production of goods for distribution? Off the top of my head (again, without spending really any time with the relevant literature, so this is all very preliminary) I can think of three broad alternative categories of economic organization:

1) Economies sufficiently local to not involve large-scale trade. These would have to be very local economies. Such a mode of economic organization is feasible in plenty of locations; but by its very nature it can’t ‘scale’ to mass production and the complex division of labour. Such a mode of economic organization is therefore, I think, simply not capable of producing sufficient resources to sustain a global population in the billions, at a decent standard of living. So this is ruled out.

2) Central planning. This was of course the classical socialist solution: the alternative to the anarchy of the market was the rational planning of a benign centralized bureaucratic organization, deputized to serve the interests of the people. This was, for generations, the main thing that people meant by ‘socialism’ and ‘communism’. The achievement of centrally planned economies, and the failure of those economies to realize the emancipatory hopes invested in them, is obviously the standard, tragic, and in my opinion basically accurate story of the failure of communist ideals in the twentieth century.

Could an alternative approach to centrally planned economies realize those ideals without replicating the failures of the twentieth century planned economies? It seems relatively clear to me (and to most) that the central failure of those communist states was their authoritarianism. In the absence of democratic institutions, those with power are always very likely to use that power for oppressive purposes, with little in the way of checks and balances to prevent this. So could central planning work if it were properly democratic?

I don’t want to rule this out; it’s worth spending time working on what this would be in more concrete practice. But I do have a reflex skepticism on this (characteristic of my time): the concentration of power required for the fully planned administration of an economy seems extremely vulnerable to abuse, even if much stronger democratic checks and balances are built into it than was the case for the twentieth century communist economies. So my impulse is that much more decentralized modes of organization are preferable – but I don’t want to take this for granted.

3) An alternative signaling system to money. It must, one would assume, be possible to devise an alternative way of fulfilling the information-transmission function of money, using modern computing: some kind of mechanism that enables the signalling of demand without the use of the ‘effective demand’ communicated by purchases and hypothetically projected future purchases, and (further) without the need to centrally manage the information thus communicated (though the problem of how to signal demand is also of course a problem for central planning). I know that there are proposals of this kind out there, but I haven’t actually read up on them; I ought to.

~~

Given that (2) and (3) above both seem at the very least worthy of serious consideration, I don’t think it’s at all obvious that ‘market socialism’ is the best candidate when considering how to build more emancipatory economic institutions. I want to give more thought to the above. But for now I’m still going to take ‘market socialism’ as the leading contender for a credible realisable emancipatory economic system, when reading and thinking more about all this.

Money, Debt and Growth

July 31, 2013

One of the major capitalist institutions that the market socialism sketchily outlined in my last post didn’t address, is the banking system. The banking system plays a fundamental role in capitalism in at least two ways. 1) It creates money. 2) It determines to a considerable extent the allocation of investment resources. Money is obviously a central institution to any system that makes substantial use of the market. And decisions around the allocation of investment determine to a large extent what ‘we’ take to be valuable productive uses of the surpluses our economic system generates.

I’ll take these two functions one at a time. The banking system creates money by lending out customers’ savings to other customers. If I put $10 in a savings account, the bank can then lend this $10 to another customer. If they spend the money on bibles, and the bible-seller pays the money back into a savings account, the bank can then lend it out again to another customer. If this customer then puts the money into their own savings account, the bank can lend it out again; and so on. This ‘duplication’ of ‘the same’ money – in this example, the transformation of $10 into $30 – is how banks create money.

The same process allocates investment resources. Banks’ decisions about who to lend to determine to a considerable extent how the surplus resources generated by our economic system are reinvested. We’re going to need some institution or institutions that perform this function – pooling common resources and redirecting them to places we regard as the most worthwhile locations for investment – if we are going to have any kind of complex and large scale economy. The issue is the principles by which this system will operate. Banks will lend to businesses that they regard as likely to be profitable; so ‘the profit motive’ here determines where our society invests its surplus.

