It’s all in Kuznets….

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I just re-read, or read properly, Simon Kuznets’ 1966 book Modern Economic Growth. (A sliver of silver lining in libraries closing or getting rid of old books is that you can sometimes find them at low prices online, although also sometimes at algorithmically weird ones.) It turns out that all the new debates are actually old debates. A few points leapt out at me on this reading.

First, Kuznets’ insistence that: “[T]he definition of national product used for measuring economic growth embodies the accepted notions of the means and ends of economic activity, reflecting the main features of modern economic society.” When society changes, the relevant concept changes. “If we are to understand modern economic growth, we must measure its magnitudes in terms of the modern system of means, ends and values.” This certainly speaks to my view that GDP is fitting society decreasingly well.

A second point is the definition of a sector – I’m puzzling now over the relevance of lengthening supply chains and implications for thinking about both sectors and productivity in the process innovation sense. A sector is defined by the raw materials it uses, the production process and the finished product. “A marked change in one … is usually the basis for distinguishing and defining a new industry.” His example is the emergence of rayon although it served the same market as cotton textiles.

There are many more fascinating reflections – including the disparity between definitions of intermediate consumption and investment for the corporate and household sectors – why is household expenditure on commuting not an intermediate, or on education not part of investment? A book well worth revisiting. And an interesting counterfactual question – what society would we have now if Keynes’s GDP-style measure had not trumped Kuznets’ economic-welfare conception of aggregate output back in 1940?

 

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Humanity’s future…

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I read On the Future: Prospects for Humanity on the train back from the Festival of Economics. (See the #EconomicsFest hashtag – recordings will go online soon.) This short and compelling book by Martin Rees, the Astronomer Royal (and a Cambridge colleague), was a bit of a dampener on my good cheer. Our prospects are not great. It turns out that the risk of a large asteroid causing mass extinction is one of the lesser worries about our future. Other existential risks have a higher probability with the same mass death/end of civilisation impact.

Take biotech terrorism: “Whatever can be done will be done by someone, somewhere,” the book calmly states in passing. Even more exotically, another: “Scary possibility is that the quarks [produced by high energy physics experiments] would reassemble themselves into compressed objects called strangelets. That in itself would be harmless. However, under some hypotheses, a strangelet could, by contagion, convert anythign else it encountered into a new form of matter, transforming the entire Earth into a hyperdense sphere about a hundred meters across.” I gather this is a remote prospect indeed, but it takes some of the gloss off the Large Hadron Collider. Strangelets, eh.

The early scientists (natural philosophers, as they called themselves) were considered ‘merchants of light’ yet science and technology have come to seem pretty scary. This book is a perfect antidote to worrying about Brexit or Donald Trump or neo-fascism, as it offers so many much bigger problems to worry about.

It tries to strike a positive note by saying science and tech offer potential solutions too. Martin Rees thus ends by calling for scientists to engage more with philosophy. I think they should be engaging more with social scientists. The barriers to taking action to safeguard humanity from any devastating effects of climate change or AI are not mainly about science and technology, but rather about what people believe and how they behave.

 

 

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Gods and Robots, myths and machines

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In one of those lucky dip moments I picked Adreinne Mayor’s Gods and Robots: Myths, Machines and Acnient Dreams of Technology off the pile. What a good move. I know nothing about ancient Greek mythology but it turns out that not only are the myths rip- roaring tales of sex and violence, they are also stuffed with automata, robots and cyborgs. Pre-digital, clearly, but vividly imagined. And even in some cases (simple automata) possibly even real.

Mayor writes: “Homer’s myth reminds us that the impulse to ‘automate’ is extremely ancient. … The myths demonstrate that automata were thinkable, long before technology made them feasible.” And even in the time of Homer and Hesiod raised questions about free will and the difference between humans and not-humans, nature and artifice. Myths were sort of the sci-fi of their day.

