Hi – Sumana Harihareswara here. You might remember me from [my April guest post about free/open source software, licensing, and codes of conduct in open
communities](https://crookedtimber.org/2015/04/10/codes-of-conduct-and-the-trade-offs-of-copyleft/). In that piece I took a stab at thinking about some useful vocabulary and distinctions that help us understand the political values and intuitions common to those communities. Today I’m considering where we got frameworks that we free software/open source folks often take for granted, and specifically what might have been erased from our intellectual heritage due to sexism.

As a soundtrack to this piece, consider [“Erase Me” by Ben Folds Five](https://www.youtube.com/watch?v=JzfXD5igRDM) (off *The Sound of the Life of the Mind*) and [“Whatever You Want” by programmer Vienna Teng](https://www.youtube.com/watch?v=m4wzzLkwAog)(off *Dreaming Through the Noise*; I recently heard tell that “Whatever You Want” is inspired by the film *Office Space*, which is amazing.)

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I’m writing a longer post on economists and the TPP for the Monkey Cage, and perhaps another post about the idea of “mood affiliation” for here (short version – I don’t think it at all does what its advocates want it to do) but in the meantime, a specific response to this post by Tyler Cowen. Tyler, partly perhaps as a result of an argument I had with him and Noah Smith on Twitter, argues that:

I’m familiar with studies showing estimated economic gains from TPP in the neighborhood of $1.9 trillion (pdf). Given the past performance of trade models, I am willing to believe that might be an overestimate. So let’s cut those gains roughly in half to say a trillion. (That said, if I understand the Peterson document correctly, they are not even trying to incorporate gains from reallocation on the production side, as might result from comparative advantage or dynamic specialization; in this sense $1 trillion may be a considerable underestimate of the upside.) That is still a sizable sum of economic gain. What would convince me to oppose TPP if is somebody did a study showing the following: when you use a better trade model, use better data, and/or add in the neglected costs of TPP (which are real), those gains go away and indeed become negative.

This is fundamentally the wrong way to think about these models. If as Tyler accepts, thinking about TPP primarily in Ricardian terms is likely to lead one ‘substantially astray,’ then starting from a Ricardian model and stipulating that you’ll lower the expected benefits by half to give your opponents a bit of a leg up, is fallacious. Specifically, it’s a weaker version of the Iraq war fallacy that Daniel identified in his 1 minute MBA.

Fibbers’ forecasts are worthless. Case after miserable case after bloody case we went through, I tell you, all of which had this moral. Not only that people who want a project will tend to make inaccurate projections about the possible outcomes of that project, but about the futility of attempts to “shade” downward a fundamentally dishonest set of predictions. If you have doubts about the integrity of a forecaster, you can’t use their forecasts at all. Not even as a “starting point”.

This isn’t to say that the Peterson Institute model that Tyler is working from is “fundamentally dishonest.” Although Alan Beattie notes that Peterson used to be “notorious for claiming trade deals would create thousands of jobs, cure scrofula and turn base metals into gold,” he accepts that they’ve gotten better under Adam Posen, (also, in fairness to the pre-Posen regime, this). But it’s highly problematic as a starting point for debate. As Jared Bernstein describes the results of the Peterson model in email conversation: “Only in DC-style econ would a number like 0.4% by 2025, derived from a model of a 29-chapter trade agreement that the modelers never saw, be taken seriously (Remember, we can’t accurately forecast monthly jobs numbers–yet we can somehow tell you to count on a miniscule change to GDP 10 years hence).”

I’ll have more to say about these issues in a follow up post. For now, just this. If you’re trying to build theoretical argument, you can reasonably ask someone to provide you with a better theory before you abandon your own. However, if you’re trying to advocate for a policy measure, and you accept that your preferred model is likely to lead people substantially astray, you don’t have any very good warrant for suggesting that this model should still anchor policy debate in lieu of someone coming up with a better one. Far better to admit ignorance (while berating the ignorance of your opponents as you like) and to accept that everyone’s views on the policy (including your own) are likely more the product of political values than dispositive evidence.

The posts in the Ken MacLeod seminar, in order of publication:

Farah Mendlesohn, And This, Too is a Romance.

Cosma Shalizi, “The Free Development of Each is the Condition of the War of All Against All”: Some Paths to the True Knowledge.

Sumana Harihareswara, Games, Simulation, Difference and Insignificance in The Restoration Game & The Human Front.

Jo Walton, Helical Construction in the Work of Ken MacLeod.

Henry Farrell, Rationalism and the True Knowledge.

Ken MacLeod, Response.

