Elinor Ostrom, a great voice for good social science, and good in social science, has died. A political scientist by training, she was the first woman to win the Nobel Prize in Economics. She did a great deal of important work on the creation and management of common-pool resources. Reading her work, it always seemed to me that she was the best kind of researcher—the sort who really cares about getting the right answer to a real empirical problem, even if the problem is very hard and the answer is very tricky.
From the category archives:
Economics/Finance
As everyone who has been paying attention knows, the news on inequality is nearly all bad. Not only has inequality increased dramatically in the US, but intergenerational economic mobility is declining[1]. And, where the US leads, the rest of the world looks likely to follow. The top 1 per cent lost more than most during the crisis of 2008-09 but, as Stephen Rattner reports here (drawing on work by Piketty and Saez), that was just a blip. A stunning 93 percent of the additional income created in the US in 2010, compared to 2009, went to the top 1 per cent, and there’s no reason to think things were much better in 2011 – average real earnings have fallen yet again, and employment growth, though positive, was still modest. Wealth inequality is also high, though it has not increased as much as income inequality.
The one bright spot mentioned by Rattner is that ” those at the top were more likely to earn than inherit their riches”. Since I’m already noticing that point popping up in the places you might expect to see it (can’t find a link right now), let me point out that Rattner’s explanation, that “the rapid growth of new American industries — from technology to financial services — has increased the need for highly educated and skilled workers” is wrong, and that there is every reason to expect a boom in inherited wealth.
Let me begin with an apology—for two things, actually. First, for the fact this response to the seminar on my debt book was so long in coming. It happening that at the time the seminar was going on I was desperately trying to finish a book with a very firm deadline (not to mention I was also struggling with a flu, which added all sorts of interesting complications. I did finish it though. Only just.) Second, for the fact that, to make up for the delay, I seem to have overcompensated and the response became… well, as you can see, a little long.
Sorry.
Allow me also to remark as well how flattered I am by so much of this discussion. When I wrote the book it never occurred to me I would end up being compared with the likes of Polanyi, Nietzsche, or even Ernest Mandel. I shall try very hard not to let this go to my head. Now how shall I start? It would be ungracious not to respond to each in some way. But I think it might be best to start by clarifying a few issues that seem to crop up pretty frequently, both in this seminar and in other reviews and comments I’ve seen on the internet. Then I will take on the specific responses.
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I’ve just sent back the proofs for the new edition of Rousseau’s _Of the Social Contract and Other Political Writings_ (edited Bertram, translated Quintin Hoare) that Penguin Classics are publishing in September. One of the “other writings” is the _Constitutional Proposal for Corsica_ . Reading through, I suddenly alighted on an sentence and thought, “hang on, that makes no sense!” The relevant phrase in French (OC3: 936) is
bq. …quand le Prince hausse les monnoyes il en retire l’avantage reel de voler ses créanciers …
For which we had
bq. …when the Prince raises the value of a currency he derives the real advantage of stealing from his creditors …
But, but …. Surely what the prince needs to do to steal from his creditors is the exact opposite? You inflate. You inflate away the debt. You make the currency worth less, not more. Isn’t Rousseau just writing nonsense then?
It turns out not, and, thanks to the help of the estimable Chris Brooke I now understand. My thinking on this, and that of just about all modern readers I suspect, is formed by thinking of fiat currency. But if we have currency that (purportedly) derives its value from its metallic content (such as gold) then you can debase the coinage by raising its _face value_ whilst keeping the metal content the same. (Or alternatively, you could adulterate the metal or clip the coin to get the same effect.) Finding out this kind of thing really is great fun.