Mayor concludes by suggesting the myths provide food for thought today as we grapple with the same questions as raised by AI. Indeed, all the more so as the day approaches when technology brings some of the things dreamt of by the ancient Greeks out of the realm of myth and into reality.

Brilliant book.

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Algorithms and humans

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If I were recommending one book for a general reader about the brave new world of algorithmic decision making and AI in particular, it would be Hannah Fry’s Hello World: How to be Human in the Age of the Machine. The ground it covers will be familiar to AI/ML experts, but for anyone else this is a terrific and – importantly – balanced introduction to the issues. There are other books around that are great on the concerns – Cathy O’Neill’s Weapons of Math Destruction leaps to mind as one aimed at the general reader. But these tend to skate over the other side of the story. There are also somewhat denser reads, such as The Master Algorithm. But Hello World is a really clear, informative introduction.

Sandwiched in between a general intro and conclusion, the bulk of the book is a series of chapters covering different issues (the locus of decision-making power,  and the role of data) and domains (the justice system, medicine, cars, crime and art). There were points in most of the chapters that made me stop and ponder.

If you wanted to criticise the book, you’d probably say it’s great on the problems and questions, light on the solutions, but that would be most unfair. Algorithmic decision making sheds an unforgivingly bright light on the trade-offs and choices our society already makes. They look far more unpalatable when we’re forced to confront them in such a stark way – because the decisions are so fast, because they are not fudged, because machines are not inconsistent in their judgements, and so on. We are all grappling with the challenges. So if you have an uneasy feeling you ought to know more about this, Hello World is a good starting point.

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The future of capitalism?

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The Future of Capitalism, Paul Collier’s new book, is not a small subject. In fact, the first half of the book is largely retrospective, looking at how capitalism got into today’s mess. There is a particular focus on the loss of moral compass in the organising structures of collective life – the family, the firm, the state. This echoes a number of authors identifying growing individualism, fed by the ideology of ‘the market’, as a corrosive force progressively undermining the conditions that enable it – Bell’s phrase ‘the cultural contradictions of capitalism‘ encapsulates it neatly.

Collier – a distinguished economist whose career has centred on developing economies –  expresses this critique with eloquence and conviction. He has a particular focus on the role of economic theory in validating self-serving behaviours such as bosses paying themselves hundreds of times more than their workers, and sketches an alternative approach to economics which embeds social norms and social influences on preferences. He blames the utilitarian and Rawlsian approaches to ethics, and advocates the communitarian alternative. I’m not persuaded by communitarianism, but surely you have to be pretty obtuse – a banker, maybe – to disagree with the diagnosis. Nobody thinks capitalism is doing just great at the moment.

It is of course harder to address the challenges than to diagnose them, and in a short book like this you can’t expect a detailed policy agenda. The book identifies three divides to be tackled: between successful global cities and ‘left behind’ places (although he deoesn’t use this term); between the skilled, well-paid, globe-trotting elite and the rest; between the rich and poor countries. It ends with the observation that capitalism is the only economic order capable of creating mass prosperity, but that it has not worked to do so since the 1945-70 period. This skates over the evident failings of postwar capitalism, which created the conditions for the ideological turn of the 1970s: inflation, shoddy nationalised industries, insider-outside labour markets and so on. Still, the suggestion here is that what’s needed is a combination of a rediscovery of ethics by political leaders (I’m not holding my breath on this front) and the shaping of identity around a shared sense of belonging to a place (rather than the more abstract ‘nation’ or identity-politics groupings).

This left me feeling a bit depressed. I can’t shake the feeling, despite only listening to the news while hiding behind the sofa these days, that it will take some cataclysmic event to reset current political dynamics. Another aspect of the turn to individualism in the 1970s was the existence of an intellectual framework on which to hang the political transformation, and I don’t see as yet a sufficiently broad and consistent alternative to the isolated individual, self-interested, rational choice model. Something for us economists to work on – as indeed Collier and others have started to do.

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