Both these functions are, under capitalism, centrally influenced by the principle of return on investment. What renders the ‘trick’ of banks’ money-creation relatively stable, most of the time, is the growth of the economy underwriting an overall return on investment that allows the banks to, on average, receive back more money than they lent out, even accounting for defaults. (When this goes wrong, and default overruns the banks’ margin for error in their lending calculations, the whole institution can potentially collapse: this is a banking crisis.) So capitalist growth is what enables the banks’ process of money-creation to ‘work’; and the banks’ process of money creation is, at the same time, a central driving force of capitalist growth. (Because money is created as loans that require repayment with interest, the need to valorise capital is ‘baked in’ to the capitalist economy at a quite basic level: the economy must grow, over the medium-long term, or the banking system will fail.)

So – the capitalist banking system binds the institution of money to the social compulsion for economic growth, in a way that strikes me as potentially quite hard to ‘unpick’ through institutional reform. To what extent is this a problem?

Initial thoughts on that question:

1) There’s nothing wrong with economic growth; economic growth doesn’t have to be environmentally destructive, for example (although it is, under our current system).

2) There is something wrong with ‘blind’ growth – growth that is driven only or principally by investors’ sense of the most profitable avenues for investment.

3) The socially destructive consequences of blind growth could possibly be ameliorated by:

3a) the more equitable distribution of wealth (because investment choices would be less likely to overwhelmingly serve economic demand associated with a small elite), and

3b) planning, regulation and/or incentivisation to guide investment in directions chosen through more democratic decision-making

4) A system that operates using a banking system of this broad kind is still going to be crisis-prone; there will just be less severe human consequences of crises, because people will be less reliant on labour for income

5) The system will also involve a strong set of incentives to ‘overide’ regulatory or social-welfare-oriented policy, in order to prevent profit-crisis (this is part of the overall social dynamic that makes left achievements in capitalism so unstable).

6) I’m not sure whether those incentives are stronger or more worrying than the usual incentives people have to screw each other over.

I admit, I am uneasy about the idea replicating this central element of the capitalist system in a proposed alternative economic system. That said:

a) it’s not clear to me that this element of capitalism in fact has to be altered/abolished in order to do away with the negative features of capitalism we’re aspiring to remove; and

b) I also don’t really know how to dissociate the socially useful functions of money from the growth dynamic described above, given our starting-point.

Of course, one could abolish money – but this seems to me to be an extreme step, with very major institutional repercussions; I want to explore the possibilities of less wholesale institutional overhauls, before assuming that such a step would be required to achieve our goals. For these reasons I am – at least for now – going to work on the assumption that we can retain something in the ballpark of a banking system that creates money by turning savings into investments; but I’m also going to try to remain attentive to alternatives.

Alternative Institutions

July 29, 2013

If we were interested in realizing the broad political ideals I wrote about in my post on social democracy, what alternative economic institutions would be required? Here’s a first pass at answering that question[a][b].

1) Guaranteed minimum income of some kind, for everyone, globally. This would go a long way towards providing a baseline standard of living for most everyone. It would also remove one of the major levers of economic exploitation (that is, the fear of poverty).

2) Free movement of people, globally. One could imagine a scenario in which our broad political goals are achievable without this; but free movement of individuals would be a valuable step in the direction of a more liberated global society. This would greatly reduce one major mechanism of global economic exploitation – the enforced international segmentation of the labour market by national class boundaries – and would provide a powerful weight against political oppression at the national (or equivalent) level.

3) Considerable democratic regulation/direction of production. A more ‘socially rational’ direction of productive resources would tend to follow from a more equitable distribution of global wealth; but one would also need heavy regulation/direction to address externalities (such as, for example, carbon emissions), and one would presumably also want a degree of collective decision-making around preferred use of collective resources. These forms of regulation/direction would have to be implemented at least in part through global institutions.

4) Considerable reduction in a typical individual’s lifetime labour, and corresponding increase in leisure/volunteer activities. This would probably follow naturally from a guaranteed minimum income – the institution-building challenge would very likely be the incentivisation of socially useful labour, rather than the reduction of labour hours – but it would be an important goal of our institution-building.

These items constitute a ‘market socialism’. More radical overhauls of global economic institutions would of course be possible – though the institutional changes above are obviously already very substantial. I’d like spend more time thinking and reading about these and other alternative institutions.

[a] This post incorporates content from offline conversations.
[b] I obviously make no claims to originality here, nor do I know the relevant literature.

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