Thanks, everyone, for all this. It’s gratifying and somewhat bemusing to have my work given so much thought, and such warm appreciation, from contributors like these, and on a site like this. I’m particularly grateful to those who’ve given my books the great and welcome benefit of their critical attention and/or enthusiasm over many years.

I’ve decided to respond to each in turn, in an order that follows the order of the books referred to: Farrell and Shalizi focus mostly on the Fall Revolution books, Walton takes in the Engines of Light trilogy, Harihareswara deals with The Restoration Game and The Human Front, and Mendlesohn covers everything up to Intrusion. There will be references back and forward — some points raised by Farrell and Shalizi, for example, are better answered in relation to later stories. And in my own life, some events that shaped my early books are only explored (and then obliquely, with much misdirection) in later ones. [click to continue…]

After a couple of preliminary posts, here goes with my first draft excerpt from my planned book on Economics in Two Lessons. They won’t be in any particular order, just tossed up for comment when I think I have something that might interest readers here. To remind you, the core idea of the book is that of discussing all of economic policy in terms of “opportunity cost”. I’ll update as I go, in response to comments and criticism; this may create some difficulties reading the comments thread, but hopefully the improvement in the final product will be worth it.

My first snippet is about

Pareto optimality

The situation where there is no way to make some people better off without making anyone worse off is often referred to as “Pareto optimal” after the Italian economist and political theorist Vilfredo Pareto, who developed the underlying concept. “Pareto optimal” is arguably, the most misleading term in economics (and there are plenty of contenders). Before explaining this, it’s important to understand Pareto’s broader body of thought, one which led him in the end to embrace fascism.

Pareto and the “libertarian” path to dictatorship

Pareto sought to undermine the version of liberalism that dominated 19th century economics, according to which the optimal (most desirable) economic outcome was the one that contributed most to human happiness[^1], often (if somewhat loosely( summed up as ‘the greatest good of the greatest number’. Particularly as developed by the great philosopher and economist John Stuart Mill, this is a naturally egalitarian doctrine.

The egalitarian implications of the classical framework reflect the fact that the needs of poor people are more urgent than those of the better off. So, the happiness of the community as a whole all be increased by policies that benefit the poorest members of the community, even if these benefits come at the expense of those who are better off. It follows that a substantial degree of income redistribution will be social desirable and that large accumulations of individual wealth, which contribute only marginally to the happiness of a small number of people are undesirable in themselves, though they may in some circumstances be a by-product of desirable policies.

Pareto’s big achievement, further developed by a large number 20th century economists, was to show that much of economic analysis could be undertaken without invoking the concept of utility. Hence, interpersonal comparisons of utility, which invariably lead to the conclusion that redistributing wealth more equally is beneficial, could be dismissed as ‘unscientific’.

Pareto didn’t stop with an attack on the economic implications of Mill’s approach. Mill’s philosophical framework implied support for political democracy, including the enfranchisement of women. Since everyone’s welfare counts equally in the classical calculus, the political process should, as far as possible, give everyone equal weight.

Pareto reversed this reasoning, arguing that a highly unequal distribution of income was both inevitable and desirable; he proposed what he called a power law, described by a statistical distribution which also bears his name. Pareto’s “Law” may be summed up the 80-20 proposition, that 20 per cent of the population have 80 per cent of the wealth.

The supposed constancy of income distribution implies that any attempt at redistribution must be essentially futile. Even the aim is to benefit the poor at the expense of the rich, the effect will simply be to make some people newly rich at the expense of those who are currently rich. Pareto called this process ‘the circulation of elites’. (Footnote: In his dystopian classic 1984, Orwell has the Trotsky-like character Emmanuel Goldstein present the same idea as the starting point of The Theory of Oligarchical Collectivism. Orwell almost certainly derived the idea from James Burnham, an admirer of Pareto whose work Orwell saw as the embodiment of ‘power worship))

All of this led Pareto to become one of the first advocates of a political position combining an extreme free-market position on economic issues with hostility to political liberalism and democracy. Pareto welcomed the rise of Mussolini’s fascist regime, and accepted and accepted a “royal” nomination to the Italian senate from Mussolini.

Pareto was not really a fascist however. Rather, he developed a version of liberalism similar to that of his more famous successors, Hayek and Mises, both of whom embraced and worked for murderous regimes that had come to power by suppressing democratic socialist parties. Like Pareto, neither Hayek nor Mises can properly be described as fascists – they weren’t interested in nationalism or in the display of power for its own sake. Rather, their brand of liberalism was hostile to democracy and indifferent to political liberty, making them natural allies of any authoritarian regime which adheres to free market orthodoxy in economics. (Fn Supporters of Hayek and Mises commonly describe themselves as “libertarians”, but their alliance with brutal dictators makes a travesty of the term – they have been derisively described as “shmibertarian”).