Since it’s starting to “filter”:http://krugman.blogs.nytimes.com/2012/03/05/economics-in-the-crisis/?pagewanted=all into “debate”:http://modeledbehavior.com/2012/03/06/in-which-i-am-won-over-by-paul-krugman/, it’s probably time that the paper that John Quiggin and I have written on Keynesianism in the Great Recession be released into the wild. It’s currently under journal review, but still has some holes (we figured it was at the stage where it would be helpful to have reviewers point out what we needed to do rather than try to model their likely responses internally). So, it’s here for downloading – and criticisms, comments and suggestions for improvements will be gratefully received. NB that both John and I have participated in this debate – but we have tried, as best as we can, to look at what happened not from the perspective of whether the people who were winning at any one point in time _deserved_ to win or not according to our subjective criteria, but instead, whether there are general explanations (independent of the quality of the arguments on the one side or the other) for the influence of different arguments at different times. In short, we’ve tried to write a paper about what happened, and why, rather than what should have happened. NB also, that we are aware of some holes (e.g. the fit between some of the theory, and the practical application is not as tight as we would like), and would love to hear suggestions for improvements.
Update: It would be particularly interesting to hear from people with strong, divergent perspectives, so as to make sure that the piece reflects as much information and as many points of view as possible. People should also feel free to email me at keynespaper@henryfarrell.net if they would prefer to make criticisms or suggestions privately rather than in public.
David Graeber’s three social principles – hierarchy, exchange and communism – are useful devices to think about the world, particularly when you become sensitized to the way in which one can turn into or mask another. One site of human interaction that may be illuminated by Graeber’s principles is the modern university: perhaps especially the British version which has evolved from nominally democratic modes of governance to extremely hierarchical ones within a generation.
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This is less a review of Ken MacLeod’s new novel, _Intrusion_ than a response to it. Ken is famous for having said that history is the trade secret of science fiction (also: for describing the Singularity as the “Rapture for nerds”) – but I can’t help wondering whether history is being overtaken by the cognitive and social sciences. Since Cosma Shalizi and I are both thinking and starting to write about some of the arguments that Ken takes on in his book, I’ll focus on drawing out the ideas. This is obviously dangerous if you do it naively – good novels of ideas play with their subject matter rather than expound it, and take care to leave a lot of space for ambiguity, counter-perspectives, the awkwardness of real human beings with human motivations and so on. And _Intrusion_ is a good novel of ideas. Even so, there may be value in drawing out the ideas that Ken is engaging with – I don’t think that the book mentions the names of Thaler and Sunstein once, but one significant skein of the book argues against them. NB that while I don’t _think_ that there are any major spoilers below the fold, some possible readers may reasonably want to preserve their reading experience from my conceptions and misconceptions of what the book is about. Certainly, people who have already read the book will get a lot more from this essay than people who haven’t. NB also that while I don’t know whether the book will have a US edition anytime soon, it can be ordered from the usual UK sources by US readers, who will also soon be treated to his robots-meet-Calvinism-and-contractarianism-and-the-illusion-of-free-will near future thriller, _The Night Sessions._
Fortunately I didn’t contract with Chris in advance to contribute to the Graeber seminar, so I’m not in debt on this score, paying late and therefore a bad person.
Right. I’m only about halfway through the book – on audiobook: must have something to do on the bus – and quite enjoying it. Some skepticism about Graeber’s scholarship has been expressed in the wake of revelation of that embarrassing bit about Apple computers that he got totally wrong. I am not an expert on all the ancient and exotic anthropological and etc. evidence Graeber cites, but I’m not an absolute beginner. I started studying the history of ideas of debt, and related subjects, a few years back. See here and here. I started because it occurred to me the Plato I was teaching was, to a surprising extent, about debt, reciprocity and, generally, the convertability of moral into monetary categories, and vice versa. Euthyphro on piety. It’s ‘care of the gods’, which – this is his final suggestion – turns out to be the capacity to enter into healthy exchange relations. Meno on whether being good boils down to getting your hands on the goods. Cephalus, the old man, launches the mighty ship, Republic, with the thought that justice is ‘speaking truth and paying debts’, which morphs into the lex talionis thought that justice is payback – doing good to friends and harm to enemies. Plato, like Graeber, is really really concerned to shred this stuff, if he can. So I find Graeber interesting. I haven’t gotten to the bits where Graeber discusses Plato, but I see he does discuss him. And I haven’t found any flagrant inconsistencies between what he says about other ancient stuff and what I have read in other authors about ancient stuff. So I’m inclined to think the Apple slip was a one-off accident, not indicative of larger problems. As to the tribute system stuff. It sounds like Henry is right about that and Graeber is wrong. I haven’t gotten to that part of the book yet.