Pareto optimality

Now back to “Pareto optimality”, and why it is such a misleading term. In ordinary language, describing a situation as “optimal” implies that it is the unique best outcome. As we shall see this is not the case. Pareto, and followers like Hazlitt, seek to claim unique social desirability for market outcomes by definition rather than demonstration.

If that were true, then only the market outcome associated with the existing distribution of property rights would be Pareto optimal. Hazlitt, like many subsequent free market advocates, implicitly assumes that this is the case. In reality, though there are infinitely many possible allocations of property rights, and infinitely many allocations of goods and services that meet the definition of “Pareto optimality”. A highly egalitarian allocation can be Pareto optimal. So can any allocation where one person has all the wealth and everyone else is reduced to a bare subsistence.

Recognising the inappropriateness of describing radically unfair allocations as “optimal”, some economists have used the description “Pareto efficient” instead, but this is not much better. It corresponds neither to the ordinary meaning of “efficient” nor to the meaning with which the term is commonly used in economics, which is also misleading, but in a different way.

The concept of opportunity cost gives us a better way to think about the possibility of making some people better off while no one is worse off. If such possibilities exist, then there are potential benefits that have no opportunity costs. Conversely, if there is a positive opportunity cost for any benefit, then we can’t make anyone better off without making someone else worse off. So, a “Pareto optimal” situation may be described, more simply as one where all opportunity costs are positive.

[^1]:This approach is often described as “utilitarianism”, and, until relatively recently, economists have mostly talked about “utility” rather than “happiness”. This terminology has been the subject of heated, but not enlightening, debate, with the result that it is best avoided.

B.B. King died last Thursday. I feel he was one of the last great blues stars. But as talented as he was I have a terrible confession to make. He was so influential on white rockers such as Eric Clapton that a) they just copied him slavishly lick for lick, all the time, forever b) I have developed a back-formation feeling that unfairly prejudices me against the music of a true guitar hero.

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Working on my Economics in Two Lessons book, I’ve had to address the concept of Pareto optimality, which naturally raises the question of how it fits into Pareto’s larger body of anti-democratic and anti-egalitarian thought, which culminated, at the end of his life, in his embrace of Mussolini’s fascism. This led me to an article (paywalled, sorry) published by Renato Cirillo, in 1983, defending Pareto against the charge of being a precursor of fascism. Cirillo asserts that, far from being a fascist, Pareto

“manifested consistently a strong attachment to a type of liberalism not dissimilar to the one later attributed to Mises and Hayek”

These are rather unfortunate examples, in view Mises writings in praise of fascism and work for the Dollfuss regime, and (even more), Hayek’s embrace of Pinochet, at the very time Cirillo was writing [^1].

This, along with my discovery that Locke was actively involved in the expropriation of the native American population, justified by his theory of property, led me (back) to the question of the relationship between the writings of political theorists (broadly defined to include economists, sociologists and philosophers engaged with these issues) and their personal political activity and commitments. I’ve come to two conclusions about this.

First, for serious writers on political theory, political engagement is and ought to be the rule rather than the exception. I don’t mean that philosophers should (necessarily) run for office. Rather someone whose political theory doesn’t lead them to have and express views on the great political issues of their day probably doesn’t much of interest to say about theory either (unless of course, their theory leads them to some form of quietism). That’s true of the writers whose commitments were creditable (for example, John Stuart Mill and Bertrand Russell) as well as the discreditable cases I’ve mentioned.

Second, it makes no sense to look at the theoretical writings and ignore the political commitments with which they are associated. For example, it is easy to construct readings of Pareto, Mises and Hayek in ways that make them appear either as friends or as enemies of political liberalism. Their (remarkably similar) actions make it clear which reading is correct. Eventually, of course, ideas outgrow their creators to the point where original intentions, and the texts in which they were expressed, cease to be relevant. But, as the Locke example shows, that’s a very slow process. As long as a writer is regarded as having any personal authority, the weight of that auhtority must be assessed in the light of their actions as well as their words.

[^1]: To be sure, none of these writers can properly be described as fascists – they aren’t interested in nationalism or in the display of power for its own sake. Rather, their brand of liberalism is hostile to democracy and indifferent to political liberty, making them natural allies of any fascist regime which adheres to free market orthodoxy in economics.

Possibly the greatest building in the history of the world ….

Almost as an illustration of the sort of thing John’s looking at in terms of misplaced opportunity costs, I have a piece up at medium.com on forthcoming changes to the UK benefit cap system, and how they could have fairly serious consequences for housing benefit tenants. I probably don’t emphasise it enough in the piece, but these knock on effects destroy the cost economics of the policy – once tenants are evicted because they can’t pay the rent, they become emergency cases and have to be accomodated by the council in short-term accomodation, which is one of the most wasteful and expensive things you can do in housing policy. As I said in discussion of the piece, if you don’t like subsidising these guys as buy-to-let landlords, you’re unlikely to love them when they come back as bed-and-breakfast proprietors, at twice the price.

I’ve been promising for a long time to write a new book, framed as a reply to a free-market tract Economics in One Lesson by Henry Hazlitt, published in 1946, but still in print and popular among free market advocates. Its popularity reflects the fact that it’s a reworking of Bastiat’s “What is Seen and What is Not Seen”, still one of the best statements of the case for free markets.

Bastiat’s argument is implicitly based on the concept of opportunity cost but, since the term wasn’t coined until 1914, he doesn’t use it. Neither, more surprisingly, does Hazlitt. Once this is made explicit, Hazlitt’s rather ponderous, and misleading statement of his “One Lesson”

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

can be boiled down to the much simpler statement “Market prices reflect opportunity cost”. In important respects, this is true, particularly when we consider the problem from the perspective of choices about how to allocate an individual, family or government budget. With fixed aggregate levels of public expenditure, for example, more money for the military means less for schools, and vice versa.

There are plenty of other questions about private and public decisions for which Hazlitt’s One Lesson is useful. Another example is the well-supported finding that the best way to fight poverty is to give money to poor people. This is unsurprising given that poor people themselves will usually have a much better idea of the opportunity costs they face than will those seeking to help them.

But as a general statement, Hazlitt’s One Lesson is false, which is why my working title is Economics in Two Lessons”. Lesson Two is “Market prices do not reflect all the opportunity costs we face as a society”
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In DC this coming Tue May 19th? If you’re interested in education and technology issues then please come hear our panel on the topic organized by Northwestern’s Institute for Policy Research.

The introduction to the American edition of *The Star Fraction* contains Ken MacLeod’s second-most famous dictum – “History is the trade secret of science fiction, and theories of history are its invisible engine.” The Fall Revolution books are all about history and people trying to make it (or perhaps more accurately, histories, and people trying to make them). They’re also books that reflect a very specific historical period – when the Berlin Wall had fallen or was about to fall but the Washington Consensus had yet to gel – a moment where the cold logic of nuclear deterrence still held, sort of, while the political transformation of Eastern Europe and the new market anarchism of Sachs, drugs and rock and roll was starting to get going. Maybe the closest thing to the manic intensity of the first three books (and chunks of the fourth) is the Zone of Thomas Pynchon’s *Gravity’s Rainbow* – black markets, hustlers, ideas, freewheeling politics, and the frozen arc of the Rocket still hanging above it all. They’re also (and much more so than Pynchon, whose zaniness is often forced) very *funny* books – they don’t play anything for obvious laughs, but are riddled through with intellectual black comedy.

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In 1898, the Skibbereen Eagle, the weekly paper of the landed and merchant classes of West Cork, published a thundering editorial against Nicholas II, Tsar of Russia. The Eagle had taken note of the Tsar’s tendency to trample the self-determinative rights of various Central Asian nations and took it upon itself to say to the world; ‘down with that sort of thing’. And so it was that the last of the Romanovs’ hand surely trembled as he clutched his own copy of the Eagle and timidly read its promise to “keep its eye on the Emperor of Russia and all such despotic enemies – whether at home or abroad – of human progression and man’s natural rights which undoubtedly include a nation’s right to self-government. ‘Truth’, ‘Liberty’, ‘Justice’ and the ‘Land for the People’ are the solid foundations on which the Eagle’s policy is based.”

And so it is, that a week after the Conservatives took power in Westminster and announced their insistence on ramming through their first round coalition negotiation document manifesto, the question of what it means for Ireland must be asked, and fulminating admonitions bellowed from across the Irish Sea. Or, in my case, south London. [click to continue…]

There’s a technique that MacLeod uses in several novels which I call helical construction. In helical construction, the story is told in two interwoven strands, each strand entirely separate from the other, both progressing forward in time and joining at the end. Chapters alternate between the two strands. If you consider the events of the book chronologically, the events of the past strand all take place before any of the events of the future strand, but the reader encounters the two strands in tandem. This casts shadows in both directions in terms of plot, foreshadowing, reader knowledge and expectations, and subverts a lot of the traditional ways stories are told.
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