Right. Getting down to business. Here’s what seems to me a fundamental tension in the book. On the one hand, Graeber wants to emphasize that debt is a very specific relation. Everything isn’t debt, human relations-wise. More generally, everything isn’t exchange. For him, this is the larger significance of defeating the myth of barter and the double-coincidence and all that (go read the other posts if you don’t know what I’m talking about.) Money emerges as a way of accounting for debt, but not everything is debt. So money isn’t a way of accounting for everything. I’m simplifying, but this is the gist. (One of many gists, but enough for one post.) [click to continue…]
David Graeber’s Debt: The First 5000 Years begins with a conversation in a London churchyard about debt and morality and takes us all the way from ancient Sumeria, through Roman slavery, the vast empires of the “Axial age”, medieval monasteries, New World conquest and slavery to the 2008 financial collapse. The breadth of material Graeber covers is extraordinarily impressive and, though anchored in the perspective of social anthropology, he also draws on economics and finance, law, history, classics, sociology and the history of ideas. I’m guessing that most of us can’t keep up and that we lack, to some degree, his erudition and multidisciplinary competence. Anyway, I do. But I hope that a Crooked Timber symposium can draw on experts and scholars from enough of these different disciplines to provide some critical perspective. My own background is in political philosophy and the history of political thought: so that naturally informs my own reactions as do my political engagements and sympathies. So mine is merely one take on some of the book’s themes.
My critique of Tyler Cowen’s post arguing the unimportance of social mobility has started off, or maybe merged into, of those old-fashioned blog firestorms we used to have back in the day, now also reticulated through Twitter – a few links here, here and here. But rather than criticise Cowen further, I thought I would try to work through the bigger issues involved from a social democratic perspective[1]. In particular, as discussed in comments here, should social democrats favor policies to enhance social mobility, or does mobility between generations make inequality even worse, for example by justifying what appears as meritocracy?
The endless EU vs US debate rolls on, but now with an odd twist. Although the objective facts about economic inequality, immobility and so on are far worse in the US than the EU, the political situation seems more promising. (I’m not talking primarily about electoral politics but about the nature of public debate.)
In the EU, the right has succeeded in taking a crisis caused primarily by banks (including the central bank, and bank regulators) and blaming it on government profligacy, which is then being used to push through yet more of the neoliberal policies that caused the crisis. And, as we’ve just seen, formerly social democratic parties like New Labour in the UK, are pushing the same line.
By contrast the success of Occupy Wall Street have changed the US debate, in ways that I think will be hard to reverse. Once the Overton window shifted enough to allow inequality and social immobility to be mentioned, the weight of evidence has been overwhelming.
This post by Tyler Cowen is an indication of how far things have moved. Cowen feels the need, not merely to dispute some aspects of the data on inequality and social mobility in the US, but to make the case that a unequal society with a static social structure isn’t so bad after all.
Update Cowen offers a non-response response here. Apparently, disliking arguments for inherited inequality, such as his point 3 (because of habit formation, social mobility reduces welfare) is a “Turing test” for reflexive leftism.
Last week’s nef event on shorter working week, which I blogged about a few days ago, is now available to watch via the LSE channel. Enjoy.
Hear hear! What a wonderful short interview with Sanjay Reddy by Perry Mehrling from the Institute for New Economic Thinking (INET):
Reddy defends the position that economics is a profoundly value-entangled science, and that “Good theory is theory which illuminates the world, and good theory cannot start from a-priori premises which are disconnected from the world. Good theory has to start in part from observation from the world.”
I agree with every word Reddy says, but am a bit puzzled why Mehrling sees Reddy’s position as ‘a strong position’. In my view, if it is regarded (by economists?) as a ‘strong position’, that is just because economics has so forcefully tried to distance itself from any evaluative or otherwise ethical concerns; but in truth, economics has never been value-free, it has only fooled itself that it could be so. I’m really glad that Reddy is contributing to a better understanding of economics as value-entangled. Can’t wait to read the result of his INET project, “a book making a broad case for the resurrection of normative reasoning in economics”.
<a href=”http://colorlines.com/archives/2011/12/in-home_care_workers_finally_get_federal_minimum_wage_and_overtime_protections.html”>This is huge</a>: medical homecare workers will start to be treated as actual workers, with overtime and minimum wage requirements, rather than volunteers. At some point perhaps other groups of workers excluded from that kind of basic protection–waiters, other domestic workers, farm laborers–will also overcome the racist legacy of not counting Certain Classes of People as “real” workers.
In the meantime, for god’s sake tip well and if you’re not paying the person who cleans your house or mows your lawn or delivers your newspaper or nannies your kids two weeks bonus wages at some point during the year (it doesn’t have to be during the Big Spending Season, but everyone is entitled to a vacation, and don’t give me this crap about how they’re “self-employed” and it’s “their responsibility” to budget for their own vacation), you suck.*
*Possibly not if you live in a country in which people who do this kind of work actually get the same benefits and protections as so-called “professionals.”
David Cameron’s use of the veto in the recent EU summit opens an era of deep uncertainty (and possible catastrophe) for British and European politics. Two things seem to be true: Cameron is an incompetent opportunist in thrall to his backbenchers and the proposed treaty is a disaster for the Eurozone countries themselves. The fact that it is a disaster (a fact recognized by Francois Hollande’s declared intention to renegotiate) might seem to give some support to Cameron. But of course it doesn’t, since the remaining 26 countries will just go ahead without the UK. All Cameron has done is isolate and exclude himself. As one MEP is reported as saying today, “If you’re not at the table, you’re on the menu.”
Cameron vetoed the proposed EU treaty on the basis, or pretext, that other countries wouldn’t agree to “safeguards” for the City of London. The reason he was asking for these was essentially just because his backbenchers had demanded he show the “bulldog spirit” and, since EU treaties need unanimity, he thought he could extract some symbolic gain to satisfy them. He didn’t clear this with Merkel or Sarkozy in advance and would have been inhibited in doing so because the British Tories withdrew from the mainstream Euro conservative grouping in order to hob-nob with a bunch of extreme nutters and anti-semites. Sarkozy, who wanted a more integrated core Europe without Britain in any case, took the opportunity to call Cameron’s bluff. All very good for Sarko in the run-up the the Presidential elections. Exit Cameron stage right, claiming to have stood up to the EU – and getting praised by the UK’s tabloid press and an opinion-poll boost – but actually exposing the City to further regulation under qualified majority voting. He’s also chucked away decades of British policy which favoured EU expansion with the new accession countries serving as a counterweight to the Franco-German axis. Where are the other countries now? Lined up with the French and Germans.
The Euro treaty itself, assuming it goes ahead as planned and is enforced, mandates balanced budgets and empowers the Eurocrats to vet national budgets and punish offenders. Social democracy is thereby effectively rendered illegal in the Eurozone in both its “social” and “democracy” aspects. Daniel put it “thus”:https://crookedtimber.org/2011/12/09/euro-kremlinology/comment-page-2/#comment-391547 :
bq. a takeover of Europe by the neoliberal “permanent government” who failed to get their way by democratic means. All of the nationalism and anti-German sentiment is a distraction from the real scandal here. The ‘technocrats’ (which is apparently what they want to be called, although frankly I am seeing a lot of ideology and not much technical ability) want to reorganise the whole of Europe on neoliberal lines (ironically, to basically replicate the Irish economic transformation
One might think, then, that the left should be happy to be well away from it and that Cameron has inadvertently done us a favour. However, the short-term consequences in British politics could well be awful. My worst-case fantasy scenario has Cameron calling a snap General Election on nationalist themes, getting a majority dominated by swivel-eyed propertarian xenophobes and dismantling the welfare state, the Health Service, the BBC etc. Riots and civil disorder would be met with force, and those driven to resistance or crime would be incarcerated in giant new prisons. The Scots would then, understandably, opt for independence, and England and Wales would be left at the mercy of the crazies for several decades. Texas-on-Thames, in short.
And Nick Clegg? Well I wonder if even Daragh McDowell will make a case for him now.